July 12, 2006 - For immediate release
Contact: Scott Shockey, CFO (740) 446-2631
Ohio Valley Banc Corp Reports Earnings Growth
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GALLIPOLIS, Ohio - Ohio Valley Banc Corp [Nasdaq: OVBC] reported consolidated
net income for the quarter ended June 30, 2006, of $1,826,000 an increase of 5.4
percent over the $1,733,000 earned for the second quarter of 2005. Earnings per
share for the second quarter of 2006 were $.43, up 7.5 percent from the prior
year second quarter. Comparing the six months ended June 30, 2006 to the same
time period in 2005, net income increased 7.9 percent to reach $3,565,000.
Earnings per share were $.84 for the first six months of 2006 versus $.77 for
the first six months of 2005, an increase of 9.1 percent. Return on average
assets and return on average equity both improved to .95 percent and 12.10
percent, respectively, for the first half of 2006, as compared to .93 percent
and 11.71 percent, respectively, for the same time period in the prior year.
Net interest income, the Company's largest revenue source, contributed to
the increased earnings. For the six months ended June 30, 2006, net interest
income increased $939,000, or 6.9 percent, over the same time period last year.
The second quarter 2006 net interest income was up $427,000, or 6.3 percent,
from the second quarter of 2005. The growth in earning assets in conjunction
with an improved net interest margin provided additional net interest income.
The Company's average earning assets for the first half of 2006 were up
$35,086,000, or 5.2 percent, from the first half of 2005 driven by commercial
and residential real estate lending. Complementing the growth in earning assets
was the .07 basis points improvement in the net interest margin. The net
interest margin for the six months ending June 30, 2006 was 4.17 percent,
compared to 4.10 percent for the same time period the prior year.
Based on the evaluation of the adequacy of the allowance for loan losses,
management provided $1,457,000 to the allowance for loan losses for the six
months ended June 30, 2006, an increase of $809,000 from the same time period
the prior year. The increase in provision for loan losses was primarily
associated with higher nonperforming loan balances. The Company's ratio of
nonperforming loans to total loans stood at 1.17 percent at June 30, 2006, as
compared to .41 percent at December 31, 2005, and the ratio of nonperforming
assets to total assets was 1.23 percent at June 30, 2006, as compared to .62
percent at December 31, 2005. The increase in nonperforming loans was
attributable to two commercial loan relationships representing .67 percent of
total loans being placed on nonaccrual status. The loans are secured by liens on
commercial real estate and equipment, personal guarantees and life insurance.
The Company's net charge-offs for the six months ending June 30, 2006 were down
$458,000 from the same six-month time period in 2005, occurring primarily in
commercial loans. The allowance for loan losses was 1.30 percent of total loans
at June 30, 2006, as compared to 1.16 percent at December 31, 2005. Management
feels that the allowance for loan losses is adequate to absorb probable losses
in the portfolio.
Noninterest income totaled $2,859,000 for the six months ended June 30,
2006, as compared to $2,663,000 for the same time period last year, an increase
of 7.4 percent. For the three months ended June 30, 2006, noninterest income
totaled $1,558,000 and was up 10.2 percent from 2005's second quarter.
Contributing to the 2006 noninterest income growth was the increase in revenue
from additional investments in bank owned life insurance purchased throughout
2005. Furthermore, income growth continues to be enhanced by the increased
volume of transactions utilizing the Company's Jeanie(R) Plus debit card.
Interchange fees earned for the first half of 2006 were up 17.4 percent from the
first half of 2005. For the same time
period, monthly service charge fees decreased 14.4% due to the growth in the
number of Easy Checking accounts featuring no service charge or minimum balance
requirements.
On a year-to-date basis, noninterest expense totaled $10,997,000 in 2006,
an increase of $179,000 or only 1.7 percent when compared to $10,818,000 the
previous year. On a quarter-to-date basis, noninterest expense increased $56,000
from the second quarter in 2005. Salaries and employee benefits, the Company's
largest noninterest expense, grew $200,000, or 3.2 percent, for the first six
months of 2006, as compared to the same time period in 2005. The remaining
noninterest expense categories are down $21,000 collectively from 2005. The
emphasis management placed on expense control contributed to an improvement in
efficiency. The efficiency ratio, which represents the cost to generate a dollar
of revenue, improved to 62.54 percent for the six months ended June 30, 2006, as
compared to 65.86 percent for the six months ended June 30, 2005.
Total assets increased $3,908,000 from year end 2005 to reach $753,627,000
at June 30, 2006. The asset growth was related to an increase in loans of
$6,529,000, occurring primarily in commercial loans. Funding loan growth was an
increase in money market deposits and certificates of deposit which contributed
to total deposit growth of $15,737,000 from December 31, 2005. The growth in
retail deposits permitted the Company to reduce borrowed funds by $7,284,000
from year end 2005.
"The second quarter reflects mixed results," stated Jeffrey E. Smith,
President and CEO. "While we are pleased with the results of our employees'
efforts in the areas of revenue growth and expense control, we are disappointed
in the increase in the level of nonperforming loans. The increase consists of
two relationships with which liquidation or resolution is ongoing. Our
lenders, collectors and attorneys have faced these challenges before and will
work diligently to reduce the Company's nonperforming loan balances."
Ohio Valley Banc Corp common stock is traded on the NASDAQ Global Market
under the symbol OVBC. The holding company owns three subsidiaries: Ohio Valley
Bank, with 16 offices in Ohio and West Virginia; Loan Central, with five
consumer finance offices in Ohio; and Ohio Valley Financial Services, an
insurance agency based in Jackson, Ohio. Learn more about Ohio Valley Banc Corp
at www.ovbc.com.
Forward-Looking Information
Certain statements contained in this earnings release which are not statements
of historical fact constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as "believes,"
"anticipates," "expects," "intends," "targeted" and similar expressions are
intended to identify forward-looking statements but are not the exclusive means
of identifying those statements. Forward-looking statements involve risks and
uncertainties. Actual results may differ materially from those predicted by the
forward-looking statements because of various factors and possible events,
including: (i) changes in political, economic or other factors such as inflation
rates, recessionary or expansive trends, and taxes; (ii) competitive pressures;
(iii) fluctuations in interest rates; (iv) the level of defaults and prepayment
on loans made by the Company; (v) unanticipated litigation, claims, or
assessments; (vi) fluctuations in the cost of obtaining funds to make loans; and
(vii) regulatory changes. Forward-looking statements speak only as of the date
on which they are made and Ohio Valley undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which the statement is made to reflect unanticipated events.
OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
------------ ------------ ------------ ---------------
PER SHARE DATA
Earnings per share $0.43 $0.40 $0.84 $0.77
Dividend per share $0.17 $0.16 $0.33 $0.31
Book value per share $14.16 $13.57 $14.16 $13.57
Dividend payout ratio 39.49% 39.60% 39.30% 40.51%
Weighted average shares outstanding 4,240,739 4,287,619 4,244,624 4,288,093
PERFORMANCE RATIOS
Return on average equity 12.26% 12.19% 12.10% 11.71%
Return on average assets 0.96% 0.97% 0.95% 0.93%
Net interest margin 4.09% 4.08% 4.17% 4.10%
Efficiency ratio 60.85% 64.48% 62.54% 65.86%
Average earning assets (in 000's) $715,960 $674,905 $712,434 $677,348
OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)
Three months ended Six months ended
(in $000's) June 30, June 30,
2006 2005 2006 2005
------------ ------------ ------------ ---------------
Interest income:
Interest and fees on loans $ 12,113 $ 10,248 $ 23,869 $ 20,333
Interest and dividends on securities 921 870 1,805 1,741
Total interest income 13,034 11,118 25,674 22,074
Interest expense:
Deposits 4,463 3,084 8,377 5,942
Borrowings 1,347 1,237 2,720 2,494
Total interest expense 5,810 4,321 11,097 8,436
Net interest income 7,224 6,797 14,577 13,638
Provision for loan losses 791 330 1,457 648
Noninterest income:
Service charges on deposit accounts 781 810 1,439 1,515
Trust fees 56 53 109 107
Income from bank owned insurance 183 144 370 292
Gain on sale of loans 28 28 54 56
Other 510 379 887 693
Total noninterest income 1,558 1,414 2,859 2,663
Noninterest expense:
Salaries and employee benefits 3,230 3,143 6,525 6,325
Occupancy 318 317 652 651
Furniture and equipment 275 296 543 592
Data processing 199 168 416 331
Other 1,368 1,410 2,861 2,919
Total noninterest expense 5,390 5,334 10,997 10,818
Income before income taxes 2,601 2,547 4,982 4,835
Income taxes 775 814 1,417 1,532
NET INCOME $ 1,826 $ 1,733 $ 3,565 $ 3,303
OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except share and per share data) June 30, December 31,
2006 2005
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ASSETS
Cash and noninterest-bearing deposits with banks $ 15,070 $ 18,516
Federal funds sold 0 1,100
Total cash and cash equivalents 15,070 19,616
Interest-bearing deposits in other financial institutions 510 510
Securities available-for-sale 67,418 66,328
Securities held-to-maturity
(estimated fair value: 2006 - $12,189, 2005 - $12,373) 12,050 12,088
FHLB stock 5,861 5,697
Total loans 624,061 617,532
Less: Allowance for loan losses (8,087) (7,133)
Net loans 615,974 610,399
Premises and equipment, net 9,204 8,299
Accrued income receivable 2,805 2,819
Goodwill 1,267 1,267
Bank owned life insurance 16,032 15,962
Other assets 7,436 6,734
Total assets $ 753,627 $ 749,719
LIABILITIES
Noninterest-bearing deposits $ 74,093 $ 82,561
Interest-bearing deposits 504,510 480,305
Total deposits 578,603 562,866
Securities sold under agreements to repurchase 21,151 29,070
Other borrowed funds 68,889 76,173
Subordinated debentures 13,500 13,500
Accrued liabilities 11,420 8,839
Total liabilities 693,563 690,448
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 10,000,000 shares authorized; 2006 -
4,626,338 shares issued,
2005 - 4,626,336 shares issued) 4,626 4,626
Additional paid-in-capital 32,282 32,282
Retained earnings 34,007 31,843
Accumulated other comprehensive income (1,981) (1,231)
Treasury stock at cost (2006 - 386,029 shares, 2005 - 361,365 shares) (8,870) (8,249)
Total shareholders' equity 60,064 59,271
Total liabilities and shareholders' equity $ 753,627 $ 749,719