Press Release


Ohio Valley Banc Corp. Reports 2nd Quarter Earnings

Company Release - 7/25/2019 6:16 PM ET

GALLIPOLIS, Ohio, July 25, 2019 /PRNewswire/ -- Ohio Valley Banc Corp. [Nasdaq: OVBC] (the "Company") reported consolidated net income for the quarter ended June 30, 2019, of $3,079,000, an increase of 3.5 percent from the $2,976,000 earned for the second quarter of 2018.   Earnings per share for the second quarter of 2019 were $.65 compared to $.63 for the prior year second quarter.  For the six months ended June 30, 2019, net income totaled $4,272,000, a decrease of $2,070,000 from the same period the prior year.  Earnings per share were $.90 for the first six months of 2019 versus $1.34 for the first six months of 2018.  Return on average assets and return on average equity were .83 percent and 7.20 percent, respectively, for the first half of 2019, compared to 1.16 percent and 11.53 percent, respectively, for the same period in the prior year.

Ohio Valley Banc Corp. CEO Tom Wiseman said, "While earnings increased over the prior quarter demonstrating a positive trend for your company, in the interest of true and complete transparency, we will discuss here the event that resulted in the decrease when comparing the first half of 2019 to the first half of 2018 and the shift in expense control that kept this impact to a minimum.  We work to continue our community first mission and the positive impact it has had on the rural areas we serve and call home.  Expense control, maximizing efficiencies, seizing opportunities to acquire other banks, and growing existing product and service lines will be key strategies as we end 2019 and plan for 2020."

For the second quarter of 2019, net interest income increased $13,000, and for the six months ended June 30, 2019, net interest income decreased $110,000 from the same respective periods last year.  Impacting net interest income was the decrease in average earning assets due to not processing tax refunds in 2019.  As previously disclosed, a third-party tax refund product provider elected to terminate the Bank's processing contract early.  During the first half of 2018, the processing of tax refunds provided $101 million in average deposits that were invested in the Federal Reserve.  This activity generated approximately $234,000 in interest revenue during the second quarter of 2018 and $803,000 in interest revenue during the first half of 2018 that was not replicated in 2019.  Absent the loss of interest revenue associated with processing tax refunds, net interest income benefitted from the growth in interest income on loans and securities exceeding the growth in interest expense on deposits and borrowed funds.  For the six months ended June 30, 2019, interest and fees on loans and securities increased $1,306,000 from the same period last year.  This increase was due to a combination of average loan growth and the benefit of rising interest rates throughout 2018.  For the same time period, interest expense on deposits and borrowed funds increased $1,004,000, primarily due to certificates of deposit repricing at higher market rates.  For the six months ended June 30, 2019, the net interest margin was 4.66 percent, compared to 4.37 percent for the same period the prior year.  The increase in net interest margin was primarily related to the higher balances maintained at the Federal Reserve during the first half of 2018, which diluted the net interest margin due to the yield on those balances being less than other earning assets, such as loans and securities.

For the three months ended June 30, 2019, the provision for loan losses decreased $783,000, and for the six months ended June 30, 2019, the provision for loan losses increased $838,000, from the same respective periods in 2018.  For the three months ended June 30, 2019, the negative provision for loan loss expense of $806,000 was primarily related to net recoveries of loans previously charged off totaling $194,000, a $227,000 reduction in specific allocations on collateral dependent impaired loans, and the improvement in certain economic risk factors contributing to lower general reserves.  For the six months ended June 30, 2019, the provision for loan losses incurred of $1,571,000 was primarily related to net loan charge-offs of $898,000 and higher general reserves in relation to certain economic risk factors.  The ratio of nonperforming loans to total loans was 1.36 percent at June 30, 2019 compared to 1.25 percent at December 31, 2018 and 1.45 percent at June 30, 2018.  The allowance for loan losses was .95 percent of total loans at June 30, 2019, compared to .87 percent at December 31, 2018 and .98 percent at June 30, 2018.

For the three months ended June 30, 2019, noninterest income totaled $2,003,000, a decrease of $535,000 from the same period last year.  Noninterest income totaled $3,849,000 for the six months ended June 30, 2019, a decrease of $1,765,000 from the same period last year.  The decrease in noninterest income was primarily related to tax processing fees.  In relation to the third-party tax refund provider terminating the contract as previously discussed, the Company experienced a decline in tax processing fees, which is a per item fee for each tax refund processed.  As a result of not performing such service in 2019, tax processing fees decreased $1,528,000 from the first half of 2018.  In addition, for the first half of 2019, gain on sale of other real estate owned decreased $143,000, which was partially offset by interchange income earned from debit and credit transactions, which increased $93,000, respectively, from the same period last year.

For the three months ended June 30, 2019, noninterest expense totaled $9,791,000, an increase of $117,000 from the same period last year.  For the six months ended June 30, 2019, noninterest expense totaled $19,359,000, a decrease of $123,000 from the same period last year.  The Company's largest noninterest expense, salaries and employee benefits, decreased $14,000 as compared to the second quarter of 2018 and decreased $180,000 as compared to the first half of 2018.  The decrease was primarily related to the expense savings associated with a lower number of employees more than offsetting the expense increase associated with annual merit increases.  Further contributing to lower noninterest expense was data processing and FDIC insurance premiums.  For the six months ended June 30, 3019, data processing expense decreased $332,000 from the same period last year in relation to lower consulting fees.  For the same period, FDIC insurance premiums decreased $145,000 in relation to a lower assessment rate.  Partially offsetting the expense reductions above was an increase in professional fees, which increased $338,000 from the first half of the prior year primarily due to litigation related legal fees.

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 18 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) 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; (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, 2018, 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,




2019


2018


2019


2018

PER SHARE DATA










  Earnings per share



$             0.65


$             0.63


$               0.90


$             1.34

  Dividends per share



$             0.21


$             0.21


$               0.42


$             0.42

  Book value per share



$           25.99


$           23.95


$            25.99


$           23.95

  Dividend payout ratio (a)



32.45%


33.31%


46.69%


31.20%

  Weighted average shares outstanding

4,763,858


4,724,124


4,756,209


4,717,901











DIVIDEND REINVESTMENT (in 000's)








  Dividends reinvested under










     employee stock ownership plan (b)


$                    -


$                    -


$                179


$              173

  Dividends reinvested under










     dividend reinvestment plan (c)



$              370


$              381


$                721


$              753











PERFORMANCE RATIOS










  Return on average equity



10.22%


10.68%


7.20%


11.53%

  Return on average assets



1.19%


1.13%


0.83%


1.16%

  Net interest margin (d)



4.43%


4.35%


4.66%


4.37%

  Efficiency ratio (e)



76.72%


72.77%


74.17%


69.62%

  Average earning assets (in 000's)



$      973,524


$      990,775


$        963,485


$   1,032,690











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







(b) Shares purchased from OVBC.










(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


Six months ended

(in $000's)



June 30,


June 30,




2019


2018


2019


2018

Interest income:










     Interest and fees on loans



$         11,302


$         10,767


$          23,214


$         22,016

     Interest and dividends on securities


856


800


1,683


1,575

     Interest on interest-bearing deposits with banks

325


371


644


1,056

          Total interest income



12,483


11,938


25,541


24,647

Interest expense:










     Deposits



1,512


961


2,854


1,853

     Borrowings



318


337


647


644

          Total interest expense



1,830


1,298


3,501


2,497

Net interest income



10,653


10,640


22,040


22,150

Provision for loan losses 



(806)


(23)


1,571


733

Noninterest income:










     Service charges on deposit accounts

517


515


1,020


1,017

     Trust fees



72


68


136


128

     Income from bank owned life insurance and








       annuity assets



177


173


355


349

     Mortgage banking income



78


68


147


132

     Electronic refund check / deposit fees

5


305


5


1,533

     Debit / credit card interchange income

972


932


1,886


1,793

     Gain on other real estate owned



14


170


14


157

     Other



168


307


286


505

          Total noninterest income



2,003


2,538


3,849


5,614

Noninterest expense:










     Salaries and employee benefits



5,527


5,541


11,063


11,243

     Occupancy 



438


426


891


867

     Furniture and equipment 



270


258


533


512

     Professional fees



689


515


1,361


1,023

     Marketing expense



270


262


540


524

     FDIC insurance 



110


115


113


258

     Data processing 



554


707


1,089


1,421

     Software



427


366


838


762

     Foreclosed assets



19


55


125


110

     Amortization of intangibles



31


36


62


72

     Other 



1,456


1,393


2,744


2,690

          Total noninterest expense



9,791


9,674


19,359


19,482

Income before income taxes



3,671


3,527


4,959


7,549

Income taxes



592


551


687


1,207

NET INCOME



$           3,079


$           2,976


$            4,272


$           6,342











 

 

OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)













(in $000's, except share data)







June 30,


December 31








2019


2018

ASSETS










Cash and noninterest-bearing deposits with banks





$          11,176


$         13,806

Interest-bearing deposits with banks






59,070


57,374

     Total cash and cash equivalents







70,246


71,180

Certificates of deposit in financial institutions





2,115


2,065

Securities available for sale 







107,053


102,164

Securities held to maturity (estimated fair value:  2019 - $13,983; 2018 - $16,234)


13,576


15,816

Restricted investments in bank stocks






7,506


7,506

Total loans 







776,126


777,052

  Less:  Allowance for loan losses 







(7,401)


(6,728)

     Net loans







768,725


770,324

Premises and equipment, net







17,214


14,855

Premises and equipment held for sale, net





471


----

Other real estate owned







203


430

Accrued interest receivable







2,720


2,638

Goodwill







7,371


7,371

Other intangible assets, net







318


379

Bank owned life insurance and annuity assets





29,748


29,392

Operating lease right-of-use asset, net






1,190


----

Other assets







6,519


6,373

          Total assets







$     1,034,975


$   1,030,493











LIABILITIES










Noninterest-bearing deposits







$        225,898


$       237,821

Noninterest-bearing deposits held for sale





7,598


----

Interest-bearing deposits







595,371


608,883

Interest-bearing deposits held for sale






18,629


----

     Total deposits







847,496


846,704

Other borrowed funds 







36,681


39,713

Subordinated debentures







8,500


8,500

Operating lease liability







1,190


----

Accrued liabilities







17,188


17,702

          Total liabilities







911,055


912,619











SHAREHOLDERS' EQUITY










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





  2019 - 5,427,497 shares issued; 2018 - 5,400,065 shares issued)




5,427


5,400

Additional paid-in capital







50,492


49,477

Retained earnings







83,121


80,844

Accumulated other comprehensive loss





592


(2,135)

Treasury stock, at cost (659,739 shares)





(15,712)


(15,712)

          Total shareholders' equity







123,920


117,874

               Total liabilities and shareholders' equity





$     1,034,975


$   1,030,493

 

 

Contact:  Scott Shockey, CFO (740) 446-2631

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SOURCE Ohio Valley Banc Corp.