Ohio Valley Banc Corp. Reports 2nd Quarter Earnings

GALLIPOLIS, Ohio, July 26, 2018 /PRNewswire/ -- Ohio Valley Banc Corp. [Nasdaq: OVBC] (the "Company") reported consolidated net income for the quarter ended June 30, 2018, of $2,976,000, an increase of 70.9 percent from the $1,741,000 earned for the second quarter of 2017.   Earnings per share for the second quarter of 2018 were $.63 compared to $.37 for the prior year second quarter.  For the six months ended June 30, 2018, net income totaled $6,342,000, a 27.9 percent increase from net income of $4,958,000 for the six months ended June 30, 2017.  Earnings per share were $1.34 for the first six months of 2018 versus $1.06 for the first six months of 2017.  Return on average assets and return on average equity were 1.16 percent and 11.53 percent, respectively, for the first half of 2018, compared to .97 percent and 9.40 percent, respectively, for the same period in the prior year.

"It is tremendous, I think, that Ohio Valley Banc Corp.'s companies were able to achieve over a half million dollar increase in net income in a quarter when they also gave so much of their time to their communities," stated Thomas E. Wiseman, President and CEO.  "Also during the quarter, our offices held seven customer appreciation events, spent 730 hours in community service, provided six new $3,000 college scholarships to deserving youth, and even organized our first ever 5K Ruck Walk to benefit area veterans' medical centers."  Wiseman further commented, "Our success isn't because we are alone in our mission to put Community First. Many have joined us to make a real and positive impact in our communities."

For the second quarter of 2018, net interest income increased $569,000, and for the six months ended June 30, 2018, net interest income increased $1,214,000 from the same respective periods last year.  Positively impacting net interest income was the growth in earning assets.  For the six months ended June 30, 2018, average earning assets increased $74 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 $42 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 125 basis point increase in short-term interest rates since December 31, 2016, generated an additional $676,000 in interest income.  For the six months ended June 30, 2018, average loans increased $30 million from the same period last year, led by growth within the commercial loan segment from our Athens market.  For the six months ended June 30, 2018, interest and fees on loans increased $1,095,000 from the same period last year.  For the six months ended June 30, 2018, the net interest margin was 4.37 percent, compared to 4.49 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 June 30, 2018, the provision for loan losses decreased $198,000, and for the six months ended June 30, 2018, the provision for loan losses increased $413,000, from the same respective periods in 2017.  For the three months ended June 30, 2018, the negative provision for loan loss expense of $23,000 was primarily related to an improvement in certain economic risk factors contributing to lower general reserves.  For the six months ended June 30, 2018, the provision for loan losses incurred of $733,000 was primarily related to net loan charge-offs of $592,000.  The ratio of nonperforming loans to total loans was 1.45 percent at June 30, 2018 compared to 1.36 percent at December 31, 2017 and 1.09 percent at June 30, 2017.  The allowance for loan losses was .98 percent of total loans at June 30, 2018, compared to .97 percent at December 31, 2017 and .92 percent at June 30, 2017.

For the three months ended June 30, 2018, noninterest income totaled $2,538,000, an increase of $426,000 from the same period last year.  Noninterest income totaled $5,614,000 for the six months ended June 30, 2018, an increase of $389,000, or 7.4 percent, from the same period last year.  The increase in noninterest income was related to an increase in gain on sale of other real estate owned and interchange income.  For the first half of 2017, gain on sale of other real estate owned increased $228,000 and interchange income earned from debit and credit transactions increased $150,000, respectively, from the same period last year.  Partially offsetting the increases above was a decrease in tax refund processing fees.  For the first six months of 2018, tax refund processing fees totaled $1,533,000, a decrease of $134,000 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 June 30, 2018, noninterest expense totaled $9,674,000, a decrease of $202,000 from the same period last year.  For the six months ended June 30, 2018, noninterest expense totaled $19,482,000, an increase of $231,000 from the same period last year.  The Company's largest noninterest expense, salaries and employee benefits, increased $396,000 as compared to the second quarter of 2017 and increased $734,000 as compared to the first half 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 $333,000 and $119,000, respectively, from the six months ended June 30, 2017.  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 June 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 six months ended June 30, 2018 decreased $157,000 from the same period last year.

For the six months ended June 30, 3018, income tax expense totaled $1,207,000, a decrease of $425,000 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, 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

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SOURCE Ohio Valley Banc Corp.