October 12, 2007 - For immediate release
Contact: Scott Shockey, CFO (740) 446-2631
Ohio Valley Banc Corp Reports 3rd Quarter Results
GALLIPOLIS, Ohio - Ohio Valley Banc Corp [Nasdaq: OVBC] reported consolidated
net income for the quarter ended September 30, 2007, of $1,833,000, an increase
from the $1,817,000 earned for the third quarter of 2006. Earnings per share for
the third quarter of 2007 were $.45, up 4.7 percent from the prior year third
quarter. Comparing the nine months ended September 30, 2007 to the same period
in 2006, net income decreased $88,000, or 1.6 percent, to reach $5,294,000.
Earnings per share were $1.28 for the first nine months of 2007 versus $1.27 for
the first nine months of 2006, an increase of .8 percent. Return on average
assets and return on average equity both decreased to .92 percent and 11.72
percent, respectively, for the nine months ended September 30, 2007, as compared
to .95 percent and 12.07 percent, respectively, for the same period in the prior
year.
Overall, management was pleased with the earnings performance and significant
progress on asset quality. These efforts produced a reduction in provision
expense, which more than offset the decrease in net interest income. In
addition, the Company has been actively managing overhead expense, which was
essentially unchanged from the prior year.
For the nine months ended September 30, 2007, net interest income decreased
$443,000, or 2.0 percent, from the same period last year. The third quarter 2007
net interest income was down only $103,000, or 1.4 percent, from the third
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 nine months ending September 30,
2007 was 3.99 percent, compared to 4.10 percent for the same 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 noninterest accruing status. The Company's average earning assets for
the first nine months of 2007 were up $7,858,000, or 1.1 percent, from the first
nine months of 2006.
During the first nine months of 2007, the Company's asset quality has improved
significantly. The ratio of nonperforming loans to total loans stood at .85
percent at September 30, 2007, as compared to 2.14 percent at December 31, 2006.
The Company's net charge-offs for the nine months ending September 30, 2007 were
up $3,240,000 from the same nine-month 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
$1,334,000 to the allowance for loan losses for the nine months ended September
30, 2007, a decrease of $597,000 from the same period the prior year. The
allowance for loan losses was 1.07 percent of total loans at September 30, 2007,
as compared to 1.51 percent at December 31, 2006. Management believes that the
allowance for loan losses at September 30, 2007 was adequate and reflects
probable incurred losses in the portfolio as of that date.
Noninterest income totaled $4,315,000 for the nine months ended September 30,
2007, as compared to $4,393,000 for the same period last year, a decrease of 1.8
percent. For the three months ended September 30, 2007, noninterest income
totaled $1,556,000, which equaled 2006's third quarter. Contributing to the
decline in year-to-date noninterest income was the recognition of tax-free life
insurance proceeds of $174,000 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 Ohio Valley Bank's Jeanie(R) Plus debit card. The
combination of these two sources generated an additional $75,000 in noninterest
income for 2007.
On a year-to-date basis, noninterest expense totaled $16,599,000 in 2007, an
increase of only $21,000 when compared to the previous year. On a
quarter-to-date basis, noninterest expense decreased $11,000 from the third
quarter in 2006. Salaries and employee benefits, the Company's largest
noninterest expense, was down $155,000, or 1.6 percent, for the first nine
months of 2007, as compared to the same 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 nine months ended
September 30, 2007 were up $160,000 from the same period the prior year.
Overall, management was pleased with the cost containment demonstrated through
the first nine months of 2007.
"The emphasis of our employees on asset quality and operating efficiency
continued throughout the third quarter as the ratio of nonperforming loans to
total loans at September 30, 2007 stood at .85%, which represents a 38%
improvement from September 30, 2006 and a 60% improvement from December 31,
2006," said Jeffrey E. Smith, President and CEO. "While costs associated with
the resolution of nonperforming loans increased $160,000 for the nine-month
period ending September 30, 2007 compared to the same period a year ago, our
employees continued their emphasis on cost containment resulting in an increase
of only .13%, or $21,000, in total noninterest expense for this same period. On
a quarter-to-date basis, comparing the period ended September 30, 2007 with
September 30, 2006, noninterest expense actually decreased by $11,000. I
continue to be pleased with not only the emphasis of our employees, but also
their priority of 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 Banc Corp 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,
2007 2006 2007 2006
---------------- ---------------- ----------------- -------------------
PER SHARE DATA
Earnings per share $0.45 $0.43 $1.28 $1.27
Dividends per share $0.18 $0.17 $0.53 $0.50
Book value per share $14.93 $14.51 $14.93 $14.51
Dividend payout ratio (a) 40.28% 39.57% 41.61% 39.39%
Weighted average shares outstanding 4,101,908 4,228,798 4,149,040 4,239,291
PERFORMANCE RATIOS
Return on average equity 12.10% 12.03% 11.72% 12.07%
Return on average assets 0.95% 0.95% 0.92% 0.95%
Net interest margin (b) 3.90% 3.97% 3.99% 4.10%
Efficiency ratio (c) 64.47% 64.09% 64.16% 63.02%
Average earning assets (in 000's) $723,612 $717,736 $722,079 $714,221
(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 Nine months ended
(in $000's) September 30, September 30,
2007 2006 2007 2006
----------------- ---------------- ----------------- -------------------
Interest income:
Interest and fees on loans $ 12,731 $ 12,410 $ 37,877 $ 36,279
Interest and dividends on securities 1,053 997 3,129 2,802
Total interest income 13,784 13,407 41,006 39,081
Interest expense:
Deposits 5,386 4,964 15,943 13,341
Borrowings 1,393 1,335 3,821 4,055
Total interest expense 6,779 6,299 19,764 17,396
Net interest income 7,005 7,108 21,242 21,685
Provision for loan losses 332 474 1,334 1,931
Noninterest income:
Service charges on deposit accounts 776 806 2,192 2,245
Trust fees 58 56 172 165
Income from bank owned insurance 173 270 515 727
Gain on sale of loans 23 21 82 75
Other 526 403 1,354 1,181
Total noninterest income 1,556 1,556 4,315 4,393
Noninterest expense:
Salaries and employee benefits 3,247 3,278 9,648 9,803
Occupancy 378 347 1,099 999
Furniture and equipment 276 268 810 811
Data processing 221 197 626 613
Other 1,470 1,513 4,416 4,352
Total noninterest expense 5,592 5,603 16,599 16,578
Income before income taxes 2,637 2,587 7,624 7,569
Income taxes 804 770 2,330 2,187
NET INCOME $ 1,833 $ 1,817 $ 5,294 $ 5,382
OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except share and per share data) September 30, December 31,
2007 2006
----------------- -----------------
ASSETS
Cash and noninterest-bearing deposits with banks $ 16,800 $ 18,965
Federal funds sold 11,756 1,800
Total cash and cash equivalents 28,556 20,765
Interest-bearing deposits in other financial institutions 620 508
Securities available-for-sale 69,536 70,267
Securities held-to-maturity
(estimated fair value: 2007 - $15,976, 2006 - $13,586) 15,937 13,350
FHLB stock 6,036 6,036
Total loans 627,616 625,164
Less: Allowance for loan losses (6,727) (9,412)
Net loans 620,889 615,752
Premises and equipment, net 9,937 9,812
Accrued income receivable 3,288 3,234
Goodwill 1,267 1,267
Bank owned life insurance 16,464 16,054
Other assets 6,916 7,316
Total assets $ 779,446 $ 764,361
LIABILITIES
Noninterest-bearing deposits $ 76,476 $ 77,960
Interest-bearing deposits 519,464 515,826
Total deposits 595,940 593,786
Securities sold under agreements to repurchase 34,168 22,556
Other borrowed funds 61,398 63,546
Subordinated debentures 13,500 13,500
Accrued liabilities 13,421 10,691
Total liabilities 718,427 704,079
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 10,000,000 shares
authorized; 2007 - 4,639,724 shares issued,
2006 - 4,626,340 shares issued) 4,640 4,626
Additional paid-in-capital 32,615 32,282
Retained earnings 37,495 34,404
Accumulated other comprehensive loss (627) (981)
Treasury stock at cost (2007 - 553,830 shares, 2006 - 432,852 shares) (13,104) (10,049)
Total shareholders' equity 61,019 60,282
Total liabilities and shareholders' equity $ 779,446 $ 764,361