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| 8-K - EARNINGS RELEASE AT 3/31/12 - OHIO VALLEY BANC CORP | sec8k_earngsrelse033112cover.htm |
Exhibit 99.1
April 17, 2012 - For immediate release
Contact: Scott Shockey, CFO (740) 446-2631
Ohio Valley Banc Corp. Reports Higher 1st Quarter Earnings
GALLIPOLIS, Ohio - Ohio Valley Banc Corp. [Nasdaq: OVBC] (the “Company”) reported consolidated net income for the quarter ended March 31, 2012, of $2,622,000, representing an increase of $589,000, or 29.0 percent, from the same period the prior year. Earnings per share for the first quarter of 2012 were $.65, up 27.5 percent from the $.51 earned the first quarter of 2011. Return on average assets and return on average equity was 1.20 percent and 14.60 percent, respectively, for the first quarter of 2012, versus .88 percent and 12.02 percent, respectively, for the same period the prior year.
“In summary, I am extremely pleased with the 29% increase in first quarter net income, as compared to the same period one year ago,” stated Jeffrey E. Smith, Chairman and CEO. “Our number one initiative in 2011 was the improvement in asset quality; the aggressive approach we took then is evident now with significantly lower provision expense in the first quarter of 2012. Our special assets section, working closely with our Board level Asset Quality Oversight Committee, deserves the credit for these positive results as this team worked tirelessly to determine the appropriate balance between foreclosure and forbearance. While we accepted the recommendation of the FDIC to cease funding refund anticipation loans after the 2011 tax season, which resulted in the elimination of $486,000 in loan fees, we continued facilitating other non-loan tax refund products, which contributed $2,038,000 in non-interest income for the first quarter of 2012. In addition, our deposit staff provided our customers with beneficial options to reduce or eliminate service charges and, at the same time, increase interchange income by nearly 32% from the first quarter of 2011. While we continue to look for the sprouts of economic recovery, we still find pride in the fact that Ohio Valley Bank, founded in 1872, has helped our customers during three centuries.”
For the first quarter of 2012, net interest income decreased $291,000, or 3.2 percent, from the same period last year. Contributing to the lower net interest income was the decline in average earning assets, which decreased nearly $65 million, primarily in loans. However, the Company’s net interest margin remains strong and for the three months ended March 31, 2012, the net interest margin increased to 4.41 percent, from 4.25 percent for the same period the prior year. The improvement in net interest margin was attributable to a decrease in our funding costs aided by a continued composition shift to lower costing transaction accounts from certificates of deposit and increased tax refund deposits held in noninterest-bearing accounts. Also impacting net interest income in 2012 was the decrease in loan fees associated with refund anticipation loans. After the 2011 tax season, the Company ceased funding refund anticipation loans as recommended by the FDIC. As a result, there were no refund anticipation loan fees earned during the first quarter of 2012, which compares to $486,000 during the first quarter of 2011.
For the three months ended March 31, 2012, management provided $1,316,000 to the allowance for loan losses, a decrease of $1,628,000 from the same period the prior year. The lower provision expense was related to the significant reduction in net charge-offs. For the three months ended March 31, 2012, net charge-offs were down $2,466,000 from the same three-month period in 2011. The first quarter of 2011 was impacted by the charge-off on one impaired loan relationship, which totaled $3,839,000. The ratio of nonperforming loans to total loans at March 31, 2012 was .83 percent compared to .77 percent at March 31, 2011, and .52 percent at December 31, 2011. Based on the evaluation of the adequacy of the allowance for loan losses, management believes that the allowance for loan losses at March 31, 2012 was adequate and reflects probable incurred losses in the portfolio. The allowance for loan losses was 1.20 percent of total loans at March 31, 2012, compared to 1.23 percent at December 31, 2011 and 1.28 percent at March 31, 2011.
For the first quarter of 2012, noninterest income totaled $3,479,000, a decrease of $180,000, or 4.9 percent, from the first quarter of 2011. Contributing to the decline was the decrease in tax processing fees received from a tax software provider. For the three months ended March 31, 2012, tax processing fees totaled $2,038,000, a decrease of $230,000 from the same period the prior year. For the 2012 tax season, the number of tax refund items processed has increased; however, the per item fee was reduced from the prior year leading to lower tax processing fees. Although tax processing fees are down, management was pleased with the significant contribution from this revenue source, which accounted for over 58 percent of our first quarter noninterest income. Contributing to revenue growth was the increase in interchange fees earned on debit and credit card transactions. By offering incentives to customers to utilize the bank’s debit and credit card for purchases, interchange income increased $95,000, or 31.7 percent, from the 2011 first quarter.
Noninterest expense totaled $7,332,000 for the first quarter of 2012, an increase of $234,000, or 3.3 percent, from the same period last year. The Company’s largest noninterest expense, salaries and employee benefits, increased $245,000 from the first quarter of 2011. The increase was primarily related to higher healthcare and retirement benefit costs. The total of all remaining noninterest expense categories decreased $11,000 from the prior year first quarter. The limited growth in noninterest expense reflects management’s continued efforts to control expenditures.
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, and taxes; (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, 2011, for further discussion of the risks affecting the business of the Company and the value of an investment in its shares.
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OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)
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Three months ended
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March 31,
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2012
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2011
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PER SHARE DATA
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Earnings per share
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$ | 0.65 | $ | 0.51 | ||||
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Dividends per share
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$ | 0.21 | $ | 0.21 | ||||
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Book value per share
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$ | 18.31 | $ | 17.36 | ||||
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Dividend payout ratio (a)
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32.25 | % | 41.33 | % | ||||
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Weighted average shares outstanding
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4,027,950 | 4,000,056 | ||||||
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PERFORMANCE RATIOS
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Return on average equity
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14.60 | % | 12.02 | % | ||||
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Return on average assets
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1.20 | % | 0.88 | % | ||||
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Net interest margin (b)
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4.41 | % | 4.25 | % | ||||
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Efficiency ratio (c)
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58.66 | % | 54.73 | % | ||||
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Average earning assets (in 000's)
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$ | 823,271 | $ | 887,972 | ||||
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(a) Total dividends paid as a percentage of net income.
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(b) Fully tax-equivalent net interest income as a percentage of average earning assets.
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(c) Noninterest expense as a percentage of fully tax-equivalent net interest income plus noninterest income.
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OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)
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Three months ended
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(in $000's)
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March 31,
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| 2012 | 2011 | |||||||
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Interest income:
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Interest and fees on loans
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$ | 9,964 | $ | 11,299 | ||||
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Interest and dividends on securities
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701 | 726 | ||||||
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Total interest income
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10,665 | 12,025 | ||||||
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Interest expense:
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Deposits
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1,374 | 2,356 | ||||||
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Borrowings
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379 | 466 | ||||||
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Total interest expense
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1,753 | 2,822 | ||||||
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Net interest income
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8,912 | 9,203 | ||||||
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Provision for loan losses
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1,316 | 2,944 | ||||||
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Noninterest income:
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Service charges on deposit accounts
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450 | 540 | ||||||
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Trust fees
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49 | 59 | ||||||
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Income from bank owned life insurance
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and annuity assets
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194 | 179 | ||||||
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Mortgage banking income
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97 | 77 | ||||||
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Electronic refund check / deposit fees
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2,038 | 2,268 | ||||||
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Debit / credit card interchange income
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395 | 300 | ||||||
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Gain on sale of other real estate owned
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8 | 5 | ||||||
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Other
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248 | 231 | ||||||
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Total noninterest income
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3,479 | 3,659 | ||||||
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Noninterest expense:
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Salaries and employee benefits
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4,268 | 4,023 | ||||||
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Occupancy
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402 | 426 | ||||||
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Furniture and equipment
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237 | 280 | ||||||
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FDIC insurance
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291 | 327 | ||||||
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Data processing
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279 | 236 | ||||||
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Foreclosed assets, net
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110 | 25 | ||||||
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Other
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1,745 | 1,781 | ||||||
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Total noninterest expense
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7,332 | 7,098 | ||||||
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Income before income taxes
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3,743 | 2,820 | ||||||
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Income taxes
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1,121 | 787 | ||||||
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NET INCOME
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$ | 2,622 | $ | 2,033 | ||||
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OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
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(in $000's, except share data)
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March 31,
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December 31,
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2012
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2011
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ASSETS
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Cash and noninterest-bearing deposits with banks
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$ | 11,122 | $ | 8,914 | ||||
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Interest-bearing deposits with banks
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108,982 | 42,716 | ||||||
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Total cash and cash equivalents
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120,104 | 51,630 | ||||||
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Securities available for sale
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91,130 | 85,670 | ||||||
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Securities held to maturity
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(estimated fair value: 2012 - $23,240; 2011 - $22,847)
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22,785 | 22,848 | ||||||
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Federal Home Loan Bank stock
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6,281 | 6,281 | ||||||
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Total loans
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572,360 | 598,308 | ||||||
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Less: Allowance for loan losses
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(6,847 | ) | (7,344 | ) | ||||
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Net loans
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565,513 | 590,964 | ||||||
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Premises and equipment, net
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9,040 | 9,216 | ||||||
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Other real estate owned
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4,430 | 4,256 | ||||||
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Accrued income receivable
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2,417 | 2,872 | ||||||
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Goodwill
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1,267 | 1,267 | ||||||
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Bank owned life insurance and annuity assets
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24,565 | 23,097 | ||||||
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Prepaid FDIC insurance
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1,336 | 1,609 | ||||||
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Other assets
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5,006 | 4,467 | ||||||
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Total assets
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$ | 853,874 | $ | 804,177 | ||||
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LIABILITIES
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Noninterest-bearing deposits
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$ | 186,393 | $ | 138,143 | ||||
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Interest-bearing deposits
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549,720 | 549,743 | ||||||
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Total deposits
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736,113 | 687,886 | ||||||
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Other borrowed funds
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20,093 | 20,296 | ||||||
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Subordinated debentures
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13,500 | 13,500 | ||||||
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Accrued liabilities
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10,389 | 10,652 | ||||||
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Total liabilities
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780,095 | 732,334 | ||||||
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SHAREHOLDERS' EQUITY
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Common stock ($1.00 stated value per share, 10,000,000 shares authorized;
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2012 - 4,689,178 shares issued; 2011 - 4,686,295 shares issued)
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4,689 | 4,686 | ||||||
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Additional paid-in capital
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33,525 | 33,473 | ||||||
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Retained earnings
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50,212 | 48,435 | ||||||
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Accumulated other comprehensive income
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1,065 | 961 | ||||||
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Treasury stock, at cost (659,739 shares)
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(15,712 | ) | (15,712 | ) | ||||
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Total shareholders' equity
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73,779 | 71,843 | ||||||
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Total liabilities and shareholders' equity
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$ | 853,874 | $ | 804,177 | ||||