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Section 1: 8-K (EARNINGS RELEASE 03/31/20)

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 27, 2020
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 April 27, 2020, Ohio Valley Banc Corp. will issue a press release announcing financial results for its first quarter period ended March 31, 2020.  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 27,  2020.



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 27, 2020
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 April 27,  2020.

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Section 2: EX-99.1 (EARNINGS RELEASE 03/31/20 EXHIBIT 99.1)

EXHIBIT 99.1
April 27, 2020 - 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, 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
 



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