Ohio Valley Banc Corp Continues Earnings Growth

Ohio Valley Banc Corp Continues Earnings Growth 


GALLIPOLIS, Ohio, July 15  /PRNewswire-FirstCall/ -- Ohio Valley Banc Corp
(NASDAQ:OVBC) reported consolidated net income for the quarter ended June 30,
2004, of $3,252,000, or $.94 per share, compared to net income of $1,573,000,
or $.45 a share, a year ago.  For the six months ended June 30, 2004,
consolidated net income was $4,817,000, or $1.39 per share, compared to
$3,032,000, or $.87 per share, a year ago.  Earnings in the second quarter of
2004 include the impact of the previously disclosed sale of OVBC's ownership in
ProCentury Corp. (NASDAQ:PROS), a Columbus-based property and casualty insurer.
 The transaction resulted in an after-tax gain of $1,625,000 or $.47 per share.

Operating earnings, earnings not including the gain on the sale of the
ProCentury investment, for the quarter ended June 30, 2004, were $1,627,000
representing an increase of 3.4 percent over the prior year.  Operating
earnings per share for the second quarter of 2004 were $.47, up 4.4 percent
from the $.45 earned the second quarter of 2003.  For the six months ended June
30, 2004, operating earnings were $3,192,000, up 5.3 percent compared to
$3,032,000 a year ago.  Operating earnings per share were $.92 for the first
six months of 2004 versus $.87 last year, an increase of 5.7 percent.  On an
operating basis, return on average assets and return on average equity were .90
percent and 11.76 percent for the first six months of 2004, versus .89 percent
and 11.95 percent for the prior year.

The increase in operating earnings reflects the benefit of OVBC's continuing
improvement in asset quality.  For the six months ended June 30, 2004,
provision for loan losses decreased $1,491,000 from the same time period the
prior year.  The decrease in provision for loan losses was attributable to both
a decline in nonperforming loans and net charge-offs in both the commercial and
consumer lending portfolios.  The Company's ratio of nonperforming loans to
total loans stood at .42 percent at June 30, 2004, as compared to 1.08 percent
at June 30, 2003.  The ratio of nonperforming assets to total assets decreased
to .61 percent at June 30, 2004 from 1.36% at June 30, 2003.  The Company's net
charge-offs for the first six months of 2004 were down $764,000 from the same
time period the prior year.  With improving credit quality, management feels
that the allowance for loan losses is adequate to absorb probable losses in the
portfolio.  The allowance for loan losses was 1.21 percent of total loans at
June 30, 2004, as compared to 1.32 percent at June 30, 2003.

For the six months ended June 30, 2004, net interest income decreased $228,000
or 1.6 percent from last year.  For the second quarter of 2004, net interest
income decreased $235,000 or 3.4 percent from the prior year second quarter. 
The net interest margin for the six months ending June 30, 2004 was 4.12
percent compared to 4.36 percent for the same time period the prior year
reflecting the extended low interest rate environment and the Company's desire
to shift from higher-yielding fixed rate assets to variable rate assets.  The
Company's average earning assets for the first six months of 2004 increased
$22,941,000 or 3.5 percent from the same time period last year.

Noninterest income totaled $5,111,000 for the six months ended June 30, 2004,
as compared to $2,974,000 for the same time period last year.  For the three
months ended June 30, 2004, noninterest income totaled $3,805,000 compared to
$1,528,000 for 2003's second quarter.  Included in the increase in noninterest
income was the pre-tax gain of $2,463,000 on the aforementioned sale of
ProCentury.  Gain on sale of loans for the first six months of 2004 was down
$342,000 from the same time period last year caused by a decline in the sales
of secondary market real estate loans due to lower mortgage refinance volume
and a shift to variable rate mortgage originations. Offsetting a portion of
this decline was an increase in service charges on deposit accounts of $98,000
or 6.5 percent.

On a year-to-date basis, noninterest expense totaled $10,534,000 in 2004, an
increase of $571,000 or 5.7 percent compared to $9,963,000 the previous year. 
On a quarter-to-date basis, noninterest expense increased $307,000 or 6.1
percent from the second quarter in 2003.  Salaries and employee benefits grew
$438,000 or 7.7 percent for the first six months of 2004, as compared to the
same time period in 2003.  The increase was related to annual merit increases
and rising benefit costs.  With the renovation of the Milton office and upgrade
in personal computers within various departments, furniture and equipment
expense was up $124,000 on a year-to-date basis.  The remaining noninterest
expense categories were up $9,000 collectively from 2003.

Total assets increased $9,852,000 from year-end 2003 to reach $717,179,000 at
June 30, 2004.  Driving asset growth for 2004 was loan growth of $17,118,000
which equals an annual growth rate of 6.0 percent as compared to the 2.5
percent growth rate for all of 2003.  Loan growth came equally from all
segments of the portfolio.  Total deposits grew $32,149,000 from year-end 2003
to fund loan growth and to reduce borrowed funds, which are down $23,191,000. 
The growth in deposits was primarily in certificates of deposit originated from
local and national markets.

"We are pleased with the work of our employees in delivering another quarter of
earnings growth," stated Jeffrey E. Smith, President and CEO.  "The decline in
nonperforming loans and the associated decrease in provision for loan losses
represent a significant achievement.  Our focus on asset quality led to
additional earnings and a stronger balance sheet for the Company.  In addition,
the gain on the sale of our ProCentury investment has generated an after-tax
benefit of $1.6 million which will be invested in the renovation and/or
relocation of facilities in existing markets as well as expansion in new
markets.  Thanks to the hard work and dedication of the employees of OVBC for
making these financial results possible."

Ohio Valley Banc Corp common stock is traded on the NASDAQ Stock Market under
the symbol OVBC.  The holding company owns three subsidiaries:  Ohio Valley
Bank, with 17 offices in Ohio and West Virginia; Loan Central, with five
consumer finance offices in Ohio, and Ohio Valley Financial Services, an
insurance agency based in Jackson, Ohio.  Learn more about Ohio Valley Banc
Corp at http://www.ovbc.com/ .

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted
accounting principles in the United States of America (GAAP), this press
release contains certain non-GAAP financial measures.  OVBC believes that
providing certain non-GAAP financial measures provides investors with
information useful in understanding OVBC's financial performance.  OVBC
provides measures based on "operating earnings," which exclude significant
non-recurring gains, losses or expenses that are not reflective of continuing
operations.  A reconciliation of these non-GAAP measures to the most comparable
GAAP equivalent is included in the attached financial tables.

Forward-Looking Information

Certain statements contained in this earnings release which 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," "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, and taxes;
(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; and (vii) regulatory changes.  Forward-
looking statements speak only as of the date on which they are made and Ohio
Valley 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 - Non-GAAP Disclosure Reconciliation

Operating earnings are net income adjusted to exclude the results of certain
significant transactions not representative of continuing operations. The
following reconciles GAAP net income and earnings per share to operating
earnings and operating earnings per share for the quarter and six months ended
June 30, 2004 and 2003.

                                     Three months ended   Six months ended
  (in $000's, except per share data)      June 30,             June 30,
                                       2004     2003        2004     2003

  Net income                          $3,252   $1,573      $4,817   $3,032

       Gain on sale of investment     (2,463)              (2,463)
       Tax effect                        838                  838
       After-tax non-operating items  (1,625)              (1,625)

  Operating earnings                  $1,627   $1,573      $3,192   $3,032

  Earnings per share                   $0.94    $0.45       $1.39    $0.87

       Gain on sale of investment      (0.71)               (0.71)
       Tax effect                       0.24                 0.24
       After-tax non-operating items   (0.47)               (0.47)

  Operating earnings per share         $0.47    $0.45       $0.92    $0.87


  OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)

                                 Three months ended     Six months ended
                                       June 30,              June 30,
                                   2004       2003       2004       2003
  PER SHARE DATA
    Operating earnings per share   $0.47      $0.45      $0.92      $0.87
    Earnings per share             $0.94      $0.45      $1.39      $0.87
    Dividend per share             $0.19      $0.18      $0.37      $0.35
    Book value per share          $16.16     $15.07     $16.16     $15.07
    Dividend payout ratio         20.26%     39.76%     26.75%     40.04%
    Weighted average shares
     outstanding               3,468,842  3,477,455  3,484,600  3,473,290

  PERFORMANCE RATIOS
    Operating return on average
     equity                       11.98%     12.22%     11.76%     11.95%
    Return on average equity      23.49%     12.22%     17.57%     11.95%
    Operating return on average
     assets                        0.90%      0.91%      0.90%      0.89%
    Return on average assets       1.80%      0.91%      1.35%      0.89%
    Net interest margin            4.01%      4.36%      4.12%      4.36%
    Operating efficiency ratio    65.51%     58.60%     63.97%     58.43%
    Efficiency ratio              50.33%     58.60%     55.65%     58.43%
      Average earning assets
       (in 000's)               $684,149   $650,898   $674,377   $651,436


  OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)

                                      Three months ended  Six months ended
  (in $000's)                              June 30,           June 30,
                                        2004    2003       2004     2003
  Interest income:
       Interest and fees on loans      $9,798  $10,551    $19,757  $21,239
       Interest and dividends on
        securities                        924      942      1,857    1,866
            Total interest income      10,722   11,493     21,614   23,105
  Interest expense:
       Deposits                         2,813    3,174      5,554    6,490
       Borrowings                       1,162    1,337      2,390    2,717
            Total interest expense      3,975    4,511      7,944    9,207
  Net interest income                   6,747    6,982     13,670   13,898
  Provision for loan losses               373    1,246      1,141    2,632
  Noninterest income:
       Service charges on deposit
        accounts                          839      803      1,598    1,500
       Trust fees                          54       58        106      111
       Income from bank owned insurance   148      172        311      344
       Gain on sale of loans                3      155         10      352
       Gain on sale of ProCentury Corp. 2,463               2,463
       Other                              298      340        623      667
            Total noninterest income    3,805    1,528      5,111    2,974
  Noninterest expense:
       Salaries and employee benefits   3,080    2,885      6,120    5,682
       Occupancy                          322      317        651      649
       Furniture and equipment            318      240        601      477
       Data processing                    182      139        360      299
       Other                            1,444    1,458      2,802    2,856
            Total noninterest expense   5,346    5,039     10,534    9,963
  Income before income taxes            4,833    2,225      7,106    4,277
  Income taxes                          1,581      652      2,289    1,245
  NET INCOME                           $3,252   $1,573     $4,817   $3,032


  OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)

  (dollars in thousands, except share
   and per share data)                        June 30,         December 31,
                                                2004               2003
  ASSETS
  Cash and noninterest-bearing deposits
   with banks                                 $15,517            $17,753
  Federal funds sold                            1,125
       Total cash and cash equivalents         16,642             17,753
  Interest-bearing deposits in other banks      1,255                859
  Securities available-for-sale                70,142             76,352
  Securities held-to-maturity
    (estimated fair value:
     2004 - $13,455 , 2003 - $13,547)          13,054             12,835
  Total loans                                 590,822            573,704
    Less:  Allowance for loan losses           (7,137)            (7,593)
       Net loans                              583,685            566,111
  Premises and equipment, net                   9,098              9,142
  Accrued income receivable                     2,732              2,700
  Goodwill                                      1,267              1,267
  Bank owned life insurance                    13,476             13,222
  Other assets                                  5,828              7,086
            Total assets                     $717,179           $707,327

  LIABILITIES
  Noninterest-bearing deposits                $63,901            $62,235
  Interest-bearing deposits                   475,757            445,274
       Total deposits                         539,658            507,509
  Securities sold under agreements to
   repurchase                                  20,779             24,018
  Other borrowed funds                         78,371            101,562
  Subordinated debentures                      13,500             13,500
  Accrued liabilities                           8,833              6,330
            Total liabilities                 661,141            652,919

  SHAREHOLDERS' EQUITY
  Common stock ($1.00 stated value,
   10,000,000 shares authorized;
   2004 - 3,674,314 shares issued,
   2003 - 3,658,212 shares issued)              3,674              3,658
  Additional paid-in capital                   31,451             30,962
  Retained earnings                            26,872             23,343
  Accumulated other comprehensive income         (374)               624
  Treasury stock at cost
   (2004 - 205,985 shares,                     (5,585)            (4,179)
    2003 - 159,611 shares)
            Total shareholders' equity         56,038             54,408
                 Total liabilities and
                  shareholders' equity       $717,179           $707,327

   Contact: Scott Shockey, CFO [phone]


DATASOURCE: Ohio Valley Banc Corp



Contact:  Scott Shockey, CFO of Ohio Valley Banc Corp, [phone]



Web site:  http://www.ovbc.com/ 

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