Ohio Valley Banc Corp. Reports Decrease in Earnings for Q4 and Fiscal Year 2024

Earnings Report of Ohio Valley Banc Corp. for Q4 2024

Ohio Valley Banc Corp. (Nasdaq: OVBC) recently released its earnings report for the fourth quarter and fiscal year ending December 31, 2024. The company reported a consolidated net income of $2,515,000 for the quarter, a decline of $708,000 compared to the same period the previous year. This downturn reflects a challenging year for the company, as earnings per share dropped to $0.53 from $0.68 in the prior year’s fourth quarter.

For the full fiscal year 2024, net income totaled $10,999,000, marking a decrease of $1,632,000, or 12.9%, from 2023. Earnings per share for the year were $2.32, down from $2.65 in 2023. The return on average assets and return on average equity stood at 0.77% and 7.50%, respectively, compared to 0.99% and 9.24% for the previous year.

Management’s Insights

The company’s President and CEO, Larry Miller, expressed that although reporting lower net income is never favorable, he is optimistic about the company’s future, considering the strategic moves made in 2024. The drop in net income was significantly impacted by two major one-time expenses. The first was $3.3 million for a voluntary early retirement program, and the second was $496,000 in bonuses paid to new depositors under the Sweet Home Ohio initiative. Miller highlighted that these decisions are part of a broader strategy aimed at enhancing shareholder value and supporting their Community First Mission.

Growth in Net Interest Income

Despite the decline in net income, the company saw a $1,755,000 increase in net interest income for the quarter. Yearly growth was reported at $2,777,000 compared to the previous year. This increase in interest income stemmed from a notable rise in average earning assets, which grew by $187 million for the fourth quarter and $149 million for the year. The loan segments, particularly commercial and residential real estate lending, exceeded expectations and were key contributors to the asset growth.

2024 experienced an $86 million increase in average loans compared to the prior year. The success in residential real estate lending was also supported by a higher utilization of a warehouse line of credit extended to another mortgage lender.

Credit Loss Provisions and Noninterest Income

In terms of credit quality, the provision for credit losses in Q4 was recorded at $617,000, down $72,000 year-over-year. For the full year, this provision totaled $2,469,000, marking an increase from the previous year, largely influenced by net charge-offs and additional reserves linked to specific risk factors. The allowance for credit losses stood at 0.95% of total loans as of December 31, 2024.

Noninterest income experienced growth as well, totaling $3,920,000 for Q4, an increase of $339,000 from the year prior. For the entire year, noninterest income reached $13,171,000, driven by service charges and interchange income from debit and credit transactions.

Cost Management and Future Strategies

Noninterest expenses totaled $13,306,000 in Q4, an increase of $3,004,000 from the previous year. The principal driver of this increase was the rise in salaries and employee benefits, largely attributed to annual merit increases and the aforementioned early retirement program expenses. As part of its strategy, the company has established a voluntary early retirement program aimed at achieving long-term savings in employee compensation costs.

Moreover, during 2024, Ohio Valley Banc Corp. engaged with the Ohio Treasurer for the Ohio Homebuyer Plus program, which facilitated the launch of the Sweet Home Ohio deposit account. This account incentivizes participants towards home purchasing savings. By the end of 2024, deposits under this program reached $6.8 million.

Conclusion

In closing, Ohio Valley Banc Corp. faced challenges in 2024 with decreased earnings resulting from strategic expenditures aimed at future growth. However, the overall progress in net interest income and asset accumulation presents a positive outlook, positioning the company for potential recovery in the forthcoming fiscal periods. Investors are encouraged to watch for how these strategic changes might improve performance in 2025 as the company seeks to enhance shareholder value while adhering to its community-focused mission.

For more information regarding Ohio Valley Banc Corp.'s financials, visit OVBC's website.