Ohio Valley Banc Corp. Reports 4th Quarter and Fiscal Year Earnings

Rhea-AI Summary

Ohio Valley Banc Corp. (NASDAQ: OVBC) reported Q4 2024 consolidated net income of $2,515,000, down $708,000 from Q4 2023. Full-year 2024 net income was $10,999,000, a 12.9% decrease from 2023. Earnings per share decreased to $2.32 in 2024 from $2.65 in 2023.

The company's performance was impacted by two significant one-time expenses: $3.3 million for a voluntary early retirement program and $496,000 in account bonuses for new Sweet Home Ohio depositors. Net interest income increased by $2,777,000 for the year, driven by loan growth and increased securities. Total assets reached $1.503 billion, up $151 million from 2023, with total loans increasing by $90 million, primarily in commercial and residential real estate segments.

The allowance for credit losses was 0.95% of total loans, with nonperforming loans ratio increasing to 0.46%. Return on average assets and equity were 0.77% and 7.50% respectively for 2024.

Positive

• Net interest income increased by $2,777,000 year-over-year
• Average loans increased by $86 million in 2024
• Total assets grew by $151 million to $1.503 billion
• Noninterest income increased by $542,000 to $13,171,000

Negative

• Net income decreased 12.9% to $10,999,000 in 2024
• EPS declined to $2.32 from $2.65 year-over-year
• One-time expense of $3.3 million for early retirement program
• Nonperforming loans ratio increased to 0.46% from 0.26%
• Return on average assets decreased to 0.77% from 0.99%

Insights

Financial Analyst

OVBC's 2024 performance reflects a strategic transformation despite the headline decline in earnings. The $3.3 million early retirement program expense, while impacting short-term profits, positions the bank for improved operational efficiency through reduced personnel costs in future periods. This move demonstrates management's focus on long-term cost optimization.

The bank's participation in the Ohio Homebuyer Plus program represents an innovative approach to deposit gathering, securing $97 million in stable, subsidized funding from the state treasurer. While the $496,000 in account bonuses impacted immediate earnings, this strategy provides a competitive advantage in deposit acquisition during a period of intense funding competition.

Notable operational shifts include:

• Strategic exit from indirect auto lending to focus on higher-margin commercial and residential real estate segments
• $90 million increase in total loans, primarily in commercial and residential sectors
• Improved asset utilization by reducing low-yielding Federal Reserve balances by $47 million

The bank's asset quality metrics remain solid, with allowance for credit losses at 0.95% of total loans, though NPLs showed a modest increase to 0.46%. The $151 million growth in total assets to $1.503 billion demonstrates successful execution of expansion strategies, particularly in core banking activities.

GALLIPOLIS, Ohio, Jan. 28, 2025 /PRNewswire/ -- Ohio Valley Banc Corp. [Nasdaq: OVBC] (the "Company") reported consolidated net income for the quarter ended December 31, 2024, of $2,515,000, a decrease of $708,000 from the same period the prior year. Earnings per share for the fourth quarter of 2024 were $.53 compared to $.68 for the prior year fourth quarter. For the year ended December 31, 2024, net income totaled $10,999,000, a decrease of $1,632,000, or 12.9%, from the same period the prior year. Earnings per share were $2.32 for 2024 versus $2.65 for 2023. Return on average assets and return on average equity were .77% and 7.50%, respectively, for the year ended December 31, 2024, compared to .99% and 9.24%, respectively, for the same period in the prior year.

Ohio Valley Banc Corp. President and CEO, Larry Miller stated, "While it is never enjoyable to report lower net income, given all that was accomplished in 2024, I am quite pleased with how the company is positioned for future success. Net income was down primarily due to two one-time expenses that management knowingly accepted to put the company in a more favorable position as we look to the future. The largest of the two expenses was the $3.3 million associated with the voluntary early retirement program. The other one-time expense was the $496,000 in account bonuses paid to new Sweet Home Ohio depositors. Both of these expenses are part of a broader strategy to improve shareholder value and further our Community First Mission."

For the three months ended December 31, 2024, net interest income increased $1,755,000, and for the year ended December 31, 2024, net interest income increased $2,777,000 from the same respective periods last year. Contributing to the increase in quarterly net interest income was the $187 million increase in average earning assets. For the year ended December 31, 2024, the increase in net interest income was attributable to the $149 million increase in average earning assets, which was partially offset by the 23 basis point decrease in the net interest margin. In general, the growth in earning assets was primarily driven by loan growth followed by an increase in average securities and higher average balances being maintained at the Federal Reserve. For 2024, average loans increased $86 million from the prior year. The loan growth experienced during 2024 exceeded expectations and occurred primarily within the commercial lending and residential real estate lending segments. A portion of the growth in the residential real estate segment was associated with the higher utilization of a warehouse line of credit extended to another mortgage lender. For 2024, average securities increased $36 million and average balances maintained at the Federal Reserve increased $28 million from the prior year. These increases were related to investing deposit growth that exceeded loan growth. The decrease in the net interest margin for the respective periods was related to the cost of funding sources increasing more than the yield on earning assets. This increase in the cost of funding was partially linked to the Company's decision to increase rates on deposit accounts to attract deposits amidst heightened market competition for such funds. In addition, the composition of funding sources trended toward certificates of deposit and wholesale funding sources, which generally cost more than other funding sources, such as checking, NOW, savings and money market deposit products.

For the three months ended December 31, 2024, the provision for credit losses was $617,000, a decrease of $72,000 from the same period last year. The provision for credit loss expense for the fourth quarter of 2024 was primarily related to additional reserves for certain qualitative risk factors, quarter-to-date net charge-offs of $433,000 and a $13 million quarterly increase in loan balances. These increases were partially offset by the release of a $427,000 specific reserve on a collateral dependent individually evaluated loan due to obtaining additional collateral to cover the deficiency. In addition, the improvement in the unemployment and gross domestic product forecast contributed to lower expected loss rates. For the year ended December 31, 2024, the provision for credit losses was $2,469,000, an increase of $379,000 from the same period last year. The year-to-date provision for credit loss expense was primarily associated with net charge-offs of $1,260,000, loan growth of $90 million and additional reserves associated with certain qualitative risk factors. The allowance for credit losses was .95% of total loans at December 31, 2024, compared to .90% at December 31, 2023. The ratio of nonperforming loans to total loans increased to .46% at December 31, 2024, compared to .26% at December 31, 2023.

For the three months ended December 31, 2024, noninterest income totaled $3,920,000, an increase of $339,000 from the same period last year. For the year ended December 31, 2024, noninterest income totaled $13,171,000, an increase of $542,000 from the same period last year. The increases were largely due to service charges on deposit accounts and interchange income earned on debit and credit card transactions. For 2024, service charges on deposit accounts increased $339,000 from the prior year. The increase was primarily related to an increase in the volume of overdraft transactions during 2024. Debit and credit card interchange income for 2024 increased $108,000 from the prior year due to an increase in the number of transactions.

For the three months ended December 31, 2024, noninterest expense totaled $13,306,000, an increase of $3,004,000 from the same period last year. For the year ended December 31, 2024, noninterest expense totaled $46,130,000, an increase of $4,762,000 from the same period last year. The Company's largest noninterest expense, salaries and employee benefits, increased $3,076,000 as compared to the fourth quarter of 2023, and $4,391,000 as compared to the year ended December 31, 2023. The increase was primarily related to annual merit increases, higher health insurance premiums, and the severance expense associated with a voluntary early retirement program. During the third quarter of 2024, the Company established a voluntary early retirement program for select employees meeting certain criteria. Based on the number of employees that accepted the severance package, the Company incurred an expense of $3,338,000. The early retirement program is expected to reduce salary and employee benefit expense on a go-forward basis. The growth in salaries and employee benefit expense was partially offset by the elimination of staffing for Race Day Mortgage by April 2023, which resulted in a savings of $200,000 for 2024, when compared to the same period last year.

Further contributing to higher noninterest expense were customer rewards for new accounts, data processing and professional fees. During the third quarter, the Company began participating in a program offered by the Ohio Treasurer called Ohio Homebuyer Plus. The program is designed to encourage Ohio residents to save for the purchase of a home. As a participant in the program, the Company developed the Sweet Home Ohio deposit account to offer participants an above-market interest rate along with a deposit bonus to assist customers in achieving their home savings goal. During the fourth quarter of 2024, the Company paid account bonuses totaling $496,000 to new Sweet Home Ohio deposit customers. For the three months and year ended December 31, 2024, data processing increased $53,000 and $285,000, respectively, from the same periods last year. The increase was primarily related to debit card processing due to higher transaction volume and to higher costs associated with enhancements to the Company's digital banking platform. Professional fees increased $10,000 for the fourth quarter of 2024 and increased $217,000 for year ended 2024, as compared to the same periods in 2023. The increase was related to higher director fees and a general increase in legal and accounting fees. These increases were partially offset by a decrease in software expense and marketing expense. For 2024, software expense decreased $389,000 from the prior year due to the closure of Race Day Mortgage, which eliminated certain processing platforms. Marketing expense for 2024 decreased $190,000 from the prior year due to a reduction in select marketing campaigns.

The Company's total assets at December 31, 2024 were $1.503 billion, an increase of $151 million from December 31, 2023. As previously discussed, the Company began participating in the Ohio Treasurer's Ohio Homebuyer Plus program. For each Sweet Home Ohio account that was opened, the Company received a deposit from the Treasurer at a subsidized interest rate. At December 31, 2024, the balance of Sweet Home Ohio accounts totaled $6.8 million and the amount deposited by the Treasurer totaled $97 million. These deposit balances were the key contributor to the $148 million increase in total deposits. Since the Treasurer deposits are classified as public funds, which are required to be collateralized, the Company invested the funds in securities to be pledged as collateral to the Treasurer. The investment of these funds contributed to the $105 million increase in securities from December 31, 2023. As of December 31, 2024, total loans have increased $90 million. The increase was largely in the commercial and residential real estate segments. The growth in these segments was partially offset by a decrease in consumer loans, as this segment was deemphasized by the Company in 2024 as other loan portfolio segments are more profitable. In line with its decision to deemphasize consumer loans, the Company exited the indirect lending business for autos and recreational vehicles effective October 11, 2024. To assist with funding the growth in loans, the balance of funds maintained at the Federal Reserve decreased $47 million from year end 2023, which provided a higher rate of return. At December 31, 2024, shareholders' equity increased $6.3 million from year end 2023. This was primarily from year-to-date net income of $11 million and an increase in accumulated other comprehensive income of $.9 million, partially offset by cash dividends paid of $4.2 million and the purchase of 82,673 treasury shares for $1.9 million under the Company's treasury repurchase program.

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 17 offices in Ohio and West Virginia, and Loan Central, Inc. 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; (vii) regulatory changes; and (viii) 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				Twelve months ended
				December 31,				December 31,
				2024		2023		2024		2023
	PER SHARE DATA
	Earnings per share			$          0.53		$          0.68		$            2.32		$           2.65
	Dividends per share			$          0.22		$          0.22		$            0.88		$           1.02
	Book value per share			$        31.91		$        30.17		$          31.91		$         30.17
	Dividend payout ratio (a)			41.21 %		32.59 %		37.98 %		38.56 %
	Weighted average shares outstanding			4,711,001		4,773,132		4,736,820		4,774,607
	DIVIDEND REINVESTMENT (in 000's)
	Dividends reinvested under
	employee stock ownership plan (b)			$                -		$                -		$             202		$            193
	Dividends reinvested under
	dividend reinvestment plan (c)			$           368		$           405		$          1,524		$         1,949
	PERFORMANCE RATIOS
	Return on average equity			6.62 %		9.32 %		7.50 %		9.24 %
	Return on average assets			0.66 %		0.97 %		0.77 %		0.99 %
	Net interest margin (d)			3.70 %		3.71 %		3.71 %		3.94 %
	Efficiency ratio (e)			77.83 %		68.47 %		73.79 %		69.82 %
	Average earning assets (in 000's)			$  1,414,863		$  1,227,454		$   1,330,841		$  1,182,155
	(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				Twelve months ended
	(in $000's)			December 31,				December 31,
				2024		2023		2024		2023
	Interest income:
	Interest and fees on loans			$       16,864		$       14,953		$        64,938		$       54,821
	Interest and dividends on securities			2,364		997		6,378		4,174
	Interest on interest-bearing deposits with banks			794		1,172		4,447		2,870
	Total interest income			20,022		17,122		75,763		61,865
	Interest expense:
	Deposits			6,393		5,193		24,639		14,174
	Borrowings			559		614		2,320		1,664
	Total interest expense			6,952		5,807		26,959		15,838
	Net interest income			13,070		11,315		48,804		46,027
	Provision for (recovery of) credit losses			617		689		2,469		2,090
	Noninterest income:
	Service charges on deposit accounts			773		722		3,039		2,700
	Trust fees			100		79		404		326
	Income from bank owned life insurance and
	annuity assets			241		223		929		860
	Mortgage banking income			45		42		163		175
	Electronic refund check/deposit fees			0		0		675		675
	Debit / credit card interchange income			1,274		1,187		4,968		4,860
	Tax preparation fees			4		2		644		669
	Other			1,483		1,326		2,349		2,364
	Total noninterest income			3,920		3,581		13,171		12,629
	Noninterest expense:
	Salaries and employee benefits			8,833		5,757		27,782		23,391
	Occupancy			447		463		1,938		1,903
	Furniture and equipment			313		342		1,300		1,321
	Professional fees			370		360		1,873		1,656
	Marketing expense			146		287		820		1,010
	FDIC insurance			179		148		648		569
	Data processing			679		626		3,094		2,809
	Software			556		878		2,260		2,649
	Foreclosed assets			6		0		4		15
	Amortization of intangibles			0		3		8		21
	Other			1,777		1,438		6,403		6,024
	Total noninterest expense			13,306		10,302		46,130		41,368
	Income before income taxes			3,067		3,905		13,376		15,198
	Income taxes			552		682		2,377		2,567
	NET INCOME			$        2,515		$        3,223		$        10,999		$       12,631
	OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
	(in $000's, except share data)							December 31,		December 31,
								2024		2023
	ASSETS
	Cash and noninterest-bearing deposits with banks							$        15,704		$       14,252
	Interest-bearing deposits with banks							67,403		113,874
	Total cash and cash equivalents							83,107		128,126
	Securities available for sale							268,120		162,258
	Securities held to maturity, net of allowance for credit losses of $1 in 2024 and $2 in 2023							7,049		7,986
	Restricted investments in bank stocks							5,007		5,037
	Total loans							1,061,825		971,900
	Less:  Allowance for credit losses							(10,088)		(8,767)
	Net loans							1,051,737		963,133
	Premises and equipment, net							21,229		21,450
	Premises and equipment held for sale, net							507		573
	Accrued interest receivable							4,805		3,606
	Goodwill							7,319		7,319
	Other intangible assets, net							0		8
	Bank owned life insurance and annuity assets							42,048		40,593
	Operating lease right-of-use asset, net							1,024		1,205
	Deferred tax assets							7,218		6,306
	Other assets							4,242		4,535
	Total assets							$   1,503,412		$  1,352,135
	LIABILITIES
	Noninterest-bearing deposits							$      322,383		$     322,222
	Interest-bearing deposits							952,795		804,914
	Total deposits							1,275,178		1,127,136
	Other borrowed funds							39,740		44,593
	Subordinated debentures							8,500		8,500
	Operating lease liability							1,024		1,205
	Allowance for credit losses on off-balance sheet commitments							582		692
	Other liabilities							28,060		26,002
	Total liabilities							1,353,084		1,208,128
	SHAREHOLDERS' EQUITY
	Common stock ($1.00 stated value per share, 10,000,000 shares authorized;
	2024 - 5,490,995 shares issued; 2023 - 5,470,453 shares issued)							5,491		5,470
	Additional paid-in capital							52,321		51,842
	Retained earnings							121,693		114,871
	Accumulated other comprehensive income (loss)							(10,484)		(11,428)
	Treasury stock, at cost (2024 - 779,994 shares; 2023 - 697,321 shares)							(18,693)		(16,748)
	Total shareholders' equity							150,328		144,007
	Total liabilities and shareholders' equity							$   1,503,412		$  1,352,135

 

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

View original content:https://www.prnewswire.com/news-releases/ohio-valley-banc-corp-reports-4th-quarter-and-fiscal-year-earnings-302362526.html

SOURCE Ohio Valley Banc Corp.

FAQ

What was OVBC's net income for Q4 2024?

OVBC reported Q4 2024 consolidated net income of $2,515,000, a decrease of $708,000 from Q4 2023.

How much did OVBC's loan portfolio grow in 2024?

OVBC's total loans increased by $90 million in 2024, primarily in commercial and residential real estate segments.

What were the major one-time expenses affecting OVBC's 2024 earnings?

OVBC incurred two major one-time expenses: $3.3 million for a voluntary early retirement program and $496,000 in Sweet Home Ohio deposit account bonuses.

What was OVBC's earnings per share (EPS) for full-year 2024?

OVBC's earnings per share for 2024 were $2.32, compared to $2.65 in 2023.

How did OVBC's asset size change in 2024?

OVBC's total assets increased by $151 million to reach $1.503 billion by December 31, 2024.