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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, 1997
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: (614) 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. X
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of February 28, 1998: $ 54,122,564
The number of common shares of the registrant outstanding
as of February 28,1998: 1,811,775 common shares.
Exhibit Index begins on page 18. Page 1 of 78 pages.
Ohio Valley Banc Corp.
Form l0-K
December 31, 1997
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the 1997 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, 7 and 8.
(2) Portions of the Proxy Statement for the Annual Meeting of Shareholders to
be held April 8, 1998 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 12
Item 3 Legal Proceedings 12
Item 4 Submission of Matters to a Vote of Security Holders 12
PART II
Item 5 Market for Registrant's Common Equity and Related
Stockholder Matters 14
Item 6 Selected Financial Data 14
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Item 7A Quantitative and Qualitative Disclosures about
Market Risk 15
Item 8 Financial Statements and Supplementary Data 15
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 15
PART III
Item 10 Directors and Executive Officers of the Registrant 15
Item 11 Executive Compensation 15
Item 12 Security Ownership of Certain Beneficial Owners and
Management 16
Item 13 Certain Relationships and Related Transactions 16
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on
Form 8-K 16
SIGNATURES 17
EXHIBIT INDEX 18
Page 2
PART I
ITEM 1 - BUSINESS
General Description of Business
Ohio Valley Banc Corp. (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 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 Bank is engaged in commercial and retail banking and Loan Central is
engaged in consumer finance. 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 and Loan Central. 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. Revenues from loans accounted for 80.66% in 1997,
79.81% in 1996 and 74.50% in 1995 of total consolidated revenues. Revenues from
interest and dividends on securities accounted for 13.56%, 15.21% and 20.58% of
total consolidated revenues in 1997, 1996 and 1995, respectively. The Bank
presently has nine offices, six of which offer drive-up services and automatic
teller machines. The Bank accounted for substantially all of the Registrant's
consolidated assets at December 31, 1997.
The banking business is highly competitive. The Bank's market area is
concentrated primarily in Gallia, Jackson, Pike and Franklin Counties in Ohio
and Mason County, 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,
Page 3
PART I (continued)
with substantially greater resources, are becoming increasingly visible. With
the formation of Loan Central, the Registrant is better able to compete in
Gallia 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. 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 service. 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 deals 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 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 are generally one year adjustable or fixed for the first three or
five years and then become one year adjustable, fully amortized 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.
Page 4
PART I (continued)
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 represents a new market 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 expects to continue this growth in 1998 by introducing a
second SuperBank branch to be located in a local Wal-Mart store in Gallipolis.
To expand on Loan Central's success, a third office was opened in Jackson, Ohio
in early 1998.
Supervision and Regulation
The following is a summary of certain statutes and regulations affecting the
Registrant and the Bank. The summary is qualified in its entirety by reference
to such statutes and regulations.
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 or 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.
As an Ohio state-chartered bank, the Bank is supervised and regulated by the
Ohio Division of Financial Institutions. The deposits of the Bank are insured by
the FDIC and the Bank is 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, limitations on payment of dividends, and limitations on branching.
Since June 1997, pursuant to federal legislation, the Bank has been authorized
to branch across state lines, unless the law of the other state specifically
prohibits the interstate branching authority granted by federal law.
Page 5
PART I (continued)
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 weighted risk 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, are subject to similar capital requirements adopted by
the FDIC.
The Registrant and the Bank 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 the Bank, which may require it to retain capital for further
investments in the Bank, rather than for dividends for shareholders of the
Registrant. The Bank may not pay dividends to the Registrant if, after paying
such dividends, it would fail to meet the required minimum levels under the
risk-based capital guidelines and the minimum leverage ratio requirements. The
Bank must have the approval of its regulatory authorities if a dividend in any
year would cause the total dividends for that year to exceed the sum of the
current year's net profits and the retained net profits for the preceding two
years, less required transfers to surplus. Payment of dividends by the Bank may
be restricted at any time at the discretion of the regulatory authorities, if
they deem such dividends to constitute an unsafe and/or unsound banking practice
or if necessary to maintain adequate capital for the Bank. These provisions
could have the effect of limiting the Registrant's ability to pay dividends on
its outstanding common shares.
Page 6
PART I (continued)
Deposit Insurance Assessments and Recent Legislation
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 is a member 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 become fully funded, BIF assessments for healthy commercial banks
were reduced to $0 per year, during 1997. 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 1998 will be $.013
per $100 in deposits. Based upon its level of deposits at December 31, 1997, the
projected BIF assessments for the Bank would be $37,427 for 1998.
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 Bank 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 the forseeable future. The Bank may be required to make capital expenditures
related to properties which it 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, 1997, the Registrant and its
subsidiaries employed 212 persons full-time and 18 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.
Page 7
PART I (continued)
Statistical Disclosure
The following section contains certain financial disclosures related 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 disclosure in the Registrant's 1997
Annual Report to Shareholders, page 9 and pages 31-43, 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, 1997, 1996 and
1995 are included in Table I - "Consolidated Average Balance Sheet &
Analysis of Net Interest Income", within Management's Discussion and
Analysis of Operations found on page 39 of the Registrant's 1997 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, 1997 and
1996 are included in Table II - "Rate Volume Analysis of Changes in
Interest Income & Expense", within Management's Discussion and Analysis
of Operations found on page 40 of the Registrant's 1997 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.
II. SECURITIES
A. Types of Securities - Total securities on the balance sheet are
comprised of the following classifications at December 31:
(dollars in thousands) 1997 1996 1995
---------------------- ---- ---- ----
Securities Available-for-Sale
U.S. Treasury securities $27,446 $28,467 $31,171
U.S. Government agency securities 2,062
Equity Securities 3,151 2,125 2,231
------- ------- -------
Total securities available-for-sale $32,659 $30,592 $33,402
======= ======= =======
Securities Held-to-Maturity
U.S. Government agency securities $24,509 $22,441 34,935
Obligations of states and
political subdivisions 13,935 12,252 12,280
Corporate obligations 503 758 1,512
Mortgage-backed securities 472 546 623
------- ------- -------
Total securities held-to-maturity $39,419 $35,997 $49,350
======= ======= =======
Page 8
PART I (continued)
Ohio Valley Banc Corp.
Statistical Information
B. Information required by this item is included in Table
III-"Securities", within Management's Discussion and Analysis of
Operations found on page 41 of the Registrant's 1997 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) 1997 1996 1995 1994 1993
- ---------------------- ---- ---- ---- ---- ----
Real estate loans $110,247 $102,158 $ 96,412 $ 86,792 $ 75,249
Commercial loans 78,124 74,666 52,361 55,899 51,754
Consumer loans 78,840 74,908 66,784 55,675 54,567
All other loans 2,568 2,312 1,200 1,954 3,552
-------- -------- -------- -------- --------
$269,779 $254,044 $216,757 $200,320 $185,122
======== ======== ======== ======== ========
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 found on page 42 of the Registrant's 1997 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 found on page 42 of
the Registrant's 1997 Annual Report to Shareholders and is incorporated
into this Item 1 by reference.
2. Potential Problem Loans - At December 31, 1997, there are
approximately $200,000 of loans, which are not included in Table VI -
"Summary of Nonperforming and Past Due Loans" within Management's
Discussion and Analysis of Operations found on page 42 of the
Registrant's 1997 Annual Report to Shareholders, for which management
has some doubt as to the borrowers' 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, 1997, 1996, or 1995.
4. Loan Concentrations - As of December 31, 1997, 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 Statement on page 15 of the Registrant's 1997
Annual Report to Shareholders incorporated herein by reference.
Page 9
PART I (continued)
Ohio Valley Banc Corp.
Statistical Information
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, 1997, 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, 1997,
other real estate owned totaled $142,000.
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) 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Balance, beginning of year $3,080 $2,388 $2,184 $2,013 $1,701
Loans charged-off:
Real estate 39 3 28 35 54
Commercial 215 78 182 377
Consumer 961 673 304 263 387
------ ------ ------ ------ ------
Total loans charged-off 1,215 754 514 298 818
Recoveries of loans:
Real estate 1 5 2
Commercial 41 73 57 4 105
Consumer 138 54 47 47 48
------ ------ ------ ------ ------
Total recoveries of loans 180 127 104 56 155
Net loan charge-offs (1,035) (627) (410) (242) (663)
Provision charged to operations 1,245 1,319 614 413 975
------ ------ ------ ------ ------
Balance, end of year $3,290 $3,080 $2,388 $2,184 $2,013
====== ====== ====== ====== ======
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
found on page 42 of the Registrants 1997 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 on page 35 of the Registrant's
1997 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
found on page 42 of the Registrants 1997 Annual Report to Shareholders
and is incorporated into this Item 1 by reference.
Page 10
PART I (continued)
Ohio Valley Banc Corp.
Statistical Information
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 found on page 39 of the Registrant's 1997 Annual Report to
Shareholders and is incorporated into this Item 1 by reference.
C. & E. Foreign Deposits - There were no foreign deposits outstanding at
December 31, 1997, 1996, or 1995.
D. Schedule of Maturities - Information required by this item is
included in Note F - Deposits in the table providing the summary of
total time deposits by remaining maturities of the notes to the
Consolidated Financial Statements found on page 18 of the Registrant's
1997 Annual Report to Shareholders and is incorporated into this Item 1
by reference.
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
found on page 43 of the Registrant's 1997 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) 1997 1996 1995
- ---------------------- ---- ---- ----
Balance outstanding at period end $12,831 $ 8,714 $ 9,504
Weighted average interest rate at period end 3.95% 3.50% 2.90%
Average amount outstanding during year $11,352 $ 9,813 $17,790
Approximate weighted average interest rate
during the year 3.83% 3.46% 3.36%
Maximum amount outstanding as of any month end $16,768 $12,288 $21,748
Page 11
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 five of the eight branch facilities are owned by the Bank. The Bank
has eight 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) SuperBank Office 236 Second Avenue, Gallipolis, OH 45631
7) Columbus Office 3700 South High Street, Suite 100, Columbus, OH 43207
8) Point Pleasant Office 328 Viand Street, Point Pleasant, WV 25550
The SuperBank, Columbus and Point Pleasant offices are all leased. The lease
term for the SuperBank 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 Columbus facility is from July 14, 1996 to July
13, 1999, 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 Bank leases a facility at 429 Viand Street, Point Pleasant, West
Virginia, 25550, that was used as a loan production office until being converted
to a temporary full-service branch in 1997. The lease will expire on December
31, 1998 and will not be renewed due to the completion of the new office in
Point Pleasant.
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 The Ohio Company, whose principal place of
business is 155 East Broad Street, Columbus, Ohio 43215. 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 three facilities used as consumer finance offices with
one facility being located at 266 Upper River Road, Gallipolis, Ohio; a second
facility being located at 367 County Road 406, Building #6, South Point, Ohio
45686; and the third facility being located at 323 East Broadway Street,
Jackson, Ohio 45640. The lease term for the Gallipolis office is from February
1, 1997 to February 1, 1999 with a base rent of $8,400. The lease term for the
South Point office is from February 1, 1996 to February 1, 1999. The base rent
is $13,500 for the first year, $14,625 for the second year and $15,750 for the
third year. The Jackson office has a lease term from January 22, 1998 to January
21, 2001 with a base rent of $9,600 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 1997 to a vote of
security holders, by solicitation of proxies or otherwise.
Page 12
PART I (continued)
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 Registrants 1998 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.
Officer of the Officer of the
Name Age Bank Since Registrant Since
---- --- ---------- ----------------
Wendell B. Thomas 63 1962 1995
Principal Occupation: Vice President and Secretary of the
Registrant beginning 1995, Senior Vice President and
Secretary of the Bank beginning 1995, Vice President and
Senior Loan Officer of the Bank from 1992 to 1994.
Sue Ann Bostic 56 1990 1996
Principal Occupation: 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, Assistant Vice
President for Retail Marketing Services in 1992.
Michael D. Francis 40 1990 1995
Principal Occupation: Vice President of the Registrant
beginning 1995, Senior Vice President of Loan Central
beginning 1995, Vice President, Loan Administration, of the
Bank from 1993 to 1994, Assistant Vice President and Loan
Administration and Compliance Officer of the Bank in 1992.
Katrinka V. Hart 39 1985 1995
Principal Occupation: Vice President of the Registrant
beginning 1995, Senior Vice President, Retail Bank Group of
the Bank beginning 1995, Vice President, Branch
Administration Division of the Bank from 1993 to 1994,
Assistant Vice President and Manager of Installment Lending,
and Branch Administration Officer of the Bank in 1992.
Charles C. Lanham 69 1997 1997
Principal Occupation: Senior Vice President of the
Registrant beginning 1997, Executive Vice President of the
Bank beginning 1997.
Mario P. Liberatore 52 1997 1997
Principal Occupation: Vice President of the Registrant
beginning 1997, Senior Vice President, West Virginia Bank
Group of the Bank beginning 1997.
Page 13
PART I (continued)
EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
E. Richard Mahan 52 1991 1995
Principal Occupation: Vice President of the Registrant
beginning 1995, Senior Vice President, Commercial Bank Group
of the Bank beginning 1995, Vice President, Lending Division
of the Bank from 1993 to 1994, Assistant Vice President and
Manager Secured Commercial Lending of the Bank in 1992.
Larry E. Miller, II 33 1991 1995
Principal Occupation: Vice President of the Registrant
beginning 1995, Senior Vice President, Financial Bank Group
of the Bank beginning 1995, Vice President and Internal
Auditor of the Bank from 1993 to 1994, Assistant Vice
President and Internal Auditor of the Bank in 1992.
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" on page 30 of the Registrant's 1997 Annual Report
to Shareholders. In addition, attention is directed to the caption "Capital
Resources" within Management's Discussion and Analysis of Operations on page 36
of the Registrant's 1997 Annual Report to Shareholders and to Note N "Regulatory
Matters" located on page 24 therein. 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" on page 9 of
the Registrant's 1997 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 on pages 31
through 38 of the Registrant's 1997 Annual Report to Shareholders and is
incorporated herein by reference.
Page 14
PART II (continued)
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required under this item is included in Table VIII - "Rate
Sensitivity Analysis" found on page 43 and the caption "Liquidity and Interest
Rate Sensitivity" found on page 37 within Management's Discussion and Analysis
of Operations of the Registrant's 1997 Annual Report to Shareholders and is
incorporated herein by reference.
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 1997 Annual Report to
Shareholders, pages 10 through 28. The "Report of Independent Auditors" appears
on page 29 and the supplementary "Summarized Quarterly Financial Information"
specified by Item 302 of Regulation S-K appears on page 28 of the 1997 Annual
Report to Shareholders and are incorporated by reference.
Consolidated Statements of Condition as of December 31, 1997 and 1996
Consolidated Statements of Income for the years ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Changes in Shareholders' Equity for the
years ended December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995
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
April 8, 1998 ("1998 Proxy Statement") filed with the Commission and is
incorporated by reference to the pages listed below into this Form l0-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
Discussion located at pages 5-6 of 1998 Proxy Statement.
See also Part I - "Executive Officers of the Registrant", beginning on
page 13 of this Form 10-K.
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 1998 Proxy Statement.
Page 15
PART III (continued)
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Discussion located at pages 2-4 of 1998 Proxy Statement.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Discussion located at page 10 of 1998 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 1997 Annual Report to Shareholders, Exhibit 13, on the pages referenced and
are specifically incorporated by reference under Item 8 of this Form 10-K:
Consolidated Statements of Condition as of December 31, 1997 and 1996 10
Consolidated Statements of Income for the years ended
December 31, 1997, 1996 and 1995 .................................. 11
Consolidated Statements of Changes in Shareholders' Equity for the
years ended December 31, 1997, 1996 and 1995 ...................... 12
Consolidated Statements of Cash Flows for the Years ended
December 31, 1997, 1996 and 1995 .................................. 13
Notes to the Consolidated Financial Statements ...................... 14-28
Report of Independent Auditors ...................................... 29
(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 18 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, 1997.
Page 16
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 17, 1998 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 17, 1998 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/Wendell B. Thomas Vice President and
- ----------------------------- Secretary
Wendell B. Thomas
/s/Morris E. Haskins Director
- -----------------------------
Morris E. Haskins
/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 17
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
3.(i) 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 8-K (File# 2-71309) [Exhibit 3a] filed
November 6, 1992.
3.(i) Certificate of Amendment by Shareholders to the
Articles of Incorporation of Ohio Valley Banc
Corp. (as filed with the Ohio Secretary of State
on April 26, 1996) [Exhibit is being filed
herewith.]
3.(i) Amended Articles of Ohio Valley Banc Corp.
(reflects amendments through April 26, 1996)[for
SEC reporting compliance only -- not filed with
Ohio Secretary of State][Exhibit is being filed
herewith.]
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 [Exhibit is being
file herewith]
11 Statement regarding computation of per share
earnings (included in Note A of the notes to the
Consolidated Financial Statements on page 43 of
this Annual Report on Form 10-K.)
13 Registrant's Annual Report to Shareholders for the
fiscal year ended December 31, 1997. [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.]
23a Consent by Certified Public Accountants - Crowe,
Chizek and Company LLP. [Exhibit is being
herewith.]
27 Financial Data Schedule. [Exhibit is filed
herewith.]
Page 18