EXHIBIT 99.1
January 15, 2009 - For immediate release
Contact: Scott Shockey, CFO (740) 446-2631
Ohio Valley Banc Corp. Reports 4th Quarter and Fiscal Year Earnings Growth
GALLIPOLIS, Ohio - Ohio Valley Banc Corp. [Nasdaq: OVBC] (the "Company")
reported consolidated net income for the quarter ended December 31, 2008 of
$1,547,000, an increase of $544,000, or 54.2 percent, from the $1,003,000 earned
for the fourth quarter of 2007. Earnings per share for the fourth quarter of
2008 were $.39, up 62.5 percent from the prior year fourth quarter. For the year
ended December 31, 2008, net income was $7,128,000, an increase of $831,000, or
13.2 percent, from the $6,297,000 earned the prior year. Earnings per share were
$1.77 for the year of 2008 versus $1.52 for the year of 2007, an increase of
$.25, or 16.4 percent. Return on average assets and return on average equity
both increased to .91 percent and 11.62 percent, respectively, for the twelve
months ended December 31, 2008, as compared to .82 percent and 10.40 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 year ended December 31, 2008, net interest
income increased $2,178,000, or 7.6 percent, from the same period last year. The
fourth quarter 2008 net interest income was up $466,000, or 6.4 percent, from
the fourth 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 for the year. The net interest margin for the year ended December
31, 2008 was 4.23 percent, compared to 3.99 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 in the yield on earning
assets. Since September 2007, the Federal Reserve has decreased short-term
interest rates 10 times for a total of 500 basis points. The Company's average
earning assets for 2008 were up $10,834,000, or 1.5 percent, from the same
period in 2007.
Supplementing the increase in revenue from net interest income was the
increase in noninterest income. Noninterest income totaled $6,211,000 for the
year ended December 31, 2008, as compared to $5,236,000 for the same period last
year, an increase of 18.6 percent. For the three months ended December 31, 2008,
noninterest income totaled $1,466,000 and was up 59.2 percent from 2007's fourth
quarter. The increase in noninterest income was related to the decline in loss
on sale of real estate acquired through foreclosure. For 2008, the loss on sale
of foreclosed real estate was only $31,000, a decrease of $746,000 from the
prior year. The decrease is primarily related to the liquidation of a single
piece of commercial real estate during the fourth quarter of 2007, which
generated a loss of $686,000. Additional revenue growth was realized from
facilitating the clearing of tax refunds for a tax software provider. With
continued growth in transaction volume, the associated fee income increased
$163,000, or over 148 percent, from 2007. In addition, service charges on
deposit accounts increased due to a higher volume of overdrafts occurring in
2008, which increased overdraft fees $163,000 from the prior year. Lastly,
interchange fees earned on transactions utilizing the Company's Jeanie(R) Plus
debit card increased $106,000.
Noninterest expense totaled $23,343,000 for the year of 2008, an increase
of $760,000, or 3.4 percent, when compared to the previous year. Noninterest
expense for the fourth quarter of 2008 decreased $195,000, or 3.3 percent, from
the fourth quarter in 2007. Salaries and employee benefits, the Company's
largest noninterest expense, was up $1,030,000, or 7.9 percent, for the year of
2008, as compared to the year of 2007. Contributing to the increase was annual
cost of living adjustments, an increase in incentive compensation due to higher
corporate performance,
and an increase in health insurance benefits. Also, during 2008, the Company
experienced an increase in FDIC insurance premiums of $198,000 over 2007.
Contributing to noninterest expense savings from 2007 were lower foreclosure
costs of $487,000 and lower data processing expense for the Company's debit card
of $159,000. Overall, management was pleased with the cost containment
demonstrated during 2008.
The ratio of nonperforming loans to total loans was .84 percent at December
31, 2008 compared to .57 percent at December 31, 2007. For the year ended
December 31, 2008, management provided $3,716,000 to the allowance for loan
losses, which represented an increase of $1,464,000 over the same period last
year. For the three months ended December 31, 2008, management provided
$1,406,000 to the allowance for loan losses, an increase of $488,000 from the
same period the prior year. The increase in provision expense was related to an
increase in nonperforming loans since year end 2007. Although the balance of
nonperforming loans was up, the balance of net charge-offs was down. For the
year ended December 31, 2008, net charge-offs were down $2,273,000 from the year
ended December 31, 2007, primarily due to the significant decrease in commercial
loan charge-offs. The ratio of net charge-offs to average loans was .42 percent
for 2008, compared to .78 percent for 2007. Based on the evaluation of the
adequacy of the allowance for loan losses, management believes that the
allowance for loan losses at December 31, 2008 was adequate and reflects
probable incurred losses in the portfolio. The allowance for loan losses was
1.24 percent of total loans at December 31, 2008, compared to 1.06 percent at
December 31, 2007.
"I want to commend our 275 employees for delivering significant improvement
in nearly every Ohio Valley Banc Corp. performance category," stated Jeffrey E.
Smith, President and CEO. "These results indicate community banking in rural
America can still be successful even
in a challenged economy. While their significant increases in earnings and
earnings per share on both a quarterly and year-to-date basis are noteworthy,
their management of asset quality is perhaps their greatest success in 2008. A
nonperforming loans to total loans ratio of 84 basis points demonstrates the
disciplined approach of our lenders, collectors and lawyers."
"While the above measures are important, perhaps of greatest importance to
our nearly 30,000 deposit customers and 2,000 shareholders alike is the fact
that Ohio Valley Banc Corp. enjoys the regulatory distinction of being
classified a well capitalized institution. At December 31, 2008, the Tier 1
leverage ratio was 9.77 percent, in spite of the fact that Ohio Valley Banc
Corp. chose not to participate in the U.S. Treasury TARP Capital Purchase Plan."
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 Twelve months ended
December 31, December 31,
2008 2007 2008 2007
------------ ------------ ------------ ---------------
PER SHARE DATA
Earnings per share $0.39 $0.24 $1.77 $1.52
Dividends per share $0.19 $0.18 $0.76 $0.71
Book value per share $15.83 $15.10 $15.83 $15.10
Dividend payout ratio (a) 48.90% 73.28% 42.94% 46.66%
Weighted average shares outstanding 3,982,107 4,079,932 4,018,367 4,131,621
PERFORMANCE RATIOS
Return on average equity 9.92% 6.52% 11.62% 10.40%
Return on average assets 0.80% 0.51% 0.91% 0.82%
Net interest margin (b) 4.32% 4.00% 4.23% 3.99%
Efficiency ratio (c) 62.10% 71.91% 62.51% 66.05%
Average earning assets (in 000's) $723,246 $733,834 $735,877 $725,043
(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 Twelve months ended
(in $000's) December 31, December 31,
2008 2007 2008 2007
------------ ------------ ------------ ---------------
Interest income:
Interest and fees on loans $ 11,307 $ 12,794 $ 47,272 $ 50,671
Interest and dividends on securities 982 1,147 4,261 4,276
Total interest income 12,289 13,941 51,533 54,947
Interest expense:
Deposits 3,566 5,372 16,636 21,315
Borrowings 972 1,284 4,192 5,105
Total interest expense 4,538 6,656 20,828 26,420
Net interest income 7,751 7,285 30,705 28,527
Provision for loan losses 1,406 918 3,716 2,252
Noninterest income:
Service charges on deposit accounts 750 790 3,073 2,982
Trust fees 56 58 240 230
Income from bank owned insurance 199 242 775 757
Gain on sale of loans 17 20 127 102
Gain (loss) on sale of other real estate owned ---- (692) (31) (777)
Other 444 503 2,027 1,942
Total noninterest income 1,466 921 6,211 5,236
Noninterest expense:
Salaries and employee benefits 3,647 3,397 14,075 13,045
Occupancy 390 368 1,562 1,467
Furniture and equipment 296 276 1,048 1,086
Data processing 66 218 773 844
Other 1,390 1,725 5,885 6,141
Total noninterest expense 5,789 5,984 23,343 22,583
Income before income taxes 2,022 1,304 9,857 8,928
Income taxes 475 301 2,729 2,631
NET INCOME $ 1,547 $ 1,003 $ 7,128 $ 6,297
OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except share data) December 31, December 31,
2008 2007
-------------- -----------------
ASSETS
Cash and noninterest-bearing deposits with banks $ 16,650 $ 15,584
Federal funds sold 1,031 1,310
Total cash and cash equivalents 17,681 16,894
Interest-bearing deposits in other financial institutions 611 633
Securities available-for-sale 75,340 78,063
Securities held-to-maturity
(estimated fair value: 2008 - $17,241; 2007 - $15,764) 16,986 15,981
Federal Home Loan Bank stock 6,281 6,036
Total loans 630,391 637,103
Less: Allowance for loan losses (7,799) (6,737)
Net loans 622,592 630,366
Premises and equipment, net 10,232 9,871
Accrued income receivable 3,172 3,254
Goodwill 1,267 1,267
Bank owned life insurance 18,153 16,339
Other assets 8,793 4,714
Total assets $ 781,108 $ 783,418
LIABILITIES
Noninterest-bearing deposits $ 85,506 $ 78,589
Interest-bearing deposits 506,855 510,437
Total deposits 592,361 589,026
Securities sold under agreements to repurchase 24,070 40,390
Other borrowed funds 76,774 67,002
Subordinated debentures 13,500 13,500
Accrued liabilities 11,347 11,989
Total liabilities 718,052 721,907
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 10,000,000 shares authorized; 2008 - 4,642,748
shares issued, 2007 - 4,641,747 shares issued) 4,643 4,642
Additional paid-in capital 32,683 32,664
Retained earnings 40,752 37,763
Accumulated other comprehensive income (loss) 690 (115)
Treasury stock at cost (2008 - 659,739 shares, 2007 - 567,403 shares) (15,712) (13,443)
Total shareholders' equity 63,056 61,511
Total liabilities and shareholders' equity $ 781,108 $ 783,418