What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-03-24 compared with 2020-03-16 · 178 added, 218 removed, 472 unchanged (46% of the section changed)

17 unchanged sentences

Company’s total revenues, totaled 94.3%, 94.2% and 92.9% of total consolidated revenues for the years ended December 31, 2020, 2019 and 2018, respectively.

Interested readers can access Ohio Valley’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to

those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), through Ohio Valley’s Internet website at www.ovbc.com (this uniform resource locator, or URL, is an inactive textual reference only and is not intended to incorporate the information contained on Ohio Valley’s website into this Annual Report on Form 10-K).

reports can be accessed free of charge through a link to The NASDAQ Stock Market, LLC’s website from Ohio Valley’s website as soon as reasonably practicable after Ohio Valley electronically files such materials with, or furnishes them to, the

Securities and Exchange Commission (“SEC”).

Interested readers can access Ohio Valley’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant

to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), through Ohio Valley’s Internet website at www.ovbc.com (this uniform resource locator, or URL, is an inactive textual reference only and is not

intended to incorporate the information contained on Ohio Valley’s website into this Annual Report on Form 10-K).

These reports can be accessed free of charge through a link to The NASDAQ Stock Market, LLC’s website from Ohio Valley’s website as

soon as reasonably practicable after Ohio Valley electronically files such materials with, or furnishes them to, the Securities and Exchange Commission (“SEC”).

Business of Ohio Valley

As a financial holding company registered under the BHC Act, Ohio Valley’s primary business is community banking.

As of December 31, 2019, Ohio Valley’s

consolidated assets approximated to $1,013,272,000, and total shareholders’ equity approximated to $128,179,000.

Ohio Valley is also permitted to engage in certain non-banking activities, such as securities underwriting and dealing activities, insurance agency and

underwriting activities and merchant banking/equity investment activities.

Ohio Valley presently has an insurance agency, Ohio Valley Financial Services, which is used to facilitate the receipt of commissions on insurance sold by the Bank and Loan

Ohio Valley also has a captive insurance company, OVBC Captive, that is engaged in the business of providing commercial property and various liability insurance to the Company and related entities.

Management will consider opportunities to

engage in additional nonbanking activities as they arise.

As of December 31, 2020, Ohio Valley’s consolidated assets approximated to

$1,050,608,000, and total shareholders’ equity approximated to $136,324,000.

Ohio Valley is also permitted to engage in certain non-banking activities, such as securities underwriting and dealing activities, insurance agency and underwriting activities and merchant

banking/equity investment activities.

Ohio Valley presently has an insurance agency, Ohio Valley Financial Services, which is used to facilitate the receipt of commissions on insurance sold by the Bank and Loan Central.

Ohio Valley also has a

captive insurance company, OVBC Captive, that is engaged in the business of providing commercial property and various liability insurance to the Company and related entities.

Management will consider opportunities to engage in additional nonbanking

activities as they arise.

Information about the Company’s business segments is set forth in Note R to the Company’s Financial Statements located in Ohio Valley’s 2020 Annual Report to Shareholders.

1 unchanged sentence

A substantial portion of Ohio Valley’s revenue is derived from cash dividends paid by the Bank.

The Bank presently has sixteen offices located in Ohio and West Virginia, all but two offering

automatic teller machines (“ATMs”).

The Bank presently has fifteen offices located in Ohio and West Virginia, all but one offer automatic

teller machines (“ATMs”).

Eleven of these offices also offer drive-up services.

16 unchanged sentences

Trust services are available to all customers of the Bank.

The Bank also offers Internet banking to its customers, which allows customers to perform various transactions using a computer from any location as long as they have access to the Internet and a

secure browser.

Specifically, customers can check personal account balances, receive information about transactions within their accounts, make transfers between accounts, stop payment on a check, and reorder checks.

Customers may also pay bills

online and can make payments to virtually any business or individual.

Furthermore, the Bank offers other financial management online services, such as cash management and news updates related to repossession auctions, current rates and general bank

The Bank also offers Internet banking to its customers, allowing customers to check personal account balances, receive information about transactions within their accounts, make transfers between

accounts, stop payment on a check, and reorder checks all from their own computer.

Customers may also pay bills online and can make payments to virtually any business or individual.

Furthermore, the Bank offers other financial management online

services, such as cash management and news updates related to repossession auctions, current rates and general bank news.

In January 2020, the Bank began offering Tax Refund Advance Loans (“TALs”) to Loan Central tax customers.

1 unchanged sentence

Previously, Loan Central offered and originated tax refund anticipation loans that represented a large composition of its annual earnings.

However, new Ohio laws that became effective in April 2019 placed numerous restrictions on short-term

and small loans extended by certain non-bank lenders in Ohio.

As a result, Loan Central is no longer able to directly offer the service to its tax preparation customers, but it is able to do so through the Bank.

After Loan Central prepares a

customer’s tax return, the customer is offered the opportunity to have immediate access to a portion of the anticipated tax refund by entering into a TAL with the Bank.

As part of the process, the tax customer completes a loan application and

authorizes the expected tax refund to be deposited with the Bank once it is issued by the IRS.

Once the Bank receives the tax refund, the refund is used to repay the TAL and Loan Central’s tax preparation fees, then the remainder of the refund is

remitted to Loan Central’s tax customer.

However, new Ohio laws that became effective in April 2019 placed numerous restrictions on

short-term and small loans extended by certain non-bank lenders in Ohio.

As a result, Loan Central no longer offers the service to its tax preparation customers, but it is able to do so through the Bank.

After Loan Central prepares a customer’s tax

return, the customer is offered the opportunity to have immediate access to a portion of the anticipated tax refund by entering into a TAL with the Bank.

As part of the process, the tax customer completes a loan application and authorizes the

expected tax refund to be deposited with the Bank once it is issued by the IRS.

Once the Bank receives the tax refund, the refund is used to repay the TAL and Loan Central’s tax preparation fees, then the remainder of the refund is remitted to Loan

Central’s tax customer.

Business of Loan Central

11 unchanged sentences

Variable Interest Entities

Ohio Valley owns one special purpose entity, Ohio Valley Statutory Trust III, which has issued $8,500,000 in

trust preferred securities.

Ohio Valley has issued a like amount of subordinated debentures to the Trust in exchange for the proceeds of the issuance of the trust preferred securities.

Ohio Valley used the proceeds to provide additional capital

to the Bank to support growth.

Further detail on Ohio Valley Statutory Trust III is located in Ohio Valley’s 2019 Annual Report to Shareholders under “Note J – Subordinated Debentures and Trust Preferred Securities,” in the notes to the

Company’s consolidated financial statements for the fiscal year ended December 31, 2019.

Ohio Valley owns one special purpose entity, Ohio Valley Statutory Trust III, which has issued $8,500,000 in trust preferred securities.

Ohio Valley has issued a like amount of subordinated

debentures to the Trust in exchange for the proceeds of the issuance of the trust preferred securities.

Ohio Valley used the proceeds to provide additional capital to the Bank to support growth.

Further detail on Ohio Valley Statutory Trust III is

located in Ohio Valley’s 2020 Annual Report to Shareholders under “Note J – Subordinated Debentures and Trust Preferred Securities,” in the notes to the Company’s consolidated financial statements for the fiscal year ended December 31, 2020.

Financial Information

2 unchanged sentences

Lending Activities

The Company’s loan portfolio decreased $4,278,000 to finish at $772,774,000 in 2019.

The decrease in total loans was primarily due to principal repayments and payoffs occurring within the Company’s

commercial and consumer loan portfolios.

The Company’s loan portfolio increased $75,890,000 to finish at $848,664,000 in 2020.

The increase in total loans was primarily due to originations of new loans occurring within the Company’s

commercial loan portfolio.

The loan portfolio is comprised of commercial (commercial real estate and commercial and industrial), residential real estate and consumer loans, including credit card and home equity loans.

commercial loans decreased $7,444,000, or 2.3%, and consumer loans decreased $4,278,000, or 0.6%, while residential real estate loans increased $6,174,000, or 2.0%, as compared to 2018.

Consolidated interest and fee revenue from loans accounted for

76.94%, 76.31%, and 76.50% of total consolidated revenues in 2019, 2018 and 2017, respectively.

During 2020, commercial loans

increased $88,982,000, or 27.6%, while consumer loans decreased $8,317,000, or 5.9%, and residential real estate loans decreased $4,775,000, or 1.5%, as compared to 2019.

Commercial loan growth was impacted by the originations of Paycheck Protection

Program loans totaling $35,141,000 during 2020, of which, $27,933,000 were still outstanding at December 31, 2020.

Consolidated interest and fee revenue from loans accounted for 74.99%, 76.94%, and 76.31% of total consolidated revenues in 2020, 2019

and 2018, respectively.

The Company’s market area for lending is primarily located in southeastern Ohio and portions of western West Virginia.

The Company believes that there is no significant concentration of loans to borrowers engaged in the same or similar industries and does not have any loans to foreign entities.

The Company believes that there is no significant concentration

of loans to borrowers engaged in the same or similar industries and does not have any loans to foreign entities.

Residential Real Estate Loans

28 unchanged sentences

require a comprehensive credit analysis and independent evaluation of virtually all larger balance commercial loans prior to approval.

The Bank’s loan committee will review and approve all new commercial loan originations that exceed the originating

loan officer’s lending limits according to the following thresholds:

The Bank’s loan committee will review and approve all new commercial loan originations that exceed the loan officer

group’s highest lending limit according to the following thresholds:

up to $750,000 unsecured, up to $3,000,000 secured, and up to $3,000,000 aggregate.

56 unchanged sentences

Electronic Refund Check / Electronic Refund Deposit Activities

The Company began its participation in a tax refund service in 2006, in which it served as a facilitator for the clearing of tax refunds for a single tax refund product provider.

between the Bank and the original provider required the Bank to process electronic refund checks ("ERCs") and electronic refund deposits ("ERDs") presented for payment on behalf of taxpayers containing taxpayer refunds.

The Bank, in turn, would

receive a fee paid by the provider for each transaction that was processed by the Bank.

The Company began its participation in a tax refund service in 2006 by serving as a facilitator for the clearing of tax refunds for a single tax refund product provider.

An agreement between the

Bank and the original provider required the Bank to process electronic refund checks ("ERCs") and electronic refund deposits ("ERDs") presented for payment on behalf of taxpayers containing taxpayer refunds.

The Bank, in turn, would receive a fee

paid by the provider for each transaction that was processed by the Bank.

In 2015, the agreement between the Bank and the original provider, which had a term ending at December 31, 2019, was assumed by MetaBank.

MetaBank ceased

utilizing the services of the Bank at the end of 2018.

Due to the absence of tax processing activity in 2019, the Bank experienced a significant decline in ERC/ERD fee income.

As a result, ERC/ ERD fees decreased $1,574,000 during the year ended

2019, as compared to the year ended 2018.

On March 10, 2020, the Bank announced that it has entered into a new agreement with a third-party to process future electronic refund checks and deposits presented for payment on behalf of taxpayers through

accounts containing taxpayer refunds.

The new agreement provides that the Bank will process refunds for five tax seasons, beginning with the 2021 tax season and extending through the 2025 tax season.

MetaBank ceased utilizing the

services of the Bank at the end of 2018.

Due to the absence of tax processing activity, the Bank experienced a significant decline in ERC/ERD fee income in 2019 and 2020.

On March 10, 2020, the Bank announced that it had entered into a new agreement

with a third-party to process future electronic refund checks and deposits presented for payment on behalf of taxpayers through accounts containing taxpayer refunds.

The new agreement provides that the Bank will process refunds for five tax seasons,

beginning with the 2021 tax season and extending through the 2025 tax season.

Competition among providers of financial products and services continues to increase, with consumers having the opportunity to select from a growing variety of traditional and nontraditional

24 unchanged sentences

This summary is qualified in its entirety by reference to such statutes and

The regulation of financial holding companies and their subsidiaries is intended primarily for the protection of consumers, depositors, borrowers, the Federal Deposit Insurance Fund (“DIF”) and the banking system as a whole, and not for

the protection of shareholders.

The regulation of financial holding companies and their subsidiaries is intended primarily for the protection of consumers, depositors, borrowers, the Deposit Insurance Fund (“DIF”) and the banking system as a whole, and not for the

protection of shareholders.

Applicable laws and regulations restrict permissible activities and investments and require actions to protect loan, deposit, brokerage, fiduciary and other customers, as well as the DIF.

17 unchanged sentences

Holding Company Activities

Ohio Valley became a financial holding company in 2000, permitting it to engage in activities beyond those permitted for traditional bank holding companies.

In order to become a financial holding

company, all of a bank holding company’s subsidiary depository institutions must be well capitalized and well managed under federal banking regulations, and such depository institutions must have received a rating of at least satisfactory under the

Community Reinvestment Act of 1977, as amended (the “CRA”).

In addition, the holding company must be well managed and, unless it is a small bank holding company under the Federal Reserve Board’s Small Bank Holding Company and Small Savings and Loan

Holding Company Policy, must be well capitalized.

Ohio Valley is a financial holding company, which permits it to engage in activities beyond those permitted for traditional bank holding companies.

A qualifying bank holding company may elect to

become a financial holding company and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature and not otherwise permissible for a bank holding company, if:

(i) the holding company

is "well managed" and "well capitalized" and (ii) each of its subsidiary banks (a) is well capitalized under the Federal Deposit Insurance Corporation Act of 1991 (“FDIA”) prompt corrective action provisions, (b) is well managed, and (c) has at least

a "satisfactory" rating under the Community Reinvestment Act of 1977, as amended (the “CRA”).

No regulatory approval is required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities

that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve Board.

Financial holding companies may engage in a wide variety of financial activities, including any activity that the Federal Reserve Board and the Treasury Department consider financial in nature or

1 unchanged sentence

These activities include securities underwriting,

and dealing activities, insurance and underwriting activities and merchant banking/equity investment activities.

Because it has authority to engage in a broad array of financial activities, a financial holding company may have several affiliates

that are functionally regulated by financial regulators other than the Federal Reserve Board, such as the SEC and state insurance regulators.

dealing, and market making activities, sponsoring mutual funds and investment companies, insurance and underwriting activities and merchant banking activities.

Because it has authority to engage in a broad array of financial activities, a financial

holding company may have several affiliates that are functionally regulated by financial regulators other than the Federal Reserve Board, such as the SEC and state insurance regulators.

If a financial holding company or a subsidiary bank fails to meet the requirements for the holding company to remain a financial holding company, the financial holding company must enter into a

2 unchanged sentences

the Federal Reserve Board may impose additional limitations or conditions on the conduct or activities of the financial holding company or any affiliate that the Federal Reserve Board finds to be appropriate or consistent with federal banking laws.

If the deficiencies are not corrected within 180 days, the financial holding company may be required to divest ownership or control of all banks.

If restrictions are imposed on the activities of the holding company, such restrictions may not be made

publicly available pursuant to confidentiality regulations of the banking regulators.

If the deficiencies are not corrected within 180 days, the financial holding company may be required to divest ownership or control of all banking subsidiaries.

If restrictions are imposed on the activities of the holding company, such restrictions

may not be made publicly available pursuant to confidentiality regulations of the banking regulators.

Loan Central is supervised and regulated by the State of Ohio Department of Financial Institutions, Division of Consumer Finance (“ODFI”).

4 unchanged sentences

OVBC Captive, require education and licensing of individual agents and agencies, require reports and impose business conduct rules.

The Coronavirus Aid, Relief, and Economic Security Act of 2020

In response to the novel COVID-19 pandemic (“COVID-19”), the Coronavirus Aid, Relief, and Economic Security Act of 2020, as amended (the “CARES Act”), was signed into law on March 27, 2020, to

provide national emergency economic relief measures.

Many of the CARES Act’s programs are dependent upon the direct involvement of U.S.

financial institutions, such as Ohio Valley and the Bank, and have been implemented through rules and guidance

adopted by federal departments and agencies, including the U.S.

Department of Treasury, the Federal Reserve Board and other federal banking agencies, including those with direct supervisory jurisdiction over Ohio Valley and the Bank.

Furthermore, as

COVID-19 evolves, federal regulatory authorities continue to issue additional guidance with respect to the implementation, lifecycle, and eligibility requirements for the various CARES Act programs as well as industry-specific recovery procedures for

In addition, it is possible that Congress will enact supplementary COVID-19 response legislation, including amendments to the CARES Act or new bills comparable in scope to the CARES Act.

For example, on December 27, 2020, the Consolidated

Appropriations Act (the “CAA”) was signed into law, which, among other things, allowed certain banks to temporarily postpone implementation of the current expected credit loss (“CECL”) model (accounting standard), which is described below.

Valley is continuing to assess the impact of the CARES Act and other statues, regulations and supervisory guidance related to COVID-19.

The CARES Act amended the loan program of the Small Business Administration (the “SBA”), in which the Bank participates, to create a guaranteed, unsecured loan program, the Paycheck Protection

Program (the “PPP”), to fund operational costs of eligible businesses, organizations and self-employed persons during COVID-19.

In June 2020, the Paycheck Protection Program Flexibility Act was enacted, which, among other things, gave borrowers

additional time and flexibility to use PPP loan proceeds.

Shortly thereafter, and due to the evolving impact of COVID-19, additional legislation was enacted authorizing the SBA to resume accepting PPP applications on July 6, 2020, and extending the

PPP application deadline to August 8, 2020.

As a participating lender in the PPP, the Bank continues to monitor legislative, regulatory, and supervisory developments related thereto.

On September 29, 2020, the federal bank regulatory agencies issued

a final rule that neutralizes the regulatory capital and liquidity coverage ratio effects of participating in certain COVID-19 liquidity facilities due to the fact there is no credit or market risk in association with exposures pledged to such

As a result, the final rule supports the flow of credit to households and businesses affected by COVID-19.

The CARES Act encouraged the Federal Reserve Board, in coordination with the Secretary of the Treasury, to establish or implement various programs to help mitigate the adverse effects of COVID-19 on

midsize businesses, nonprofits, and municipalities.

In April 2020, the Federal Reserve Board established the Main Street Lending Program (“MSLP”) to implement certain of these recommendations.

The MSLP supported lending to small and medium-sized

businesses that were in sound financial condition before the onset of COVID-19.

On November 19, 2020, Treasury Secretary Steven Mnuchin indicated that he would not reauthorize extending the MSLP past December 31, 2020.

However, the Federal Reserve

Board extended the program to January 8, 2021, in order to process loans that were submitted on or before December 14, 2020.

The program ended on January 8, 2021.

Economic Growth, Regulatory Relief and Consumer Protection Act

On May 25, 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act (the “Regulatory Relief Act”) was signed into law.

The Regulatory Relief Act repealed or modified certain

provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended (“Dodd-Frank Act”), and eased regulations on all but the largest banks (those with consolidated assets in excess of $250 billion).

Bank holding companies

with consolidated assets of less than $100 billion, including Ohio Valley, are no longer subject to enhanced prudential standards.

The Regulatory Relief Act also relieves bank holding companies and banks with consolidated assets of less than $100

billion, including Ohio Valley, from certain record-keeping, reporting and disclosure requirements.

Certain other regulatory requirements applied only to banks with assets in excess of $50 billion and so did not apply to the Company even before the

enactment of the Regulatory Relief Act.

In December 2018, the Office of the Comptroller of the Currency (“OCC”), the Federal Reserve Board, and the FDIC issued a final rule to address regulatory treatment of credit loss allowances under

the current expected credit loss (“CECL”) model (accounting standard).

The rule revised the federal banking agencies’ regulatory capital rules to identify which credit loss allowances under the CECL model are eligible for inclusion in regulatory

capital and to provide banking organizations the option to phase in over three years the day one adverse effects on regulatory capital that may result from the adoption of the CECL model.

Transactions with Affiliates, Directors, Executive Officers and Shareholders

Section 23A and 23B of the Federal Reserve Act, as amended, and Regulation W restrict transactions by banks and their subsidiaries with their affiliates.

affiliate of a bank is any company or entity which controls, is controlled by or is under common control with the bank.

Generally, Sections 23A and 23B and Regulation W:

limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10% of that bank’s capital stock

and surplus (i.e., tangible capital);

limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with all affiliates to 20% of that bank’s capital stock and surplus;

require that all such transactions be on terms substantially the same, or at least as favorable to the bank subsidiary, as those provided to a non-affiliate.

The term “covered transaction” includes the making of loans to the affiliate, the purchase of assets from the affiliate, the issuance of a guarantee on behalf

of the affiliate, the purchase of securities issued by the affiliate, and other similar types of transactions.

A bank’s authority to extend credit to executive officers, directors and greater than 10% shareholders, as well as entities such persons control, is subject

to Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O promulgated thereunder by the Federal Reserve Board.

Among other things, these loans must be made on terms substantially the same as those offered to unaffiliated individuals

or be made as part of a benefit or compensation program and on terms widely available to employees, and must not involve a greater than normal risk of repayment.

In addition, the amount of loans a bank may make to these persons is based, in part,

on the bank’s capital position, and specified approval procedures must be followed in making loans which exceed specified amounts.

On May 25, 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act (the “Regulatory Relief Act”) was enacted, which repealed or modified certain provisions of the Dodd-Frank Wall

Street Reform and Consumer Protection Act of 2010, as amended (“Dodd-Frank Act”), and eased regulations on all but the largest banks (those with consolidated assets in excess of $250 billion).

Bank holding companies with consolidated assets of less

than $100 billion, including Ohio Valley, are no longer subject to enhanced prudential standards.

The Regulatory Relief Act also relieves bank holding companies and banks with consolidated assets of less than $100 billion, including Ohio Valley, from

certain record-keeping, reporting and disclosure requirements.

Certain other regulatory requirements applied only to banks with assets in excess of $50 billion and so did not apply to the Company even before the enactment of the Regulatory Relief

Regulation of Ohio State Chartered Banks

1 unchanged sentence

is also subject to the regulations of the Consumer Financial Protection Bureau (the “CFPB”), which has broad authority to adopt and enforce consumer protection regulations.

The Bank’s deposits are insured up to applicable limits by the FDIC, and the Bank is subject to the applicable provisions of the Federal Deposit Insurance Act, as amended (“FDIA”) and certain

regulations of the FDIC.

The Bank’s deposits are insured up to applicable limits by the FDIC, and the Bank is subject to the applicable provisions of the FDIA and certain regulations of the FDIC.

Various requirements and restrictions under the laws of the United States, the State of Ohio and the State of West Virginia affect the operations of the Bank, including requirements to maintain

1 unchanged sentence

limitations on activities based on capital and surplus, limitations on payment of dividends, limitations on branching and increasingly extensive consumer protection laws and regulations.

In 2017, the State of Ohio completed a substantial re-writing of Ohio’s banking laws that became effective on January 1, 2018.

One of the primary purposes of the revision of the

law was to adopt one universal bank charter for depository institutions chartered by the state, rather than having separate types of state depository institution charters with different powers and limitations for banks, savings banks and savings and

loan associations.

The result is that all Ohio-chartered depository institutions are now considered to have full commercial bank powers, unless an institution elects to continue to be governed by federal restrictions applicable to federal savings

and loan associations and federal savings banks.

While the most substantial changes in the law affect institutions chartered by Ohio as savings banks or savings and loan associations prior to the effectiveness of the new law, some changes also apply

to institutions, like the Bank, that were chartered as commercial banks prior to the change in the law.

The changes for all Ohio-chartered banks include provisions allowing Ohio-chartered banks to exercise the same powers, perform all acts, and

provide all services that are permitted for federally chartered depository institutions, with the exception of laws and regulations dealing with interest rates, thereby enhancing opportunities for Ohio-chartered banks to compete with other financial

institutions.

Other provisions clarify previous laws addressing, or allow more flexibility with respect to, corporate governance matters, mergers and acquisitions and additional reliance on Ohio corporate law generally.

Consumer Protection Laws and Regulations

1 unchanged sentence

implementing regulations.

Potential penalties under these laws include, but are not limited to, fines.

The Dodd-Frank Act established the CFPB, which has extensive regulatory and enforcement powers over consumer financial products and services.

CFPB has adopted numerous rules with respect to consumer protection laws and has commenced related enforcement actions.

The CFPB has adopted numerous rules with respect to consumer protection laws and

has commenced related enforcement actions.

The following are just a few of the consumer protection laws applicable to the Bank:

19 unchanged sentences

deceptive acts or practices by banks that may not necessarily fall within the scope of specific banking or consumer finance law.

In October 2017, the CFPB issued a final rule (the “Payday Rule”) to establish regulations for payday loans, vehicle title loans, and certain high-cost installment loans.

The Payday Rule addressed

two discrete topics.

First, it contained a set of provisions with respect to the underwriting of certain covered loans and related reporting and recordkeeping requirements (the “Mandatory Underwriting Provisions”).

Second, it contained a set of

provisions establishing certain requirements and limitations with respect to attempts to withdraw payments from consumers’ checking or other accounts and related recordkeeping requirements (the “Payment Provisions”).

The Payday Rule became effective

on January 16, 2018.

However, most provisions had a compliance date of August 19, 2019.

On February 6, 2019, the CFPB proposed delaying the August 19, 2019, compliance date for the Mandatory Underwriting Provisions to November 19, 2020.

The CFPB proposed in a separate notice to rescind

the Mandatory Underwriting Provisions.

On June 6, 2019, the CFPB issued a final rule delaying the compliance date for most Mandatory Underwriting Provisions until November 19, 2020.

However, the final rule did not delay the compliance

date for the Payment Provisions.

The Company does not currently expect the Payday Rule to have a material effect on its financial condition or results of operations on a consolidated basis.

Ohio law requires that lenders in Ohio, with exemptions for banks, savings associations, credit unions and certain other financial institutions, obtain licenses and comply with numerous restrictions

on various types of consumer lending.

The regulations address maximum permissible interest rates, duration, amounts, permissible collateral, underwriting, renewals, collection and various other aspects of such loans.

On July 30, 2018, Ohio adopted

a law (“HB 123”) placing much greater restrictions on such loans originated after April 26, 2019.

While the Bank is exempt from such laws, Ohio Valley’s consumer finance subsidiary, Loan Central, is not.

As discussed above, HB 123 resulted in the

Bank beginning to offer TALs to Ohio Valley’s customers so that those customers needs could continue to be met.

On July 22, 2020, the CFPB issued a final small dollar loan rule related to payday, vehicle title and certain high cost installment loans (the “Small Dollar Rule”) that modified

a former rule that was issued in November 2013.

Specifically, the Small Dollar Rule revokes provisions contained in the 2013 rule that:

(i) provide that it is an unfair and abusive practice for a lender to make a covered short-term or longer-term

balloon-payment loan, including payday and vehicle title loans, without reasonably determining that consumers have the ability to repay those loans according to their terms;

(ii) prescribe mandatory underwriting requirements for making the

ability-to-repay determination;

(iii) exempt certain loans from mandatory underwriting requirements;

and (iv) establish related definitions, reporting, and recordkeeping requirements.

Further, the federal bank regulatory agencies issued interagency guidance on May 20, 2020, to encourage banks, savings associations, and credit unions to offer responsible

small-dollar loans to customers for consumer and small business purposes.

The Small Dollar Rule did not have a material effect on Ohio Valley’s financial condition or results of operations on a consolidated basis in 2020.

Capital Requirements

2 unchanged sentences

adopted risk-based capital guidelines for financial holding companies as well as state banks that are members of a Federal Reserve Bank.

The OCC and the FDIC have adopted risk-based capital guidelines for national banks and state non-member banks,

respectively.

The guidelines provide a systematic analytical framework which makes regulatory capital requirements sensitive to differences in risk profiles among banking organizations, takes off-balance sheet exposures expressly into account in

evaluating capital adequacy and incentivizes holding liquid, low-risk assets.

Capital levels as measured by these standards are also used to categorize financial institutions for purposes of certain prompt corrective action regulatory provisions.

The risk-based capital guidelines adopted by the federal banking agencies are based on the “International Convergence of Capital Measurement and Capital Standard,” published by the Basel Committee on

Banking Supervision.

New capital rules applicable to smaller banking organizations (the “Basel III Capital Rules”), which also implement certain of the provisions of the Dodd-Frank Act, became effective commencing on January 1, 2015.

with the new minimum capital requirements was required effective January 1, 2015, whereas a new capital conservation buffer and deductions from common equity capital phased in from January 1, 2016, through January 1, 2019, and most deductions from

common equity tier 1 capital phased in from January 1, 2015, through January 1, 2019.

The rules include (a) a minimum common equity tier 1 capital ratio of 4.5%, (b) a minimum tier 1 capital ratio of 6.0%, (c) a minimum total risk-based capital ratio of 8.0%, and (d) a minimum tier 1

leverage ratio of 4.0%.

The Office of the Comptroller of the Currency (“OCC”) and the FDIC have adopted risk-based capital guidelines

for national banks and state non-member banks, respectively.

The guidelines provide a systematic analytical framework which makes regulatory capital requirements sensitive to differences in risk profiles among banking organizations, takes

off-balance sheet exposures expressly into account in evaluating capital adequacy and incentivizes holding liquid, low-risk assets.

Capital levels as measured by these standards are also used to categorize financial institutions for purposes of

certain prompt corrective action regulatory provisions.

Capital rules applicable to smaller banking organizations (the “Basel III Capital Rules”), which also implement certain of the provisions of the Dodd-Frank Act, became effective commencing on January

Compliance with the new minimum capital requirements was required effective January 1, 2015, while a new capital conservation buffer and deductions from common equity capital phased in from January 1, 2016, through January 1, 2019, and most

deductions from common equity tier 1 capital phased in from January 1, 2015, through January 1, 2019.

The rules include (i) a minimum common equity tier 1 capital ratio of 4.5%, (ii) a minimum tier 1 capital ratio of 6.0%, (iii) a minimum total risk-based capital ratio of 8.0%, and (iv) a minimum

tier 1 leverage ratio of 4.0%.

Common equity for the common equity tier 1 capital ratio includes common stock (plus related surplus) and retained earnings, plus limited amounts of minority interests in the form of common stock,

14 unchanged sentences

ratio was less than 2.5% at the beginning of the quarter.

The capital conservation buffer phased in beginning January 1, 2016, at .625% of risk-weighted assets and was increased by that amount each year until fully implemented at 2.50% on January 1,

In December 2018, the federal banking agencies issued a final rule to address regulatory treatment of credit loss allowances under CECL.

The rule revised the federal banking agencies’ regulatory

capital rules to identify which credit loss allowances under the CECL model are eligible for inclusion in regulatory capital and to provide banking organizations the option to phase in over three years the day-one adverse effects on regulatory

capital that may result from the adoption of the CECL model.

Concurrent with the enactment of the CARES Act, federal banking agencies issued an interim final rule that delayed the estimated impact on regulatory capital resulting from the adoption of

The interim final rule provided banking organizations that implemented CECL prior to the end of 2020 the option to delay for two years the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior

incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of capital benefit provided during the initial two-year delay.

On August 26, 2020, the federal banking agencies issued a final rule that made

certain technical changes to the interim final rule, including expanding the pool of eligible institutions.

The changes in the final rule applied only to those banking organizations that elected the CECL transition relief provided for under the rule.

Federal banking regulators have established regulations governing prompt corrective action to resolve capital deficient banks.

61 unchanged sentences

increase in the statutory minimum DRR to 1.35% from the former statutory minimum of 1.15%.

Although the FDIC’s new rules reduced assessment rates on all banks, they imposed a surcharge on banks with assets of $10 billion or more to be paid until the

DRR reached 1.35%.

The DRR reached 1.35% at September 30, 2018.

Although the FDIC’s rules reduced assessment rates on all banks, they imposed a surcharge on banks with assets of $10 billion or more to be paid until the DRR

reached 1.35%.

The DRR reached 1.35% on September 30, 2018.

The rules further changed the method of determining risk-based assessment rates for established banks with less than $10 billion in assets to better ensure that banks taking on greater

risks pay more for deposit insurance than banks that take on less risk.

The rules also provide assessment credits to banks with assets of less than $10 billion for the portion of their assessments that contribute to the increase of the DRR to

The Bank’s calculated assessment credits totaled $252,900.

Such credits will be applied when the reserve ratio is at least 1.38%.

At June 30, 2019, the DRR reached 1.40%, exceeding the 1.38% threshold for the first time.

As a result, the

FDIC began to apply small bank assessment credits to quarterly assessment invoices, beginning with the second quarter assessment payable in September 2019.

In addition, the FDIC announced that such credits would continue to be applied as long as the

DRR is at least 1.35%, instead of 1.38%, as was originally announced.

In 2019, assessment credits totaling $137,600 were applied to the Bank’s quarterly assessments during the second half of 2019.

The rules also provide assessment credits to banks with assets of less than $10 billion for the portion of their assessments that contributed to the increase of the DRR to

On June 30, 2019, the DRR reached 1.40%, and the FDIC applied small bank assessment credits to quarterly assessment invoices, beginning with the second quarter assessment payable in September 2019.

In addition, the FDIC announced that such

credits would continue to be applied as long as the DRR is at least 1.35%, instead of 1.38%, as was originally announced.

Insurance of deposits may be terminated by the FDIC upon a finding that the insured institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue

12 unchanged sentences

disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a nonaffiliated party.

Monetary Policy and Economic Conditions

The business of commercial banks is affected not only by general economic conditions, but also by the policies of various governmental regulatory authorities, including the Federal Reserve Board.

The Federal Reserve Board regulates the money and credit conditions and interest rates in order to influence general economic conditions primarily through open market operations in United States Government securities, changes in the discount rate on

bank borrowings and changes in reserve requirements against bank deposits.

These policies and regulations significantly influence the amount of bank loans and deposits and the interest rates charged and paid thereon, and thus have an effect on

The Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorist Act of 2001, as amended (the “Patriot Act”), and related regulations require

2 unchanged sentences

The Company has established policies and procedures to comply with the requirements of the Patriot Act.

Executive and Incentive Compensation

In June 2010, the Federal Reserve Board, the OCC and the FDIC issued joint interagecy guidance on incentive compensation policies (the “Joint Guidance”) intended to ensure that the incentive

compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking.

This principles-based guidance, which covers all employees that have the ability to affect

materially the risk profile of an organization, either individually or as part of a group, is based upon the key principles that a banking organization’s incentive compensation arrangements should:

(i) provide incentives that do not encourage

risk-taking beyond the organization’s ability to effectively identify and manage risks;

(ii) be compatible with effective internal controls and risk management;

and (iii) be supported by strong corporate governance, including active and effective

oversight by the organization’s board of directors.

The Joint Guidance made incentive compensation part of the regulatory agencies’ examination process, with the findings of the supervisory intiatives included in reports of examination and

enforcement actions possible.

In 2011, federal bank regulatory agencies jointly issued proposed rules on incentive-based compensation arrangements under applicable provisions of the Dodd-Frank Act (the “First Proposed Joint

The First Proposed Joint Rules generally would have applied to financial institutions with $1 billion or more in assets that maintain incentive-based compensation arrangements for certain covered employees.

In May 2016, the federal bank regulatory agencies approved a second joint notice of proposed rules (“the Second Proposed Joint Rules”) designed to prohibit incentive-based compensation arrangements

that encourage inappropriate risks at financial institutions.

The Second Proposed Joint Rules would apply to covered financial institutions with total assets of $1 billion or more.

The requirements of the Second Proposed Joint Rules would differ

for each of three categories of financial institutions:

Level 1 consists of institutions with assets of $250 billion or more;

Level 2 consists of institutions with assets of at least $50 billion and less than $250 billion;

Level 3 consists of institutions with assets of at least $1 billion and less than $50 billion.

Some of the requirements would apply only to Level 1 and Level 2 institutions.

For all covered institutions, including Level 3 institutions, the Second Proposed Joint Rules would:

prohibit incentive-based compensation arrangements that are “excessive” or “could lead to material financial loss;”

require incentive based compensation that is consistent with a balance of risk and reward, effective management and control of risk, and effective governance;

require board oversight, recordkeeping and disclosure to the appropriate regulatory agency.

Level 1 and Level 2 institutions would have additional requirements, including deferrals of awards to certain covered persons;

potential downward adjustments, forfeitures or clawbacks;

and additional

risk-management and control standards, policies and procedures.

In addition, certain practices and types of incentive compensation would be prohibited.

Office of Foreign Assets Control Regulation

38 unchanged sentences

foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of Internet banking, mobile banking and other technology-based products and services by us and our customers.

As of December 31, 2019, Ohio Valley and its subsidiaries had approximately 284 full-time equivalent employees and officers.

Management considers its relationship with its employees and officers to

As of December 31, 2020, Ohio Valley and its subsidiaries had approximately 270 employees and officers and 264 full-time equivalent employees and officers.

Management considers its relationship with

its employees and officers to be good.

Other Information

14 unchanged sentences

reference as to the location of the required disclosures in Ohio Valley’s 2020 Annual Report to Shareholders, which are incorporated herein by reference.

D ISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY;

DISTRIBUTION OF

ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY;

INTEREST RATES AND INTEREST DIFFERENTIAL

& B.The average balance sheet information and the related analysis of net interest earnings for the years ended December 31, 2019, 2018 and 2017 are incorporated herein by

The average balance sheet information and the related analysis of net interest earnings for the years ended December 31, 2020, 2019 and 2018 are incorporated herein by

reference to the information appearing under the caption “Table I – Consolidated Average Balance Sheet & Analysis of Net Interest Income,” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” located in

Ohio Valley’s 2020 Annual Report to Shareholders.

Tables setting forth the effect of volume and rate changes on interest income and expense for the years ended December 31, 2019 and 2018 are incorporated herein by reference to the information appearing under the caption “Table II -

Rate Volume Analysis of Changes in Interest Income & Expense,” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” located in Ohio Valley’s 2019 Annual Report to Shareholders.

Tables setting forth the effect of volume and rate changes on interest income and expense for the years ended December 31, 2020 and 2019 are incorporated herein by reference to the information appearing under the caption “Table II - Rate

Volume Analysis of Changes in Interest Income & Expense,” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” located in Ohio Valley’s 2020 Annual Report to Shareholders.

INVESTMENT PORTFOLIO

10 unchanged sentences

Total securities held to maturity

Information required by this item is incorporated herein by reference to the information appearing under the caption “Table III - Securities,” within “Management’s Discussion and Analysis of Financial Condition and Results of

Operations” located in Ohio Valley’s 2019 Annual Report to Shareholders.

located in Ohio Valley’s 2020 Annual Report to Shareholders.

Excluding obligations of the United States Government and its agencies, no concentration of securities exists of any issuer that is greater than 10% of shareholders’ equity of Ohio Valley.

5 unchanged sentences

Commercial and industrial

Maturities and Sensitivities of Loans to Changes in Interest Rates - Information required by this item is incorporated herein by reference to the information appearing under the caption “Table VI - Maturity and Repricing Data of

Loans,” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” located in Ohio Valley’s 2019 Annual Report to Shareholders.

within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” located in Ohio Valley’s 2020 Annual Report to Shareholders.

Risk Elements - Gross interest income that would have been recorded on loans that were classified as nonaccrual or troubled debt restructurings if the loans had been in

4 unchanged sentences

the caption “Table V - Summary of Nonperforming, Past Due and Restructured Loans,” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” located in Ohio Valley’s 2020 Annual Report to Shareholders.

Potential Problem Loans - At December 31, 2019 and 2018, there were no loans that are not already included in “Table V - Summary of Nonperforming, Past Due and Restructured Loans” within “Management’s Discussion and Analysis of

Financial Condition and Results of Operations” located in Ohio Valley’s 2019 Annual Report to Shareholders, for which management has some doubt as to the borrower’s ability to comply with the present repayment terms.

These loans and

their loss exposure have been considered in management’s analysis of the adequacy of the allowance for loan losses.

Potential Problem Loans - At December 31, 2020 and 2019, there were no loans that are not already included in “Table V - Summary of Nonperforming, Past Due and Restructured Loans” within “Management’s Discussion and Analysis of Financial

Condition and Results of Operations” located in Ohio Valley’s 2020 Annual Report to Shareholders, for which management has some doubt as to the borrower’s ability to comply with the present repayment terms.

These loans and their loss

exposure have been considered in management’s analysis of the adequacy of the allowance for loan losses.

Foreign Outstandings - There were no foreign outstandings at December 31, 2020, 2019 or 2018.

4 unchanged sentences

Other Interest-Bearing Assets - As of December 31, 2020 and 2019, there were no other interest-bearing assets that would be required to be disclosed under Item III.C.

if such assets were loans.

assets were loans

SUMMARY OF LOAN LOSS EXPERIENCE

16 unchanged sentences

Ratio of net charge-offs to average loans outstanding

Ratio of allowance for loan losses to non-performing assets

Ratio of allowance for loan losses to

non-performing assets

Discussion of factors that influenced management in determining the amount of additions charged to provision expense is incorporated herein by reference to the information appearing under the

18 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-K

Item 1. Business