Ohio Valley Banc Corp. Reports 2nd Quarter Earnings

Rhea-AI Summary

Ohio Valley Banc Corp. (OVBC) reported a net income of $1,999,000 for Q2 2022, down $862,000 year-over-year, with EPS declining to $0.42 from $0.60. For the first half, net income totaled $6,124,000, a 4.2% decrease. While net interest income rose by $338,000 in Q2, the net interest margin fell to 3.58% due to a shift in asset composition. Noninterest expense increased by 7.2% in the first half, driven by staffing costs and software expenses. Total assets reached $1.254 billion, while shareholders' equity declined by $9 million, reflecting a fair value adjustment on securities.

Positive

• Net interest income increased by $338,000 in Q2 2022.
• Noninterest income rose by $130,000 in Q2, primarily from service charges.
• Decrease in nonperforming loans to 0.46% from 0.77% year-over-year.

Negative

• Net income decreased by $862,000 in Q2 2022.
• EPS declined to $0.42 from $0.60 in the prior year.
• Noninterest expense increased by 7.2% in the first half of 2022.

GALLIPOLIS, Ohio, July 28, 2022 /PRNewswire/ -- Ohio Valley Banc Corp. [Nasdaq: OVBC] (the "Company") reported consolidated net income for the quarter ended June 30, 2022, of $1,999,000, a decrease of $862,000 from the same period the prior year. Earnings per share for the second quarter of 2022 were $.42 compared to $.60 for the prior year second quarter. For the six months ended June 30, 2022, net income totaled $6,124,000, a decrease of $268,000, or 4.2%, from the same period the prior year. Earnings per share were $1.29 for the first six months of 2022 versus $1.34 for the first six months of 2021. Return on average assets and return on average equity were .98% and 8.87%, respectively, for the first half of 2022, compared to 1.06% and 9.39%, respectively, for the same period in the prior year.

Ohio Valley Banc Corp. President and CEO, Larry Miller said, "OVBC has had an active quarter. We are set to open our newest Ohio Valley Bank location in Ironton later this summer.  The office will expand our footprint into Lawrence County, Ohio, as well as keep us on the path to continue growing as a strong, independent community bank. We have also been involved in local county fairs this summer and are proud to continue our support of these wonderful community events. OVB's 150th anniversary celebration has also continued with our locations hosting special customer appreciation events along with monthly cash giveaways. Although market conditions continue to be very challenging, our associates at Race Day Mortgage are now offering lending services in additional states across the country. As we continue to grow, our goal of enhancing the communities we serve remains steadfast."

For the second quarter of 2022, net interest income increased $338,000, and for the six months ended June 30, 2022, net interest income increased $280,000 from the same respective periods last year. Contributing to the increase in net interest income was the growth in average earning assets. For the six months ended June 30, 2022, average earning assets increased $39 million from the same period the prior year. The increase was partly due to average securities, which increased $58 million from the first half of last year in relation to higher average deposit balances. Partially offsetting the growth in securities was the $14 million decrease in average loan balances. The decrease in average loans was related to SBA Paycheck Protection Program (PPP) loans. As of the first quarter of 2022, all PPP loans have been paid off. As a result, the average balance of PPP loans decreased $24 million and the corresponding interest and fees on PPP loans decreased $697,000 for the first half of 2022, as compared to the same period last year. The earnings contribution from the higher balance of earning assets was partially offset by a decrease in the net interest margin. For the six months ended June 30, 2022, the net interest margin was 3.58%, compared to 3.65% for the same period the prior year. The decrease was attributable to the higher relative balances maintained in securities, which generally yield less than loans. With the actions taken by the Federal Reserve to increase interest rates during the first half of 2022, the net interest margin has responded positively. On a linked quarter basis, the net interest margin increased to 3.64% for the second quarter of 2022 versus 3.51% for the first quarter of 2022.

For the three months ended June 30, 2022, the provision for loan losses totaled $813,000, an increase of $786,000 from the same period last year. The quarterly provision for loan loss expense was primarily associated with quarter-to-date net charge-offs of $868,000, of which, $613,000 was related to a single loan relationship. For the six months ended June 30, 2022, the provision for loan losses was negative $313,000, a decrease of $288,000 from the same period last year. The negative provision for loan loss expense experienced during the first half of 2022 was due to a decrease in certain economic risk factors, such as the level of classified and criticized loans and the partial release of the COVID reserve. These improvements contributed to lower general reserves, which more than offset the year-to-date net charge-offs of $956,000 and the increase in specific reserves on collateral-dependent, impaired loans of $287,000. The allowance for loan losses was .60% of total loans at June 30, 2022, compared to .78% at December 31, 2021 and .80% at June 30, 2021. The ratio of nonperforming loans to total loans improved to .46% at June 30, 2022, compared to .56% at December 31, 2021 and .77% at June 30, 2021.

For the three months ended June 30, 2022, noninterest income totaled $2,636,000, an increase of $130,000 from the same period last year, which was attributable to service charges on deposit accounts. For the six months ended June 30, 2022, noninterest income totaled $6,356,000, an increase of $511,000 from the same period last year. The increase in year-to-date noninterest income was due to a $358,000 increase in service charges on deposit accounts, an $89,000 increase in interchange income on debit and credit card transactions, and a $90,000 increase in mortgage banking income in relation to our new mortgage company, Race Day Mortgage.

For the three months ended June 30, 2022, noninterest expense totaled $10,023,000, an increase of $726,000 from the same period last year. For the six months ended June 30, 2022, noninterest expense totaled $19,811,000, an increase of $1,327,000, or 7.2%, from the same period last year. The Company's largest noninterest expense, salaries and employee benefits, increased $404,000 as compared to the second quarter of 2021 and increased $704,000 as compared to the first half of 2021. The increase was primarily related to the staffing of Race Day Mortgage and to annual merit increases. Further contributing to higher noninterest expense was software expense, professional fees and data processing. For the three months and six months ended June 30, 2022, software expense increased $122,000 and $176,000, respectively, from the same periods last year. The increase was partly due to software platforms utilized by Race Day Mortgage. Professional fees increased $71,000 during the second quarter of 2022 and increased $130,000 during the first half of 2022, compared to the same periods in 2021. Professional fees were impacted by higher accounting fees associated with additional audit requirements. For the six months ended June 30, 2022, data processing expense increased $125,000 from the same period last year due to higher credit and debit card transaction volume.

The Company's total assets at June 30, 2022 were $1.254 billion, an increase of $4 million from December 31, 2021. During the first half of 2022, the Company deployed a portion of the heightened cash balance into higher yielding earning assets. Since December 31, 2021, loan balances have increased $39 million, which was largely related to funding a warehouse line of credit for a mortgage lender. In addition, the securities portfolio increased $16 million. These increases were funded by a $58 million decrease cash and cash equivalents. At June 30, 2022, total deposits increased $13 million and shareholders' equity decreased $9 million from year end 2021. The decrease in shareholders' equity was related to recording the fair value adjustment for securities classified as available-for-sale. Based on the increase in market rates during the first half of 2022, the fair value of securities decreased $13 million on an after-tax basis.

Ohio Valley Banc Corp. common stock is traded on The NASDAQ Global Market under the symbol OVBC. The 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 coronavirus (COVID-19) pandemic on our business, operations, customers and capital position; (ii) 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; (iii) 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; (iv) competitive pressures;  (v) fluctuations in interest rates; (vi) the level of defaults and prepayment on loans made by the Company; (vii) unanticipated litigation, claims, or assessments; (viii) fluctuations in the cost of obtaining funds to make loans; (ix) regulatory changes; and (x) 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				Six months ended
			June 30,				June 30,
			2022		2021		2022		2021
PER SHARE DATA
Earnings per share			$          0.42		$          0.60		$            1.29		$          1.34
Dividends per share			$          0.36		$          0.21		$            0.57		$          0.42
Book value per share			$        27.78		$        29.12		$          27.78		$         29.12
Dividend payout ratio (a)			85.89 %		35.14 %		44.35 %		31.46 %
Weighted average shares outstanding			4,771,774		4,787,446		4,766,453		4,787,446
DIVIDEND REINVESTMENT (in 000's)
Dividends reinvested under
employee stock ownership plan (b)			$              -		$              -		$             154		$           188
Dividends reinvested under
dividend reinvestment plan (c)			$           710		$           437		$          1,225		$           862
PERFORMANCE RATIOS
Return on average equity			5.87 %		8.32 %		8.87 %		9.39 %
Return on average assets			0.63 %		0.92 %		0.98 %		1.06 %
Net interest margin (d)			3.64 %		3.58 %		3.58 %		3.65 %
Efficiency ratio (e)			75.33 %		72.41 %		73.03 %		70.16 %
Average earning assets (in 000's)			$  1,174,755		$  1,157,040		$   1,171,081		$  1,131,654
(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 earning assets.
(e) 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				Six months ended
(in $000's)			June 30,				June 30,
			2022		2021		2022		2021
Interest income:
Interest and fees on loans			$       10,020		$       10,562		$        19,818		$       21,127
Interest and dividends on securities			969		604		1,775		1,137
Interest on interest-bearing deposits with banks			232		33		285		61
Total interest income			11,221		11,199		21,878		22,325
Interest expense:
Deposits			507		799		1,026		1,682
Borrowings			161		185		309		380
Total interest expense			668		984		1,335		2,062
Net interest income			10,553		10,215		20,543		20,263
Provision for loan losses			813		27		(313)		(25)
Noninterest income:
Service charges on deposit accounts			595		390		1,153		795
Trust fees			86		70		167		142
Income from bank owned life insurance and
annuity assets			195		200		469		448
Mortgage banking income			220		186		455		365
Electronic refund check/deposit fees			135		135		675		675
Debit / credit card interchange income			1,177		1,173		2,312		2,223
Gain on other real estate owned			0		0		7		1
Tax preparation fees			50		55		738		749
Other			178		297		380		447
Total noninterest income			2,636		2,506		6,356		5,845
Noninterest expense:
Salaries and employee benefits			5,683		5,279		11,253		10,549
Occupancy			424		465		902		932
Furniture and equipment			279		269		545		565
Professional fees			498		427		987		857
Marketing expense			229		268		458		536
FDIC insurance			88		79		170		158
Data processing			688		660		1,360		1,235
Software			556		434		1,059		883
Foreclosed assets			36		8		37		22
Amortization of intangibles			10		14		20		27
Other			1,532		1,394		3,020		2,720
Total noninterest expense			10,023		9,297		19,811		18,484
Income before income taxes			2,353		3,397		7,401		7,649
Income taxes			354		536		1,277		1,257
NET INCOME			$        1,999		$        2,861		$          6,124		$         6,392
OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except share data)							June 30,		December 31
							2022		2021
ASSETS
Cash and noninterest-bearing deposits with banks							$        14,942		$       14,111
Interest-bearing deposits with banks							79,152		137,923
Total cash and cash equivalents							94,094		152,034
Certificates of deposit in financial institutions							1,873		2,329
Securities available for sale							193,617		177,000
Securities held to maturity (estimated fair value:  2022 - $9,037; 2021 - $10,450)							9,735		10,294
Restricted investments in bank stocks							7,265		7,265
Total loans							870,252		831,191
Less:  Allowance for loan losses							(5,214)		(6,483)
Net loans							865,038		824,708
Premises and equipment, net							20,742		20,730
Premises and equipment held for sale, net							432		438
Other real estate owned, net							15		15
Accrued interest receivable							2,940		2,695
Goodwill							7,319		7,319
Other intangible assets, net							44		64
Bank owned life insurance and annuity assets							37,750		37,281
Operating lease right-of-use asset, net							1,116		1,195
Other assets							11,906		6,402
Total assets							$   1,253,886		$  1,249,769
LIABILITIES
Noninterest-bearing deposits							$      346,144		$     353,578
Interest-bearing deposits							727,210		706,330
Total deposits							1,073,354		1,059,908
Other borrowed funds							18,484		19,614
Subordinated debentures							8,500		8,500
Operating lease liability							1,116		1,195
Other liabilities							19,862		19,196
Total liabilities							1,121,316		1,108,413
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value per share, 10,000,000 shares authorized;
2022 - 5,465,707 shares issued; 2021 - 5,447,185 shares issued)							5,465		5,447
Additional paid-in capital							51,722		51,165
Retained earnings							104,110		100,702
Accumulated other comprehensive income							(12,061)		708
Treasury stock, at cost (693,933 shares)							(16,666)		(16,666)
Total shareholders' equity							132,570		141,356
Total liabilities and shareholders' equity							$   1,253,886		$  1,249,769

 

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

View original content:https://www.prnewswire.com/news-releases/ohio-valley-banc-corp-reports-2nd-quarter-earnings-301595437.html

SOURCE Ohio Valley Banc Corp.

FAQ

What was Ohio Valley Banc Corp.'s net income for Q2 2022?

Ohio Valley Banc Corp. reported a net income of $1,999,000 for Q2 2022.

How did OVBC's earnings per share change in Q2 2022?

Earnings per share for OVBC decreased to $0.42 in Q2 2022, down from $0.60 in the same quarter of the previous year.

What is the current financial outlook for Ohio Valley Banc Corp. in 2022?

The financial outlook indicates challenges with decreasing net income and rising noninterest expenses, impacting profitability.

What was the increase in noninterest income for OVBC in Q2 2022?

Noninterest income increased by $130,000 in Q2 2022, primarily due to higher service charges.

How did the net interest margin for OVBC change in the first half of 2022?

The net interest margin decreased to 3.58% for the first half of 2022, down from 3.65% in the same period last year.