GALLIPOLIS, Ohio, April 17 /PRNewswire-FirstCall/ -- Ohio Valley Banc Corp. reported consolidated net income for the quarter ended March 31, 2007, of $1,775,000, representing an increase of 2.1 percent over the same period the prior year. Earnings per share for the first quarter of 2007 were $.42, up 2.4 percent from the $.41 earned the first quarter of 2006. Return on average assets and return on average equity remained stable at .94 percent and 11.91 percent, respectively, for the first quarter of 2007, versus .94 percent and 11.93 percent, respectively, for the same period the prior year. The increase in earnings was primarily the result of reductions in both provision for loan loss expense and noninterest expense. The expense reduction was complemented by revenue growth within noninterest income.
The reduction in provision for loan losses was based on the evaluation of the adequacy of the allowance for loan losses. Management provided $386,000 to the allowance for loan losses for the three months ended March 31, 2007, a decrease of $280,000 from the same period the prior year. Although the ratio of nonperforming loans to total loans at March 31, 2007 of 1.60 percent was up from the .40 percent at March 31, 2006, the ratio was down from the 2.14 percent at December 31, 2006. Credit deterioration of loans occurred during 2006, primarily in the fourth quarter, resulting in the Company providing $3,731,000 to the allowance for loan losses. For the three months ended March 31, 2007, net charge-offs were up $873,000 from the same three-month period in 2006, primarily due to the charge-off of specific allocations established for nonperforming loans in 2006. Management believes that the allowance for loan losses is adequate and reflects probable incurred losses in the portfolio. The allowance for loan losses was 1.34 percent of total loans at March 31, 2007, compared to 1.51 percent at December 31, 2006 and 1.16 percent at March 31, 2006.
For the first quarter of 2007, net interest income decreased $282,000, or 3.8 percent, from the same period last year. This decrease was attributable to a lower net interest margin, which was partially offset by the growth in the Company's earning assets. The net interest margin for the three months ended March 31, 2007 was 4.02%, compared to 4.25% for the same period the prior year. The net interest margin compression was related to the upward pressure of the Company's funding costs in conjunction with the higher balance of loans on nonaccrual status. The Company's average earning assets for the first quarter of 2007 were up $13,469,000, or 1.9 percent, from the first quarter of 2006.
Partially offsetting the decline in revenue from net interest income was the increase in noninterest income. For the first quarter of 2007, noninterest income totaled $1,393,000, an increase of $114,000, or 8.9 percent, from 2006. Contributing to over half of the increase was processing fee income earned from facilitating the clearing of tax refunds for a tax software provider, a service initiated in 2006. In addition, interchange fees earned on transactions utilizing the Company's Jeanie(R) Plus debit card increased 12.6 percent. The growth in noninterest income demonstrates management's desire to leverage technology to enhance efficiency and diversify the Company's revenue sources.
Noninterest expense totaled $5,521,000 for the first quarter of 2007, a decrease of $64,000 when compared to the previous year first quarter. Salaries and employee benefits, the Company's largest noninterest expense, was down $62,000 led by the lower full-time equivalent number of employees and lower incentive compensation. The total of all remaining noninterest expense categories was essentially unchanged from the prior year. The emphasis management placed on expense control contributed to a stable efficiency ratio of 64.49 percent for the three months ended March 31, 2007, as compared to 64.17 percent for the three months ended March 31, 2006.
Total assets increased $4,970,000 from year end 2006 to reach $769,331,000 at March 31, 2007. Driving asset growth for 2007 was loan growth of $3,626,000. Funding loan growth was deposit growth of $8,922,000. The excess growth in retail deposits permitted the Company to reduce borrowed funds by $4,628,000 from December 31, 2006.
"I am extremely proud of the efforts of all the employees of Ohio Valley Banc Corp. in the first quarter of 2007," stated Jeffrey E. Smith, President and CEO. "The 2% increase in both earnings and earnings per share, while modest, was the result of both their efficiency and effectiveness: efficiency in the 8.9% increase in noninterest income as well as the 1% decrease in noninterest expense compared to the first quarter of 2006; effectiveness in the 25% reduction of nonperforming loans at March 31, 2007 compared to December 31, 2006. Our emphasis for the balance of 2007 will continue to be asset quality and operating efficiency, in that order, as the challenge of net interest margin compression continues."
Ohio Valley Banc Corp. common stock is traded on the NASDAQ Global Market under the symbol OVBC. The holding company owns three subsidiaries: Ohio Valley Bank, with 15 offices in Ohio and West Virginia; Loan Central, with five consumer finance offices in Ohio, and Ohio Valley Financial Services, an insurance agency based in Jackson, Ohio. Learn more about Ohio Valley Banc Corp. at http://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," "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 Ohio Valley 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.
Contact: Scott Shockey, CFO (740) 446-2631
OHIO VALLEY BANC CORP -- Financial Highlights (Unaudited)
Three months ended
March 31,
2007 2006
PER SHARE DATA
Earnings per share $0.42 $0.41
Dividends per share $0.17 $0.16
Book value per share $14.61 $14.04
Dividend payout ratio (a) 40.23% 39.11%
Weighted average shares
outstanding 4,192,809 4,248,551
PERFORMANCE RATIOS
Return on average equity 11.91% 11.93%
Return on average assets 0.94% 0.94%
Net interest margin (b) 4.02% 4.25%
Efficiency ratio (c) 64.49% 64.17%
Average earning assets (in
000's) $722,338 $708,869
(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,
2007 2006
Interest income:
Interest and fees on loans $12,440 $11,756
Interest and dividends on
securities 1,062 884
Total interest income 13,502 12,640
Interest expense:
Deposits 5,267 3,914
Borrowings 1,164 1,373
Total interest expense 6,431 5,287
Net interest income 7,071 7,353
Provision for loan losses 386 666
Noninterest income:
Service charges on deposit
accounts 660 658
Trust fees 56 53
Income from bank owned
insurance 180 187
Gain on sale of loans 39 26
Other 458 355
Total noninterest income 1,393 1,279
Noninterest expense:
Salaries and employee
benefits 3,233 3,295
Occupancy 364 334
Furniture and equipment 270 268
Data processing 194 217
Other 1,460 1,471
Total noninterest
expense 5,521 5,585
Income before income taxes 2,557 2,381
Income taxes 782 642
NET INCOME $1,775 $1,739
OHIO VALLEY BANC CORP -- Consolidated Balance Sheets (Unaudited)
(in $000's, except share and per
share data) March 31, December 31,
2007 2006
ASSETS
Cash and noninterest-bearing
deposits with banks $17,772 $18,965
Federal funds sold 1,162 1,800
Total cash and cash
equivalents 18,934 20,765
Interest-bearing deposits in other
financial institutions 612 508
Securities available-for-sale 70,435 70,267
Securities held-to-maturity
(estimated fair value:
2007 - $13,526,
2006 - $13,586) 13,337 13,350
FHLB stock 6,036 6,036
Total loans 628,790 625,164
Less: Allowance for loan losses (8,400) (9,412)
Net loans 620,390 615,752
Premises and equipment, net 9,855 9,812
Accrued income receivable 3,322 3,234
Goodwill 1,267 1,267
Bank owned life insurance 16,202 16,054
Other assets 8,941 7,316
Total assets $769,331 $764,361
LIABILITIES
Noninterest-bearing deposits $80,328 $77,960
Interest-bearing deposits 522,380 515,826
Total deposits 602,708 593,786
Securities sold under agreements to
repurchase 28,087 22,556
Other borrowed funds 53,387 63,546
Subordinated debentures 13,500 13,500
Accrued liabilities 10,720 10,691
Total liabilities 708,402 704,079
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value,
10,000,000 shares authorized;
2007 - 4,639,722 shares issued,
2006 - 4,626,340 shares issued) 4,640 4,626
Additional paid-in-capital 32,615 32,282
Retained earnings 35,465 34,404
Accumulated other comprehensive
income (827) (981)
Treasury stock at cost
(2007 - 469,002 shares,
2006 - 432,852 shares) (10,964) (10,049)
Total shareholders'
equity 60,929 60,282
Total liabilities
and shareholders'
equity $769,331 $764,361
