July 13, 2007 - For immediate release
Contact: Scott Shockey, CFO (740) 446-2631
Ohio Valley Banc Corp Reports 2nd Quarter Results
GALLIPOLIS, Ohio - Ohio Valley Banc Corp [Nasdaq: OVBC] reported consolidated
net income for the quarter ended June 30, 2007, of $1,686,000 a decrease of 7.7
percent from the $1,826,000 earned for the second quarter of 2006. Earnings per
share for the second quarter of 2007 were $.41, down 4.7 percent from the prior
year second quarter. Comparing the six months ended June 30, 2007 to the same
time period in 2006, net income decreased $104,000, or 2.9 percent, to reach
$3,461,000. Earnings per share were $.83 for the first six months of 2007 versus
$.84 for the first six months of 2006, a decrease of 1.2 percent. Return on
average assets and return on average equity both decreased to .91 percent and
11.53 percent, respectively, for the first half of 2007, as compared to .95
percent and 12.10 percent, respectively, for the same time period in the prior
year.
Net interest income, the Company's largest revenue source, contributed to
the decline in earnings. For the six months ended June 30, 2007, net interest
income decreased $340,000, or 2.3 percent, from the same time period last year.
The second quarter 2007 net interest income was down only $58,000, or .8
percent, from the second quarter of 2006. The decrease in net interest income
was attributable to a lower net interest margin, which was partially offset by
the growth in the Company's earning assets. The net interest margin for the six
months ending June 30, 2007 was 4.04 percent, compared to 4.17 percent for the
same time period the prior year. The net interest margin compression was related
to the upward pressure of the Company's funding costs in conjunction with the
higher average balance of loans on nonaccrual status. The Company's average
earning assets for the first half of 2007 were up $8,867,000, or 1.2 percent,
from the first half of 2006.
During the first half of 2007, the Company's asset quality has improved
significantly. The ratio of nonperforming loans to total loans stood at .83
percent at June 30, 2007, as compared to 1.60 percent the prior quarter and 2.14
percent at December 31, 2006. The Company's net charge-offs for the six months
ending June 30, 2007 were up $3,225,000 from the same six-month time period in
2006, primarily due to the charge-off of specific allocations established for
nonperforming loans in 2006. The provision expense associated with establishing
the specific allocations also occurred in 2006, primarily in the fourth quarter
when the Company provided $3,731,000 to the allowance for loan losses. Based on
the evaluation of the current adequacy of the allowance for loan losses,
management provided $1,002,000 to the allowance for loan losses for the six
months ended June 30, 2007, a decrease of $455,000 from the same time period the
prior year. The allowance for loan losses was 1.07 percent of total loans at
June 30, 2007, as compared to 1.51 percent at December 31, 2006. Management
believes that the allowance for loan losses is adequate and reflects probable
incurred losses in the portfolio.
Noninterest income totaled $2,759,000 for the six months ended June 30,
2007, as compared to $2,837,000 for the same time period last year, a decrease
of 2.8 percent. For the three months ended June 30, 2007, noninterest income
totaled $1,366,000 and was down 12.3 percent from 2006's second quarter.
Contributing to the decline in 2007 noninterest income was the increase in net
loss on sale of other real estate owned of $78,000 and the recognition of
tax-free life insurance proceeds of $87,000 in the prior year. Providing
additional noninterest income was processing fee income earned from facilitating
the clearing of tax refunds for a tax software provider and interchange fees
earned on transactions utilizing the Company's Jeanie(R) Plus debit card. The
combination of these two sources generated an additional $96,000 in noninterest
income.
On a year-to-date basis, noninterest expense totaled $11,007,000 in 2007,
an increase of only $32,000 when compared to the previous year. On a
quarter-to-date basis, noninterest expense increased $96,000 from the second
quarter in 2006. Salaries and employee benefits, the Company's largest
noninterest expense, was down $124,000, or 1.9 percent, for the first six months
of 2007, as compared to the same time period in 2006. Offsetting the savings in
personnel expense was the increase in costs associated with resolving
nonperforming loans. The Company's foreclosure costs for the six months ended
June 30, 2007 were up $181,000 from the same time period the prior year.
Overall, management was pleased with the cost containment demonstrated through
the first half of 2007.
"I said, at the end of this year's first quarter, our emphasis for the
balance of 2007 would continue to be asset quality and operating efficiency, in
that order", stated Jeffrey E. Smith, President and CEO; "and I continue to be
extremely pleased with the efforts of all the employees of Ohio Valley Banc Corp
in both these areas. That emphasis has led to a significant increase in asset
quality as well as excellent expense control. Our ratio of non-performing loans
to total loans at June 30, 2007 stood at .83 percent, which represents a 29
percent improvement from June 30, 2006 and a 61 percent improvement from
December 31, 2006; but more importantly, it represents a 48 percent improvement
from the linked quarter ending March 31 of this year. Even though costs
associated with the resolution of non-performing loans increased $181,000 for
the six-month period ending June 30, 2007, our employees' containment of other
noninterest expenses limited the total increase to just $32,000, or .3 percent,
and they are continuing their emphasis on asset quality and operating
efficiency, in that order."
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 15 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,
2007 2006 2007 2006
------------ ------------ ------------- -------------
PER SHARE DATA
Earnings per share $0.41 $0.43 $0.83 $0.84
Dividends per share $0.18 $0.17 $0.35 $0.33
Book value per share $14.67 $14.16 $14.67 $14.16
Dividend payout ratio (a) 44.52% 39.49% 42.32% 39.30%
Weighted average shares outstanding 4,153,401 4,240,739 4,172,996 4,244,624
PERFORMANCE RATIOS
Return on average equity 11.16% 12.26% 11.53% 12.10%
Return on average assets 0.88% 0.96% 0.91% 0.95%
Net interest margin (b) 4.05% 4.09% 4.04% 4.17%
Efficiency ratio (c) 63.53% 60.85% 64.01% 62.54%
Average earning assets (in 000's) $720,247 $715,960 $721,301 $712,434
(a) Total dividends paid as a percentage of net income.
(b) Fully tax-equivalent net interest income as a percentage of average earning assets.
(c) Noninterest expense as a percentage of fully tax-equivalent net interest income plus noninterest income.
OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)
Three months ended Six months ended
(in $000's) June 30, June 30,
2007 2006 2007 2006
------------ ------------ ------------- --------------
Interest income:
Interest and fees on loans $ 12,706 $ 12,113 $ 25,146 $ 23,869
Interest and dividends on securities 1,014 921 2,076 1,805
Total interest income 13,720 13,034 27,222 25,674
Interest expense:
Deposits 5,290 4,463 10,557 8,377
Borrowings 1,264 1,347 2,428 2,720
Total interest expense 6,554 5,810 12,985 11,097
Net interest income 7,166 7,224 14,237 14,577
Provision for loan losses 616 791 1,002 1,457
Noninterest income:
Service charges on deposit accounts 756 781 1,416 1,439
Trust fees 58 56 114 109
Income from bank owned insurance 162 270 342 457
Gain on sale of loans 20 28 59 54
Other 370 423 828 778
Total noninterest income 1,366 1,558 2,759 2,837
Noninterest expense:
Salaries and employee benefits 3,168 3,230 6,401 6,525
Occupancy 357 318 721 652
Furniture and equipment 264 275 534 543
Data processing 211 199 405 416
Other 1,486 1,368 2,946 2,839
Total noninterest expense 5,486 5,390 11,007 10,975
Income before income taxes 2,430 2,601 4,987 4,982
Income taxes 744 775 1,526 1,417
NET INCOME $ 1,686 $ 1,826 $ 3,461 $ 3,565
OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except share and per share data) June 30, December 31,
2007 2006
--------------- ---------------
ASSETS
Cash and noninterest-bearing deposits with banks $ 14,282 $ 18,965
Federal funds sold 905 1,800
Total cash and cash equivalents 15,187 20,765
Interest-bearing deposits in other financial institutions 609 508
Securities available-for-sale 70,697 70,267
Securities held-to-maturity
(estimated fair value: 2007 - $14,523, 2006 - $13,586) 14,562 13,350
FHLB stock 6,036 6,036
Total loans 624,131 625,164
Less: Allowance for loan losses (6,685) (9,412)
Net loans 617,446 615,752
Premises and equipment, net 9,765 9,812
Accrued income receivable 3,355 3,234
Goodwill 1,267 1,267
Bank owned life insurance 16,327 16,054
Other assets 7,748 7,316
Total assets $ 762,999 764,361
LIABILITIES
Noninterest-bearing deposits $ 76,135 $ 77,960
Interest-bearing deposits 504,788 515,826
Total deposits 580,923 593,786
Securities sold under agreements to repurchase 27,667 22,556
Other borrowed funds 68,719 63,546
Subordinated debentures 13,500 13,500
Accrued liabilities 11,646 10,691
Total liabilities 702,455 704,079
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 10,000,000 shares
authorized; 2007 - 4,639,723 shares issued,
2006 - 4,626,340 shares issued) 4,640 4,626
Additional paid-in-capital 32,615 32,282
Retained earnings 36,400 34,404
Accumulated other comprehensive loss (1,038) (981)
Treasury stock at cost (2007 - 512,861 shares, 2006 - 432,852 shares) (12,073) (10,049)
Total shareholders' equity 60,544 60,282
Total liabilities and shareholders' equity $ 762,999 764,361