GALLIPOLIS, Ohio, April 17 /PRNewswire-FirstCall/ -- Ohio Valley Banc Corp. (the "Company") reported consolidated net income for the quarter ended March 31, 2008, of $1,965,000, representing an increase of 10.7 percent over the same period the prior year. Earnings per share for the first quarter of 2008 were $.48, up 14.3 percent from the $.42 earned the first quarter of 2007. Return on average assets and return on average equity both increased to 1.00 percent and 13.02 percent, respectively, for the first quarter of 2008, versus .94 percent and 11.91 percent, respectively, for the same period the prior year. The increase in earnings was primarily the result of increased revenues from both net interest income and noninterest income, while exercising good expense control.
For the first quarter of 2008, net interest income increased $604,000, or 8.5 percent, from the same period last year. The increase was attributable to a higher net interest margin in conjunction with the Company's growth in earning assets. The net interest margin for the three months ended March 31, 2008 was 4.21 percent, compared to 4.02 percent for the same period the prior year. The net interest margin improvement was related to the balance sheet being positioned to benefit from the declining interest rate environment, which produced a greater decrease in the cost of funds than the yield on earning assets. The Company's average earning assets for the first quarter of 2008 were up $21,571,000, or 3.0 percent, from the first quarter of 2007.
Supplementing the increase in revenue from net interest income was the increase in noninterest income. For the first quarter of 2008, noninterest income totaled $1,584,000, an increase of $191,000, or 13.7 percent, from the first quarter of 2007. Contributing to the increase was processing fee income earned from facilitating the clearing of tax refunds for a tax software provider. With continued growth in transaction volume, the associated fee income increased $80,000, or over 140 percent, from the 2007 quarter. In addition, service charges on deposit accounts increased primarily due to a higher volume of overdrafts occurring in 2008, which increased fees $62,000 from the prior year.
Noninterest expense totaled $5,752,000 for the first quarter of 2008, an increase of $231,000, or 4.2 percent, from the same period last year. Salaries and employee benefits, the Company's largest noninterest expense, was up $196,000, led by incentive compensation and health insurance benefits. The total of all remaining noninterest expense categories increased only $35,000 from the prior year first quarter. The emphasis management placed on expense control and revenue generation contributed to an improved efficiency ratio of 61.38 percent for the three months ended March 31, 2008, as compared to 64.49 percent for the three months ended March 31, 2007.
For the three months ended March 31, 2008, management provided $701,000 to the allowance for loan losses, an increase of $315,000 from the same period the prior year. Although the ratio of nonperforming loans to total loans at March 31, 2008 of 1.40 percent was down from the 1.60 percent at March 31, 2007, the ratio was up from the .57 percent at December 31, 2007. Nonperforming loans totaled $8.9 million at March 31, 2008. The increase from year end was primarily related to one borrower, which accounted for 56 percent of total nonperforming loans. Management believes that the loan relationship is adequately collateralized by real estate. For the three months ended March 31, 2008, net charge-offs were down $858,000 from the same three-month period in 2007, primarily due to the significant decrease in commercial loan charge- offs. Based on the evaluation of the adequacy of the allowance for loan losses, management believes that the allowance for loan losses at March 31, 2008 was adequate and reflects probable incurred losses in the portfolio. The allowance for loan losses was 1.09 percent of total loans at March 31, 2008, compared to 1.06 percent at December 31, 2007 and 1.34 percent at March 31, 2007.
"I am extremely proud of all the employees of Ohio Valley Banc Corp. in the first quarter of 2008," stated Jeffrey E. Smith, President and CEO. "During a challenged banking environment, their efforts produced many positive results, including an improved net interest margin and an enhanced efficiency ratio driven by revenue enhancement and expense control. These efforts culminated in producing double-digit earnings growth for the Company."
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 16 offices in Ohio and West Virginia; Loan Central, with six 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 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, 2007, 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 March 31, 2008 2007 PER SHARE DATA Earnings per share $0.48 $0.42 Dividends per share $0.19 $0.17 Book value per share $15.39 $14.61 Dividend payout ratio (a) 39.38% 40.23% Weighted average shares outstanding 4,060,585 4,192,809 PERFORMANCE RATIOS Return on average equity 13.02% 11.91% Return on average assets 1.00% 0.94% Net interest margin (b) 4.21% 4.02% Efficiency ratio (c) 61.38% 64.49% Average earning assets (in 000's) $743,909 $722,338 (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, 2008 2007 Interest income: Interest and fees on loans $12,642 $12,440 Interest and dividends on securities 1,092 1,062 Total interest income 13,734 13,502 Interest expense: Deposits 4,886 5,267 Borrowings 1,173 1,164 Total interest expense 6,059 6,431 Net interest income 7,675 7,071 Provision for loan losses 701 386 Noninterest income: Service charges on deposit accounts 710 660 Trust fees 61 56 Income from bank owned insurance 175 180 Gain on sale of loans 45 39 Loss on sale of other real estate owned -41 -1 Other 634 459 Total noninterest income 1,584 1,393 Noninterest expense: Salaries and employee benefits 3,429 3,233 Occupancy 386 364 Furniture and equipment 235 270 Data processing 265 194 Other 1,437 1,460 Total noninterest expense 5,752 5,521 Income before income taxes 2,806 2,557 Income taxes 841 782 NET INCOME $1,965 $1,775 OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited) (in $000's, except share and per share data) March 31, December 31, 2008 2007 ASSETS Cash and noninterest-bearing deposits with banks $17,946 $15,584 Federal funds sold 15,732 1,310 Total cash and cash equivalents 33,678 16,894 Interest-bearing deposits in other financial institutions 507 633 Securities available-for-sale 71,333 78,063 Securities held-to-maturity (estimated fair value: 2008 - $17,464; 2007 - $15,764) 18,589 15,981 Federal Home Loan Bank stock 6,114 6,036 Total loans 633,232 637,103 Less: Allowance for loan losses (6,898) (6,737) Net loans 626,334 630,366 Premises and equipment, net 9,760 9,871 Accrued income receivable 3,450 3,254 Goodwill 1,267 1,267 Bank owned life insurance 16,475 16,339 Other assets 4,874 4,714 Total assets $792,381 $783,418 LIABILITIES Noninterest-bearing deposits $86,348 $78,589 Interest-bearing deposits 524,940 510,437 Total deposits 611,288 589,026 Securities sold under agreements to repurchase 30,043 40,390 Other borrowed funds 61,881 67,002 Subordinated debentures 13,500 13,500 Accrued liabilities 13,334 11,989 Total liabilities 730,046 721,907 SHAREHOLDERS' EQUITY Common stock ($1.00 par value per share, 10,000,000 shares authorized; 2008 - 4,641,748 shares issued; 2007 - 4,641,747 shares issued) 4,642 4,642 Additional paid-in capital 32,664 32,664 Retained earnings 38,243 37,763 Accumulated other comprehensive income (loss) 815 (115) Treasury stock, at cost (2008 - 590,731 shares; 2007 - 567,403 shares) (14,029) (13,443) Total shareholders' equity 62,335 61,511 Total liabilities and shareholders' equity $792,381 $783,418
