EXHIBIT 99.1
July 11, 2008 - For immediate release
Contact: Scott Shockey, CFO (740) 446-2631
Ohio Valley Banc Corp Reports 2nd Quarter Earnings Growth
GALLIPOLIS, Ohio - Ohio Valley Banc Corp [Nasdaq: OVBC] (the "Company") reported
consolidated net income for the quarter ended June 30, 2008, of $1,731,000 an
increase of 2.7 percent from the $1,686,000 earned for the second quarter of
2007. Earnings per share for the second quarter of 2008 were $.43, up 4.9
percent from the prior year second quarter. Comparing the six months ended June
30, 2008 to the same period in 2007, net income increased $235,000, or 6.8
percent, to reach $3,696,000. Earnings per share were $.91 for the first six
months of 2008 versus $.83 for the first six months of 2007, an increase of 9.6
percent. Return on average assets and return on average equity both increased to
..94 percent and 12.18 percent, respectively, for the first half of 2008, as
compared to .91 percent and 11.53 percent, respectively, for the same period in
the prior year.
Net interest income, the Company's largest revenue source, contributed to
the increase in earnings. For the six months ended June 30, 2008, net interest
income increased $993,000, or 7.0 percent, from the same period last year. The
second quarter 2008 net interest income was up $389,000, or 5.4 percent, from
the second quarter of 2007. The increase in net interest income was attributable
to a higher net interest margin in conjunction with the Company's growth in
earning assets. The net interest margin for the six months ending June 30, 2008
was 4.17 percent, compared to 4.04 percent for the same period the prior year.
The net interest margin improvement was related to the balance sheet being
positioned to benefit from the declining interest rate environment, which
produced a greater decrease in the cost of funds than the yield
on earning assets. The Company's average earning assets for the first half of
2008 were up $24,075,000, or 3.3 percent, from the first half of 2007.
Supplementing the increase in revenue from net interest income was the
increase in noninterest income. Noninterest income totaled $3,171,000 for the
six months ended June 30, 2008, as compared to $2,759,000 for the same period
last year, an increase of 14.9 percent. For the three months ended June 30,
2008, noninterest income totaled $1,587,000 and was up 16.2 percent from 2007's
second quarter. Contributing to the increase was processing fee income earned
from facilitating the clearing of tax refunds for a tax software provider. With
continued growth in transaction volume, the associated fee income increased
$95,000, or over 144 percent, from the first half of 2007. In addition, service
charges on deposit accounts increased due to a higher volume of overdrafts
occurring in 2008, which increased overdraft fees $109,000 from the prior year.
Lastly, interchange fees earned on transactions utilizing the Company's
Jeanie(R) Plus debit card increased $48,000.
On a year-to-date basis, noninterest expense totaled $11,567,000 in 2008,
an increase of $560,000, or 5.1 percent, when compared to the previous year. On
a quarter-to-date basis, noninterest expense increased $329,000, or 6.0 percent,
from the second quarter in 2007. Salaries and employee benefits, the Company's
largest noninterest expense, was up $418,000, or 6.5 percent, for the first six
months of 2008, as compared to the same period in 2007. Contributing to the
increase was annual cost of living adjustments, an increase in incentive
compensation, and an increase in health insurance benefits. Comparing the first
half of 2008 to the first half of 2007, all remaining noninterest expenses were
up $142,000, led by debit card data processing. Overall, management was pleased
with the cost containment demonstrated through the first half of 2008.
For the six months ended June 30, 2008, management provided $1,617,000 to
the allowance for loan losses, which represented an increase of $615,000 over
the same period last year. For the three months ended June 30, 2008, management
provided $916,000 to the allowance for loan losses, an increase of $300,000 from
the same period the prior year. The increase in provision expense was related to
an increase in nonperforming loans since year end. The ratio of nonperforming
loans to total loans was .57 percent at December 31, 2007 and subsequently
increased to 1.40 percent at March 31, 2008, primarily related to one borrower.
During the second quarter, the Company foreclosed on the one borrower, which
resulted in a charge-off of $750,000. As a result of the foreclosure, the ratio
of nonperforming loans to total loans decreased to .75 percent at June 30, 2008
and the ratio of nonperforming assets to total assets increased to 1.19 percent
from .50 percent at year end. For the six months ended June 30, 2008, net
charge-offs were down $1,946,000 from the same six-month period in 2007,
primarily due to the significant decrease in commercial loan charge-offs. Based
on the evaluation of the adequacy of the allowance for loan losses, management
believes that the allowance for loan losses at June 30, 2008 was adequate and
reflects probable incurred losses in the portfolio. The allowance for loan
losses was 1.05 percent of total loans at June 30, 2008, compared to 1.06
percent at December 31, 2007.
"Given the challenging banking environment, I'm very pleased with the
results our employees delivered during the quarter," stated Jeffrey E. Smith,
President and CEO. "Their emphasis on the key fundamentals of revenue growth and
expense control continued the earnings momentum from the first quarter,
producing nearly a 10 percent growth in year-to-date earnings per share. As we
enter the second half of 2008, our employees will continue striving to execute
on the fundamentals to generate a greater return to our shareholders."
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 six 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 the Company 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. See Item 1.A. "Risk
Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2007, for further discussion of the risks affecting the business of
the Company and the value of an investment in its shares.
OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)
Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
------------ ------------ ------------ ---------------
PER SHARE DATA
Earnings per share $0.43 $0.41 $0.91 $0.83
Dividends per share $0.19 $0.18 $0.38 $0.35
Book value per share $15.32 $14.67 $15.32 $14.67
Dividend payout ratio (a) 44.48% 44.52% 41.77% 42.32%
Weighted average shares outstanding 4,032,883 4,153,401 4,046,734 4,172,996
PERFORMANCE RATIOS
Return on average equity 11.28% 11.16% 12.18% 11.53%
Return on average assets 0.88% 0.88% 0.94% 0.91%
Net interest margin (b) 4.13% 4.05% 4.17% 4.04%
Efficiency ratio (c) 62.88% 63.53% 62.13% 64.01%
Average earning assets (in 000's) $746,843 $720,247 $745,376 $721,301
(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,
2008 2007 2008 2007
------------ ------------ ------------ ---------------
Interest income:
Interest and fees on loans $ 11,743 $ 12,706 $ 24,385 $ 25,146
Interest and dividends on securities 1,110 1,014 2,202 2,076
Total interest income 12,853 13,720 26,587 27,222
Interest expense:
Deposits 4,270 5,290 9,156 10,557
Borrowings 1,028 1,264 2,201 2,428
Total interest expense 5,298 6,554 11,357 12,985
Net interest income 7,555 7,166 15,230 14,237
Provision for loan losses 916 616 1,617 1,002
Noninterest income:
Service charges on deposit accounts 780 756 1,490 1,416
Trust fees 64 58 125 114
Income from bank owned insurance 201 162 376 342
Gain on sale of loans 45 20 90 59
Gain (loss) on sale of other real estate owned 3 (84) (38) (85)
Other 494 454 1,128 913
Total noninterest income 1,587 1,366 3,171 2,759
Noninterest expense:
Salaries and employee benefits 3,390 3,168 6,819 6,401
Occupancy 382 357 768 721
Furniture and equipment 257 264 492 534
Data processing 266 211 531 405
Other 1,520 1,486 2,957 2,946
Total noninterest expense 5,815 5,486 11,567 11,007
Income before income taxes 2,411 2,430 5,217 4,987
Income taxes 680 744 1,521 1,526
NET INCOME $ 1,731 $ 1,686 $ 3,696 $ 3,461
OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except share data) June 30, December 31,
2008 2007
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ASSETS
Cash and noninterest-bearing deposits with banks $ 20,625 $ 15,584
Federal funds sold 1,239 1,310
Total cash and cash equivalents 21,864 16,894
Interest-bearing deposits in other financial institutions 15,507 633
Securities available-for-sale 72,203 78,063
Securities held-to-maturity
(estimated fair value: 2008 - $17,620, 2007 - $15,764) 17,690 15,981
Federal Home Loan Bank stock 6,197 6,036
Total loans 623,126 637,103
Less: Allowance for loan losses (6,571) (6,737)
Net loans 616,555 630,366
Premises and equipment, net 9,898 9,871
Accrued income receivable 3,078 3,254
Goodwill 1,267 1,267
Bank owned life insurance 17,062 16,339
Other assets 9,369 4,714
Total assets $ 790,690 $ 783,418
LIABILITIES
Noninterest-bearing deposits $ 85,823 $ 78,589
Interest-bearing deposits 522,375 510,437
Total deposits 608,198 589,026
Securities sold under agreements to repurchase 35,309 40,390
Other borrowed funds 59,767 67,002
Subordinated debentures 13,500 13,500
Accrued liabilities 12,322 11,989
Total liabilities 729,096 721,907
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 10,000,000 shares
authorized; 2008 - 4,641,748 shares issued,
2007 - 4,641,747 shares issued) 4,642 4,642
Additional paid-in capital 32,665 32,664
Retained earnings 38,837 37,763
Accumulated other comprehensive income (loss) 268 (115)
Treasury stock at cost (2008 - 622,239 shares, 2007 - 567,403 shares) (14,818) (13,443)
Total shareholders' equity 61,594 61,511
Total liabilities and shareholders' equity $ 790,690 $ 783,418