EX-13 13 sec10k123120ex13.htm ANNUAL REPORT TO SHAREHOLDERS AS OF 12/31/20


OVBC
ANNUAL REPORT
2020







[Picture of Rio Grande Office]













Honoring 50 years in Rio Grande











A note about the cover:
Throughout much of this report you will see how your company faced the challenges of the COVID-19 global pandemic that changed everything. There is no doubt that when we mark this year in history, the pandemic will always be front and center. However, it should also be noted that there were other things that happened in 2020. Fantastic things. Positive milestones and achievements that deserved not to be swept aside and forgotten. And for this reason, we chose to adorn this year’s cover not with masks, but with a celebration. Help us in congratulating the community bankers at OVB Rio Grande on the 50th anniversary of Ohio Valley Bank’s first branch.







[Picture]
Remote workstation technology was set up for 71 employees in just two weeks, securing the continuancy of financial services for our communities. Pictured in mask is Chairman Wiseman; on screen is President Miller.




Message from Management

Dear Neighbors and Friends,


Before the 2020 pandemic, the CDC notes the Flu Pandemic of 1918 as the most severe in recent history. OVB survived that one too.

We have always attributed the bank’s longevity to the loyal support of our community. We returned that support with interest during this pandemic.

When we had to close Ohio Valley Bank lobbies, we extended drive-thru hours and invested over $170,000 in advancing contactless banking services. When the IRS sent over 3,000 stimulus checks to Loan Central instead of to the people, we didn’t just send them back to the IRS as our competitors did. We got each one to its rightful owner. When gatherings of more than ten were banned, we secured the means to hold the first virtual Annual Meeting in the company’s history. When the big banks used their might to try to scoop up all the Paycheck Protection Program (PPP) funding, we worked through the nights and weekends to secure over $35 million for our local businesses.

Ohio Valley Bank and Loan Central did not lay off  any workers or permanently close any offices. As a matter of fact, it was all hands on deck as we accelerated technology projects, put in overtime, sought opportunities for expansion, and worked to be there for our communities in new ways.

And though we were able to keep business as usual for the most part, special honors had to be delayed. Milestones like the completion of OVB on the Square and the retirement celebration for the distinguished career of former Chairman Jeff Smith were put on hold. We do still plan to celebrate both when Governor DeWine lifts gathering restrictions.

Another event you can count on, though it will be a virtual event, is our 2021 Annual Shareholders Meeting. Plan to join us online May 19th at 3:00 p.m. Have your control number, found with your voting information, ready when you log in. We plan to return to the Ariel Theatre in 2022. Until then, know that your teams here at Ohio Valley Banc Corp. deeply appreciate your ongoing support and will continue working to pay it forward to the communities we share.



Sincerely,
Thomas E. Wiseman
Chairman of the Board & CEO
Ohio Valley Banc Corp.

Larry E. Miller, II
President & Chief Operating Officer
Ohio Valley Banc Corp.

1


[Picture]
Hometown commercial loan officers like Shelly Boothe and Pat Tackett worked into the wee hours of the morning for several days to secure PPP funding for local businesses.




With lobbies closed for much of 2020, contactless banking channels such as mobile banking, ATMs, and drive-thru windows took center stage. With a robust technology infrastructure already in place, Ohio Valley Bank was well prepared for the challenges of the year.

OVB’s ATM network includes 35 locally installed machines and customer surcharge-free access to more than 37,000 through the MoneyPass network. The added convenience of drive-thru ATMs at 12 locations, made banking even easier.

Ohio Valley Bank introduced a major upgrade to its OVB Line telephone banking in May. The project was in progress before the pandemic, but couldn’t come at a better time. The improved OVB Line fielded over 10,000 calls in its first month, answering customer needs on the first ring.

Users flocked to NetTeller internet banking and the OVB Mobile App each month. More than 2,000 customers discovered the ease of mobile banking for the first time in 2020. Text Message Banking received a record 35,358 requests for balances and history.

These electronic channels provided access 24/7 during the unprecedented crisis, but they could never replace the special touch of our hometown community bankers. These remarkable folks found ways to work with safety protocols to continue to provide unmatched service, as proven by the more than 450,000 estimated transactions conducted at OVB drive-thru windows during the year and outreach in the form of  six-months of  deferred loan payments, waived early closeout fees for Christmas Savings accounts, and financial support for charities committed to helping our communities.


2




2020  by  the  numbers



$35,000,000
In 100% forgiveable loans secured by OVB for businesses through the SBA.


$10,649,306.02
Deposited using a cell phone or tablet on the go.
Over a million in the month of December alone!


225,566
Statements and notices contactlessly delivered by OVB eDelivery.


116,640
Online bill payments sent by customers.


678,320
Safe and secure transactions at the ATM.


214,553
People shopped for their next vehicle at the online OVB Auto Loan Center.


77,903
Calls answered by OVB Line telephone banking, assisting customers with
transfers, loan payments, debit card activation and more.


$172,000,000
Increase in total deposits at December 31 over the prior year.





3



[Picture]





Our employees found many ways to work with pandemic restrictions and still be there for our communities who needed us.

Above: Community bankers Maranda Prevatt, Rachel Stevens, and Leigh Anne Roten have a little fun during a clean sweep of  the high touch areas at the Barboursville Office lobby.

Right Page Top Row Left: In March, several improvements were made to the Waverly Office including new concrete and lights for the exterior. Middle: 2020 OVB 4-H Scholar Olivia Harrison with OVB’s Larry Miller and Tom Wiseman. Special thanks to the Gallia Co. 4-H Advisors for allowing us to present this honor during their awards when COVID restrictions cancelled the event where we usually bestow the honor. Right: Larry Miller presents a donation to God’s Hands at Work to help them provide winter heating bill assistance for those financially burdened by the pandemic.

Right Page Middle Row Left: “Penny Bandit”, OVB Jackson’s entry in this year’s Farm Bureau Hog Wild fundraiser made the Top 15 in donations raised. Outfitted in a custom made mask, she was hard to resist. Middle: Community Banker  Alex White shines up the drive- thru window at OVB Rio Grande as they prepare for another day of contactless banking. Right: President and Chief Operating Officer Larry Miller delivered a Merry Christmas message to all from the rooftop patio at OVB on the Square overlooking the OVB Tree at Gallipolis in Lights. OVB on the Square participated in the event for the first time with lighted window displays, rooftop lights, and red and green spotlights at the base of each of the building’s massive windows.

Right Page Bottom Row Left: In July, community banker Crystal Ramey was excited to welcome customers back into the OVB Milton bank lobby. Like all OVB branches, Milton is equipped with safety barriers and social  distancing markers for the continued health of our customers. Middle: OVBC Chairman Tom Wiseman personally delivers the bank’s donation of  10,000 masks to Holzer Health for frontline healthcare workers in need of PPE. Right: Though the bank’s Veteran’s Action Committee (VAC) was unable to hold their annual Ruck Walk fundraiser, they still raised $2,400 for local veterans organizations, largely through the Community First Debit Card program’s veterans designs. Pictured are Tom Wiseman and VAC Chair Johnnie Wamsley presenting the donations to representatives from the American Legion Post 23 in Point Pleasant, Gallia/Meigs/Mason Marine Corps League Detachment 1180, and the Gallipolis VFW.




4







[ Pictures Only]




5



 


OVBC DIRECTORS

Thomas E. Wiseman
Chairman and Chief Executive Officer, Ohio Valley Banc Corp.
and Ohio Valley Bank

Larry E. Miller, II
President & Chief Operating Officer, Ohio Valley Banc Corp. and
Ohio Valley Bank

David W. Thomas, Lead Director
Former Chief Examiner, Ohio Division of Financial Institutions
bank supervision and regulation

Anna P. Barnitz
Treasurer & CFO, Bob’s Market & Greenhouses, Inc.
wholesale horticultural products and retail landscaping stores

Brent A. Saunders
Chairman of the Board, Holzer Health System
Attorney, Halliday, Sheets & Saunders
healthcare

Harold A. Howe
Self-employed, Real Estate Investment and Rental Property

Brent R. Eastman
President and Co-owner, Ohio Valley Supermarkets
Partner, Eastman Enterprises

Kimberly A. Canady
Owner, Canady Farms, LLC
agricultural products and agronomy services

Edward J. Robbins
President & CEO, Ohio Valley Veneer, Inc.
wood harvesting, processing and manufacturing of dry
lumber & flooring in Ohio, Kentucky, and Tennessee



OHIO VALLEY BANK DIRECTORS
Thomas E. Wiseman       Brent R. Eastmam
DavidW. Thomas            K imberly A. Canady
Harold A. Howe              Edward J. Robbins
Anna P. Barnitz                Larry E. Miller, II
Brent A. Saunders
 


 OVBC OFFICERS

Thomas E. Wiseman, Chairman and Chief Executive Officer
Larry E. Miller, II, President & Chief Operating Officer
Scott W. Shockey, Senior Vice President & Chief Financial Officer
Tommy R. Shepherd, Senior Vice President & Secretary
Bryan F. Stepp, Senior Vice President - Lending/Credit

Mario P. Liberatore, Vice President
Cherie A. Elliott, Vice President
Frank W. Davison, Vice President
Ryan J. Jones, Vice President
Allen W. Elliott, Vice President
Shawn R. Siders, Vice President
Bryna S. Butler, Vice President
Marilyn G. Kearns, Vice President
Paula W. Clay, Assistant Secretary
Cindy H. Johnston, Assistant Secretary


LOAN CENTRAL DIRECTORS
Larry E. Miller, II
Cherie A. Elliott
Ryan J. Jones


LOAN CENTRAL OFFICERS
Larry E. Miller, II                          Chairman of the Board
Cherie A. Elliott                             President
Timothy R. Brumfield                   Vice President & Secretary
            Manager, Gallipolis Office
John J. Holtzapfel                          Compliance Officer &
            Manager, Wheelersburg Office
T. Joe Wilson                                 Manager, Waverly Office
Joseph I. Jones                               Manager, South Point Office
Gregory G. Kauffman                    Manager, Chillicothe Office
Steven B. Leach                                                                                                                    Manager, Jackson Office


WEST VIRGINIA ADVISORY BOARD
Mario P. Liberatore              E. Allen Bell
Richard L. Handley             John A. Myers
Stephen L. Johnson


DIRECTORS EMERITUS
W. Lowell Call                     Barney A. Molnar
Steven B. Chapman              Jeffrey E. Smith
Robert E. Daniel                   Wendell B. Thomas
John G. Jones                        Lannes C. Williamson



6




 OHIO VALLEY BANK OFFICERS

EXECUTIVE OFFICERS
Thomas E. Wiseman             
Larry E. Miller, II                  
Scott W. Shockey                 
Tommy R. Shepherd              
Bryan F. Stepp                     
Mario P. Liberatore               

SENIOR VICE PRESIDENTS
FrankW.Davison                 
Ryan J.Jones                         
Allen W.Elliott                     
Shawn R. Siders                    
Bryna S. Butler                
Marilyn G. Kearns                 

VICE PRESIDENTS
Patrick H. Tackett                 
Rick A. Swain                       
Tamela D. LeMaster            
Christopher L. Preston        
Gregory A. Phillips             
Diana L. Parks                      
John A. Anderson                
Kyla R. Carpenter                
E. Kate Cox                          
Brian E. Hall                         
Daniel T. Roush                  
Adam D. Massie                   
Jay D. Miller                         
Jody M. DeWees                   
Christopher S. Petro              
Benjamin F. Pewitt               
Lori A. Edwards                    
Brandon O. Huff                   

ASSISTANT VICE PRESIDENTS
Melissa P. Wooten                 
Kimberly R. Williams          
Paula W. Clay                      
Cindy H. Johnston               
Joe J. Wyant                        
  Brenda G. Henson                
Barbara A. Patrick                
Richard P. Speirs                  
Raymond G. Polcyn            
Anita M. Good                     
Angela S. Kinnaird             
Terri M. Camden                
Shelly N. Boothe                
Stephenie L. Peck              




Chairman and Chief Executive Officer
President and Chief Operating Officer
Executive Vice President, Chief Financial Officer
Executive Vice President and Secretary
Executive Vice President,Lending/Credit
President, OVB West Virginia


 Financial Bank Group
 Chief Risk Officer
 Branch Administration
 Chief Credit Officer
 Corporate Communications
 Human Resources


  Corporate Banking
Western Division Branch Manager
Branch Administration/CRM
Business Development West Virginia
Consumer Lending
Internal Audit Liaison
Director of Loan Operations
Director of Marketing
Director of Cultural Enhancement
Corporate Banking
Senior Compliance Officer
Northern Region Manager
Business Development Officer
Trust
Comptroller
Business Development
Residential Loan Operations Manager
Director of IT


  Shareholder Relations Manager & Trust Officer
Systems Officer
Assistant Secretary                                                                                                  
Assistant Secretary                                                                                             
Region Manager Jackson County
Manager Deposit Services                                                                                     
BSA Officer/Loss Prevention                                                                          
Facilities Manager /Security Officer                                                                  
Manager of Buying Department                                                                           
Branch Retail Banking Officer                                                                       
Customer Support Manager
Human Resources Officer
Business Development Officer
Regional Branch Administrator







OUR

VISION is

to

remain an

independent

community bank










 

ASSISTANT CASHIERS
Lois J. Scherer                                EFT Officer
Glen P. Arrowood, II                      Manager of Indirect Lending
Anthony W. Staley                         Product Development
                  Business Sales & Support
Jon C. Jones                                    Western Cabell Region Manager
Daniel F. Short                                Bend Area Region Manager
Pamela K. Smith                             Eastern Cabell Region Manager
William F. Richards                        Advertising Manager


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[Picture]

Secure the Legacy

Ohio Valley Bank celebrates 150 years in business in 2022. This American institution has survived two World Wars, the Great Depression, the Great Recession, and now two global pandemics.
 
The company’s continued success lies in large part with our loyal OVBC shareholders who join Ohio Valley Bank and Loan Central in our work to put Community First. Our shareholders reinvested over $1 million of their dividends in Ohio Valley Banc Corp. stock in 2020 through the Dividend Reinvestment Program and Employee Stock Ownership Plan. They didn’t stop there. OVBC shareholders then went on to invest close to $600,000 in supplemental investments in the company. When we pay a dividend and shareholders overwhelmingly choose to invest that money back into the company, we know we are doing something right.

As we look to the future of  Ohio Valley Banc Corp., it is important to think about securing the legacy of what our shareholders, customers, and employees have worked so hard to build. As a shareholder, you can help by making plans to pass on shares to heirs who will not just sell them on the open market, but to those who will be dedicated to following your example. Let your family and friends know that you support OVBC and its importance in your life and community. Ensure that your shares will go to those who believe, as you do, in the importance of giving back to our community.
 
  We urge you to make plans now to not only secure the legacy of Ohio Valley Banc Corp., but to secure your role in the continuation of  this local success story.

  Want  to get  your  family involved now? Did you know that you can transfer ownership of shares at any time without brokerage fees? Gifting shares to a child, grandchild, or anyone you wish is simple. If you are a registered shareholder, contact our Shareholder Relations Department at 800-468-6682 or email investorrelations@ ovbc.com for information.

  Thank you for playing a vital role in OVBC’s past, present, and future. We look forward to serving you and your loved ones for many generations to come.







8












OHIO VALLEY BANC CORP.
ANNUAL REPORT 2020
FINANCIALS











SELECTED FINANCIAL DATA

 
 
Years Ended December 31
 
 
 
2020
   
2019
   
2018
   
2017
   
2016
 
(dollars in thousands, except share and per share data)
                             
 
                             
SUMMARY OF OPERATIONS:
                             
 
                             
Total interest income
 
$
46,173
   
$
50,317
   
$
49,197
   
$
45,708
   
$
39,348
 
Total interest expense
   
6,191
     
7,265
     
5,471
     
3,975
     
3,022
 
Net interest income
   
39,982
     
43,052
     
43,726
     
41,733
     
36,326
 
Provision for loan losses
   
2,980
     
1,000
     
1,039
     
2,564
     
2,826
 
Total other income
   
11,438
     
9,166
     
8,938
     
9,435
     
8,239
 
Total other expenses
   
36,133
     
39,498
     
37,426
     
36,609
     
32,899
 
Income before income taxes
   
12,307
     
11,720
     
14,199
     
11,995
     
8,840
 
Income taxes
   
2,048
     
1,813
     
2,255
     
4,486
     
1,920
 
Net income
   
10,259
     
9,907
     
11,944
     
7,509
     
6,920
 
 
                                       
PER SHARE DATA:
                                       
 
                                       
Earnings per share
 
$
2.14
   
$
2.08
   
$
2.53
   
$
1.60
   
$
1.59
 
Cash dividends declared per share
 
$
0.84
   
$
0.84
   
$
0.84
   
$
0.84
   
$
0.82
 
Book value per share
 
$
28.48
   
$
26.77
   
$
24.87
   
$
23.26
   
$
22.40
 
Weighted average number of common shares outstanding 
   
4,787,446
     
4,767,279
     
4,725,971
     
4,685,067
     
4,351,748
 
 
                                       
AVERAGE BALANCE SUMMARY:
                                       
 
                                       
Total loans
 
$
811,434
   
$
775,860
   
$
773,995
   
$
753,204
   
$
644,690
 
Securities(1) 
   
205,532
     
189,187
     
223,390
     
193,199
     
196,389
 
Deposits
   
906,315
     
850,400
     
886,639
     
845,227
     
749,054
 
Other borrowed funds(2) 
   
40,416
     
45,850
     
48,967
     
47,663
     
39,553
 
Shareholders’ equity
   
131,038
     
122,314
     
112,393
     
108,110
     
98,133
 
Total assets
   
1,096,191
     
1,035,230
     
1,063,256
     
1,014,115
     
899,209
 
 
                                       
PERIOD END BALANCES:
                                       
 
                                       
Total loans
 
$
848,664
   
$
772,774
   
$
777,052
   
$
769,319
   
$
734,901
 
Securities(1) 
   
255,662
     
166,761
     
184,925
     
189,941
     
151,985
 
Deposits
   
993,739
     
821,471
     
846,704
     
856,724
     
790,452
 
Shareholders’ equity
   
136,324
     
128,179
     
117,874
     
109,361
     
104,528
 
Total assets
   
1,186,932
     
1,013,272
     
1,030,493
     
1,026,290
     
954,640
 
 
                                       
KEY RATIOS:
                                       
 
                                       
Return on average assets
   
.94
%
   
.96
%
   
1.12
%
   
0.74
%
   
0.77
%
Return on average equity
   
7.83
%
   
8.10
%
   
10.63
%
   
6.95
%
   
7.05
%
Dividend payout ratio
   
39.20
%
   
40.37
%
   
33.20
%
   
52.36
%
   
51.79
%
Average equity to average assets
   
11.95
%
   
11.82
%
   
10.57
%
   
10.66
%
   
10.91
%

(1) Securities include interest-bearing deposits with banks and restricted investments in bank stocks.
(2) Other borrowed funds include subordinated debentures.

9


consolidated statements of condition

 
 
As of December 31
 
 
 
2020
   
2019
 
(dollars in thousands, except share and per share data)
           
 
           
Assets
           
 
           
Cash and noninterest-bearing deposits with banks
 
$
14,989
   
$
12,812
 
Interest-bearing deposits with banks
   
123,314
     
39,544
 
Total cash and cash equivalents
   
138,303
     
52,356
 
 
               
Certificates of deposit in financial institutions
   
2,500
     
2,360
 
Securities available for sale
   
112,322
     
105,318
 
Securities held to maturity (estimated fair value: 2020 - $10,344; 2019 - $12,404) 
   
10,020
     
12,033
 
Restricted investments in bank stocks
   
7,506
     
7,506
 
 
               
Total loans
   
848,664
     
772,774
 
 Less: Allowance for loan losses
   
(7,160
)
   
(6,272
)
Net loans
   
841,504
     
766,502
 
 
               
Premises and equipment, net
   
21,312
     
19,217
 
Premises and equipment held for sale, net
   
637
     
653
 
Other real estate owned, net
   
49
     
540
 
Accrued interest receivable
   
3,319
     
2,564
 
Goodwill
   
7,319
     
7,319
 
Other intangible assets, net
   
112
     
174
 
Bank owned life insurance and annuity assets
   
35,999
     
30,596
 
Operating lease right-of-use asset, net
   
880
     
1,053
 
Other assets
   
5,150
     
5,081
 
Total assets
 
$
1,186,932
   
$
1,013,272
 
 
               
Liabilities
               
 
               
Noninterest-bearing deposits
 
$
314,777
   
$
222,607
 
Interest-bearing deposits
   
678,962
     
598,864
 
Total deposits
   
993,739
     
821,471
 
 
               
Other borrowed funds
   
27,863
     
33,991
 
Subordinated debentures
   
8,500
     
8,500
 
Operating lease liability
   
880
     
1,053
 
Accrued liabilities
   
19,626
     
20,078
 
Total liabilities
   
1,050,608
     
885,093
 
 
               
Commitments and Contingent Liabilities (See Note L)
   
----
     
----
 
 
               
Shareholders’ Equity
               
 
               
Common stock ($1.00 stated value per share, 10,000,000 shares authorized; 2020 – 5,447,185 shares issued; 2019 - 5,447,185 shares issued)
   
5,447
     
5,447
 
Additional paid-in capital
   
51,165
     
51,165
 
Retained earnings
   
92,988
     
86,751
 
Accumulated other comprehensive income
   
2,436
     
528
 
Treasury stock, at cost (659,739 shares)
   
(15,712
)
   
(15,712
)
Total shareholders’ equity
   
136,324
     
128,179
 
 Total liabilities and shareholders’ equity
 
$
1,186,932
   
$
1,013,272
 



See accompanying notes to consolidated financial statements
10


Consolidated Statements of Income

For the years ended December 31
 
2020
   
2019
   
2018
 
(dollars in thousands, except per share data)
                 
 
                 
Interest and dividend income:
                 
Loans, including fees
 
$
43,204
   
$
45,766
   
$
44,365
 
Securities:
                       
Taxable
   
2,164
     
2,542
     
2,377
 
Tax exempt
   
286
     
344
     
369
 
Dividends
   
245
     
393
     
440
 
Interest-bearing deposits with banks
   
226
     
1,221
     
1,608
 
Other interest
   
48
     
51
     
38
 
 
   
46,173
     
50,317
     
49,197
 
Interest expense:
                       
Deposits
   
5,254
     
6,026
     
4,155
 
Other borrowed funds
   
729
     
883
     
986
 
Subordinated debentures
   
208
     
356
     
330
 
 
   
6,191
     
7,265
     
5,471
 
Net interest income 
   
39,982
     
43,052
     
43,726
 
Provision for loan losses
   
2,980
     
1,000
     
1,039
 
Net interest income after provision for loan losses
   
37,002
     
42,052
     
42,687
 
 
                       
Noninterest income:
                       
Service charges on deposit accounts
   
1,685
     
2,118
     
2,084
 
Trust fees
   
257
     
264
     
263
 
Income from bank owned life insurance and annuity assets
   
820
     
704
     
717
 
Mortgage banking income
   
1,254
     
310
     
342
 
Electronic refund check / deposit fees
   
----
     
5
     
1,579
 
Debit / credit card interchange income
   
4,031
     
3,905
     
3,662
 
Loss on other real estate owned
   
(35
)
   
(65
)
   
(559
)
Net gain on branch divestitures
   
----
     
1,256
     
----
 
Tax preparation fees
   
644
     
----
     
----
 
Litigation settlement
   
2,000
     
----
     
----
 
Other
   
782
     
669
     
850
 
 
   
11,438
     
9,166
     
8,938
 
Noninterest expense:
                       
Salaries and employee benefits
   
21,636
     
23,524
     
22,191
 
Occupancy
   
1,817
     
1,771
     
1,754
 
Furniture and equipment
   
1,096
     
1,060
     
1,023
 
Professional fees     
   
1,519
     
2,508
     
2,016
 
Marketing expense
   
613
     
841
     
777
 
FDIC insurance
   
165
     
113
     
447
 
Data processing
   
2,170
     
1,996
     
2,115
 
Software
   
1,454
     
1,705
     
1,533
 
Foreclosed assets
   
128
     
266
     
238
 
Amortization of intangibles
   
62
     
206
     
135
 
Other
   
5,473
     
5,508
     
5,197
 
 
   
36,133
     
39,498
     
37,426
 
Income before income taxes
   
12,307
     
11,720
     
14,199
 
Provision for income taxes
   
2,048
     
1,813
     
2,255
 
NET INCOME
 
$
10,259
   
$
9,907
   
$
11,944
 
                         
Earnings per share
 
$
2.14
   
$
2.08
   
$
2.53
 


See accompanying notes to consolidated financial statements
11


Consolidated Statements of
Comprehensive Income

For the years ended December 31
 
2020
   
2019
   
2018
 
(dollars in thousands)
                 
 
                 
NET INCOME
 
$
10,259
   
$
9,907
   
$
11,944
 
                         
Other comprehensive income (loss):
                       
     Change in unrealized gain (loss) on available for sale securities
   
2,415
     
3,371
     
(1,373
)
     Related tax (expense) benefit
   
(507
)
   
(708
)
   
289
 
          Total other comprehensive income (loss), net of tax
   
1,908
     
2,663
     
(1,084
)
                         
Total comprehensive income
 
$
12,167
   
$
12,570
   
$
10,860
 



See accompanying notes to consolidated financial statements
12


Consolidated Statements of Changes in
Shareholders’ Equity

For the years ended December 31, 2020, 2019, and 2018
       
(dollars in thousands, except share and per share data)
       
 
 
Common
Stock
   
Additional
Paid-In
Capital
   
Retained
Earnings
   
Accumulated Other Comprehensive Income (Loss)
   
Treasury
Stock
   
Total
Shareholders' Equity
 
Balances at January 1, 2018
 
$
5,362
   
$
47,895
   
$
72,694
   
$
(878
)
 
$
(15,712
)
 
$
109,361
 
                                                 
Net income
   
----
     
----
     
11,944
     
----
     
----
     
11,944
 
Other comprehensive income (loss), net
   
----
     
----
     
----
     
(1,084
)
   
----
     
(1,084
)
Amount reclassified out of accumulated other 
comprehensive income (loss)  per ASU 2018-02
   
----
     
----
     
173
     
(173
)
     ----      
----
 
Common stock issued to ESOP, 7,294 shares
   
7
     
288
     
----
     
----
     
----
     
295
 
Common stock issued through dividend reinvestment,
    30,766 shares
   
31
     
1,294
     
----
     
----
     
----
     
1,325
 
Cash dividends, $.84 per share
   
----
     
----
     
(3,967
)
   
----
     
----
     
(3,967
)
Balances at December 31, 2018
   
5,400
     
49,477
     
80,844
     
(2,135
)
   
(15,712
)
   
117,874
 
                                                 
Net income
   
----
     
----
     
9,907
     
----
     
----
     
9,907
 
Other comprehensive income (loss), net
   
----
     
----
     
----
     
2,663
     
----
     
2,663
 
Common stock issued to ESOP, 8,333 shares
   
8
     
320
     
----
     
----
     
----
     
328
 
Common stock issued through dividend reinvestment,
   38,787 shares
   
39
     
1,368
     
----
     
----
     
----
     
1,407
 
Cash dividends, $.84 per share
   
----
     
----
     
(4,000
)
   
----
     
----
     
(4,000
)
Balances at December 31, 2019
   
5,447
     
51,165
     
86,751
     
528
     
(15,712
)
   
128,179
 
                                                 
Net income
   
----
     
----
     
10,259
     
----
     
----
     
10,259
 
Other comprehensive income (loss), net
   
----
     
----
     
----
     
1,908
     
----
     
1,908
 
Cash dividends, $.84 per share
   
----
     
----
     
(4,022
)
   
----
     
----
     
(4,022
)
Balances at December 31, 2020
 
$
5,447
   
$
51,165
   
$
92,988
   
$
2,436
   
$
(15,712
)
 
$
136,324
 



See accompanying notes to consolidated financial statements
13


CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31
 
2020
   
2019
   
2018
 
(dollars in thousands)
                 
 
                 
Cash flows from operating activities:
                 
Net income
 
$
10,259
   
$
9,907
   
$
11,944
 
Adjustments to reconcile net income to net cash provided by operating activities:
                       
Depreciation of premises and equipment
   
1,341
     
1,183
     
1,141
 
Net (accretion) of purchase accounting adjustments
   
(42
)
   
(494
)
   
(188
)
Net amortization of securities
   
459
     
173
     
260
 
Proceeds from sale of loans in secondary market
   
40,158
     
9,840
     
11,034
 
Loans disbursed for sale in secondary market
   
(38,904
)
   
(9,530
)
   
(10,692
)
Amortization of mortgage servicing rights
   
126
     
68
     
55
 
Impairment of mortgage servicing rights
   
11
     
----
     
----
 
Gain on sale of loans
   
(1,391
)
   
(378
)
   
(397
)
Amortization of intangible assets
   
62
     
206
     
135
 
Deferred tax (benefit) expense
   
12
     
367
     
(134
)
Provision for loan losses
   
2,980
     
1,000
     
1,039
 
Common stock issued to ESOP
   
----
     
328
     
295
 
Earnings on bank owned life insurance and annuity assets
   
(820
)
   
(704
)
   
(717
)
Loss on sale of other real estate owned
   
35
     
57
     
21
 
Net write-down of other real estate owned
   
----
     
8
     
538
 
Net gain on branch divestitures
   
----
     
(1,256
)
   
----
 
Change in accrued interest receivable
   
(755
)
   
74
     
(135
)
Change in accrued liabilities
   
(632
)
   
2,376
     
1,946
 
Change in other assets
   
(408
)
   
1,528
     
1,996
 
 Net cash provided by operating activities
   
12,491
     
14,753
     
18,141
 
 
                       
Cash flows from investing activities:
                       
Payments related to branch divestitures
   
----
     
(26,326
)
   
----
 
Proceeds from maturities and paydowns of securities available for sale
   
36,154
     
20,199
     
21,139
 
Purchases of securities available for sale
   
(41,162
)
   
(20,126
)
   
(23,757
)
Proceeds from calls and maturities of securities held to maturity
   
2,694
     
3,754
     
1,711
 
Purchases of securities held to maturity
   
(721
)
   
----
     
----
 
Proceeds from maturities of certificates of deposit in financial institutions
   
980
     
----
     
----
 
Purchases of certificates of deposit in financial institutions
   
(1,120
)
   
(295
)
   
(245
)
Net change in loans
   
(78,038
)
   
2,323
     
(9,981
)
Proceeds from sale of other real estate owned
   
548
     
392
     
1,132
 
Purchases of premises and equipment
   
(3,450
)
   
(6,232
)
   
(2,725
)
Disposals of premises and equipment
   
13
     
402
     
----
 
Purchases of bank owned life insurance and annuity assets
   
(4,583
)
   
(500
)
   
----
 
Net cash (used in) investing activities
   
(88,685
)
   
(26,409
)
   
(12,726
)
 
                       
Cash flows from financing activities:
                       
Change in deposits
   
172,290
     
1,147
     
(9,930
)
Proceeds from common stock through dividend reinvestment
   
----
     
1,407
     
1,325
 
Cash dividends
   
(4,022
)
   
(4,000
)
   
(3,967
)
Proceeds from Federal Home Loan Bank borrowings
   
----
     
----
     
8,000
 
Repayment of Federal Home Loan Bank borrowings
   
(5,093
)
   
(3,676
)
   
(3,162
)
Change in other long-term borrowings
   
(405
)
   
(2,046
)
   
(989
)
Change in other short-term borrowings
   
(629
)
   
----
     
(85
)
Net cash provided by (used in) by financing activities
   
162,141
     
(7,168
)
   
(8,808
)
 
                       
Cash and cash equivalents:
                       
Change in cash and cash equivalents
   
85,947
     
(18,824
)
   
(3,393
)
Cash and cash equivalents at beginning of year
   
52,356
     
71,180
     
74,573
 
Cash and cash equivalents at end of year
 
$
138,303
   
$
52,356
   
$
71,180
 
                         
Supplemental disclosure:
                       
Cash paid for interest
 
$
6,681
   
$
6,931
   
$
5,008
 
Cash paid for income taxes
   
2,050
     
890
     
2,050
 
Transfers from loans to other real estate owned
   
92
     
570
     
547
 
Initial recognition of operating lease right-of-use asset
   
----
     
1,280
     
----
 
Operating lease liability arising from obtaining right-of-use asset
   
----
     
1,280
     
----
 


See accompanying notes to consolidated financial statements
14


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Amounts are in thousands, except share and per share data.
 
Note A - Summary of Significant Accounting Policies

Description of Business:  Ohio Valley Banc Corp. (“Ohio Valley”) is a financial holding company registered under the Bank Holding Company Act of 1956.  Ohio Valley has one banking subsidiary, The Ohio Valley Bank Company (the “Bank”), an Ohio state-chartered bank that is a member of the Federal Reserve Bank (“FRB”) and is regulated primarily by the Ohio Division of Financial Institutions and the Federal Reserve Board.  Ohio Valley also has a subsidiary that engages in consumer lending generally to individuals with higher credit risk history, Loan Central, Inc.; a subsidiary insurance agency that facilitates the receipts of insurance commissions, Ohio Valley Financial Services Agency, LLC; and a limited purpose property and casualty insurance company, OVBC Captive, Inc.  The Bank has one wholly-owned subsidiary, Ohio Valley REO, LLC ("Ohio Valley REO"), an Ohio limited liability company, to which the Bank transfers certain real estate acquired by the Bank through foreclosure for sale by Ohio Valley REO. Ohio Valley and its subsidiaries are collectively referred to as the “Company.”

The Company provides a full range of commercial and retail banking services from 21 offices located in southeastern Ohio and western West Virginia.  It accepts deposits in checking, savings, time and money market accounts and makes personal, commercial, floor plan, student, construction and real estate loans.  Substantially all loans are secured by specific items of collateral, including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from business operations. The Company also offers safe deposit boxes, wire transfers and other standard banking products and services.  The Bank’s deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”).  In addition to accepting deposits and making loans, the Bank invests in U. S. Government and agency obligations, interest-bearing deposits in other financial institutions and investments permitted by applicable law.

The Bank’s trust department provides a wide variety of fiduciary services for trusts, estates and benefit plans and also provides investment and security services as an agent for its customers.

Principles of Consolidation: The consolidated financial statements include the accounts of Ohio Valley and its wholly-owned subsidiaries, the Bank, Loan Central, Inc., Ohio Valley Financial Services Agency, LLC, and OVBC Captive, Inc.  All material intercompany accounts and transactions have been eliminated.

Industry Segment Information:  Internal financial information is primarily reported and aggregated in two lines of business, banking and consumer finance.

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the U.S., management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, noninterest-bearing deposits with banks, federal funds sold and interest-bearing deposits with banks with maturity terms of less than 90 days. Generally, federal funds are purchased and sold for one-day periods. The Company reports net cash flows for customer loan transactions, deposit transactions, short-term borrowings and interest-bearing deposits with other financial institutions.

Certificates of deposit in financial institutions:  Certificates of deposit in financial institutions are carried at cost and have maturity terms of 90 days or greater.  The longest maturity date is May 31, 2023.

Securities: The Company classifies securities into held to maturity and available for sale categories. Held to maturity 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 available for sale 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. Available for sale 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.


15


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note A - Summary of Significant Accounting Policies (continued)

Other-Than-Temporary Impairments of Securities:  In determining an other-than-temporary impairment (“OTTI”), management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an OTTI decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time. 
 
When an OTTI occurs, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss. If an entity intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less any current-period credit loss, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment.

Restricted Investments in Bank Stocks:  As a member of the Federal Home Loan Bank (“FHLB”) system and the FRB system, the Bank is required to own a certain amount of stock based on its level of borrowings and other factors and may invest in additional amounts.  FHLB stock and FRB stock are carried at cost, classified as restricted securities, and periodically evaluated for impairment based on ultimate recovery of par value.  Both cash and stock dividends are reported as income. The Company has additional investments in other restricted bank stocks that are not material to the financial statements.

Loans: 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 allowance for loan losses. 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 is impaired or 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.  Nonaccrual loans and loans past due 90 days or over and still accruing include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

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.  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 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 December 31, 2020, there were $70 in loans held for sale by the Bank, as compared to no loans held for sale at December 31, 2019.


16


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note A - Summary of Significant Accounting Policies (continued)

Allowance for Loan Losses:  The allowance for loan losses is a valuation allowance for probable incurred credit losses.  Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.  Subsequent recoveries, if any, are credited to the allowance.  Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors.  Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off.

The allowance consists of specific and general components.  The specific component relates to loans that are individually classified as impaired.  A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.  Loans for which the terms have been modified and for which the borrower is experiencing financial difficulties are considered troubled debt restructurings and classified as impaired.
 
Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length and reasons for the delay, the borrower’s prior payment record, and the amount of shortfall in relation to the principal and interest owed. 

Commercial and commercial real estate loans are individually evaluated for impairment.  If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.  Smaller balance homogeneous loans, such as consumer and most residential real estate, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosure.  Troubled debt restructurings are measured at the present value of estimated future cash flows using the loan’s effective rate at inception.  If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral.  For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component covers non-impaired loans and impaired loans that are not individually reviewed for impairment and is based on historical loss experience adjusted for current factors.  The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent 3 years for the consumer and real estate portfolio segment and 5 years for the commercial portfolio segment. The total loan portfolio’s actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment.  These economic factors include consideration of the following:  levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.  The following portfolio segments have been identified:  Commercial and Industrial, Commercial Real Estate, Residential Real Estate, and Consumer.

Commercial and industrial loans consist 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.  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.

17


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note A - Summary of Significant Accounting Policies (continued)

Commercial real estate 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.  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.  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 which may be absorbed by the Company.

Residential real estate loans consist 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.
 
Consumer loans are comprised 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 6 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 loan losses as a percentage of loans to the other identified loan portfolio segments due to the larger dollar balances associated with such portfolios.

At December 31, 2020, there were no changes to the accounting policies or methodologies within any of the Company’s loan portfolio segments from the prior period.

Concentrations of Credit Risk:  The Company grants residential, consumer and commercial loans to customers located primarily in the southeastern Ohio and western West Virginia areas.

The following represents the composition of the Company’s loan portfolio as of December 31:

   
% of Total Loans
 
   
2020
   
2019
 
Residential real estate loans
   
36.00
%
   
40.15
%
Commercial real estate loans
   
29.86
%
   
28.75
%
Consumer loans
   
15.56
%
   
18.16
%
Commercial and industrial loans
   
18.58
%
   
12.94
%
     
100.00
%
   
100.00
%
 
Approximately 4.22% of total loans were unsecured at December 31, 2020, down from 5.00% at December 31, 2019.

The Bank, in the normal course of its operations, conducts business with correspondent financial institutions. Balances in correspondent accounts, investments in federal funds, certificates of deposit and other short-term securities are closely monitored to ensure that prudent levels of credit and liquidity risks are maintained.  At December 31, 2020, the Bank’s primary correspondent balance was $121,148 on deposit at the FRB, Cleveland, Ohio.

Premises and Equipment:  Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation, which is computed using the straight-line method over the estimated useful life of the owned asset and, for leasehold improvement, over the remaining term of the leased facility, whichever is shorter. The useful lives range from 3 to 8 years for equipment, furniture and fixtures and 7 to 39 years for buildings and improvements.

Foreclosed assets:  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.  Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense.  Operating costs after acquisition are expensed. Foreclosed assets totaled $49 and $540 at December 31, 2020 and 2019.


18


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Note A - Summary of Significant Accounting Policies (continued)

Goodwill:  Goodwill arises from business combinations and is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date.  Goodwill acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually. Goodwill is the only intangible asset with an indefinite life on our balance sheet. The Company has selected December 31 as the date to perform its annual qualitative impairment test.  Given that the Company’s stock price had traded below book value for an extended period throughout 2020, management could not conclude using a qualitative assessment that its fair value of goodwill exceeded the carrying amount during the year ended December 31, 2020. Therefore, the Company performed a quantitative impairment test to conclude that there was no goodwill impairment for the year ended December 31, 2020. For the year ended December 31, 2019, the Company used a qualitative assessment based on profitability and positive equity to determine that it was more likely than not that the fair value of goodwill was more than the carrying amount, resulting in no impairment.  See Note F for more specific disclosures related to goodwill impairment testing.

Long-term Assets:  Premises and equipment and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.
 
Mortgage Servicing Rights:  A mortgage servicing right (“MSR”) is a contractual agreement where the right to service a mortgage loan is sold by the original lender to another party. When the Company sells mortgage loans to the secondary market, it retains the servicing rights to these loans. The Company’s MSR is recognized separately when acquired through sales of loans and is initially recorded at fair value with the income statement effect recorded in mortgage banking income. Subsequently, the MSR is then amortized in proportion to and over the period of estimated future servicing income of the underlying loan. The MSR is then evaluated for impairment periodically based upon the fair value of the rights as compared to the carrying amount, with any impairment being recognized through a valuation allowance. Fair value of the MSR is based on market prices for comparable mortgage servicing contracts. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type.  If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income.  At December 31, 2020 and 2019, the Company’s MSR assets were $458 and $357, respectively.

Earnings Per Share:  Earnings per share is based on net income divided by the following weighted average number of common shares outstanding during the periods: 4,787,446 for 2020; 4,767,279 for 2019; 4,725,971 for 2018.  Ohio Valley had no dilutive effect and no potential common shares issuable under stock options or other agreements for any period presented.

Income Taxes: Income tax expense is the sum of the current year income tax due or refundable and the change in deferred tax assets and liabilities.  Deferred tax assets and liabilities are the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized at the time of enactment of such change in tax rates.  A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.  The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination.  For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.  The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale which are also recognized as separate components of equity, net of tax.


19


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Note A - Summary of Significant Accounting Policies (continued)

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the financial statements.

Bank Owned Life Insurance and Annuity Assets:  The Company has purchased life insurance policies on certain key executives.  Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. The Company also purchased an annuity investment for a certain key executive that earns interest.

Employee Stock Ownership Plan: Compensation expense is based on the market price of shares as they are committed to be allocated to participant accounts.

Dividend Reinvestment Plan:  The Company maintains a Dividend Reinvestment Plan. The plan enables shareholders to elect to have their cash dividends on all or a portion of shares held automatically reinvested in additional shares of the Company’s common stock. The stock is issued out of the Company’s authorized shares and credited to participant accounts at fair market value. Dividends are reinvested on a quarterly basis.

Loan Commitments and Related Financial Instruments:  Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs.  The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay.  These financial instruments are recorded when they are funded.  See Note L for more specific disclosure related to loan commitments.

Dividend Restrictions:  Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to Ohio Valley or by Ohio Valley to its shareholders.   See Note P for more specific disclosure related to dividend restrictions.

Restrictions on Cash:  Cash on hand or on deposit with a third-party correspondent and the FRB totaled $121,839 at year-end 2020, and was not limited to any regulatory reserve or clearing requirements.  Cash on hand or on deposit with a third-party correspondent and the FRB totaled $38,794 at year-end 2019, and was subject to regulatory reserve and clearing requirements.  The balances on deposit with a third-party correspondent do not earn interest.

Derivatives:  At the inception of a derivative contract, the Company designates the derivative as one of three types based on the Company’s intentions and belief as to likely effectiveness as a hedge.  These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), or (3) an instrument with no hedging designation (“stand-alone derivative”).

Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged.  Net cash settlements on derivatives that do not qualify for hedge accounting are reported in noninterest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.

At December 31, 2020 and 2019, the Company’s only derivatives on hand were interest rate swaps, which are classified as stand-alone derivatives.  See Note H for more specific disclosures related to interest rate swaps.

Fair Value of Financial Instruments:  Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note O.  Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items.  Changes in assumptions or in market conditions could significantly affect the estimates.

Reclassifications: The consolidated financial statements for 2019 and 2018 have been reclassified to conform with the presentation for 2020.  These reclassifications had no effect on the net results of operations or shareholders’ equity.

20


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note A - Summary of Significant Accounting Policies (continued)

Current Events:  In March 2020, the World Health Organization declared the outbreak of the coronavirus (“COVID-19”) as a global pandemic. COVID-19 has continued to negatively impact the global economy, disrupt global supply chains, create significant volatility, disrupt financial markets, and increase unemployment levels. The resulting temporary closure of many businesses and the implementation of social distancing and sheltering-in-place policies has impacted, and may continue to impact, many of the Company’s customers.

The continued financial impact of COVID-19 depends largely on the actions taken by governmental authorities and other third parties. In addition, COVID-19 may continue to adversely impact several industries within our geographic footprint for some time and impair the ability of our customers to fulfill their contractual obligations to the Company. This could result in a material adverse effect on our business operations, asset valuations, liquidity, financial condition, and results of operations. Effects may include:

Increased provision for loan losses. Continued uncertainty regarding the severity and duration of COVID-19 and related economic effects will continue to affect the accounting for loan losses. It also is possible that asset quality could worsen, and that loan charge-offs could increase. The Company is actively participating in the Paycheck Protection Program (“PPP”) by providing loans to small businesses negatively impacted by COVID-19. PPP loans are fully guaranteed by the U.S. government, and if that should change, the Company could be required to increase its allowance for loan losses through an additional provision for loan losses charged to earnings.

Valuation and fair value measurement challenges. Material adverse impacts of COVID-19 may result in valuation impairments on the Company’s securities, impaired loans, goodwill, other real estate owned, and interest rate swap agreements.

Adoption of New Accounting Standard Updates (“ASU”):  In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The adoption of this ASU did not have a material impact on the Company’s consolidated financial position or results of operations.

In January 2017, the FASB amended ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill. The amendment was to simplify the goodwill impairment measurement test by eliminating Step 2. The amendment requires the Company to perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the fair value. Additionally, an entity should consider the tax effects from any tax deductible goodwill on the carrying amount when measuring the impairment loss. This amendment is effective for public business entities for reporting periods beginning after December 15, 2019, including interim periods within that reporting period. The adoption of this ASU did not have a material impact on the Company’s consolidated financial position or results of operations.

Accounting Guidance to be Adopted in Future Periods:  In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses”. ASU 2016-13 requires entities to replace the current “incurred loss” model with an “expected loss” model, which is referred to as the current expected credit loss (“CECL”) model.  These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. A CECL steering committee has developed a CECL model and is evaluating the source data, various credit loss methodologies and model results in relation to the new ASU guidance.  Management expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective.  Management expects the adoption will result in a material increase to the allowance for loan losses balance.  At this time, the impact is being evaluated. On October 16, 2019, the FASB confirmed it would delay the effective date of this ASU for smaller reporting companies, such as the Company, until fiscal years beginning after December 15, 2022.


21


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note B - Securities
 
The following table summarizes the amortized cost and fair value of securities available for sale and securities held to maturity at December 31, 2020 and 2019 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses:
 
 
 
Amortized
Cost
   
Gross Unrealized
Gains
   
Gross Unrealized
Losses
   
Estimated
Fair Value
 
Securities Available for Sale
                       
December 31, 2020
                       
U.S. Government sponsored entity securities
 
$
17,814
   
$
339
   
$
----
   
$
18,153
 
 Agency mortgage-backed securities, residential
   
91,425
     
2,748
     
(4
)
   
94,169
 
Total securities  
 
$
109,239
   
$
3,087
   
$
(4
)
 
$
112,322
 
 
                               
 December 31, 2019
                               
 U.S. Government sponsored entity securities
 
$
16,579
   
$
163
   
$
(6
)
 
$
16,736
 
 Agency mortgage-backed securities, residential
   
88,071
     
807
     
(296
)
   
88,582
 
Total securities  
 
$
104,650
   
$
970
   
$
(302
)
 
$
105,318
 

 
 
Amortized
Cost
   
Gross Unrecognized
Gains
   
Gross Unrecognized
Losses
   
Estimated
Fair Value
 
Securities Held to Maturity
                       
 December 31, 2020
                       
 Obligations of states and political subdivisions
 
$
10,018
   
$
324
   
$
----
   
$
10,342
 
 Agency mortgage-backed securities, residential
   
2
     
----
     
----
     
2
 
Total securities  
 
$
10,020
   
$
324
   
$
----
   
$
10,344
 
 
                               
 December 31, 2019
                               
 Obligations of states and political subdivisions
 
$
12,031
   
$
372
   
$
(1
)
 
$
12,402
 
 Agency mortgage-backed securities, residential
   
2
     
----
     
----
     
2
 
Total securities  
 
$
12,033
   
$
372
   
$
(1
)
 
$
12,404
 
 
At year-end 2020 and 2019, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders’ equity.
 
There were no sales of debt securities during 2020, 2019 and 2018.
 
Securities with a carrying value of approximately $83,344 at December 31, 2020 and $78,418 at December 31, 2019 were pledged to secure public deposits and repurchase agreements and for other purposes as required or permitted by law.
 
Unrealized losses on the Company’s debt securities have not been recognized into income because the issuers’ securities are of high credit quality as of December 31, 2020, and management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery.  Management does not believe any individual unrealized loss at December 31, 2020 and 2019 represents an OTTI.


22


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note B - Securities (continued)

The amortized cost and estimated fair value of debt securities at December 31, 2020, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay the debt obligations prior to their contractual maturities. Securities not due at a single maturity are shown separately. 

 
 
Available for Sale
   
Held to Maturity
 
Debt Securities:
 
Amortized
Cost
   
Estimated
Fair
Value
   
Amortized
Cost
   
Estimated
Fair
Value
 
Due in one year or less
 
$
4,599
   
$
4,612
   
$
2,016
   
$
2,048
 
 Due in one to five years
   
8,215
     
8,531
     
4,107
     
4,276
 
 Due in five to ten years
   
5,000
     
5,010
     
3,895
     
4,018
 
 Agency mortgage-backed securities, residential
   
91,425
     
94,169
     
2
     
2
 
Total debt securities  
 
$
109,239
   
$
112,322
   
$
10,020
   
$
10,344
 
   
The following table summarizes securities with unrealized losses at December 31, 2020 and December 31, 2019, aggregated by major security type and length of time in a continuous unrealized loss position:

December 31, 2020
Less than 12 Months
 
12 Months or More
 
Total
 
Securities Available for Sale
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
Agency mortgage-backed securities, residential
 
$
14,517
   
$
(4
)
 
$
----
   
$
----
   
$
14,517
   
$
(4
)
Total available for sale
 
$
14,517
   
$
(4
)
 
$
----
   
$
----
   
$
14,517
   
$
(4
)


December 31, 2019
Less than 12 Months
 
12 Months or More
 
Total
 
Securities Available for Sale
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
U.S. Government sponsored entity securities
 
$
----
   
$
----
   
$
1,999
   
$
(6
)
 
$
1,999
   
$
(6
)
Agency mortgage-backed securities, residential
   
15,041
     
(84
)
   
21,344
     
(212
)
   
36,385
     
(296
)
 Total available for sale
 
$
15,041
   
$
(84
)
 
$
23,343
   
$
(218
)
 
$
38,384
   
$
(302
)


 
Less than 12 Months
 
12 Months or More
 
Total
 
Securities Held to Maturity
Fair
Value
 
Unrecognized
Loss
 
Fair
Value
 
Unrecognized
Loss
 
Fair
Value
 
Unrecognized
Loss
 
Obligations of states and political subdivisions
 
$
204
   
$
(1
)
 
$
----
   
$
----
   
$
204
   
$
(1
)
 Total held to maturity
 
$
204
   
$
(1
)
 
$
----
   
$
----
   
$
204
   
$
(1
)
 


23


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note C - Loans and Allowance for Loan Losses

Loans are comprised of the following at December 31:
 
 
2020
   
2019
 
Residential real estate
 
$
305,478
   
$
310,253
 
Commercial real estate:
               
Owner-occupied
   
51,863
     
55,825
 
Nonowner-occupied
   
164,523
     
131,398
 
Construction
   
37,063
     
34,913
 
Commercial and industrial
   
157,692
     
100,023
 
Consumer:
               
Automobile
   
55,241
     
63,770
 
Home equity
   
19,993
     
22,882
 
Other
   
56,811
     
53,710
 
 
   
848,664
     
772,774
 
Less: Allowance for loan losses
   
(7,160
)
   
(6,272
)
 
               
Loans, net
 
$
841,504
   
$
766,502
 
 
Commercial and industrial loans include $27,933 of loans originated under the PPP at December 31, 2020. These loans are guaranteed by the SBA.

The following table presents the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2020, 2019 and 2018:

December 31, 2020
 
Residential
Real Estate
   
Commercial
Real Estate
   
Commercial
& Industrial
   
Consumer
   
Total
 
Allowance for loan losses:
                             
Beginning balance
 
$
1,250
   
$
1,928
   
$
1,447
   
$
1,647
   
$
6,272
 
Provision for loan losses
   
413
     
946
     
443
     
1,178
     
2,980
 
Loans charged off
   
(340
)
   
(559
)
   
(185
)
   
(1,949
)
   
(3,033
)
 Recoveries
   
157
     
116
     
71
     
597
     
941
 
 Total ending allowance balance
 
$
1,480
   
$
2,431
   
$
1,776
   
$
1,473
   
$
7,160
 


December 31, 2019
 
Residential
Real Estate
   
Commercial
Real Estate
   
Commercial
& Industrial
   
Consumer
   
Total
 
Allowance for loan losses:
                             
Beginning balance
 
$
1,583
   
$
2,186
   
$
1,063
   
$
1,896
   
$
6,728
 
Provision for loan losses
   
98
     
(1,745
)
   
1,807
     
840
     
1,000
 
Loans charged off
   
(1,060
)
   
(602
)
   
(1,513
)
   
(1,917
)
   
(5,092
)
 Recoveries
   
629
     
2,089
     
90
     
828
     
3,636
 
 Total ending allowance balance
 
$
1,250
   
$
1,928
   
$
1,447
   
$
1,647
   
$
6,272
 

 
December 31, 2018
 
Residential
Real Estate
   
Commercial
Real Estate
   
Commercial
& Industrial
   
Consumer
   
Total
 
Allowance for loan losses:
                             
Beginning balance
 
$
1,470
   
$
2,978
   
$
1,024
   
$
2,027
   
$
7,499
 
Provision for loan losses
   
772
     
(1,311
)
   
(80
)
   
1,658
     
1,039
 
Loans charged off
   
(874
)
   
(4
)
   
(208
)
   
(2,514
)
   
(3,600
)
 Recoveries
   
215
     
523
     
327
     
725
     
1,790
 
 Total ending allowance balance
 
$
1,583
   
$
2,186
   
$
1,063
   
$
1,896
   
$
6,728
 
 


24


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


 Note C - Loans and Allowance for Loan Losses (continued)
 
The following table presents the balance in the allowance for loan losses and the recorded investment of loans by portfolio segment and based on impairment method as of December 31, 2020 and 2019:
 
December 31, 2020
 
Residential
Real Estate
   
Commercial
Real Estate
   
Commercial
& Industrial
   
Consumer
   
Total
 
Allowance for loan losses:
                             
Ending allowance balance attributable to loans:
                             
Individually evaluated for impairment
 
$
----
   
$
----
   
$
----
   
$
----
   
$
----
 
 Collectively evaluated for impairment
   
1,480
     
2,431
     
1,776
     
1,473
     
7,160
 
Total ending allowance balance
 
$
1,480
   
$
2,431
   
$
1,776
   
$
1,473
   
$
7,160
 
 
                                       
Loans:
                                       
Loans individually evaluated for impairment
 
$
411
   
$
5,845
   
$
4,686
   
$
84
   
$
11,026
 
 Loans collectively evaluated for impairment
   
305,067
     
247,604
     
153,006
     
131,961
     
837,638
 
 Total ending loans balance
 
$
305,478
   
$
253,449
   
$
157,692
   
$
132,045
   
$
848,664
 


December 31, 2019
 
Residential
Real Estate
   
Commercial
Real Estate
   
Commercial
& Industrial
   
Consumer
   
Total
 
Allowance for loan losses:
                             
Ending allowance balance attributable to loans:
                             
Individually evaluated for impairment
 
$
----
   
$
385
   
$
303
   
$
119
   
$
807
 
 Collectively evaluated for impairment
   
1,250
     
1,543
     
1,144
     
1,528
     
5,465
 
Total ending allowance balance
 
$
1,250
   
$
1,928
   
$
1,447
   
$
1,647
   
$
6,272
 
 
                                       
Loans:
                                       
Loans individually evaluated for impairment
 
$
438
   
$
11,300
   
$
4,910
   
$
487
   
$
17,135
 
 Loans collectively evaluated for impairment
   
309,815
     
210,836
     
95,113
     
139,875
     
755,639
 
 Total ending loans balance
 
$
310,253
   
$
222,136
   
$
100,023
   
$
140,362
   
$
772,774
 



25


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
Note C – Loans and Allowance for Loan Losses (continued)
 
The following table presents information related to loans individually evaluated for impairment by class of loans as of the years ended December 31, 2020, 2019 and 2018:

December 31, 2020
 
Unpaid
Principal
Balance
   
Recorded
Investment
   
Allowance for
Loan Losses
Allocated
   
Average
Impaired
Loans
   
Interest
Income
Recognized
   
Cash Basis
Interest
Recognized
 
With an allowance recorded:
 
$
----
   
$
----
   
$
----
   
$
----
   
$
----
   
$
----
 
With no related allowance recorded:
                                               
 Residential real estate
   
418
     
411
     
----
     
423
     
21
     
21
 
 Commercial real estate:
                                               
 Owner-occupied
   
5,256
     
5,256
     
----
     
3,417
     
260
     
260
 
    Nonowner-occupied
   
632
     
589
     
----
     
626
     
29
     
29
 
 Commercial and industrial
   
4,686
     
4,686
     
----
     
3,772
     
196
     
196
 
 Consumer:
                                               
 Home equity
   
34
     
34
     
----
     
28
     
2
     
2
 
 Other
   
50
     
50
     
----
     
10
     
2
     
2
 
                                                 
Total
 
$
11,076
   
$
11,026
   
$
----
   
$
8,276
   
$
510
   
$
510
 

December 31, 2019
 
Unpaid
Principal
Balance
   
Recorded
Investment
   
Allowance for
Loan Losses
Allocated
   
Average
Impaired
Loans
   
Interest
Income
Recognized
   
Cash Basis
Interest
Recognized
 
With an allowance recorded:
                                   
Commercial real estate:
                                   
 Owner-occupied
 
$
2,030
   
$
2,030
   
$
385
   
$
1,375
   
$
197
   
$
197
 
 Commercial and industrial
   
4,861
     
4,861
     
303
     
4,796
     
319
     
319
 
 Consumer:
                                               
 Automobile
   
8
     
8
     
8
     
2
     
----
     
----
 
 Other
   
111
     
111
     
111
     
22
     
9
     
9
 
                                                 
With no related allowance recorded:
                                               
 Residential real estate
   
438
     
438
     
----
     
453
     
23
     
23
 
 Commercial real estate:
                                               
 Owner-occupied
   
1,778
     
1,778
     
----
     
1,902
     
113
     
113
 
    Nonowner-occupied
   
7,492
     
7,492
     
----
     
6,160
     
477
     
477
 
 Commercial and industrial
   
49
     
49
     
----
     
300
     
111
     
111
 
 Consumer:
                                               
 Home equity
   
368
     
368
     
----
     
143
     
19
     
19
 
                                                 
Total
 
$
17,135
   
$
17,135
   
$
807
   
$
15,153
   
$
1,268
   
$
1,268
 



26


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Note C – Loans and Allowance for Loan Losses (continued)

December 31, 2018
 
Unpaid
Principal
Balance
   
Recorded
Investment
   
Allowance for
Loan Losses
Allocated
   
Average
Impaired
Loans
   
Interest
Income
Recognized
   
Cash Basis
Interest
Recognized
 
With an allowance recorded:
                                   
Commercial real estate:
                                   
 Nonowner-occupied
 
$
362
   
$
362
   
$
98
   
$
367
   
$
15
   
$
15
 
 
                                               
With no related allowance recorded:
                                               
 Residential real estate
   
1,667
     
1,667
     
----
     
511
     
101
     
101
 
 Commercial real estate:
                                               
 Owner-occupied
   
2,527
     
2,527
     
----
     
2,475
     
141
     
141
 
    Nonowner-occupied
   
2,368
     
946
     
----
     
1,912
     
57
     
57
 
     Construction   
   
336
     
----
     
----
     
----
     
20
     
20
 
 Commercial and industrial
   
7,116
     
7,116
     
----
     
5,802
     
414
     
414
 
                                                 
Total
 
$
14,376
   
$
12,618
   
$
98
   
$
11,067
   
$
748
   
$
748
 

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

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

The Company transfers loans to other real estate owned, at fair value less cost to sell, in the period the Company obtains physical possession of the property (through legal title or through a deed in lieu). As of December 31, 2020 and December 31, 2019, other real estate owned for residential real estate properties totaled $43 and $68, respectively. In addition, nonaccrual residential mortgage loans that are in the process of foreclosure had a recorded investment of $1,097 and $1,780 as of December 31, 2020 and December 31, 2019, respectively.
 
The following table presents the recorded investment of nonaccrual loans and loans past due 90 days or more and still accruing by class of loans as of December 31, 2020 and 2019:

 
 
Loans Past Due 90 Days
And Still Accruing
   
Nonaccrual
 
December 31, 2020
           
Residential real estate
 
$
127
   
$
5,256
 
Commercial real estate:
               
Owner-occupied
   
----
     
205
 
Nonowner-occupied
   
----
     
362
 
Construction 
   
----
     
156
 
Commercial and industrial
   
15
     
149
 
Consumer:
               
Automobile
   
146
     
129
 
Home equity
   
----
     
210
 
Other
   
136
     
36
 
Total
 
$