Ohio Valley Banc Corp. Reports Higher 1st Quarter Earnings

GALLIPOLIS, Ohio, April 25, 2014 /PRNewswire/ -- Ohio Valley Banc Corp. [Nasdaq: OVBC] (the "Company") reported consolidated net income for the quarter ended March 31, 2014, of $3,564,000, representing an increase of $341,000, or 10.6 percent, from the same period the prior year.  Earnings per share for the first quarter of 2014 were $.87, up 10.1 percent from the $.79 earned the first quarter of 2013.  Return on average assets and return on average equity were 1.70 percent and 17.84 percent, respectively, for the first quarter of 2014, versus 1.56 percent and 17.13 percent, respectively, for the same period the prior year.

"We are extremely pleased with our first quarter results," stated Thomas E. Wiseman, President and CEO.  "I would be remiss if I didn't acknowledge the outstanding contribution made by Loan Central to our consolidated results.  Their operations contributed 20 percent to first quarter earnings.  The bank experienced an increase in commercial loan demand during the fourth quarter of 2013.  That momentum continued to gain traction the first quarter of 2014.  The effort of our entire staff, pursuing our 'Community First' mission, remains a key to our ongoing success."

For the first quarter of 2014, net interest income increased $361,000, or 4.3 percent, from the same period last year.  Contributing to the higher net interest income was the increase in both average earning assets and net interest margin.  For the first quarter of 2014, average earning assets increased over $17 million, or 2.2 percent, from the same period last year, which occurred primarily in commercial loans.  With the challenge to grow loan balances in prior years, the growth experienced in the first quarter was an encouraging sign.  Additionally, the Company's strong net interest margin improved even more from the prior year.  For the three months ended March 31, 2014, the net interest margin was 4.51 percent compared to 4.40 percent for the same period the prior year.  Contributing to the higher net interest margin was the redemption of $5 million in trust preferred securities during the first quarter of 2013, which had an interest cost of 10.60%.  Furthermore, the yield on mortgage-backed securities has improved with the slowdown in prepayments, which reduced the amortization expense of premiums paid on the bonds.

For the three months ended March 31, 2014, management provided $494,000 to the allowance for loan losses, an increase of $463,000 from the same period the prior year.  The increase in provision expense was associated with an increase in general allocations for specific loan portfolio risks determined by management.  For the three months ended March 31, 2014, net charge-offs totaled only $186,000, a decrease of $78,000 from the same three-month period in 2013.  The ratio of nonperforming loans to total loans at March 31, 2014 was .64 percent compared to .81 percent at March 31, 2013.  Based on the evaluation of the adequacy of the allowance for loan losses, management believes that the allowance for loan losses at March 31, 2014 was adequate and reflects probable incurred losses in the portfolio.  The allowance for loan losses was 1.13 percent of total loans at March 31, 2014, compared to 1.21 percent at March 31, 2013.

For the first quarter of 2014, noninterest income totaled $4,118,000, an increase of $178,000, or 4.5 percent, from the first quarter of 2013.  For the three months ended March 31, 2014, tax processing fees totaled $2,648,000, an increase of $543,000 from the same period the prior year due to an increase in the number of tax refund items processed.  Management was pleased with the significant contribution from this revenue source, which accounted for over 64 percent of our first quarter noninterest income.   During the first quarter, the Company entered into an agreement to sell its pro rata share of ProAlliance, a specialty property and casualty insurance company.  As part of the agreement, the Company received a $135,000 non-refundable fee for giving the buyers the option to purchase the outstanding shares at a future date.  If the option to purchase is exercised, the Company anticipates receiving $675,000 for its ownership interest in ProAlliance.  Further contributing to revenue growth was the increase in interchange fees earned on debit and credit card transactions.  By continuing to offer incentives to customers to utilize the bank's debit and credit card for purchases, interchange income increased $52,000, or 11.5 percent, from the 2013 first quarter.  Partially offsetting the increases above was the decrease in earnings on bank owned life insurance.  In the first quarter of 2013, the Company received life insurance proceeds totaling $452,000.

Noninterest expense totaled $7,295,000 for the first quarter of 2014, a decrease of $653,000, or 8.2 percent, from the same period last year.  The Company's largest noninterest expense, salaries and employee benefits, decreased $62,000 from the first quarter of 2013.  The decrease was primarily related to lower retirement benefit costs, which more than offset the limited increase in salary expense of $12,000.   For the first quarter of 2014, foreclosure costs decreased $234,000 from the prior year first quarter.  The decrease was related to expenses incurred last year in association with the liquidation of real estate in process of foreclosure.  As previously mentioned, the Company redeemed trust preferred securities prior to maturity during the first quarter of 2013.   The trust preferred securities were redeemed at a premium.  The redemption expense of $212,000 was not repeated in the first quarter of 2014.  Additionally, the redemption had a favorable impact on future earnings due to the elimination of the annual interest expense on the trust preferred securities totaling $530,000.  As a result of the new Ohio state tax methodology for financial institutions, the Company's tax expense for the first quarter of 2014 decreased $82,000 from the same period last year.  This lower tax expense is anticipated to continue for the rest of 2014.  Overall, management was pleased with the lower expense levels demonstrated in the first quarter.

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 15 offices in Ohio and West Virginia, and Loan Central, with seven consumer finance offices in Ohio.  Learn more about Ohio Valley Banc Corp. at www.ovbc.com.

Forward-Looking Information

Certain statements contained in this earnings release which 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, 2013, 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,








2014


2013

PER SHARE DATA










  Earnings per share







$           0.87


$          0.79

  Dividends per share







$           0.21


$          0.10

  Book value per share







$         20.35


$        19.34

  Dividend payout ratio (a)







24.15%


12.60%

  Weighted average shares outstanding





4,098,753


4,062,204











PERFORMANCE RATIOS










  Return on average equity







17.84%


17.13%

  Return on average assets







1.70%


1.56%

  Net interest margin (b)







4.51%


4.40%

  Efficiency ratio (c)







55.91%


63.70%

  Average earning assets (in 000's)




$     803,467


$    786,219











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

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

(c) 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,








2014


2013

Interest income:










     Interest and fees on loans







$         8,814


$        8,917

     Interest and dividends on securities






694


563

          Total interest income







9,508


9,480

Interest expense:










     Deposits







573


839

     Borrowings







153


220

          Total interest expense







726


1,059

Net interest income







8,782


8,421

Provision for loan losses 







494


31

Noninterest income:










     Service charges on deposit accounts


391


424

     Trust fees







55


51

     Income from bank owned life insurance and annuity assets

159


631

     Mortgage banking income







58


137

     Electronic refund check / deposit fees




2,648


2,105

     Debit / credit card interchange income




504


452

     Loss on other real estate owned




(12)


(65)

     Gain on sale of ProAlliance Corporation




135


----

     Other







180


205

          Total noninterest income





4,118


3,940

Noninterest expense:








     Salaries and employee benefits





4,377


4,439

     Occupancy 







398


394

     Furniture and equipment 







180


226

     FDIC insurance 







127


144

     Data processing 







321


281

     Foreclosed assets







61


295

     Other 







1,831


2,169

          Total noninterest expense



7,295


7,948

Income before income taxes







5,111


4,382

Income taxes







1,547


1,159

NET INCOME







$         3,564


$        3,223







OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)













(in $000's, except share data)







March 31,


December 31,








2014


2013

ASSETS










Cash and noninterest-bearing deposits with banks


$       11,048


$        9,841

Interest-bearing deposits with banks




84,556


18,503

     Total cash and cash equivalents



95,604


28,344

Securities available for sale 


88,858


84,068

Securities held to maturity







  (estimated fair value:  2014 - $22,892; 2013 - $22,984)

22,620


22,826

Federal Home Loan Bank and Federal Reserve Bank stock

6,576


7,776

Total loans 







574,327


566,319

  Less:  Allowance for loan losses 







(6,462)


(6,155)

     Net loans







567,865


560,164

Premises and equipment, net







9,478


9,005

Other real estate owned







1,422


1,354

Accrued interest receivable







1,933


1,901

Goodwill







1,267


1,267

Bank owned life insurance and annuity assets

25,099


24,940

Other assets







4,813


5,723

          Total assets







$     825,535


$    747,368











LIABILITIES










Noninterest-bearing deposits







$     219,202


$    149,823

Interest-bearing deposits







482,758


479,054

     Total deposits







701,960


628,877

Other borrowed funds 







20,161


18,748

Subordinated debentures







8,500


8,500

Accrued liabilities







11,497


10,824

          Total liabilities







742,118


666,949











SHAREHOLDERS' EQUITY










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




  authorized; 4,758,492 shares issued)


4,758


4,758

Additional paid-in capital







34,883


34,883

Retained earnings







58,944


56,241

Accumulated other comprehensive income



544


249

Treasury stock, at cost (659,739 shares)



(15,712)


(15,712)

          Total shareholders' equity





83,417


80,419

               Total liabilities and shareholders' equity


$     825,535


$    747,368











 

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

SOURCE Ohio Valley Banc Corp.



RELATED LINKS
http://www.ovbc.com

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