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Section 1: 8-K (EARNINGS RELEASE 03/31/19)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

April 25, 2019
Date of Report (Date of earliest event reported)

OHIO VALLEY BANC CORP.    
(Exact name of registrant as specified in its charter)

Ohio
(State or other jurisdiction of incorporation)

0-20914
31-1359191
(Commission File Number)
(IRS Employer Identification No.)

420 Third Avenue, Gallipolis, Ohio
45631
(Address of principal executive offices)
(Zip Code)

Registrant's telephone number, including area code:  (740) 446-2631

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).   Emerging growth company   ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐



Section 2 – Financial Information

Item 2.02.  Results of Operations and Financial Condition

On April 25, 2019, Ohio Valley Banc Corp. will issue a press release announcing financial results for its first quarter period ended March 31, 2019.  A copy of the press release is furnished with this Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

Section 9 – Financial Statements and Exhibits

Item 9.01.  Financial Statements and Exhibits

(a)  Not applicable

(b)  Not applicable

(c)  Not applicable

(d)  Exhibits – The following exhibit is being filed with this Current Report on Form 8-K:

Exhibit Number
 
Description
     
99.1
 
Press release to be issued by Ohio Valley Banc Corp. on April 25,  2019.





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




     
OHIO VALLEY BANC CORP.
 
Date:
April 25, 2019
By:
/s/Thomas E. Wiseman
     
Thomas E. Wiseman
President and Chief Executive Officer
































EXHIBIT INDEX



Exhibit Number
 
Description
     
99.1
 
Press release to be issued by Ohio Valley Banc Corp. on April 25,  2019.

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Section 2: EX-99.1 (EARNINGS RELEASE 03/31/19 EXHIBIT 99.1)

EXHIBIT 99.1

April 25, 2019 - For immediate release
Contact:  Scott Shockey, CFO (740) 446-2631

Ohio Valley Banc Corp. Reports 1st Quarter Earnings

GALLIPOLIS, Ohio - Ohio Valley Banc Corp. [Nasdaq: OVBC] (the “Company”) reported consolidated net income for the quarter ended March 31, 2019, of $1,193,000, a decrease of $2,173,000 from the same period the prior year.  Earnings per share for the first quarter of 2019 were $.25, compared to $.71 for the first quarter of 2018.  Return on average assets and return on average equity were .47 percent and 4.08 percent, respectively, for the first quarter of 2019, versus 1.20 percent and 12.41 percent, respectively, for the same period the prior year.

President and CEO Tom Wiseman commented, “While we strive for positive earnings growth each quarter, we were not able to achieve that in the first quarter of 2019 due to several factors.  This is not acceptable to us.  Our teams are working strategically to improve loan growth and reduce overhead expense.  Proof of OVBC’s subsidiaries’ work with the latter is already evident with a substantial decrease in the Company’s largest non-interest expense category over the same period last year.  We expect overhead expense to continue to be positively impacted with the closing of our Milton Banking Division location in Jackson, Ohio, in early April, and with the pending sale of the New Holland and Mount Sterling branches in the second half of 2019.  On the income side, specifically regarding loan growth, innovative programs like our Professionals Mortgage, RentBuster Loan program, and Additional College Expense Line, show much promise as they uniquely satisfy the needs of the communities we serve.”

For the first quarter of 2019, net interest income decreased $123,000, or 1.1 percent, from the same period last year.  Contributing to the lower net interest income was the decrease in average earning assets.  For the three months ended March 31, 2019, average earning assets decreased $122 million from the same period the prior year, primarily attributable 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 quarter of 2018, the processing of tax refunds provided nearly $151 million in average deposits that was invested in the Federal Reserve.  This activity generated approximately $569,000 in interest revenue that was not replicated in 2019.  Absent the loss of interest revenue associated with processing tax refunds, net interest income did benefit from the growth in interest income on loans and securities exceeding the growth in interest expense on deposits and borrowed funds.  For the three months ended March 31, 2019, interest and fees on loans increased $663,000 and interest on securities increased $52,000 from the same period last year.  These increases were 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 $472,000, primarily due to certificates of deposit repricing at higher market rates.  For the quarter ended March 31, 2019, the net interest margin was 4.89 percent, compared to 4.38 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 quarter 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 March 31, 2019, the provision for loan loss expense totaled $2,377,000, an increase of $1,621,000.  For the three months ended March, 31, 2019, the provision for loan loss expense incurred was related to net loan charge-offs of $1,092,000 and to an increase in general reserves related to certain economic risk factors.  During the first quarter, the level of classified loans, or those loans demonstrating financial weakness, increased from the prior quarter due to the deterioration in financial performance by certain loan relationships.  In addition, our historical loan loss factors and our regional unemployment levels increased from the prior quarter.  In association with these higher risk factors, the general reserves required for the allowance for loan losses increased.  The allowance for loan losses was 1.03 percent of total loans at March 31, 2019, compared to .87 percent at December 31, 2018 and 1.04 percent at March 31, 2018.

For the first quarter of 2019, noninterest income totaled $1,846,000, a decrease of $1,230,000 from the first quarter of 2018, primarily due to a $1,228,000 reduction in tax processing fees.  In relation to the third-party tax refund provider terminating the contract as previously discussed, the Company also experienced a decline in tax processing fees, which is a per item fee for each item processed.  As a result of not performing such service in 2019, there was no corresponding revenue earned.  Partially offsetting the decrease in tax refund processing fees was the increase in fee income related to interchange income earned from debit and credit transactions, which increased $53,000 from the same period last year.

Noninterest expense totaled $9,568,000 for the first quarter of 2019, a decrease of $240,000, or 2.4 percent, from the same period last year.  The Company’s largest noninterest expense, salaries and employee benefits, decreased $166,000, or 2.9 percent, from the first quarter 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 three months ended March 31, 3019, data processing expense decreased $179,000 from the same period last year in relation to lower consulting fees.  For the same period, FDIC insurance premiums decreased $140,000 in relation to anticipated insurance credits based on the FDIC’s reserve fund achieving its target level.  Partially offsetting the expense reductions above was an increase in professional fees, which increased $164,000 from the prior year first quarter primarily due to litigation related legal fees.  The remaining noninterest expenses increased $81,000, led by foreclosure 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 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
 
   
March 31,
 
   
2019
   
2018
 
PER SHARE DATA
           
  Earnings per share
 
$
0.25
   
$
0.71
 
  Dividends per share
 
$
0.21
   
$
0.21
 
  Book value per share
 
$
25.29
   
$
23.56
 
  Dividend payout ratio (a)
   
83.46
%
   
29.33
%
  Weighted average shares outstanding
   
4,748,474
     
4,711,608
 
                 
DIVIDEND REINVESTMENT (in 000's)
               
  Dividends reinvested under
               
     employee stock ownership plan (b)
 
$
179
   
$
173
 
  Dividends reinvested under
               
     dividend reinvestment plan (c)
 
$
351
   
$
373
 
                 
PERFORMANCE RATIOS
               
  Return on average equity
   
4.08
%
   
12.41
%
  Return on average assets
   
0.47
%
   
1.20
%
  Net interest margin (d)
   
4.89
%
   
4.38
%
  Efficiency ratio (e)
   
71.72
%
   
66.76
%
  Average earning assets (in 000's)
 
$
953,335
   
$
1,075,070
 
                 
(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
 
(in $000's)
 
March 31,
 
     
2019
     
2018
 
Interest income:
               
     Interest and fees on loans
 
$
11,912
   
$
11,249
 
     Interest and dividends on securities
   
827
     
775
 
     Interest on interest-bearing deposits with banks
   
319
     
685
 
          Total interest income
   
13,058
     
12,709
 
Interest expense:
               
     Deposits
   
1,342
     
892
 
     Borrowings
   
329
     
307
 
          Total interest expense
   
1,671
     
1,199
 
Net interest income
   
11,387
     
11,510
 
Provision for loan losses
   
2,377
     
756
 
Noninterest income:
               
     Service charges on deposit accounts
   
503
     
502
 
     Trust fees
   
64
     
60
 
     Income from bank owned life insurance and
               
       annuity assets
   
178
     
176
 
     Mortgage banking income
   
69
     
64
 
     Electronic refund check / deposit fees
   
----
     
1,228
 
     Debit / credit card interchange income
   
914
     
861
 
     Loss on other real estate owned
   
----
     
(13
)
     Other
   
118
     
198
 
          Total noninterest income
   
1,846
     
3,076
 
Noninterest expense:
               
     Salaries and employee benefits
   
5,536
     
5,702
 
     Occupancy
   
453
     
441
 
     Furniture and equipment
   
263
     
254
 
     Professional fees
   
672
     
508
 
     Marketing expense
   
270
     
262
 
     FDIC insurance
   
3
     
143
 
     Data processing
   
535
     
714
 
     Software
   
411
     
396
 
     Foreclosed assets
   
106
     
55
 
     Amortization of intangibles
   
31
     
36
 
     Other
   
1,288
     
1,297
 
          Total noninterest expense
   
9,568
     
9,808
 
Income before income taxes
   
1,288
     
4,022
 
Income taxes
   
95
     
656
 
NET INCOME
 
$
1,193
   
$
3,366
 





OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
         
                 
(in $000's, except share data)
 
March 31,
   
December 31
 
     
2019
     
2018
 
ASSETS
               
Cash and noninterest-bearing deposits with banks
 
$
13,128
   
$
13,806
 
Interest-bearing deposits with banks
   
59,769
     
57,374
 
     Total cash and cash equivalents
   
72,897
     
71,180
 
Certificates of deposit in financial institutions
   
2,065
     
2,065
 
Securities available for sale
   
110,281
     
102,164
 
Securities held to maturity (estimated fair value:  2019 - $16,124; 2018 - $16,234)
   
15,590
     
15,816
 
Restricted investments in bank stocks
   
7,506
     
7,506
 
Total loans
   
780,644
     
777,052
 
  Less:  Allowance for loan losses
   
(8,013
)
   
(6,728
)
     Net loans
   
772,631
     
770,324
 
Premises and equipment, net
   
15,815
     
14,855
 
Other real estate owned
   
470
     
430
 
Accrued interest receivable
   
2,808
     
2,638
 
Goodwill
   
7,371
     
7,371
 
Other intangible assets, net
   
349
     
379
 
Bank owned life insurance and annuity assets
   
29,571
     
29,392
 
Operating lease right-of-use asset, net
   
1,415
     
----
 
Other assets
   
6,305
     
6,373
 
          Total assets
 
$
1,045,074
   
$
1,030,493
 
                 
LIABILITIES
               
Noninterest-bearing deposits
 
$
242,461
   
$
237,821
 
Interest-bearing deposits
   
619,243
     
608,883
 
     Total deposits
   
861,704
     
846,704
 
Other borrowed funds
   
37,577
     
39,713
 
Subordinated debentures
   
8,500
     
8,500
 
Operating lease liability
   
1,415
     
----
 
Accrued liabilities
   
15,526
     
17,702
 
          Total liabilities
   
924,722
     
912,619
 
                 
SHAREHOLDERS' EQUITY
               
Common stock ($1.00 stated value per share, 10,000,000 shares authorized;
         
  2019 - 5,418,398 shares issued; 2018 - 5,400,065 shares issued)
   
5,418
     
5,400
 
Additional paid-in capital
   
50,162
     
49,477
 
Retained earnings
   
81,042
     
80,844
 
Accumulated other comprehensive loss
   
(558
)
   
(2,135
)
Treasury stock, at cost (659,739 shares)
   
(15,712
)
   
(15,712
)
          Total shareholders' equity
   
120,352
     
117,874
 
               Total liabilities and shareholders' equity
 
$
1,045,074
   
$
1,030,493
 
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