UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended:
MARCH 31, 1997
Commission file number: 0-20914
Ohio Valley Banc Corp.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Ohio
--------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
31-1359191
---------------------------------------
(I.R.S. Employer Identification Number)
420 Third Avenue. Gallipolis, Ohio 45631
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (614) 446-2631
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
------- -------
Indicate the number of shares outstanding of the issuers classes of
commom stock, as of the latest practicable date.
Common stock, $1.00 stated value Outstanding at April 30, 1997
1,326,326 common shares
<PAGE>
OHIO VALLEY BANC CORP
FORM 10-Q
QUARTER ENDED MARCH 31, 1997
Part I - Financial Information
Item 1 - Financial Statements
Interim financial information required by Regulation 210.10-01 of Regulation
S-X is included in this Form 10Q as referenced below:
Consolidated Balance Sheets...................................... 1
Consolidated Statements of Income................................ 2
Condensed Consolidated Statements of Changes in
Shareholders' Equity.......................................... 4
Condensed Consolidated Statements of Cash Flows.................. 5
Notes to the Consolidated Financial Statements................... 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations........ 11
<PAGE>
OHIO VALLEY BANC CORP
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1997 1996
------------ -------------
ASSETS
Cash and noninterest-bearing deposits with banks $ 8,159,765 $ 8,687,640
Federal funds sold 8,950,000
------------ ------------
Total cash and cash equivalents 17,109,765 8,687,640
Interest-bearing balances with banks 101,986 77,618
Securities available-for-sale (Note 2) 33,163,199 30,591,988
Securities held-to-maturity (Approximate market
value: $33,149,000 and $36,253,000)(Note 2) 32,978,077 35,996,835
Total loans (Note 3) 258,302,556 254,044,106
Allowance for loan losses (Note 4) (3,117,885) (3,080,494)
------------ ------------
Net loans 255,184,671 250,963,612
Premises and equipment, net 7,052,010 6,365,672
Accrued interest receivable 2,404,719 2,354,809
Other assets 6,238,206 5,884,503
------------ ------------
Total assets $354,232,633 $340,922,677
============ ============
LIABILITIES
Noninterest-bearing deposits $ 34,578,180 $ 34,091,593
Interest-bearing deposits 259,521,257 247,733,542
------------ ------------
Total deposits 294,099,437 281,825,135
Securities sold under agreements to repurchase 10,769,860 8,713,972
Other borrowed funds (Note 6) 14,544,517 17,210,117
Accrued liabilities 3,854,136 2,795,452
------------ ------------
Total liabilities 323,267,950 310,544,676
------------ ------------
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 5,000,000
shares authorized; 1,326,326 shares issued
and outstanding at March 31, 1997; $10.00
stated value, 1,318,262 shares issued and
outstanding at December 31, 1996) 1,326,326 13,182,620
Surplus 24,774,017 12,618,641
Retained earnings 4,831,796 4,376,500
Net unrealized gains on available-for-sale
securities 32,544 200,240
------------ ------------
Total shareholders' equity 30,964,683 30,378,001
------------ ------------
Total liabilities and
shareholders' equity $354,232,633 $340,922,677
============ ============
See notes to the consolidated financial statements.
1
<PAGE>
OHIO VALLEY BANC CORP
CONSOLIDATED STATEMENTS OF INCOME
Three months ended March 31,
1997 1996
------------ ------------
Interest and fees on loans $ 6,144,464 $ 5,202,484
Interest and dividends on securities:
Taxable 793,950 897,952
Nontaxable 153,838 155,558
Dividends 44,423 37,215
------------ ------------
992,211 1,090,725
Interest on federal funds sold 12,382 79,247
Interest on deposits with banks 1,152 657
------------ ------------
Interest on investments 1,005,745 1,170,629
------------ ------------
Total interest income 7,150,209 6,373,113
Interest expense:
Interest on deposits 2,978,813 2,834,241
Interest on repurchase agreements 69,861 99,884
Interest on other borrowed funds 249,544 70,776
------------ ------------
Total interest expense 3,298,218 3,004,901
------------ ------------
Net interest income 3,851,991 3,368,212
Provision for loan losses (Note 4) 299,482 237,802
------------ ------------
Net interest income after provision 3,552,509 3,130,410
Other income:
Service charges on deposit accounts 186,919 181,477
Trust division income 47,695 75,608
Other operating income 180,720 81,666
------------ ------------
Total other income 415,334 338,751
Other expense:
Salaries and employee benefits 1,682,535 1,414,089
FDIC premiums 8,498 500
Occupancy expense 122,417 123,852
Furniture and equipment expense 141,347 143,468
Data processing expense 156,000 106,737
Other operating expense 782,311 656,564
------------ ------------
Total other expense 2,893,108 2,445,210
------------ ------------
(Continued)
2
<PAGE>
OHIO VALLEY BANC CORP
CONSOLIDATED STATEMENTS OF INCOME (Continued)
Three months ended March 31,
1997 1996
------------ ------------
Income before federal income taxes $ 1,074,735 $ 1,023,951
Provision for income taxes 289,873 297,385
------------ ------------
Net income $ 784,862 $ 726,566
============ ============
Earnings per share (Note 1): $ .45 $ .42
============ ============
Dividends per share (Note 1): $ .19 $ .18
============ ============
Weighted average shares
outstanding (Note 1): 1,763,334 1,718,657
See notes to the consolidated financial statements.
3
<PAGE>
OHIO VALLEY BANC CORP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
Three months ended March 31,
1997 1996
------------ ------------
Balance at beginning of period $ 30,378,001 $ 27,577,478
Net income 784,862 726,566
Proceeds from issuance of common
stock through the dividend
reinvestment plan 299,082 141,265
Cash dividends (329,566) (308,798)
Net change in unrealized
appreciation on available-
for-sale securities (167,696) (148,819)
------------ ------------
Balance at end of period $ 30,964,683 $ 27,987,692
============ ============
See notes to the consolidated financial statements.
4
<PAGE>
OHIO VALLEY BANC CORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31,
1997 1996
------------ ------------
Net cash from operating activities $ 1,926,842 $ 734,048
Investing activities
Proceeds from maturities of
securities available-for-sale 1,000,000 5,500,000
Purchases of securities available-
for-sale (3,008,281)
Proceeds from maturities of
securities held-to-maturity 4,012,365 3,914,346
Purchase of securities held-to-maturity (1,782,783) (345,680)
Change in interest-bearing deposits
in other banks (24,368) (300)
Net increase in loans (4,520,540) (11,043,269)
Purchase of premises and equipment, net (815,216) (236,158)
------------ ------------
Net cash from investing activities (5,138,823) (2,211,061)
Financing activities
Net change in deposits 12,274,302 5,559,863
Cash dividends (329,566) (308,798)
Proceeds from issuance of common stock 299,082 141,265
Change in securities sold under
agreements to repurchase 2,055,888 1,766,335
Proceeds from long-term borrowings 11,200,000 2,279,523
Repayment of long-term borrowings (4,090,600) (2,364,813)
Change in other short-term borrowings (9,775,000)
------------ ------------
Net cash from financing activities 11,634,106 7,073,375
------------ ------------
Change in cash and cash equivalents 8,422,125 5,596,362
Cash and cash equivalents at beginning
of year 8,687,640 11,230,748
------------ -------------
Cash and cash equivalents at end of year $ 17,109,765 $ 16,827,110
============ =============
See notes to the consolidated financial statements
5
<PAGE>
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include the accounts of Ohio
Valley Banc Corp. and its wholly owned subsidiaries The Ohio Valley Bank Company
and Loan Central, Inc. All material intercompany accounts and transactions have
been eliminated in consolidation.
These interim financial statements are prepared without audit and reflect all
adjustments of a normal recurring nature which, in the opinion of Management,
are necessary to present fairly the consolidated financial position of Ohio
Valley Banc Corp. at March 31, 1997, and its results of operations and cash
flows for the periods presented. The accompanying consolidated financial
statements do not purport to contain all the necessary financial disclosures
required by generally accepted accounting principles that might otherwise be
necessary in the circumstances. The Annual Report for Ohio Valley Banc Corp. for
the year ended December 31, 1996, contains consolidated financial statements and
related notes which should be read in conjunction with the accompanying
consolidated financial statements.
The provision for income taxes is based upon the effective income tax rate
expected to be applicable for the entire year.
For consolidated financial statement classification and cash flow reporting
purposes, cash and cash equivalents include cash on hand, noninterest-bearing
deposits with banks and federal funds sold. For the three months ended March 31,
1997 and March 31, 1996, Ohio Valley Banc Corp. paid interest in the amount of
$2,944,177 and $3,642,552, respectively. For the three months ended March 31,
1997 and March 31, 1996, Ohio Valley Banc Corp. paid income taxes of $160,000
and $0, respectively.
Earnings per share is computed based on the weighted average shares outstanding
during the period. On April 9, 1997, the Board of Directors declared a four for
three stock split to shareholders of record on April 21, 1997. The stock split
was recorded by transferring from retained earnings an amount equal to the
stated value of the shares issued. Earnings and cash dividends per share amounts
have been retroactively adjusted to reflect the effect of the stock split.
On April 9, 1997, the shareholders approved a proposal to fix the stated capital
of the common shares of the Company at one dollar per share, a change from ten
dollars per share previously applied.
(Continued)
6
<PAGE>
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SECURITIES
The amortized cost, gross unrealized gains and losses and estimated fair values
of the securities, as presented in the consolidated balance sheet at March 31,
1997 and December 31, 1996 are as follows:
March 31, 1997
-----------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Values
------------ ---------- ---------- ------------
Securities Available-for-Sale
- -----------------------------
U.S. Treasury
securities $ 30,055,191 $ 226,394 $ 59,898 $ 30,221,687
Marketable equity
securities 3,058,700 117,188 2,941,512
------------ ---------- ---------- ------------
Total securities $ 33,113,891 $ 226,394 $ 177,086 $ 33,163,199
============ ========== ========== ============
Securities Held-to-Maturity
- ---------------------------
U.S. Government agency
securities $ 19,690,814 $ 72,081 $ 106,777 $ 19,656,118
Obligations of state and
political subdivisions 12,247,807 260,254 28,818 12,479,243
Corporate Obligations 506,960 5,090 512,050
Mortgage-backed securities 532,496 1,299 31,896 501,899
------------ ---------- ---------- ------------
Total securities $ 32,978,077 $ 338,724 $ 167,491 $ 33,149,310
============ ========== ========== ============
December 31, 1996
-----------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Values
------------ ---------- ---------- ------------
Securities Available-for-Sale
- -----------------------------
U.S. Treasury
securities $ 28,038,794 $ 432,570 $ 4,176 $ 28,467,188
Marketable equity
securities 2,249,800 125,000 2,124,800
------------ ---------- ---------- ------------
Total securities $ 30,288,594 $ 432,570 $ 129,176 $ 30,591,988
============ ========== ========== ============
Securities Held-to-Maturity
- ---------------------------
U.S. Government agency
securities $ 22,441,039 $ 100,444 $ 84,667 $ 22,456,816
Obligations of state and
political subdivisions 12,252,242 288,961 29,808 12,511,395
Corporate Obligations 758,062 7,838 765,900
Mortgage-backed securities 545,492 1,724 28,551 518,665
------------ ---------- ---------- ------------
Total securities $ 35,996,835 $ 398,967 $ 143,026 $ 36,252,776
============ ========== ========== ============
(Continued)
7
<PAGE>
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SECURITIES (Continued)
The amortized cost and estimated fair value of debt securities at March 31,
1997, by contractual maturity, are shown below. Actual maturities may differ
from contractual maturities because certain borrowers may have the right to call
or prepay the debt obligations prior to their contractual maturities.
Available-for-Sale Held-to-Maturity
--------------------------- ---------------------------
Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
------------ ------------ ------------ ------------
Debt securities:
Due in one year
or less $ 6,982,393 $ 7,033,281 $ 12,899,754 $ 12,833,022
Due in one to
five years 23,072,798 23,188,406 14,181,789 14,261,567
Due in five to
ten years 5,364,038 5,552,822
Mortgage-backed sec. 532,496 501,899
------------ ------------ ------------ ------------
Total debt
securities $ 30,055,191 $ 30,221,687 $ 32,978,077 $ 33,149,310
============ ============ ============ ============
Gains and losses on the sale of securities are determined using the specific
identification method. There were no sales of debt or equity securities during
the first three months of 1997 or 1996.
NOTE 3 - LOANS
Total loans as presented on the balance sheet are comprised of the following
classifications:
March 31, December 31,
1997 1996
------------ ------------
Real estate loans $114,313,742 $113,648,586
Commercial and industrial loans 66,588,408 63,174,969
Consumer loans 75,016,770 74,908,483
Other loans 2,383,636 2,312,068
------------ ------------
$258,302,556 $254,044,106
============ ============
At March 31, 1997 and December 31, 1996, loans on nonaccrual status were
approximately $773,000 and $737,000, respectively. Loans past due more than 90
days and still accruing at March 31, 1997 and December 31, 1996 were $2,484,000
and $2,207,000, respectively. Other real estate owned at March 31, 1997 totaled
$217,110 unchanged from December 31, 1996.
(Continued)
8
<PAGE>
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - ALLOWANCE FOR LOAN LOSSES
A summary of activity in the allowance for loan losses for the three months
ended March 31, 1997 and March 31, 1996 is as follows:
1997 1996
------------ ------------
Balance - January 1, $ 3,080,494 $ 2,388,639
Loans charged off:
Real estate 2,741 1,250
Commercial 118,962
Consumer 194,709 133,289
------------ ------------
Total loans charged off 316,412 134,539
Recoveries of loans:
Real estate
Commercial 104 103
Consumer 54,217 21,074
------------ -----------
Total recoveries 54,321 21,177
Net loan charge-offs (262,091) (113,362)
Provision charged to operations 299,482 237,802
------------ ------------
Balance - March 31, $ 3,117,885 $ 2,513,079
============ ============
Information regarding impaired loans at March 31, 1997 and March 31, 1996:
1997 1996
------------ ------------
Balance of impaired loans $ 437,837 $ 579,423
Less portion for which no allowance for
loan losses is allocated
------------ ------------
Portion of impaired loan balance for which an
allowance for credit losses is allocated $ 437,837 $ 579,423
============ ============
Portion of allowance for loan losses
allocated to the impaired loan balance $ 200,000 $ 100,000
============ ============
Information regarding impaired loans for the periods ended March 31, 1997
and March 31, 1996:
Average investment in impaired
loans for the year $ 448,337 $ 629,423
Interest income recognized on impaired
loans including interest income
recognized on a cash basis
Interest income recognized on impaired
loans on a cash basis
(Continued)
9
<PAGE>
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - CONCENTRATIONS OF CREDIT RISK AND FINANCIAL
INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Company, through its subsidiaries, grants residential, consumer, and
commercial loans to customers located primarily in the southeastern Ohio area.
Approximately 8.90% of total loans are unsecured at March 31, 1997.
The Corporation is a party to financial instruments with off-balance sheet risk.
These instruments are required in the normal course of business to meet the
financial needs of its customers. The contract or notional amounts of these
instruments are not included in the consolidated financial statements. At March
31, 1997, the contract or notional amounts of these instruments, which primarily
include commitments to extend credit and standby letters of credit and financial
guarantees, totaled approximately $30,804,000.
NOTE 6 - OTHER BORROWED FUNDS
Other borrowed funds at March 31, 1997 and December 31, 1996 are comprised of
advances from the Federal Home Loan Bank (FHLB)and promissory notes. Pursuant to
collateral agreements with the FHLB, advances are secured by certain qualifying
first mortgage loans which total $20,041,708 at March 31, 1997. Promissory notes
have been issued primarily by Loan Central and are due at various dates through
a final maturity date of May 29, 2002.
Interest Balance Balance
Maturity Rates at 3/31/97 at 12/31/96
-------- ------- ------------ ------------
1997 5.60-6.91 $ 2,000,000 $ 11,675,000
1998 5.55-6.05 7,644,461 448,616
2000 6.00-6.15 1,500,000 1,500,000
2002 5.80-6.10 2,216,677 2,300,788
------------ -------------
Total FHLB borrowings 13,361,138 15,924,404
Promissory notes 4.50-7.10 1,183,379 1,285,713
------------ -------------
Total $ 14,544,517 $ 17,210,117
============ =============
The following table is a summary of the scheduled principal payments for these
borrowings at March 31, 1997:
1997 1998 1999 2000 2001 Thereafter
---- ---- ---- ---- ---- ----------
FHLB borrowings $2,303,890 $7,997,305 $ 389,718 $1,913,709 $ 439,178 $ 317,338
Promissory notes 1,082,197 10,230 15,981 16,780 52,650 5,541
(Continued)
10
<PAGE>
OHIO VALLEY BANC CORP
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
INTRODUCTION
The following discussion focuses on the consolidated financial condition of Ohio
Valley Banc Corp. at March 31, 1997, compared to December 31, 1996, and the
consolidated results of operations for the first three months of 1997 compared
to the same period in 1996. The purpose of this discussion is to provide the
reader a more thorough understanding of the consolidated financial statements.
This discussion should be read in conjunction with the interim consolidated
financial statements and the footnotes included in this Form 10-Q.
The Registrant is not aware of any trends, events or uncertainties that will
have or are reasonably likely to have a material effect on the liquidity,
capital resources or operations except as discussed herein. Also, the Registrant
is not aware of any current recommendations by regulatory authorities which
would have such effect if implemented.
FINANCIAL CONDITION
The consolidated total assets of Ohio Valley Banc Corp. grew $13,310,000 or 3.9%
to reach $354,233,000 at March 31, 1997. The growth in total assets occurred in
federal funds sold and loans which had increases of $8,950,000 and $4,258,000.
Funding the growth in assets was an increase in total deposits of $12,274,000.
For the first quarter of 1997, commercial loans expanded $3,413,000 or 5.4% and
was due primarily to one loan. For the same time period, mortgage loans grew
$665,000 and consumer loans increased slightly. At March 31, 1997, the ratio of
loans to deposits was 87.8% compared to 90.1% at December 31, 1996. The decline
in this ratio was attributable to deposit growth exceeding loan growth. Loans
past due more than 90 days plus loans placed on nonaccrual status were
approximately $3,257,000 or 1.26% of outstanding balances at March 31, 1997
compared to $2,944,000 or 1.16% of outstanding balances at the end of 1996. As a
result of the Company's continued loan growth and increase in nonperforming
loans, management provided an additional $62,000 to the allowance for losses
compared to the provision expense for the first quarter of 1996. Management
anticipates that it will continue its provision to the allowance for loan losses
at its current level for the foreseeable future and believes the allowance is
adequate to absorb inherent losses in the portfolio based on collateral values.
As a percentage of total loans, the allowance for loan losses at March 31, 1997
was 1.21% versus 1.10% at March 31, 1996.
The securities portfolio declined only slightly from December 31, 1996 as the
majority of matured securities were reinvested in U.S. Treasury notes or FHLB
stock. The fair market value of the portfolio was higher than the amortized cost
by $221,000 at March 31, 1997 compared to a $559,000 unrealized gain at
December 31, 1996. The decrease in market value was due to an increase in market
rates during the first quarter of 1997. Within the Company's portfolio are
securities which are considered to be structured notes. Structured notes are
debt securities other than mortgage-backed securities whose cash flow
characteristics depend on one or more indices and/or that have embedded forward,
put or call options. The investment portfolio contains $10,500,000 of structured
notes which represents 16% of the entire portfolio. The fair market value of
these securities was less than the amortized cost by $97,000 or .9%. Management
has the ability and presently intends to hold these securities to maturity. $2
million of step-up bonds matured during the first quarter of 1997. The Company
has had no sales of investment securities during 1997 and does not anticipate
any sales.
11
<PAGE>
Total deposits on March 31, 1997, of $294,099,000 represents an increase of
$12,274,000 or 4.4% from December 31, 1996. Time deposits grew $6,609,000 or
3.8% and savings and interest-bearing demand deposits grew $5,179,000 or 7.0%. A
portion of the deposit growth was associated with the collection and
distribution of real estate taxes to various deposit accounts within the bank.
Securities sold under agreements to repurchase increased $2,056,000 from
December 31, 1996. Other borrowed funds are primarily advances from the Federal
Home Loan Bank (FHLB), which are used to fund loan growth or short-term
liquidity needs. Other borrowed funds are down $2,666,000 from December 31,
1996.
Total shareholders' equity at March 31, 1997 of $30,965,000 was 1.9% greater
than the balance of $30,378,000 on December 31, 1996. Contributing to this
increase was year-to-date income of $785,000 and proceeds from the issuance of
common stock through the dividend reinvestment plan of $299,000 less cash
dividends paid of $330,000, or $.19 per share adjusted for the stock split. The
cash dividend represents 42.0% of the year-to-date income; although the Dividend
Reinvestment Plan effectively reduces the payout ratio to 3.9%. Management's
decision to effect a four for three stock split was generated by a desire to
make the Company's common stock more accessible to the smaller investor.
RESULTS OF OPERATIONS
Ohio Valley Banc Corp's net income was $785,000 for the first quarter of 1997,
up 8.0% compared to $727,000 for the first quarter of 1996. Comparing March 31,
1997 to March 31, 1996, return on assets increased to .93% from .92% and return
on equity decreased to 10.36% from 10.54%. The Company's earnings per share was
$.45 per share at March 31, 1997 which was $.03 higher than the $.42 per share
recorded for the first quarter of 1996, adjusted for the stock split. The
primary contributor to the gain in net income was net interest income. Net
interest income increased $484,000 or 14.4% over the first quarter of 1996 due
to the growth in earning assets accompanied by a higher net interest margin. The
Company achieved a higher net interest margin by allocating a larger percentage
of earning assets to loans.
Total other income increased $77,000 or 22.6% over March 31, 1996's total other
income of $339,000 due primarily to earnings on life insurance contracts
purchased in the fourth quarter of 1996 to take advantage of the tax preferenced
nature of life insurance contracts and to support additional benefit packages.
Total other expense of $2,893,000 at March 31, 1997, was up $448,000 or 18.3%
from the first quarter of 1996. Contributing to the increase in total other
expense was salary and employee benefits, which increased $268,000 or 19.0%.
With the establishment of additional offices and growth in assets which require
more people to service, the number of full-time equivalent employees increased
from 177 at March 31, 1996 to 206 at March 31, 1997. Data processing expense
increased $49,000 in relation to credit card processing and consulting services
provided in the implementation of a new processing system. Contributing to the
increase in other operating expense was the supplemental retirement program
established in 1997 and general increases in overhead expenses.
12
<PAGE>
CAPITAL RESOURCES
Shareholders' equity totaled $30,965,000 at March 31, 1997, compared to
$30,378,000 at December 31, 1996. All of the capital ratio's exceeded the
regulatory minimum guidelines as identified in the following table:
Company Ratios Regulatory
March 31, 1997 December 31, 1996 Minimum
-------------- ----------------- --------
Tier 1 risk-based capital 12.4% 12.5% 4.00%
Total risk-based capital ratio 13.7% 13.8% 8.00%
Leverage ratio 9.0% 8.9% 4.00%
Cash dividends paid of $330,000 for the first three months of 1997 represents a
6.7% increase over the cash dividends paid during the same period in 1996. The
increase in cash dividends paid is due to the additional shares outstanding
during 1997 which were not outstanding during 1996 and to the increase in the
dividend paid per share. During the first quarter of 1997, the Company issued
8,064 shares under the dividend reinvestment and stock purchase plan. At March
31, 1997, approximately 58% of the shareholders were enrolled in the dividend
reinvestment plan.
LIQUIDITY
Liquidity relates to the Bank's ability to meet the cash demands and credit
needs of its customers and is provided by the ability to readily convert assets
to cash and raise funds in the market place. Total cash and cash equivalents,
interest-bearing deposits with banks, securities available-for-sale and
held-to-maturity securities maturing within one year of $63,275,000 represented
17.9% of total assets at March 31, 1997. In addition, the Corporation has
established a $16,200,000 line of credit with the Federal Home Loan Bank in
Cincinnati to further enhance the bank's ability to meet liquidity demands. As
of March 31, 1997, the Bank had the full amount of the line of credit available.
The Company experienced an increase of $8,422,000 in cash and cash equivalents
for the three months ended March 31, 1997. See the condensed consolidated
statement of cash flows on page 5 for further cash flow information.
CONCENTRATION OF CREDIT RISK
The Company maintains a diversified credit portfolio, with real estate loans
comprising the most significant portion. Credit risk is primarily subject to
loans made to businesses and individuals in southeastern Ohio. Management
believes this risk to be general in nature, as there are no material
concentrations of loans to any industry or consumer group. To the extent
possible, the Company diversifies its loan portfolio to limit credit risk by
avoiding industry concentrations.
13
<PAGE>
OHIO VALLEY BANC CORP
Part II - Other Information
Submission of Matters to a Vote of Security Holders
- ---------------------------------------------------
Ohio Valley Banc Corp. held its Annual Meeting of Shareholders on April 9, 1997,
for the purpose of electing directors and fixing the stated capital of common
shares of the Company at one dollar per share. Shareholders received proxy
materials containing the information required by these items. Three Directors,
Keith R. Brandeberry, Merrill L. Evans, and Thomas E. Wiseman, were nominated
for reelection and were reelected. The proposal to fix the stated capital at one
dollar per share was approved. The summary of voting of the 1,325,937 shares
outstanding were as follows:
Director Candidate Shares voted: For Against Abstain
- ------------------ --- ------- -------
Keith R. Brandeberry 1,078,539 11,768
Merrill L. Evans 1,069,013 21,294
Thomas E. Wiseman 1,087,115 3,192
Proposal to fix the stated
capital of common shares of the
Company at one dollar per share 1,073,412 1,920 14,975
235,630 shares were not voted.
Exhibits and Reports on Form 8-K
- --------------------------------
A. Exhibits - not applicable
B. Reports - Form 8-K - No reports on Form 8-K were filed by the Registrant
during the first three months of 1997.
OHIO VALLEY BANC CORP.
------------------------------------
Date May 14, 1997 /S/ James L. Dailey
----------------- ------------------------------------
James L. Dailey
Chairman and Chief Executive Officer
Date May 14, 1997 /S/ Jeffrey E. Smith
----------------- ------------------------------------
Jeffrey E. Smith
President, Chief Operating Officer
and Treasurer
14
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 8,159,765
<INT-BEARING-DEPOSITS> 101,986
<FED-FUNDS-SOLD> 8,950,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 33,163,199
<INVESTMENTS-CARRYING> 32,978,077
<INVESTMENTS-MARKET> 33,149,310
<LOANS> 258,302,556
<ALLOWANCE> 3,117,885
<TOTAL-ASSETS> 354,232,633
<DEPOSITS> 294,099,437
<SHORT-TERM> 10,769,860
<LIABILITIES-OTHER> 3,854,136
<LONG-TERM> 14,544,517
0
0
<COMMON> 1,326,326
<OTHER-SE> 29,638,357
<TOTAL-LIABILITIES-AND-EQUITY> 354,232,633
<INTEREST-LOAN> 6,144,464
<INTEREST-INVEST> 992,211
<INTEREST-OTHER> 13,534
<INTEREST-TOTAL> 7,150,209
<INTEREST-DEPOSIT> 2,978,813
<INTEREST-EXPENSE> 3,298,218
<INTEREST-INCOME-NET> 3,851,991
<LOAN-LOSSES> 299,482
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,893,108
<INCOME-PRETAX> 1,074,735
<INCOME-PRE-EXTRAORDINARY> 1,074,735
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 784,862
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
<YIELD-ACTUAL> 4.75
<LOANS-NON> 773,701
<LOANS-PAST> 2,484,279
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 250,000
<ALLOWANCE-OPEN> 3,080,494
<CHARGE-OFFS> 316,412
<RECOVERIES> 54,321
<ALLOWANCE-CLOSE> 3,117,885
<ALLOWANCE-DOMESTIC> 1,944,526
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,173,359
</TABLE>
