Ohio Valley Banc (OVBC) - 2024 Q3 - Quarterly Report

Financial Performance - Net income for Q3 2024 was $2,719, an increase of $468 from Q3 2023, with earnings per share rising to $0.58 from $0.47[137] - Noninterest income increased by $286, or 11.1%, in Q3 2024 compared to Q3 2023, largely from service charges and trust fee income[141] - Net interest income increased by $1,205, or 10.6%, for the three months ended September 30, 2024, compared to the same period in 2023[183] - Total interest and fee income increased by $3,473, or 21.8%, during the third quarter of 2024 compared to the same period in 2023[185] - Noninterest expense rose by $841, or 8.1%, in Q3 2024, mainly due to increased salaries and employee benefits[142] - The efficiency ratio improved to 72.0% during the three months ended September 30, 2024, from 73.6% during the same period in 2023, but increased to 72.3% for the nine months ended September 30, 2024, from 70.3% in 2023[201] Assets and Liabilities - Total assets increased to $1,494,023, up $141,888 from year-end 2023, driven by a $108,855 increase in securities and a $77,012 increase in loans[144] - Total liabilities rose to $1,341,870, an increase of $133,742 from year-end 2023, primarily due to a $134,284 increase in deposit balances[145] - Total shareholders' equity increased to $152,153, up $8,146 from December 31, 2023, driven by year-to-date net income[146] - Total cash and cash equivalents, HTM securities maturing within one year, and AFS securities totaled $354,566, representing 23.7% of total assets at September 30, 2024, compared to $290,781 and 21.5% at December 31, 2023[209] Loans and Credit Quality - Loans grew by 7.9% from year-end 2023, with commercial real estate loans up 13.2% and residential real estate loans up 12.5%[144] - The loan portfolio increased to $1,048,912, representing a $77,012 increase, or 7.9%, compared to $971,900 at December 31, 2023[160] - Commercial real estate loans increased by $42,603, or 13.2%, from year-end 2023, making up 34.8% of the total loan portfolio[161] - Residential real estate loans increased by $39,805, or 12.5%, from year-end 2023, representing 34.3% of the total loan portfolio[164] - Nonperforming loans to total loans increased to 0.44% at September 30, 2024, from 0.26% at December 31, 2023[172] - The allowance for credit losses (ACL) for loans totaled $9,919, or 0.95% of total loans, an increase of $1,152, or 13.1%, from $8,767, or 0.90%, at year-end 2023[170] - The increase in ACL was primarily due to a $72,333 increase in collectively evaluated loan balances, mainly from residential and commercial real estate segments[170] Deposits - Total deposits increased by $134,284, or 11.9%, to $1,267,000 at September 30, 2024, compared to year-end 2023[174] - Interest-bearing NOW account balances increased by $120,194, or 70.5%, primarily due to the Ohio Homebuyer Plus program[175] - Deposits increased by 30.3% from year-end 2023, while noninterest-bearing deposits decreased by 1.9%[209] Investment and Securities - Total securities increased by $108,855, or 63.9%, compared to year-end 2023, with U.S. Government securities increasing from $50,297 to $168,842[151] - The fair value of available for sale securities increased by $5,432 during the third quarter of 2024 due to a decrease in long-term reinvestment rates[152] - The company plans to invest excess funds into longer-term, higher-yielding assets during periods of heightened liquidity[150] Credit Losses and Provisions - The provision for credit loss expense increased by $32 in Q3 2024 compared to Q3 2023, primarily due to a specific reserve on an impaired loan[139] - Provision for credit losses expense totaled $920 for the three months ended September 30, 2024, an increase of $32 from $888 in the same period in 2023[190] - Credit loss expense decreased by $140 and $137 during the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily from the commercial real estate construction segment[192] Corporate Governance and Compliance - As of September 30, 2024, the Company's disclosure controls and procedures were evaluated as effective by the Chief Executive Officer and Chief Financial Officer[220] - There were no changes in the Company's internal control over financial reporting during the fiscal quarter ended September 30, 2024, that materially affected its internal control[221] - The Company is involved in various claims and legal actions arising in the ordinary course of business, but does not believe these will have a material adverse effect on its financial position or results[222] Strategic Decisions - The Company participated in the Ohio Homebuyer Plus program, resulting in a $134,284 increase in total deposits from year-end 2023[136] - The company exited the indirect lending business for automobiles and recreational vehicles effective October 11, 2024, to focus on higher yielding loan portfolios[165] - The Bank had utilized 59.53% of its FHLB capacity as of September 30, 2024, an increase from 51.74% at December 31, 2023[210] - The Company engages in off-balance sheet credit-related activities, including commitments to extend credit and standby letters of credit, which may require cash payments if specified future events occur[214] - The determination of the Allowance for Credit Losses (ACL) involves significant judgment and complexity, with management evaluating past events and current conditions to maintain a sufficient reserve level[217] - The Company maintains a diversified credit portfolio, with residential real estate loans being the most significant portion, and avoids material concentrations of loans to any industry or consumer group[218]