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Ohio Valley Banc Corp. Reports 4th Quarter and Record Fiscal Year Earnings

GALLIPOLIS, Ohio, Jan. 29, 2019 /PRNewswire/ -- Ohio Valley Banc Corp. [Nasdaq: OVBC] (the "Company") reported consolidated net income for the quarter ended December 31, 2019, of $3,856,000, an increase of $2,958,000 from the $898,000 earned for the fourth quarter of 2017.   Earnings per share for the fourth quarter of 2018 were $.82 compared to $.19 for the prior year fourth quarter.  For the year ended December 31, 2018, net income totaled $11,944,000, a 59.1 percent increase from net income of $7,509,000 for the year ended December 31, 2017.  Earnings per share were $2.53 for 2018 versus $1.60 for 2017.  Return on average assets and return on average equity were 1.12 percent and 10.63 percent, respectively, for the year ended December 31, 2018, compared to .74 percent and 6.95 percent, respectively, for the same period in the prior year.

Thomas E. Wiseman, president and CEO of Ohio Valley Banc Corp., commented, "The last quarter of 2018 signaled growth for OVBC.  Not only in commercial loans as you will see in our earnings release, but physical growth as well as we began construction on two new locations: OVB on the Square and OVB Bend Area Office.  OVB on the Square is our project to reclaim one of the bank's first locations and outfit it to become our new headquarters.  The OVB Bend Area Office is a new branch location, estimated to open in the first half of 2019.  We look forward to better serving the Meigs/Mason area with convenient drive-thru lanes and a modern, comfortable office."

For the fourth quarter of 2018, net interest income increased $284,000, and for the year ended December 31, 2018, net interest income increased $1,993,000, from the same respective periods last year.  Positively impacting net interest income was the growth in earning assets.  For the year ended December 31, 2018, average earning assets increased $51 million from the same period the prior year.  The growth in average earning assets was primarily attributable to an increase in balances being maintained at the Federal Reserve and from the loan portfolio.  The $30 million increase in average balances being maintained at the Federal Reserve was related to the growth in average deposits exceeding the growth in average loans, partially due to an increase in seasonal deposit balances associated with clearing tax refunds.  This increase in average balance, when coupled with the 100 basis point increase in short-term interest rates since December 31, 2017, generated an additional $1,017,000 in year-to-date interest income.  For the year ended December 31, 2018, average loans increased $21 million from the same period last year, led by growth within the commercial loan segment.  For the year ended December 31, 2018, interest and fees on loans increased $2,183,000 from the same period last year.  For the year ended December 31, 2018, the net interest margin was 4.43 percent, compared to 4.49 percent for the same period the prior year.  The decrease in net interest margin was related to the higher balances maintained at the Federal Reserve, 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 December 31, 2018, the provision for loan losses decreased $1,299,000, and for the year ended December 31, 2018, the provision for loan losses decreased $1,525,000, from the same respective periods in 2017.  For the three months ended December 31, 2018, the negative provision for loan loss expense of $656,000 was primarily related to the improvement in certain economic risk factors contributing to lower general reserves.  During the fourth quarter, the level of classified loans, or those loans demonstrating financial weakness, declined from the prior quarter due to the improvement in financial performance by certain loan relationships.  In addition, our historical loss rates on loans, overall loan delinquency, and regional unemployment improved from the prior quarter.  In association with these lower risk factors, the general reserves required for the allowance for loan losses decreased.  For the year ended December 31, 2018, the provision for loan losses incurred of $1,039,000 was primarily related to year-to-date net loan charge-offs of $1,810,000, which was partially offset by lower general reserves in relation to the improved risk factors experienced in the fourth quarter.  The ratio of nonperforming loans to total loans was 1.25 percent at December 31, 2018 compared to 1.36 percent at December 31, 2017.  The allowance for loan losses was .87 percent of total loans at December 31, 2018, compared to .97 percent at December 31, 2017.

For the three months ended December 31, 2018, noninterest income totaled $1,397,000, a decrease of $531,000 from the same period last year.  Noninterest income totaled $8,938,000 for the year ended December 31, 2018, a decrease of $497,000 from the same period last year.  Contributing to the decrease for the quarter and part of the year-to-date was the loss on sale of other real estate owned, which increased $539,000 for the quarter and increased $370,000 for the year.  The primary contributor was the liquidation of one foreclosed property during the fourth quarter of 2018, which resulted in a loss on sale of $594,000.  Further contributing to the year-to-date decrease was income on bank owned life insurance.  In conjunction with various benefit plans for directors and key employees, the Company maintains an investment in bank owned life insurance.  During 2017, the Company received life insurance proceeds of $514,000, which contributed to the $509,000 decrease in bank owned life insurance income for 2018.  For the year ended December 31, 2018, tax refund processing fees totaled $1,579,000, a decrease of $113,000 from the same period the prior year.  The decrease was related to the lower per item fee received by the Company under the contract with the third-party tax refund product provider.  Partially offsetting the decreases above was the increase in interchange income earned from debit and credit transactions.  For the year ended December 31, 2018, interchange income increased $286,000 from the same period last year in relation to the growth in number of cards issued and higher transaction volume.

For the three months ended December 31, 2018, noninterest expense totaled $8,183,000, an increase of $47,000 from the same period last year.  For the year ended December 31, 2018, noninterest expense totaled $37,426,000, an increase of $817,000, or 2.2 percent, from the same period last year.  The Company's largest noninterest expense, salaries and employee benefits, increased $130,000 as compared to the fourth quarter of 2017 and increased $1,382,000 as compared to the year ended December 31, 2017.  The increase was primarily related to annual merit increases and higher health insurance expense.  Partially offsetting the year-to-date increase above was lower expense associated with foreclosed assets and lower marketing expense, which decreased $261,000 and $257,000, respectively, from the year ended December 31, 2017.

For the year ended December 31, 2018, income tax expense totaled $2,255,000, a decrease of $2,231,000 from the same period last year.  As part of the Tax Cuts and Jobs Act, which was enacted on December 22, 2017, the Company's statutory federal income tax rate was reduced from 34 percent to 21 percent resulting in lower tax expense.  In addition, during the fourth quarter of 2017, the Company recorded a one-time charge of $1,783,000 to revalue the Company's net deferred tax asset in accordance with the tax rate change.

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 19 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, 2017 and Part II. Item 1.A. "Risk Factors" in the Company's Quarterly Report on Form 10-Q for the quarterly periods ended June 30, 2018 and September 30, 2018, for further discussion of the risks affecting the business of the Company and the value of an investment in its shares.

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

 

OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)


















Three months ended


Twelve months ended




December 31,


December 31,




2018


2017


2018


2017

PER SHARE DATA










  Earnings per share



$             0.82


$             0.19


$               2.53


$             1.60

  Dividends per share



$             0.21


$             0.21


$               0.84


$             0.84

  Book value per share



$           24.87


$           23.26


$            24.87


$           23.26

  Dividend payout ratio (a)



25.77%


109.75%


33.20%


52.36%

  Weighted average shares outstanding

4,737,193


4,697,592


4,725,971


4,685,067











DIVIDEND REINVESTMENT (in 000's)








  Dividends reinvested under










     employee stock ownership plan (b)


$                    -


$                    -


$                173


$              188

  Dividends reinvested under










     dividend reinvestment plan (c)



$              321


$              372


$            1,379


$           1,539











PERFORMANCE RATIOS










  Return on average equity



13.39%


3.22%


10.63%


6.95%

  Return on average assets



1.49%


0.35%


1.12%


0.74%

  Net interest margin (d)



4.50%


4.47%


4.43%


4.49%

  Efficiency ratio (e)



66.40%


64.30%


70.47%


70.48%

  Average earning assets (in 000's)



$      963,707


$      951,037


$        997,385


$       946,403











(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


Twelve months ended

(in $000's)



December 31,


December 31,




2018


2017


2018


2017

Interest income:










     Interest and fees on loans



$         11,231


$         10,772


$          44,365


$         42,182

     Interest and dividends on securities


851


768


3,224


2,944

     Interest on interest-bearing deposits with banks

287


124


1,608


582

          Total interest income



12,369


11,664


49,197


45,708

Interest expense:










     Deposits



1,221


858


4,155


2,843

     Borrowings



335


277


1,316


1,132

          Total interest expense



1,556


1,135


5,471


3,975

Net interest income



10,813


10,529


43,726


41,733

Provision for loan losses 



(656)


643


1,039


2,564

Noninterest income:










     Service charges on deposit accounts

533


562


2,084


2,137

     Trust fees



66


63


263


240

     Income from bank owned life insurance and








       annuity assets



195


245


717


1,226

     Mortgage banking income



117


101


342


265

     Electronic refund check / deposit fees

13


25


1,579


1,692

     Debit / credit card interchange income

926


870


3,662


3,376

     Gain (loss) on other real estate owned

(634)


(95)


(559)


(189)

     Other



181


157


850


688

          Total noninterest income



1,397


1,928


8,938


9,435

Noninterest expense:










     Salaries and employee benefits



5,411


5,281


22,191


20,809

     Occupancy 



418


439


1,754


1,770

     Furniture and equipment 



248


262


1,023


1,049

     Professional fees



479


454


2,016


1,792

     Marketing expense



(10)


249


777


1,034

     FDIC insurance 



79


99


447


465

     Data processing 



(65)


429


2,115


2,081

     Software



373


384


1,533


1,486

     Foreclosed assets



74


74


238


499

     Amortization of intangibles



30


36


135


156

     Other 



1,146


429


5,197


5,468

          Total noninterest expense



8,183


8,136


37,426


36,609

Income before income taxes



4,683


3,678


14,199


11,995

Income taxes



827


2,780


2,255


4,486

NET INCOME



$           3,856


$              898


$          11,944


$           7,509







OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)













(in $000's, except share data)







December 31,


December 31,








2018


2017

ASSETS










Cash and noninterest-bearing deposits with banks





$          13,806


$         12,664

Interest-bearing deposits with banks






57,374


61,909

     Total cash and cash equivalents







71,180


74,573

Certificates of deposit in financial institutions





2,065


1,820

Securities available for sale 







102,164


101,125

Securities held to maturity (estimated fair value:  2018 - $16,234; 2017 - $18,079)


15,816


17,581

Restricted investments in bank stocks






7,506


7,506

Total loans 







777,052


769,319

  Less:  Allowance for loan losses 







(6,728)


(7,499)

     Net loans







770,324


761,820

Premises and equipment, net







14,855


13,281

Other real estate owned







430


1,574

Accrued interest receivable







2,638


2,503

Goodwill







7,371


7,371

Other intangible assets, net







379


514

Bank owned life insurance and annuity assets





29,392


28,675

Other assets







6,373


7,947

          Total assets







$     1,030,493


$   1,026,290











LIABILITIES










Noninterest-bearing deposits







$        237,821


$       253,655

Interest-bearing deposits







608,883


603,069

     Total deposits







846,704


856,724

Other borrowed funds 







39,713


35,949

Subordinated debentures







8,500


8,500

Accrued liabilities







17,702


15,756

          Total liabilities







912,619


916,929











SHAREHOLDERS' EQUITY










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





  2018 - 5,400,065 shares issued; 2017 - 5,362,005 shares issued)




5,400


5,362

Additional paid-in capital







49,477


47,895

Retained earnings







80,844


72,694

Accumulated other comprehensive loss





(2,135)


(878)

Treasury stock, at cost (659,739 shares)





(15,712)


(15,712)

          Total shareholders' equity







117,874


109,361

               Total liabilities and shareholders' equity





$     1,030,493


$   1,026,290


 

 

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