PR Newswire | Apr 30, 2021 03:39PM EDT

04/30 14:38 CDT

Ohio Valley Banc Corp. Reports 1st Quarter Earnings GALLIPOLIS, Ohio, April 30, 2021

GALLIPOLIS, Ohio, April 30, 2021 /PRNewswire/ -- Ohio Valley Banc Corp. [Nasdaq: OVBC] (the "Company") reported consolidated net income for the quarter ended March 31, 2021, of $3,531,000, an increase of $2,529,000 from the same period the prior year. Earnings per share for the first quarter of 2021 was $.74, compared to $.21 for the first quarter of 2020. Return on average assets and return on average equity were 1.20% and 10.47%, respectively, for the first quarter of 2021, versus .40% and 3.14%, respectively, for the same period the prior year.

"A fantastic quarter as our communities begin to emerge from the pandemic and move into 2021. However, our management team remains vigilant as interest rates continue at an extreme low and the boon seen from government pandemic recovery programs wane," said Chairman and CEO Tom Wiseman. Wiseman also noted an encouraging increase in income from mortgage banking and interchange fees for the quarter.

For the first quarter of 2021, net interest income increased $44,000 from the same period last year. For the three months ended March 31, 2021, average earning assets increased $170 million from the same period the prior year. The increase was partly due to average loans, which increased $72 million from the first quarter of last year in relation to higher commercial loan balances. Approximately $27 million of the growth in average loans was related to the Company's participation in the SBA's Paycheck Protection Program (PPP) to assist various businesses in our market during the pandemic. Also contributing to earning asset growth was the $83 million increase in average balances maintained at the Federal Reserve. In relation to the various stimulus payments received by customers, the Company experienced a significant increase in deposit balances and, to the extent those deposits are not invested in loans or investments, they are invested at the Federal Reserve to be readily available for future funding needs. The earnings contribution from the higher balance of earning assets was mostly offset by a decrease in the net interest margin. For the quarter ended March 31, 2021, the net interest margin was 3.73%, compared to 4.34% for the same period the prior year. The decrease was primarily related to the actions taken by the Federal Reserve to reduce interest rates by 150 basis points in March of 2020. In relation to the decrease in market rates, the Company experienced a greater decrease in yield on earning assets than the average cost on interest-bearing liabilities. This trend was partly due to certain deposits already being at or near their interest rate floor, which limited the Company's ability to reduce deposit costs to the same magnitude as experienced on earning assets. Furthermore, the current rate on balances maintained at the Federal Reserve is .10% and, when combined with the heightened balances it has a dilutive effect on the net interest margin.

For the three months ended March 31, 2021, the provision for loan loss expense was negative $52,000, a decrease of $3,898,000 from the first quarter of 2020. The negative provision for loan loss expense for the first quarter of 2021 was primarily related to lower general reserves in association with improved economic risk factors and a decrease in loan balances since December 31, 2020, which was partly offset by quarterly net charge-offs of $222,000. The decrease in provision for loan loss expense from the prior year first quarter was due to a decrease in net loan charge-offs of $1,168,000 and to the provision expense associated with the establishment of an economic risk factor for the pandemic during the first quarter of 2020, which resulted in additional provision expense of $1,942,000. The allowance for loan losses was .83% of total loans at March 31, 2021, compared to .84% at December 31, 2020 and 1.13% at March 31, 2020.

For the first quarter of 2021, noninterest income totaled $3,339,000, a decrease of $1,103,000 from the first quarter of 2020. The decrease was primarily due to the receipt of a $2,000,000 settlement payment from a third-party tax software product provider for early termination of its contract during the first quarter of 2020. As part of the settlement agreement, the Bank is scheduled to process a certain amount of tax items starting in 2021 and ending in 2025. For the first quarter of 2021, the Bank recognized $540,000 of additional income under the agreement. This income along with higher interchange fees of $107,000, lower losses on foreclosed properties of $102,000 and higher mortgage banking income of $89,000, partially offset this year's decrease in noninterest income related to the litigation settlement payment received the prior year.

Noninterest expense totaled $9,187,000 for the first quarter of 2021, a decrease of $332,000, or 3.5%, from the same period last year. The Company's largest noninterest expense, salaries and employee benefits, decreased $185,000, or 3.4%, from the first quarter of 2020. The decrease was primarily related to the expense savings associated with a lower number of employees. Further contributing to lower noninterest expense was professional fees. For the three months ended March 31, 2021, professional fees decreased $168,000 from the same period last year due to lower legal fees associated with collecting troubled loans. Partially offsetting the expense reductions above was an increase in software expense, which increased $68,000 from the prior year first quarter. The increase was mostly due to software utilized to process PPP loan applications. Lastly, FDIC insurance expense increased $79,000 from the first quarter of last year since there was no FDIC insurance expense incurred in the first quarter of 2020 as a result of assessment credits received from the FDIC.

The Company's total assets at March 31, 2021 were $1.225 billion, an increase of $38 million, or 3.2%, from December 31, 2020. The increase in assets was related to a $38 million increase in cash and cash equivalents. The increase in cash and cash equivalents was related to the heightened deposit balances received during the first quarter of 2021 from additional stimulus payments received by customers. At March 31, 2021, total deposits increased $39 million, or 3.9%, from year end 2020.

Ohio Valley Banc Corp. common stock is traded on the NASDAQ Global Market under the symbol OVBC. The holding company owns The Ohio Valley Bank Company, with 15 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) impacts from the novel coronavirus (COVID-19) pandemic on our business, operations, customers and capital position; (ii) higher default rates on loans made to our customers related to COVID-19 and its impact on our customers' operations and financial condition; (iii) the impact of COVID-19 on local, national and global economic conditions; unexpected changes in interest rates or disruptions in the mortgage market related to COVID-19 or responses to the health crisis; (iv) the effects of various governmental responses to the COVID-19 pandemic; (v) 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; (vi) competitive pressures; (vii) fluctuations in interest rates; (viii) the level of defaults and prepayment on loans made by the Company; (ix) unanticipated litigation, claims, or assessments; (x) fluctuations in the cost of obtaining funds to make loans; (xi) regulatory changes; (xii) and other factors that may be described in the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission from time to time. 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.

OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)

Three months ended

March 31,

2021 2020

PER SHARE DATA

Earnings per share $ 0.74 $ 0.21

Dividends per share $ 0.21 $ 0.21

Book value per share $ 28.77 $ 27.26

Dividend payout ratio (a) 28.47% 100.34%

Weighted average shares outstanding 4,787,446 4,787,446

DIVIDEND REINVESTMENT (in 000's)

Dividends reinvested under

employee stock ownership plan (b) $ 188 $ 154

Dividends reinvested under

dividend reinvestment plan (c) $ 425 $ 372

PERFORMANCE RATIOS

Return on average equity 10.47% 3.14%

Return on average assets 1.20% 0.40%

Net interest margin (d) 3.73% 4.34%

Efficiency ratio (e) 68.03% 65.42%

Average earning assets (in 000's) $ 1,105,984 $ 936,008

(a) Total dividends paid as a percentage of net income.

(b) Shares may be purchased from OVBC and on secondary market.

(c) Shares may be purchased from OVBC and on secondary market.

(d) Fully tax-equivalent net interest income as a percentage of average earningassets.

(e) Noninterest expense as a percentage of fully tax-equivalent net interestincome plus noninterest income.

OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)

Three months ended

(in $000's) March 31,

2021 2020

Interest income:

Interest and fees on loans $ 10,565 $ 10,873

Interest and dividends on securities 533 750

Interest on interest-bearing deposits with banks 28 162

Total interest income 11,126 11,785

Interest expense:

Deposits 883 1,509

Borrowings 195 272

Total interest expense 1,078 1,781

Net interest income 10,048 10,004

Provision for (recovery of) loan losses (52) 3,846

Noninterest income:

Service charges on deposit accounts 405 493

Trust fees 72 68

Income from bank owned life insurance and

annuity assets 248 217

Mortgage banking income 179 90

Electronic refund check/deposit fees 540 ---

Debit / credit card interchange income 1,050 943

Gain (loss) on other real estate owned 1 (101)

Tax preparation fees 694 615

Litigation settlement --- 2,000

Other 150 117

Total noninterest income 3,339 4,442

Noninterest expense:

Salaries and employee benefits 5,270 5,455

Occupancy 467 432

Furniture and equipment 296 262

Professional fees 430 598

Marketing expense 268 268

FDIC insurance 79 ---

Data processing 575 599

Software 449 381

Foreclosed assets 14 43

Amortization of intangibles 13 17

Other 1,326 1,464

Total noninterest expense 9,187 9,519

Income before income taxes 4,252 1,081

Income taxes 721 79

NET INCOME $ 3,531 $ 1,002

OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)

(in $000's, except share data) March 31, December 31

2021 2020

ASSETS

Cash and noninterest-bearing deposits with banks $ 15,884 $ 14,989

Interest-bearing deposits with banks 160,536 123,314

Total cash and cash equivalents 176,420 138,303

Certificates of deposit in financial institutions 2,255 2,500

Securities available for sale 126,394 112,322

Securities held to maturity (estimated fair value: 2021 - $11,376; 2020 - 11,137 10,020$10,344)

Restricted investments in bank stocks 7,506 7,506

Total loans 831,050 848,664

Less: Allowance for loan losses (6,887) (7,160)

Net loans 824,163 841,504

Premises and equipment, net 21,127 21,312

Premises and equipment held for sale, net 633 637

Other real estate owned, net 0 49

Accrued interest receivable 3,257 3,319

Goodwill 7,319 7,319

Other intangible assets, net 99 112

Bank owned life insurance and annuity assets 36,247 35,999

Operating lease right-of-use asset, net 1,133 880

Other assets 7,494 5,150

Total assets $ 1,225,184 $ 1,186,932

LIABILITIES

Noninterest-bearing deposits $ 327,976 $ 314,777

Interest-bearing deposits 704,652 678,962

Total deposits 1,032,628 993,739

Other borrowed funds 26,691 27,863

Subordinated debentures 8,500 8,500

Operating lease liability 1,133 880

Accrued liabilities 18,492 19,626

Total liabilities 1,087,444 1,050,608

SHAREHOLDERS' EQUITY

Common stock ($1.00 stated value per share, 10,000,000 shares authorized;

5,447,185 shares issued) 5,447 5,447

Additional paid-in capital 51,165 51,165

Retained earnings 95,514 92,988

Accumulated other comprehensive income 1,326 2,436

Treasury stock, at cost (659,739 shares) (15,712) (15,712)

Total shareholders' equity 137,740 136,324

Total liabilities and shareholders' equity $ 1,225,184 $ 1,186,932

Contact: Scott Shockey, CFO (740) 446-2631

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SOURCE Ohio Valley Banc Corp.