JACKSON, Ohio, July 12 /PRNewswire-FirstCall/ -- Oak Hill
Financial, Inc. (NASDAQ:OAKF) today reported net earnings (U.S.
GAAP) for the three months ended June 30, 2007 of $4,613,000, or
$0.86 per diluted share. The second quarter 2007 earnings compare
to the $2,994,000, or $0.54 per diluted share, in net earnings that
the company recorded for the quarter ended June 30, 2006, and to
the $2,613,000, or $0.48 per diluted share, in net earnings
reported for the first quarter of 2007. For the six months ended
June 30, 2007, Oak Hill Financial recorded net earnings (U.S. GAAP)
of $7,226,000, or $1.34 per diluted share, as compared to the
$6,488,000, or $1.16 per diluted share, in net earnings for the
first six months of 2006. The net earnings for the second quarter
and first six months of 2007 include a $1,648,000 non-taxable gain
on bank-owned life insurance. Excluding this item, the company's
net income was $2,965,000, or $0.55 per diluted share, for the
second quarter of 2007 and $5,578,000, or $1.03 per diluted share,
for the first six months of 2007. The company's total assets ended
the second quarter of 2007 at $1.29 billion, as compared to the
$1.26 billion in total assets recorded at June 30, 2006. Net loans
at June 30, 2007 were $1.03 billion, which was essentially
unchanged from June 30, 2006. Reviewing Oak Hill Financial's second
quarter results, President and CEO R. E. Coffman, Jr. said, "We
continue to make progress in growing our revenues and bottom line.
On a linked-quarter basis, operating revenues in the second quarter
were up 7%. We had a strong increase in non-interest income, and
net interest income increased as well. Although we continue to
experience pressure on the net interest margin, the margin in the
second quarter was in line with our expectations. While the
increase in revenues was offset somewhat by higher operating
expenses, operating earnings for the second quarter were still up
over 13% as compared to the first quarter." Coffman continued,
"Loan volume was moderate during the quarter, but we did have some
loan payoffs and we sold $2.3 million in classified loans, both of
which affected our overall loan totals. Going forward, we continue
to work diligently on reducing our nonperforming loans, and we
remain optimistic that we will be able to further improve this
area." Key Issue Review and Outlook Net Interest Margin -- Net
interest margin for the second quarter was 3.19%, as compared to
the 3.34% posted in the second quarter of 2006 and the 3.24%
recorded for the first quarter of 2007. The current interest rate
environment continues to affect asset yields, although liability
costs have leveled off, which in turn has brought some degree of
stabilization to the margin in recent months. Operating Expenses --
Non-interest expenses from continuing operations were 2.76% of
average assets for the second quarter of 2007, which compares to
2.64% for the second quarter of 2006 and 2.63% for the first
quarter of 2007. On a linked-quarter basis, the increase in
operating expenses was due primarily to increases in credit and
collections expense and mark-to-market adjustments related to
interest rate swaps. The company's efficiency ratio from operations
for the second quarter of 2007 was 66.0%, as compared to 59.8% in
the prior year's quarter and 63.4% in the first quarter of 2007.
Non-Interest Income -- Non-interest income from operations, which
excludes the $1.6 million nontaxable gain on bank-owned life
insurance mentioned earlier in this release, was $3.5 million in
the second quarter, which was comparable to the second quarter of
2006 and an increase of 28.0% over the first quarter of 2007. The
linked-quarter growth in non-interest income from operations
resulted primarily from increases in deposit service charges and
insurance and investment services commissions, and lower losses on
sale of other real estate owned (OREO). Offsetting the linked
quarter increase was increased amortization and impairment of
mortgage servicing rights, which the company accounts for as a
reduction in other non-interest income. Asset Quality -- At the end
of the second quarter, the nonperforming loans/total loans and
nonperforming assets/total assets ratios were 1.38% and 1.30%,
respectively, as compared to the 1.36% and 1.31%, respectively,
recorded at March 31, 2007. During the second quarter, the company
sold three adversely classified, but still performing, loans
totaling $2.3 million and disposed of $324,000 of OREO. Going
forward, the company intends to pursue additional sales of
nonperforming and classified loans and assets. The company's net
charge-offs (non-annualized) were 0.06% of average loans for the
second quarter of 2007, as compared to 0.04% in the first quarter.
Nearly 33% of the company's net charge-offs for the second quarter
were the result of the sale of the classified loans. Annualized net
charge-offs were 0.19% through the first six months of 2007, which
is in line with its historical range of 0.20% to 0.25%. However,
the potential disposition of nonperforming loans could effect
future net charge-offs. 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 charge-
offs as well as 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. Using this
methodology, the loans involved in the second quarter loan sales
had previously been allocated specific amounts for expected losses
in the ALLL. As a result, management's most recent analysis of the
above factors indicated that an ALLL/total loans ratio of 1.22% was
appropriate at June 30, 2007. Asset/Loan Growth -- Oak Hill
Financial's total assets and net loans were essentially flat during
the second quarter as moderate loan volume was offset by the payoff
of several commercial real estate loans and the classified loan
sale. In addition, management continues to maintain tighter
underwriting standards and a conservative approach to loan pricing.
Total deposits on a linked-quarter basis were also flat, with
growth in money market and interest bearing transaction accounts
offset by declines in non-core interest bearing deposits as the
company allowed maturing brokered deposits and other large time
deposits to run off without replacement. Oak Hill Financial is a
financial holding company headquartered in Jackson, Ohio. Its
subsidiary, Oak Hill Banks, operates 36 full-service banking
offices and one bank loan production office 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.
Additional information about Oak Hill Financial can be found on the
company's website at http://www.oakf.com/. 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) July 12, 2007 Press Release At June 30, (In thousands)
2007 2006 SUMMARY OF FINANCIAL CONDITION Total assets $1,287,263
$1,262,771 Interest-bearing deposits and federal funds sold 1,927
3,431 Investment securities 160,385 143,124 Loans receivable - net
1,027,954 1,023,629 Deposits 958,200 978,038 Federal Home Loan Bank
advances and other borrowings 228,174 190,083 Stockholders' equity
95,440 90,246 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 reporting 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 Six Months Ended June 30, June 30, (In thousands,
except share data) 2007 2006 2007 2006 RECONCILIATION OF NON-GAAP
NET EARNINGS, DILUTED EARNINGS PER SHARE AND OTHER PERFORMANCE
RATIOS Net earnings (U.S. GAAP) $4,613 $2,994 $7,226 $6,488
Non-recurring items: Non-taxable gain on bank owned life insurance
(1,648) - (1,648) - Net earnings from operations $2,965 $2,994
$5,578 $6,488 Diluted earnings per share (U.S. GAAP) $0.86 $0.54
$1.34 $1.16 Non-recurring items: Non-taxable gain on bank owned
life insurance (0.31) - (0.31) - Diluted earnings per share from
operations $0.55 $0.54 $1.03 $1.16 Non-interest income (U.S. GAAP)
$5,159 $3,507 $7,903 $6,794 Non-recurring items: Non-taxable gain
on bank owned life insurance (1,648) - (1,648) - Non-interest
income from operations $3,511 $3,507 $6,255 $6,794 SUMMARY OF
OPERATIONS(1) Interest income $21,247 $19,647 $42,160 $38,618
Interest expense 11,903 10,127 23,548 19,407 Net interest income
9,344 9,520 18,612 19,211 Provision for losses on loans 282 1,073
825 1,273 Net interest income after provision losses on loans 9,062
8,447 17,787 17,938 Gain on sale of loans 203 333 350 542
Commissions income 934 873 1,750 1,693 Other non-interest income
2,374 2,301 4,155 4,559 General, administrative and other expense
8,872 8,267 17,109 16,516 Earnings before federal income tax 3,701
3,687 6,933 8,216 Federal income taxes 1,011 943 1,905 2,228
Federal new markets tax credit (275) (250) (550) (500) Net earnings
from operations $2,965 $2,994 $5,578 $6,488 SELECTED PERFORMANCE
RATIOS FROM OPERATIONS(1) Diluted earnings per share $0.55 $0.54
$1.03 $1.16 Return on average assets 0.92% 0.96% 0.88% 1.05% Return
on average equity 12.64% 13.01% 12.08% 14.05% Efficiency ratio
66.02% 59.76% 64.73% 59.95% PER SHARE INFORMATION (U.S. GAAP) Basic
earnings per share(2) $0.86 $0.55 $1.35 $1.18 Diluted earnings per
share(3) $0.86 $0.54 $1.34 $1.16 Dividends per share $0.21 $0.19
$0.42 $0.39 Book value per share $17.85 $16.78 OTHER STATISTICAL
AND OPERATING DATA (U.S. GAAP)(4) Return on average assets 1.43%
0.96% 1.13% 1.05% Return on average equity 19.66% 13.01% 15.65%
14.05% Non-interest expense to average assets 2.76% 2.64% 2.69%
2.67% Net interest margin (fully-taxable equivalent) 3.19% 3.34%
3.22% 3.41% Total allowance for losses on loans to non-performing
loans 88.82% 73.86% Total allowance for losses on loans to total
loans 1.22% 1.32% Non-performing loans to total loans 1.38% 1.79%
Non-performing assets to total assets 1.30% 1.55% Net charge-offs
to average loans (actual for the period) 0.06% 0.11% 0.10% 0.12%
Net charge-offs to average loans (annualized) 0.23% 0.43% 0.19%
0.24% Equity to assets at period end 7.41% 7.15% Efficiency ratio
58.68% 59.76% 60.85% 59.95% (1) Does not include a $1.6 million
non-taxable gain on bank owned life insurance for the three and six
months ended June 30, 2007. (2) Based on 5,341,939, 5,457,931,
5,333,287 and 5,512,408 weighted- average shares outstanding for
the three and six months ended June 30, 2007 and 2006,
respectively. (3) Based on 5,398,471, 5,545,728, 5,395,478 and
5,606,204 weighted- average shares outstanding for the three and
six months ended June 30, 2007 and 2006, respectively. (4)
Annualized where appropriate. At June 30, (In thousands, except
share data) 2007 2006 SUPPLEMENTAL DETAIL BALANCE SHEET - ASSETS
Cash and cash equivalents 22,128 24,754 Trading account securities
- - Securities available for sale 158,866 139,516 Securities held
to maturity 1,519 3,608 Other securities 8,078 7,845 Total
securities 168,463 150,969 Total cash and securities 190,591
175,723 Loans and leases held for investment(1) 1,037,258 1,033,359
Loans and leases held for sale(1) 239 455 Total loans and leases(1)
1,037,497 1,033,814 Allowance for losses on loans 12,748 13,678
Goodwill 8,485 7,935 Other intangible assets 2,720 3,556 Total
intangible assets 11,205 11,491 Mortgage servicing rights 3,205
3,493 Purchased credit card relationships - - Other real estate
owned 2,375 1,018 Bank owned life insurance 13,038 13,216 Other
assets 42,100 37,694 Total assets 1,287,263 1,262,771 BALANCE SHEET
- LIABILITIES Deposits 958,200 978,038 Borrowings 205,174 167,083
Other liabilities 5,441 4,396 Total liabilities 1,168,815 1,149,517
Redeemable preferred stock - - Trust preferred securities 23,000
23,000 Minority interests 8 8 Other mezzanine level items - - Total
mezzanine level items 23,008 23,008 Total liabilities and mezzanine
level items 1,191,823 1,172,525 BALANCE SHEET - EQUITY Preferred
equity - - Common equity 95,440 90,246 MEMO ITEM: Net unrealized
gain (loss) on securities available for sale, net of tax (1,219)
(1,817) End of period shares outstanding(2) 5,345,554 5,379,756
Options outstanding 384,233 453,583 Treasury shares held by the
Company 529,080 494,878 (1) Data is net of unearned interest, gross
of allowance for losses on loans (2) Excludes treasury shares For
the For the Three Months Ended Six Months Ended June 30, June 30,
(In thousands, except share data) 2007 2006 2007 2006 SUPPLEMENTAL
DETAIL (continued) Repurchase plan announced? No No No Yes Number
of shares to be repurchased in plan(1) N/A N/A N/A 278,000 Number
of shares repurchased during the period(1) N/A 175,200 N/A 249,655
Average price of shares repurchased(1) N/A $27.94 N/A $29.16 INCOME
STATEMENT Interest income 21,247 19,647 42,160 38,618 Interest
expense 11,903 10,127 23,548 19,407 Net interest income 9,344 9,520
18,612 19,211 Net interest income (fully-taxable equivalent) 9,694
9,888 19,320 19,962 Provision for losses on loans 282 1,073 825
1,273 Non-recurring expense: Merger-related expenses - - - -
Trading account income - - - - Foreign exchange income - - - -
Trust income - - - - Commissions income 934 873 1,750 1,693 Service
charges on deposits 1,570 1,358 2,800 2,565 Gain on sale of loans
203 333 350 542 Gain on investment securities transactions 34 (35)
121 104 Other non-interest income 2,418 978 2,882 1,890 Total
non-interest income 5,159 3,507 7,903 6,794 Employee compensation
and benefits 4,472 4,104 8,918 8,404 Occupancy and equipment
expense 1,137 987 2,301 1,980 Foreclosed property expense - - - -
Amortization of intangibles 175 229 391 512 Other general,
administrative and other expense 3,088 2,947 5,499 5,620 Total
non-interest expenses 8,872 8,267 17,109 16,516 Net income before
taxes 5,349 3,687 8,581 8,216 Federal income taxes 1,011 943 1,905
2,228 Federal new markets tax credit (275) (250) (550) (500) Net
income before extraordinary items 4,613 2,994 7,226 6,488
Extraordinary items - - - - Net income 4,613 2,994 7,226 6,488
CHARGE-OFFS Loan charge-offs 815 1,475 1,456 2,214 Recoveries on
loans 218 373 454 966 Net loan charge-offs 597 1,102 1,002 1,248
AVERAGE BALANCE SHEET Average loans and leases 1,045,777 1,034,614
1,042,025 1,032,165 Average other earning assets 172,243 151,785
168,998 148,194 (1) There were 52,055 shares repurchased at an
average price of $32.40 under the plan announced on May 26, 2005.
These shares completed the plan, and a new plan was announced on
February 21, 2006. There were 175,200 and 197,600 shares
repurchased at an average price of $27.94 and $28.29 for the three
and six months ended June 30, 2006 under the new plan. For the For
the Three Months Ended Six Months Ended June 30, June 30, (In
thousands, except share data) 2007 2006 2007 2006 SUPPLEMENTAL
DETAIL (continued) AVERAGE BALANCE SHEET (continued) Average total
earning assets 1,218,020 1,186,399 1,211,023 1,180,359 Average
total assets 1,291,111 1,253,840 1,284,018 1,246,153 Average
non-interest bearing deposits 95,409 92,624 93,356 92,584 Average
total time deposits 520,651 554,193 519,353 563,411 Average other
interest- bearing deposits 349,762 335,037 342,423 322,825 Average
total interest- bearing deposits 870,413 889,230 861,776 886,236
Average borrowings 226,931 175,142 231,300 170,071 Average
interest- bearing liabilities 1,097,344 1,064,372 1,093,076
1,056,307 Average preferred equity - - - - Average common equity
94,114 92,270 93,122 93,183 ASSET QUALITY AND OTHER DATA
Non-accrual loans 14,183 16,538 Renegotiated loans - - Loans 90+
days past due and still accruing 169 1,979 Total non-performing
loans 14,352 18,517 Other real estate owned 2,375 1,018 Total
non-performing assets 16,727 19,535 ADDITIONAL DATA 1 - 4 family
mortgage loans serviced for others 227,758 241,465 Proprietary
mutual fund balances - - Fair value of securities held to maturity
1,804 3,780 Full-time equivalent employees 425 438 Total number of
full-service banking offices 36 36 Total number of bank and thrift
subsidiaries 1 1 Total number of ATMs 42 41 LOANS RECEIVABLE 1 - 4
family residential 228,624 237,203 Home equity 40,694 43,385
Multi-family residential 39,297 41,789 Commercial real estate
419,222 391,000 Construction and land development 55,558 55,311
Commercial and other 155,549 152,494 Consumer 96,201 110,478 Credit
cards 2,352 2,154 Loans receivable - gross 1,037,497 1,033,814
Unearned interest - - Loans receivable - net of unearned interest
1,037,497 1,033,814 Allowance for losses on loans (12,748) (13,678)
Loans receivable - net (1) 1,024,749 1,020,136 (1) Does not include
mortgage servicing rights. For the At or For the Three Months Ended
Six Months Ended June 30, June 30, (In thousands, except share
data) 2007 2006 2007 2006 SUPPLEMENTAL DETAIL (continued) DEPOSITS
Transaction accounts Non-interest bearing 95,074 96,365
Interest-bearing 75,146 76,938 Savings accounts 48,037 56,599 Money
market deposit accounts 225,863 203,209 Other core interest-bearing
384,748 432,686 Total core deposit accounts 828,868 865,797
Brokered deposits 38,339 46,366 Non-core interest-bearing accounts
90,993 65,875 Total deposits 958,200 978,038 Yield/average earning
assets (fully-taxable equivalent) 7.11% 6.76% 7.14% 6.73%
Cost/average interest earnings assets 3.92% 3.42% 3.92% 3.32% Net
interest income (fully-taxable equivalent) 3.19% 3.34% 3.22% 3.41%
NEW MARKETS TAX CREDIT Qualified equity investment in Oak Hill
Banks Community Development Corp. 20,000 20,000 Aggregate QEI New
Markets Tax Credit Year Amount 2006 2007 2008 2009 2010 2011 2004
10,000 500 600 600 600 600 - 2005 10,000 500 500 600 600 600 600
Totals 20,000 1,000 1,100 1,200 1,200 1,200 600 DATASOURCE: Oak
Hill Financial, Inc. CONTACT: David G. Ratz, Executive Vice
President of Oak Hill Financial, Inc., +1-740-286-3283 Web site:
http://www.oakf.com/
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