ITEM 1 - BUSINESS
General Description of Business
Ohio Valley Banc Corp ("Ohio Valley"), a financial holding company, was incorporated under the laws of the State of Ohio on January 8, 1992. Ohio Valley is registered under the Bank Holding Company Act of 1956, as amended ("BHC Act"). The principal executive offices of Ohio Valley are located at 420 Third Avenue, Gallipolis, Ohio 45631. Ohio Valley's common shares are listed on the NASDAQ Securities Market under the symbol "OVBC".
A substantial portion of Ohio Valley's revenue is derived from cash dividends paid by The Ohio Valley Bank Company, Ohio Valley's wholly-owned subsidiary (the "Bank"). The Bank is engaged in commercial and retail banking. 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").
Ohio Valley's wholly-owned subsidiary, Loan Central, Inc. (Loan Central), was formed on February 1, 1996. Loan Central is engaged in consumer finance. Loan Central was incorporated under the laws of the State of Ohio governing finance companies.
Ohio Valley's wholly owned subsidiary, Ohio Valley Financial Services Agency, LLC ("Ohio Valley Financial Services"), was formed on January 10, 2000 as a joint venture with an insurance agency. Ohio Valley Financial Services is engaged in selling life insurance. On September 30, 2002, Ohio Valley assumed a 100% ownership interest of Ohio Valley Financial Services. Ohio Valley Financial Services was approved under the guidelines of the State of Ohio Department of Insurance.
Ohio Valley has a minority equity interest in two insurance companies. The first company, ProFinance Holdings Corporation, was formed on October 5, 2000 and is engaged primarily in property and casualty insurance. The second company, BSG Title Services, was formed on February 28, 2001 and is engaged primarily in title services related to real estate, commercial and consumer loan customers. Both investments were approved under the guidelines of the State of Ohio Department of Insurance.
Prior to 2003, Ohio Valley classified its 100% ownership of Ohio Valley Statutory Trusts I and II as wholly owned subsidiaries and consolidated these investments in the Company's financial statements as liabilities. Under new accounting guidance outlined by Financial Accounting Standards Board Interpretation No. 46, the trusts are no longer consolidated with the Company. As a result, the Company does not report the securities issued by the trust as liabilities, and instead reports as liabilities the subordinated debentures issued by the Company
and held by the trusts. Further detail on this new accounting guidance and the deconsolidation of Ohio Valley Statutory Trusts I and II is located in Ohio Valley's 2003 Annual Report to Shareholders under Note A - Summary of Significant Accounting Policies on page 11 and Note I - Subordinated Debentures and Trust Preferred Securities on page 18. All such information is incorporated herein by reference.
Reference is hereby made to Item 1 (E), "Statistical Disclosure" and Item 8 of this Form 10-K for financial information pertaining to Ohio Valley's business through its subsidiaries as required by Item 101 of Regulation S-K.
Description of Ohio Valley Banc Corp.'s Business
Ohio Valley's business is incident to its 100% ownership of the outstanding equity of the Bank, Loan Central and Ohio Valley Financial Services. The Bank is a full-service financial institution offering a blend of commercial, consumer 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. In addition to originating loans, the Bank invests in U.S. Government and agency obligations, interest-bearing deposits in other financial institutions and other investments permitted by applicable law. Loan Central, a consumer finance company, offers smaller balance consumer loans to individuals with higher credit risk history.
Consolidated revenues from loans accounted for 81.07%, 82.29% and 82.18% of total consolidated revenues in 2003, 2002 and 2001, respectively. Revenues from interest and dividends on securities accounted for 7.23%, 7.16% and 8.09% of total consolidated revenues in 2003, 2002 and 2001, respectively. The Bank presently has seventeen offices, all of which offer automatic teller machines ("ATM's"). Seven of these offices also offer drive-up services. The Bank accounted for substantially all of Ohio Valley's consolidated assets at December 31, 2003.
The banking business is highly competitive. The market area for the Bank 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 generating a growing market presence. Loan Central's market presence further strengthens Ohio Valley's ability to compete in the Gallia, Jackson and Pike Counties by serving a consumer base which may not meet the Bank's credit standards. Loan Central also operates in the Ohio counties of Lawrence and Scioto which are outside the Bank's primary market area. Additionally, Ohio Valley Financial Services sells life insurance which further strengthens the blend of services available to Ohio Valley's consumer base. The principal factors of competition for Ohio Valley's banking business 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 Ohio Valley 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 individuals, businesses and corporations which are located primarily in southeastern Ohio and western West Virginia. 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, 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 in its exposure to higher average dollars per loan as compared with other types of lending (i.e., single-family residential mortgagelending, installment lending and credit card loans). The payment experience on commercial loans is typically dependent on adequate cash flows to service both interest and principal due. Thus, commercial loans may be more sensitive to adverse conditions in the economy generally or adverse conditions in a specific industry.
The Bank and Loan Central make installment credit available to customers in their primary market area of southeastern Ohio and portions of western West Virginia. Credit approval for consumer loans requires demonstration of sufficient 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 Bank and Loan Central to adhere strictly to all laws and regulations governing consumer lending. A qualified compliance officer is responsible for monitoring the performance of his or her respective consumer portfolio and updating loan personnel. The Bank and Loan Central make credit life insurance and health and accident insurance available to all qualified borrowers thus reducing their risk of loss when a borrower's income is terminated or interrupted. The Bank and Loan Central 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 those 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 are 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 and portions of western West Virginia. The Bank generally requires the amount of a residential real estate loan 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. In the third quarter of 2002, the Bank began selling a large portion of its new fixed-rate real estate loan originations to the Federal Home Loan Mortgage Corporation ("Freddie Mac") to enhance customer service and loan pricing. Secondary market sales of these real estate loans, which have fixed rates with fifteen to thirty year terms, will assist in minimizing the Bank's exposure to interest rate risk in a rising rate environment. 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.
Beginning in December 1996, the Bank began a phase of SuperBank branch openings with the objective of further enhancing customer service through extended hours and convenience as well as expanding the new market area of western West Virginia. From 1996 to 2001, the Bank opened eight SuperBank facilities within supermarkets and Wal-Mart stores. These new branches service the market areas of Gallia, Jackson, Meigs and Lawrence counties in Ohio as well as the growing Kanawha and Cabell counties in West Virginia.
With the advent of the Gramm-Leach-Bliley Act, Ohio Valley began to expand its businessbeyond banking services. In October 2000, Ohio Valley combined resources with five unaffiliated financial holding companies, a private equity firm and a group of insurance executives to purchase ProFinance Holdings Corporation, a property and casualty insurance underwriter and reinsurance company. Ohio Valley also formed Ohio Valley Financial Services, a life insurance company, which opened for business on January 2, 2001. Ohio Valley Financial Services initially operated as a joint venture with an existing insurance agency (The Wiseman Agency, Inc.) located in Jackson, Ohio. However, The Wiseman Agency, Inc. exited the venture in September 2002, leaving Ohio Valley with 100% equity ownership of the insurance company. Furthermore, Ohio Valley participated as an investor with two other banks to acquire BSG Title Services, a title insurance agency which opened for business on March 2, 2001. BSG Title Services offers title insurance to real estate, commercial and consumer loan customers.
Supervision and Regulation
The following is a summary of certain statutes and regulations affecting Ohio Valley and the Bank. The summary is qualified in its entirety by reference to such statutes and regulations.
Ohio Valley is subject to regulation under the BHC Act and to the reporting requirements of, and examination and regulation by, the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"). On October 31, 2002, the Federal Reserve Board approved Regulation W which comprehensively implements Section 23A and 23B of the Federal Reserve Act. Sections 23A and 23B and Regulation W restrict transactions by banks and their subsidiaries with their affiliates. An affiliate of a bank is any company or entity which controls, is controlled by or is under common control with the bank.
Generally, Sections 23A and 23B and Regulation W: (1) limit the extent to which a bank or its subsidiaries may engage in "covered transactions" with any one affiliate to an amount equal to 10% of that bank's capital stock and surplus (i.e., tangible capital), (2) limit the extent to which a bank or its subsidiaries may engage in "covered transactions" with all affiliates to 20% of that bank's capital stock and surplus, and (3) require that all such transactions be on terms substantially the same, or at least as favorable to the bank subsidiary, as those provided to a non-affiliate. The term "covered transaction" includes the making of loans, purchase of assets, issuance of a guarantee and other similar types of transactions.
Regulation W became effective on April 1, 2003 and under this adoption, all existing Federal Reserve Board interpretations of Sections 23A and 23B will be rescinded.
A bank's authority to extend credit to executive officers, directors and greater than 10% shareholders, as well as entities such persons control, is subject to Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O promulgated thereunder by the Federal Reserve Board. Among other things, these loans must be made on terms substantially the same as those offered to unaffiliated individuals or be made as part of a benefit or compensation program and on terms widely available to employees, and must not involve a greater than normal risk of repayment. In addition, the amount of loans a bank may make to these persons is based, in part, on the bank's capital position, and specified approval procedures must be followed in making loans which exceed specified amounts.
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 Act, also known as the Financial Services Modernization Act, was enacted, amending the BHC Act and modernizing the laws governing the financial services industry. The Gramm-Leach-Bliley Act authorized the creation of financial holding companies, a new type of bank holding company with powers exceeding those of traditional bank holding companies. Ohio Valley became a financial holding company during 2000. In order to become a financial holding company, a bank holding company and all of its depository institutions must be well capitalized and well managed under federal banking regulations, and the depository institutions must have received a Community Investment Act rating of at least satisfactory.
Financial holding companies may engage in a wide variety of financial activities including any activity that the Federal Reserve and the Treasury Department consider financial in nature or incidental to financial activities; and any activity that the Federal Reserve Board determines complementary to a financial activity and which does not pose a substantial safety and soundness risk. These activities include securities underwriting and dealing activities, insurance and underwriting activities and merchant banking/equity investment activities. Because it has authority to engage in a broad array of financial activities, a financial holding company may have several affiliates that are functionally regulated by financial regulators other than the Federal Reserve Board, such as the Securities and Exchange Commission (the "SEC") and state insurance regulators. The Gramm-Leach-Bliley Act directs the Federal Reserve Board to rely to the maximum extent possible on examinations and reports prepared by functional regulators. The Federal Reserve Board is also prohibited from applying any capital standard directly to any functionally regulated subsidiary that is already in compliance with the capital requirements of its functional regulator.
The Gramm-Leach-Bliley Act provides that if a subsidiary bank of a financial holding company fails to be both well capitalized and well managed, the financial holding company must enter into a written agreement with the Federal Reserve Board within 45 days to comply with all applicable capital and management requirements. Until the Federal Reserve Board determines that the bank is again well capitalized and well managed, the Federal Reserve Board may impose additional limitations or conditions on the conduct or activities of the financial holding company or any affiliate that the Federal Reserve Board finds to be appropriate or consistent with federal banking laws. If the financial holding company does not correct the capital or management deficiencies within 180 days, the financial holding company may be required to divest ownership or control of all banks, including state-chartered non-member banks and other well capitalized institutions owned by the financial holding company. If an insured bank subsidiary fails to maintain a satisfactory rating under the Community Reinvestment Act, the financial holding company may not engage in activities permitted only to financial holding companies until such time as the bank receives a satisfactory rating.
The Gramm-Leach-Bliley Act also 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 Gramm-Leach-Bliley Act also includes new provisions in the privacy area, restricting the ability of financial institutions to share nonpublic personal customer information with third parties.
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"). The stated goals of the Sarbanes-Oxley Act are to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws. The proposed changes are intended to allow shareholders to monitor the performance of companies and directors more easily and efficiently.
The Sarbanes-Oxley Act generally applies to all companies, both U.S. and non-U.S., that file or are required to file periodic reports with the SEC under the Exchange Act. Further, the Sarbanes-Oxley Act includes very specific additional disclosure requirements and new corporate governance rules, requires the SEC, securities exchanges and the NASDAQ Stock Market to adopt extensive additional disclosure, corporate governance and other related rules and mandates further studies of certain issues by the SEC and the Comptroller General of the United States.
The Sarbanes-Oxley Act addresses, among other matters: audit committees; corporate responsibility of financial reports; a requirement that chief executive and chief financial officers forfeit certain bonuses and profits if their companies issue an accounting restatement as a result of misconduct; a prohibition on insider trading during pension fund black out periods; disclosure of off-balance sheet transactions; conditions for the use of non-GAAP financial information; a prohibition on personal loans to directors and executive officers (excluding loans by insured depository institutions that are subject to the insider lending restrictions of the Federal Reserve Act); expedited filing requirements for stock transaction reports by officers and directors; the formation of the Public Accounting Oversight Board; auditor independence; and various increased criminal penalties for violations of securities laws.
In response to the Sarbanes-Oxley Act, Ohio Valley adopted a series of procedures to improve its already strong corporate governance practices. One of these actions included the formation of a Financial Disclosure Committee to evaluate and monitor the continued effectiveness of the design and operation of Ohio Valley's disclosure controls for financial reporting. This committee consists of key members of Ohio Valley's management, including the Chief Executive Officer and the Treasurer. See Item 9A "Controls and Procedures" for Ohio Valley's evaluation of its disclosure controls and procedures.
As an Ohio state-chartered bank, the Bank is supervised and regulated by the Ohio Division of Financial Institutions. The Bank's deposits 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. Loan Central is supervised and regulated by the State of Ohio Department of Financial Institutions, Division of Consumer Finance. Ohio Valley's insurance company investments, ProFinance Holdings Corporation, Ohio Valley Financial Services and BSG Title Services are all supervised and regulated by the State of Ohio Department of Insurance.
Various requirements and restrictions under the laws of the United States and the State of Ohio and the State of West Virginia 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.
The Federal Reserve Board has adopted risk-based capital guidelines for bank holding companies. 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) to be considered adequately capitalized is 8%. At least 4.0 percentage points is to be comprised of common shareholders' 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 of certain amounts of mandatory convertible debt securities, subordinated debt, preferred stock not qualifying as Tier 1 Capital 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 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. Ohio Valley and the Bank currently satisfy all applicable 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.
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 Ohio Valley 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 Ohio Valley. The Bank may not pay dividends to Ohio Valley 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 its current year's net profits and 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 its 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 Ohio Valley's ability to pay dividends on its outstanding common shares.
Deposit Insurance Assessments
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 was fully funded, BIF assessments for healthy commercial banks was $0 per year during 2003. 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 (the "FICO Assessment"). As a result of such cost sharing, the FICO Assessments for healthy banks during 2004 will be $0.020 per $100 in deposits. Based upon their level of deposits at December 31, 2003, the projected FICO Assessment for the Bank would be $78,156 for 2004.
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 Ohio Valley or its subsidiaries by reason of any laws regulating or protecting the environment. Ohio Valley believes that the nature of the operations of the subsidiaries has little, if any, environmental impact. Ohio Valley, therefore, anticipates no material capital expenditures for environmental control facilities in its current fiscal year or for the foreseeable future.
The Bank and Loan Central 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 Ohio Valley 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, 2003, Ohio Valley and its subsidiaries employed 262 full-time equivalent employees. Management considers its relationship with its employees to be good.
Access to SEC Filings through Ohio Valley's Website
Interested readers can access Ohio Valley's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, through Ohio Valley's Internet website at www.ovbc.com (this uniform resource locator, or URL, is an inactive textual reference only and is not intended to incorporate the information contained on Ohio Valley's website into this Annual Report on Form 10-K). These reports can be accessed free of charge from Ohio Valley's website as soon as reasonably practicable after Ohio Valley electronically files such materials with, or furnishes them to, the SEC.
Financial Information About Foreign and Domestic Operations and Export Sales
Ohio Valley'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 Ohio Valley as required under the SEC's Industry Guide 3, "Statistical Disclosure by Bank Holding Companies", or a specific reference as to the location of the required disclosures in Ohio Valley's 2003 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, 2003, 2002 and 2001 is incorporated herein by reference to the information appearing under the caption "Table I - Consolidated Average Balance Sheet & Analysis of Net Interest Income", within "Management's Discussion and Analysis of Operations" located on page 30 of Ohio Valley's 2003 Annual Report to Shareholders.
C. Tables setting forth the effect of volume and rate changes on interest income and expense for the years ended December 31, 2003, 2002 and 2001 is incorporated herein by reference to the information appearing under the caption "Table II - Rate Volume Analysis of Changes in Interest Income & Expense", within "Management's Discussion and Analysis of Operations" located on page 32 of Ohio Valley's 2003 Annual Report to Shareholders. 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.
Changes not due solely to either a change in volume or a change in rate have been allocated proportionally to both changes due to volume and 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) 2003 2002 2001 ---- ---- ---- Securities Available-for-Sale
U.S. Treasury securities .......... $ 1,993 U.S. Government agency securities.. $ 37,785 $ 66,838 53,056 Mortgage-backed securities......... 33,364 3,425 1,734 Marketable equity securities....... 5,203 5,001 4,776 --------- --------- --------- Total securities available-for-sale $ 76,352 $ 75,264 $ 61,559 ========= ========= =========
Securities Held-to-Maturity
Obligations of states of the U.S. and political subdivisions....... $ 12,724 $ 13,821 13,765 Mortgage-backed securities......... 111 169 208 --------- --------- --------- Total securities held-to-maturity $ 12,835 $ 13,990 $ 13,973 ========= ========= =========
B. Information required by this item is incorporated herein by reference to the information appearing under the caption "Table III - Securities", within "Management's Discussion and Analysis of Operations" located on page 33 of Ohio Valley's 2003 Annual Report to Shareholders.
C. Excluding obligations of the U.S. Government and its agencies, no concentration of securities exists of any issuer that is greater than 10% of shareholders' equity of Ohio Valley.
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) 2003 2002 2001 2000 1999 ---- ---- ---- ---- ----
Real estate loans $217,636 $224,212 $226,212 $209,724 $201,625 Commercial loans 220,724 205,508 173,154 139,826 119,585 Consumer loans 134,720 128,662 108,437 98,013 88,942 All other loans 624 1,179 857 740 1,006 -------- -------- -------- -------- -------- $573,704 $559,561 $508,660 $448,303 $411,158 ======== ======== ======== ======== ========
B. Maturities and Sensitivities of Loans to Changes in Interest Rates - Information required by this item is incorporated herein by reference to the information appearing under the caption "Table VII - Maturity and Repricing Data of Loans", within "Management's Discussion and Analysis of Operations" located on page 35 of Ohio Valley's 2003 Annual Report to Shareholders.
C. 1. Risk Elements - Gross interest income that would have been recorded on loans that were troubled debt restructurings, nonaccrual or past due 90 days is estimated to be $350,000 for the fiscal year ending December 31, 2003. Additional information required by this item is incorporated herein by reference to the information appearing under the caption "Table VI - Summary of Nonperforming and Past Due Loans", within "Management's Discussion and Analysis of Operations" located on page 35 of Ohio Valley's 2003 Annual Report to Shareholders.
2. Potential Problem Loans - At December 31, 2003, there are approximately $475,000 of loans, which are not included in "Table VI - Summary of Nonperforming and Past Due Loans" within "Management's Discussion and Analysis of Operations" located on page 35 of Ohio Valley's 2003 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 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, 2003, 2002 or 2001.
4. Loan Concentrations - As of December 31, 2003, there were no concentrations of loans greater than 10% of total loans which are not otherwisedisclosed as a category of loans pursuant to Item III.A. above. Also refer to the Consolidated Financial Statements regarding concentrations of credit risk found within Note A of the Notes to the Consolidated Financial Statements of Ohio Valley's 2003 Annual Report to Shareholders incorporated herein by reference.
5. No 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, 2003, there were no other interest-bearing assets that would be required to be disclosed under Item III.C. if such assets were loans.
IV. SUMMARY OF LOAN LOSS EXPERIENCE
A. The following schedule presents an analysis of the allowance for loan losses for the fiscal years ended December 31:
(dollars in thousands) 2003 2002 2001 2000 1999 ---- ---- ---- ---- ----
Balance, beginning of year $7,069 $6,251 $5,385 $5,055 $4,277
Loans charged-off: Real estate 1,110 636 659 92 41 Commercial 2,267 2,272 620 61 454 Consumer 2,661 2,656 1,903 1,642 1,298 -------- -------- -------- -------- ------- Total loans charged-off 6,038 5,564 3,182 1,795 1,793
Recoveries of loans: Real estate 279 119 69 4 13 Commercial 1,057 158 17 0 23 Consumer 887 635 459 231 232 -------- ------- -------- -------- ------- Total recoveries of loans 2,223 912 545 235 268
Net loan charge-offs (3,815) (4,652) (2,637) (1,560) (1,525) Provision charged to operations 4,339 5,470 3,503 1,890 2,303 -------- ------- -------- -------- ------- Balance, end of year $7,593 $7,069 $6,251 $5,385 $5,055 ======== ======= ======== ======== ======= Ratio of Net Charge-offs to Average Loans outstanding .68% .86% .56% .36% .40% ======== ======= ======== ======== ======= Ratio of Allowance for Loan Losses to Non-Performing Assets 140.66% 83.16% 94.73% 80.70% 75.52% ======== ======= ======== ======== =======
Discussion on factors which influenced management in determining the amount of additions charged to provision expense is incorporated herein by reference to the information appearing under the caption "Loans" within "Management's Discussion and Analysis of Operations" located on page 33 of Ohio Valley's 2003 Annual Report to Shareholders.
B. Allocation of the Allowance for Loan Losses - Information required by this item is incorporated herein by reference to the information appearing under the caption "Table V - Allocation of the Allowance for Loan Losses", within "Management's Discussion and Analysis of Operations" located on page 35 of Ohio Valley's 2003 Annual Report to Shareholders.
V. DEPOSITS
A. Deposit Summary - Information required by this item is incorporated herein by reference to the information appearing under the caption "Table I - Consolidated Average Balance Sheet & Analysis of Net Interest Income", within "Management's Discussion and Analysis of Operations" located on page 30 of Ohio Valley's 2003 Annual Report to Shareholders.
C.&E. Foreign Deposits - There were no foreign deposits outstanding at December 31, 2003, 2002, or 2001.
D. Schedule of Maturities - The following table provides a summary of total time deposits by remaining maturities for the fiscal year ended December 31, 2003:
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 ................. $ 9,091 $ 5,465 $ 24,500 $ 45,195 Other time deposits of $100,000 or greater ................. 1,326 1,363 2,711 2,493 -------- ------- -------- -------- Total time deposits of $100,000 or greater ................. $ 10,417 $ 6,828 $ 27,211 $ 47,688 ======== ======= ======== ========
VI. RETURN ON EQUITY AND ASSETS
Information required by this section is incorporated herein by reference to the information appearing under the caption "Table X - Key Ratios" within "Management's Discussion and Analysis of Operations" located on page 40 of Ohio Valley's 2003 Annual Report to Shareholders.
VII. SHORT-TERM BORROWINGS
The following schedule is a summary of securities sold under agreements to repurchase at December 31:
(dollars in thousands) 2003 2002 2001 ---- ---- ----
Balance outstanding at period-end .......... $ 24,018 $ 33,052 $ 29,274 -------- -------- -------- Weighted average interest rate at period-end .80% 1.08% 1.90% -------- -------- -------- Average amount outstanding during year ..... $ 23,396 $ 23,090 $ 19,893 -------- -------- -------- Approximate weighted average interest rate during the year ......................... .87% 1.56% 3.15% -------- -------- -------- Maximum amount outstanding as of any month-end ............................... $ 35,213 $ 33,052 $ 29,274 -------- -------- --------
Forward-Looking Information
Certain statements contained in this Annual Report on Form 10-K which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act), including, without limitation, the statements specifically identified as forward-looking statements within this document. In addition, certain statements in future filings by Ohio Valley with the SEC, in press releases, and in oral and written statements made by or with the approval of Ohio Valley which are not statements of historical fact constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include: (i) projections of revenues, income or loss, earnings or loss per share, the payment or non-payment of dividends, capital structure and other financial items; (ii) statements of plans and objectives of Ohio Valley or its management or its board of directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as "believes," "anticipates," "expects," "intends," "targeted" and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying those statements.
Forward-looking statements involve risks and uncertainties. Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events, including: (i) changes in political, economic or other factors such as inflation rates, recessionary or expansive trends, and taxes; (ii) competitive pressures; (iii) fluctuations in interest rates; (iv) the level of defaults and prepayment on loans made by the Company; (v) unanticipated litigation, claims, or assessments; (vi) fluctuations in the cost of obtaining funds to make loans; and (vii) regulatory changes.
There is also the risk that we incorrectly analyze these risks and forces, or that the strategies we develop to address them are unsuccessful.
Forward-looking statements speak only as of the date on which they are made and Ohio Valley undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made to reflect unanticipated events. All subsequent written and oral forward-looking statements attributable to Ohio Valley or any person acting on our behalf are qualified by the cautionary statements in this selection.
ITEM 2
ITEM 2 - PROPERTIES
Ohio Valley 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 and six of the sixteen branch facilities are owned by the Bank. A summary of these owned properties are as follows:
1) Mini-Bank Office 437 Fourth Avenue, Gallipolis, OH 2) Jackson Pike Office 3035 State Route 160, Gallipolis, OH 3) Rio Grande Office 416 West College Avenue, Rio Grande, OH 4) Jackson Office 738 East Main Street, Jackson, OH 5) Waverly Office 507 W. Emmitt Avenue, Waverly, OH 6) Milton Office 280 East Main Street, Milton, WV
The Bank leases ten of its sixteen branch facilities. A summary of these leased properties are as follows:
1) Columbus Office 3700 South High Street, Columbus, OH 2) Point Pleasant Office 328 Viand Street, Point Pleasant, WV 3) SuperBank-Gallipolis Office 236 Second Avenue, Gallipolis, OH 4) SuperBank-Pomeroy Office 700 West Main Street, Pomeroy, OH 5) Wal-Mart Gallipolis Office 2145 Eastern Avenue, Gallipolis, OH 6) Wal-Mart Cross Lanes Office 100 Nitro Marketplace, Cross Lanes, WV 7) Wal-Mart Southridge Office 2700 Mountaineer Blvd., S Charleston, WV 8) Wal-Mart Huntington Office 5170 US Rt. 60 East, Huntington, WV 9) Wal-Mart South Point Office US Rt. 52, South Point, OH 10) SuperBank-Jackson Office 530 East Main Street, Jackson, OH
The Bank also owns eight ATM's that are not included in its existing branch facilities listed above. A summary of these ATM's are as follows:
1) Proctorville Kroger ATM 6306 State Route 7, Proctorville, OH 2) Sunoco Food Mart ATM 3175 Route 60 East, Huntington, WV 3) BP Truck Stop ATM Route 35 and 5 Mile Rd., Fraziers Bottom, WV 4) One Stop Exxon ATM 501 8th Street, Huntington, WV 5) Buckeye Foodland ATM 9039 State Route 160, Bidwell, OH 6) Holzer Medical Center ATM 100 Jackson Pike, Gallipolis, OH 7) Pleasant Valley Hospital ATM 2520 Valley Drive, Point Pleasant, WV 8) Bob Evans ATM 3776 South High Street, Columbus, OH
In addition, 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.
Loan Central leases four of its five facilities used as consumer finance offices. A summary of these leased properties are as follows:
1) Gallipolis Office 2145-E Eastern Avenue, Gallipolis, Ohio 2) South Point Office 348 County Road 410, South Point, Ohio 3) Jackson Office 323 East Broadway, Jackson, Ohio 4) Waverly Office 505 West Emmitt Avenue, Waverly, Ohio
Loan Central owns its Wheelersburg office facility located at 326 Center Street, Wheelersburg, Ohio. Loan Central leases a portion of its Wheelersburg facility to a local video rental store.
Ohio Valley Financial Services conducts business in the Loan Central Jackson facility.
The Bank, Loan Central and Ohio Valley Financial Services' leased facilities are all subject to commercially standard leasing arrangements.
Management considers these properties to be satisfactory for its current operations.
ITEM 3
ITEM 3 - LEGAL PROCEEDINGS
There are no material pending legal proceedings against Ohio Valley or any of its subsidiaries, other than ordinary, routine litigation incidental to their respective businesses.
ITEM 4
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There was no matter submitted during the fourth quarter of 2003 to a vote of security holders, by solicitation of proxies or otherwise.
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G of Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K, the following information regarding Ohio Valley's executive officers is included as an unnumbered item in Part I of this Form 10-K in lieu of being included in Ohio Valley's 2004 Proxy Statement. In addition to James L. Dailey, Chairman, and Jeffrey E. Smith, President and Chief Executive Officer, who are included in Ohio Valley's 2004 Proxy Statement under the caption "Election of Directors" on page 4, the executive officers of Ohio Valley are as follows:
Current Position and Name and Age Business Experience During Past 5 Years - ------------------ ---------------------------------------
Sue Ann Bostic, 62 Vice President of Ohio Valley beginning 1996, Senior Vice President, Administrative Group of the Bank beginning 1996.
Cherie A. Barr, 37 Vice President of Ohio Valley beginning 1998, President of Loan Central beginning 2000, President and Secretary of Loan Central from 1999 to 2000, Senior Vice President and Secretary of Loan Central from 1998 to 1999.
Katrinka V. Hart, 45 Senior Vice President of Ohio Valley beginning 2003, Executive Vice President and Risk Management Officer of the Bank beginning 2003, Vice President of Ohio Valley from 1995 to 2003, Senior Vice President, Retail Bank Group and Risk Management Officer of the Bank from 2001 to 2003, Senior Vice President, Retail Bank Group of the Bank beginning 1995.
Mario P. Liberatore, 58 Vice President of Ohio Valley beginning 1997, Senior Vice President, West Virginia Bank Group of the Bank beginning 1997.
E. Richard Mahan, 58 Senior Vice President and Secretary of Ohio Valley beginning 2000, Executive Vice President and Secretary of the Bank beginning 2000, Senior Vice President of Ohio Valley from 1999 to 2000, Executive Vice President of the Bank from 1999 to 2000, Vice President of Ohio Valley from 1995 to 1998, Senior Vice President, Commercial Bank Group of the Bank from 1995 to 1998.
Current Position and Name and Age Business Experience During Past 5 Years - ------------------ ---------------------------------------
Larry E. Miller, II, 39 Senior Vice President and Treasurer of Ohio Valley beginning 2000, Executive Vice President and Treasurer of the Bank beginning 2000, Senior Vice President of Ohio Valley from 1999 to 2000, Executive Vice President of the Bank from 1999 to 2000, Vice President of Ohio Valley from 1995 to 1998, Senior Vice President, Financial Bank Group of the Bank from 1995 to 1998.
Harold A. Howe, 54 Vice President of Ohio Valley beginning 1998, President of Jackson Savings Bank from 1994 to 2000.
David L. Shaffer, 45 Vice President of Ohio Valley beginning 2000, Senior Vice President, Commercial Bank Group of the Bank beginning 2000, Vice President, Commercial Lending of the Bank from 1999 to 2000, Vice President, Retail Lending of the Bank from 1994 to 1999.
Sandra L. Edwards, 56 Vice President of Ohio Valley beginning 2000, Senior Vice President, Financial Bank Group of the Bank beginning 2000, Vice President, Management Information Systems of the Bank from 1999 to 2000, Assistant Vice President, Operations Center Manager of the Bank from 1993 to 1999.
Scott W. Shockey, 34 Assistant Treasurer of Ohio Valley beginning 2001, Vice President and Chief Financial Officer of the Bank beginning 2001, Assistant Vice President and Comptroller of the Bank from 1999 to 2001, Assistant Cashier and Regulatory Reporting Manager of the Bank from 1995 to 1999.
Cindy H. Johnston, 43 Assistant Secretary of Ohio Valley beginning 1995, Assistant Secretary of the Bank beginning 1995,
Paula W. Salisbury, 45 Assistant Secretary of Ohio Valley beginning 1995, Assistant Secretary of the Bank beginning 1995
PART II
ITEM 5
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required under this item is located under the captions "Summary of Common Stock Data" located on page 41 in Ohio Valley's 2003 Annual Report to Shareholders, "Capital Resources" within "Management's Discussion and Analysis of Operations" located on page 36 of Ohio Valley's 2003 Annual Report to Shareholders and Note P within the Notes to the Consolidated Financial Statements - "Regulatory Matters" located on page 23 of Ohio Valley's 2003 Annual Report to Shareholders. All such information is incorporated herein by reference.
Ohio Valley was not involved in any sale of unregistered securities during its 2003 fiscal year.
ITEM 6
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" located on page 4 of Ohio Valley's 2003 Annual Report to Shareholders.
ITEM 7
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required under this item is incorporated by reference to the information appearing under the caption "Management's Discussion and Analysis of Operations" located on pages 27-40 of Ohio Valley's 2003 Annual Report to Shareholders.
ITEM 7A
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required under this item is included in Table VIII - "Interest Rate Sensitivity" and the caption "Interest Rate Sensitivity and Liquidity" found within "Management's Discussion and Analysis of Operations" located on pages 27-40 of Ohio Valley's 2003 Annual Report to Shareholders and is incorporated herein by reference.
ITEM 8
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Ohio Valley's consolidated financial statements and related notes are listed below and incorporated herein by reference to pages 6-26 of Ohio Valley's 2003 Annual Report to Shareholders. The "Report of Independent Auditors" and the supplementary "Consolidated Quarterly Financial Information (unaudited)" located on pages 5 and 26, respectively, of Ohio Valley's 2003 Annual Report to Shareholders are also incorporated herein by reference.
Report of Independent Auditors Consolidated Statements of Condition as of December 31, 2003 and 2002 Consolidated Statements of Income for the years ended December 31, 2003, 2002 and 2001 Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2003, 2002 and 2001 Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001 Notes to the Consolidated Financial Statements
ITEM 9
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Ohio Valley has not changed accountants during the two year period ending December 31, 2003, nor has it had disagreements with its accountants on accounting or financial disclosure matters.
ITEM 9A
ITEM 9A - CONTROLS AND PROCEDURES
As of December 31, 2003, an evaluation was carried out under the supervision and with the participation of management, including the principal executive officer and the principal financial officer, of the effectiveness of Ohio Valley's disclosure controls and procedures (as defined in Rule 13a-15 of the Securities Exchange Act of 1934 (the "Exchange Act"). Based upon this evaluation, Ohio Valley's principal executive officer and principal financial officer concluded that Ohio Valley's disclosure controls and procedures as of December 31, 2003 were effective in ensuring that material information relating to Ohio Valley and its consolidated subsidiaries, is made known to them, particularly during the period for which Ohio Valley's periodic reports, including this Annual Report on Form 10-K, are being prepared.
In addition, there were no changes during the period covered by this Annual report on Form 10-K in Ohio Valley's internal control over financial reporting (as defined in Rule 13a-15 of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, Ohio Valley's internal control over financial reporting.
PART III
ITEM 10
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required under this item is incorporated herein by reference to Ohio Valley's definitive proxy statement relating to the annual meeting of shareholders of Ohio Valley to be held on April14, 2004 (the "2004 Proxy Statement"), under the captions "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" located on pages 4-6 and page 3, respectively, of the 2004 Proxy Statement. In addition, certain information concerning executive officers of Ohio Valley is set forth in the portion of this Annual Report on Form 10-K entitled "Executive Officers of the Registrant."
The Board of Directors of Ohio Valley has adopted charters for each of the Audit Committee, the Compensation Committee and the Nominating Committee. Each committee is posted under the "Charters" link on the homepage of Ohio Valley's Internet website.
In accordance with the requirements of Item 406 of Regulation S-K, the Board of Directors of Ohio Valley has adopted a Code of Ethics covering the directors, officers and employees of Ohio Valley and its affiliates, including, without limitation, the principal executive officer, the principal financial officer and the principal accounting officer of Ohio Valley. Interested persons may obtain copies of the Code of Ethics without charge by writing to Ohio Valley Banc Corp, Attention: E. Richard Mahan, Secretary, P.O. Box 240, Gallipolis, Ohio 45631.
ITEM 11
ITEM 11 - EXECUTIVE COMPENSATION
The information required under this item is incorporated herein by reference to the information appearing under the caption "Compensation of Executive Officers and Directors" located on page 9 of the 2004 Proxy Statement.
ITEM 12
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required under this item is incorporated herein by reference to the information appearing under the caption "Ownership of Certain Beneficial Owners and Management" located on pages 2-3 of the 2004 Proxy Statement.
Ohio Valley does not maintain any equity compensation plans requiring disclosure pursuant to Item 201(d) of Regulation S-K.
ITEM 13
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required under this item is incorporated herein by reference to the information appearing under the caption "Certain Relationships and Related Transactions" located on page 14 of the 2004 Proxy Statement.
ITEM 14
ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required under this item is incorporated herein by reference to the information appearing under the caption "Services Rendered by the Independent Auditor" located on pages 16-17 of the 2004 Proxy Statement.
PART IV
ITEM 15
ITEM 15 - 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 2003 Annual Report to Shareholders, Exhibit 13, and are specifically incorporated by reference under Item 8 of this Form 10-K:
Report of Independent Auditors Consolidated Statements of Condition as of December 31, 2003 and 2002 Consolidated Statements of Income for the years ended December 31, 2003, 2002 and 2001 Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2003, 2002 and 2001 Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001 Notes to the Consolidated Financial Statements
(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 24 of this Form 10-K.
B. Reports on Form 8-K
Ohio Valley filed a Current Report on Form 8-K with the SEC on October 10, 2003 (SEC File No. 0-20914) regarding the issuance of a press release announcing its earnings for the third quarter and year-to-date periods ending September 30, 2003. This 8-K filing is being incorporated into this Form 10-K by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Ohio Valley has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. OHIO VALLEY BANC CORP.
Date: March 15 , 2004 By /s/James L. Dailey -------- ------------------------- James L. Dailey, Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 15 , 2004 by the following persons on behalf of Ohio Valley and in the capacities indicated.
Name Capacity ---- --------
/s/James L. Dailey Chairman - ----------------------------- James L. Dailey
/s/Jeffrey E. Smith President, Chief Executive Officer - ----------------------------- and Director Jeffrey E. Smith
/s/Lannes C. Williamson Director - ----------------------------- Lannes C. Williamson
/s/Anna P. Barnitz Director - ----------------------------- Anna P. Barnitz
/s/W. Lowell Call Director - ----------------------------- W. Lowell Call
/s/Robert H. Eastman Director - ----------------------------- Robert H. Eastman
/s/Brent A. Saunders Director - ----------------------------- Brent A. Saunders
/s/Steven B. Chapman Director - ----------------------------- Steven B. Chapman
/s/Thomas E. Wiseman Director - ----------------------------- Thomas E. Wiseman
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(a) Amended Articles of Incorporation of Ohio Valley. Incorporated herein by reference to Exhibit 3(a) to Ohio Valley's Annual Report on Form 10-K for fiscal year ending December 31, 1997 (SEC File No. 0-20914).
3(b) Code of Regulations of Ohio Valley. Incorporated herein by reference to Exhibit 3(b) to Ohio Valley's current report on Form 8-K (SEC File No. 0-20914) filed November 6, 1992.
4 Agreement to furnish instruments and agreements defining rights of holders of long-term debt. Filed herewith.
10.1 Split Dollar Agreement, dated November 11, 1996, between Jeffrey E. Smith and The Ohio Valley Bank Company. Incorporated herein by reference to Exhibit 10.1 to Ohio Valley's Annual Report on Form 10-K for fiscal year ending December 31, 2002 (SEC File No. 0-20914).
10.2 Schedule A to Exhibit 10.1 identifying other identical Split Dollar Agreements between The Ohio Valley Bank Company and executive officers of Ohio Valley Banc Corp. Incorporated herein by reference to Exhibit 10.2 to Ohio Valley's Annual Report on Form 10-K for fiscal year ending December 31, 2002 (SEC File No. 0-20914).
10.3 Director Retirement Plan, dated October 10, 2002, between Brent A. Saunders and The Ohio Valley Bank Company. Incorporated herein by reference to Exhibit 10.3 to Ohio Valley's Annual Report on Form 10-K for fiscal year ending December 31, 2002 (SEC File No. 0-20914).
10.4 Schedule A to Exhibit 10.3 identifying other identical director retirement plans between The Ohio Valley Bank Company and executive officers who are directors of Ohio Valley Banc Corp. Incorporated herein by reference to Exhibit 10.4 to Ohio Valley's Annual Report on Form 10-K for fiscal year ending December 31, 2002 (SEC File No. 0-20914).
10.5 Salary Continuation Plan, dated January 2, 1997, between Jeffrey E. Smith and The Ohio Valley Bank Company. Incorporated herein by reference to Exhibit 10.5 to Ohio Valley's Annual Report on Form 10-K for fiscal year ending December 31, 2002 (SEC File No. 0-20914).
10.6 Schedule A to Exhibit 10.5 identifying other identical salary continuation plans between The Ohio Valley Bank Company and executive officers of Ohio Valley Banc Corp. Incorporated herein by reference to Exhibit 10.6 to Ohio Valley's Annual Report on Form 10-K for fiscal year ending December 31, 2002 (SEC File No. 0-20914).
10.7 Deferred Compensation Plan, dated November 11, 2002, between Barney A. Molnar and The Ohio Valley Bank Company. Incorporated herein by reference to Exhibit 10.7 to Ohio Valley's Annual Report on Form 10-K for fiscal year ending December 31, 2002 (SEC File No. 0-20914).
10.8 Schedule A to Exhibit 10.7 identifying other identical deferred compensation plans between The Ohio Valley Bank Company and executive officers or directors of Ohio Valley Banc Corp. Incorporated herein by reference to Exhibit 10.8 to Ohio Valley's Annual Report on Form 10-K for fiscal year ending December 31, 2002 (SEC File No. 0-20914).
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 Ohio Valley's Annual Report to Shareholders for the fiscal year ended December 31, 2003 filed herewith. (Not deemed filed except for portions thereof specifically incorporated by reference into this Annual Report on Form 10-K.)
21 Subsidiaries of Ohio Valley. Filed herewith.
23 Consent of IndependentAccountant - Crowe Chizek and Company LLC. Filed herewith.
31.1 Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer). Filed herewith.
31.2 Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer). Filed herewith.
32 Section 1350 Certifications (Principal Executive Officer and Principal Accounting Officer). Filed herewith.