FOR IMMEDIATE RELEASE
Friday, January 19, 2001
Contact: David G. Ratz, Chief Administrative Officer
(740) 286-3283
OAK HILL FINANCIAL REPORTS FOURTH QUARTER 2000 RESULTS
JACKSON, OHIO -- Oak Hill Financial, Inc. (Nasdaq NMS: OAKF) today reported net
earnings from operations for the three months ended December 31, 2001 of
$1,586,000, or $.31 per diluted share, which was in line with the company's
previously released earnings estimate. The fourth quarter 2000 operating
earnings, which exclude restructuring and non-recurring charges of $369,000, or
$.07 per share, compare to the $1,838,000, or $.34 per diluted share, in
operating earnings that the company recorded for the quarter ended December 31,
1999.
For the fiscal year ended December 31, 2000, Oak Hill Financial recorded net
earnings from operations of $6,691,000, or $1.28 per diluted share, as compared
to the $7,329,000, or $1.36 per diluted share, in operating earnings for fiscal
1999. Results for the three and twelve months ended December 31, 1999 exclude
charges related to Oak Hill Financial's October 1, 1999 merger with Towne
Financial Corp.
Oak Hill Financial experienced substantial growth during 2000. The company's
total assets ended the year at $694.6 million, an increase of 16.0% over the
$598.9 million in assets recorded at December 31, 1999. Net loans at December
31, 2000 were $599.1 million, up 17.9% from December 31, 1999.
Reviewing the fourth quarter and the 2000 fiscal year, Oak Hill Financial
President and CEO John D. Kidd said, "We're very pleased with our growth, and
our expanding customer base will serve us very well in the future. However,
higher funding costs kept pressure on the net interest margin all year and, as a
result, our earnings were off. "
Looking forward, Kidd added, "We are very optimistic about 2001 and beyond. We
expect improvement in all areas. Interest rates are coming down, and we are
going to leverage that by restructuring our funding. Non-interest income is
going up, and operating expenses are stable. We've got growth momentum, and we
believe this is going to be a good year for us."
KEY ISSUE REVIEW AND OUTLOOK
NET INTEREST MARGIN - Net interest margin for the fourth quarter was 3.87%, a
slight change from the 3.89% posted in the third quarter. The magnitude of the
fourth quarter change in net interest margin was far less than the decline from
4.16% in the second quarter to 3.89% in the third quarter, and the net interest
margin was well above management's previously announced fourth quarter "floor"
estimate of 3.75%. Pressure on the margin is mitigating rapidly due to declining
rates and management's efforts to restructure the company's funding as
liabilities mature. As a result, management believes that the net interest
margin will begin to increase and should be at or above 3.95% for the first
quarter of 2001.
TOWNE BANK - Towne Bank became part of Oak Hill Financial with the October 1,
1999 acquisition of Towne Financial Corp. and the conversion of its subsidiary,
Blue Ash Building and Loan, from a thrift to a commercial bank. Towne Bank had
considerable loan growth in 2001, particularly in higher-yielding commercial and
commercial real estate loans. The net interest margin at Towne Bank suffered
from very high retail deposit rates in the suburban Cincinnati market in which
it competes. With various initiatives to drive performance and the benefit of
lower interest rates, management reiterates its expectation of significant
improvement in Towne Bank's profitability by the end of the second quarter of
2001.
Page 1 of 10
STOCK REPURCHASE - Under a stock repurchase plan announced on April 11, 2000,
Oak Hill Financial had repurchased 253,570 shares of its common stock through
December 31, which represents 79.2% of the 320,000 shares authorized for the
buyback program. Management believes that continuing the program will increase
long-term shareholder value. Therefore, the company has extended the repurchase
program until June 30, 2001 or until the entire amount of shares authorized has
been repurchased, whichever is earlier.
INVESTMENT RESTRUCTURING -- Oak Hill Financial announced in September a plan to
restructure its investment portfolio, under which investment securities were to
be replaced with quality, higher-yielding instruments. Approximately $21 million
in investments have been sold and replaced, resulting in an after-tax charge of
$248,000 in the fourth quarter.
ASSET IMPAIRMENT - During the fourth quarter, Oak Hill Financial incurred an
after-tax impairment charge of $121,000 to reflect a reduction in the book value
of a former branch building. The building is currently for sale, and the
impairment is due to a title defect.
OPERATING EXPENSES - Non-interest expense was 2.40% of average assets for the
fourth quarter, which was in line with management's expectations. Management
anticipates that non-interest expenses will range from 2.30% to 2.40% in 2001.
NON-INTEREST INCOME - Non-interest income from operations in the fourth quarter
was $754,000, an increase of 15.3% over the third quarter of 2000 and 35.9% over
the fourth quarter of 1999. Management attributes the growth in non-interest
income to increases in certain fees and charges, more aggressive collection of
existing service charges, and growth in the company's alternative investment
program. For 2001, the company is pursuing further increases in non-interest
income through these means plus other annual service charge adjustments and
growth in fee-producing commercial banking products such as ACH and cash
management. Also, management believes that lower interest rates create an
opportunity to significantly increase its secondary market lending, which in
previous low-rate environments has produced substantial non-interest income for
the company. The company has the resources and experienced personnel in place to
take advantage of increased demand for refinancings and other mortgage loans.
ASSET QUALITY - The company's asset quality improved during the fourth quarter
as the nonperforming loans/total loans and nonperforming assets/total assets
ratios decreased from 0.62% and 0.57%, respectively, at September 30 to 0.47%
and 0.45%, respectively, at December 31. Of the non-performing loan ratio,
approximately 0.22% represents a single commercial real estate loan. Management
believes that the company is very well-secured on this loan, and no charge-off
or write-down is expected. Net charge-offs in the fourth quarter were 0.06% of
total loans, which was consistent with management's expectations. At this point,
management does not anticipate significant changes in asset quality in the first
quarter of 2001.
OVERALL STRATEGY - Oak Hill Financial will continue to pursue adjustable-rate
commercial loans, commercial real estate loans and residential mortgage loans;
fixed-rate residential mortgage loans for sale in the secondary market; and
consumer loans. Management believes that commercial and commercial real estate
loans hold the greatest potential for growth and margin improvement within its
bank subsidiaries, and the year 2001 emphasis will be on these products.
ASSET/LOAN GROWTH - As stated in a previous release, the company's objectives
for 2001 call for approximately 12% growth in loans and assets, which is below
the rate of growth for the year 2000. Management believes that the 12% target
will strike the correct balance between maintaining the company's growth
momentum, which is viewed as a key to its long-term success, and supporting the
net interest margin through less-aggressive pricing of loans and deposits.
However, if current trends in interest rates continue, management believes that
it may be possible to pursue -- and attain -- a higher asset growth rate while
still achieving the company's net interest margin and earnings objectives.
EXPANSION - The company's Action Finance subsidiary has already opened one new
consumer finance office in 2001, and another is scheduled to open before the end
of the first quarter. Also in 2001, the company expects to open one full-service
branch banking office (which is currently under construction) and one bank loan
production office.
Page 2 of 10
ESTIMATES - Oak Hill Financial had previously estimated that 2001 earnings per
share from operations would be in the range of $1.35 to $1.45 per share. Based
on the company's current condition and management's expectations of improved
operating effectiveness and favorable interest rate trends, management has
increased its estimate of earnings per share for 2001 to a range of $1.40 to
$1.50, excluding any securities gains or losses or other non-recurring items.
Oak Hill Financial is a community bank holding company headquartered in Jackson,
Ohio. Its subsidiaries, Oak Hill Banks, Towne Bank, and Action Finance Company,
operate 23 full-service banking offices, three bank loan production offices, and
five consumer finance offices in 15 counties across southern Ohio.
FORWARD-LOOKING STATEMENTS DISCLOSURE
This release contains certain forward-looking statements related to the future
performance and condition of Oak Hill Financial, Inc. These statements, which
are subject to numerous risks and uncertainties, are presented in good faith
based on the company's current condition and management's understanding,
expectations, and assumptions regarding its future prospects as of the date of
this release. Actual results could differ materially from those projected or
implied by the statements contained herein. The factors that could affect the
company's future results are set forth in the periodic reports and registration
statements filed by the company with the Securities and Exchange Commission.
Page 3 of 10
Oak Hill Financial, Inc.
January 19, 2001 Press Release
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
FOR THE AT OR FOR THE
THREE MONTHS ENDED DECEMBER 31, TWELVE MONTHS ENDED DECEMBER 31,
2000 1999 2000 1999
(unaudited) (unaudited)
SUMMARY OF FINANCIAL CONDITION
Total assets $ 694,637 $ 598,921
Interest bearing deposits
and federal funds sold
442 4,144
Investment securities
61,270 53,338
Loans receivable -- net
599,086 507,969
Deposits
562,617 488,880
Federal Home Loan Bank
advances and other borrowings
77,595 60,853
Stockholders' equity
49,896 47,724
SUMMARY OF OPERATIONS(1)(2)
Interest income 14,907 11,835 54,578 45,250
Interest expense 8,462 6,058 29,510 22,419
-------- -------- -------- --------
Net interest income 6,445 5,777 25,068 22,831
Provision for loan losses 697 560 2,263 1,748
-------- -------- -------- --------
Net interest income after
provision for loan losses 5,748 5,217 22,805 21,083
Gain on sale of loans 2 10 89 477
Other non-interest income 754 555 2,610 2,116
Non-interest expense 4,118 3,019 15,449 12,671
-------- -------- -------- --------
Earnings before federal income taxes 2,386 2,763 10,055 11,005
Federal income taxes 800 925 3,364 3,676
-------- -------- -------- --------
Net earnings $ 1,586 $ 1,838 $ 6,691 $ 7,329
======== ======== ======= =======
Page 4 of 10
Oak Hill Financial, Inc.
January 19, 2001 Press Release
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
FOR THE AT OR FOR THE
THREE MONTHS ENDED DECEMBER 31, TWELVE MONTHS ENDED DECEMBER 31,
2000 1999 2000 1999
(unaudited) (unaudited)
PER SHARE INFORMATION
Basic earnings per share(3) $ 0.24 $ 0.20 $ 1.21 $ 0.77
====== ====== ====== ======
Diluted earnings per share(4) $ 0.24 $ 0.20 $ 1.21 $ 0.76
====== ====== ====== ======
Dividends per share(3) $ 0.11 $ 0.10 $ 0.41 $ 0.34
====== ====== ====== ======
Book value per share $ 9.77 $ 8.97
====== ======
SELECTED OPERATING PERFORMANCE RATIOS(1)(2)(5)
Basic earnings per share(3) $ 0.31 $ 0.35 $ 1.28 $ 1.39
====== ====== ====== ======
Diluted earnings per share(4) $ 0.31 $ 0.34 $ 1.28 $ 1.36
====== ====== ====== ======
Return on average assets 0.92% 1.23% 1.04% 1.25%
Return on average equity 12.78% 15.30% 13.70% 15.23%
Non-interest expense to average assets 2.40% 2.02% 2.41% 2.15%
Dividend payout ratio 34.81% 29.32% 31.83% 24.45%
OTHER STATISTICAL AND OPERATING DATA(5)
Net interest margin 3.87% 4.02% 4.04% 4.16%
Total allowance for loan losses
to nonperforming loans 250.81% 192.40%
Total allowance for loan losses
to total loans 1.19% 1.19%
Nonperforming loans to total loans 0.47% 0.62%
Nonperforming assets to total assets 0.45% 0.56%
Net charge-offs to average loans 0.06% 0.08% 0.22% 0.19%
Equity to assets at period end 7.18% 7.97%
(1) Does not include $1.1 million and $4.8 million, pre-tax, merger-related and
restructuring charges for the three and twelve months ended December 31,
1999, respectively.
(2) Does not include $375,000 and $184,000, pre-tax, securities losses and asset
impairment charges, respectively, for the three months ended
December 31, 2000, and $381,000 and $184,000, pre-tax, securities losses and
asset impairment charges, respectively, for the twelve months
ended December 31, 2000.
(3) Based on 5,123,853, 5,229,007, 5,297,535, and 5,290,140 weighted-average
shares outstanding for the three and twelve month periods ended December 31,
2000, and December 31, 1999, respectively.
(4) Based on 5,132,255, 5,230,056, 5,386,798, and 5,403,087 weighted-average
shares outstanding for the three and twelve month periods ended December 31,
2000, and December 31, 1999, respectively.
(5) Annualized where appropriate.
Page 5 of 10
Oak Hill Financial, Inc.
January 19, 2001 Press Release
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
FOR THE AT OR FOR THE
THREE MONTHS ENDED DECEMBER 31, 2000 TWELVE MONTHS ENDED DECEMBER 31, 2000
(unaudited) (unaudited)
SUPPLEMENTAL DETAIL
BALANCE SHEET - ASSETS
Cash and cash equivalents 13,301
Trading account securities -
Securities available for sale 56,323
Held to maturity securities 4,947
Other securities 4,981
Total securities 66,251
Total cash and securities 79,552
Loans and leases held for investment(1) 605,136
Loans and leases held for sale(1) 183
Total loans and leases(1) 605,319
Loan loss reserve 7,197
Goodwill 249
Other intangibles -
Total intangible assets 249
Mortgage servicing rights 964
Purchased credit card relationships -
Other real estate owned 232
Other assets 15,518
Total assets 694,637
BALANCE SHEET - LIABILITIES
Deposits 562,617
Borrowings 72,595
Other liabilities 4,529
Total liabilities 639,741
Redeemable preferred stock -
Trust preferred securities 5,000
Minority interest -
Other mezzanine level items -
Total mezzanine level items 5,000
Total liabilities and mezzanine 644,741
(1) Data is net of discount, gross of reserve.
Page 6 of 10
Oak Hill Financial, Inc.
January 19, 2001 Press Release
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
FOR THE AT OR FOR THE
THREE MONTHS ENDED DECEMBER 31, 2000 TWELVE MONTHS ENDED DECEMBER 31, 2000
(unaudited) (unaudited)
SUPPLEMENTAL DETAIL (CONTINUED)
BALANCE SHEET - EQUITY
Preferred equity -
Common equity 49,896
MEMO ITEM: Net unrealized gain (loss) on
securities held for sale (FASB 115 adjustment) (84)
EOP shares outstanding(1) 5,108,856
Options outstanding 713,301
Treasury shares held by company 304,470
Repurchase plan announced? No Yes
# of shares to be repurchased in plan 320,000 320,000
# of shares repurchased during period 36,775 253,570
Average price of repurchased shares 15.31 15.48
INCOME STATEMENT
Interest income 14,907 54,578
Interest expense 8,462 29,510
Net interest income 6,445 25,068
Net interest income (FTE) 6,475 25,178
Provision for loan losses 697 2,263
Nonrecurring income - -
Nonrecurring expense - -
Trading account income - -
Foreign exchange income - -
Trust revenue - -
Service charges on deposits 433 1,513
Gain on sale of loans 2 89
Loss on investment securities transactions (375) (381)
Other noninterest income 321 1,097
Total noninterest income 381 2,318
(1) Excludes treasury shares.
Page 7 of 10
Oak Hill Financial, Inc.
January 19, 2001 Press Release
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
FOR THE AT OR FOR THE
THREE MONTHS ENDED DECEMBER 31, 2000 TWELVE MONTHS ENDED DECEMBER 31, 2000
(unaudited) (unaudited)
SUPPLEMENTAL DETAIL (CONTINUED)
INCOME STATEMENT (CONTINUED)
Employee compensation and benefits expense 2,335 8,880
Occupancy and equipment expense 502 1,909
Foreclosed property expense - -
Amortization of intangibles 9 34
Other noninterest expense 1,456 4,810
Total noninterest expense 4,302 15,633
Net income before taxes 1,827 9,490
Tax provision 610 3,172
Net income before extraordinary items 1,217 6,318
Extraordinary and after-tax items - -
Net income 1,217 6,318
CHARGEOFFS
Loan chargeoffs 444 1,415
Recoveries on loans 61 215
Net loan chargeoffs 383 1,200
AVERAGE BALANCE SHEET
Average loans and leases 597,031 557,037
Average other earning assets 64,644 63,499
Average total earning assets 661,675 620,536
Average total assets 682,408 641,528
Average total time deposits 363,676 335,678
Average other interest-bearing deposits 144,308 137,471
Average total interest-bearing deposits 507,984 473,149
Average borrowings 75,554 72,029
Average interest-bearing liabilities 583,538 545,178
Average preferred equity - -
Average common equity 49,385 48,823
Page 8 of 10
Oak Hill Financial, Inc.
January 19, 2001 Press Release
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
FOR THE AT OR FOR THE
THREE MONTHS ENDED DECEMBER 31, 2000 TWELVE MONTHS ENDED DECEMBER 31, 2000
(unaudited) (unaudited)
SUPPLEMENTAL DETAIL (CONTINUED)
ASSET QUALITY AND OTHER DATA
Nonaccrual loans 2,351
Renegotiated loans -
Other real estate owned 232
Total nonperforming assets 2,583
Loans 90+ days past due and still accruing 518
NPAs plus loans over 90 days delinquent 3,101
ADDITIONAL DATA
1-4 Family mortgage loans serviced for others 113,546
Proprietary mutual fund balances -
Held to maturity securities (fair value) 4,598
EOP employees (FTE) 267
Total number of full-service banking offices 23
Total number of bank and thrift subsidiaries 2
Total number of ATMs 23
LOANS RECEIVABLE
Real estate 263,116
Commercial real estate 174,032
Commercial and other 77,697
Consumer 91,155
Credit cards 1,605
-------
Loans - gross 607,605
Unearned interest (2,286)
-------
Loans - net of unearned interest 605,319
Reserve for loan losses (7,197)
-------
Loans - net(1) 598,122
=======
(1) Does not include mortgage servicing assets.
Page 9 of 10
Oak Hill Financial, Inc.
January 19, 2001 Press Release
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
FOR THE AT OR FOR THE
THREE MONTHS ENDED DECEMBER 31, 2000 TWELVE MONTHS ENDED DECEMBER 31, 2000
(unaudited) (unaudited)
SUPPLEMENTAL DETAIL (CONTINUED)
DEPOSITS
Non-interest bearing 45,792
Core interest bearing 408,110
Non-core interest bearing 108,715
=======
Total deposits 562,617
=======
Yield/average earning assets 8.96% 8.80%
Cost/average earning assets 5.09% 4.76%
Net interest margin 3.87% 4.76%
Page 10 of 10