EXHIBIT 99.1
October 19, 2009 - For immediate release
Contact: Scott Shockey, CFO (740) 446-2631
Ohio Valley Banc Corp. Reports 3rd Quarter Earnings
GALLIPOLIS, Ohio - Ohio Valley Banc Corp. [Nasdaq: OVBC] (the "Company")
reported consolidated net income for the quarter ended September 30, 2009, of
$1,700,000, a decrease of $185,000, or 9.8 percent, from the $1,885,000 earned
for the third quarter of 2008. Earnings per share for the third quarter of 2009
were $.43, down 8.5 percent from the prior year's third quarter. For the nine
months ended September 30, 2009, net income totaled $5,147,000, a 7.8 percent
decrease from net income of $5,581,000 for the nine months ended September 30,
2008. Earnings per share were $1.29 for the first nine months of 2009 versus
$1.38 for the first nine months of 2008, a decrease of 6.5 percent. Return on
average assets and return on average equity decreased to .84 percent and 10.66
percent, respectively, for the nine months ended September 30, 2009, as compared
to .95 percent and 12.20 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 nine months ended September 30, 2009, our premiums
increased $1,148,000 over the same period last year. FDIC premiums for the third
quarter of 2009 were up $201,000 from the third quarter of 2008. The higher
insurance premiums had a dramatic impact on the financial results of the
Company. For the nine months ended September 30, 2009, the net of tax increase
in premiums reduced earnings per share by $.19, return on average assets by 9
basis points (1 basis point equals .01%) and return on average equity by 117
basis points. Based on the FDIC's restoration plan, management expects the
heightened assessment levels to continue for up to eight years.
Net interest income, the Company's largest revenue source, increased
$77,000 for the nine months ended September 30, 2009 compared to the same period
last year. Third quarter 2009 net interest income was down $276,000, or 3.6
percent, from the third quarter of 2008. The increase in net interest income for
the nine-month period was attributable to growth in the Company's average
earning assets, which for the first nine months of 2009 had increased
$37,679,000, or 5.1 percent, from the first nine months of 2008. However, the
net interest margin started contracting 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 $61,310,000. 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 third
quarter of 2009 was 3.85 percent, a decrease from 4.27 percent for the third
quarter of 2008. The net interest margin for the nine months ended September 30,
2009 was 4.01 percent, compared to 4.20 percent for the same period the prior
year. Although the net interest margin has been trending down, it appears to
have stabilized. Compared to the second quarter of 2009, the third quarter net
interest margin improved 7 basis points as funds held in liquid assets were used
to fund loan growth.
Contributing to growth in revenue was the increase in noninterest income.
Noninterest income totaled $6,111,000 for the nine months ended September 30,
2009, as compared to $4,745,000 for the same period last year, an increase of
28.8 percent. For the three months ended September 30, 2009, noninterest income
totaled $2,184,000, an increase of 38.8 percent from 2008's third quarter.
Contributing to the double-digit growth in noninterest income was the gain on
sale of loans. With the historically 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 $603,000
increase in secondary market loan income for the nine months ended September 30,
2009, compared to the same period last year. In conjunction with various benefit
plans, the Company maintains an investment in bank owned life insurance on key
employees. During the third quarter, the Company received life insurance
proceeds of $556,000, which generated an increase in earnings on bank owned
insurance. 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 93 percent, from the same period in
2008.
For the nine months ended September 30, 2009, noninterest expense totaled
$20,134,000, an increase of $2,580,000, or 14.7 percent, when compared to the
same period in the previous year. For the third quarter of 2009, noninterest
expense increased $588,000, or 9.8 percent, from the third quarter in 2008. The
higher FDIC insurance expense that was previously discussed was included in
these increases in noninterest expense. The higher premiums contributed over 44
percent of the nine month increase and over 34 percent of the quarterly increase
in noninterest expense. Salaries and employee benefits, the Company's largest
noninterest expense, increased $814,000, or 7.8 percent, for the first nine
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
full-time equivalent employees from 266 at September 30 2008, to 272 at
September 30, 2009. Comparing the nine-month periods, all remaining noninterest
expenses were up $618,000, led by communication and equipment expense.
For the nine months ended September 30, 2009, management provided
$2,101,000 to the allowance for loan losses, which represented a decrease of
$209,000 from the same period last year. For the three months ended September
30, 2009, management provided $957,000 to the allowance for loan losses, an
increase of $264,000 from the same period in the prior year. The decrease in the
nine month 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 nine months ended
September 30, 2009 was .27 percent, compared to .71 percent for the same period
last year. Although net charge-offs declined, this was partially offset by an
increase in nonperforming loans. The ratio of nonperforming loans to total loans
was 1.10 percent at September 30, 2009 compared to .84 percent at December 31,
2008 and .70 percent at September 30, 2008. Based on the evaluation of the
adequacy of the allowance for loan losses, management believes that the
allowance for loan losses at September 30, 2009 was adequate and reflects
probable incurred losses in the portfolio. The allowance for loan losses was
1.33 percent of total loans at September 30, 2009, compared to 1.24 percent at
December 31, 2008 and 1.10 percent at September 30, 2008.
"In this challenging economic environment, I'm pleased to report that our
team of dedicated employees earned $1.7 million in the third quarter of 2009 and
more than $5.1 million for the nine months ended September 30, 2009," stated
Jeffrey E. Smith, President and CEO. "Even though our earnings for the quarter
and nine months ended September, 2009 were lower by $185,000 and $434,000,
respectively, when compared to 2008, at September 30, 2009 our nonperforming
loans to total loans ratio stood at an enviable 1.10% and our nonperforming
assets to total assets ratio stood at 1.51%. The lower operating earnings were
impacted by lower loan demand generally, and higher FDIC insurance premiums
specifically. In addition, the decision to shift real estate mortgage
originations to secondary markets in this historically low interest rate
environment has lowered interest income; but has decreased interest rate risk
and increased liquidity, both of which we believe to be prudent in the current
environment. We also believe the increased liquidity coupled with the
significant growth in core deposits will increase our institution's flexibility
as the economic environment improves."
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," "appears," "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 Nine months ended
September 30, September 30,
2009 2008 2009 2008
------------ ------------ ------------ --------------
PER SHARE DATA
Earnings per share $0.43 $0.47 $1.29 $1.38
Cash dividends per share $0.20 $0.19 $0.60 $0.57
Book value per share $16.58 $15.53 $16.58 $15.53
Dividend payout ratio (a) 46.86% 40.34% 46.43% 41.28%
Weighted average shares outstanding 3,983,009 3,998,509 3,983,009 4,030,542
PERFORMANCE RATIOS
Return on average equity 10.27% 12.24% 10.66% 12.20%
Return on average assets 0.82% 0.96% 0.84% 0.95%
Net interest margin (b) 3.85% 4.27% 4.01% 4.20%
Efficiency ratio (c) 67.56% 63.66% 68.38% 62.64%
Average earning assets (in 000's) $778,660 $729,715 $777,797 $740,118
(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,
2009 2008 2009 2008
-------------- ------------ -------------- ----------------
Interest income:
Interest and fees on loans $ 10,854 $ 11,580 $ 33,300 $ 35,965
Interest and dividends on securities 879 1,077 2,754 3,279
-------------- ------------ -------------- ----------------
Total interest income 11,733 12,657 36,054 39,244
Interest expense:
Deposits 3,516 3,914 10,527 13,070
Borrowings 769 1,019 2,496 3,220
-------------- -------------- -------------- ----------------
Total interest expense 4,285 4,933 13,023 16,290
-------------- -------------- -------------- ----------------
Net interest income 7,448 7,724 23,031 22,954
Provision for loan losses 957 693 2,101 2,310
Noninterest income:
Service charges on deposit accounts 776 833 2,108 2,323
Trust fees 61 59 171 184
Income from bank owned insurance 755 200 1,158 576
Gain on sale of loans 95 20 713 110
Gain (loss) on sale of other real estate owned 1 7 28 (31)
Other 496 455 1,933 1,583
-------------- -------------- -------------- ----------------
Total noninterest income 2,184 1,574 6,111 4,745
Noninterest expense:
Salaries and employee benefits 3,838 3,609 11,242 10,428
Occupancy 406 404 1,208 1,172
Furniture and equipment 308 260 874 752
Data processing 142 176 601 707
FDIC insurance 322 121 1,303 155
Other 1,559 1,417 4,906 4,340
-------------- -------------- -------------- ----------------
Total noninterest expense 6,575 5,987 20,134 17,554
-------------- -------------- -------------- ----------------
Income before income taxes 2,100 2,618 6,907 7,835
Income taxes 400 733 1,760 2,254
-------------- -------------- -------------- ----------------
NET INCOME $ 1,700 $ 1,885 $ 5,147 $ 5,581
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OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except share data) September 30, December 31,
2009 2008
-------------- ----------------
ASSETS
Cash and noninterest-bearing deposits with banks $ 10,088 $ 16,650
Federal funds sold 0 1,031
-------------- ----------------
Total cash and cash equivalents 10,088 17,681
Interest-bearing deposits in other financial institutions 12,834 611
Securities available-for-sale 92,651 75,340
Securities held-to-maturity
(estimated fair value: 2009 - $15,617, 2008 - $17,241) 15,270 16,986
Federal Home Loan Bank stock 6,281 6,281
Total loans 648,370 630,391
Less: Allowance for loan losses (8,622) (7,799)
-------------- ----------------
Net loans 639,748 622,592
Premises and equipment, net 10,488 10,232
Accrued income receivable 3,170 3,172
Goodwill 1,267 1,267
Bank owned life insurance 18,446 18,153
Other assets 9,734 8,793
-------------- ----------------
Total assets $ 819,977 $ 781,108
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LIABILITIES
Noninterest-bearing deposits $ 81,576 $ 85,506
Interest-bearing deposits 572,095 506,855
-------------- ----------------
Total deposits 653,671 592,361
Securities sold under agreements to repurchase 29,853 24,070
Other borrowed funds 41,439 76,774
Subordinated debentures 13,500 13,500
Accrued liabilities 15,461 11,347
-------------- ----------------
Total liabilities 753,924 718,052
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 43,509 40,752
Accumulated other comprehensive income (loss) 930 690
Treasury stock at cost (2009 and 2008 - 659,739 shares) (15,712) (15,712)
-------------- ----------------
Total shareholders' equity 66,053 63,056
-------------- ----------------
Total liabilities and shareholders' equity $ 819,977 $ 781,108
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