EXHIBIT 99
For Immediate Release
Thursday, April 8, 2004
Contact: David G. Ratz, Executive Vice President & COO
(740) 286-3283
Oak Hill Financial Posts Earnings Increase
Jackson, Ohio -- Oak Hill Financial, Inc. (Nasdaq NMS: OAKF) today reported net
earnings for the three months ended March 31, 2004 of $3,147,000, or $.55 per
diluted share, an increase of 10.6% over the $2,846,000, or $.51 per diluted
share, in net earnings from operations that the company recorded for the quarter
ended March 31, 2003. The first quarter 2003 operating earnings have been
adjusted for non-recurring tax savings of $133,000 resulting from a one-time tax
savings of $531,000 for the full year 2003.
Oak Hill Financial's total assets increased 14.0% over the prior year, ending
the first quarter of 2004 at $955.4 million as compared to $837.9 million at
March 31, 2003. Net loans at March 31, 2004 were $829.1 million, up 16.4% from
March 31, 2003.
Reviewing the first quarter, Oak Hill Financial President and CEO R. E. Coffman,
Jr. said, "Overall, we're pleased with the quarter. In 2002 and 2003, we took
advantage of the low rate environment and were very successful in generating
revenues from mortgage originations. With the refinancing boom over, we knew
that we would be challenged this year to offset the decline in mortgage volume.
However, we had good loan growth, particularly for the winter quarter, we were
able to maintain the net interest margin at the level we needed, and we kept a
lid on operating expenses."
Looking forward, Coffman added, "We remain optimistic that we will achieve our
goals for 2004. Loan demand is increasing, credit quality is in line, we're
making strides at building our other sources of non-interest income, and the
economy in our market areas is picking up. This year will be more a story of net
interest income than non-interest income, but we expect the end result to be
another good year for the company and its shareholders."
Key Issue Review and Outlook
Net Interest Margin - Net interest margin for the first quarter was 4.11%, as
compared to the 4.17% recorded for the fourth quarter of 2003. The margin was in
line with management's expectations and was the result of the company's loan
growth and management's ongoing efforts to maintain the yield on earning assets
and control liability costs. The company also benefited from continued
stabilization of loan rates. Management believes that the margin can be
maintained at or near the first quarter level which, coupled with the company's
expected growth, will facilitate 2004 earnings within the company's estimated
range. In addition, if interest rates begin to rise, the net interest margin
should increase.
Operating Expenses & Efficiency - On an operating basis, non-interest expense
was 2.73% of average assets for the first quarter of 2004, as compared to 2.97%
for the first quarter of 2003. The efficiency ratio for the same periods was
54.8% and
56.4%, respectively. On the expense side, the improvement was attributable to
moderating employee health insurance costs and, in general, to the company's
expense control efforts, which had a positive impact on a broad range of
operating expense categories.
Non-Interest Income - Non-interest income was $2,443,000 in the first quarter,
an increase of 1.6% over the first quarter of 2003. Also, non-interest income
declined 12.1% from the fourth quarter of 2003, primarily as a result of a
substantial increase in amortization of mortgage servicing rights and a decline
in gain on sale of loans due to the fall-off in residential mortgage
originations. These were offset in part by increases in gain on sale of
securities and insurance commissions. Insurance commissions increased 22.5%
year-over-year and 15.6% over the fourth quarter of 2003. Revenues of Oak Hill
Title Agency, an LLC of which the company owns 49%, were up 111.5% in the first
quarter. Also, the company's insurance agency generated new business for group
health insurance products and increased its revenues from third-party
administration of employee benefit programs.
Asset Quality - At the end of the first quarter, the nonperforming loans/total
loans and nonperforming assets/total assets ratios were 0.90% and 0.88%,
respectively, a decrease from the 0.99% and 0.93%, respectively, posted at
December 31, 2003. The largest of the non-performing loans, which the company
has discussed in previous releases, represents 0.13% of the nonperforming loan
ratio. Another non-performing loan, also discussed in earlier releases,
contributes 0.09% to the nonperforming loan ratio. The remaining nonperforming
loans are a mix of commercial real estate, commercial, residential real estate,
and consumer loans. The largest of these represents less than 0.06% of the
nonperforming loan ratio. The loss on all nonperforming loans combined is not
expected to exceed $850,000.
In the company's fourth quarter 2003 earnings announcement, a large lending
relationship for which the company had started foreclosure proceedings was
reviewed. Management is very pleased to report that this situation was
successfully resolved during the first quarter. The borrower receiving a
substantial infusion of capital from private investors and the company's risk
exposure was significantly reduced. All loans in this relationship are now
current and paying as agreed, and no further issues are anticipated.
Net charge-offs (non-annualized) for the first quarter were 0.04% of loans, with
an annualized rate of 0.17%. Both are essentially unchanged from the fourth
quarter of 2003 and consistent with management's objective of maintaining net
charge-offs in the 0.20% range for the full year 2004.
Overall Strategy - Oak Hill Financial will continue to pursue revenue growth
through originating adjustable-rate commercial loans, commercial real estate
loans, and residential mortgage loans; fixed-rate residential mortgage loans and
SBA loans for sale in the secondary market; and consumer loans. Management
continues to believe that commercial and commercial real estate loans hold the
greatest potential for growth and margin improvement within its bank subsidiary.
Non-interest income growth and diversification of non-interest revenues are also
major elements in the company's strategy. With respect to non-interest income
opportunities, management believes that the recent legislative resolution of the
issues concerning the SBA 7(a) loan program will greatly benefit the company's
efforts as it aggressively pursues SBA loans. The company currently has several
of these loans in its pipeline.
Asset/Loan Growth - The company's total assets grew at a 7.4% annual rate during
the first quarter. Loans increased at an annualized 9.0%, with commercial loans,
construction loans, and home equity lines of credit the primary contributors to
the quarter's growth. Management believes that these results bode well for the
remainder of the year. While the company has an objective of 13% loan growth for
2004, the bulk of the company's growth traditionally comes in the second through
fourth quarters (for example, the company had 5.8% annualized loan growth in the
first quarter of 2003 and ultimately posted a
15.5% increase in loans by year-end). Moving into the second quarter, the
company's loan pipeline is growing, and there are strong indications that loan
demand is accelerating, particularly in the commercial area. Therefore,
management believes that the 13% growth target will be achieved. However,
management also remains committed that loan growth will not come at the expense
of credit quality or the company's earnings objectives.
Expansion - During the first quarter, the company's Oak Hill Banks subsidiary
opened a full-service branch in Centerville, Ohio, a suburb of Dayton. The new
branch incorporates the operations of the highly successful loan production
office that the bank opened in Centerville in 2002. In addition, the bank has a
branch office under construction in the Columbus suburb of Grove City, which is
expected to be opened by the end of the second quarter. Also during the second
quarter, the bank will begin construction of a branch in Chillicothe, Ohio. This
will be the company's third banking office in Chillicothe and its fourth in Ross
County, which is contiguous to the company's home county of Jackson.
Estimate - The company is reiterating its previously released estimate that
earnings per share from operations for the full year 2004 will be in the range
of $2.26 to $2.38 per share. Management has developed several possible scenarios
under which the earnings estimate can be achieved and believes it is attainable
under both moderate and high-growth scenarios.
Oak Hill Financial is a financial holding company headquartered in Jackson,
Ohio. Its subsidiaries, Oak Hill Banks and Action Finance Company, operate 26
full-service banking offices, five bank loan production offices, and six
consumer finance offices in 15 counties across southern and central Ohio. A
third subsidiary, Oak Hill Financial Insurance Agency, provides group health
plans and other insurance services to private and public-sector organizations
throughout the same region. The company also holds 49% of Oak Hill Title Agency,
LLC, which provides title services for commercial and residential real estate
transactions.
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.
Oak Hill Financial, Inc.
SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)
April 8, 2004 Press Release
At or For the
Three Months Ended
March 31,
(In thousands) 2004 2003
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SUMMARY OF FINANCIAL CONDITION
Total assets $955,413 $837,864
Interest-bearing deposits and federal funds sold 1,250 1,365
Investment securities 81,416 81,575
Loans receivable - net 829,089 712,093
Deposits 772,498 662,552
Federal Home Loan Bank advances and other borrowings 99,952 101,830
Stockholders' equity 79,791 70,529
The Company discloses net earnings, diluted earnings per share and certain
performance ratios adjusted for non-recurring items. Management believes that
presenting this information is an additional measure of performance that
investors can use to compare operating results between reporting periods. These
measures should not be considered an alternative to measurements required by
accounting principles generally accepted in the United States of America ("U.S.
GAAP"). In accordance with Securities and Exchange Commission Regulation G,
reconciliation of the Company's U.S. GAAP information to its operating
information is presented in the table below.
At or For the
Three Months Ended
March 31,
(In thousands, except share data) 2004 2003
- --------------------------------------------------------------------------------
RECONCILIATION OF NON-GAAP NET EARNINGS,
DILUTED EARNINGS PER SHARE AND OTHER PERFORMANCE MEASURES
Net earnings (U.S. GAAP) $ 3,147 $ 2,979
Non-recurring items, net of tax:
Reduction in tax expense -- (133)
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Net earnings from operations $ 3,147 $ 2,846
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Diluted earnings per share (U.S. GAAP) $ 0.55 $ 0.54
Non-recurring items, net of tax:
Reduction in tax expense -- (0.03)
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Diluted earnings per share from operations $ 0.55 $ 0.51
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Oak Hill Financial, Inc.
SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)
April 8, 2004 Press Release
At or For the
Three Months Ended
March 31,
(In thousands, except share data) 2004 2003
- -------------------------------------------------------------------------------------------------
RECONCILIATION OF NON-GAAP NET EARNINGS,
DILUTED EARNINGS PER SHARE AND OTHER PERFORMANCE MEASURES (continued)
Non-interest expense (U.S. GAAP) $ 6,424 $ 5,903
Non-recurring items:
Reduction in tax expense 203
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Non-interest expense from operations $ 6,424 $ 6,106
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SUMMARY OF OPERATIONS (1)
Interest income $14,188 $13,740
Interest expense 4,910 5,320
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Net interest income 9,278 8,420
Provision for losses on loans 575 509
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Net interest income after provision for losses on loans 8,703 7,911
Gain on sale of loans 295 926
Insurance commissions 828 676
Other non-interest income 1,320 802
General, administrative and other expense 6,424 6,106
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Earnings before federal income taxes 4,722 4,209
Federal income taxes 1,575 1,363
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Net earnings from operations $ 3,147 $ 2,846
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SELECTED PERFORMANCE RATIOS FROM OPERATIONS (1)(4)
Diluted earnings per share (3) $ 0.55 $ 0.51
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Return on average assets 1.34% 1.38%
Return on average equity 15.62% 16.75%
Non-interest expense to average assets 2.73% 2.97%
Efficiency ratio 54.80% 56.40%
Oak Hill Financial, Inc.
SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)
April 8, 2004 Press Release
At or For the
Three Months Ended
(In thousands, except share data) 2004 2003
- -------------------------------------------------------------------------------------------
PER SHARE INFORMATION (U.S. GAAP)
Basic earnings per share (2) $ 0.56 $ 0.55
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Diluted earnings per share (3) $ 0.55 $ 0.54
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Dividends per share $ 0.15 $ 0.13
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Book value per share $ 14.46 $ 12.94
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OTHER STATISTICAL AND OPERATING DATA (U.S. GAAP) (4)
Return on average assets 1.34% 1.45%
Return on average equity 15.62% 17.53%
Non-interest expense to average assets 2.73% 2.87%
Net interest margin (fully-taxable equivalent) 4.11% 4.30%
Total allowance for losses on loans to non-performing loans 146.36% 124.53%
Total allowance for losses on loans to total loans 1.32% 1.30%
Non-performing loans to total loans 0.90% 1.05%
Non-performing assets to total assets 0.88% 0.93%
Net charge-offs to average loans (actual for the period) 0.04% 0.03%
Net charge-offs to average loans (annualized) 0.17% 0.14%
Equity to assets at period end 8.35% 8.42%
Efficiency ratio 54.80% 54.53%
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(1) Includes $202,500, pre-tax reduction in tax expense for the three months
ended March 31, 2003 resulting from a one-time pre-tax savings of $810,000
for 2003.
(2) Based on 5,582,171 and 5,421,597 weighted-average shares outstanding for
the three months ended March 31, 2004 and 2003, respectively.
(3) Based on 5,737,110 and 5,564,562 weighted-average shares outstanding for
the three months ended March 31, 2004 and 2003, respectively.
(4) Annualized where appropriate.
Oak Hill Financial, Inc.
SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)
April 8, 2004 Press Release
At or For the
Three Months Ended
March 31,
(In thousands, except share data) 2004 2003
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SUPPLEMENTAL DETAIL
BALANCE SHEET - ASSETS
Cash and cash equivalents 18,006 21,066
Trading account securities
Securities available for sale 77,762 77,903
Securities held to maturity 3,654 3,672
Other securities 6,058 5,821
Total securities 87,474 87,396
Total cash and securities 105,480 108,462
Loans and leases held for investment (1) 836,009 716,390
Loans and leases held for sale (1) 1,140 3,061
Total loans and leases (1) 837,149 719,451
Allowance for losses on loans 11,061 9,409
Goodwill 413 413
Other intangible assets
Total intangible assets 413 413
Mortgage servicing rights 3,001 2,051
Purchased credit card relationships
Other real estate owned 885 278
Other assets 19,546 16,618
Total assets 955,413 837,864
BALANCE SHEET - LIABILITIES
Deposits 772,498 662,552
Borrowings 94,952 96,830
Other liabilities 3,164 2,945
Total liabilities 870,614 762,327
Redeemable preferred stock
Trust preferred securities 5,000 5,000
Minority interests 8 8
Other mezzanine level items
Total mezzanine level items 5,008 5,008
Total liabilities and mezzanine level items 875,622 767,335
BALANCE SHEET - EQUITY
Preferred equity
Common equity 79,791 70,529
MEMO ITEM: Net unrealized gain (loss) on securities
available for sale, net of tax 1,133 1,235
End of period shares outstanding (2) 5,519,147 5,451,841
Options outstanding 490,700 631,367
Treasury shares held by the Company 134,936 142,387
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(1) Data is net of unearned interest, gross of allowance for losses on loans
(2) Excludes treasury shares
Oak Hill Financial, Inc.
SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)
April 8, 2004 Press Release
At or For the
Three Months Ended
March 31,
(In thousands, except share data) 2004 2003
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SUPPLEMENTAL DETAIL (continued)
Repurchase plan announced? Yes No
Number of shares to be repurchased in plan 300,000
Number of shares repurchased during the period 134,936 N/A
Average price of repurchased shares $ 32.38 N/A
INCOME STATEMENT
Interest income 14,188 13,740
Interest expense 4,910 5,320
Net interest income 9,278 8,420
Net interest income (fully-taxable equivalent) 9,404 8,554
Provision for losses on loans 575 509
Non-recurring income -- --
Trading account income -- --
Foreign exchange income -- --
Trust income -- --
Insurance commissions 828 676
Service charges on deposits 818 477
Gain on sale of loans 295 926
Gain on investment securities transactions 134 122
Other non-interest income 368 203
Total non-interest income 2,443 2,404
Employee compensation and benefits 3,440 3,555
Occupancy and equipment expense 833 761
Foreclosed property expense -- --
Amortization of intangibles -- --
Other general, administrative and other expense 2,151 1,588
Total non-interest expenses 6,424 5,904
Net income before taxes 4,722 4,411
Federal income taxes 1,575 1,432
Net income before extraordinary items 3,147 2,979
Extraordinary items -- --
Net income 3,147 2,979
CHARGE-OFFS
Loan charge-offs 495 381
Recoveries on loans 145 139
Net loan charge-offs 350 242
AVERAGE BALANCE SHEET
Average loans and leases 829,242 715,074
Average other earning assets 90,571 92,295
Oak Hill Financial, Inc.
SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)
April 8, 2004 Press Release
At or For the
Three Months Ended
March 31,
(In thousands, except share data) 2004 2003
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SUPPLEMENTAL DETAIL (continued)
AVERAGE BALANCE SHEET (continued)
Average total earning assets 919,813 807,369
Average total assets 947,964 833,522
Average non-interest bearing deposits 65,207 58,683
Average total time deposits 481,437 416,925
Average other interest-bearing deposits 192,883 182,036
Average total interest-bearing deposits 674,320 598,961
Average borrowings 124,295 103,894
Average interest-bearing liabilities 798,615 702,855
Average preferred equity
Average common equity 81,023 68,908
ASSET QUALITY AND OTHER DATA
Non-accrual loans 6,930 6,923
Renegotiated loans
Loans 90+ days past due and still accruing 628 632
Total non-performing loans 7,558 7,555
Other real estate owned 885 278
Total non-performing assets 8,443 7,833
ADDITIONAL DATA
1 - 4 family mortgage loans serviced for others 254,791 208,902
Proprietary mutual fund balances
Fair value of securities held to maturity 3,655 3,572
Full-time equivalent employees 355 329
Total number of full-service banking offices 26 24
Total number of bank and thrift subsidiaries 1 1
Total number of ATMs 30 27
LOANS RECEIVABLE
1 - 4 family residential 175,283 176,670
Home equity 35,956 26,142
Multi-family residential 23,773 37,167
Commercial real estate 318,601 235,825
Construction and land development 60,232 39,008
Commercial and other 147,994 133,422
Consumer 75,167 71,416
Credit cards 1,582 1,371
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Loans receivable - gross 838,588 721,021
Unearned interest (1,439) (1,571)
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Loans receivable - net of unearned interest 837,149 719,450
Allowance for losses on loans (11,061) (9,409)
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Loans receivable - net (1) 826,088 710,041
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(1) Does not include mortgage servicing rights.
Oak Hill Financial, Inc.
SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)
April 8, 2004 Press Release
At or For the
Three Months Ended
March 31,
(In thousands, except share data) 2004 2003
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SUPPLEMENTAL DETAIL (continued)
DEPOSITS
Transaction accounts
Non-interest bearing 70,221 62,641
Interest-bearing 78,560 61,672
Savings accounts 49,632 45,571
Money market deposit accounts 77,610 80,894
Other core interest-bearing 333,412 315,276
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Total core deposit accounts 609,435 566,054
Non-core interest-bearing 163,063 96,498
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Total deposits 772,498 662,552
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Yield/average earning assets (fully-taxable equivalent) 6.26% 6.97%
Cost/average earning assets 2.15% 2.67%
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Net interest income (fully-taxable equivalent) 4.11% 4.30%
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