October 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 September 30, 2006, of $1,817,000, an increase
of 4.7 percent over the $1,736,000 earned for the third quarter of 2005.
Earnings per share for the third quarter of 2006 were $.43, up 4.9 percent from
the prior year third quarter. Comparing the nine months ended September 30, 2006
to the same time period in 2005, net income increased 6.8 percent to reach
$5,382,000. Earnings per share were $1.27 for the first nine months of 2006
versus $1.18 for the first nine months of 2005, an increase of 7.6 percent.
Return on average assets and return on average equity both improved to .95
percent and 12.07 percent, respectively, for the nine months ended September 30,
2006, as compared to .93 percent and 11.76 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 nine months ended September 30, 2006, net
interest income increased $959,000, or 4.6 percent, over the same time period
last year. This increase was attributable to the growth in the Company's earning
assets during the first nine months of 2006; while the Company's net interest
margin remained stable. The average earning assets for the first nine months of
2006 were up $33,675,000, or 4.9 percent, from the same time period in 2005
driven by commercial and residential real estate lending. The net interest
margin for the nine months ending September 30, 2006 was 4.10 percent, compared
to 4.11 percent for the same time period the prior year. For the third quarter
of 2006, net interest income was up $13,000 from the prior year third quarter.
Although the Company's average earning assets were up $30,880,000 during the
third quarter of 2006, as compared to the third quarter of 2005, this growth was
offset by a lower net interest margin. Comparing the third quarter of 2006 to
the third quarter of 2005, the net interest margin was down 16 basis points. The
decline in net interest margin was partially related to a higher balance of
loans on nonaccrual status.
Based on the evaluation of the adequacy of the allowance for loan losses,
management provided $1,931,000 to the allowance for loan losses for the nine
months ended September 30, 2006, an increase of $783,000 from the same time
period the prior year. The increase in the provision for loan losses was
primarily associated with higher nonperforming loan balances. The Company's
ratio of nonperforming loans to total loans stood at 1.36 percent at September
30, 2006, as compared to .41 percent at December 31, 2005, and the ratio of
nonperforming assets to total assets was 1.36 percent at September 30, 2006, as
compared to .62 percent at December 31, 2005. The higher nonperforming loan
balance consists primarily of two commercial loan relationships representing .90
percent of total loans. 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 nine months ending September 30, 2006 were down $542,000
from the same nine-month time period in 2005, occurring primarily in commercial
loans. The allowance for loan losses was 1.32 percent of total loans at
September 30, 2006, as compared to 1.16 percent at December 31, 2005. Management
believes that the allowance for loan losses is adequate and reflects probable
incurred losses in the portfolio.
Noninterest income totaled $4,475,000 for the nine months ended September
30, 2006, as compared to $4,064,000 for the same time period last year, an
increase of 10.1 percent. For the three months ended September 30, 2006,
noninterest income totaled $1,616,000 and was up 16.0 percent from 2005's third
quarter. Contributing to the 2006 noninterest income growth was the increase in
revenue from additional investments in bank owned life insurance throughout 2005
in addition to life insurance proceeds received in 2006. 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 nine months of 2006 were up 17.0 percent from the first nine months in
2005. For the same time period, monthly service charge fees decreased 15.8% 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 $16,660,000 in 2006,
an increase of $384,000, or only 2.4 percent, when compared to $16,276,000 the
previous year. On a quarter-to-date basis, noninterest expense increased
$206,000, or 3.8 percent, from the third quarter in 2005. Salaries and employee
benefits, the Company's largest noninterest expense, grew $233,000, or 2.4
percent, for the first nine months of 2006, as compared to the same time period
in 2005. The remaining noninterest expense categories were up $151,000
collectively from 2005, led by additional collection expense associated with the
higher nonperforming loans. 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 63.14 percent
for the nine months ended September 30, 2006, as compared to 65.17 percent for
the nine months ended September 30, 2005.
Total assets increased $22,482,000 from year-end 2005 to reach $772,201,000
at September 30, 2006. The asset growth resulted from an increase in loans of
$11,279,000, occurring primarily in commercial and residential real estate
loans. Funding loan growth was an increase in money market deposits and
certificates of deposit which contributed to total deposit growth of $36,170,000
from December 31, 2005. The growth in retail deposits permitted the Company to
reduce borrowed funds by $18,822,000 from year-end 2005.
"The third quarter continues to reflect mixed results from operations,"
stated Jeffrey E. Smith, President and CEO. "On the down side our earnings
increase, on a year-to-date basis, was limited to 6.8 percent by higher
provision for loan loss expense as well as increased collection expenses due to
higher nonperforming loans. The higher nonperforming loans at 1.36 percent of
total loans consist primarily of two commercial relationships which account for
..90 percent of the total nonperforming ratio. While our lenders, collectors and
attorneys are working diligently to resolve or liquidate the problem credits;
they could linger into fiscal year 2007. On the other hand, we are pleased with
our employees' continued efforts in the areas of revenue growth and expense
control. Our debit card interchange fees continue to increase and our
internet-related services helped to hold the increase in noninterest expense to
just 2.4 percent."
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 Nine months ended
September 30, September 30,
2006 2005 2006 2005
------------- ------------ ------------- --------------
PER SHARE DATA
Earnings per share $0.43 $0.41 $1.27 $1.18
Dividend per share $0.17 $0.16 $0.50 $0.47
Book value per share $14.51 $13.71 $14.51 $13.71
Dividend payout ratio 39.57% 39.42% 39.39% 40.14%
Weighted average shares outstanding 4,228,798 4,270,276 4,239,291 4,282,089
PERFORMANCE RATIOS
Return on average equity 12.03% 11.86% 12.07% 11.76%
Return on average assets 0.95% 0.94% 0.95% 0.93%
Net interest margin 3.97% 4.13% 4.10% 4.11%
Efficiency ratio 64.34% 63.84% 63.14% 65.17%
Average earning assets (in 000's) $717,736 $686,856 $714,221 $680,546
OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)
Three months ended Nine months ended
(in $000's) September 30, September 30,
2006 2005 2006 2005
------------- ------------ ------------- --------------
Interest income:
Interest and fees on loans $ 12,410 $ 10,933 $ 36,279 $ 31,259
Interest and dividends on securities 997 840 2,802 2,581
Total interest income 13,407 11,773 39,081 33,840
Interest expense:
Deposits 4,964 3,349 13,341 9,291
Borrowings 1,335 1,329 4,055 3,823
Total interest expense 6,299 4,678 17,396 13,114
Net interest income 7,108 7,095 21,685 20,726
Provision for loan losses 474 501 1,931 1,148
Noninterest income:
Service charges on deposit accounts 806 783 2,245 2,299
Trust fees 56 54 165 161
Income from bank owned insurance 270 149 727 440
Gain on sale of loans 21 32 75 88
Other 463 375 1,263 1,076
Total noninterest income 1,616 1,393 4,475 4,064
Noninterest expense:
Salaries and employee benefits 3,278 3,244 9,803 9,570
Occupancy 347 327 999 978
Furniture and equipment 268 310 811 902
Data processing 197 170 613 501
Other 1,573 1,406 4,434 4,325
Total noninterest expense 5,663 5,457 16,660 16,276
Income before income taxes 2,587 2,530 7,569 7,366
Income taxes 770 794 2,187 2,328
NET INCOME $ 1,817 $ 1,736 $ 5,382 $ 5,038
OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except share and per share data) September 30, December 31,
2006 2005
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ASSETS
Cash and noninterest-bearing deposits with banks $ 15,125 $ 18,516
Federal funds sold 9,900 1,100
Total cash and cash equivalents 25,025 19,616
Interest-bearing deposits in other financial institutions 515 510
Securities available-for-sale 68,972 66,328
Securities held-to-maturity
(estimated fair value: 2006 - $13,800, 2005 - $12,373) 13,519 12,088
FHLB stock 5,946 5,697
Total loans 628,811 617,532
Less: Allowance for loan losses (8,285) (7,133)
Net loans 620,526 610,399
Premises and equipment, net 9,908 8,299
Accrued income receivable 3,383 2,819
Goodwill 1,267 1,267
Bank owned life insurance 15,906 15,962
Other assets 7,234 6,734
Total assets $ 772,201 $ 749,719
LIABILITIES
Noninterest-bearing deposits $ 72,363 $ 82,561
Interest-bearing deposits 526,673 480,305
Total deposits 599,036 562,866
Securities sold under agreements to repurchase 19,923 29,070
Other borrowed funds 66,498 76,173
Subordinated debentures 13,500 13,500
Accrued liabilities 12,066 8,839
Total liabilities 711,023 690,448
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 10,000,000 shares authorized;
2006 - 4,626,339 shares issued, 2005 - 4,626,336 shares issued) 4,626 4,626
Additional paid-in-capital 32,282 32,282
Retained earnings 35,106 31,843
Accumulated other comprehensive income (1,356) (1,231)
Treasury stock at cost (2006 - 410,220 shares, 2005 - 361,365 shares) (9,480) (8,249)
Total shareholders' equity 61,178 59,271
Total liabilities and shareholders' equity $ 772,201 $ 749,719