Ohio Valley Banc Corp. Reports 3rd Quarter Earnings

GALLIPOLIS, Ohio, Oct. 25, 2019 /PRNewswire/ -- Ohio Valley Banc Corp. OVBC (the "Company") reported consolidated net income for the quarter ended September 30, 2019, of $2,137,000, an increase of 22.4 percent from the $1,746,000 earned for the third quarter of 2018.   Earnings per share for the third quarter of 2019 were $.45 compared to $.37 for the prior year third quarter, a 21.6 percent increase.  For the nine months ended September 30, 2019, net income totaled $6,409,000, a decrease of $1,679,000 from the same period the prior year.  Earnings per share were $1.35 for the first nine months of 2019 versus $1.71 for the first nine months of 2018.  Return on average assets and return on average equity were .83 percent and 7.07 percent, respectively, for the first nine months of 2019, compared to 1.01 percent and 9.67 percent, respectively, for the same period in the prior year.

Tom Wiseman, president and CEO of Ohio Valley Banc Corp., commented, "Revenue lost due to our involuntary exit of the tax refund business continues to negatively impact our bottom line.  However, we have successfully pursued other revenue sources and our core business lines remain steady, keeping us solidly focused on our community first mission."

For the third quarter of 2019, net interest income decreased $137,000, and for the nine months ended September 30, 2019, net interest income decreased $247,000, from the same respective periods last year.  Impacting net interest income was the decrease in average earning assets due to not processing tax refunds in 2019.  As previously disclosed in 2018, a third-party tax refund product provider elected to terminate the Bank's processing contract early.  During the first nine months of 2018, the processing of tax refunds provided $73 million in average deposits that were invested in the Federal Reserve.  This activity generated approximately $88,000 in interest revenue during the third quarter of 2018 and $890,000 in interest revenue during the first nine months of 2018 that was not replicated in 2019.  As a result, interest on interest-bearing deposits with banks for the nine months ended September 30, 2019 decreased $344,000 from the same period last year.  The higher interest rate paid by the Federal Reserve during 2019 helped reduce the impact of the lower amount available to be invested.  For the nine months ended September 30, 2019, interest and fees on loans and securities increased $1,578,000 from the same period last year.  This increase was due to a combination of average loan growth and the benefit of rising interest rates throughout 2018 that increased asset yields entering 2019.  For the same time period, interest expense on deposits and borrowed funds increased $1,481,000, primarily due to certificates of deposit and money market accounts repricing at higher market rates.  For the nine months ended September 30, 2019, the net interest margin was 4.57 percent, compared to 4.41 percent for the same period the prior year.  The increase in net interest margin was primarily related to the higher balances maintained at the Federal Reserve during the first nine months of 2018, 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, 2019, the provision for loan losses decreased $518,000, and for the nine months ended September 30, 2019, the provision for loan losses increased $320,000, from the same respective periods in 2018.  For the three months ended September 30, 2019, the provision for loan loss expense of $444,000 was primarily related to quarterly net loan charge-offs of $1,693,000, which was partially offset by lower general reserves associated with improved economic risk factors, such as lower delinquency levels and lower levels of classified and criticized loans, which are loans demonstrating financial weakness.  For the nine months ended September 30, 2019, the provision for loan losses of $2,015,000 was primarily related to year-to-date net loan charge-offs of $2,591,000, which was partially offset by the lower general reserves for the economic risk factors mentioned above.  The ratio of nonperforming loans to total loans was 1.18 percent at September 30, 2019 compared to 1.25 percent at December 31, 2018 and 1.36 percent at September 30, 2018.  The allowance for loan losses was .79 percent of total loans at September 30, 2019, compared to .87 percent at December 31, 2018 and 1.06 percent at September 30, 2018.

For the three months ended September 30, 2019, noninterest income totaled $2,107,000, an increase of $180,000 from the same period last year.  Noninterest income totaled $5,956,000 for the nine months ended September 30, 2019, a decrease of $1,585,000 from the same period last year.  The decrease in year-to-date noninterest income was primarily related to tax processing fees.  In relation to the third-party tax refund provider terminating the contract as previously discussed, the Company experienced a decline in tax processing fees, which is a per item fee for each tax refund processed.  As a result of not performing such service in 2019, tax processing fees decreased $1,561,000 from the first nine months of 2018.  The increase in quarter-to-date noninterest income was related to interchange income earned from debit and credit transactions, which increased $106,000, and gain on sale of other real estate owned, which increased $67,000, respectively, from the same period last year.

For the three months ended September 30, 2019, noninterest expense totaled $9,738,000, a decrease of $23,000 from the same period last year.  For the nine months ended September 30, 2019, noninterest expense totaled $29,097,000, a decrease of $146,000 from the same period last year.  The Company's largest noninterest expense, salaries and employee benefits, increased $115,000 as compared to the third quarter of 2018 and decreased $65,000 as compared to the first nine months of 2018.  The limited growth in salaries and employee benefits in 2019 was primarily associated with a lower number of employees in 2019, which more than offset the expense increase associated with annual merit increases.  Further contributing to lower noninterest expense was data processing and FDIC insurance premiums.  For the nine months ended September 30, 3019, data processing expense decreased $551,000 from the same period last year as a result of lower consulting fees.  For the same period, FDIC insurance premiums decreased $255,000 in relation to a lower assessment rate and the receipt of a portion of our premium credit granted by the FDIC during the third quarter of 2019.  Partially offsetting the expense reductions above was an increase in professional fees of $422,000 from the first nine months of last year, primarily due to litigation related to the early termination of the Bank's tax refund processing contract.

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 18 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, 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

SOURCE Ohio Valley Banc Corp.