Introduction
Ohio Valley Banc Corp. (OVBC) is a diversified financial services company that has been serving the banking needs of southeastern Ohio and western West Virginia for over a century. With a relentless focus on community-centric banking, OVBC has weathered various economic cycles, emerging as a trusted partner for individuals, businesses, and institutions alike.
Historical Background
OVBC’s story began in 1872 with the establishment of The Ohio Valley Bank Company, the company’s primary banking subsidiary. Over the decades, OVBC has navigated periods of prosperity and adversity, adapting its strategies to meet the evolving needs of its customers. In 1985, the company took a significant step forward by becoming a publicly traded entity, offering investors the opportunity to participate in its growth and success.
Current Operations
Today, OVBC operates a network of 17 banking offices, providing a comprehensive suite of financial products and services, including commercial and retail banking, trust and investment management, and consumer finance. The company’s unwavering commitment to its local communities has been a key driver of its success, as it has consistently reinvested in the regions it serves, fostering economic development and supporting local initiatives.
Financials
OVBC’s financial performance has been marked by stability and resilience. In the fiscal year ended December 31, 2023, the company reported revenue of $58.66 million, net income of $12.63 million, operating cash flow of $20.75 million, and free cash flow of $18.06 million. The return on average assets was 1.00% and the return on average equity was 9.21%.
For the most recent quarter (Q3 2024), OVBC reported revenue of $19,005,000, net income of $2,719,000, operating cash flow of $5,599,000, and free cash flow of $5,416,000. Compared to Q3 2023, revenue increased 10.60% and net income increased 20.80%. This growth was primarily driven by an increase in average earning assets, particularly loans, which grew by 9.10% during the quarter. However, the net interest margin declined by 9 basis points due to higher funding costs.
The company’s strong liquidity position, as evidenced by a cash and cash equivalents balance of $82.20 million as of September 30, 2024, has provided it with the flexibility to capitalize on growth opportunities and weather market volatility.
Pandemic Response
Despite the challenges posed by the global pandemic, OVBC demonstrated its adaptability and commitment to its customers. The company quickly implemented remote banking solutions, expanded its digital offerings, and provided relief measures to support its community during the most difficult times. These actions not only reinforced OVBC’s customer-centric approach but also positioned the company for continued success in the post-pandemic era.
Technology Investments
OVBC’s investment in technology has been a key focus in recent years, as the company seeks to enhance the customer experience and improve operational efficiency. The company has made strategic investments in digital banking platforms, data analytics, and cybersecurity, ensuring that it remains at the forefront of industry trends and customer expectations.
Strategic Initiatives
One of the most significant developments in OVBC’s recent history was the company’s participation in the Ohio Homebuyer Plus program. This initiative, introduced in the third quarter of 2024, was designed to encourage Ohio residents to save for the purchase of a home. OVBC’s involvement in the program resulted in a $100 million deposit from the Ohio Treasurer, which the company invested in U.S. Government securities to meet pledging requirements. This strategic move not only strengthened OVBC’s liquidity position but also contributed to the company’s net interest income, as the securities generated a weighted average yield of 4.70%.
Diversification Efforts
In addition to its core banking operations, OVBC has pursued strategic initiatives to diversify its services and improve risk management. In 2021, the company acquired Race Day Mortgage, Inc., a wholly-owned subsidiary of the Bank, to expand its mortgage banking services. However, due to low loan demand, poor employee retention, and lack of profitability, Ohio Valley ceased operating Race Day in December 2023. Similarly, in 2014, OVBC established OVBC Captive, Inc., a subsidiary that provided additional insurance and risk management capabilities. However, proposed IRS regulations that adversely impacted the taxation of small captives led to the cessation of the Captive’s operations in December 2023.
Credit Portfolio and Risk Management
Despite these challenges, OVBC has maintained a diversified credit portfolio, with residential real estate loans currently comprising the most significant portion. As of September 30, 2024, OVBC’s total loan portfolio was $1.05 billion, an increase of $77.01 million, or 7.9%, from December 31, 2023. This growth was led by increases in the commercial real estate loan segment, which grew $42.60 million, or 13.2%, and the residential real estate loan segment, which increased $39.80 million, or 12.5%. The commercial and industrial loan portfolio also saw an increase of $4.49 million, or 2.9%, from year-end 2023. These increases were partially offset by a $9.89 million, or 5.7%, decrease in the consumer loan portfolio.
The company has also focused on managing its balance sheet mix and interest rate sensitivity, as well as developing innovative ways to generate noninterest revenue. These efforts demonstrate OVBC’s ability to adapt to changing market conditions and regulatory environments while remaining committed to its core mission of serving local communities.
Business Segments
OVBC operates two primary business segments: banking and consumer finance. The banking segment is the primary driver of OVBC’s operations, accounting for 96% and 95.1% of the company’s total revenues during the three and nine months ended September 30, 2024, respectively. This segment offers a variety of commercial and retail banking services, including accepting deposits and making loans.
The consumer finance segment, operated through the company’s Loan Central subsidiary, provides consumer loans, primarily focused on tax refund advance loans. This segment accounted for 4% and 4.9% of OVBC’s total revenues during the three and nine months ended September 30, 2024, respectively. Consumer finance segment loans totaled $14.34 million as of September 30, 2024, a slight decrease from $14.40 million as of December 31, 2023.
Liquidity
OVBC maintains a strong liquidity position. As of September 30, 2024, the company reported:
These metrics indicate that OVBC has ample liquidity to meet its short-term obligations and pursue growth opportunities.
Future Outlook
As OVBC looks to the future, the company remains focused on enhancing shareholder value through a balanced approach of organic growth, strategic acquisitions, and prudent capital management. The company’s robust risk management framework, coupled with its deep understanding of its local markets, positions OVBC as a dependable partner for its customers and a reliable investment for its shareholders.
Conclusion
In conclusion, Ohio Valley Banc Corp. is a community-focused financial institution that has demonstrated its ability to adapt and thrive in the face of evolving market conditions. With a strong balance sheet, a commitment to innovation, and a steadfast dedication to its local communities, OVBC is poised to continue delivering value for its shareholders in the years to come. The company’s solid financial performance, diversified loan portfolio, and strong liquidity position provide a solid foundation for future growth and stability in its primary markets of southeastern Ohio and western West Virginia.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.