For the third quarter of 2019, net interest income decreased $137,000
Impacting net interest income was the decrease in average earning assets due to not processing tax refunds in 2019
The higher interest rate paid by the Federal Reserve during 2019 helped reduce the impact of the lower amount available to be invested
Ohio Valley Banc Corp. reported consolidated net income for the quarter ended September 30, 2019, of $2,137,000, an increase of 22.4 percent from the $1,746,000 earned for the third quarter of 2018.
Earnings per share for the third quarter of 2019 were $.45 compared to $.37 for the prior year third quarter, a 21.6 percent increase.
Return on average assets and return on average equity were .83 percent and 7.07 percent, respectively, for the first nine months of 2019, compared to 1.01 percent and 9.67 percent, respectively, for the same period in the prior year.
For the third quarter of 2019, net interest income decreased $137,000, and for the nine months ended September 30, 2019, net interest income decreased $247,000, from the same respective periods last year.
Impacting net interest income was the decrease in average earning assets due to not processing tax refunds in 2019.
As previously disclosed in 2018, a third-party tax refund product provider elected to terminate the Bank's processing contract early.
During the first nine months of 2018, the processing of tax refunds provided $73 million in average deposits that were invested in the Federal Reserve.
This activity generated approximately $88,000 in interest revenue during the third quarter of 2018 and $890,000 in interest revenue during the first nine months of 2018 that was not replicated in 2019.
As a result, interest on interest-bearing deposits with banks for the nine months ended September 30, 2019 decreased $344,000 from the same period last year.
The higher interest rate paid by the Federal Reserve during 2019 helped reduce the impact of the lower amount available to be invested.
For the three months ended September 30, 2019, the provision for loan losses decreased $518,000, and for the nine months ended September 30, 2019, the provision for loan losses increased $320,000, from the same respective periods in 2018.
For the three months ended September 30, 2019, the provision for loan loss expense of $444,000 was primarily related to quarterly net loan charge-offs of $1,693,000, which was partially offset by lower general reserves associated with improved economic risk factors, such as lower delinquency levels and lower levels of classified and criticized loans, which are loans demonstrating financial weakness.
The ratio of nonperforming loans to total loans was 1.18 percent at September 30, 2019 compared to 1.25 percent at December 31, 2018 and 1.36 percent at September 30, 2018.
The allowance for loan losses was .79 percent of total loans at September 30, 2019, compared to .87 percent at December 31, 2018 and 1.06 percent at September 30, 2018.
For the three months ended September 30, 2019, noninterest income totaled $2,107,000, an increase of $180,000 from the same period last year.
Noninterest income totaled $5,956,000 for the nine months ended September 30, 2019, a decrease of $1,585,000 from the same period last year.
The decrease in year-to-date noninterest income was primarily related to tax processing fees.
In relation to the third-party tax refund provider terminating the contract as previously discussed, the Company experienced a decline in tax processing fees, which is a per item fee for each tax refund processed.
As a result of not performing such service in 2019, tax processing fees decreased $1,561,000 from the first nine months of 2018.
The increase in quarter-to-date noninterest income was related to interchange income earned from debit and credit transactions, which increased $106,000, and gain on sale of other real estate owned, which increased $67,000, respectively, from the same period last year.
For the three months ended September 30, 2019, noninterest expense totaled $9,738,000, a decrease of $23,000 from the same period last year.
For the nine months ended September 30, 2019, noninterest expense totaled $29,097,000, a decrease of $146,000 from the same period last year.
The company's largest noninterest expense, salaries and employee benefits, increased $115,000 as compared to the third quarter of 2018 and decreased $65,000 as compared to the first nine months of 2018.
The limited growth in salaries and employee benefits in 2019 was primarily associated with a lower number of employees in 2019, which more than offset the expense increase associated with annual merit increases.
Further contributing to lower noninterest expense was data processing and FDIC insurance premiums. ■