GALLIPOLIS, Ohio, Oct. 25, 2018 /PRNewswire/ -- Ohio Valley Banc Corp. [Nasdaq: OVBC] (the "Company") reported consolidated net income for the quarter ended September 30, 2018, of $1,746,000, an increase of 5.6 percent from the $1,653,000 earned for the third quarter of 2017.  Earnings per share for the third quarter of 2018 were $.37 compared to $.35 for the prior year third quarter, a 5.7 percent increase.  For the nine months ended September 30, 2018, net income totaled $8,088,000, a 22.3 percent increase from net income of $6,611,000 for the nine months ended September 30, 2017.  Earnings per share were $1.71 for the first nine months of 2018 versus $1.41 for the first nine months of 2017.  Return on average assets and return on average equity were 1.01 percent and 9.67 percent, respectively, for the first nine months of 2018, compared to .87 percent and 8.24 percent, respectively, for the same period in the prior year.

Tom Wiseman, president and CEO of Ohio Valley Banc Corp., commented, "Change, is the one word I would use to describe the first three quarters of 2018.  These changes yield both opportunities and challenges for this company.  We're experiencing a rising rate environment for the first time in over 10 years; a new accounting standard to become effective in 2020 has kept our credit team busy establishing and testing new methodologies for calculating our loan loss reserves; more and more customers are banking via device rather than visiting the bank; and two construction projects are underway.  Your company is well positioned to not only meet these changes, but embrace them, as proven by the continued growth we have experienced over these past months."

For the third quarter of 2018, net interest income increased $495,000, and for the nine months ended September 30, 2018, net interest income increased $1,709,000, from the same respective periods last year.  Positively impacting net interest income was the growth in earning assets.  For the nine months ended September 30, 2018, average earning assets increased $64 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 $37 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 September 30, 2017, generated an additional $858,000 in year-to-date interest income.  For the nine months ended September 30, 2018, average loans increased $27 million from the same period last year, led by growth within the commercial loan segment.  For the nine months ended September 30, 2018, interest and fees on loans increased $1,724,000 from the same period last year.  For the nine months ended September 30, 2018, the net interest margin was 4.41 percent, compared to 4.50 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 September 30, 2018, the provision for loan losses decreased $639,000, and for the nine months ended September 30, 2018, the provision for loan losses decreased $226,000, from the same respective periods in 2017.  For the three months ended September 30, 2018, the provision for loan loss expense of $962,000 was primarily related to the establishment of a specific allocation of $409,000 on a collateral dependent impaired loan and quarterly net loan charge-offs of $287,000.  For the nine months ended September 30, 2018, the provision for loan losses incurred of $1,695,000 was primarily related to year-to-date net loan charge-offs of $879,000 and the $409,000 specific allocation previously mentioned.  The ratio of nonperforming loans to total loans was 1.36 percent at September 30, 2018 compared to 1.36 percent at December 31, 2017 and 1.19 percent at September 30, 2017.  The allowance for loan losses was 1.06 percent of total loans at September 30, 2018, compared to .97 percent at December 31, 2017 and .94 percent at September 30, 2017.

For the three months ended September 30, 2018, noninterest income totaled $1,927,000, a decrease of $355,000 from the same period last year.  Noninterest income totaled $7,541,000 for the nine months ended September 30, 2018, an increase of $34,000 from the same period last year.  Contributing to the decrease for the quarter and limiting the year-to-date increase 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 the third quarter of 2017, the Company received life insurance proceeds of $399,000, which contributed to the income decrease on bank owned life insurance for 2018.  For the first nine months of 2018, interchange income earned from debit and credit transactions increased $230,000 and gain on sale of other real estate owned increased $169,000, respectively, from the same period last year.  Partially offsetting the increases above was a decrease in tax refund processing fees.  For the first nine months of 2018, tax refund processing fees totaled $1,566,000, a decrease of $101,000 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.

For the three months ended September 30, 2018, noninterest expense totaled $9,761,000, an increase of $539,000 from the same period last year.  For the nine months ended September 30, 2018, noninterest expense totaled $29,243,000, an increase of $770,000 from the same period last year.  The Company's largest noninterest expense, salaries and employee benefits, increased $518,000 as compared to the third quarter of 2017 and increased $1,252,000 as compared to the first nine months of 2017.  The increase was primarily related to annual merit increases and higher health insurance expense.  Also adding to higher noninterest expense was data processing and professional fees, which increased $195,000 and $80,000, respectively, from the three months ended September 30, 2017 and increased $528,000 and $199,000, respectively, from the nine months ended September 30, 2017.  Partially offsetting the increases above was the decrease in fraud expense.  During the second quarter of 2017, the Company incurred $830,000 in fraud expense in relation to fraudulent wire transfers.  The fraud expense was recouped via existing insurance policies in the fourth quarter of 2017; however, as of September 30, 2017, noninterest expense reflected the increase in expense.  Also helping to limit noninterest expense growth was the decrease in foreclosure expense, which for the three months ended September 30, 2018 decreased $104,000 and for the nine months ended September 30, 2018 decreased $261,000 from the same periods last year.

For the nine months ended September 30, 2018, income tax expense totaled $1,428,000, a decrease of $278,000 from the same period last year.  The primary contributor to the lower tax expense was the lower federal income tax rate applicable in 2018.  As part of the Tax Cuts and Jobs Act that was enacted on December 22, 2017, the Company's statutory federal income tax rate was reduced from 34 percent to 21 percent.

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 period ended June 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


Nine months ended




September 30,


September 30,




2018


2017


2018


2017

PER SHARE DATA










  Earnings per share



$             0.37


$             0.35


$               1.71


$             1.41

  Dividends per share



$             0.21


$             0.21


$               0.63


$             0.63

  Book value per share



$           24.05


$           23.43


$            24.05


$           23.43

  Dividend payout ratio (a)



56.87%


59.49%


36.74%


44.57%

  Weighted average shares outstanding

4,730,624


4,688,284


4,722,189


4,680,846











DIVIDEND REINVESTMENT (in 000's)








  Dividends reinvested under










     employee stock ownership plan (b)


$                    -


$                    -


$                173


$              188

  Dividends reinvested under










     dividend reinvestment plan (c)



$              305


$              370


$            1,058


$           1,167











PERFORMANCE RATIOS










  Return on average equity



6.10%


6.01%


9.67%


8.24%

  Return on average assets



0.67%


0.66%


1.01%


0.87%

  Net interest margin (d)



4.49%


4.52%


4.41%


4.50%

  Efficiency ratio (e)



76.23%


72.33%


71.69%


72.46%

  Average earning assets (in 000's)



$      961,607


$      918,443


$     1,008,735


$       944,842











(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


Nine months ended

(in $000's)



September 30,


September 30,




2018


2017


2018


2017

Interest income:










     Interest and fees on loans



$         11,118


$         10,489


$          33,134


$         31,410

     Interest and dividends on securities


798


746


2,373


2,175

     Interest on interest-bearing deposits with banks

265


82


1,321


459

          Total interest income



12,181


11,317


36,828


34,044

Interest expense:










     Deposits



1,081


757


2,934


1,985

     Borrowings



337


292


981


855

          Total interest expense



1,418


1,049


3,915


2,840

Net interest income



10,763


10,268


32,913


31,204

Provision for loan losses 



962


1,601


1,695


1,921

Noninterest income:










     Service charges on deposit accounts

534


541


1,551


1,575

     Trust fees



69


64


197


177

     Income from bank owned life insurance and








       annuity assets



173


577


522


981

     Mortgage banking income



93


59


225


164

     Electronic refund check / deposit fees

33


0


1,566


1,667

     Debit / credit card interchange income

943


863


2,736


2,506

     Gain (loss) on other real estate owned

(82)


(23)


75


(94)

     Other



164


201


669


531

          Total noninterest income



1,927


2,282


7,541


7,507

Noninterest expense:










     Salaries and employee benefits



5,537


5,019


16,780


15,528

     Occupancy 



469


449


1,336


1,331

     Furniture and equipment 



263


269


775


787

     Professional fees



514


434


1,537


1,338

     Marketing expense



263


273


787


785

     FDIC insurance 



110


99


368


366

     Data processing 



759


564


2,180


1,652

     Software



398


365


1,160


1,102

     Foreclosed assets



54


158


164


425

     Amortization of intangibles



33


38


105


120

     Other 



1,361


1,554


4,051


5,039

          Total noninterest expense



9,761


9,222


29,243


28,473

Income before income taxes



1,967


1,727


9,516


8,317

Income taxes



221


74


1,428


1,706

NET INCOME



$           1,746


$           1,653


$            8,088


$           6,611





OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)













(in $000's, except share data)







September 30,


December 31,








2018


2017

ASSETS










Cash and noninterest-bearing deposits with banks





$          11,349


$         12,664

Interest-bearing deposits with banks






53,770


61,909

     Total cash and cash equivalents







65,119


74,573

Certificates of deposit in financial institutions





2,310


1,820

Securities available for sale 







104,877


101,125

Securities held to maturity (estimated fair value:  2018 - $17,538; 2017 - $18,079)


17,219


17,581

Restricted investments in bank stocks






7,506


7,506

Total loans 







782,377


769,319

  Less:  Allowance for loan losses 







(8,315)


(7,499)

     Net loans







774,062


761,820

Premises and equipment, net







13,856


13,281

Other real estate owned







1,332


1,574

Accrued interest receivable







2,862


2,503

Goodwill







7,371


7,371

Other intangible assets, net







410


514

Bank owned life insurance and annuity assets





29,198


28,675

Other assets







7,394


7,947

          Total assets







$     1,033,516


$   1,026,290











LIABILITIES










Noninterest-bearing deposits







$        232,575


$       253,655

Interest-bearing deposits







620,320


603,069

     Total deposits







852,895


856,724

Other borrowed funds 







40,514


35,949

Subordinated debentures







8,500


8,500

Accrued liabilities







17,768


15,756

          Total liabilities







919,677


916,929











SHAREHOLDERS' EQUITY










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





  2018 - 5,392,859 shares issued; 2017 - 5,362,005 shares issued)




5,393


5,362

Additional paid-in capital







49,208


47,895

Retained earnings







77,982


72,694

Accumulated other comprehensive loss





(3,032)


(878)

Treasury stock, at cost (659,739 shares)





(15,712)


(15,712)

          Total shareholders' equity







113,839


109,361

               Total liabilities and shareholders' equity





$     1,033,516


$   1,026,290

 

Cision View original content:http://www.prnewswire.com/news-releases/ohio-valley-banc-corp-reports-3rd-quarter-earnings-300738358.html

SOURCE Ohio Valley Banc Corp.


Source: Ohio Valley Banc Corp.