Item 2.02. Results of Operations and Financial Condition
GALLIPOLIS, Ohio - Ohio Valley Banc Corp. [Nasdaq: OVBC] (the "Company")
reported consolidated net income for the quarter ended March 31, 2022, of
$4,125,000, an increase of $594,000, or 16.8%, from the same period the prior
year. Earnings per share for the first quarter of 2022 was $.87, compared to
$.74 for the first quarter of 2021. Return on average assets and return on
average equity were 1.34% and 11.78%, respectively, for the first quarter of
2022, versus 1.20% and 10.47%, respectively, for the same period the prior year.
"OVBC has had a successful quarter, and we intend to build on this momentum,"
said Chairman and CEO Tom Wiseman. "At Ohio Valley Bank, we recently
demonstrated this by expanding operating hours and announcing that contactless
OVB credit cards are arriving in May. Loan Central has completed another season
of tax advance loans and is helping the members of its communities prepare for
summer expenses. At Race Day Mortgage, we are pushing out of the starting gate
as we have now realized full staffing and are lending in more states with more
lead generation partners. All these plans stem from a dedication to enhance the
communities we serve. I cannot think of a better way to honor the bank's 150th
anniversary year."
For the first quarter of 2022, net interest income decreased $58,000 from the
first quarter of 2021. For the three months ended March 31, 2022, average
earning assets increased $61 million from the same period the prior year. The
increase was due to average securities and average balances maintained at the
Federal Reserve, which increased $69 million and $11 million, respectively, from
the first quarter of last year in relation to higher average deposit balances.
Partially offsetting the growth in these areas was the $18 million decrease in
average loan balances. The decrease in average loans was related to SBA
Paycheck Protection Program (PPP) loans. As of March 31, 2022, all PPP loans
have been paid off. As a result, the average balance of PPP loans decreased $27
million and the corresponding interest and fees on PPP loans decreased $352,000
for the first quarter of 2022, as compared to the same period last year. The
earnings contribution from the higher balance of earning assets was offset by a
decrease in the net interest margin. For the quarter ended March 31, 2022, the
net interest margin was 3.51%, compared to 3.73% for the same period the prior
year. The decrease was attributable to the higher relative balances maintained
in securities and the Federal Reserve, which generally yield less than loans.
For the three months ended March 31, 2022, the provision for loan loss expense
was negative $1,126,000, a decrease of $1,074,000 from the first quarter of
2021. The negative provision for loan loss expense for the first quarter of
2022 was primarily related to lower general reserves in association with
improved economic risk factors and a decrease in loan balances since December
31, 2021, which was partly offset by quarterly net charge-offs of $88,000. The
decrease in general reserves was related to lower criticized and classified
loans and the partial release of the COVID reserve for the pandemic
environment. Based on positive asset quality trends and low net charge offs,
management released $645,000 of the COVID economic risk factor. We will monitor
the pandemic environment and asset quality trends moving forward to determine
the appropriate level of the COVID economic risk factor, which totaled
$1,936,000 at March 31, 2022. The allowance for loan losses was .65% of total
loans at March 31, 2022, compared to .78% at December 31, 2021 and .83% at March
31, 2021.
For the first quarter of 2022, noninterest income totaled $3,720,000, an
increase of $381,000 from the first quarter of 2021. The increase was related
to a $153,000 increase in service charges on deposit accounts, an $85,000
increase in interchange income on debit and credit card transactions, and a
$56,000 increase in mortgage banking income in relation to our new mortgage
company, Race Day Mortgage.
Noninterest expense totaled $9,788,000 for the first quarter of 2022, an
increase of $601,000, or 6.5%, from the same period last year. The Company's
largest noninterest expense, salaries and employee benefits, increased $300,000,
or 5.7%, from the first quarter of 2021. The increase was primarily related to
staffing Race Day Mortgage and to annual merit increases. Further contributing
to higher noninterest expense was data processing. For the three months ended
March 31, 2022, data processing expense increased $97,000 from the same period
last year due to higher credit and debit card transaction volume. Also
contributing to higher noninterest expense for the first quarter of 2022 was a
$59,000 increase in professional fees and a $54,000 increase in software
expense, as compared to the same period last year.
The Company's total assets at March 31, 2022 were $1.258 billion, an increase of
$8 million from December 31, 2021. The increase in assets was related to a $12
million increase in both securities and balances maintained at the Federal
Reserve, which was partially offset by a $20 million decrease in loans. The
decrease in loans was largely related to the payoff of a limited number of large
commercial loans. At March 31, 2022, total deposits increased $15 million and
shareholders' equity decreased $5 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 quarter of 2022, the fair value of securities decreased
$8 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 novel 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.
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OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)
Three months ended
March 31,
2022 2021
PER SHARE DATA
Earnings per share $ 0.87 $ 0.74
Dividends per share $ 0.21 $ 0.21
Book value per share $ 28.63 $ 28.77
Dividend payout ratio (a) 24.20 % 28.47 %
Weighted average shares outstanding 4,761,072 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) $ 515 $ 425
PERFORMANCE RATIOS
Return on average equity 11.78 % 10.47 %
Return on average assets 1.34 % 1.20 %
Net interest margin (d) 3.51 % 3.73 %
Efficiency ratio (e) 70.81 % 68.03 %
Average earning assets (in 000's) $ 1,167,366 $ 1,105,984
(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)
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