OHIO VALLEY BANC CORP MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
(dollars in thousands, except share and per share data)
Forward Looking Statements
Certain statements contained in this report and other publicly available
documents incorporated herein by reference constitute “forward looking
statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Act of 1934, as amended (the
“Exchange Act”), 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,” “intends,” “plan,” “goal,”
“seek,” “project,” “estimate,” “strategy,” “future,” “likely,” “may,” “should,”
“will,” and other similar expressions. Such statements involve various important
assumptions, risks, uncertainties, and other factors, many of which are beyond
our control, particularly with regard to developments related to the Coronavirus
(“COVID-19”) pandemic, and which could cause actual results to differ materially
from those expressed in such forward looking statements. These factors include,
but are not limited to: the effects of COVID-19 on our business, operations,
customers and capital position; higher default rates on loans made to our
customers related to COVID-19 and its impact on our customers’ operations and
financial condition; the impact of COVID-19 on local, national and global
economic conditions; unexpected changes in interest rates or disruptions in the
mortgage market; the effects of various governmental responses to COVID-19;
changes in political, economic or other factors, such as inflation rates,
recessionary or expansive trends, taxes, the effects of implementation of
legislation and the continuing economic uncertainty in various parts of the
world; 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. Additional detailed information concerning such
factors is available in the Company’s filings with the
Commission
“Item 1A. Risk Factors” of Part I of the Company’s Annual Report on Form 10-K
for the fiscal year ended
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.
BUSINESS OVERVIEW: The accompanying discussion on consolidated financial
statements include the accounts of
subsidiaries,
consumer finance company (“Loan Central”),
Agency, LLC
property and casualty insurance company (“the Captive”). The Bank has two
wholly-owned subsidiaries,
provides online consumer mortgages (“Race Day”), and
collectively referred to as the “Company.”
The Company is primarily engaged in commercial and retail banking, offering a
blend of commercial and consumer banking services within southeastern
well as western
the acceptance of deposits in checking, savings, time and money market accounts;
the making and servicing of personal, commercial, floor plan and student loans;
the making of construction and real estate loans; and credit card services. The
Bank also offers individual retirement accounts, safe deposit boxes, wire
transfers and other standard banking products and services. Furthermore, the
Bank offers Tax Refund Advance Loans (“TALs”) to Loan Central tax customers. A
TAL represents a short-term loan offered by the Bank to tax preparation
customers of Loan Central.
IMPACT of COVID-19: COVID-19 has caused significant disruption in
States
served by the Company in southeastern
significantly impacted by COVID-19, which has changed the way we live and work.
The continued effects of COVID-19 on the economy, supply chains, financial
markets, unemployment levels, businesses and our customers is unknown and
unpredictable.
On
(“CARES Act”) was signed into law. The CARES Act provided assistance to small
businesses through the establishment of the Paycheck Protection Program (“PPP”).
Pursuant to the CARES Act, PPP funds were provided to small businesses in the
form of loans that would be fully forgiven if certain criteria were met. In
2021,
Administration
disburse PPP loans until
experienced financial hardship due to COVID-19 through participation in the PPP,
assistance with expedited deposits of CARES Act stimulus payments, and loan
modifications, as needed.
27 --------------------------------------------------------------------------------
FINANCIAL RESULTS OVERVIEW: Net income totaled
of 2022, an increase of
for the first quarter of 2022 finished at
share during the first quarter of 2021. Quarterly earnings improved largely due
to lower provision expense and higher noninterest income being partially offset
by a combination of lower net interest income and higher noninterest expense.
The impact of higher net earnings during the first quarter of 2022 also had a
direct impact to the Company’s annualized net income to average asset ratio, or
return on assets, which increased to 1.34% at
at
on equity, also increased to 11.78% at
During the three months ended
or 0.6%, from the same period in 2021. Lower net interest income was negatively
impacted by a 2.2% decrease in average loans, which contributed to a 7.3%
decrease in interest and fees on loans. The decrease in average loans was
impacted mostly by lower residential real estate loans and payoffs of PPP
loans. Excluding loans, the Company’s remaining average earning assets
increased 29.5%, coming mostly from securities and
balances. This composition of higher balances in securities and the
Reserve Bank
interest margin, which decreased from 3.73% during the quarter ended
2021
During the three months ended
provision for loan loss, which contributed to a
expense when compared to the same period in 2021. The decrease from the prior
year was related to improved economic risk factors impacted by lower net
charge-offs and criticized and classified loans, as well as the partial release
of the COVID-19 reserve for the pandemic environment.
During the three months ended
or 11.4%, from the same period in 2021. This growth came largely from increases
in service charges on deposit accounts, interchange income on debit and credit
card transactions, and mortgage banking income in relation to Race Day, the
Company’s new online mortgage company.
During the three months ended
to higher salaries and employee benefit costs impacted by the staffing of Race
Day, as well as higher annual merit expenses. The Company also experienced
increases in data processing costs, professional fees, and software expense, as
well as various other overhead costs from Race Day.
The Company’s provision for income taxes increased
three months ended
affected by the factors mentioned above.
At
year-end 2021. Higher assets were primarily impacted by increases in cash and
cash equivalents and…
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