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Item 1. Financial Statements

2023-11-14 compared with 2023-08-14 · 452 added, 263 removed, 611 unchanged (54% of the section changed)

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CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(dollars in thousands, except share and per share data)

(dollars in thousands, except share

and per share data)

September 30,

Cash and noninterest-bearing deposits with banks

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Securities held to maturity, net of allowance for credit losses of $ 2 in 2023 and $ 0 in 2022;

(estimated fair value:

(estimated fair

2023 - $ 7,929 ;

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Treasury stock, at cost (2023 - 697,321 shares;

2022 - 693,933 shares)

Total shareholders’ equity

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Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Interest and dividend income:

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Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Other comprehensive income (loss):

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Shareholders’

Balance at April 1, 2023

Balance at July 1, 2023

Other comprehensive loss, net

Cash dividends, $ 0.22 per share

Balance at June 30 , 2023

Balance at April 1, 2022

Shares acquired for treasury, 3,388 shares

Balance at September 30 , 2023

Balance at July 1, 2022

Other comprehensive loss, net

Cash dividends, $ 0.21 per share

Balance at June 30 , 2022

Balance at September 30 , 2022

Comprehensive

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Common Stock issued to ESOP, 4,746 shares

Balance at June 30 , 2023

Shares acquired for treasury, 3,388 shares

Balance at September 30 , 2023

Balance at January 1, 2022

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Common stock issued to ESOP, 18,522 shares

Balance at June 30 , 2022

Balance at September 30 , 2022

See accompanying notes to consolidated financial statements

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(dollars in thousands)

Six months ended

Nine months ended

September 30,

Net cash provided by operating activities:

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Purchases of premises and equipment

Disposals of premises and equipment

Proceeds from building grant

Reimbursement of building grant

Purchases of bank owned life insurance and annuity assets

Withdrawals from annuity asset

Net cash (used in) investing activities

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Cash dividends

Purchases of treasury stock

Proceeds from Federal Home Loan Bank borrowings

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BASIS OF PRESENTATION:

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., a consumer finance company, Ohio Valley Financial Services Agency, LLC, an insurance agency, and OVBC Captive, Inc., a limited purpose property and casualty insurance company.

The Bank has two wholly-owned subsidiaries, Race Day Mortgage, Inc., an Ohio corporation that provided online consumer mortgages, and Ohio Valley REO, LLC, an Ohio limited liability company (“Ohio Valley REO”), to which the Bank transfers certain real estate acquired by the Bank through foreclosure for sale by Ohio Valley REO.

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., a consumer finance company, Ohio Valley

Financial Services Agency, LLC, an insurance agency, and OVBC Captive, Inc., a limited purpose property and casualty insurance company.

The Bank has two

wholly-owned subsidiaries, Race Day Mortgage, Inc.

(“Race Day”), an Ohio corporation that provided online consumer mortgages, and Ohio Valley REO, LLC, an Ohio limited liability company (“Ohio Valley REO”), to which the Bank transfers certain real

estate acquired by the Bank through foreclosure for sale by Ohio Valley REO.

In February 2023, Ohio Valley announced that it was taking steps toward closing Race Day.

The decision to start this process was made due to low loan demand, issues retaining personnel, and lack of profitability.

All pending loan applications have been processed and a closing date will be determined upon termination of various contractual service agreements.

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, 2023, 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, 2023, are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, 2023.

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

The decision to start this process was made due to low loan demand, issues retaining

personnel, and lack of profitability.

Currently, there are no remaining loan applications to complete, and all commissions earned on mortgage application referrals have been recorded.

An exact date of closing is still yet to be determined.

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 September 30, 2023, and its results of operations and cash flows for the periods presented.

The results of operations for the three and nine months

ended September 30, 2023, are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, 2023.

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, 2022, 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, 2022, contains consolidated financial

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

The consolidated financial statements for 2022 have been reclassified to conform to the presentation for 2023.

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

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:

These reclassifications had no effect on net

income or shareholders’ equity.

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.

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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banking and consumer finance.

ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS:

ADOPTION OF NEW

ACCOUNTING PRONOUNCEMENTS:

Effective January 1, 2023, the Company adopted ASU No.

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TDR’s and Vintage Disclosures .

This new accounting guidance eliminated the previous accounting guidance for troubled debt restructurings (“TDRs”) and resulted in additional disclosure requirements related to gross charge offs by year of origination and the removal of TDR disclosures, replaced by additional disclosures on the types of modifications of loans to borrowers experiencing financial difficulties.

origination and the removal of TDR disclosures, replaced by additional disclosures on the types of modifications of loans to borrowers experiencing financial difficulties.

Effective January 1, 2023, the Company adopted ASU No.

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Measurement of Credit Losses on Financial Instruments, (“ASU 2016-13”) (“ASC 326”) as amended.

The new accounting guidance replaces the “incurred loss” model with an “expected loss” model, which is referred to as the current expected credit loss (“CECL”) model.

new accounting guidance replaces the “incurred loss” model with an “expected loss” model, which is referred to as the current expected credit loss

(“CECL”) model.

The measurement of expected credit losses under the CECL model is applicable to financial assets measured at amortized cost, including loan receivables and HTM debt securities.

It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments).

It also applies to off-balance sheet credit exposures not

accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments).

In addition, ASC 326 made changes to the accounting for available for sale debt securities.

One such change is to require credit losses to be presented as an allowance rather than as a write-down on available for sale debt securities management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures.

One such change is to require

credit losses to be presented as an allowance rather than as a write-down on available for sale debt securities management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit

Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable US GAAP.

The Company recorded a net decrease to retained earnings of $ 2,209 as of January 1, 2023 for the cumulative effect of adopting ASC 326.

The Company recorded a net decrease to retained

earnings of $ 2,209 as of January 1, 2023 for the cumulative effect of adopting ASC 326.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The following table illustrates the transition adjustment of adopting ASC 326:

The following table illustrates

the transition adjustment of adopting ASC 326:

January 1, 2023

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DEBT SECURITIES:

The Company classifies securities into held to maturity (“HTM”) and available for sale (“AFS”) categories.

classifies securities into held to maturity (“HTM”) and available for sale (“AFS”) categories.

HTM securities are those which the Company has the positive intent and ability to hold to maturity and are reported at amortized cost.

Securities classified as AFS include securities that could be sold for liquidity, investment management or similar reasons even if there is not a present intention of such a sale.

AFS securities are reported at fair value, with unrealized gains or losses included in other comprehensive income, net of tax.

Premium amortization is deducted from, and discount accretion is added to, interest income on securities using the level yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated.

Securities classified

as AFS include securities that could be sold for liquidity, investment management or similar reasons even if there is not a present intention of such a sale.

AFS securities are reported at fair value, with unrealized gains or losses included in other

comprehensive income, net of tax.

Premium amortization is deducted from, and discount accretion is added to, interest income on securities using the level yield method without

anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated.

Gains and losses are recognized upon the sale of specific identified securities on the completed trade date.

ALLOWANCE FOR CREDIT LOSSES (“ACL”) - AFS SECURITIES:

For AFS debt securities in an unrealized position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis.

For AFS debt securities in an unrealized position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the

security before recovery of its amortized cost basis.

If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income.

For debt securities AFS that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair values has resulted from credit losses or other factors.

In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.

If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis.

For debt securities AFS that do not meet

the aforementioned criteria, the Company evaluates whether the decline in fair values has resulted from credit losses or other factors.

In making this assessment, management considers the extent to which fair value is less than amortized cost, any

changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.

If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected

from the security are compared to the amortized cost basis of the security.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by

the amount that the fair value is less than the amortized cost basis.

Any impairment that has not been recorded through an ACL is recognized in other comprehensive income.

Changes in the ACL are recorded as credit loss expense (or reversal).

Losses are charged against the allowance when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on AFS debt securities totaled $ 429 at June 30, 2023, and is excluded from the estimate of credit losses.

Losses are charged against the allowance when management believes the

uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on AFS debt securities totaled $ 433 at September 30, 2023, and is excluded from the estimate of credit losses.

Management classifies the AFS portfolio into the following major security types:

Government securities, U.S.

Government sponsored entity securities, and Agency mortgage-backed residential securities.

These security types have an explicit government guarantee, and therefore, no ACL is recorded for these securities.

As a result, there was no ACL related to AFS debt securities at June 30, 2023.

Government sponsored entity

securities, and Agency mortgage-backed residential securities.

These security types have an explicit government guarantee, and therefore, no ACL

is recorded for these securities.

As a result, there was no ACL related to AFS debt securities at September 30, 2023.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

ACL - HTM SECURITIES:

Management measures expected credit losses on HTM debt securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.

measures expected credit losses on HTM debt securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and

reasonable and supportable forecasts.

The ACL on securities HTM is a contra asset valuation account that is deducted from the carrying amount of HTM securities to present the net amount expected to be collected.

HTM securities are charged off against the ACL when deemed uncollectible.

HTM securities are charged off against

the ACL when deemed uncollectible.

Adjustments to the ACL are reported in the Company’s consolidated statements of income in the provision for credit losses.

Accrued interest receivable on HTM securities is excluded from the estimate of credit losses.

Accrued interest receivable on HTM securities is excluded from the estimate of credit

Management classifies the HTM portfolio into two major security types:

Obligations of states and political subdivisions and Agency mortgage-backed residential securities.

Agency mortgage-backed residential securities consist of only two securities with balances that are not significant.

With regard to obligations of states and political subdivisions, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities.

At June 30, 2023, there was $ 3 in the ACL related to HTM debt securities, with no corresponding provision expense during the three and six months ended June 30, 2023.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred loan fees and costs, and an ACL.

Interest income is reported on an accrual basis using the interest method and includes amortization of net deferred loan fees and costs over the loan term using the level yield method without anticipating prepayments.

The amount of the Company’s recorded investment is not materially different than the amount of unpaid principal balance for loans.

Interest income is discontinued and the loan moved to non-accrual status when full loan repayment is in doubt, typically when the loan payments are past due 90 days or over unless the loan is well-secured or in process of collection.

Agency mortgage-backed residential securities consist of only two

securities with balances that are not significant.

With regard to obligations of states and political subdivisions, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the

issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities.

30, 2023, there was $ 2 in the ACL related

to HTM debt securities, which included a $ 1 recovery of provision expense during the three and nine months ended September 30,

Loans that management has the intent and ability to hold

for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred loan fees and costs, and an ACL.

Interest income is reported on an accrual basis using the interest method and

includes amortization of net deferred loan fees and costs over the loan term using the level yield method without anticipating prepayments.

The amount of the Company’s recorded investment is not materially different than the amount of unpaid principal

balance for loans.

Interest income is discontinued and the loan moved to non-accrual status when full loan repayment is in doubt, typically when the loan

payments are past due 90 days or over unless the loan is well-secured or in process of collection.

Past due status is based on the contractual terms of the loan.

In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

In all cases, loans are placed on nonaccrual or charged-off at an earlier date if

collection of principal or interest is considered doubtful.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income.

Interest received on such loans is accounted for on the cash-basis method until qualifying for return to accrual.

Interest received on such loans is

accounted for on the cash-basis method until qualifying for return to accrual.

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 Bank also originates long-term, fixed-rate mortgage loans, with the full intention of being sold to the secondary market.

These loans are considered held for sale during the period of time after the principal has been advanced to the borrower by the Bank, but before the Bank has been reimbursed by the Federal Home Loan Mortgage Corporation, typically within a few business days.

The Bank also originates long-term, fixed-rate mortgage loans,

with the full intention of being sold to the secondary market.

These loans are considered held for sale during the period of time after the principal has been advanced to the borrower by the Bank, but before the Bank has been reimbursed by the

Federal Home Loan Mortgage Corporation, typically within a few business days.

Loans sold to the secondary market are carried at the lower of aggregate cost or fair value.

As of June 30, 2023 and December 31, 2022, there were no loans held for sale by the Bank.

The ACL for loans is a contra asset valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans.

As of September 30, 2023 and December 31, 2022, there were no loans held for sale by the Bank.

The ACL for loans is a

contra asset valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans.

Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible.

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The ACL is adjusted through the provision for credit losses and reduced by net charge offs of loans.

The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers historical loss experience, current conditions and forecasts of future economic conditions.

The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers historical loss experience,

current conditions and forecasts of future economic conditions.

Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period.

The methodology for determining the ACL has two main components:

evaluation of expected credit losses for certain groups of loans that share similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans.

evaluation of expected credit losses for certain groups of loans that share

similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The ACL is measured on a collective (pool) basis when similar risk characteristics exist.

The Company has identified the following portfolio segments and measures the ACL using the following methods:

The Company has identified the

following portfolio segments and measures the ACL using the following methods:

Portfolio Segment

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National Unemployment

Cumulative Undiscounted Expected Loss,

Remaining Life Method

Cumulative Undiscounted Expected Loss, Remaining Life Method

National Unemployment

Historical credit loss experience is the basis for the estimation of expected credit losses.

We apply historical loss rates to pools of loans with similar risk characteristics.

We apply historical loss rates to pools of loans

with similar risk characteristics.

In defining historical loss rates and the prepayment rates and curtailment rates used to determine the expected life of loans, the use of regional and national peer data was used.

After consideration of the historic loss calculation, management applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information at the balance sheet date.

Our reasonable and supportable forecast adjustment is based on the national unemployment rate and the national gross domestic product forecast for the first year.

For periods beyond our reasonable and supportable forecast, we revert to historical loss rates utilizing a straight-line method over a two-year reversion period.

The qualitative adjustments for current conditions are based upon changes in lending policies and practices, experience and ability of lending staff, quality of the Company’s loan review system, value of underlying collateral, the volume and severity of past due loans, the value of underlying collateral for collateral dependent loans, the existence of and changes in concentrations and other external factors.

After consideration of the historic

loss calculation, management applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information at the balance sheet date.

Our reasonable and supportable

forecast adjustment is based on the national unemployment rate and the national gross domestic product forecast for the first year.

For periods beyond our reasonable and supportable forecast, we revert to historical loss rates utilizing a straight-line

method over a two-year reversion period.

The qualitative adjustments for current conditions are based upon changes in lending policies and

practices, experience and ability of lending staff, quality of the Company’s loan review system, value of underlying collateral, the volume and severity of past due loans, the value of underlying collateral for collateral dependent loans, the existence

of and changes in concentrations and other external factors.

Each factor is assigned a value to reflect improving, stable, or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation.

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The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies:

management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower, or the extension of renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

and are not unconditionally cancellable by the Company.

The Company has elected to exclude accrued interest receivable from the measurement of its ACL.

When a loan is placed on non-accrual status, any outstanding accrued interest is reversed against interest income.

When a loan is placed on non-accrual status,

any outstanding accrued interest is reversed against interest income.

Loans that do not share risk characteristics are evaluated on an individual basis.

Loans evaluated individually are not also included in the collective evaluation.

Loans evaluated individually are not also included in the

collective evaluation.

We evaluate all loans that meet the following criteria:

1) when it is determined that foreclosure is probable;

2) substandard, doubtful and nonperforming loans when repayment is expected to be provided substantially through the operation or sale of the collateral;

2) substandard, doubtful and nonperforming loans when repayment is expected to be provided substantially through the

operation or sale of the collateral;

3) when it is determined by management that a loan does not share similar risk characteristics with other loans.

Specific reserves are established based on the following three acceptable methods for measuring the ACL:

Specific reserves are established based on the following three acceptable methods for measuring the

1) the present value of expected future cash flows discounted at the loan’s original effective interest rate;

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or 3) the fair value of the collateral when the loan is collateral dependent.

Our individual loan evaluations consist primarily of the fair value of collateral method because most of our loans are collateral dependent.

Our individual loan

evaluations consist primarily of the fair value of collateral method because most of our loans are collateral dependent.

Collateral values are discounted to consider disposition costs when appropriate.

A specific reserve is established or a charge-off is taken if the fair value of the loan is less than the loan balance.

At June 30, 2023, there was $ 7,571 in the ACL related to loans, with corresponding provision expense of $ 114 and $ 579 during the three and six months ended June 30, 2023, respectively.

A specific reserve is established or a charge-off

is taken if the fair value of the loan is less than the loan balance.

At September 30, 2023, there was $ 8,173 in the ACL related to loans, with corresponding provision expense of $ 812 and $ 1,391 during the three and nine months ended September 30, 2023, respectively.

The Company’s loan portfolio segments have been identified as follows:

Commercial and Industrial, Commercial Real Estate, Residential Real Estate, and Consumer.

Commercial and Industrial, Commercial Real Estate, Residential Real

Estate, and Consumer.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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Portfolio segment consists of borrowings for commercial purposes to individuals, corporations, partnerships, sole proprietorships, and other business enterprises.

Commercial and industrial loans are generally secured by business assets such as equipment, accounts receivable, inventory, or any other asset excluding real estate and generally made to finance capital expenditures or operations.

The Company’s risk exposure is related to deterioration in the value of collateral securing the loan should foreclosure become necessary.

Commercial and industrial loans are generally secured by business assets such as

equipment, accounts receivable, inventory, or any other asset excluding real estate and generally made to finance capital expenditures or operations.

The Company’s risk exposure is related to deterioration in the value of collateral securing the loan

should foreclosure become necessary.

Generally, business assets used or produced in operations do not maintain their value upon foreclosure, which may require the Company to write down the value significantly to sell.

Commercial real estate:

Portfolio segment consists of nonfarm, nonresidential loans secured by owner-occupied and nonowner-occupied commercial real estate as well as commercial construction loans.

An owner-occupied loan relates to a borrower purchased building or space for which the repayment of principal is dependent upon cash flows from the ongoing business operations conducted by the party, or an affiliate of the party, who owns the property.

Owner-occupied loans that are dependent on cash flows from operations can be adversely affected by current market conditions for their product or service.

A nonowner-occupied loan is a property loan for which the repayment of principal is dependent upon rental income associated with the property or the subsequent sale of the property.

Portfolio segment consists

of nonfarm, nonresidential loans secured by owner-occupied and nonowner-occupied commercial real estate as well as commercial construction loans.

An owner-occupied loan relates to a borrower purchased building or space for which the repayment of

principal is dependent upon cash flows from the ongoing business operations conducted by the party, or an affiliate of the party, who owns the property.

Owner-occupied loans that are dependent on cash flows from operations can be adversely affected by

current market conditions for their product or service.

A nonowner-occupied loan is a property loan for which the repayment of principal is dependent upon rental income associated with the property or the subsequent sale of the

Nonowner-occupied loans that are dependent upon rental income are primarily impacted by local economic conditions which dictate occupancy rates and the amount of rent charged.

Commercial construction loans consist of borrowings to purchase and develop raw land into 1-4 family residential properties.

Construction loans are extended to individuals as well as corporations for the construction of an individual or multiple properties and are secured by raw land and the subsequent improvements.

Commercial construction loans consist of borrowings to purchase

and develop raw land into 1-4 family residential properties.

Construction loans are extended to individuals as well as corporations for the construction of an individual or multiple properties and are secured by raw land and the subsequent

improvements.

Repayment of the loans to real estate developers is dependent upon the sale of properties to third parties in a timely fashion upon completion.

Should there be delays in construction or a downturn in the market for those properties, there may be significant erosion in value that may be absorbed by the Company.

Should there be delays in construction or a downturn in the market for those properties,

there may be significant erosion in value that may be absorbed by the Company.

Residential real estate:

Portfolio segment consists of loans to individuals for the purchase of 1-4 family primary residences with repayment primarily through wage or other income sources of the individual borrower.

The Company’s loss exposure to these loans is dependent on local market conditions for residential properties as loan amounts are determined, in part, by the fair value of the property at origination.

Portfolio segment consists of loans to individuals secured by automobiles, open-end home equity loans and other loans to individuals for household, family, and other personal expenditures, both secured and unsecured.

Portfolio segment

consists of loans to individuals for the purchase of 1-4 family primary residences with repayment primarily through wage or other income sources of the individual borrower.

The Company’s loss exposure to these loans is dependent on local market

conditions for residential properties as loan amounts are determined, in part, by the fair value of the property at origination.

Portfolio segment consists of loans to

individuals secured by automobiles, open-end home equity loans and other loans to individuals for household, family, and other personal expenditures, both secured and unsecured.

These loans typically have maturities of six years or less with repayment dependent on individual wages and income.

The risk of loss on consumer loans is elevated as the collateral securing these loans, if any, rapidly depreciate in value or may be worthless and/or difficult to locate if repossession is necessary.

The Company has allocated the highest percentage of its allowance for credit losses as a percentage of loans to the other identified loan portfolio segments due to the larger dollar balances associated with such portfolios..

ACL – OFF-BALANCE SHEET CREDIT EXPOSURES:

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company.

The risk of loss on consumer loans is elevated as the collateral securing these

loans, if any, rapidly depreciate in value or may be worthless and/or difficult to locate if repossession is necessary.

The Company has allocated the highest percentage of its allowance for credit losses as a percentage of loans to the other

identified loan portfolio segments due to the larger dollar balances associated with such portfolios.

ACL – OFF-BALANCE SHEET

CREDIT EXPOSURES:

The ACL on off-balance sheet credit exposures is adjusted through credit loss expense.

The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.

At June 30, 2023, there was $ 565 in the ACL related to off-balance sheet credit exposures, with a corresponding recovery of provision expense totaling $ 90 and $ 66 during the three and six months ended June 30, 2023, respectively.

The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be

funded over its estimated life.

At September 30, 2023, there was $ 643 in the ACL related to off-balance sheet credit exposures, with corresponding provision expense of

$ 77 and $ 11 during the three and nine months ended September 30, 2023, respectively.

EARNINGS PER SHARE:

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

The weighted average common shares outstanding were 4,776,520 and 4,771,774 for the three months ended June 30, 2023 and 2022, respectively.

The weighted average common shares outstanding were 4,774,999 and 4,766,453 for the six months ended June 30, 2023 and 2022, respectively.

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

Earnings per share are

computed based on net income divided by the weighted average number of common shares outstanding during the quarter.

The weighted average common shares outstanding were 4,775,308 and 4,771,774 for the three months ended September 30, 2023 and 2022 ,

respectively.

The weighted average common shares outstanding were 4,775,103 and 4,768,246 for the nine months ended September 30, 2023 and 2022 , respectively.

Ohio Valley had no dilutive effect and no potential common shares issuable under

stock options or other agreements for any period presented.

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.

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

The following is a description of the Company’s valuation methodologies used to measure and disclose the fair values of its financial assets and liabilities on a recurring or nonrecurring basis:

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

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 unobservable

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

The following is a description of the Company’s valuation methodologies used to measure and disclose the fair values of its financial assets

and liabilities on a recurring or nonrecurring basis:

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

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.

Individually Evaluated Collateral Dependent Loans:

Individually Evaluated Collateral Dependent

The fair value of individually evaluated collateral dependent loans is generally based on the fair value of collateral, less costs to sell.

When carried at fair value, individually evaluated collateral dependent loans generally receive specific allocations of the ACL.

When carried at fair value, individually evaluated collateral dependent loans generally receive

specific allocations of the ACL.

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.

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.

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

2 unchanged sentences

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.

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

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.

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.

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

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

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, which typically amount to approximately 10 % of the fair value of such collateral.

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, which typically amount to approximately 10 % of the fair value of such collateral.

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).

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).

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

1 unchanged sentence

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

Fair Value Measurements at June 30, 2023 Using

Fair Value Measurements at September 30, 2023 Using

Quoted Prices in Active

21 unchanged sentences

Assets and Liabilities Measured on a Nonrecurring Basis

There were no assets or liabilities measured at fair value on a nonrecurring basis at June 30, 2023 and December 31, 2022.

There was no other real estate owned measured at fair value less costs to sell at June 30, 2023 and December 31, 2022.

Furthermore, there were no corresponding write downs during the three and six months ended June 30, 2023 and 2022.

There was no quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2023 and December 31, 2022.

There were no assets or

liabilities measured at fair value on a nonrecurring basis at September 30, 2023 and December 31, 2022.

There was no other real

estate owned measured at fair value less costs to sell at September 30, 2023 and December 31, 2022.

Furthermore, there were no corresponding

write downs during the three and nine months ended September 30, 2023 and 2022.

There was no quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a

non-recurring basis at September 30, 2023 and December 31, 2022.

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The carrying amounts and estimated fair values of financial instruments at June 30, 2023 and December 31, 2022 are as follows:

Fair Value Measurements at June 30, 2023 Using

The carrying amounts and estimated fair values of financial instruments at September 30, 2023 and December 31, 2022 are as follows:

Fair Value Measurements at September 30, 2023 Using

Financial Assets:

23 unchanged sentences

Accrued interest payable

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

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

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.

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 June 30, 2023 and December 31, 2022, 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 September 30, 2023

and December 31, 2022, 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

1 unchanged sentence

Gross Unrealized

June 30 , 2023

September 30 , 2023

Government securities

11 unchanged sentences

Allowance for Credit Losses

June 30 , 2023

September 30 , 2023

Obligations of states and political subdivisions

5 unchanged sentences

Total securities

The amortized cost and estimated fair value of debt securities at June 30, 2023, 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 September 30, 2023, 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.

8 unchanged sentences

Total debt securities

There were no sales of securities during the three and six months ended June 30, 2023 and 2022.

Debt securities with a carrying value of approximately $ 133,093 at June 30, 2023 and $ 126,318 at December 31, 2022 , were pledged to secure public deposits, repurchase agreements, and for other purposes required or permitted by law.

There were no sales of securities during the

three and nine months ended September 30, 2023 and 2022.

Debt securities with a carrying value of approximately $ 134,812 at September 30, 2023 and $ 126,318 at December

31, 2022 , were pledged to secure public deposits, repurchase agreements, and for other purposes required or permitted by law.

NOTE 3 – SECURITIES (Continued)

The following table summarizes debt securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded at June 30, 2023 and December 31, 2022, aggregated by major security type and length of time in a continuous unrealized loss position:

June 30 , 2023

The following table summarizes debt securities available for sale in an unrealized loss position for which

an allowance for credit losses has not been recorded at September 30, 2023 and December 31, 2022, aggregated by major security type and length of time in a continuous unrealized loss position:

September 30 , 2023

Less Than 12 Months

20 unchanged sentences

Management evaluates available for sale debt securities in unrealized positions to determine whether impairment is due to credit-related factors.

Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

At June 30, 2023, the Company had 103 available for sale debt securities in an unrealized position without an allowance for credit losses, of which 19 were from U.S.

Government securities, 3 were from U.S.

of time sufficient to allow for any anticipated recovery in fair value.

At September 30, 2023, the Company had 102

available for sale debt securities in an unrealized position without an allowance for credit losses, of which 19 were from U.S.

securities, 3 were from U.S.

Government sponsored entity securities, and 80 were from Agency mortgage-backed residential securities.

Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost.

Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will

not have to sell any such securities before a recovery of cost.

The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

Accordingly, as of June 30, 2023, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in interest rates and other market conditions and, therefore, the Company carried no allowance for credit losses on available for sale debt securities at June 30, 2023.

Accordingly, as of September 30,

2023, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in interest rates and other market conditions and, therefore, the Company carried no allowance for credit losses

on available for sale debt securities at September 30, 2023.

NOTE 3 – SECURITIES (Continued)

1 unchanged sentence

Held to Maturity Debt Securities

Six months ended

June 30, 2023

Nine months ended

September 30, 2023

Allowance for credit losses:

1 unchanged sentence

Impact of adopting ASC 326

Credit loss expense

Provision for (recovery of) credit loss expense

Allowance for credit losses ending balance

The Company’s held to maturity securities primarily consist of obligations of states and political subdivisions.

The Company’s held to maturity securities primarily consist of

obligations of states and political subdivisions.

The ACL on held to maturity securities is estimated at each measurement date on a collective basis by major security type.

Risk factors such as issuer bond ratings, historical loss rates, financial condition of issuer, and timely principal and interest payments of issuer were evaluated to determine if a credit reserve was required within the portfolio.

At June 30, 2023, there were no past due principal and interest payments related to held to maturity securities.

The Company identified a cumulative loss rate of .03 % using historical loss data provided by S&P and Moody’s bond rating service.

This resulted in a $ 3 credit loss reserve for held to maturity debt securities upon adoption of ASC 326 on January 1, 2023, with no provision expense during the three and six months ended June 30, 2023.

Risk factors such as issuer bond ratings, historical loss rates, financial

condition of issuer, and timely principal and interest payments of issuer were evaluated to determine if a credit reserve was required within the portfolio.

At September 30, 2023, there were no past due principal and interest payments related to held

to maturity securities.

Upon adoption of ASC 326 on January 1, 2023, the Company identified a cumulative loss rate of .03 % using historical loss data provided by S&P and Moody’s bond rating service.

This resulted in a $ 3 credit loss reserve for held to maturity debt securities.

During the third quarter of 2023, the

cumulative loss rate decreased to 0.02 % ,

resulting in a $ 1 recovery of provision

expense during the three and nine months ended September 30, 2023.

NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans are comprised of the following:

September 30,

Residential real estate

4 unchanged sentences

Allowance for credit losses

At June 30, 2023 and December 31, 2022 , net deferred loan origination costs were $ 903 and $ 663 , respectively.

At June 30, 2023 and December 31, 2022 , net unamortized loan purchase premiums were $ 787 and $ 1,142 , respectively.

At September 30, 2023 and December 31, 2022 , net deferred loan origination costs were $ 892 and $ 663 , respectively.

At September 30, 2023 and December 31, 2022 , net unamortized loan purchase premiums were $ 739 and $ 1,142 , respectively.

NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT 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, 2023 and December 31, 2022:

June 30 ,2023

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 September 30, 2023 and December 31, 2022:

September 30 , 2023

Loans Past Due

15 unchanged sentences

Commercial and industrial

The Company recognized $ 67 and $ 87 of interest income in nonaccrual loans during the three and six months ended June 30, 2023.

The Company recognized $ 55 and $ 142 of interest income in nonaccrual loans during the three and nine months ended September 30, 2023.

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

The following table presents the aging of the recorded investment of past due loans by class of loans as of June 30, 2023 and December 31, 2022:

June 30 , 2023

The following table presents the aging of the recorded investment of past due

loans by class of loans as of September 30, 2023

and December 31, 2022:

September 30 , 2023

Residential real estate

10 unchanged sentences

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:

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

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

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 $ 1,000 .

1 unchanged sentence

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.

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.

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.

2 unchanged sentences

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.

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 loans.

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 are made to reduce the seriousness of the classification.

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 are 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.

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

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 that may strengthen the credit can be more accurately

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.

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.

As of June 30, 2023 and December 31, 2022, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:

As of September 30,

2023 and December 31, 2022, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:

Term Loans Amortized Cost Basis by Origination Year

June 30, 2023

Commercial real estate - Owner-occupied

September 30 , 2023

Commercial real estate:

Owner-occupied

Special Mention

2 unchanged sentences

Term Loans Amortized Cost Basis by Origination Year

June 30, 2023

Commercial real estate - Nonowner-occupied

September 30 , 2023

Commercial real estate:

Nonowner-occupied

Special Mention

1 unchanged sentence

Term Loans Amortized Cost Basis by Origination Year

June 30, 2023

Commercial real estate - Construction

September 30 , 2023

Commercial real estate:

Special Mention

1 unchanged sentence

Term Loans Amortized Cost Basis by Origination Year

June 30, 2023

September 30 , 2023

Commercial and Industrial:

7 unchanged sentences

Commercial and industrial

The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses.

The Company considers the performance of the loan portfolio and its impact on the allowance for credit

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 June 30, 2023 and December 31, 2022:

The following table presents the recorded investment of residential

and consumer loans by class of loans based on repayment activity as of September 30, 2023 and December 31, 2022:

Term Loans Amortized Cost Basis by Origination Year

June 30, 2023

September 30 , 2023

Residential Real Estate:

3 unchanged sentences

Term Loans Amortized Cost Basis by Origination Year

June 30, 2023

Consumer - Automobile:

September 30 , 2023

Payment Performance

3 unchanged sentences

Term Loans Amortized Cost Basis by Origination Year

June 30, 2023

Consumer - Home Equity:

September 30 , 2023

Payment Performance

2 unchanged sentences

Term Loans Amortized Cost Basis by Origination Year

June 30, 2023

Consumer - Other:

September 30 , 2023

Payment Performance

3 unchanged sentences

Nonperforming

The Company 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 4.36 % of total loans were unsecured at June 30, 2023, down from 4.52 % at December 31, 2022.

N OTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The Company 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 4.23 % of total loans were unsecured at September 30, 2023, down from 4.52 % at December 31, 2022.

N OTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Modifications to Borrowers Experiencing Financial Difficulty:

Occasionally, the Company modifies loans to borrowers experiencing financial difficulty.

These modifications may include one or a combination of the following:

These modifications may include 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;

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

a reduction in the contractual

principal and interest payments of the loan;

or short-term interest-only payment terms.

All modifications to borrowers experiencing financial difficulty are considered to be impaired.

During the six months ended June 30, 2023, the Company experienced no new modifications to borrowers experiencing financial difficulty.

The following table presents the activity in the allowance for credit losses by portfolio segment for the three months ended June 30, 2023 and 2022:

June 30 , 2023

During the nine months ended September 30, 2023, the Company experienced no new modifications to borrowers experiencing financial difficulty.

The following table presents the activity in the allowance for credit losses by portfolio segment

for the three months ended September 30, 2023

September 30 , 2023

and Industrial

4 unchanged sentences

Total ending allowance balance

June 30 , 2022

September 30 , 2022

and Industrial

4 unchanged sentences

Total ending allowance balance

The following table presents the activity in the allowance for credit losses by portfolio segment for the six months ended June 30, 2023 and 2022:

June 30 , 2023

The following table presents the activity in the allowance for credit losses by portfolio segment for the nine months ended September 30, 2023 and 2022:

September 30 , 2023

and Industrial

5 unchanged sentences

Total ending allowance balance

June 30 , 2022

September 30 , 2022

and Industrial

4 unchanged sentences

Total ending allowance balance

N OTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The following table presents the balance in the allowance for credit losses and the recorded investment of loans by portfolio segment and based on impairment method as of December 31, 2022:

N OTE 4 – LOANS AND ALLOWANCE FOR CREDIT

LOSSES (Continued)

The following table presents the

balance in the allowance for credit losses and the recorded investment of loans by portfolio segment and based on impairment method as of December 31,

December 31 , 2022

8 unchanged sentences

Total ending loans balance

The following table presents the amortized cost basis of collateral dependent loans by class of loans as of June 30, 2023:

The following table presents the amortized cost basis of collateral dependent loans by class of loans as

of September 30, 2023:

Collateral Type

June 30, 2023

September 30, 2023

Business Assets

Residential real estate

Commercial real estate:

1 unchanged sentence

Total collateral dependent loans

The following tables present information related to loans individually evaluated for impairment by class of loans as of December 31, 2022:

The following tables present information related to loans individually evaluated for

impairment by class of loans as of December 31, 2022:

December 31 , 2022

5 unchanged sentences

Nonowner-occupied

N OTE 4 – LOANS AND ALLOWANCE FOR CREDIT 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, 2022:

Three months ended June 30, 2022

Six months ended June 30, 2022

N OTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

The following tables present information related to loans individually evaluated

for impairment by class of loans for the three and nine months ended September 30, 2022:

Three months ended September 30, 2022

Nine months ended September 30, 2022

Average Impaired

5 unchanged sentences

With an allowance recorded:

Commercial and industrial

With no related allowance recorded:

3 unchanged sentences

The recorded investment of a loan excludes accrued interest and net deferred origination fees and costs due to immateriality.

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 lieu).

As of June 30, 2023, the Company had 68 in other real estate owned for residential real estate properties compared to none at December 31, 2022.

In addition, nonaccrual residential mortgage loans that are in the process of foreclosure had a recorded investment of $ 455 and $ 370 as of June 30, 2023 and December 31, 2022, respectively.

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 lieu).

As of September 30, 2023, the Company had $ 68 in other real estate

owned for residential real estate properties compared to none at December 31, 2022.

In addition, nonaccrual residential mortgage loans that are in the process of foreclosure had a recorded investment of $ 349 and $ 370 as of September 30, 2023 and December 31, 2022, respectively.

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.

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

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 June 30, 2023, the contract amounts of these instruments totaled approximately $ 110,924 , compared to $ 103,413 at December 31, 2022.

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

At September 30, 2023,

the contract amounts of these instruments totaled approximately $ 128,781 , compared to $ 103,413 at December 31, 2022.

The Bank estimates expected credit losses over the contractual period in which the Bank is exposed to credit risk via a contractual obligation to extend credit.

At June 30, 2023, the estimated ACL related to off-balance sheet commitments was $ 565 , which includes a $ 90 recovery of provision during the three months ended June 30, 2023 and a $ 66 recovery of provision during the six months ended June 30, 2023.

At September 30, 2023, the

estimated ACL related to off-balance sheet commitments was $ 643 , which included $ 77 provision expense during the three months ended September 30, 2023 and $ 11 in

provision during the nine months ended September 30, 2023.

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 June 30, 2023 and December 31, 2022 are comprised of advances from the Federal Home Loan Bank (“FHLB”) of Cincinnati and promissory notes.

June 30 , 2023

Other borrowed funds at September 30, 2023 and December 31, 2022 are comprised of advances from the Federal Home Loan Bank (“FHLB”) of Cincinnati and promissory notes.

September 30 , 2023

December 31, 2022

Pursuant to collateral agreements with the FHLB, advances are secured by $ 312,680 in qualifying mortgage loans, $ 32,359 in commercial loans and $ 2,064 in FHLB stock at June 30, 2023.

Fixed-rate FHLB advances of $ 24,510 mature through 2042 and have interest rates ranging from 1.53 % to 4.68 % and a year-to-date weighted average cost of 2.70 % at June 30, 2023 and 2.39 % at December 31, 2022.

There were no variable-rate FHLB borrowings at June 30, 2023.

At June 30, 2023, the Company had a cash management line of credit enabling it to borrow up to $ 100,000 from the FHLB, subject to the stock ownership and collateral limitations described below.

NOTE 6 – OTHER BORROWED FUNDS (Continued)

Pursuant to collateral agreements with the FHLB, advances are secured by $ 315,076 in qualifying mortgage loans, $ 34,202 in commercial loans and $ 2,922 in FHLB stock at September 30, 2023.

Fixed-rate FHLB advances of $ 43,357

mature through 2042 and have interest rates ranging from 1.53 % to 4.91 % and a year-to-date weighted average cost of 3.19 % at September 30, 2023 and 2.34 % at December 31, 2022.

There were no

variable-rate FHLB borrowings at September 30, 2023.

At September 30, 2023, the Company had a cash management line of credit enabling it to borrow up to $ 100,000 from the FHLB, subject to the stock ownership and collateral limitations described below.

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

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

There was $ 100,000 available on this line of credit at June 30, 2023.

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 $ 191,392 at June 30, 2023.

Of this maximum borrowing capacity, the Company had $ 106,932 available to use as additional borrowings, of which $ 100,000 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 November 18, 2024 , and have fixed rates ranging from 3.15 % to 5.00 % and a year-to-date weighted average cost of 3.26 % at June 30, 2023, as compared to 1.35 % at December 31, 2022.

At June 30, 2023, there were six promissory notes payable by Ohio Valley to related parties totaling $ 2,394 .

There were no promissory notes payable to other banks at June 30, 2023 or December 31, 2022.

Letters of credit issued on the Bank’s behalf by the FHLB to collateralize certain public unit deposits as required by law totaled $ 59,950 at June 30, 2023 and $ 75,140 at December 31, 2022.

Scheduled principal payments as of June 30, 2023:

There was $ 100,000 available on this line of credit at September 30, 2023.

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 $ 180,030 at September 30, 2023.

Of this maximum borrowing capacity, the Company had $ 87,522 available to use as additional borrowings, of which $ 87,522 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 November 18, 2024 , and have fixed rates ranging from 3.15 %

to 5.00 % and a year-to-date weighted average cost of 3.61 % at September 30, 2023, as compared to 1.35 % at December 31, 2022.

30, 2023, there were six promissory notes payable by Ohio Valley to related parties totaling $ 2,394 .

There were no promissory notes payable to other banks at September 30, 2023 or December 31, 2022.

Letters of credit issued on the Bank’s behalf by the FHLB to collateralize certain public unit deposits as required by law totaled $ 49,150 at September 30, 2023 and $ 75,140 at December 31, 2022.

Scheduled principal payments as of September 30, 2023:

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.

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 94.4 % and 92.9 % of total consolidated revenues for the quarters end June 30, 2023 and 2022, 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.

segments are domestic.

Total revenues from the banking segment, which accounted for the majority of the Company’s total revenues, totaled 95.1 % and 94.0 % of total consolidated revenues

for the quarters end September 30, 2023 and 2022,

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.

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

Three Months Ended June 30, 2023

Three Months Ended September 30,

Net interest income

3 unchanged sentences

Provision for income taxes

Three Months Ended June 30, 2022

Three Months Ended September 30,

Net interest income

3 unchanged sentences

Provision for income taxes

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Net interest income

3 unchanged sentences

Provision for income taxes

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Net interest income

4 unchanged sentences

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.

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.

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.

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 34 months to 18 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.

Operating leases have remaining lease terms ranging from 31 months to 18 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.

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

Balance sheet information related to leases is as follows:

June 30, 2023

September 30, 2023

December 31, 2022

4 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Operating lease cost

Short-term lease expense

Future undiscounted lease payments for operating leases with initial terms of one year or more as of June 30, 2023 are as follows:

Future undiscounted lease payments for operating leases with initial terms of one year or more as of September 30, 2023 are as follows:

Operating Leases

2023 (remaining)

Total lease payments

2 unchanged sentences

Other information is as follows:

June 30, 2023

September 30, 2023

December 31, 2022

2 unchanged sentences

NOTE 9 – RISKS AND UNCERTAINTIES

The risks pertinent to our bank regarding liquidity and rising deposit costs have increased due to an elevated interest rate environment and increased deposit competition within our markets.

The risks pertinent to our bank regarding liquidity and rising deposit costs have increased due to an elevated interest rate environment and

increased deposit competition within our markets.

Our liquidity position is supported by the management of liquid assets such as cash and interest-bearing deposits with banks, and liabilities such as core deposits.

The bank can also access other sources of funds such as brokered deposits and FHLB advances.

With the present economic conditions putting a strain on liquidity and higher borrowing costs, the Company believes it has sufficient liquid assets and funding sources should there be a liquidity need.

The bank can also access other

sources of funds such as brokered deposits and FHLB advances.

With the present economic conditions putting a strain on liquidity and higher borrowing costs, the Company believes it has sufficient liquid assets and funding sources should there be a

liquidity need.

NOTE 10 – DEPOSITS

Deposits are comprised of the following:

September 30,

Noninterest-bearing deposits

5 unchanged sentences

Total deposits

Brokered deposits, included in time deposits, were $ 62,648 and $ 3,999 at June 30, 2023 and December 31, 2022, respectively.

Brokered deposits, included in time deposits, were $ 66,071

and $ 3,999 at September 30, 2023 and December 31, 2022, respectively.

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