EXHIBIT 99.1
July 15, 2009 - For immediate release
Contact: Scott Shockey, CFO (740) 446-2631
Ohio Valley Banc Corp. Reports 2nd Quarter Earnings
GALLIPOLIS, Ohio - Ohio Valley Banc Corp. [Nasdaq: OVBC] (the "Company")
reported consolidated net income for the quarter ended June 30, 2009, of
$1,396,000, a decrease of 19.4 percent from the $1,731,000 earned for the second
quarter of 2008. Earnings per share for the second quarter of 2009 were $.35,
down 18.6 percent from the prior year second quarter. For the six months ended
June 30, 2009, net income totaled $3,447,000, a 6.7 percent decrease from net
income of $3,696,000 for the six months ended June 30, 2008. Earnings per share
were $.86 for the first six months of 2009 versus $.91 for the first six months
of 2008, a decrease of 5.5 percent. Return on average assets and return on
average equity both decreased to .85 percent and 10.86 percent, respectively,
for the first half of 2009, as compared to .94 percent and 12.18 percent,
respectively, for the same period in the prior year.
The Company's earnings declined primarily due to the increase in FDIC
insurance premiums that are being assessed on all FDIC insured financial
institutions. For the six months ended June 30, 2009, our premiums increased
$947,000 over the same period last year. Included in this increase was an
additional special assessment of $373,000 charged by the FDIC. As a result, FDIC
premiums for the second quarter of 2009 were up $679,000 from the second quarter
of 2008. The higher insurance premiums had a dramatic impact on the financial
results of the Company. On a year-to-date basis, the increase in premiums
reduced earnings per share by $.16, return on assets by 15 basis points (1 basis
point equals .01%) and return on equity by 197 basis points. Management expects
the heightened assessment levels to continue, and the FDIC has indicated that
future special assessments may be required.
Net interest income, the Company's largest revenue source, increased
$353,000 for the six months ended June 30, 2009 compared to the same period last
year. The second quarter 2009 net interest income was down $252,000, or 3.3
percent, from the second quarter of 2008. The increase in net interest income
for the six-month period was attributable to growth in the Company's average
earning assets, which for the first half of 2009 had increased $31,983,000, or
4.3 percent, from the first half of 2008. However, the net interest margin
contracted in the second quarter due to higher relative balances being invested
in overnight or short-term instruments, which also return lower yields. With
deposit growth outpacing loan growth, the balances were deployed in liquid
assets to fund either future loan growth or the acquisition of longer-term
securities if interest rates rise. Since December 31, 2008, total deposits have
increased $67,403,000. The increase was primarily related to management's focus
on growing core deposits and the influx of deposits to various public fund
accounts. The net interest margin for the second quarter of 2009 was 3.78
percent, compared to 4.13 percent for the second quarter of 2008. The net
interest margin for the six months ended June 30, 2009 was 4.09 percent,
compared to 4.17 percent for the same period the prior year.
Supplementing the growth in revenue from net interest income was the
increase in noninterest income. Noninterest income totaled $3,927,000 for the
six months ended June 30, 2009, as compared to $3,171,000 for the same period
last year, an increase of 23.8 percent. For the three months ended June 30,
2008, noninterest income totaled $1,864,000, an increase of 17.5 percent from
2008's second quarter. Contributing to the double-digit growth in noninterest
income was the gain on sale of loans. With the historic low mortgage rates, the
Company elected to emphasize secondary market loans to reduce the exposure to
rising interest rates. Even though the mortgage is sold, the Company retains the
loan servicing and the customer
relationship. The increase in volume generated a $528,000 increase in secondary
market loan income for the six months ended June 30, 2009, compared to the same
period last year. Also contributing to the increase in noninterest income was
the 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 $251,000, or over 93 percent, from the first
half of 2008.
On a year-to-date basis, noninterest expense totaled $13,559,000 in 2009,
an increase of $1,992,000, or 17.2 percent, when compared to the previous year.
On a quarter-to-date basis, noninterest expense increased $1,146,000, or 19.7
percent, from the second quarter in 2008. Included in the increase in
noninterest expense was the higher FDIC insurance expense that was previously
discussed. The higher premiums contributed over 47 percent of the year-to-date
increase and nearly 60 percent of the quarter-to-date increase in noninterest
expense. Salaries and employee benefits, the Company's largest noninterest
expense, increased $585,000, or 8.6 percent, for the first six months of 2009,
as compared to the same period in 2008. Contributing to the increase were annual
cost of living adjustments and an increase in the number of employees. Comparing
the first half of 2009 to the first half of 2008, all remaining noninterest
expenses were up $460,000, led by communication and equipment expense.
For the six months ended June 30, 2009, management provided $1,144,000 to
the allowance for loan losses, which represented a decrease of $473,000 from the
same period last year. For the three months ended June 30, 2009, management
provided $296,000 to the allowance for loan losses, a decrease of $620,000 from
the same period the prior year. The decrease in provision expense was related to
a decline in net charge-offs, largely due to a $648,000 recovery of a loan
previously charged off. The annualized ratio of net charge-offs to
average loans for the six months ended June 30, 2009 was .23 percent, compared
to .56 percent for the same period last year. The ratio of nonperforming loans
to total loans was .97 percent at June 30, 2009 compared to .84 percent at
December 31, 2008 and .75 percent at June 30, 2008. Based on the evaluation of
the adequacy of the allowance for loan losses, management believes that the
allowance for loan losses at June 30, 2009 was adequate and reflects probable
incurred losses in the portfolio. The allowance for loan losses was 1.30 percent
of total loans at June 30, 2009, compared to 1.24 percent at December 31, 2008
and 1.05 percent at June 30, 2008.
"I am very pleased to share with our stakeholders that the employees of
Ohio Valley Banc Corp. earned nearly $1.4 million in the three months ending
June 30, 2009 and more than $3.4 million for the first six months of 2009,"
stated Jeffrey E. Smith, President and CEO. "While this performance is
significantly lower than the respective periods a year ago, these results
include $679 thousand in additional FDIC insurance premiums for the quarter
ended June 30, 2009, bringing the total increase in FDIC premiums to $947,000
for the first six months of 2009, an amount which also includes $373,000 for the
special assessment charged by the FDIC. If the impact of higher premiums was
excluded, the financial results would have exceeded the previous year's
performance. In spite of the additional charges for FDIC premiums and a
challenging economy, Ohio Valley Banc Corp., for the first six months of 2009,
achieved a .85 percent return on average assets, a 10.86 percent return on
average equity, and a period ending nonperforming loans to total loans ratio of
..97 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 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, 2008, 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,
2009 2008 2009 2008
------------ ------------ ------------ --------------
PER SHARE DATA
Earnings per share $0.35 $0.43 $0.86 $0.91
Dividends per share $0.20 $0.19 $0.40 $0.38
Book value per share $16.41 $15.32 $16.41 $15.32
Dividend payout ratio (a) 57.09% 44.48% 46.22% 41.77%
Weighted average shares outstanding 3,983,009 4,032,883 3,983,009 4,046,734
PERFORMANCE RATIOS
Return on average equity 8.66% 11.28% 10.86% 12.18%
Return on average assets 0.68% 0.88% 0.85% 0.94%
Net interest margin (b) 3.78% 4.13% 4.09% 4.17%
Efficiency ratio (c) 64.70% 62.88% 61.03% 62.13%
Average earning assets (in 000's) $785,458 $746,843 $777,359 $745,376
(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,
2009 2008 2009 2008
-------------- ------------ ------------- ---------------
Interest income:
Interest and fees on loans $ 10,787 $ 11,743 $ 22,446 $ 24,385
Interest and dividends on securities 923 1,110 1,875 2,202
-------------- ------------ -------------- ----------------
Total interest income 11,710 12,853 24,321 26,587
Interest expense:
Deposits 3,562 4,270 7,011 9,156
Borrowings 845 1,028 1,727 2,201
-------------- -------------- -------------- ----------------
Total interest expense 4,407 5,298 8,738 11,357
-------------- -------------- -------------- ----------------
Net interest income 7,303 7,555 15,583 15,230
Provision for loan losses 296 916 1,144 1,617
Noninterest income:
Service charges on deposit accounts 707 780 1,332 1,490
Trust fees 55 64 110 125
Income from bank owned insurance 203 201 403 376
Gain on sale of loans 360 45 618 90
Gain (loss) on sale of other real estate owned 27 3 27 (38)
Other 512 494 1,437 1,128
-------------- -------------- -------------- ----------------
Total noninterest income 1,864 1,587 3,927 3,171
Noninterest expense:
Salaries and employee benefits 3,704 3,390 7,404 6,819
Occupancy 399 382 802 768
Furniture and equipment 281 257 566 492
Data processing 232 266 459 531
FDIC insurance 696 17 981 34
Other 1,649 1,503 3,347 2,923
-------------- -------------- -------------- ----------------
Total noninterest expense 6,961 5,815 13,559 11,567
-------------- -------------- -------------- ----------------
Income before income taxes 1,910 2,411 4,807 5,217
Income taxes 514 680 1,360 1,521
-------------- -------------- -------------- ----------------
NET INCOME $ 1,396 $ 1,731 $ 3,447 $ 3,696
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OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except share data) June 30, December 31,
2009 2008
-------------- ----------------
ASSETS
Cash and noninterest-bearing deposits with banks $ 7,933 $ 16,650
Federal funds sold --- 1,031
-------------- ----------------
Total cash and cash equivalents 7,933 17,681
Interest-bearing deposits in other financial institutions 37,606 611
Securities available-for-sale 89,783 75,340
Securities held-to-maturity
(estimated fair value: 2009 - $15,809, 2008 - $17,241) 15,553 16,986
Federal Home Loan Bank stock 6,281 6,281
Total loans 633,211 630,391
Less: Allowance for loan losses (8,217) (7,799)
-------------- ----------------
Net loans 624,994 622,592
Premises and equipment, net 10,605 10,232
Accrued income receivable 2,757 3,172
Goodwill 1,267 1,267
Bank owned life insurance 18,468 18,153
Other assets 9,720 8,793
-------------- ----------------
Total assets $ 824,967 $ 781,108
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LIABILITIES
Noninterest-bearing deposits $ 83,415 $ 85,506
Interest-bearing deposits 576,349 506,855
-------------- ----------------
Total deposits 659,764 592,361
Securities sold under agreements to repurchase 29,037 24,070
Other borrowed funds 45,472 76,774
Subordinated debentures 13,500 13,500
Accrued liabilities 11,846 11,347
-------------- ----------------
Total liabilities 759,619 718,052
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 10,000,000 shares
authorized; 2009 and 2008 - 4,642,748 shares issued) 4,643 4,643
Additional paid-in capital 32,683 32,683
Retained earnings 42,606 40,752
Accumulated other comprehensive income (loss) 1,128 690
Treasury stock at cost (2009 and 2008 - 659,739 shares) (15,712) (15,712)
-------------- ----------------
Total shareholders' equity 65,348 63,056
-------------- ----------------
Total liabilities and shareholders' equity $ 824,967 $ 781,108
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