JACKSON, Ohio, Oct. 13 /PRNewswire-FirstCall/ -- Oak Hill
Financial, Inc. (NASDAQ:OAKF) today reported net earnings from
operations for the three months ended September 30, 2005 of
$3,787,000, or $0.65 per diluted share, which exceeded analysts'
consensus estimate of $0.573 per share (source: Thomson Financial
as reported by nasdaq.com). The third quarter 2005 earnings
represent a 14.5% increase over the $3,307,000, or $0.58 per
diluted share, in net earnings from operations that the company
recorded for the quarter ended September 30, 2004. For the nine
months ended September 30, 2005, Oak Hill Financial recorded net
earnings from operations of $7,485,000, or $1.29 per diluted share,
as compared to the $9,702,000, or $1.70 per diluted share, in net
earnings from operations for the first nine months of 2004. The
operating earnings for the third quarter and first nine months of
2005 have been adjusted for non-recurring tax savings of $261,000
and $783,000, respectively, resulting from a one-time tax savings
of $1.0 million for the full year 2005. Also, the operating
earnings do not include $24,000 and $205,000 of gains on the sale
of former branch facilities, and $49,000 and $502,000 of
merger-related charges, for the three and nine months ended
September 30, 2005, respectively. The facilities sale and
merger-related charges resulted from the company's acquisition of
Lawrence Financial Holdings, Inc. on April 1, 2005. Including the
non-recurring items, the company's U.S. GAAP (accounting principles
generally accepted in the United States) net income was $3,939,000,
or $0.68 per diluted share, for the third quarter of 2005 and
$7,800,000, or $1.34 per diluted share, for the nine months ended
September 30, 2005, which compares to U.S. GAAP net income of
$3,214,000, or $0.57 per diluted share, for the third quarter of
2004, and $9,609,000, or $1.69 per diluted share, for the first
nine months of 2004. The company's total assets ended the third
quarter of 2005 at $1.23 billion, an increase of 20.8% over the
$1.02 billion in total assets recorded at September 30, 2004. Net
loans at September 30, 2005 were $995.6 million, up 13.8% over the
$875.1 million in net loans at September 30, 2004. The year-
over-year comparisons are enhanced by Oak Hill Financial's
acquisitions of Ripley National Bank and Lawrence Financial
Holdings. The fourth quarter 2004 acquisition of Ripley National
added $58.6 million in assets and $39.1 million in loans to Oak
Hill Financial's totals, while the Lawrence Financial transaction
brought $116.9 million in assets and $76.5 million in loans to the
company. Discussing the results of the third quarter, Oak Hill
Financial President and CEO R. E. Coffman, Jr., said, "Overall, we
are pleased with our performance. The company posted a healthy
increase in earnings, which was driven primarily by improvement in
the net interest margin, growth in non- interest income, and lower
loan loss provision." "We are also making progress in improving our
nonperforming loans and assets ratios," Coffman added, "and we had
a favorable quarter in terms of loan recoveries. Our special assets
and credit administration people are working diligently on the
nonperforming loans, and we are firmly committed to further
improvement in this area." "Conversely, our loan totals were static
in the third quarter as loan demand in our market areas remained
below average and we continued to experience payoffs on commercial
loans. Also, some of the pricing we've seen for commercial and
commercial real estate loans is below what we consider prudent in
the current rate environment. As a result, rather than meet the
competition's pricing, we have chosen not to pursue certain lending
opportunities and have allowed a few larger existing credits to pay
off. We are much more focused on the net interest margin and credit
quality, not on growth solely for the sake of growth." Looking
forward, Coffman said, "We continue to follow an aggressive plan to
grow revenues while keeping a close eye on operating expenses. We
have added to our commercial lending, mortgage origination,
investment services, and insurance teams, and we are concentrating
on growth in these areas. Also, we had considerable success in the
third quarter growing our core transaction accounts and are in the
process of rolling out new marketing programs to further build our
retail customer base." Key Issue Review and Outlook Net Interest
Margin - Net interest margin for the third quarter was 3.72%, as
compared to the 4.08% posted in the third quarter of 2004 and the
3.61% recorded for the second quarter of 2005. Management
attributes the linked- quarter improvement in the margin to the
company's continued discipline in loan and deposit pricing and
recent increases in the prime rate. However, the flat yield curve
is constraining asset yields somewhat, and the company continues to
experience pressure on both loan rates and liability costs.
Management believes that the margin can be maintained in the range
attained in the second and third quarters. Operating Expenses -
Non-interest expenses from operations were 2.72% of average assets
for the third quarter of 2005, which compares to 2.64% for the
third quarter of 2004 and 2.67% for the second quarter of 2005. The
linked- quarter change is due primarily to increased compensation
expense, including incentive and commission compensation, resulting
from the addition of commercial lending, mortgage origination, and
investment services personnel. Also, the non-interest expense ratio
continues to be affected by the integration of Lawrence Financial,
which had a higher level of operating expenses. However, the impact
of Lawrence Federal on expenses is mitigating and the cost savings
to date from the transaction are as expected and should be fully
realized by mid-2006. The company's efficiency ratio from
operations for the third quarter of 2005 was 58.9%, as compared to
52.5% in the prior year's quarter and 59.0% in the second quarter
of 2005. Non-Interest Income - Non-interest income from operations,
including gain on sale of loans, was $3.0 million in the third
quarter, an increase of 23.8% over the third quarter of 2004 and
5.9% over the second quarter of 2005. The linked-quarter increase
was the result of increases in deposit service charges, insurance
commissions, gain on sale of loans, ATM fees, investment services
income, and income from bank-owned life insurance. Offsetting the
linked-quarter increase was a decline in the gain on the sale of
investments and increased amortization of mortgage servicing
rights, which the company accounts for as a reduction in other
non-interest income. Asset Quality - At the end of the third
quarter, the nonperforming loans/total loans and nonperforming
assets/total assets ratios were 1.67% and 1.41%, respectively, an
improvement from the 1.76% and 1.53%, respectively, recorded at
June 30, 2005. The improvements were due to decreases of $1.5
million and $246,000 in nonaccrual loans and other real estate
owned, respectively, which was partially offset by a $600,000
increase in loans 90 days past due. The largest of the company's
nonperforming loans is a group of commercial real estate loans from
a single relationship totaling $5.4 million. A $2.0 million
charge-off on this relationship was reported by the company
previously, and management believes that further losses on this
relationship will be minimal. The second largest of the
nonperforming loans, also reported previously, is a $3.4 million
commercial real estate loan on which little or no loss is
anticipated. The company's net charge-offs (non-annualized) were
0.02% of total loans for the quarter, as compared to 0.07% in the
third quarter of 2004. The low net charge-offs were driven by
strong recoveries during the quarter. Going forward, the company
does not anticipate such a high level of recoveries and expects net
charge-offs to be more in line with its historical range.
Consistent with generally accepted accounting principles and
regulatory guidelines, the company uses various formulas to
determine its allowance for loan and lease losses (ALLL). The
methodology takes into consideration not only charge-offs but also
the rated quality of the company's loans based on loan review
grades and the types and amounts of loans comprising the portfolio,
while allowing some discretion by management to make adjustments
based on near-term economic conditions. The ALLL/total loans ratio
began the third quarter at 1.32%. Management's ongoing analysis of
the above factors indicated that the 1.32% ALLL/total loans ratio
was still appropriate at September 30. Asset/Loan Growth - Oak Hill
Financial's total assets increased at a 5.9% annual rate from June
30 to September 30, while net loans declined at an annualized 0.9%.
The lack of linked-quarter growth was the result of below- average
loan demand in the company's market areas, payoffs of several large
loans during the quarter, and the company's continued focus on
improving credit quality and disciplined loan pricing. Stock
Buyback - In May, Oak Hill Financial announced a program under
which it may repurchase up to 290,000 shares, or approximately
5.0%, of its outstanding common stock. The new program replaced the
company's previous repurchase plan, which was announced in February
2004. During the third quarter of 2005, Oak Hill Financial
repurchased 79,644 common shares under its new buyback program. A
total of 216,295 common shares have been repurchased by the company
under its buyback plans during the first nine months of 2005.
Expansion - During the third quarter, the company's Oak Hill Banks
affiliate broke ground on a new branch in Mt. Orab, Ohio, a growing
community east of Cincinnati. In the fourth quarter, the bank
expects to open Business Financial Centers in the Ohio communities
of Athens and Lancaster to serve the lending, depository, and
financial services needs of small- and mid-size businesses in those
communities. Oak Hill Financial is a financial holding company
headquartered in Jackson, Ohio. Its subsidiary, Oak Hill Banks,
operates 34 full-service banking offices and three bank loan
production offices in 15 counties across southern and central Ohio.
A second subsidiary, Oak Hill Financial Insurance Agency, provides
group health plans, benefits administration, and other insurance
services to business and public-sector organizations throughout the
same region. The company also holds 49% of Oak Hill Title Agency,
LLC, which provides title services for commercial and residential
real estate transactions. Forward-Looking Statements Disclosure
This release contains certain forward-looking statements related to
the future performance and condition of Oak Hill Financial, Inc.
These statements, which are subject to numerous risks and
uncertainties, are presented in good faith based on the company's
current condition and management's understanding, expectations, and
assumptions regarding its future prospects as of the date of this
release. Actual results could differ materially from those
projected or implied by the statements contained herein. The
factors that could affect the company's future results are set
forth in the periodic reports and registration statements filed by
the company with the Securities and Exchange Commission. Oak Hill
Financial, Inc. SELECTED CONSOLIDATED FINANCIAL INFORMATION
(unaudited) October 13, 2005 Press Release At September 30, (In
thousands) 2005 2004 SUMMARY OF FINANCIAL CONDITION Total assets
$1,229,228 $1,017,917 Interest-bearing deposits and federal funds
sold 4,802 1,317 Investment securities 131,066 82,256 Loans
receivable - net 995,632 875,135 Deposits 980,246 790,656 Federal
Home Loan Bank advances and other borrowings 149,921 138,797
Stockholders' equity 93,860 84,889 The Company discloses net
earnings, diluted earnings per share and certain performance ratios
adjusted for non-recurring items. Management believes that
presenting this information is an additional measure of performance
that investors can use to compare operating results between
periods. These measures should not be considered an alternative to
measurements required by accounting principles generally accepted
in the United States of America ("U.S. GAAP"). In accordance with
Securities and Exchange Commission Regulation G, reconciliation of
the Company's U.S. GAAP information is presented in the tables
below. For the For the Three Months Ended Nine Months Ended
September 30, September 30, (In thousands) 2005 2004 2005 2004
RECONCILIATION OF NON-GAAP NET EARNINGS, DILUTED EARNINGS PER SHARE
AND OTHER PERFORMANCE RATIOS Net earnings (U.S. GAAP) $3,939 $3,214
$7,800 $9,609 Non-recurring items, net of tax: Gain on sale of
branch locations and other fixed assets (16) - (133) -
Merger-related expenses 33 93 327 93 Reduction in tax expense (169)
- (509) - Net earnings from operations $3,787 $3,307 $7,485 $9,702
Diluted earnings per share (U.S. GAAP) $0.68 $0.57 $1.34 $1.69
Non-recurring items, net of tax: Gain on sale of branch locations
and other fixed assets - - (0.02) - Merger-related expenses - 0.01
0.06 0.01 Reduction in tax expense (0.03) - (0.09) - Diluted
earnings per share from operations $0.65 $0.58 $1.29 $1.70 Oak Hill
Financial, Inc. SELECTED CONSOLIDATED FINANCIAL INFORMATION
(unaudited) October 13, 2005 Press Release For the For the Three
Months Ended Nine Months Ended September 30, September 30, (In
thousands) 2005 2004 2005 2004 RECONCILIATION OF NON-GAAP NET
EARNINGS, DILUTED EARNINGS PER SHARE AND OTHER PERFORMANCE RATIOS
(continued) Non-interest income (U.S. GAAP) $3,013 $2,414 $8,556
$7,530 Non-recurring items Gain on sale of branch locations and
other fixed assets (24) - (205) - Non-interest income from
operations $2,989 $2,414 $8,351 $7,530 Non-interest expense (U.S.
GAAP) $8,144 $6,745 $22,938 $19,669 Non-recurring items
Merger-related expenses (49) (143) (502) (143) Reduction in tax
expense 261 - 783 - Non-interest expense from operations $8,356
$6,602 $23,219 $19,526 SUMMARY OF OPERATIONS (1)(2)(3) Interest
income $18,179 $14,933 $51,046 $43,495 Interest expense 7,760 5,230
20,955 15,106 Net interest income 10,419 9,703 30,091 28,389
Provision for losses on loans 212 1,002 5,671 2,285 Net interest
income after provision for losses on loans 10,207 8,701 24,420
26,104 Gain on sale of loans 327 454 869 1,354 Insurance
commissions 710 712 2,071 2,224 Other non- interest income 1,952
1,248 5,411 3,952 General, administrative and other expense 8,356
6,602 23,219 19,526 Earnings before federal income tax 4,840 4,513
9,552 14,108 Federal income taxes 1,428 1,456 2,692 4,656 Federal
new markets tax credit (375) (250) (625) (250) Net earnings from
operations $3,787 $3,307 $7,485 $9,702 SELECTED PERFORMANCE RATIOS
FROM OPERATIONS (1)(2)(3)(5)(6) Diluted earnings per share $0.65
$0.58 $1.29 $1.70 Return on average assets 1.23% 1.32% 0.86% 1.33%
Return on average equity 16.03% 15.80% 10.96% 15.85% Non-interest
expense to average assets 2.72% 2.64% 2.65% 2.68% Efficiency ratio
58.86% 52.47% 57.67% 53.69% Oak Hill Financial, Inc. SELECTED
CONSOLIDATED FINANCIAL INFORMATION (unaudited) October 13, 2005
Press Release For the For the Three Months Ended Nine Months Ended
September 30, September 30, (In thousands, except share data) 2005
2004 2005 2004 PER SHARE INFORMATION (U.S. GAAP) Basic earnings per
share (4) $0.69 $0.58 $1.37 $1.73 Diluted earnings per share (5)
$0.68 $0.57 $1.34 $1.69 Dividends per share $0.17 $0.15 $0.51 $0.45
Book value per share $16.62 $15.31 OTHER STATISTICAL AND OPERATING
DATA (U.S. GAAP) (6) Return on average assets 1.28% 1.29% 0.89%
1.32% Return on average equity 16.67% 15.35% 11.43% 15.69%
Non-interest expense to average assets 2.66% 2.70% 2.62% 2.70% Net
interest margin (fully-taxable equivalent) 3.72% 4.08% 3.73% 4.09%
Total allowance for losses on loans to non-performing loans 79.32%
141.47% Total allowance for losses on loans to total loans 1.32%
1.31% Non-performing loans total loans 1.67% 0.93% Non-performing
assets to total assets 1.41% 0.87% Net charge-offs to average loans
(actual for the period) 0.02% 0.07% 0.48% 0.17% Net charge-offs to
average loans (annualized) 0.10% 0.29% 0.64% 0.23% Equity to assets
at period end 7.64% 8.34% Efficiency ratio 57.31% 53.60% 56.96%
54.09% (1) Excludes $261,000 and $783,000 reduction in tax expense
for the three and nine months ended September 30, 2005 resulting
from a tax savings of $1.0 million for 2005. (2) Does not include
$49,000 and $502,000 of merger-related charges for the three and
nine months ended September 30, 2005 and $143,000 of merger-related
charges for the three and nine months ended September 30, 2004. (3)
Does not include $24,000 and $205,000 of gains on the sale of
branch locations and other fixed assets for the three and nine
months ended September 30, 2005. (4) Based on 5,688,601, 5,543,405,
5,684,826 and 5,550,921 weighted- average shares outstanding for
the three and nine months ended September 30, 2005 and 2004,
respectively. (5) Based on 5,797,053, 5,679,855, 5,812,934 and
5,694,877 weighted- average shares outstanding for the three and
nine months ended September 30, 2005 and 2004, respectively. (6)
Annualized where appropriate. Oak Hill Financial, Inc. SELECTED
CONSOLIDATED FINANCIAL INFORMATION (unaudited) October 13, 2005
Press Release At September 30, (In thousands, except share data)
2005 2004 SUPPLEMENTAL DETAIL BALANCE SHEET - ASSETS Cash and cash
equivalents 26,889 21,725 Trading account securities - - Securities
available for sale 127,442 78,611 Securities held to maturity 3,624
3,645 Other securities 7,517 6,183 Total securities 138,583 88,439
Total cash and securities 165,472 110,164 Loans and leases held for
investment (1) 1,005,795 883,346 Loans and leases held for sale (1)
75 268 Total loans and leases (1) 1,005,870 883,614 Allowance for
losses on loans 13,347 11,633 Goodwill 7,441 413 Other intangible
assets 4,351 - Total intangible assets 11,792 413 Mortgage
servicing rights 3,109 3,154 Purchased credit card relationships -
- Other real estate owned 498 666 Bank owned life insurance 12,836
10,000 Other assets 42,998 21,539 Total assets 1,229,228 1,017,917
BALANCE SHEET - LIABILITIES Deposits 980,246 790,656 Federal Home
Loan Bank advances and other borrowings 126,921 128,797 Other
liabilities 5,193 3,567 Total liabilities 1,112,360 923,020
Redeemable preferred stock - - Trust preferred securities 23,000
10,000 Minority interests 8 8 Other mezzanine level items - - Total
mezzanine level items 23,008 10,008 Total liabilities and mezzanine
level items 1,135,368 933,028 BALANCE SHEET - EQUITY Preferred
equity - - Common equity 93,860 84,889 MEMO ITEM: Net unrealized
gain (loss) on securities available for sale, net of tax (2) (217)
901 End of period shares outstanding (2) 5,647,760 5,544,514
Options outstanding 498,783 464,733 Treasury shares held by the
Company 226,874 109,069 (1) Data is net of unearned interest, gross
of allowance for losses on loans (2) Excludes treasury shares Oak
Hill Financial, Inc. SELECTED CONSOLIDATED FINANCIAL INFORMATION
(unaudited) October 13, 2005 Press Release At or For the At or For
the Three Months Ended Nine Months Ended September 30, September
30, (In thousands, except share data) 2005 2004 2005 2004
SUPPLEMENTAL DETAIL (continued) Repurchase plan announced? No No
Yes Yes Number of shares to be repurchased in plan(1) N/A N/A
290,000 300,000 Number of shares repurchased during the period(1)
79,644 - 216,295 134,936 Average price of shares repurchased(1)
$29.96 $- $28.61 $32.38 INCOME STATEMENT Interest income 18,179
14,933 51,046 43,495 Interest expense 7,760 5,230 20,955 15,106 Net
interest income 10,419 9,703 30,091 28,389 Net interest income
(fully-taxable equivalent) 10,767 9,900 30,985 28,839 Provision for
losses on loans 212 1,002 5,671 2,285 Non-recurring expense:
Merger-related expenses 49 143 502 143 Non-recurring income: Gain
on sale of branch locaitons and other fixed assets 24 - 205 -
Trading account income - - - - Foreign exchange income - - - -
Trust income - - - - Insurance commissions 710 712 2,071 2,224
Service charges on deposits 1,226 927 3,186 2,637 Gain on sale of
loans 327 454 869 1,354 Gain on investment securities transactions
138 74 508 276 Other non-interest income 588 247 1,717 1,039 Total
non-interest income 2,989 2,414 8,351 7,530 Employee compensation
and benefits 4,437 3,665 12,012 10,743 Occupancy and equipment
expense 1,037 826 3,090 2,446 Foreclosed property expense - - - -
Amortization of intangibles 299 - 670 - Other general,
administrative and other expense 2,322 2,111 6,664 6,337 Total
non-interest expenses 8,095 6,602 22,436 19,526 Net income before
taxes 5,076 4,370 10,038 13,965 Federal income taxes 1,512 1,406
2,863 4,606 Federal new markets tax credit (375) (250) (625) (250)
Net income before extraordinary items 3,939 3,214 7,800 9,609
Extraordinary items - - - - Net income 3,939 3,214 7,800 9,609
CHARGE-OFFS Loan charge-offs 1,665 783 6,908 1,957 Recoveries on
loans 1,413 138 2,214 468 Net loan charge-offs 252 645 4,694 1,489
AVERAGE BALANCE SHEET Average loans and leases 1,012,772 872,202
984,481 851,543 Average other earning assets 136,153 92,507 125,175
91,275 (1) The existing plan, approved on February 26, 2004, was
rescinded and a new plan was announced on May 26, 2005. Under the
existing plan, 32,000 shares were repurchased at an average price
of $27.70 during the nine months ended September 30, 2005. Under
the new plan, 79,644 and 184,295 shares were repurchased at an
average price of $29.96 and $28.76 during the three and nine months
ended September 30, 2005, respectively. Oak Hill Financial, Inc.
SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited) October 13,
2005 Press Release At or For the At or For the Three Months Ended
Nine Months Ended September 30, September 30, (In thousands, except
share data) 2005 2004 2005 2004 SUPPLEMENTAL DETAIL (continued)
AVERAGE BALANCE SHEET (continued) Average total earning assets
1,148,925 964,709 1,109,656 942,818 Average total assets 1,216,862
994,237 1,169,568 971,656 Average non-interest bearing deposits
92,647 70,780 88,362 69,406 Average total time deposits 592,743
508,413 583,770 496,657 Average other interest- bearing deposits
282,853 206,731 256,424 201,374 Average total interest- bearing
deposits 875,596 715,144 840,194 698,031 Average borrowings 148,873
124,430 143,916 120,701 Average interest-bearing liabilities
1,024,469 839,574 984,110 818,732 Average preferred equity - - - -
Average common equity 93,745 83,275 91,275 81,783 ASSET QUALITY AND
OTHER DATA Non-accrual loans 16,021 5,104 Renegotiated loans - -
Loans 90+ days past due and still accruing 806 3,119 Total
non-performing loans 16,827 8,223 Other real estate owned 498 666
Total non-performing assets 17,325 8,889 ADDITIONAL DATA 1 - 4
family mortgage loans serviced for others 247,505 252,859
Proprietary mutual fund balances - - Fair value of securities held
to maturity 3,881 3,919 Full-time equivalent employees 439 359
Total number of full- service banking offices 34 27 Total number of
bank and thrift subsidiaries 1 1 Total number of ATMs 40 31 LOANS
RECEIVABLE 1 - 4 family residential 236,898 179,504 Home equity
43,038 41,002 Multi-family residential 32,751 24,007 Commercial
real estate 373,992 327,759 Construction and land development
57,298 59,222 Commercial and other 157,497 173,900 Consumer 102,348
77,870 Credit cards 2,049 1,687 Loans receivable - gross 1,005,871
884,951 Unearned interest (1) (1,337) Loans receivable - net of
unearned interest 1,005,870 883,614 Allowance for losses on loans
(13,347) (11,633) Loans receivable - net (1) 992,523 871,981 (1)
Does not include mortgage servicing rights. Oak Hill Financial,
Inc. SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)
October 13, 2005 Press Release At or For the At or For the Three
Months Ended Nine Months Ended September 30, September 30, (In
thousands, except share data) 2005 2004 2005 2004 SUPPLEMENTAL
DETAIL (continued) DEPOSITS Transaction accounts Non-interest
bearing 100,872 68,974 Interest-bearing 79,425 74,503 Savings
accounts 69,946 49,668 Money market deposit accounts 138,084 81,602
Other core interest-bearing 420,786 343,150 Total core deposit
accounts 809,113 617,897 Non-core interest-bearing accounts 171,133
172,759 Total deposits 980,246 790,656 Yield/average earning assets
(fully-taxable equivalent) 6.40% 6.24% 6.26% 6.23% Cost/average
interest earnings assets 2.68% 2.16% 2.53% 2.14% Net interest
income (fully-taxable equivalent) 3.72% 4.08% 3.73% 4.09%
DATASOURCE: Oak Hill Financial, Inc. CONTACT: David G. Ratz,
Executive Vice President of Oak Hill Financial, Inc.,
+1-740-286-3283
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