What changed in this filing

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Item 1. Financial Statements

2020-08-10 compared with 2020-05-11 · 290 added, 349 removed, 514 unchanged (55% of the section changed)

44 unchanged sentences

Three months ended

Six months ended

Interest and dividend income:

6 unchanged sentences

Net interest income

Provision for loan losses

Provision for (recovery of) loan losses

Net interest income after provision for loan losses

4 unchanged sentences

Debit / credit card interchange income

Loss on other real estate owned

Gain (loss) on other real estate owned

Tax preparation fees

17 unchanged sentences

Three months ended

Six months ended

Other comprehensive income:

9 unchanged sentences

Quarter-to-date

Additional Paid-In Capital

Accumulated Other Comprehensive Income (Loss)

Shareholders' Equity

Comprehensive

Income (Loss)

Shareholders'

Balance at April 1, 2020

Other comprehensive income, net

Cash dividends, $ 0.21 per share

Balance at June 30, 2020

Balance at April 1, 2019

Other comprehensive income, net

Common stock issued through dividend reinvestment, 9,099 shares

Cash dividends, $ 0.21 per share

Balance at June 30, 2019

Comprehensive

Income (Loss)

Shareholders'

Balance at January 1, 2020

1 unchanged sentence

Cash dividends, $ 0.42 per share

Balance at March 31, 2020

Balance at June 30, 2020

Balance at January 1, 2019

1 unchanged sentence

Common stock issued to ESOP, 8,333 shares

Common stock issued through

dividend reinvestment, 10,000 shares

Common stock issued through dividend reinvestment, 19,099 shares

Cash dividends, $ 0.42 per share

Balance at March 31, 2019

Balance at June 30, 2019

See accompanying notes to consolidated financial statements

3 unchanged sentences

(dollars in thousands)

Three months ended

Six months ended

Net cash provided by operating activities:

3 unchanged sentences

Proceeds from maturities of securities held to maturity

Proceeds from maturities of certificates of deposit in financial institutions

Purchase of certificates of deposit in financial institutions

Net change in loans

1 unchanged sentence

Purchases of premises and equipment

Purchases of bank owned life insurance and annuity assets

Net cash used in investing activities

5 unchanged sentences

Change in other long-term borrowings

Net cash provided by financing activities

Change in other short-term borrowings

Net cash provided by (used in) financing activities

Change in cash and cash equivalents

3 unchanged sentences

Cash paid for interest

Cash paid for income taxes

Transfers from loans to other real estate owned

7 unchanged sentences

The accompanying consolidated financial statements include the accounts of Ohio Valley Banc Corp.

(“Ohio Valley”) and its wholly-owned subsidiaries, The Ohio Valley Bank

Company (the “Bank”), Loan Central, Inc.

(“Ohio Valley”) and its wholly-owned subsidiaries, The Ohio Valley Bank Company (the “Bank”), Loan Central, Inc.

(“Loan Central”), a consumer finance company, Ohio Valley Financial Services Agency, LLC, an insurance agency, and OVBC Captive, Inc.

(the “Captive”), a limited purpose property and casualty insurance

(the “Captive”), a limited purpose property and casualty insurance company.

The Bank has one wholly-owned subsidiary, Ohio Valley REO, LLC (“Ohio Valley REO”), an Ohio limited liability company, to which the Bank transfers certain real estate acquired by the Bank through foreclosure for sale by Ohio Valley REO.

Ohio Valley and its subsidiaries are collectively referred to as the “Company”.

All material intercompany accounts and transactions have been eliminated in consolidation.

These interim financial statements are prepared by the Company without audit and reflect all adjustments of a normal recurring nature which, in the opinion of management, are necessary

to present fairly the consolidated financial position of the Company at March 31, 2020 , and its results of operations and cash flows for the periods presented.

The results of operations for the three months

ended March 31, 2020 are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, 2020.

The accompanying consolidated financial statements do not purport to contain all the necessary

financial disclosures required by U.S.

Ohio Valley and its subsidiaries are collectively referred to as the “Company.” All material intercompany accounts and transactions have been eliminated in consolidation.

These interim financial statements are prepared by the Company without audit and reflect all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly the consolidated financial position of the Company at June 30, 2020, and its results of operations and cash flows for the periods presented.

The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, 2020.

The accompanying consolidated financial statements do not purport to contain all the necessary financial disclosures required by U.S.

generally accepted accounting principles (“US GAAP”) that might otherwise be necessary in the circumstances.

The Annual Report of the Company for the year ended December 31, 2019 contains consolidated

financial statements and related notes which should be read in conjunction with the accompanying consolidated financial statements.

The Annual Report of the Company for the year ended December 31, 2019 contains consolidated financial statements and related notes which should be read in conjunction with the accompanying consolidated financial statements.

The consolidated financial statements for 2019 have been reclassified to conform to the presentation for 2020.

These reclassifications had no effect on net income or shareholders’ equity.

RECENT EVENTS:

In March 2020, the World Health Organization declared the outbreak of the coronavirus (“COVID-19”) as a global pandemic, which continues to spread throughout the United States and around the world.

COVID-19 has negatively impacted the global economy, disrupted global supply chains and increased unemployment levels.

The resulting temporary closure of many businesses and the implementation of social distancing and sheltering-in-place policies

has, and may continue to impact, many of the Company’s customers.

While the full effects of the pandemic remain unknown, the Company is committed to supporting its customers, employees and communities during this difficult time.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), was signed into law.

The goal of the CARES Act is to prevent a severe economic downturn through various measures, including direct

financial aid to American families and economic stimulus to significantly impacted industry sectors.

Certain provisions within the CARES Act encourage financial institutions to practice prudent efforts to work with borrowers impacted by COVID-19.

Under these provisions, modifications deemed to be COVID-19-related would not be considered a troubled debt restructuring if the loan was not more than 30 days past due as of December 31, 2019 and the deferral was executed between March 1, 2020 and

the earlier of 60 days after the date of termination of the COVID-19 national emergency or December 31, 2020.

Also under the CARE Act, the Bank is a lender for the Small Business Administration's (“SBA”) Paycheck Protection Program ("PPP"), a

program that provides assistance to small businesses.

The PPP provides small businesses with funds to pay up to 8 weeks of payroll costs, including benefits.

The funds are provided in the form of loans that will be fully forgiven when used for

payroll costs, interest on mortgages, rent, and utilities.

The payments on these loans will be deferred for six months.

Forgiveness of the PPP loans is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:

The accounting and reporting policies followed by the Company conform to US GAAP established by the Financial Accounting Standards Board (“FASB”).

preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The potential financial impact of COVID 19 is unknown at this time.

However, if these actions are sustained, it may adversely impact several industries within our geographic footprint and impair the ability of our

customers to fulfill their contractual obligations to the Company.

This could cause the Company to experience a material adverse effect on our business operations, asset valuations, financial condition, and results of operations.

CURRENT EVENTS:

In March 2020, the World Health Organization declared the outbreak of the coronavirus (“COVID-19”) as a global pandemic.

COVID-19 has negatively impacted the global economy, disrupted global supply chains, created significant volatility and disruption in financial markets, and increased unemployment levels.

The resulting temporary closure of many businesses and the implementation of social distancing and sheltering-in-place policies has, and may continue to impact, many of the Company’s customers.

The potential financial impact of COVID-19 is unknown at this time and depends largely on the actions taken by governmental authorities and other third parties.

In addition, COVID-19 may adversely impact several industries within our geographic footprint and impair the ability of our customers to fulfill their contractual obligations to the Company.

This could result in a material adverse effect on our business operations, asset valuations, liquidity, financial condition, and results of operations.

Effects may include:

The provision for loan losses could increase.

Continued uncertainty regarding the severity and duration of the COVID-19 pandemic and

related economic effects will continue to affect the accounting for loan losses.

It also is possible that asset quality could worsen, and loan charge-offs increase.

The Company is actively participating in the PPP program providing loans to small

businesses negatively impacted by the COVID-19 pandemic.

Continued uncertainty regarding the severity and duration of the COVID-19 pandemic and related economic effects will continue to affect the accounting for loan losses.

It also is possible that asset quality could worsen, and that loan charge-offs could increase.

The Company is actively participating in the Paycheck Protection Program (“PPP”) by providing loans to small businesses negatively impacted by the COVID-19 pandemic.

PPP loans are fully guaranteed by the U.S.

government, if that should change, the Company could be required to increase its allowance for loan losses through an additional provision for loan

losses charged to earnings.

government, and if that should change, the Company could be required to increase its allowance for loan losses through an additional provision for loan losses charged to earnings.

Valuation and fair value measurement challenges may occur.

Material adverse impacts may include all or a combination of valuation

impairments on the Company’s securities, impaired loans, other real estate owned, and interest rate swap agreements.

Material adverse impacts may include all or a combination of valuation impairments on the Company’s securities, impaired loans, goodwill, other real estate owned, and interest rate swap agreements.

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:

The accounting and reporting policies followed by the Company conform to US GAAP established by the Financial Accounting Standards Board (“FASB”).

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

INDUSTRY SEGMENT INFORMATION:

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Earnings per share are computed based on net income divided by the weighted average number of common shares outstanding during the period.

The weighted average common shares outstanding were

4,787,446 and 4,748,474 for the three months ended March 31, 2020 and 2019, respectively.

The weighted average common shares outstanding were 4,787,446 and 4,763,858 for the three months ended June 30 , 2020 and 2019 , respectively.

The weighted average common shares outstanding were 4,787,446 and 4,756,209 for the six months ended June 30, 2020 and 2019, respectively.

Ohio Valley had no dilutive effect and no potential common shares issuable under stock options or other agreements for any period presented.

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In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.

This ASU eliminates, adds

and modifies certain disclosure requirements for fair value measurements.

Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy but will be

required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.

ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019, and early

adoption is permitted.

This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements.

Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.

ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted.

For non-public entities, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

The adoption of this ASU did not have a material impact on the Company’s

consolidated financial position or results of operations.

The adoption of this ASU did not have a material impact on the Company’s consolidated financial position or results of operations.

ACCOUNTING GUIDANCE TO BE ADOPTED IN FUTURE PERIODS:

1 unchanged sentence

2016-13, “Financial Instruments - Credit Losses”.

ASU 2016-13 requires

entities to replace the current “incurred loss” model with an “expected loss” model, which is referred to as the current expected credit loss (“CECL”) model.

These expected credit losses for financial assets held at the reporting date are to be

based on historical experience, current conditions, and reasonable and supportable forecasts.

This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and

judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio.

These disclosures include qualitative and quantitative requirements that provide additional information about the amounts

recorded in the financial statements.

ASU 2016-13 requires entities to replace the current “incurred loss” model with an “expected loss” model, which is referred to as the current expected credit loss (“CECL”) model.

These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts.

This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio.

These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.

A CECL steering committee has developed a CECL model and is evaluating the source data, various credit loss methodologies and model results in relation to the new ASU guidance.

Management expects to recognize

a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective.

Management expects the adoption will result in a material increase to the allowance

for loan losses balance.

Management expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective.

Management expects the adoption will result in a material increase to the allowance for loan losses balance.

At this time, the impact is being evaluated.

On October 16, 2019, the FASB confirmed it would delay the effective date of this ASU for smaller reporting companies, such as the Company, until fiscal years beginning after

December 15, 2022.

On October 16, 2019, the FASB confirmed it would delay the effective date of this ASU for smaller reporting companies, such as the Company, until fiscal years beginning after December 15, 2022.

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction

between market participants on the measurement date.

There are three levels of inputs that may be used to measure fair values:

Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or

other inputs that are observable or can be corroborated by observable market data.

Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

1 unchanged sentence

The fair values for securities are determined by quoted market prices, if available (Level 1).

For securities where quoted prices are not available, fair values are

calculated based on market prices of similar securities (Level 2).

For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2).

For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

During times when trading is more liquid, broker quotes are used (if available) to validate the model.

Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the

calculations.

Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

Impaired Loans:

At the time a loan is considered impaired, it is valued at the lower of cost or fair value.

Impaired loans carried at fair value generally receive specific

allocations of the allowance for loan losses.

Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses.

For collateral dependent loans, fair value is commonly based on recent real estate appraisals.

These appraisals may utilize a single valuation approach or a combination of approaches including comparable

sales and the income approach.

These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.

Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.

Such adjustments are usually significant and

typically result in a Level 3 classification of the inputs for determining fair value.

Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based

on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification.

Impaired loans are

evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification.

Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Other Real Estate Owned:

Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.

These assets are

subsequently accounted for at lower of cost or fair value less estimated costs to sell.

These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell.

Fair value is commonly based on recent real estate appraisals.

These appraisals may utilize a single valuation approach or a combination of approaches including

comparable sales and the income approach.

These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.

Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.

Such adjustments are usually

significant and typically result in a Level 3 classification of the inputs for determining fair value.

Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

In some instances, fair value adjustments can be made based on a quoted price from an observable input, such as a purchase agreement.

adjustments would be classified as a Level 2 classification.

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

properties) whose qualifications and licenses have been reviewed and verified by the Company.

Once received, a member of management reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in

comparison with management’s own assumptions of fair value based on factors that include recent market data or industry-wide statistics.

Such adjustments would be classified as a Level 2 classification.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.

Once received, a member of management reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with management’s own assumptions of fair value based on factors that include recent market data or industry-wide statistics.

On an as-needed basis, the Company reviews the fair value of collateral, taking into consideration current market data, as well as all selling costs that typically approximate 10 %.

Interest Rate Swap Agreements:

The fair value of interest rate swap agreements is determined using the market standard methodology of netting the discounted future fixed cash

payments (or receipts) and the discounted expected variable cash receipts (or payments).

The variable cash receipts (or payments) are based on the expectation of future interest rates (forward curves) derived from observed market interest rate

curves (Level 2).

The fair value of interest rate swap agreements is determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments).

The variable cash receipts (or payments) are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves (Level 2).

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:

Fair Value Measurements at March 31, 2020 Using

Quoted Prices in Active Markets for Identical Assets

Significant Other Observable

Significant Unobservable Inputs

Fair Value Measurements at June 30, 2020 Using

Quoted Prices in Active

Markets for Identical Assets

Significant Other

Observable Inputs

Unobservable Inputs

Government sponsored entity securities

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Interest rate swap derivatives

Liabilities :

Interest rate swap derivatives

Fair Value Measurements at December 31, 2019 Using

Quoted Prices in Active Markets for Identical Assets

Significant Other Observable

Significant Unobservable Inputs

Quoted Prices in Active

Markets for Identical Assets

Significant Other

Observable Inputs

Unobservable Inputs

Government sponsored entity securities

1 unchanged sentence

Interest rate swap derivatives

Liabilities :

Interest rate swap derivatives

2 unchanged sentences

Assets and Liabilities Measured on a Nonrecurring Basis

Assets and liabilities measured at fair value on a nonrecurring basis are summarized below:

Fair Value Measurements at March 31, 2020, Using

Quoted Prices in Active Markets for Identical Assets

Significant Other Observable

Significant Unobservable Inputs

Impaired loans:

Commercial real estate:

Owner-occupied

Commercial and Industrial

There were no assets or liabilities measured at fair value on a nonrecurring basis at June 30, 2020.

Assets and liabilities measured at fair value on a nonrecurring basis at December 31, 2019 are summarized below:

Fair Value Measurements at December 31, 2019, Using

Quoted Prices in Active Markets for Identical Assets

Significant Other Observable

Significant Unobservable Inputs

Impaired loans:

Commercial real estate:

Owner-occupied

Commercial and Industrial

At March 31, 2020, the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled $2,090, with a corresponding valuation allowance of $854,

resulting in an increase of $854 in provision expense during the three months ended March 31, 2020, with no corresponding charge-offs recognized.

This is compared to an increase of $163 in provision expense during the three months ended March 31,

2019, with no corresponding charge-offs recognized.

At December 31, 2019, the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled $7,010, with a corresponding

valuation allowance of $807, resulting in an increase of $807 in provision expense during the year ended December 31, 2019, with no corresponding charge-offs recognized.

There was no other real estate owned that was measured at fair value less costs to sell at March 31, 2020 and December 31, 2019.

There were no corresponding write downs during the three months ended March 31, 2020 and

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at March 31, 2020 and December 31, 2019:

March 31, 2020

Quoted Prices in Active

Markets for Identical Assets

Significant Other

Observable Inputs

Unobservable Inputs

Impaired loans:

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Owner-occupied

Sales approach

Adjustment to comparables

Commercial and Industrial

Sales approach

Adjustment to comparables

At June 30, 2020, the Company had no recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans and, therefore, recorded no impact to provision expense during the three and six months ended June 30, 2020.

This is compared to a decrease of $ 3 to provision expense during the three months ended June 30, 2019, and an increase of $ 1 to provision expense during the six months ended June 30, 2019, with $ 65 in additional charge-offs recognized during both periods.

At December 31, 2019, the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled $ 7,010 , with a corresponding valuation allowance of $ 807 , resulting in an increase of $ 807 in provision expense during the year ended December 31, 2019, with no corresponding charge-offs recognized.

There was no other real estate owned that was measured at fair value less costs to sell at June 30, 2020 and December 31, 2019.

There were no corresponding write downs during the three and six months ended June 30, 2020 and 2019.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2019:

December 31, 2019

(Weighted Average)

Impaired loans:

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NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The carrying amounts and estimated fair values of financial instruments at March 31, 2020 and December 31, 2019 are as follows:

Fair Value Measurements at March 31, 2020 Using

The carrying amounts and estimated fair values of financial instruments at June 30, 2020 and December 31, 2019 are as follows:

Fair Value Measurements at June 30, 2020 Using

Financial Assets:

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Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.

These estimates do not reflect any premium or

discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.

Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are

based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors.

These estimates are subjective in nature and involve uncertainties and matters of

significant judgment and therefore cannot be determined with precision.

These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.

Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors.

These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.

Changes in assumptions could significantly affect the estimates.

NOTE 3 – SECURITIES

The following table summarizes the amortized cost and fair value of securities available for sale and securities held to maturity at March 31, 2020 and December 31, 2019 and the corresponding amounts of

gross unrealized gains and losses recognized in accumulated other comprehensive (loss) and gross unrecognized gains and losses:

The following table summarizes the amortized cost and fair value of securities available for sale and securities held to maturity at June 30, 2020 and December 31, 2019, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive (loss) and gross unrecognized gains and losses:

Securities Available for Sale

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Gross Unrealized

March 31, 2020

June 30 , 2020

Government sponsored entity securities

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Gross Unrecognized

March 31, 2020

June 30 , 2020

Obligations of states and political subdivisions

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Total securities

The amortized cost and estimated fair value of debt securities at March 31, 2020, by contractual maturity, are shown below.

Actual maturities may differ from contractual maturities because certain

issuers may have the right to call or prepay the debt obligations prior to their contractual maturities.

The amortized cost and estimated fair value of debt securities at June 30, 2020, by contractual maturity, are shown below.

Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay the debt obligations prior to their contractual maturities.

Securities not due at a single maturity are shown separately.

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Total debt securities

The following table summarizes securities with unrealized losses at March 31, 2020 and December 31, 2019, aggregated by major security type and length of time in a continuous unrealized loss position:

March 31, 2020

NOTE 3 – SECURITIES (Continued)

The following table summarizes securities with unrealized losses at June 30, 2020 and December 31, 2019, aggregated by major security type and length of time in a continuous unrealized loss position:

June 30, 2020

Less Than 12 Months

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Securities Held to Maturity

Obligations of states and

political subdivisions

Obligations of states and political subdivisions

Total held to maturity

NOTE 3 – SECURITIES (Continued)

December 31, 2019

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Securities Available for Sale

Government sponsored

entity securities

Agency mortgage-backed

securities, residential

Government sponsored entity securities

Agency mortgage-backedsecurities, residential

Total available for sale

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Securities Held to Maturity

Obligations of states and

political subdivisions

Obligations of states and political subdivisions

Total held to maturity

There were no sales of investment securities during the three months ended March 31, 2020 or 2019.

Unrealized losses on the Company’s debt securities

have not been recognized into income because the issuers’ securities are of high credit quality as of March 31, 2020, and management does not intend to sell, and it is likely that management will not be required to sell, the securities prior to their

anticipated recovery.

Management does not believe any individual unrealized loss at March 31, 2020 and December 31, 2019 represents an other-than-temporary impairment.

There were no sales of investment securities during the three and six months ended June 30, 2020 or 2019.

Unrealized losses on the Company’s debt securities have not been recognized into income because the issuers’ securities are of high credit quality as of June 30, 2020, and management does not intend to sell, and it is likely that management will not be required to sell, the securities prior to their anticipated recovery.

Management does no t believe any individual unrealized loss at June 30, 2020 and December 31, 2019 represents an other-than-temporary impairment.

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES

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Allowance for loan losses

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2020 and 2019:

March 31, 2020

Commercial and industrial loans include $ 34,145 of loans originated under the PPP at June 30, 2020.

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended June 30, 2020 and 2019:

June 30 , 2020

and Industrial

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Total ending allowance balance

March 31, 2019

June 30 , 2019

and Industrial

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NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The following table presents the balance in the allowance for loan losses and the recorded investment of loans by portfolio segment and based on impairment method as of March 31, 2020 and December 31,

March 31, 2020

The following table presents the activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2020 and 2019:

June 30 , 2020

and Industrial

Allowance for loan losses:

Beginning balance

Provision for loan losses

Loans charged off

Total ending allowance balance

June 30 , 2019

and Industrial

Allowance for loan losses:

Beginning balance

Provision for loan losses

Loans charged-off

Total ending allowance balance

The following table presents the balance in the allowance for loan losses and the recorded investment of loans by portfolio segment and based on impairment method as of June 30, 2020 and December 31, 2019:

June 30 , 2020

and Industrial

Allowance for loan losses:

Ending allowance balance attributable to loans:

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Total ending loans balance

The following tables present information related to loans individually evaluated for impairment by class of loans as of March 31, 2020 and December 31, 2019:

March 31, 2020

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The following tables present information related to loans individually evaluated for impairment by class of loans as of June 30, 2020 and December 31, 2019:

June 30 , 2020

Principal Balance

Allowance for Loan Losses Allocated

Allowance for Loan

Losses Allocated

With an allowance recorded

Commercial real estate:

Owner-occupied

Commercial and industrial

With no related allowance recorded:

4 unchanged sentences

Commercial and industrial

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

December 31, 2019

Principal Balance

Allowance for Loan Losses Allocated

Allowance for Loan

Losses Allocated

With an allowance recorded:

8 unchanged sentences

Commercial and industrial

The following tables present information related to loans individually evaluated for impairment by class of loans for the three months ended March 31, 2020 and 2019:

Three months ended March 31, 2020

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The following tables present information related to loans individually evaluated for impairment by class of loans for the three and six months ended June 30, 2020 and 2019:

Three months ended June 30, 2020

Six months ended June 30, 2020

Impaired Loans

Interest Income

Cash Basis Interest Recognized

Interest Recognized

Impaired Loans

Interest Income

Interest Recognized

With an allowance recorded

Commercial real estate:

Owner-occupied

Commercial and industrial

With no related allowance recorded:

4 unchanged sentences

Commercial and industrial

Three months ended March 31, 2019

Three months ended June 30, 2019

Six months ended June 30, 2019

Impaired Loans

Interest Income

Cash Basis Interest Recognized

Interest Recognized

Impaired Loans

Interest Income

Interest Recognized

With an allowance recorded:

1 unchanged sentence

Commercial real estate:

Owner-occupied

Nonowner-occupied

Commercial and industrial

With no related allowance recorded:

4 unchanged sentences

Commercial and industrial

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The recorded investment of a loan is its carrying value excluding accrued interest and deferred loan fees.

Nonaccrual loans and loans past due 90 days or more and still accruing include both smaller balance homogenous loans that are collectively evaluated for impairment and individually classified as

impaired loans.

The Company transfers loans to other real estate owned, at fair value less cost to sell, in the period the Company obtains physical possession of the property (through legal title or through a deed in

As of March 31, 2020, there were no other real estate owned for residential real estate properties, as compared to $68 at December 31, 2019.

In addition, nonaccrual residential mortgage loans that are in the process of foreclosure had a

recorded investment of $831 and $1,780 as of March 31, 2020 and December 31, 2019, respectively.

The following table presents the recorded investment of nonaccrual loans and loans past due 90 days or more and still accruing by class of loans as of March 31, 2020 and December 31, 2019:

March 31, 2020

Nonaccrual loans and loans past due 90 days or more and still accruing include both smaller balance homogenous loans that are collectively evaluated for impairment and individually classified as impaired loans.

As of June 30, 2020, there were no other real estate owned for residential real estate properties, as compared to $ 68 at December 31, 2019.

In addition, nonaccrual residential mortgage loans that are in the process of foreclosure had a recorded investment of $ 759 and $ 1,780 as of June 30, 2020 and December 31, 2019, respectively.

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The following table presents the recorded investment of nonaccrual loans and loans past due 90 days or more and still accruing by class of loans as of June 30, 2020 and December 31, 2019:

June 30 , 2020

Loans Past Due

14 unchanged sentences

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The following table presents the aging of the recorded investment of past due loans by class of loans as of March 31, 2020 and December 31, 2019:

March 31, 2020

The following table presents the aging of the recorded investment of past due loans by class of loans as of June 30, 2020 and December 31, 2019:

June 30 , 2020

Residential real estate

11 unchanged sentences

A troubled debt restructuring (“TDR”) occurs when the Company has agreed to a loan modification in the form of a concession for a borrower who is experiencing financial difficulty.

considered to be impaired.

All TDRs are considered to be impaired.

The modification of the terms of such loans included one or a combination of the following:

a reduction of the stated interest rate of the loan;

an extension of the maturity date at a stated rate of interest lower than

the current market rate for new debt with similar risk;

an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk;

a reduction in the contractual principal and interest payments of the loan;

2 unchanged sentences

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The following table presents the types of TDR loan modifications by class of loans as of March 31, 2020 and December 31, 2019:

March 31, 2020

The following table presents the types of TDR loan modifications by class of loans as of June 30, 2020 and December 31, 2019:

June 30 , 2020

Performing to Modified Terms

28 unchanged sentences

Reduction of principal and interest payments

At March 31, 2020, the balance in TDR loans decreased $826, or 9.7%, from year-end 2019.

The Company’s specific allocations in reserves to customers whose loan terms have been modified in TDRs totaled

$450 at March 31, 2020, as compared to $227 in reserves at December 31, 2019.

At March 31, 2020, the Company had $1,516 in commitments to lend additional amounts to customers with outstanding loans that are classified as TDRs, as compared to $941 at

December 31, 2019.

At June 30 , 2020 , the balance in TDR loans decreased $ 1,766 , or 20.7 % , from year-end 2019 .

The Company had no specific allocations in reserves to customers whose loan terms have been modified in TDRs at  

June 30 , 2020 , as compared to $ 227 in reserves at December 31, 2019 .

At June 30 , 2020 , the Company had $ 2,423 in commitments to lend additional amounts to customers with outstanding loans that are classified as TDRs, as compared to $ 941 at December 31, 2019 .

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

There were no TDR loan modifications that occurred during the three months ended March 31, 2020.

The following table presents the pre- and post-modification balances of TDR loan modifications by class

of loans that occurred during the three months ended March 31, 2019:

There were no TDR loan modifications that occurred during the three and six months ended June 30, 2020.

The following table presents the pre- and post-modification balances of TDR loan modifications by class of loans that occurred during the three and six months ended June 30, 2019:

Performing to Modified Terms

Performing toModified Terms

Three months ended June 30 , 2019

Pre-Modification Recorded

Post-Modification Recorded

Pre-Modification Recorded

Post-Modification Recorded

Residential real estate:

Interest only payments

Commercial and Industrial:

Interest only payments

Performing to Modified Terms

Three months ended March 31, 2019

Pre-Modification Recorded Investment

Post-Modification Recorded Investment

Pre-Modification Recorded Investment

Post-Modification Recorded Investment

Commercial real estate:

Owner-occupied

Reduction of principal and interest payments

Performing to Modified Terms

Six months ended June 30 , 2019

Pre-Modification Recorded

Post-Modification Recorded

Pre-Modification Recorded

Post-Modification Recorded

Residential real estate:

Interest only payments

Commercial and Industrial:

Reduction of principal and interest payments

The TDRs described above had no impact on the allowance for loan losses and resulted in no charge-offs during the three months ended March 31, 2019.

The Company had no TDRs that occurred during the three months ended March 31, 2020 or March 31, 2019 that experienced any payment defaults within twelve months following their loan modification.

default is considered to have occurred once the TDR is past due 90 days or more or it has been placed on nonaccrual.

TDR loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and

future payments are reasonably assured.

Under the terms of the CARE Act, as of March 31, 2020, the Company had modified 95 loans related to the COVID-19 pandemic with an aggregate loan balance of $15,934 that were not reported as TDRs in

the tables presented above.

As of May 7, 2020, the volume of COVID-19 modifications had increased to 593 loans with an aggregate loan balance of $128,262.

Interest only payments

The TDRs described above had no impact on the allowance for loan losses and resulted in no charge-offs during the three and six months ended June 30, 2019.

The Company had no TDRs that occurred during the three and six months ended June 30, 2020 or June 30, 2019 that experienced any payment defaults within twelve months following their loan modification.

A default is considered to have occurred once the TDR is past due 90 days or more or it has been placed on nonaccrual.

TDR loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020 and provided guidance around the modification of loans as a result of the COVID-19 pandemic, which outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs.

This includes short-term modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant.

Borrowers are considered current under the CARES Act and related regulatory guidance if they are less than 30 days past due on their contractual payments at the time a modification program is implemented.

As of June 30 , 2020 , the Company had modified 692 loans related to the COVID-19 pandemic with an aggregate loan balance of $ 139,304 that were not reported as TDRs in the tables presented above.

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as:

current financial information, historical payment

experience, credit documentation, public information, and current economic trends, among other factors.

current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.

These risk categories are represented by a loan grading scale from 1 through 11.

The Company analyzes loans individually with a higher credit risk

rating and groups these loans into categories called “criticized” and ”classified” assets.

The Company analyzes loans individually with a higher credit risk rating and groups these loans into categories called “criticized” and ”classified” assets.

The Company considers its criticized assets to be loans that are graded 8 and its classified assets to be loans that are graded 9 through 11.

The Company’s

risk categories are reviewed at least annually on loans that have aggregate borrowing amounts that meet or exceed $750.

The Company’s risk categories are reviewed at least annually on loans that have aggregate borrowing amounts that meet or exceed $ 750 .

The Company uses the following definitions for its criticized loan risk ratings:

Special Mention.

Loans classified as special mention indicate considerable risk due to deterioration of

repayment (in the earliest stages) due to potential weak primary repayment source, or payment delinquency.

These loans will be under constant supervision, are not classified and do not expose the institution to sufficient risks to warrant

classification.

Loans classified as special mention indicate considerable risk due to deterioration of repayment (in the earliest stages) due to potential weak primary repayment source, or payment delinquency.

These loans will be under constant supervision, are not classified and do not expose the institution to sufficient risks to warrant classification.

These deficiencies should be correctable within the normal course of business, although significant changes in company structure or policy may be necessary to correct the deficiencies.

These loans are considered bankable

assets with no apparent loss of principal or interest envisioned.

These loans are considered bankable assets with no apparent loss of principal or interest envisioned.

The perceived risk in continued lending is considered to have increased beyond the level where such loans would normally be granted.

Credits that are defined as a TDR should

be graded no higher than special mention until they have been reported as performing over one year after restructuring.

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Credits that are defined as a TDR should be graded no higher than special mention until they have been reported as performing over one year after restructuring.

The Company uses the following definitions for its classified loan risk ratings:

Loans classified as substandard represent very high risk, serious delinquency, nonaccrual, or unacceptable credit.

Repayment through the

primary source of repayment is in jeopardy due to the existence of one or more well defined weaknesses and the collateral pledged may inadequately protect collection of the loans.

Loss of principal is not likely if weaknesses are corrected,

although financial statements normally reveal significant weakness.

Loans are still considered collectible, although loss of principal is more likely than with special mention loan grade 8 loans.

Collateral liquidation is considered likely to

satisfy debt.

Loans classified as doubtful display a high probability of loss, although the amount of actual loss at the time of classification is

undetermined.

Repayment through the primary source of repayment is in jeopardy due to the existence of one or more well defined weaknesses and the collateral pledged may inadequately protect collection of the loans.

Loss of principal is not likely if weaknesses are corrected, although financial statements normally reveal significant weakness.

Loans are still considered collectible, although loss of principal is more likely than with special mention loans.

Collateral liquidation is considered likely to satisfy debt.

Loans classified as doubtful display a high probability of loss, although the amount of actual loss at the time of classification is undetermined.

This classification should be temporary until such time that actual loss can be identified, or improvements made to reduce the seriousness of the classification.

These loans exhibit all substandard characteristics with the

addition that weaknesses make collection or liquidation in full highly questionable and improbable.

This classification consists of loans where the possibility of loss is high after collateral liquidation based upon existing facts, market

conditions, and value.

These loans exhibit all substandard characteristics with the addition that weaknesses make collection or liquidation in full highly questionable and improbable.

This classification consists of loans where the possibility of loss is high after collateral liquidation based upon existing facts, market conditions, and value.

Loss is deferred until certain important and reasonable specific pending factors which may strengthen the credit can be more accurately determined.

These factors may include proposed acquisitions, liquidation

procedures, capital injection, receipt of additional collateral, mergers, or refinancing plans.

A doubtful classification for an entire credit should be avoided when collection of a specific portion appears highly probable with the adequately

secured portion graded substandard.

These factors may include proposed acquisitions, liquidation procedures, capital injection, receipt of additional collateral, mergers, or refinancing plans.

A doubtful classification for an entire credit should be avoided when collection of a specific portion appears highly probable with the adequately secured portion graded substandard.

Loans classified as loss are considered uncollectible and are of such little value that their continuance as bankable assets is not warranted.

This classification does not mean that the credit has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset yielding such a minimum value even though partial recovery may be

affected in the future.

Amounts classified as loss should be promptly charged off.

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Criticized and classified loans will mostly consist of commercial and industrial and commercial real estate loans.

The Company considers its loans that do not meet the criteria for a criticized and

classified asset rating as pass rated loans, which will include loans graded from 1 (Prime) to 7 (Watch).

The Company considers its loans that do not meet the criteria for a criticized and classified asset rating as pass rated loans, which will include loans graded from 1 (Prime) to 7 (Watch).

All commercial loans are categorized into a risk category either at the time of origination or reevaluation date.

As of March 31, 2020 and

December 31, 2019, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:

March 31, 2020

As of June 30, 2020 and December 31, 2019, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:

June 30 , 2020

Commercial real estate:

8 unchanged sentences

The Company also obtains the credit scores of its borrowers upon origination (if available by the credit bureau), but the scores are not updated.

The Company focuses mostly on the performance and

repayment ability of the borrower as an indicator of credit risk and does not consider a borrower's credit score to be a significant influence in the determination of a loan's credit risk grading.

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

The Company focuses mostly on the performance and repayment ability of the borrower as an indicator of credit risk and does not consider a borrower's credit score to be a significant influence in the determination of a loan's credit risk grading.

For residential and consumer loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity.

The following table

presents the recorded investment of residential and consumer loans by class of loans based on repayment activity as of March 31, 2020 and December 31, 2019:

March 31, 2020

The following table presents the recorded investment of residential and consumer loans by class of loans based on repayment activity as of June 30, 2020 and December 31, 2019:

June 30 , 2020

Nonperforming

1 unchanged sentence

Nonperforming

The Company, through its subsidiaries, originates residential, consumer, and commercial loans to customers located primarily in the southeastern areas of Ohio as well as the western counties of

West Virginia.

Approximately 5.13% of total loans were unsecured at March 31, 2020, up from 5.00% at December 31, 2019.

The Company, through its subsidiaries, originates residential, consumer, and commercial loans to customers located primarily in the southeastern areas of Ohio as well as the western counties of West Virginia.

Approximately 4.34 % of total loans were unsecured at June 30, 2020, down from 5.00 % at December 31, 2019.

NOTE 5 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.

These financial instruments include commitments

to extend credit, standby letters of credit and financial guarantees.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit,

and financial guarantees written, is represented by the contractual amount of those instruments.

These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, and financial guarantees written, is represented by the contractual amount of those instruments.

The contract amounts of these instruments are not included in the consolidated financial statements.

At March 31, 2020, the contract amounts of these

instruments totaled approximately $78,563, compared to $75,178 at December 31, 2019.

At June 30, 2020, the contract amounts of these instruments totaled approximately $ 84,507 , compared to $ 75,178 at December 31, 2019.

The Bank uses the same credit policies in making commitments and conditional obligations as it does for instruments recorded on the balance sheet.

Since many of

these instruments are expected to expire without being drawn upon, the total contract amounts do not necessarily represent future cash requirements.

Since many of these instruments are expected to expire without being drawn upon, the total contract amounts do not necessarily represent future cash requirements.

NOTE 6 - OTHER BORROWED FUNDS

Other borrowed funds at March 31, 2020 and December 31, 2019 are comprised of advances from the Federal Home Loan Bank (“FHLB”) of Cincinnati and promissory notes.

Other borrowed funds at June 30, 2020 and December 31, 2019 are comprised of advances from the Federal Home Loan Bank (“FHLB”) of Cincinnati and promissory notes.

FHLB Borrowings

Promissory Notes

March 31, 2020

June 30, 2020

December 31, 2019

Pursuant to collateral agreements with the FHLB, advances were secured by $299,428 in qualifying mortgage loans, $65,741 in commercial loans and $5,365 in FHLB stock at March 31,

Pursuant to collateral agreements with the FHLB, advances were secured by $ 306,417 in qualifying mortgage loans, $ 79,976 in commercial loans and $ 5,365 in FHLB stock at June 30, 2020.

Fixed-rate FHLB advances of $ 26,446 mature through 2042 and have interest rates ranging from 1.53 % to 3.31 % and a year-to-date weighted average cost of 2.40 %.

There were no variable-rate FHLB borrowings at March 31, 2020.

At March 31, 2020, the Company had a cash management line of credit enabling it to borrow up to $80,000 from the FHLB.

There were no variable-rate FHLB borrowings at June 30, 2020.

At June 30, 2020, the Company had a cash management line of credit enabling it to borrow up to $ 80,000 from the FHLB.

All cash management advances have an original maturity of 90 days.

The line of credit must be

renewed on an annual basis.

There was $80,000 available on this line of credit at March 31, 2020.

NOTE 6 - OTHER BORROWED FUNDS (Continued)

Based on the Company's current FHLB stock ownership, total assets and pledgeable loans, the Company had the ability to obtain borrowings from the FHLB up to a maximum of $202,356 at March 31, 2020.

Of this maximum

borrowing capacity, the Company had $110,295 available to use as additional borrowings, of which $80,000 could be used for short-term, cash management advances, as mentioned above.

Promissory notes, issued primarily by Ohio Valley, are due at various dates through a final maturity date of May 17, 2021, and have fixed rates ranging from 2.00% to 4.09% and a year-to-date weighted average cost of

2.56% at March 31, 2020, as compared to 2.73% at December 31, 2019.

There were eight promissory notes payable by Ohio Valley to related parties totaling $3,558 at March 31, 2020, and December 31, 2019.

Promissory notes payable to other banks

totaled $256 at March 31, 2020, as compared to $405 at December 31, 2019.

Letters of credit issued on the Bank's behalf by the FHLB to collateralize certain public unit deposits as required by law totaled $63,687 at March 31, 2020 and $56,500 at December 31, 2019.

Scheduled principal payments as of March 31, 2020:

The line of credit must be renewed on an annual basis.

There was $ 80,000 available on this line of credit at June 30, 2020.

Based on the Company's current FHLB stock ownership, total assets and pledgeable loans, the Company had the ability to obtain borrowings from the FHLB up to a maximum of $ 198,131 at June 30, 2020.

Of this maximum borrowing capacity, the Company had $ 109,288 available to use as additional borrowings, of which $ 80,000 could be used for short-term, cash management advances, as mentioned above.

Promissory notes, issued primarily by Ohio Valley, are due at various dates through a final maturity date of May 18, 2021 , and have fixed rates ranging from 2.00 % to 4.09 % and a year-to-date weighted average cost of 2.40 % at June 30, 2020, as compared to 2.73 % at December 31, 2019.

There were seven promissory notes payable by Ohio Valley to related parties totaling $ 3,558 at June 30, 2020, and December 31, 2019.

Promissory notes payable to other banks totaled $ 106 at June 30, 2020, as compared to $ 405 at December 31, 2019.

Letters of credit issued on the Bank's behalf by the FHLB to collateralize certain public unit deposits as required by law totaled $ 62,397 at June 30, 2020 and $ 56,500 at December 31, 2019.

Scheduled principal payments as of June 30, 2020:

NOTE 7 – SEGMENT INFORMATION

The reportable segments are determined by the products and services offered, primarily distinguished between banking and consumer finance.

They are also distinguished by the level of information

provided to the chief operating decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar.

investments, and deposits provide the majority of the net revenues from the banking operation, while loans provide the majority of the net revenues for the consumer finance segment.

They are also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar.

Loans, investments, and deposits provide the majority of the net revenues from the banking operation, while loans provide the majority of the net revenues for the consumer finance segment.

All Company segments are domestic.

Total revenues from the banking segment, which accounted for the majority of the Company's total revenues, totaled 90.8% and 90.6% of total

consolidated revenues for the quarters end March 31, 2020 and 2019, respectively.

Total revenues from the banking segment, which accounted for the majority of the Company's total revenues, totaled 93.2 % and 93.1 % of total consolidated revenues for the quarters end June 30, 2020 and 2019, respectively.

The accounting policies used for the Company's reportable segments are the same as those described in Note 1 - Summary of Significant Accounting Policies.

Income taxes are allocated based on income

before tax expense.

Income taxes are allocated based on income before tax expense.

Information for the Company’s reportable segments is as follows:

Three Months Ended March 31, 2020

Total Company

Three Months Ended June 30, 2020

Net interest income

2 unchanged sentences

Noninterest expense

NOTE 7 – SEGMENT INFORMATION (Continued)

Three Months Ended March 31, 2019

Total Company

Three Months Ended June 30, 2019

Net interest income

2 unchanged sentences

Noninterest expense

Six Months Ended June 30, 2020

Net interest income

Provision expense

Noninterest income

Noninterest expense

Six Months Ended June 30, 2019

Net interest income

Provision expense

Noninterest income

Noninterest expense

NOTE 8 – LEASES

Substantially all of the Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities represent leases for branch buildings and office space to conduct business.

Leases with an initial term of

12 months or less are not recorded on the consolidated balance sheet.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.

The lease expense for these leases are recorded on a straight-line basis over the lease term.

Leases with initial terms in excess of 12 months are recorded as either operating or

financing leases on the consolidated balance sheet.

Leases with initial terms in excess of 12 months are recorded as either operating or financing leases on the consolidated balance sheet.

The Company has no finance lease arrangements.

Operating leases have remaining lease terms ranging from 1 month to 17.3 years, some of which include options to extend the leases for up to 15 years.

Operating leases have remaining lease terms ranging from 15 months to 17 years, some of which include options to extend the leases for up to 15 years.

Operating lease ROU assets and operating lease liabilities are valued based on the present value of future minimum lease payments, discounted with an incremental borrowing rate for the same term as the underlying lease.

Company has one lease arrangement that contains variable lease payments that are adjusted periodically for an index.

Upon adoption of the new lease guidance on January 1, 2019, an initial ROU asset of $1,280 was recognized as a non-cash

asset addition to the consolidated balance sheet.

The Company has one lease arrangement that contains variable lease payments that are adjusted periodically for an index.

Upon adoption of the new lease guidance on January 1, 2019, an initial ROU asset of $ 1,280 was recognized as a non-cash asset addition to the consolidated balance sheet.

Balance sheet information related to leases was as follows:

March 31, 2020

June 30, 2020

December 31, 2019

3 unchanged sentences

The components of lease cost were as follows:

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Operating lease cost

Short-term lease expense

Future undiscounted lease payments for operating leases with initial terms of one year or more as of March 31, 2020 are as follows:

Future undiscounted lease payments for operating leases with initial terms of one year or more as of June 30, 2020 are as follows:

Operating Leases

4 unchanged sentences

Other information was as follows:

March 31, 2020

June 30, 2020

December 31, 2019

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements