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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: DECEMBER 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period ended:___________________
Commission file number: 0-20914
Ohio Valley Banc Corp.
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(Exact name of registrant as specified in its charter)
Ohio
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(State or other jurisdiction 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
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:
Common Shares, Without Par Value
--------------------------------
(Title of Class)
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. X Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S - K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of February 29, 2000: $102,245,888
The number of common shares of the registrant outstanding
as of February 29, 2000: 3,542,987 common shares.
Exhibit Index begins on page 20. Page 1 of 68 pages.
Ohio Valley Banc Corp.
Form l0-K
December 31, 1999
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the 1999 Annual Report to Shareholders of Ohio Valley Banc
Corp. (Exhibit 13) are incorporated by reference into Part I, Item 1 and
Part II, Items 5, 6, 7A and 8.
(2) Portions of the Proxy Statement for the Annual Meeting of Shareholders to
be held April 12, 2000 are incorporated by reference into Part III, Items
10, 11, 12 and 13.
Contents of Form 10-K
PART I
Item 1 Business 3
Item 2 Properties 13
Item 3 Legal Proceedings 15
Item 4 Submission of Matters to a Vote of Security Holders 15
PART II
Item 5 Market for Registrant's Common Equity and Related
Stockholder Matters 15
Item 6 Selected Financial Data 15
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
Item 7A Quantitative and Qualitative Disclosures about
Market Risk 15
Item 8 Financial Statements and Supplementary Data 16
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 16
PART III
Item 10 Directors and Executive Officers of the Registrant 16
Item 11 Executive Compensation 17
Item 12 Security Ownership of Certain Beneficial Owners and
Management 18
Item 13 Certain Relationships and Related Transactions 18
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on
Form 8-K 18
SIGNATURES 19
EXHIBIT INDEX 20
Page 2
PART I
ITEM 1 - BUSINESS
General Description of Business
Ohio Valley Banc Corp. (the Registrant), was incorporated under the laws of
the State of Ohio on January 8, 1992. The Registrant is registered under the
Bank Holding Company Act of 1956, as amended (BHC Act). A substantial portion of
the Registrant's revenue is derived from cash dividends paid by The Ohio Valley
Bank Company, the Registrant's wholly-owned subsidiary (the Bank). The principal
executive offices of the Registrant are located at 420 Third Avenue, Gallipolis,
Ohio 45631.
The Bank was organized on September 24, 1872, under the laws governing private
banking in Ohio. The Bank was incorporated in accordance with the general
corporation laws governing savings and loan associations of the State of Ohio on
January 8, 1901. The Articles of Incorporation of the Bank were amended on
January 25, 1935, for the purpose of authorizing the Bank to transact a
commercial savings bank and safe deposit business and again on January 26, 1950,
for the purpose of adding special plan banking. The Bank was approved for trust
powers in 1980 with trust services first being offered in 1981. The Bank's
deposits are insured up to applicable limits by the Federal Deposit Insurance
Corporation (FDIC).
The Registrant's wholly-owned subsidiary, Loan Central, Inc. (Loan Central),
was formed on February 1, 1996. Loan Central was incorporated under the Ohio
laws governing finance companies.
The Registrant's wholly-owned subsidiary, The Jackson Savings Bank (Jackson),
was acquired in a business combination accounted for using the pooling of
interest method on December 15, 1998. Jackson was incorporated under the laws of
the State of Ohio on January 1, 1899. Jackson's deposits are insured up to
applicable limits by the FDIC.
The Bank is engaged in commercial and retail banking. Loan Central is engaged
in consumer finance. Jackson is engaged primarily in the business of accepting
deposits and issuing first mortgage and consumer loans. Reference is hereby made
to Item 1 (E), "Statistical Disclosure" and Item 8 of this Form 10-K for
financial information pertaining to the Registrant's business through its
subsidiaries.
Description of Ohio Valley Banc Corp.'s Business
The Registrant's business is incident to its 100% ownership of the outstanding
stock of the Bank, Loan Central and Jackson. The Bank is a full-service
financial institution offering a blend of commercial, retail and agricultural
banking services. Loans of all types and checking, savings and time deposits are
offered, along with such services as safe deposit boxes, issuance of travelers'
checks and administration of trusts. Loan Central, a consumer finance company,
offers smaller balance consumer loans to individuals with nonconforming or
nontraditional credit history. Jackson, a state-chartered savings bank,
principally offers first mortgage loans used to finance the purchase,
construction or improvement of residential or other real property. In addition
to originating loans, the Bank and Jackson invest in U.S. Government and agency
obligations, interest-bearing deposits in other financial institutions and other
investments permitted by applicable law.
Page 3
PART I (continued)
Revenues from loans accounted for 82.38% in 1999, 80.50% in 1998 and 80.62% in
1997 of total consolidated revenues. Revenues from interest and dividends on
securities accounted for 10.36%, 12.23% and 13.79% of total consolidated
revenues in 1999, 1998 and 1997, respectively. The Bank presently has sixteen
offices, all of which offer automatic teller machines. Seven of these offices
also offer drive-up services. The Bank accounted for substantially all of the
Registrant's consolidated assets at December 31, 1999.
The banking business is highly competitive. The market area for the Bank and
Jackson is concentrated primarily in the Gallia, Jackson, Pike and Franklin
Counties of Ohio as well as the Mason, Kanawha and Cabell Counties of West
Virginia. Some additional business originates from the surrounding Ohio counties
of Meigs, Vinton, Scioto and Ross. Competition for deposits and loans comes
primarily from local banks and savings associations, although some competition
is also experienced from local credit unions, insurance companies and mutual
funds. In addition, larger regional institutions, with substantially greater
resources, are becoming increasingly visible. With the formation of Loan
Central, the Registrant is better able to compete in Gallia, Jackson and Pike
County by serving a consumer base which may not meet the Bank's credit
standards. Loan Central also operates in Lawrence County which is outside the
Bank's primary market area. In addition, the acquisition of Jackson has expanded
the Registrant's market share in Jackson County by enhancing bank activities.
The principal methods of competition are the rates of interest charged for
loans, the rates of interest paid for deposits, the fees charged for services
and the availability and quality of services. The business of the Registrant and
its subsidiaries is not seasonal, nor is it dependent upon a single or small
group of customers.
The Bank and Jackson deal with a wide cross-section of businesses and
corporations which are located primarily in southeastern Ohio. Few loans are
made to borrowers outside this area. Lending decisions are made in accordance
with written loan policies designed to maintain loan quality. The Bank
originates commercial loans, commercial leases, residential real estate loans,
home equity lines of credit, installment loans and credit card loans. The Bank
believes that there is no significant concentration of loans to borrowers
engaged in the same or similar industries and does not have any loans to foreign
entities.
Commercial lending entails significant risks as compared with consumer lending
- - i.e., single-family residential mortgage lending, installment lending and
credit card loans. In addition, the payment experience on commercial loans is
typically dependent on adequate cash flows in order to evaluate whether
anticipated future cash flows will be adequate to service both interest and
principal due. Thus, commercial loans may be subject, to a greater extent, to
adverse conditions in the economy generally or adverse conditions in a specific
industry.
The Registrant's subsidiaries make installment credit available to customers
and prospective customers in their primary market area of southeastern Ohio.
Credit approval for consumer loans requires demonstration of sufficiency of
income to repay principal and interest due, stability of employment, a positive
credit record and sufficient collateral for secured loans. It is the policy of
the subsidiaries to adhere strictly to all laws and regulations governing
consumer lending. A qualified compliance officer is responsible for monitoring
the performance of their respective consumer portfolio and updating loan
personnel. The Registrant's subsidiaries make credit life insurance and health
and accident insurance available to all qualified buyers thus reducing their
risk of loss when a borrower's income is terminated or interrupted. The
Registrant's subsidiaries
Page 4
PART I (continued)
review their respective consumer loan portfolios monthly to charge off loans
which do not meet that subsidiary's standards. Credit card accounts are
administered in accordance with the same standards as applied to other consumer
loans.
Consumer loans generally involve more risk as to collectibility than
mortgage loans because of the type and nature of collateral and, in certain
instances, the absence of collateral. As a result, consumer lending collections
are dependent upon the borrower's continued financial stability and thus are
more likely to be adversely affected by job loss, divorce or personal bankruptcy
and by adverse economic conditions.
The market area for real estate lending by the Bank is also located in
southeastern Ohio. The Bank generally requires that the loan amount with respect
to residential real estate loans be no more than 89% of the purchase price or
the appraisal value of the real estate securing the loan, unless private
mortgage insurance is obtained by the borrower for the percentage exceeding 89%.
These loans generally range from one year adjustable to thirty year fixed rate
mortgages. The Bank is currently not originating mortgages for the secondary
market. Real estate loans are secured by first mortgages with evidence of title
in favor of the Bank in the form of an attorney's opinion of title or a title
insurance policy. The Bank also requires proof of hazard insurance with the Bank
named as the mortgagee and as loss payee. Home equity lines of credit are
generally made as second mortgages by the Bank. The home equity lines of credit
are written with ten year terms but are reviewed annually. A variable interest
rate is generally charged on the home equity lines of credit.
The Bank expanded its operations in December 1996 by introducing a supermarket
branch in the Bank's existing market area of Gallia County to further enhance
the Bank's customer service through extended hours and convenience. In January
1997, another branch was opened in Columbus, Ohio (Franklin County) which
represented a new market area for the Bank. The Bank also converted its loan
origination office in Point Pleasant, West Virginia to a full-service branch
providing greater access to its current and future customers. The Bank continued
this growth in 1998 by opening three additional SuperBank branches, two of which
are located within Wal-Mart stores in Gallipolis, Ohio and Cross Lanes, West
Virginia (Kanawha County), and the third branch located within a supermarket in
Pomeroy, Ohio (Meigs County). In December 1998, the Registrant acquired Jackson,
conducting business with one office in Jackson, Ohio, to further enhance banking
activities in Jackson County. The expansion into newer market areas continued in
1999 with the acquisition of two Huntington National Bank (HNB) branches in
Milton and Barboursville, West Virginia (Cabell County), with the Milton office
offering a traditional-style service and the Barboursville office representing a
SuperBank facility. The Bank continued its growth by adding two additional
SuperBanks in South Charleston, West Virginia (Kanawha County) and South Point,
Ohio (Lawrence County). To expand on Loan Central's success, a fourth office
located in Waverly, Ohio (Pike County) opened for business in early 1999. To
further strengthen its presence in the growing I-64 corridor of western West
Virginia, the Bank's eighth SuperBank facility in Huntington (Cabell County) is
expected to commence operations in the second quarter of 2000.
Supervision and Regulation
The following is a summary of certain statutes and regulations affecting the
Registrant, Bank and Jackson. The summary is qualified in its entirety by
reference to such statutes and regulations.
Page 5
PART I (continued)
The Registrant is a bank holding company under the BHC Act, which restricts
the activities of the Registrant and the acquisition by the Registrant of voting
shares or assets of any bank, savings association or other company. The
Registrant is also subject to the reporting requirements of, and examination and
regulation by, the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"). Subsidiary banks of a bank holding company are subject
to certain restrictions imposed by the Federal Reserve Act on transactions with
affiliates, including any loans or extensions of credit to the bank holding
company or any of its subsidiaries, investments in the stock or other securities
thereof and the taking of such stock securities as collateral for loans or
extensions of credit to any borrower; the issuance of guarantees, acceptances or
letters of credit on behalf of the bank holding company and its subsidiaries;
purchases or sales of securities or other assets; and the payment of money or
furnishing of services to the bank holding company and other subsidiaries. Bank
holding companies are prohibited from acquiring direct or indirect control of
more than 5% of any class of voting stock or substantially all of the assets of
any bank holding company without the prior approval of the Federal Reserve
Board. A bank holding company and its subsidiaries are prohibited from engaging
in certain tying arrangements in connection with extensions of credit and/or the
provision of other property or services to a customer by the bank holding
company or its subsidiaries.
In November of 1999, the Gramm-Leach-Bliley, or Financial Services
Modernization Act was enacted, amending the Bank Holding Company Act of 1956,
modernizing the laws governing the financial services industry. This Act
contains a variety of provisions of benefit to the banking industry, including
language which greatly expands the powers of banks and bank holding companies by
authorizing a bank holding company to affiliate with any financial company and
cross-sell an affiliate's products, thus allowing such a company to offer its
customers any financial product or service. The Act expands the number of
permissible activities to include a wide variety of financial activities; any
activity in the future not already included in the list that the Federal Reserve
and the Treasury Department consider financial in nature or incidental to
financial activities; and any activity that the Federal Reserve determines
complementary to a financial activity and which does not pose a substantial
safety and soundness risk. In addition, the Act fully closes the unitary thrift
loophole which permits commercial companies to own and operate thrifts, reforms
the Federal Home Loan Bank System to significantly increase community banks'
access to loan funding and protects banks from discriminatory state insurance
regulation. The Act also includes new provisions in the privacy area,
restricting the ability of financial institutions to share nonpublic personal
customer information with third parties.
As Ohio state-chartered banks, the Bank and Jackson are supervised and
regulated by the Ohio Division of Financial Institutions. The deposits of these
banks are insured up to applicable limits by the FDIC and are subject to the
applicable provisions of the Federal Deposit Insurance Act. In addition, the
holding company of any insured financial institution that submits a capital plan
under the federal banking agencies' regulations on prompt corrective action
guarantees a portion of the institution's capital shortfall, as discussed below.
Various requirements and restrictions under the laws of the United States and
the State of Ohio affect the operations of the Bank including requirements to
maintain reserves against deposits, restrictions on the nature and amount of
loans which may be made and the interest that may be charged thereon,
restrictions relating to investments and other activities, limitations on credit
exposure to correspondent banks, limitations on activities based on capital and
surplus,
Page 6
PART I (continued)
limitations on payment of dividends, and limitations on branching. Since June
1997, pursuant to federal legislation, the Bank and Jackson have been authorized
to branch across state lines, unless the law of the other state specifically
prohibits the interstate branching authority granted by federal law.
The Federal Reserve Board has adopted risk-based capital guidelines for bank
holding companies and for state member banks. The risk-based capital guidelines
include both a definition of capital and a framework for calculating weighted
risk assets by assigning assets and off-balance sheet items to broad risk
categories. The minimum ratio of capital to risk weighted assets (including
certain off-balance sheet items, such as standby letters of credit) is 8%. At
least 4.0 percentage points is to be comprised of common stockholders' equity
(including retained earnings but excluding treasury stock), noncumulative
perpetual preferred stock, a limited amount of cumulative perpetual preferred
stock, and minority interests in equity accounts of consolidated subsidiaries,
less goodwill and certain other intangible assets ("Tier 1 capital"). The
remainder ("Tier 2 Capital") may consist, among other things, of mandatory
convertible debt securities, a limited amount of subordinated debt, other
preferred stock and a limited amount of allowance for loan and lease losses. The
Federal Reserve Board also imposes a minimum leverage ratio (Tier 1 capital to
total assets) of 3% for bank holding companies and state member banks that meet
certain specified conditions, including no operational, financial or supervisory
deficiencies, and including having the highest regulatory rating. The minimum
leverage ratio is 100-200 basis points higher for other bank holding companies
and state member banks based on their particular circumstances and risk profiles
and those experiencing or anticipating significant growth. State non-member
banks, such as the Bank and Jackson, are subject to similar capital requirements
adopted by the FDIC.
The Registrant, Bank and Jackson currently satisfy all capital requirements.
Failure to meet applicable capital guidelines could subject a banking
institution to a variety of enforcement remedies available to federal and state
regulatory authorities, including the termination of deposit insurance by the
FDIC.
The federal banking regulators have established regulations governing
prompt corrective action to resolve capital deficient banks. Under these
regulations, institutions which become undercapitalized become subject to
mandatory regulatory scrutiny and limitations, which increase as capital
continues to decrease. Such institutions are also required to file capital plans
with their primary federal regulator, and their holding companies must guarantee
the capital shortfall up to 5% of the assets of the capital deficient
institution at the time it becomes undercapitalized.
The ability of a bank holding company to obtain funds for the payment of
dividends and for other cash requirements is largely dependent on the amount of
dividends which may be declared by its subsidiary banks and other subsidiaries.
However, the Federal Reserve Board expects the Registrant to serve as a source
of strength to these banks, which may require them to retain capital for further
investments in these banks, rather than for dividends for shareholders of the
Registrant. These banks may not pay dividends to the Registrant if, after paying
such dividends, they would fail to meet the required minimum levels under the
risk-based capital guidelines and the minimum leverage ratio requirements. These
banks must have the approval of their regulatory authorities if a dividend in
any year would cause the total dividends for that year to exceed the sum of
their current year's net profits and retained net profits for the preceding two
Page 7
PART I (continued)
years, less required transfers to surplus. Payment of dividends by these banks
may be restricted at any time at the discretion of their regulatory authorities,
if they deem such dividends to constitute an unsafe and/or unsound banking
practice or if necessary to maintain adequate capital for these banks. These
provisions could have the effect of limiting the Registrant's ability to pay
dividends on its outstanding common shares.
Deposit Insurance Assessments and Recent Litigation
The FDIC is authorized to establish separate annual assessment rates for
deposit insurance for members of the Bank Insurance Fund ("BIF") and the Savings
Association Insurance Fund ("SAIF"). The Bank and Jackson are members of the
BIF. The FDIC may increase assessment rates for either fund if necessary to
restore the fund's ratio of reserves to insured deposits to its target level
within a reasonable time and may decrease such rates if such target level has
been met. The FDIC has established a risk-based assessment system for both BIF
and SAIF members. Under this system, assessments vary based on the risk the
institution poses to its deposit insurance fund. The risk level is determined
based on the institution's capital level and the FDIC's level of supervisory
concern about the institution.
Because BIF became fully funded, BIF assessments for healthy commercial banks
were reduced to $0 per year during 1999. Federal legislation, which became
effective September 30, 1996, provides, among other things, for the costs of
prior thrift failures to be shared by both the SAIF and the BIF. As a result of
such cost sharing, BIF assessments for healthy banks during 2000 will be $0.021
per $100 in deposits. Based upon their level of deposits at December 31, 1999,
the projected BIF assessments for the Bank and Jackson would be $82,698 and
$3,232, respectively for 2000.
Monetary Policy and Economic Conditions
The business of commercial banks is affected not only by general economic
conditions, but also by the policies of various governmental regulatory
authorities, including the Federal Reserve Board. The Federal Reserve Board
regulates the money and credit conditions and interest rates in order to
influence general economic conditions primarily through open market operations
in U.S. Government securities, changes in the discount rate on bank borrowings
and changes in reserve requirements against bank deposits. These policies and
regulations significantly influence the amount of bank loans and deposits and
the interest rates charged and paid thereon, and thus have an effect on
earnings. The monetary policies of the Federal Reserve Board have had a
significant effect on the operating results of commercial banks in the past and
are expected to have significant effects in the future. In view of the changing
conditions in the economy and the money market and the activities of monetary
and fiscal authorities, no definitive predictions can be made as to future
changes in interest rates, credit availability or deposit levels.
Other Information
Management anticipates no material effect upon the capital expenditures,
earnings and competitive position of the Registrant or its subsidiaries by
reason of any laws regulating or protecting the environment. The Registrant
believes that the nature of the operations of the subsidiaries has little, if
any, environmental impact. The Registrant, therefore, anticipates no material
capital expenditures for environmental control facilities in its current fiscal
year or for
Page 8
PART I (continued)
the foreseeable future. The subsidiaries may be required to make capital
expenditures related to properties which they may acquire through foreclosure
proceedings in the future; however, the amount of such capital expenditures, if
any, is not currently determinable. Neither the Registrant nor its subsidiaries
have any material patents, trademarks, licenses, franchises or concessions. No
material amounts have been spent on research activities and no employees are
engaged full-time in research activities. As of December 31, 1999, the
Registrant and its subsidiaries employed 254 persons full-time and 25 persons
part-time. Management considers its relationship with its employees to be good.
Financial Information About Foreign and Domestic Operations and Export Sales
The Registrant's subsidiaries do not have any offices located in a foreign
country and they have no foreign assets, liabilities, or related income and
expense.
Statistical Disclosure
The following section contains certain financial disclosures relating to the
Registrant as required under the Securities and Exchange Commission's Industry
Guide 3, "Statistical Disclosure by Bank Holding Companies", or a specific
reference as to the location of the required disclosures in the Registrant's
1999 Annual Report to Shareholders which are hereby incorporated herein by
reference.
Ohio Valley Banc Corp.
Statistical Information
I. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
A. & B. The average balance sheet information and the related analysis of net
interest earnings for the years ending December 31, 1999, 1998 and 1997 are
included in Table I - "Consolidated Average Balance Sheet & Analysis of Net
Interest Income", within Management's Discussion and Analysis of Operations of
the Registrant's 1999 Annual Report to Shareholders and is incorporated into
this Item 1 by reference.
C. Tables setting forth the effect of volume and rate changes on interest income
and expense for the years ended December 31, 1999, 1998 and 1997 are included in
Table II - "Rate Volume Analysis of Changes in Interest Income & Expense",
within Management's Discussion and Analysis of Operations of the Registrant's
1999 Annual Report to Shareholders and is incorporated into this Item 1 by
reference. For purposes of these Tables, changes in interest due to volume and
rate were determined as follows:
Volume Variance - Change in volume multiplied by the previous year's rate.
Rate Variance - Change in rate multiplied by the previous year's volume.
Rate/Volume Variance - Change in volume multiplied by the change in rate.
Page 9
PART I (continued)
Ohio Valley Banc Corp.
Statistical Information
II. SECURITIES
A. Types of Securities - Total securities on the balance sheet are comprised of
the following classifications at December 31:
(dollars in thousands) 1999 1998 1997
---- ---- ----
Securities Available-for-Sale
U.S. Treasury securities .......... $ 7,510 $ 18,143 $ 27,446
U.S. Government agency securities.. 41,522 4,114 2,062
Mortgage-backed securities......... 2,189
Marketable equity securities....... 4,150 3,998 3,861
--------- --------- ---------
Total securities available-for-sale $ 55,371 $ 26,255 $ 33,369
========= ========= =========
Securities Held-to-Maturity
U.S. Treasury securities........... $ 100
U.S. Government agency securities.. 27,693 $ 24,509
Obligations of states and
political subdivisions........... $ 15,690 17,195 13,935
Corporate obligations.............. 503
Mortgage-backed securities......... 319 381 472
--------- --------- ---------
Total securities held-to-maturity $ 16,009 $ 45,369 $ 39,419
========= ========= =========
B. Information required by this item is included in Table III - "Securities",
within Management's Discussion and Analysis of Operations of the Registrant's
1999 Annual Report to Shareholders and is incorporated into this item 1 by
reference.
C. Excluding obligations of the U.S. Treasury and other agencies and
corporations of the U.S. Government, no concentration of securities exists of
any issuer that is greater than 10% of shareholders' equity of the Registrant.
III. LOAN PORTFOLIO
A. Types of Loans - Total loans on the balance sheet are comprised of the
following classifications at December 31:
(dollars in thousands) 1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Real estate loans $201,625 $163,650 $120,697 $112,635 $106,734
Commercial loans 119,585 96,116 78,124 74,666 52,361
Consumer loans 88,942 85,664 78,878 75,047 66,922
All other loans 1,006 1,700 2,568 2,312 1,200
-------- -------- -------- -------- --------
$411,158 $347,130 $280,267 $264,660 $227,217
======== ======== ======== ======== ========
Page 10
PART I (continued)
Ohio Valley Banc Corp.
Statistical Information
B. Maturities and Sensitivities of Loans to Changes in Interest Rates -
Information required by this item is included in table VII - "Maturity and
Repricing Data of Loans", within Management's Discussion and Analysis of
Operations of the Registrant's 1999 Annual Report to Shareholders and is
incorporated into this Item 1 by reference.
C.1. Risk Elements - Information required by this item is included in Table VI -
"Summary of Nonperforming and Past Due Loans", within Management's Discussion
and Analysis of Operations of the Registrant's 1999 Annual Report to
Shareholders and is incorporated into this Item 1 by reference.
2. Potential Problem Loans - At December 31, 1999, there are approximately
$600,000 of loans, which are not included in Table VI - "Summary of
Nonperforming and Past Due Loans" within Management's Discussion and Analysis of
Operations of the Registrant's 1999 Annual Report to Shareholders, for which
management has some doubt as to the borrower's ability to comply with the
present repayment terms. These loans and their potential loss exposure have been
considered in management's analysis of the adequacy of the allowance for loan
losses.
3. Foreign Outstandings - There were no foreign outstandings at December 31,
1999, 1998, or 1997.
4. Loan Concentrations - As of December 31, 1999, there were no concentrations
of loans greater than 10% of total loans which are not otherwise disclosed as a
category of loans pursuant to Item III (A) above. Also refer to the Consolidated
Financial Statements regarding concentrations of credit found within Note A of
the Notes to the Consolidated Financial Statements of the Registrant's 1999
Annual Report to Shareholders incorporated herein by reference.
5. No material amount of loans that have been classified by regulatory examiners
as loss, substandard, doubtful, or special mention have been excluded from the
amounts disclosed as impaired, nonaccrual, past due 90 days or more,
restructured, or potential problem loans.
D. Other Interest-Bearing Assets - As of December 31, 1999, there were no other
interest-bearing assets that would be required to be disclosed under Item III
(C) if such assets were loans. At December 31, 1999, other real estate owned
totaled $30,000.
Page 11
PART I (continued)
Ohio Valley Banc Corp.
Statistical Information
IV. SUMMARY OF LOAN LOSS EXPERIENCE
A. The following schedule presents an analysis of the allowance for loan losses
for the years ended December 31:
(dollars in thousands) 1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Balance, beginning of year.... $4,277 $3,390 $3,180 $2,481 $2,261
Loans charged-off:
Real estate............... 41 110 39 5 32
Commercial................ 454 130 215 78 182
Consumer.................. 1,298 1,433 961 673 304
-------- -------- -------- -------- --------
Total loans charged-off 1,793 1,673 1,215 756 518
Recoveries of loans:
Real estate............... 13 40 1
Commercial................ 23 47 41 73 57
Consumer.................. 232 178 138 54 47
-------- -------- -------- -------- --------
Total recoveries of loans 268 265 180 127 104
Net loan charge-offs.......... (1,525) (1,408) (1,035) (629) (414)
Provision charged to operations 2,303 2,295 1,245 1,328 634
-------- -------- -------- -------- --------
Balance, end of year.......... $5,055 $4,277 $3,390 $3,180 $2,481
======== ======== ======== ======== ========
Ratio of Net Charge-offs to Average Loans - Information required by this
item is included in Table V - "Allocation of the Allowance for Loan Losses",
within Management's Discussion and Analysis of Operations of the Registrant's
1999 Annual Report to Shareholders and is incorporated into this Item 1 by
reference. In addition, attention is directed to the caption "Loans" within
Management's Discussion and Analysis of Operations of the Registrant's 1999
Annual Report to Shareholders and is incorporated into this Item 1 by reference.
B. Allocation of the Allowance for Loan Losses - Information required by this
item is included in Table V - "Allocation of the Allowance for Loan Losses",
within Management's Discussion and Analysis of Operations of the Registrant's
1999 Annual Report to Shareholders and is incorporated into this Item 1 by
reference.
V. DEPOSITS
A. & B. Deposit Summary - Information required by this item is included in Table
I - "Consolidated Average Balance Sheet & Analysis of Net Interest Income",
within Management's Discussion and Analysis of Operations of the Registrant's
1999 Annual Report to Shareholders and is incorporated into this Item 1 by
reference.
Page 12
PART I (continued)
Ohio Valley Banc Corp.
Statistical Information
C. & E. Foreign Deposits - There were no foreign deposits outstanding at
December 31, 1999, 1998, or 1997.
D. Schedule of Maturities - The following table provides a summary of total time
deposits by remaining maturities for the period ended December 31, 1999:
Over Over
3 months 3 through 6 through Over
(dollars in thousands) or less 6 months 12 months 12 months
--------- --------- --------- ---------
Certificates of deposit of
$100,000 or greater.................. $ 13,825 $ 20,103 $ 21,292 $ 15,363
Other time deposits of
$100,000 or greater.................. 877 670 1,092 3,698
--------- --------- --------- ---------
Total time deposits of
$100,000 or greater.................. $ 14,702 $ 20,773 $ 22,384 $ 19,061
========= ========= ========= =========
VI. RETURN ON EQUITY AND ASSETS
Information required by this section is included in Table IX -
"Key Ratios", within Management's Discussion and Analysis of Operations of the
Registrant's 1999 Annual Report to Shareholders and is incorporated into this
Item 1 by reference.
VII. SHORT-TERM BORROWINGS
The following schedule is a summary of securities sold under agreements to
repurchase at December 31:
(dollars in thousands) 1999 1998 1997
-------- -------- --------
Balance outstanding at period-end........... $ 16,788 $ 19,066 $ 12,831
-------- -------- --------
Weighted average interest rate at period-end 4.54% 3.96% 3.95%
-------- -------- --------
Average amount outstanding during year...... $ 13,961 $ 18,148 $ 11,352
-------- -------- --------
Approximate weighted average interest rate
during the year.......................... 3.65% 3.77% 3.83%
-------- -------- --------
Maximum amount outstanding as of any
month-end................................ $ 16,788 $ 25,112 $ 16,768
-------- -------- --------
ITEM 2 - PROPERTIES
The Registrant owns no material physical properties except through the Bank.
The Bank conducts its operations from its main office building at 420 Third
Avenue, in Gallipolis, Ohio 45631. The main office building, Trust/Operations
Center and six of the fifteen branch facilities are owned by the Bank.
Page 13
PART I (continued)
The Bank has fifteen branch offices. A summary of these properties are as
follows:
1) Mini-Bank Office 437 Fourth Avenue, Gallipolis, OH 45631
2) Jackson Pike Office 3035 State Route 160, Gallipolis, OH 45631
3) Rio Grande Office 416 West College Avenue, Rio Grande, OH 45674
4) Jackson Office 738 East Main Street, Jackson, OH 45640
5) Waverly Office 507 W. Emmitt Avenue, Waverly, OH 45690
6) Columbus Office 3700 South High Street, Columbus, OH 43207
7) Point Pleasant Office 328 Viand Street, Point Pleasant, WV 25550
8) SuperBank-Gallipolis Office 236 Second Avenue, Gallipolis, OH 45631
9) SuperBank-Pomeroy Office 700 West Main Street, Pomeroy, OH 45769
10) Wal-Mart Gallipolis Office 2145 Eastern Avenue, Gallipolis, OH 45631
11) Wal-Mart Cross Lanes Office 100 Nitro Marketplace, Cross Lanes, WV 25315
12) Wal-Mart Southridge Office 2700 Mountaineer Blvd., S. Charleston, WV 25309
13) SuperBank-Pea Ridge Office 6360 US Rt. 60 East, Barboursville, WV 25504
14) Milton Office 280 East Main Street, Milton, WV 25541
15) Wal-Mart South Point Office US Rt. 52, South Point, OH 45680
The Columbus, Point Pleasant, SuperBank and Wal-Mart offices are all leased.
The lease term for the Columbus facility is from July 14, 1999 to July 13, 2002,
with a base rent of $8,010 per year. The Point Pleasant location has a lease
term from July 1, 1997 to June 30, 2017, with a base rent of $30,000 per year.
The lease term for the SuperBank-Gallipolis facility is from December 1, 1996 to
November 30, 2001, with an option to renew for an additional five years. The
base rent is $8,900 per year. The lease term for the SuperBank-Pomeroy facility
is from August 1, 1998 to July 31, 2003, with a base rent of $13,000 per year.
The lease term for the Wal-Mart Gallipolis location is from May 20, 1998 to May
19, 2003, with a base rent of $25,000 per year. The lease term for the Wal-Mart
Cross Lanes location is from August 19, 1998 to August 18, 2003, with a base
rent of $25,000 per year. The lease term for the Wal-Mart Southridge location is
from August 27, 1999 to August 31, 2004, with a base rent of $32,000 per year.
The lease term for the SuperBank-Pea Ridge facility is from September 30, 1999
to October 1, 2000, with a base rent of $24,000 per year. The lease term for the
Wal-Mart South Point location is from November 4, 1999 to November 30, 2004,
with a base rent of $25,000 per year.
The Bank owns a facility at 143 Third Avenue, Gallipolis, Ohio used for
additional office space. The Bank also owns a facility at 441 Second Avenue,
Gallipolis, Ohio, which it leases to Caldwell Miller Financial Group, Inc. The
primary lease term is from July 1, 1997 to June 30, 2002, with a base rent of
$13,800 per year.
Loan Central leases four facilities used as consumer finance offices with one
facility being located at 2145-E Eastern Avenue, Gallipolis, Ohio 45631; a
second facility being located at 348 County Road 410, Suite 3, South Point, Ohio
45680; a third facility being located at 323 East Broadway Street, Jackson, Ohio
45640; and a fourth facility being located at 505 West Emmitt Avenue, Suite 3,
Waverly, Ohio 45690. The lease term for the Gallipolis office is from February
1, 1999 to February 1, 2004, with a base rent of $25,000 in year 1, $25,500 in
year 2, $25,900 in year 3, $26,400 in year 4, and $26,800 in year 5. The lease
term for the South Point office is from February 1, 1999 to February 1, 2004,
with a base rent of $18,000 per year. The lease term for the Jackson office is
from January 22, 1998 to January 21, 2001, with a base rent of $9,600
Page 14
PART I (continued)
per year. The lease term for the Waverly office is from April 1, 1999 to April
1, 2004, with a base rent of $9,600 per year.
Jackson leases its office located at 221 Main Street, Jackson, Ohio 45640. The
lease term for this location is from July 1, 1999 to July 1, 2002, with a base
rent of $5,400 per year.
Management considers its properties to be satisfactory for its current
operations.
ITEM 3 - LEGAL PROCEEDINGS
There are no material pending legal proceedings against the Registrant or its
subsidiaries, other than ordinary litigation incidental to their respective
businesses.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There was no matter submitted during the fourth quarter of 1999 to a vote of
security holders, by solicitation of proxies or otherwise.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required under this item is located under the caption "Summary
of Common Stock Data" in the Registrant's 1999 Annual Report to Shareholders. In
addition, attention is directed to the caption "Capital Resources" within
Management's Discussion and Analysis of Operations of the Registrant's 1999
Annual Report to Shareholders and to Note O - "Regulatory Matters". All such
information is incorporated herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The information required under this item is incorporated by reference to the
information appearing under the caption "Selected Financial Data" of the
Registrant's 1999 Annual Report to Shareholders.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Operations" appears within the
Registrant's 1999 Annual Report to Shareholders and is incorporated herein by
reference.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
The information required under this item is included in Table VIII - "Rate
Sensitivity Analysis" and the caption "Liquidity and Interest Rate Sensitivity"
found within Management's Discussion and Analysis of Operations of the
Registrant's 1999 Annual Report to Shareholders and is incorporated herein by
reference.
Page 15
PART II (continued)
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Registrant's consolidated financial statements and related notes are
listed below and incorporated herein by reference to the 1999 Annual Report to
Shareholders. The "Report of Independent Auditors" and the supplementary
"Summarized Quarterly Financial Information" specified by Item 302 of Regulation
S-K appear within the 1999 Annual Report to Shareholders and are incorporated by
reference.
Consolidated Statements of Condition as of December 31, 1999 and 1998
Consolidated Statements of Income for the years ended December 31, 1999, 1998
and 1997
Consolidated Statements of Changes in Shareholders' Equity for the years
ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended December 31, 1999,
1998 and 1997
Notes to the Consolidated Financial Statements
Report of Independent Auditors
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
No response required.
PART III
Information relating to the following items is included in the Registrant's
definitive proxy statement for the Annual Meeting of Shareholders to be held on
April 12, 2000 ("2000 Proxy Statement") filed with the Commission and is
incorporated by reference to the pages listed below into this Form 10-K Annual
Report, provided, that neither the report on executive compensation nor the
performance graph included in the Registrant's definitive proxy statement shall
be deemed to be incorporated herein by reference.
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item with respect to Executive Officers who
are directors is incorporated by reference to the information appearing under
the caption "Election of Directors" on page 4 of the Registrant's 2000 Proxy
Statement. Executive officers not required to be disclosed in the Proxy
Statement are presented in the table below. Executive officers serve at the
pleasure of the Board of Directors.
Current Position and
Name and Age Business Experience During Past 5 Years
- ------------------ ---------------------------------------
Sue Ann Bostic, 58 Vice President of the Registrant beginning 1996,
Senior Vice President, Administrative Group of the
Bank beginning 1996, Vice President, Support Services
Division of the Bank from 1993 to 1995.
Page 16
PART III (continued)
Current Position and
Name and Age Business Experience During Past 5 Years
- ------------------ ---------------------------------------
Cherie A. Barr, 33 Vice President of the Registrant beginning 1998,
President and Secretary of Loan Central beginning
1999, Senior Vice President and Secretary of Loan
Central beginning 1998, Secretary of Loan Central
beginning 1997, Office Manager of Loan Central
beginning 1996, Office Manager, American General
Finance, Gallipolis, Ohio from 1994 to 1996.
Katrinka V. Hart, 41 Vice President of the Registrant beginning 1995,
Senior Vice President, Retail Bank Group of the Bank
beginning 1995.
Charles C. Lanham, 71 Governmental Relations and Secretary of the
Registrant beginning 1999, Governmental Relations and
Secretary of the Bank beginning 1999, Secretary and
Director of Jackson beginning 1999, Senior Vice
President of the Registrant from 1997 to 1998,
Executive Vice President of the Bank from 1997 to
1998, Chairman of Bank One, Point Pleasant, West
Virginia, N.A. beginning 1995, President of Bank One,
Point Pleasant, West Virginia, N.A from 1993 to 1995.
Mario P. Liberatore, 54 Vice President of the Registrant beginning 1997,
Senior Vice President, West Virginia Bank Group of
the Bank beginning 1997, President of Bank One, Point
Pleasant, West Virginia, N.A. beginning 1995,
Executive Vice President of Bank One, Point Pleasant,
West Virginia, N.A. from 1993 to 1995.
E. Richard Mahan, 54 Senior Vice President of the Registrant beginning
1999, Executive Vice President of the Bank beginning
1999, Vice President of the Registrant from 1995 to
1998, Senior Vice President, Commercial Bank Group of
the Bank from 1995 to 1998.
Larry E. Miller, II, 35 Senior Vice President of the Registrant beginning
1999, Executive Vice President of the Bank beginning
1999, Vice President of the Registrant from 1995 to
1998, Senior Vice President, Financial Bank Group of
the Bank from 1995 to 1998.
Harold A. Howe, 50 Vice President of the Registrant beginning 1998,
President of Jackson beginning 1994.
Further discussion located at pages 5-6 of 2000 Proxy Statement.
No facts exist which would require disclosure under Item 405 of
Regulation S-K.
ITEM 11 - EXECUTIVE COMPENSATION
Discussion located at pages 7-8 of 2000 Proxy Statement.
Page 17
PART III (continued)
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Discussion located at pages 2-4 of 2000 Proxy Statement.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Discussion located at page 10 of 2000 Proxy Statement.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
A. (1) Financial Statements
The following consolidated financial statements of the Registrant appear in
the 1999 Annual Report to Shareholders, Exhibit 13, and are specifically
incorporated by reference under Item 8 of this Form 10-K:
Consolidated Statements of Condition as of December 31, 1999 and 1998
Consolidated Statements of Income for the years ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Changes in Shareholders' Equity for the years ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997
Notes to the Consolidated Financial Statements
Report of Independent Auditors
(2) Financial Statement Schedules
Financial statement schedules are omitted as they are not required or are not
applicable, or the required information is included in the financial statements.
(3) Exhibits
Reference is made to the Exhibit Index which is found on page 20 of this Form
10-K.
B. Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the year ended
December 31, 1999.
Page 18
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
OHIO VALLEY BANC CORP.
Date: March 30, 2000 By /s/James L. Dailey
-----------------------------
James L. Dailey, Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 30, 2000 by the following persons on
behalf of the Registrant and in the capacities indicated.
Name Capacity
---- --------
/s/James L. Dailey Chairman, Chief Executive
- ----------------------------- Officer and Director
James L. Dailey
/s/Jeffrey E. Smith President, Chief Operating Officer,
- ----------------------------- Treasurer and Director
Jeffrey E. Smith
/s/Charles C. Lanham Governmental Relations and
- ----------------------------- Secretary
Charles C. Lanham
/s/Phil A. Bowman Director
- -----------------------------
Phil A. Bowman
/s/Keith R. Brandeberry, M.D. Director
- -----------------------------
Keith R. Brandeberry, M.D.
/s/W. Lowell Call Director
- -----------------------------
W. Lowell Call
/s/Robert H. Eastman Director
- -----------------------------
Robert H. Eastman
/s/Merrill L. Evans Director
- -----------------------------
Merrill L. Evans
/s/Warren F. Sheets Director
- -----------------------------
Warren F. Sheets
/s/Thomas E. Wiseman Director
- -----------------------------
Thomas E. Wiseman
Page 19
EXHIBIT INDEX
The following exhibits are included in this Form 10-K or are incorporated by
reference as noted in the following table:
Exhibit Number Exhibit Description
3a Amended Articles of Ohio Valley Banc Corp. (as
filed with the Ohio Secretary of State on August
21, 1992) are incorporated herein by reference to
Form 10-K filed for the fiscal year ending
December 31, 1997 [Exhibit 3a] filed March 31,
1998.
3b Code of Regulations of the Registrant are
incorporated herein by reference to Form 8-K (File
# 2-71309) [Exhibit 3b] filed November 6, 1992.
10 Summary of Deferred Compensation Plan for
Directors and Executive Officers is incorporated
herein by reference to Form 10-K filed for the
fiscal year ending December 31, 1997.
11 Statement regarding computation of per share
earnings (included in Note A of the notes to the
Consolidated Financial Statements of this Annual
Report on Form 10-K.)
13 Registrant's Annual Report to Shareholders for the
fiscal year ended December 31, 1999. [Exhibit is
being filed herewith] (Not deemed filed except for
portions thereof which are specifically
incorporated by reference into this Annual Report
on Form 10-K.)
21 Subsidiaries of the Registrant [Exhibit is being
filed herewith.]
23 Consent of Independent Accountant - Crowe, Chizek
and Company LLP.[Exhibit is being filed herewith.]
27 Financial Data Schedule. [Exhibit is filed
herewith.]
Page 20