8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

July 26, 2011

Date of Report (Date of earliest event reported)

OHIO VALLEY BANC CORP.     

(Exact name of registrant as specified in its charter)

Ohio

(State or other jurisdiction of incorporation)

0-20914	31-1359191
(Commission File Number)	(IRS Employer Identification No.)

420 Third Avenue, Gallipolis, Ohio	45631
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:  (740) 446-2631

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 – Financial Information

Item 2.02.  Results of Operations and Financial Condition

On July 26, 2011, Ohio Valley Banc Corp. will issue a press release announcing financial results for its second quarter and year-to-date periods ended June 30, 2011.  A copy of the press release is furnished with this Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

Section 9 – Financial Statements and Exhibits

Item 9.01.  Financial Statements and Exhibits

(a)  Not applicable

(b)  Not applicable

(c)  Not applicable

(d)  Exhibits – The following exhibit is being filed with this Current Report on Form 8-K:

Exhibit Number	Description
99.1	Press release to be issued by Ohio Valley Banc Corp. on July 26,  2011.

SIGNATURES

Pursuant to the requirements 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:	July 26, 2011	By:	/s/ Jeffrey E. Smith
			Jeffrey E. Smith Chairman and Chief Executive Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release to be issued by Ohio Valley Banc Corp. on July 26,  2011.

EX-99.1

EXHIBIT 99.1

July 26, 2011 - For immediate release

Contact:  Scott Shockey, CFO (740) 446-2631

Ohio Valley Banc Corp. Reports Higher 2nd Quarter Earnings

GALLIPOLIS, Ohio - Ohio Valley Banc Corp. [Nasdaq: OVBC] (the “Company”) reported consolidated net income for the quarter ended June 30, 2011, of $1,555,000, an increase of 5.7 percent from the $1,471,000 earned for the second quarter of 2010.   Earnings per share for the second quarter of 2011 were $.39, up 5.4 percent from the prior year second quarter.  For the six months ended June 30, 2011, net income totaled $3,588,000, a 6.2 percent increase from net income of $3,377,000 for the six months ended June 30, 2010.  Earnings per share were $.90 for the first six months of 2011 versus $.85 for the first six months of 2010, an increase of 5.9 percent.  Return on average assets and return on average equity was .81 percent and 10.49 percent, respectively, for the first half of 2011, compared to .80 percent and 10.15 percent, respectively, for the same period in the prior year.

The improvement in second quarter and year-to-date earnings was primarily attributable to higher noninterest income, specifically tax processing fees.  Furthermore, earnings were enhanced by the growth in year-to-date net interest income and by the limited increase in overhead expenses.

Net interest income, the Company’s largest revenue source, increased $570,000, or 3.4 percent, for the six months ended June 30, 2011 compared to the same period last year.  The second quarter 2011 net interest income was down $24,000 from the second quarter of 2010.  The increase in year-to-date net interest income was attributable to the extended low interest rate environment, as interest-bearing liabilities accounts continue to reprice to current market interest rates faster than the interest-earning assets.  Comparing the first half of 2011 to the first half of 2010, interest expense decreased $1,555,000, or 22.1 percent, and interest income decreased $985,000, or 4.1 percent.  Comparing the second quarter of 2011 to the second quarter of 2010, interest expense decreased $758,000, or 22.2 percent, and interest income decreased $782,000, or 6.7 percent.  Also contributing to higher net interest income for the six-month period was the growth in average earning assets, which for the first six months of 2011 grew over $50 million, or 6.3 percent, from the same period last year.  The growth in earning assets occurred primarily in relation to the clearing of tax refunds for a tax software provider.  During the short time we held such refunds, constituting noninterest-bearing deposits, we increased our deposits at the Federal Reserve.  However, the balances carried at the Federal Reserve only earn approximately .25 percent, which had a negative impact on our net interest margin.  The net interest margin for the six months ended June 30, 2011 was 4.17 percent, compared to 4.29 percent for the same period the prior year.  The net interest margin for the second quarter of 2011 was 4.08 percent, compared to 4.23 percent for the second quarter of 2010.  Even though the tax processing contributed to a lower net interest margin, it significantly increased noninterest income due to the collection of per item fees.

For the six months ended June 30, 2011, management provided $3,703,000 to the allowance for loan losses, which represented an increase of $2,061,000 from the same period last year.  For the three months ended June 30, 2011, management provided $759,000 to the allowance for loan losses, an increase of $38,000 from the same period the prior year.  The increase in provision expense was related to the further deterioration of collateral values on select impaired loans and to higher general loan loss reserves due to an increase in charge-offs.  The annualized ratio of net charge-offs to average loans for the six months ended June 30, 2011 was 2.07 percent, compared to .61 percent for the same period last year.  Most of the increase in charge-offs was associated with charging off specific allocations on impaired loans.  Given that a majority of the loss had been previously identified and specifically allocated for in the allowance for loan losses, a corresponding increase in provision expense was not required.  However, the higher net charge-offs had an impact on our historical loss factor for loans, which requires higher general allocations for loan losses going forward.  Given the status of the economy and the customers’ continued financial weakness, management charged off the identified impairment for collateral dependent impaired loans.  The ratio of nonperforming loans to total loans was .93 percent at June 30, 2011 compared to .78 percent at December 31, 2010 and 1.08 percent at June 30, 2010.  Based on the evaluation of the adequacy of the allowance for loan losses, management believes that the allowance for loan losses at June 30, 2011 was adequate and reflects probable incurred losses in the portfolio.  The allowance for loan losses was 1.04 percent of total loans at June 30, 2011, compared to 1.46 percent at December 31, 2010 and 1.20 percent at June 30, 2010.  The decrease in the allowance for loan losses from year end was primarily related to the charge-off of specific allocations on collateral dependent impaired loans.

Noninterest income totaled $5,346,000 for the six months ended June 30, 2011, as compared to $3,389,000 for the same period last year, an increase of $1,957,000, or 57.7 percent.  For the three months ended June 30, 2011, noninterest income totaled $1,687,000, an increase of $163,000, or 10.7 percent, from 2010’s second quarter.  Contributing to the increase in noninterest income was the significant growth in transaction volume in processing tax refund payments for a tax software provider.  For the 2011 tax season, the tax software provider was able to expand the number of tax preparers utilizing its software.  With the growth in transaction volume, the associated fee income for the six months ended June 30, 2011 increased $1,762,000, or more than 228 percent, from the same period last year.  Also contributing to revenue growth was the increase in interchange fees earned on debit and credit card transactions.  By offering incentives to customers to utilize the bank’s debit and credit card for purchases, interchange income increased $187,000, or 40.9 percent, from the first half of 2010.  Overall, management was pleased with the revenue growth derived from the utilization of technology, which enhances efficiency.

On a year-to-date basis, noninterest expense totaled $14,079,000 in 2011, an increase of $222,000, or 1.6 percent, when compared to the previous year.  For the quarter, noninterest expense increased only $5,000 from the second quarter in 2010.  Salaries and employee benefits, the Company’s largest noninterest expense, increased $222,000, or 2.8 percent, for the first six months of 2011, as compared to the same period in 2010.  Contributing to the increase were annual merit increases, higher health insurance premiums and an increase in the number of employees.  Comparing the first half of 2011 to the first half of 2010, all remaining noninterest expenses were unchanged on a net basis.  The limited growth in noninterest expense reflects management’s efforts to control expenditures.

“I am very pleased to represent a financial holding company which, in a struggling economy, generated a 5.7 percent increase in earnings for the quarter ended June, 2011 and a 6.2 percent increase in earnings for the six months ended June, 2011 as compared to the same periods a year ago,” stated Jeffrey E. Smith, Chairman and CEO.  “While our return on assets of .81 percent was affected by the continuing low rate environment, our return on equity continues to be in double digits at 10.49 percent for the six month ended June 30, 2011.”

“Our earnings performance and capital position also permitted, as previously announced, our Board of Directors to declare a $.21 per common share dividend payable August 10, 2011 to shareholders of record August 4, 2011.”

“While the preceding information contains significant detail regarding the overall performance of Ohio Valley Banc Corp, the more significant report, to me, is that our non-performing loans to total loans at period ended June 30, 2011 was .93 percent; which, at less than 1 percent, is an enviable industry number.  However, further deterioration of collateral values, lack of employment growth, and the struggling economy motivated management to charge off specific allocations on previously identified impaired loans, which increased the annualized ratio of net charge-offs to average loans significantly, as compared to the same period in 2010.  This process of the continued monitoring of asset values, payment prospects, and borrower motivations will be the new normal for the foreseeable future. While this process also requires the reallocation of personnel, our year-to-date noninterest expense increased only 1.6 percent compared to the previous year; and, on a quarterly basis, noninterest expense increased only $5,000 from the second quarter of 2010.  Finally, the long anticipated ‘recovery’ remains just that ‘long anticipated’ in Ohio Valley Banc Corp’s core markets; however, the state of the economy in southern Ohio and western West Virginia continues to be preferable to the economies of a half dozen other states in our nation.”

Ohio Valley Banc Corp. common stock is traded on the NASDAQ Global Market under the symbol OVBC.  The holding company owns Ohio Valley Bank, with 16 offices in Ohio and West Virginia, and Loan Central, with six consumer finance offices in Ohio.  Learn more about Ohio Valley Banc Corp. at www.ovbc.com.

Forward-Looking Information

Certain statements contained in this  earnings  release  which  are  not  statements of  historical  fact constitute  forward-looking  statements  within the meaning  of the Private Securities Litigation Reform Act of 1995.  Words such as “believes,” “anticipates,” “expects,” “appears,” “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.  Forward-looking statements speak only as of the date on which they are made, and the Company 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.  See Item 1.A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, for further discussion of the risks affecting the business of the Company and the value of an investment in its shares.

OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)
	Three months ended						Six months ended
	June 30,						June 30,
	2011			2010			2011			2010
PER SHARE DATA
Earnings per share	$	0.39		$	0.37		$	0.90		$	0.85
Dividends per share	$	0.21		$	0.21		$	0.42		$	0.42
Book value per share	$	17.70		$	17.15		$	17.70		$	17.15
Dividend payout ratio (a)		54.01	%		56.89	%		46.83	%		49.55	%
Weighted average shares outstanding		4,000,056			3,984,009			4,000,056			3,984,009
PERFORMANCE RATIOS
Return on average equity		9.00	%		8.76	%		10.49	%		10.15	%
Return on average assets		0.73	%		0.71	%		0.81	%		0.80	%
Net interest margin (b)		4.08	%		4.23	%		4.17	%		4.29	%
Efficiency ratio (c)		70.20	%		71.17	%		61.45	%		68.02	%
Average earning assets (in 000's)	$	811,296		$	784,733		$	849,422		$	798,809
(a) Total dividends paid as a percentage of net income.
(b) Fully tax-equivalent net interest income as a percentage of average earning assets.
(c) Noninterest expense as a percentage of fully tax-equivalent net interest income plus noninterest income.
OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)
	Three months ended						Six months ended
(in $000's)	June 30,						June 30,
		2011			2010			2011			2010
Interest income:
Interest and fees on loans	$	10,090		$	10,807		$	21,389		$	22,243
Interest and dividends on securities		727			792			1,453			1,584
Total interest income		10,817			11,599			22,842			23,827
Interest expense:
Deposits		2,227			2,802			4,583			5,707
Borrowings		436			619			902			1,333
Total interest expense		2,663			3,421			5,485			7,040
Net interest income		8,154			8,178			17,357			16,787
Provision for loan losses		759			721			3,703			1,642
Noninterest income:
Service charges on deposit accounts		553			573			1,093			1,129
Trust fees		56			58			115			119
Income from bank owned life insurance		182			185			361			364
Mortgage banking income		60			54			137			129
Electronic refund check / deposit fees		265			127			2,533			771
Debit / credit card interchange income		344			247			644			457
Gain (loss) on sale of other real estate owned		5			34			10			(77	)
Other		222			246			453			497
Total noninterest income		1,687			1,524			5,346			3,389
Noninterest expense:
Salaries and employee benefits		4,084			3,993			8,107			7,885
Occupancy		378			397			804			811
Furniture and equipment		282			304			562			596
FDIC insurance		285			262			612			521
Data processing		215			201			451			405
Other		1,737			1,819			3,543			3,639
Total noninterest expense		6,981			6,976			14,079			13,857
Income before income taxes		2,101			2,005			4,921			4,677
Income taxes		546			534			1,333			1,300
NET INCOME	$	1,555		$	1,471		$	3,588		$	3,377

OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except share data)	June 30,			December 31,
	2011			2010
ASSETS
Cash and noninterest-bearing deposits with banks	$	10,631		$	8,979
Interest-bearing deposits with banks		37,335			50,772
Total cash and cash equivalents		47,966			59,751
Securities available for sale		100,703			85,839
Securities held to maturity
(estimated fair value:  2011 - $20,941; 2010 - $21,198)		21,345			22,178
Federal Home Loan Bank stock		6,281			6,281
Total loans		623,370			641,322
Less:  Allowance for loan losses		(6,479	)		(9,386	)
Net loans		616,891			631,936
Premises and equipment, net		9,607			9,738
Other real estate owned		4,327			4,403
Accrued income receivable		2,611			2,704
Goodwill		1,267			1,267
Bank owned life insurance		20,122			19,761
Prepaid FDIC insurance		2,001			2,576
Other assets		5,169			5,080
Total assets	$	838,290		$	851,514
LIABILITIES
Noninterest-bearing deposits	$	108,119		$	91,949
Interest-bearing deposits		573,435			602,832
Total deposits		681,554			694,781
Securities sold under agreements to repurchase		36,680			38,107
Other borrowed funds		24,712			27,743
Subordinated debentures		13,500			13,500
Accrued liabilities		11,039			9,255
Total liabilities		767,485			783,386
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value per share, 10,000,000 shares
authorized; 4,659,795 shares issued)		4,660			4,660
Additional paid-in capital		33,003			33,003
Retained earnings		47,868			45,960
Accumulated other comprehensive income		986			217
Treasury stock, at cost (659,739 shares)		(15,712	)		(15,712	)
Total shareholders' equity		70,805			68,128
Total liabilities and shareholders' equity	$	838,290		$	851,514