PR Newswire | Oct 27, 2021 06:36PM EDT

10/27 17:35 CDT

Ohio Valley Banc Corp. Reports 3rd Quarter Earnings GALLIPOLIS, Ohio, Oct. 27, 2021

GALLIPOLIS, Ohio, Oct. 27, 2021 /PRNewswire/ -- Ohio Valley Banc Corp. [Nasdaq: OVBC] (the "Company") reported consolidated net income for the quarter ended September 30, 2021, of $3,036,000, an increase of $742,000, or 32.3%, from the same period the prior year. Earnings per share for the third quarter of 2021 were $.63 compared to $.48 for the prior year third quarter. For the nine months ended September 30, 2021, net income totaled $9,428,000, an increase of $3,869,000, or 69.6%, from the same period the prior year. Earnings per share were $1.97 for the first nine months of 2021 versus $1.16 for the first nine months of 2020. Return on average assets and return on average equity were 1.03% and 9.13%, respectively, for the first nine months of 2021, compared to .69% and 5.70%, respectively, for the same period in the prior year.

"Careful planning by the hometown team at Ohio Valley Banc Corp. has led to another successful quarter. Our communities are not only starting to emerge from the pandemic, but are bouncing back with a renewed vigor as demonstrated by increased loan demand," said Tom Wiseman, Chairman and CEO of Ohio Valley Banc Corp. "Current low interest rates are providing opportunities for businesses and consumers alike, and our experienced teams at Ohio Valley Bank, Loan Central, and Race Day Mortgage are uniquely positioned to help those ready to take advantage of those opportunities. Our Community First mission is more than helping our small communities survive. We are working to be the reason they thrive."

For the third quarter of 2021, net interest income increased $277,000, and for the nine months ended September 30, 2021, net interest income increased $741,000 from the same respective periods last year. Contributing to the increase in net interest income was the growth in average earning assets, which was partially offset by a decrease in the net interest margin. For the nine months ended September 30, 2021, average earning assets increased $145 million from the same period the prior year. The increase was partly due to average loans, which increased $45 million from the first nine months of last year due to higher commercial loan balances. In general, commercial loan demand has been positive in our markets, particularly in the counties of Pike and Athens in Ohio and Cabell County in West Virginia. In addition, the Company participated in the SBA's Paycheck Protection Program (PPP) to assist various businesses in our market during the pandemic. The loan fees earned in association with the PPP loans for the nine months ended September 30, 2021 totaled $836,000, an increase of $651,000 from the same period the prior year. As of September 30, 2021, there were $5.6 million in PPP loans still outstanding with $273,000 in deferred fees yet to be recognized. Also contributing to earning asset growth was the $64 million increase in average balances maintained at the Federal Reserve and a $36 million increase in average security balances. In relation to the various stimulus payments received by customers, the Company experienced a significant increase in deposit balances. A portion of the increase in deposits was invested in the securities portfolio and, to the extent those deposits are not invested in loans or securities, 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 nine months ended September 30, 2021, the net interest margin was 3.62%, compared to 4.04% 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 .15% and, when combined with the heightened balances, it had a dilutive effect on the net interest margin.

For the three months ended September 30, 2021, the provision for loan losses was negative $93,000, a decrease of $91,000 from the same period last year. The negative provision expense for the third quarter of 2021 was primarily related to the continued low level of net charge offs. As a result, the historical loss factors decreased, which contributed to lower general reserves. For the nine months ended September 30, 2021, the provision for loan losses was negative $118,000, a decrease of $3,569,000 from the same period last year. The decrease in provision for loan loss expense was due to a decrease in net loan charge-offs of $1,616,000 and to a decrease in the provision expense associated with the establishment of an economic risk factor for the pandemic during the first quarter of 2020. The establishment of this risk factor resulted in additional provision expense of $1,942,000 in the first quarter of 2020. The allowance for loan losses was .79% of total loans at September 30, 2021, compared to .84% at December 31, 2020 and .91% at September 30, 2020. The ratio of nonperforming loans to total loans improved to .72% at September 30, 2021, compared to .82% at December 31, 2020 and .75% at September 30, 2020.

For the three months ended September 30, 2021, noninterest income totaled $2,612,000, an increase of $178,000 from the same period last year. For the nine months ended September 30, 2021, noninterest income totaled $8,457,000, a decrease of $668,000 from the same period last year. The primary reason for the decrease in year-to-date noninterest income was 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 processing a certain amount of tax items, which started in 2021 and will end in 2025. For the nine months ended September 30, 2021, the Bank recognized $675,000 of additional income under the agreement. Contributing to higher noninterest revenue was interchange income on debit and credit card transactions as customers increased spending. Interchange income increased $107,000, or 9.5%, during the three months ended September 30, 2021, and $457,000, or 15.2%, during the first nine months of 2021, as compared to the same periods in 2020, respectively. During the first nine months of 2021, the Company experienced lower mortgage banking income following the heightened refinance boom that occurred during 2020. As a result, mortgage banking income decreased $266,000 and $422,000 during the three and nine months ended September 30, 2021, respectively, when compared to the same periods in 2020.

For the three months ended September 30, 2021, noninterest expense totaled $9,469,000, a decrease of $422,000 from the same period last year. For the nine months ended September 30, 2021, noninterest expense totaled $27,953,000, a decrease of $1,059,000, or 3.7%, from the same period last year. The Company's largest noninterest expense, salaries and employee benefits, decreased $497,000 as compared to the third quarter of 2020 and decreased $829,000, or 4.9%, as compared to the first nine months of 2020. The decrease was primarily related to the expense savings associated with a lower number of employees. Further contributing to lower noninterest expense were professional fees. For the three months and nine months ended September 30, 2021, professional fees decreased $100,000 and $314,000, respectively, from the same periods last year. The decrease was related to lower legal fees associated with collecting troubled loans. Partially offsetting the expense reductions described above was an increase in software expense and FDIC insurance expense. During the three months ended September 30, 2021, software expense increased $146,000 and increased $236,000 during the first nine months of 2021, as compared to the same periods in 2020. The increase was related to the purchase of software to enhance the platform used for the loan origination process, as well as, to process PPP loans. For the nine months ended September 30, 2021, FDIC insurance expense increased $149,000 from the first nine months of 2020. The increase was primarily due to assessment credits received from the FDIC in 2020 that were not received in 2021.

The Company's total assets at September 30, 2021 were $1.245 billion, an increase of $58 million from December 31, 2020. The increase in assets was related to a $61 million increase in securities. The growth in securities was linked to investing the heightened deposit balances received during the first nine months of 2021. At September 30, 2021, total deposits had increased $58 million from year end, primarily as a result of customers receiving stimulus payments.

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 16 offices in Ohio and West Virginia, Loan Central, Inc. with six consumer finance offices in Ohio, and Race Day Mortgage, Inc., an online consumer direct mortgage company. 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 Nine months ended

September 30, September 30,

2021 2020 2021 2020

PER SHARE DATA

Earnings per share $ 0.63 $ 0.48 $ 1.97 $ 1.16

Dividends per share $ 0.21 $ 0.21 $ 0.63 $ 0.63

Book value per share $ 29.54 $ 27.76 $ 29.54 $ 27.76

Dividend payout ratio (a) 33.11% 43.82% 31.99% 54.26%

Weighted average shares outstanding 4,783,886 4,787,446 4,786,246 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) $ 426 $ 398 $ 1,288 $ 1,142

PERFORMANCE RATIOS

Return on average equity 8.63% 6.92% 9.13% 5.70%

Return on average assets 0.96% 0.81% 1.03% 0.69%

Net interest margin (d) 3.57% 3.88% 3.62% 4.04%

Efficiency ratio (e) 72.32% 78.33% 70.88% 73.77%

Average earning assets (in 000's) $ 1,164,309 $ 1,044,060 $ 1,142,658 $ 997,425

(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 averageearning assets.

(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 Nine months ended

(in $000's) September 30, September 30,

2021 2020 2021 2020

Interest income:

Interest and fees on loans $ 10,522 $ 10,877 $ 31,649 $ 32,389

Interest and dividends on securities 654 677 1,791 2,169

Interest on interest-bearing deposits with banks 50 20 111 200

Total interest income 11,226 11,574 33,551 34,758

Interest expense:

Deposits 692 1,274 2,374 4,150

Borrowings 175 218 555 727

Total interest expense 867 1,492 2,929 4,877

Net interest income 10,359 10,082 30,622 29,881

Provision for loan losses (93) (2) (118) 3,451

Noninterest income:

Service charges on deposit accounts 514 423 1,309 1,249

Trust fees 70 64 212 193

Income from bank owned life insurance and

annuity assets 253 207 701 616

Mortgage banking income 179 445 544 966

Electronic refund check/deposit fees --- --- 675 ---

Debit / credit card interchange income 1,237 1,130 3,460 3,003

Gain (loss) on other real estate owned --- (1) 1 (84)

Tax preparation fees 3 9 752 643

Litigation settlement --- --- --- 2,000

Other 356 157 803 539

Total noninterest income 2,612 2,434 8,457 9,125

Noninterest expense:

Salaries and employee benefits 5,476 5,973 16,025 16,854

Occupancy 483 481 1,415 1,362

Furniture and equipment 287 284 852 824

Professional fees 425 525 1,282 1,596

Marketing expense 128 306 664 867

FDIC insurance 84 69 242 93

Data processing 667 538 1,902 1,841

Software 464 318 1,347 1,111

Foreclosed assets 10 38 32 117

Amortization of intangibles 11 14 38 48

Other 1,434 1,345 4,154 4,299

Total noninterest expense 9,469 9,891 27,953 29,012

Income before income taxes 3,595 2,627 11,244 6,543

Income taxes 559 333 1,816 984

NET INCOME $ 3,036 $ 2,294 $ 9,428 $ 5,559

OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)

(in $000's, except share data) September 30, December 31

2021 2020

ASSETS

Cash and noninterest-bearing deposits with banks $ 14,328 $ 14,989

Interest-bearing deposits with banks 120,736 123,314

Total cash and cash equivalents 135,064 138,303

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

Securities available for sale 173,448 112,322

Securities held to maturity (estimated fair value: 2021 - $9,949; 2020 - 9,753 10,020$10,344)

Restricted investments in bank stocks 7,265 7,506

Total loans 845,733 848,664

Less: Allowance for loan losses (6,664) (7,160)

Net loans 839,069 841,504

Premises and equipment, net 20,811 21,312

Premises and equipment held for sale, net 441 637

Other real estate owned, net --- 49

Accrued interest receivable 3,118 3,319

Goodwill 7,319 7,319

Other intangible assets, net 74 112

Bank owned life insurance and annuity assets 37,078 35,999

Operating lease right-of-use asset, net 1,235 880

Other assets 8,203 5,150

Total assets $ 1,245,378 $ 1,186,932

LIABILITIES

Noninterest-bearing deposits $ 331,195 $ 314,777

Interest-bearing deposits 720,480 678,962

Total deposits 1,051,675 993,739

Other borrowed funds 23,285 27,863

Subordinated debentures 8,500 8,500

Operating lease liability 1,235 880

Accrued liabilities 19,753 19,626

Total liabilities 1,104,448 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 99,400 92,988

Accumulated other comprehensive income 1,088 2,436

Treasury stock, at cost (2021 - 676,308 shares, 2020 - 659,739 shares) (16,170) (15,712)

Total shareholders' equity 140,930 136,324

Total liabilities and shareholders' equity $ 1,245,378 $ 1,186,932

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

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SOURCE Ohio Valley Banc Corp.