OVB Corp. reports 3rd quarter earnings


Staff Report



GALLIPOLIS — Ohio Valley Banc Corp. reported consolidated net income for the quarter ended Sept. 30, of $1.64 million, a decrease of $1.1 million from the third quarter of 2014.

Earnings per share for the third quarter of 2015 were 40 cents compared to 67 cents for the prior year third quarter. For the nine months ended Sept. 30, 2015, net income totaled $6.67 million, a 12.7 percent decrease from net income of $7.65 million for the nine months ended Sept. 30, 2014.

Earnings per share were $1.62 for the first nine months of 2015 versus $1.87 for the first nine months of 2014. Return on average assets and return on average equity were 1.06 percent and 10.10 percent, respectively, for the first nine months of 2015, compared to 1.27 percent and 12.30 percent, respectively, for the same period in the prior year.

“In light of the unique events contributing to last year’s exceptionally strong third quarter, such as the sale of ProAlliance and negative provision for loan loss expense, our expectations for this year’s third quarter in comparison were conservative. We are pleased with the results, which surpassed the prior quarter’s earnings by $232,000,” said Thomas E. Wiseman, president and CEO. “Our 250 employees have invested their time and talents in the company’s Community First Mission. Their efforts have generated excitement and enthusiasm throughout our footprint, positively impacting the communities we serve. These dedicated bankers are responsible for the growth in our core lines of business.”

For the three months ended Sept. 30, 2015, net interest income increased $77,000 and for the nine months ended Sept. 30, 2015, net interest income increased $187,000, from the same respective periods last year. Positively impacting net interest income was the growth in earning assets.

For the nine months ended Sept. 30, 2015, average earning assets increased nearly $32 million, or 4.2 percent, from the same period the prior year. The growth in earning assets was attributable to an increase in average loan balances and to an increase in balances being maintained in interest-bearing deposits with banks. The growth in loan balances occurred within all loan segments, but was primarily attributable to commercial and consumer lending.

The growth in interest-bearing deposits with banks was related to higher balances being maintained at the Federal Reserve in relation to seasonal tax refund processing. Although the company experienced growth in average earning assets, the net interest margin declined.

For the three months ended Sept. 30, 2015, the provision for loan losses increased $671,000, and for the nine months ended Sept. 30, 2015, the provision for loan losses decreased $488,000 from the same respective periods in 2014. The provision for loan loss expense incurred for the first nine months of 2015 totaled $710,000.

Contributing to the year-to-date provision expense was year-to-date net charge-offs of $2,141,000, which was partially offset by a reduction in specific allocations on impaired loans of $1,293,000. Impacting both charge-offs and specific allocations was the charge-off of an existing specific allocation on a collateral dependent impaired loan totaling $1.3 million.

For the nine months ended Sept. 30, 2014, provision for loan loss expense totaled $1.2 million, which was attributable to net charge-offs of $389,000 and higher general reserves for certain economic risk factors. The ratio of nonperforming loans to total loans was 1.42 percent at Sept. 30, 2015 compared to .81 percent at Sept. 30, 2014.

For the three months ended Sept. 30, 2015, noninterest income totaled $1.6 million, a decrease of $522,000 from 2014’s third quarter. Noninterest income totaled $6.99 million for the nine months ended Sept. 30, 2015, as compared to $8.12 million for the same period last year, a decrease of $1.15 million. The primary contributor to the lower quarter-to-date and year-to-date noninterest income was the sale of the company’s nine percent ownership interest in ProAlliance, a specialty property and casualty insurance company.

During the third quarter of 2014, the company recorded a $675,000 gain from the sale of ProAlliance. The combination of the gain on sale with the $135,000 option to purchase fee received during the first quarter of 2014 generated a total gain on sale of $810,000. Also contributing to lower year-to-date noninterest income was the decrease in tax processing fees. Tax refund processing fees decreased $711,000 for the nine months ended Sept. 30, 2015, when compared to the same period in 2014. Although the volume of tax refunds processed increased from the prior year, the per item fees received by the company were lower under the new contract with the third-party tax refund product provider, which was reported in October of last year. For the first nine months of 2015, all other noninterest income sources increased $375,000 from the same period a year ago, led by interchange fees earned on debit and credit card transactions and gain on sale of securities.

For the three months ended Sept. 30, 2015, noninterest expense totaled $7.73 million, an increase of $483,000 from the same period last year. For the nine months ended Sept. 30, 2015, noninterest expense totaled $22.71 million, an increase of $1.17 million, or 5.4 percent, from the same period last year. The company’s largest noninterest expense, salaries and employee benefits, increased $343,000 from the third quarter of 2014 and increased $557,000 from the first nine months of 2014. The increase was primarily related to higher retirement benefit costs and annual merit increases. Also contributing to higher noninterest expense was the continued growth in debit and credit card transaction volume.

Staff Report

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