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, 1999
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
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(I.R.S. Employer Identification Number)
420 Third Avenue. Gallipolis, Ohio 45631
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (740) 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, 1999
2,825,436 common shares
<PAGE>
OHIO VALLEY BANC CORP
FORM 10-Q
QUARTER ENDED MARCH 31, 1999
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.......................................... 3
Condensed Consolidated Statements of Cash Flows.................. 4
Notes to the Consolidated Financial Statements................... 5
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations........ 10
Item 3 - Quantitative and Qualitative Disclosure About
Market Risk.......................................... 14
Part II - Other Information
Other Information and Signatures................................. 15
<PAGE>
OHIO VALLEY BANC CORP
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
March 31, December 31,
1999 1998
------------ ------------
ASSETS
Cash and noninterest-bearing deposits with banks $ 11,455 $ 12,342
Federal funds sold 2,125 375
------------ ------------
Total cash and cash equivalents 13,580 12,717
Interest-bearing balances with banks 502 795
Securities available-for-sale 25,905 26,255
Securities held-to-maturity 44,933 45,369
Total loans 367,943 347,130
Allowance for loan losses (4,431) (4,277)
------------ ------------
Net loans 363,512 342,853
Premises and equipment, net 8,650 8,360
Accrued interest receivable 3,019 2,723
Other assets 8,858 8,376
------------ ------------
Total assets $ 468,959 $ 447,448
============ ============
LIABILITIES
Noninterest-bearing deposits $ 41,382 $ 45,961
Interest-bearing deposits 326,142 281,356
------------ ------------
Total deposits 367,524 327,317
Securities sold under agreements to repurchase 9,008 19,066
Other borrowed funds 45,569 55,743
Accrued liabilities 5,290 4,642
------------ ------------
Total liabilities 427,391 406,768
------------ ------------
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 5,000,000
shares authorized; 2,825,436 and 2,818,413
shares issued and outstanding at March 31,
1999 and December 31, 1998) 2,825 2,818
Surplus 27,892 27,598
Retained earnings 10,435 9,797
Net unrealized gain on available-for-sale
securities 416 467
------------ ------------
Total shareholders' equity 41,568 40,680
------------ ------------
Total liabilities and
shareholders' equity $ 468,959 $ 447,448
============ ============
See notes to the consolidated financial statements.
1
<PAGE>
OHIO VALLEY BANC CORP
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
Three months ended March 31,
1999 1998
------------ ------------
Interest income:
Interest and fees on loans $ 8,345 $ 7,038
Interest on taxable securities 767 826
Interest on nontaxable securities 208 168
Dividends 68 59
Other interest 49 90
------------ ------------
Total interest income 9,437 8,181
Interest expense:
Interest on deposits 3,580 3,294
Interest on repurchase agreements 98 111
Interest on other borrowed funds 697 279
------------ ------------
Total interest expense 4,375 3,684
------------ ------------
Net interest income 5,062 4,497
Provision for loan losses 448 356
------------ ------------
Net interest income after provision 4,614 4,141
Other income:
Service charges on deposit accounts 256 202
Trust division income 56 52
Other operating income 266 250
------------ ------------
Total other income 578 504
Other expense:
Salaries and employee benefits 2,139 1,887
Occupancy expense 230 150
Furniture and equipment expense 230 192
Data processing expense 104 119
Other operating expense 1,066 964
------------ ------------
Total other expense 3,769 3,312
------------ ------------
Income before taxes 1,423 1,333
Provision for income taxes 391 366
------------ ------------
NET INCOME $ 1,032 $ 967
============ ============
Earnings per share $ 0.29 $ 0.28
============ ============
(Continued)
2
<PAGE>
OHIO VALLEY BANC CORP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(dollars in thousands, except per share data)
Three months ended March 31,
1999 1998
------------ ------------
Balance at beginning of period $ 40,680 $ 36,834
Comprehensive income:
Net income 1,032 967
Net change in unrealized gain on
available-for-sale securities (51) (1)
------------ ------------
Total comprehensive income 981 966
Proceeds from issuance of common
stock through the dividend
reinvestment plan 301 348
Cash dividends (394) (360)
------------ ------------
Balance at end of period $ 41,568 $ 37,788
============ ============
See notes to the consolidated financial statements.
3
<PAGE>
OHIO VALLEY BANC CORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands, except per share data)
Three months ended March 31,
1999 1998
------------ ------------
Net cash provided by operating activities $ 1,866 $ 2,119
Investing activities
Proceeds from maturities of
securities available-for-sale 2,100 3,500
Purchases of securities available-
for-sale (1,763)
Proceeds from maturities of
securities held-to-maturity 300 3,344
Change in interest-bearing deposits
in other banks 293 (14)
Net increase in loans (21,107) (8,538)
Purchases of premises and equipment, net (533) (660)
Purchases of insurance contracts (175) (580)
------------ ------------
Net cash from investing activities (20,885) (2,948)
Financing activities
Change in deposits 40,207 6,964
Cash dividends (394) (360)
Proceeds from issuance of common stock 301 348
Change in securities sold under
agreements to repurchase (10,059) 1,693
Proceeds from long-term borrowings 4,500 12,164
Repayment of long-term borrowings (3,345) (4,266)
Change in other short-term borrowings (11,328) (4,298)
------------ ------------
Net cash from financing activities 19,882 12,245
------------ ------------
Change in cash and cash equivalents 863 11,416
Cash and cash equivalents at beginning
of year 12,717 7,806
------------ -------------
Cash and cash equivalents at March 31, $ 13,580 $ 19,222
============ =============
See notes to the consolidated financial statements
4
<PAGE>
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
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, Jackson Savings Bank 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, 1999, 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, 1998, 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,
1999 and March 31, 1998, Ohio Valley Banc Corp. paid interest in the amount of
$4,466 and $3,804, respectively. For the three months ended March 31, 1999 and
March 31, 1998, Ohio Valley Banc Corp. paid income taxes of $140 and $50,
respectively.
Earnings per share is computed based on the weighted average shares outstanding
during the period. For the three months ended March 31, 1999 and March 31, 1998,
weighted average shares outstanding were 3,527,893 and 3,481,722, respectively.
On April 7, 1999, the Board of Directors declared a five for four stock split to
shareholders of record on April 19, 1999. 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.
The Company adopted Statement of Financial Accounting Standard No. 130,
"Reporting Comprehensive Income". Under this new accounting standard,
comprehensive income is now reported for all periods. Comprehensive income
includes both net income and other comprehensive income. Other comprehensive
income includes the change in unrealized gains and losses on securities
available-for-sale.
(Continued)
5
<PAGE>
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
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,
1999 and December 31, 1998 are as follows:
March 31, 1999
-----------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Values
------------ ---------- ---------- ------------
Securities Available-for-Sale
- -----------------------------
U.S. Treasury
securities $ 15,802 $ 240 $ 16,042
U.S. Government agency
securities 4,053 47 $ (16) 4,084
Mortgage-backed
securities 1,478 1 (12) 1,467
Marketable equity
securities 3,942 370 4,312
------------ ---------- ---------- ------------
Total securities $ 25,275 $ 658 $ (28) $ 25,905
============ ========== ========== ============
Securities Held-to-Maturity
- ---------------------------
U.S. Government agency
securities $ 27,676 $ 273 $ (21) $ 27,928
Obligations of state and
political subdivisions 16,892 507 (21) 17,378
Mortgage-backed securities 365 1 (19) 347
------------ ---------- ---------- ------------
Total securities $ 44,933 $ 781 $ (61) $ 45,653
============ ========== ========== ============
December 31, 1998
-----------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Values
------------ ---------- ---------- ------------
Securities Available-for-Sale
- -----------------------------
U.S. Treasury
securities $ 17,807 $ 336 $ 18,143
U.S. Government agency
securities 4,057 67 $ (10) 4,114
Marketable equity
securities 3,591 407 3,998
------------ ---------- ---------- ------------
Total securities $ 25,455 $ 810 $ (10) $ 26,255
============ ========== ========== ============
Securities Held-to-Maturity
- ---------------------------
U.S. Treasury securities $ 100 $ 100
U.S. Government agency
securities 27,693 $ 431 $ (12) 28,112
Obligations of state and
political subdivisions 17,195 571 (21) 17,745
Mortgage-backed securities 381 1 (20) 362
------------ ---------- ---------- ------------
Total securities $ 45,369 $ 1,003 $ (53) $ 46,319
============ ========== ========== ============
(Continued)
6
<PAGE>
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
NOTE 2 - SECURITIES (Continued)
The amortized cost and estimated fair value of debt securities at March 31,
1998, 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 $ 9,823 $ 9,932 $ 2,747 $ 2,762
Due in one to
five years 10,032 10,195 34,683 35,178
Due in five to
ten years 4,392 4,609
Due after ten years 2,745 2,757
Mortgage-backed sec. 1,478 1,466 366 347
------------ ------------ ------------ ------------
Total debt
securities $ 21,333 $ 21,593 $ 44,933 $ 45,653
============ ============ ============ ============
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 1999 or 1998.
NOTE 3 - LOANS
Total loans as presented on the balance sheet are comprised of the following
classifications:
March 31, December 31,
1999 1998
------------ ------------
Real estate loans $ 173,267 $ 163,650
Commercial and industrial loans 107,745 96,116
Consumer loans 85,574 85,664
Other loans 1,357 1,700
------------ ------------
$ 367,943 $ 347,130
============ ============
At March 31, 1999 and December 31, 1998, loans on nonaccrual status were
approximately $900 and $981, respectively. Loans past due more than 90 days and
still accruing at March 31, 1999 and December 31, 1998 were $3,416 and $2,106,
respectively. Other real estate owned at March 31, 1999 and December 31, 1998
was unchanged at $31.
(Continued)
7
<PAGE>
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
NOTE 4 - ALLOWANCE FOR LOAN LOSSES
A summary of activity in the allowance for loan losses for the three months
ended March 31 is as follows:
1999 1998
------------ ------------
Balance - January 1, $ 4,277 $ 3,290
Loans charged off:
Real estate 16 2
Commercial 45
Consumer 298 319
------------ ------------
Total loans charged off 359 321
Recoveries of loans:
Real estate 11 38
Commercial 2 44
Consumer 52 35
------------ -----------
Total recoveries 65 117
Net loan charge-offs (294) (204)
Provision charged to operations 448 356
------------ ------------
Balance - March 31, $ 4,431 $ 3,442
============ ============
Information regarding impaired loans is as follows:
March 31, December 31,
1999 1998
------------ ------------
Balance of impaired loans $ 619 $ 624
============ ============
Portion of impaired loan balance for which an
allowance for credit losses is allocated $ 619 $ 624
============ ============
Portion of allowance for loan losses
allocated to the impaired loan balance $ 250 $ 275
============ ============
Average investment in impaired
loans for the year $ 621 $ 632
============ ============
Interest on impaired loans was not material for the periods ended March 31,
1999 and December 31, 1998.
(Continued)
8
<PAGE>
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
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 8.06% of total loans were unsecured at March 31, 1999 as compared
to 8.04% at December 31, 1998.
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, 1999, 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 $45,955 as compared to $46,106 at December 31,
1998.
NOTE 6 - OTHER BORROWED FUNDS
Other borrowed funds at March 31, 1999 and December 31, 1998 are comprised of
advances from the Federal Home Loan Bank (FHLB), promissory notes and Federal
Reserve Bank Notes. Pursuant to collateral agreements with the FHLB, advances
are secured by certain qualifying first mortgage loans and by FHLB stock which
total $58,330 and $3,691 at March 31, 1999. Fixed rate FHLB advances of $36,386
mature through 2008 and have interest rates ranging from 4.88% to 6.15%. In
addition, variable rate FHLB borrowings represent $2,500.
Promissory notes, issued primarily by the parent company, have fixed rates of
5.15% to 7.00% and are due at various dates through a final maturity date of May
29, 2002.
Scheduled principal payments over the next five years are to be:
FHLB borrowings Promissory notes FRB Notes
--------------- ---------------- ---------
1999 $ 292 $ 4,051 $ 2,102
2000 14,188 512
2001 5,689 13
2002 5,336 5
2003 3,098
Thereafter 10,283
--------------- ---------------- ---------
$ 38,886 $ 4,581 $ 2,102
=============== ================ =========
(Continued)
9
<PAGE>
OHIO VALLEY BANC CORP
(dollars in thousands, except per share data)
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, 1999, compared to December 31, 1998, and the
consolidated results of operations for the first three months of 1999 compared
to the same period in 1998. 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.
On May 3, 1999, the Company entered into a purchase agreement to acquire two
West Virginia branches of Huntington National Bank. The two offices had combined
deposits of $27 million at December 31, 1998. These offices are the Milton
office, located at 280 East Main Street, Milton, and the Barboursville office,
located in the Krogers Supermarket at 5636 U.S. Route 60 East, Barboursville.
The purchase is subject to certain conditions including the approval of
regulatory authorities and is expected to be completed in the third quarter of
1999. Management entered into the agreement to expand and enhance the Company's
existing banking activities in West Virginia.
Management will continue to grow into new markets by establishing three
Superbanks in Wal-Mart stores. Two branches will be located in West Virginia,
one in Huntington and one in South Charleston. The third branch will be located
in South Point, Ohio.
FINANCIAL CONDITION
The consolidated total assets of Ohio Valley Banc Corp. grew $21,511 or 4.8% to
reach $468,959 at March 31, 1999. The growth in total assets occurred in loans
which increased $20,813. Funding the growth in loans was deposit growth of
$40,207 or 12.3%. A portion of the deposit growth was utilized to reduce
borrowed funds and securities sold under agreements to repurchase which are
collectively down $20,232.
For the first quarter of 1999, loan growth was led by commercial loans expanding
$11,629 or 12.1%. Approximately half of the commercial loan growth was generated
from the Columbus, Ohio market. In which, the Company has had a branch since
1997. For the same time period, real estate mortgages expanded $9,617 or 5.9%.
The Company has generated a large volume of new residential loans as well as
refinances. A majority of the real estate loans were generated in newer markets.
Consumer loans remained level for the first quarter. 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 and a
comprehensive analysis of the allowance for loan and lease loss which is
performed on a quarterly basis. As a percentage of total loans, the allowance
for loan losses at March 31, 1999 was 1.20% versus 1.23% at December 31, 1998.
10
<PAGE>
Total deposit growth was led by time deposits increasing $30,514 or 16.9%
followed by savings and interest-bearing demand deposits increasing $14,272 or
14.1%. Noninterest-bearing demand deposits are down $4,579. During the first
quarter, management generated deposit growth through more aggressive pricing,
especially in new markets. Management utilized the deposit growth to fund the
strong loan growth and to reduce borrowed funds.
Other borrowed funds are primarily advances from the Federal Home Loan Bank,
which are used to fund loan growth or short-term liquidity needs. Other borrowed
funds are down $10,174 from December 31, 1998. The decrease occurred primarily
in overnight borrowings. Furthermore, securities sold under agreements to
repurchase are down $10,058 from December 31, 1998.
Total shareholders' equity at March 31, 1999 of $41,568 was 2.2% greater than
the balance of $40,680 on December 31, 1998. Contributing to this increase was
year-to-date income of $1,032 and proceeds from the issuance of common stock
through the dividend reinvestment plan of $301 less cash dividends paid of $394,
or $.11 per share adjusted for the stock split. The cash dividend represents
38.2% of the year-to-date income; although the Dividend Reinvestment Plan
effectively reduces the payout ratio to 9.0%. Management's decision to effect a
five for four 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 $1,032 for the first quarter of 1999, up
6.7% compared to $967 for the first quarter of 1998. Comparing March 31, 1999 to
March 31, 1998, return on assets decreased from 1.03% to .91% and return on
equity decreased from 10.57% to 10.22%. The Company's earnings per share was
$.29 per share at March 31, 1999, as compared to $.28 per share recorded for the
first quarter of 1998, adjusted for the stock split. The primary contributor to
the gain in net income was net interest income. Net interest income increased
$564 or 12.5% over the first quarter of 1998 due to the growth in earning
assets. Net interest income was negatively impacted in the first quarter of 1999
by a decline in the net interest margin. The decline in net interest margin was
related to a decrease in interest rates during the fourth quarter of 1998.
The gain in net interest income was partially offset by net noninterest expense
being up $383 or 13.6%. Total other income increased $74 or 14.7% over March 31,
1998, due primarily to service charges on deposit accounts which contributed an
additional $54. Total other expense of $3,769 at March 31, 1999, was up $457 or
13.8% from the first quarter of 1998. Contributing to the increase in total
other expense was salary and employee benefits, which increased $252 or 13.4%.
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 217 at March 31, 1998 to 243 at March 31, 1999. Additionally, the Company
awarded annual merit increases. The growth in operations coupled with the
investment in processing technology provided for the increase in occupancy
expense and furniture and equipment expense. The upgrade in technology produced
the decrease in data processing. Contributing to the increase in other operating
expense was computer software depreciation and general increases in overhead
expenses.
11
<PAGE>
In May of 1997, a six member committee was formed and charged with the
responsibility of ensuring that the Company will be ready for the Year 2000
transition. This committee has conducted extensive inventories of the Company's
computer software and hardware as well as other equipment that may be microchip
dependent. The vendors associated with the aforementioned hardware and software
were contacted to determine the product's Year 2000 readiness. A Year 2000 plan
has been developed which commits the Company to being Year 2000 compliant by
December 31, 1998, thereby affording the Company one full year to test all
mission critical systems to verify their viability for the Year 2000 and beyond.
The Company's core software applications, which process loans and deposits, were
developed with the Year 2000 in mind. Nevertheless, in October 1998 the Company
tested its core hardware and software applications. The review of the test
results produced no Year 2000 problems.
The awareness and assessment phases of the Company's Year 2000 effort are
complete. Management estimates that 90% of renovations have been completed.
Ninety percent of the Company's testing has been completed. Management plans to
have all renovations and testing completed by June 30, 1999. Management
anticipates a total compliance cost of less than $100,000 and therefore such
costs will not materially effect the Company's results of operations, liquidity
and capital resources.
The risks associated with the Company's Year 2000 compliance relate primarily to
its relationships with critical business partners, which include service
suppliers and customers, and their ability to effectively address Year 2000
issues. In an effort to mitigate such risk, the Company has attempted to assess
the Year 2000 efforts and preparedness of our significant customers and service
suppliers. The Company has formulated a Year 2000 contingency plan which was
approved by the Company's Board of Directors.
CAPITAL RESOURCES
All of the capital ratio's exceeded the regulatory minimum guidelines as
identified in the following table:
Company Ratios Regulatory
March 31, 1999 December 31, 1998 Minimum
----------------- ----------------- ---------
Tier 1 risk-based capital 12.1% 12.6% 4.00%
Total risk-based capital ratio 13.4% 13.8% 8.00%
Leverage ratio 8.9% 9.3% 4.00%
Cash dividends paid of $394 for the first three months of 1999 represents a 9.4%
increase over the cash dividends paid during the same period in 1998. The
increase in cash dividends paid is due to the additional shares outstanding
during 1999 which were not outstanding during 1998. At March 31, 1999,
approximately 69% of the shareholders were enrolled in the dividend reinvestment
plan. The dollars reninvested through the plan offset a majority of dividends
paid.
12
<PAGE>
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 $42,734 represented 9.1%
of total assets at March 31, 1999. In addition, the Federal Home Loan Bank in
Cincinnati offers advances to the Bank which further enhances the Bank's ability
to meet liquidity demands. At March 31, 1999, the Bank could borrow an
additional $35 million from the Federal Home Loan Bank. The Company experienced
an increase of $862 in cash and cash equivalents for the three months ended
March 31, 1999. 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.
FORWARD LOOKING STATEMENTS
Except for the historical statements and discussions contained herein,
statements contained in this report constitute "forward looking statements'
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Act of 1934 and as defined in the Private Securities
Litigation Reform Act of 1995. Such statements are often, but not always,
identified by the use of such words as "believes," "anticipates," "expects," and
similar expressions. Such statements involve various important assumptions,
risks, uncertainties, and other factors, many of which are beyond our control,
that could cause actual results to differ materially from those expressed in
such forward looking statements. These factors include, but are not limited to:
changes in political, economic or other factors such as inflation rates,
recessionary or expansive trends, and taxes; competitive pressures; fluctuations
in interest rates; the level of defaults and prepayment on loans made by the
Company; unanticipated litigation, claims, or assessments; fluctuations in the
cost of obtaining funds to make loans; and regulatory changes. Readers are
cautioned not to place undue reliance on such forward looking statements, which
speak only as of the date hereof. The Company undertakes no obligation and
disclaims any intention to republish revised or updated forward looking
statements, whether as a result of new information, unanticipated future events
or otherwise.
13
<PAGE>
OHIO VALLEY BANC CORP.
MATURITY ANALYSIS
<TABLE>
<CAPTION>
(dollars in thousands)
As of March 31, 1999 Principal Amount Maturing in:
There- Fair Value
1999 2000 2001 2002 2003 after Total 03/31/99
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rate-Sensitive Assets:
Fixed interest rate loans $ 10,036 $ 6,748 $ 13,269 $ 19,053 $ 17,136 $137,162 $203,404 $209,466
Average interest rate 9.31% 11.99% 12.20% 11.33% 10.21% 8.34% 9.20%
Variable interest rate loans $ 36,640 $ 3,099 $ 5,812 $ 5,272 $ 3,980 $109,736 $164,539 $164,901
Average interest rate 9.46% 11.04% 9.22% 8.64% 8.23% 7.80% 8.31%
Fixed interest rate securities $ 10,777 $ 8,340 $ 10,309 $ 11,371 $ 16,387 $ 13,024 $ 70,208 $ 71,558
Average interest rate 7.05% 6.44% 6.40% 6.24% 6.20% 7.13% 6.57%
Other interest-bearing assets $ 2,627 $ 2,627 $ 2,627
Average interest rate 4.68% 4.68%
Rate-Sensitive Liabilities:
Noninterest-bearing checking $ 4,966 $ 4,734 $ 3,802 $ 3,346 $ 2,944 $ 21,590 $ 41,382 $ 41,382
Savings & Interest-bearing checking $ 17,315 $ 14,206 $ 11,729 $ 9,747 $ 8,151 $ 54,041 $115,189 $115,189
Average interest rate 2.95% 3.00% 3.04% 3.09% 3.13% 3.38% 3.19%
Time deposits $ 97,454 $ 86,596 $ 9,878 $ 4,971 $ 10,357 $ 1,697 $210,953 $212,346
Average interest rate 5.41% 5.49% 5.64% 6.17% 6.02% 6.84% 5.51%
Fixed interest rate borrowings $ 4,335 $ 13,439 $ 4,439 $ 5,336 $ 3,098 $ 10,321 $ 40,968 $ 41,050
Average interest rate 5.54% 5.33% 5.55% 5.42% 5.71% 5.37% 5.42%
Variable interest rate borrowings $ 13,609 $ 13,609 $ 13,609
Average interest rate 4.33% 4.33%
14
</TABLE>
<PAGE>
OHIO VALLEY BANC CORP
Part II - Other Information
Item 1 - Legal Proceedings
- --------------------------
None
Item 2 - Changes in Securities
- ------------------------------
None
Item 3 - Defaults Upon Senior Securities
- ----------------------------------------
None
Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None
Item 5 - Other Information
- --------------------------
None
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
A. Exhibit 27 - Financial Data Schedule [Exhibit is filed herewith.]
B. Form 8-K dated May 5, 1999 describing the acquisition of two Huntington
Bancshares Inc. branches by the Company was filed and is incorporated into
this Form 10-Q by reference.
OHIO VALLEY BANC CORP.
------------------------------------
Date May 14, 1999 /S/ James L. Dailey
----------------- ------------------------------------
James L. Dailey
Chairman and Chief Executive Officer
Date May 14, 1999 /S/ Jeffrey E. Smith
----------------- ------------------------------------
Jeffrey E. Smith
President, Chief Operating Officer
and Treasurer
15
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<FISCAL-YEAR-END> DEC-31-1999
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