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Section 1: 8-K (EARNINGS RELEASE 06/30/19)

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

July 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.  ☐
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol
Name of each exchange on which registered
Common shares, without par value
OVBC
The NASDAQ Stock Market LLC (The NASDAQ Global Market)




Section 2 – Financial Information

Item 2.02.  Results of Operations and Financial Condition

On July 25, 2019, Ohio Valley Banc Corp. will issue a press release announcing financial results for its second quarter period ended June 30, 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 July 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:
July 25, 2019
By:
/s/Thomas E. Wiseman
     
Thomas E. Wiseman
Chief Executive Officer















EXHIBIT INDEX



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

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Section 2: EX-99.1 (EARNINGS RELEASE 06/30/19 EXHIBIT 99.1)

EXHIBIT 99.1

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

Ohio Valley Banc Corp. Reports 2nd Quarter Earnings

GALLIPOLIS, Ohio - 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
 



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