Press Release


Ohio Valley Banc Corp. Reports 1st Quarter Earnings

Company Release - 4/27/2020 7:49 PM ET

GALLIPOLIS, Ohio, April 27, 2020 /PRNewswire/ -- Ohio Valley Banc Corp. (Nasdaq: OVBC) (the "Company") reported consolidated net income for the quarter ended March 31, 2020, of $1,002,000, a decrease of $191,000 from the same period the prior year.  Earnings per share for the first quarter of 2020 was $.21, compared to $.25 for the first quarter of 2019.  Return on average assets and return on average equity were .40 percent and 3.14 percent, respectively, for the first quarter of 2020, versus .47 percent and 4.08 percent, respectively, for the same period the prior year.

CEO Tom Wiseman commented, "No matter the circumstances, it is always disappointing to not report record earnings.  However, during this period of unprecedented challenge, it is the health, safety and welfare of our customers, employees and shareholders that is of utmost importance.  Our community bankers' response to the COVID-19 pandemic has been nothing short of heroic.  OVB staff came up with new ways to serve our customers without contact, closed out Christmas Savings for customers that needed funds early, and extended hours at two of our drive-thru locations to 8 p.m. Monday through Saturday.  As of last week, our lending teams worked day and night to arrange loan payment deferments for over 1,000 customers and helped local small businesses gain over $2.6 million from the SBA Paycheck Protection Program.  Loan Central tax professionals distributed 3,000 stimulus payments to their tax refund loan customers.  I'm proud to say we were early to respond and proactive in our approach to protecting the physical and economic wellbeing of all our stakeholders."

For the first quarter of 2020, net interest income decreased $1,383,000, or 12.1 percent, from the same period last year.  Contributing to the lower net interest income was the decrease in loan fees, the net interest margin and average earning assets.  Starting in 2020, the Company changed its business model for Loan Central's assessment of fees for tax refund advance loans from only assessing loan fees for the tax refund loan to primarily assessing a fee for preparing the tax return in combination with a reduced loan fee.  This fundamental change in the fee structure was imposed upon the Company in order to comply with new regulation.  As a result, tax refund advance loan fees for the first quarter of 2020 decreased $709,000 from the same period last year.  The fee income for tax preparation services was recorded as noninterest income and is discussed below.  For the quarter ended March 31, 2020, the net interest margin was 4.34 percent, compared to 4.89 percent for the same period the prior year.  The reduction in tax refund advance fees lowered the net interest margin 30 basis points for the first quarter of 2020.  The remaining decrease in the net interest margin was related to the decrease in market rates.  The Federal Reserve reduced interest rates by 75 basis points during the second half of 2019 and another 150 basis points in March of 2020, which contributed to a decrease in yield on earning assets.  However, the average cost of interest-bearing liabilities actually increased due to interest rates on deposits lagging the decrease in general market rates.  Furthermore, certain deposits were already at or near their interest rate floor, which limited the Company's ability to reduce deposit costs to the same magnitude as experienced on earning assets.  For the three months ended March 31, 2020, average earning assets decreased $17 million from the same period the prior year, primarily attributable to commercial and installment loan segments of the loan portfolio.

For the three months ended March 31, 2020, the provision for loan loss expense totaled $3,846,000, an increase of $1,469,000 from the first quarter of 2019.  For the three months ended March, 31, 2020, the provision for loan loss expense incurred was primarily related to net loan charge-offs of $1,390,000 and to an increase in general reserves related to the establishment of an economic risk factor for the coronavirus pandemic.  Based on declining economic conditions and increasing unemployment levels, management increased general reserves $1,942,000 to reflect higher anticipated losses due to the expected financial impact of the coronavirus on customers.  In association with this higher risk factor, the allowance for loan losses increased to 1.13 percent of total loans at March 31, 2020, compared to .81 percent at December 31, 2019 and 1.03 percent at March 31, 2019.

For the first quarter of 2020, noninterest income totaled $4,442,000, an increase of $2,596,000 from the first quarter of 2019.  During the first quarter of 2020, the Bank entered into a settlement agreement relating to the previously disclosed litigation the Bank had filed against a third-party tax software product provider for early termination of its tax processing contract.  Under the settlement agreement, the third-party paid a $2,000,000 settlement payment.  Further contributing to the increase was the Company's change in its business model for assessing fees on tax refund advance loans.  By primarily charging for the tax preparation services, the Company recorded $615,000 in tax preparation fee income during the first quarter of 2020.

Noninterest expense totaled $9,519,000 for the first quarter of 2020, a decrease of $49,000 from the same period last year.  The Company's largest noninterest expense, salaries and employee benefits, decreased $81,000, or 1.5 percent, from the first quarter of 2019.  The decrease was primarily related to the expense savings associated with a lower number of employees from the sale of two branches in December 2019 and the voluntary severance program that was completed during the fourth quarter of 2019, which more than offset the expense increase associated with annual merit increases.  Further contributing to lower noninterest expense was professional fees and costs associated with foreclosed assets.  For the three months ended March 31, 2020, professional fees decreased $74,000 from the same period last year in relation to lower legal and accounting fees.  For the same period, foreclosed asset expense decreased $63,000.  Partially offsetting the expense reductions above was an increase in data processing, which increased $64,000 from the prior year first quarter primarily due to credit card processing and website maintenance costs. 

Ohio Valley Banc Corp. common stock is traded on the NASDAQ Global Market under the symbol OVBC.  The holding company owns Ohio Valley Bank, with 16 offices in Ohio and West Virginia, and Loan Central, with six consumer finance offices in Ohio.  Learn more about Ohio Valley Banc Corp. at www.ovbc.com.

Caution Regarding Forward-Looking Information

Certain statements contained in this earnings release that 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) impacts from the novel coronavirus (COVID-19) pandemic on our business, operations, customers and capital position; (ii) higher default rates on loans made to our customers related to COVID-19 and its impact on our customers' operations and financial condition; (iii) the impact of COVID-19 on local, national and global economic conditions; unexpected changes in interest rates or disruptions in the mortgage market related to COVID-19 or responses to the health crisis;  (iv) the effects of various governmental responses to the COVID-19 pandemic; (v) changes in political, economic or other factors, such as inflation rates, recessionary or expansive trends, taxes, the effects of implementation of federal legislation with respect to taxes and government spending and the continuing economic uncertainty in various parts of the world; (vi) competitive pressures;  (vii) fluctuations in interest rates; (viii) the level of defaults and prepayment on loans made by the Company; (ix) unanticipated litigation, claims, or assessments; (x) fluctuations in the cost of obtaining funds to make loans; (xi) regulatory changes; (xii) and other factors that may be described in the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission from time to time.  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.

 

 

OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)






















Three months ended








March 31,








2020


2019

PER SHARE DATA










  Earnings per share







$            0.21


$           0.25

  Dividends per share







$            0.21


$           0.21

  Book value per share







$          27.26


$         25.29

  Dividend payout ratio (a)







100.34%


83.46%

  Weighted average shares outstanding





4,787,446


4,748,474











DIVIDEND REINVESTMENT (in 000's)








  Dividends reinvested under










     employee stock ownership plan (b)





$             154


$            179

  Dividends reinvested under










     dividend reinvestment plan (c)






$             372


$            351











PERFORMANCE RATIOS










  Return on average equity







3.14%


4.08%

  Return on average assets







0.40%


0.47%

  Net interest margin (d)







4.34%


4.89%

  Efficiency ratio (e)







65.42%


71.72%

  Average earning assets (in 000's)






$      936,008


$     953,335











(a) Total dividends paid as a percentage of net income.







(b) Shares may be purchased from OVBC and on secondary market.





(c) Shares may be purchased from OVBC and on secondary market.





(d) Fully tax-equivalent net interest income as a percentage of average earning assets.




(e) 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

(in $000's)







March 31,








2020


2019

Interest income:










     Interest and fees on loans







$        10,873


$       11,912

     Interest and dividends on securities






750


827

     Interest on interest-bearing deposits with banks




162


319

          Total interest income







11,785


13,058

Interest expense:










     Deposits







1,509


1,342

     Borrowings







272


329

          Total interest expense







1,781


1,671

Net interest income







10,004


11,387

Provision for loan losses 







3,846


2,377

Noninterest income:










     Service charges on deposit accounts





493


503

     Trust fees







68


64

     Income from bank owned life insurance and








       annuity assets







217


178

     Mortgage banking income







90


69

     Debit / credit card interchange income





943


914

     Loss on other real estate owned






(101)


----

     Tax preparation fees







615


----

     Litigation settlement







2,000


----

     Other







117


118

          Total noninterest income







4,442


1,846

Noninterest expense:










     Salaries and employee benefits






5,455


5,536

     Occupancy 







432


453

     Furniture and equipment 







262


263

     Professional fees







598


672

     Marketing expense







268


270

     FDIC insurance 







----


3

     Data processing 







599


535

     Software







381


411

     Foreclosed assets







43


106

     Amortization of intangibles







17


31

     Other 







1,464


1,288

          Total noninterest expense







9,519


9,568

Income before income taxes







1,081


1,288

Income taxes







79


95

NET INCOME







$          1,002


$         1,193










OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)













(in $000's, except share data)







March 31,


December 31








2020


2019

ASSETS










Cash and noninterest-bearing deposits with banks




$        16,023


$       12,812

Interest-bearing deposits with banks






50,648


39,544

     Total cash and cash equivalents






66,671


52,356

Certificates of deposit in financial institutions





2,360


2,360

Securities available for sale 







112,191


105,318

Securities held to maturity (estimated fair value:  2020 - $12,115; 2019 - $12,404)


11,808


12,033

Restricted investments in bank stocks





7,506


7,506

Total loans 







775,086


772,774

  Less:  Allowance for loan losses 






(8,729)


(6,272)

     Net loans







766,357


766,502

Premises and equipment, net







20,970


19,217

Premises and equipment held for sale, net





649


653

Other real estate owned







325


540

Accrued interest receivable







2,650


2,564

Goodwill







7,319


7,319

Other intangible assets, net







157


174

Bank owned life insurance and annuity assets





30,813


30,596

Operating lease right-of-use asset, net





998


1,053

Other assets







5,067


5,081

          Total assets







$   1,035,841


$  1,013,272











LIABILITIES










Noninterest-bearing deposits







$      213,262


$     222,607

Interest-bearing deposits







632,617


598,864

     Total deposits







845,879


821,471

Other borrowed funds 







32,459


33,991

Subordinated debentures







8,500


8,500

Operating lease liability







998


1,053

Accrued liabilities







17,509


20,078

          Total liabilities







905,345


885,093











SHAREHOLDERS' EQUITY










Common stock ($1.00 stated value per share, 10,000,000 shares authorized;





  2020 - 5,447,185 shares issued; 2019 - 5,447,185 shares issued)



5,447


5,447

Additional paid-in capital







51,165


51,165

Retained earnings







86,748


86,751

Accumulated other comprehensive income (loss)





2,848


528

Treasury stock, at cost (659,739 shares)





(15,712)


(15,712)

          Total shareholders' equity







130,496


128,179

               Total liabilities and shareholders' equity





$   1,035,841


$  1,013,272

 

Contact:  Ohio Valley Banc Corp., Scott Shockey, CFO (740) 446-2631

Cision View original content:http://www.prnewswire.com/news-releases/ohio-valley-banc-corp-reports-1st-quarter-earnings-301047935.html

SOURCE Ohio Valley Banc Corp.