10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number 0-20914

OHIO VALLEY BANC CORP.

(Exact name of registrant as specified in its charter)

Ohio	31-1359191
(State of Incorporation)	(I.R.S. Employer Identification No.)

420 Third Avenue, Gallipolis, Ohio	45631
(Address of principal executive offices)	(ZIP Code)

(740) 446-2631

(Registrant’s telephone number, including area code)

_____________________

Securities registered pursuant to Section 12(b) of the Act:

Common shares, without par value	OVBC	The NASDAQ Stock Market LLC
(Title of each class)	(Trading Symbol)	(Name of each exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data file required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,  a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☐	Accelerated filer  ☐
Non-accelerated filer  ☒	Smaller reporting company  ☒
Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of common shares, without par value, of the registrant outstanding as of  November 15, 2021 was 4,770,877.

OHIO VALLEY BANC CORP.

Index

		Page Number
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Changes in Shareholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to the Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43
Signatures		44

2

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

OHIO VALLEY BANC CORP.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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

	September 30, 2021			December 31, 2020
ASSETS
Cash and noninterest-bearing deposits with banks	$	14,328		$	14,989
Interest-bearing deposits with banks		120,736			123,314
Total cash and cash equivalents		135,064			138,303
Certificates of deposit in financial institutions		2,500			2,500
Securities available for sale		173,448			112,322
Securities held to maturity (estimated fair value: 2021 - $9,949; 2020 - $10,344)		9,753			10,020
Restricted investments in bank stocks		7,265			7,506
Total loans		845,733			848,664
Less: Allowance for loan losses		(6,664	)		(7,160	)
Net loans		839,069			841,504
Premises and equipment, net		20,811			21,312
Premises and equipment held for sale, net		441			637
Other real estate owned, net		—			49
Accrued interest receivable		3,118			3,319
Goodwill		7,319			7,319
Other intangible assets, net		74			112
Bank owned life insurance and annuity assets		37,078			35,999
Operating lease right-of-use asset, net		1,235			880
Other assets		8,203			5,150
Total assets	$	1,245,378		$	1,186,932
LIABILITIES
Noninterest-bearing deposits	$	331,195		$	314,777
Interest-bearing deposits		720,480			678,962
Total deposits		1,051,675			993,739
Other borrowed funds		23,285			27,863
Subordinated debentures		8,500			8,500
Operating lease liability		1,235			880
Accrued liabilities		19,753			19,626
Total liabilities		1,104,448			1,050,608
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 5)
SHAREHOLDERS’ EQUITY
Common stock ($1.00 stated value per share, 10,000,000 shares authorized; 5,447,185 shares issued)		5,447			5,447
Additional paid-in capital		51,165			51,165
Retained earnings		99,400			92,988
Accumulated other comprehensive income		1,088			2,436
Treasury stock, at cost (2021 - 676,308 shares, 2020 - 659,739 shares)		(16,170	)		(15,712	)
Total shareholders’ equity		140,930			136,324
Total liabilities and shareholders’ equity	$	1,245,378		$	1,186,932

See accompanying notes to consolidated financial statements

3

OHIO VALLEY BANC CORP.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(dollars in thousands, except per share data)

	Three months ended September 30,						Nine months ended September 30,
	2021			2020			2021			2020
Interest and dividend income:
Loans, including fees	$	10,522		$	10,877		$	31,649		$	32,389
Securities
Taxable		527			535			1,411			1,723
Tax exempt		61			73			180			220
Dividends		58			58			174			188
Interest-bearing deposits with banks		50			20			111			200
Other Interest		8			11			26			38
		11,226			11,574			33,551			34,758
Interest expense:
Deposits		692			1,274			2,374			4,150
Other borrowed funds		136			174			436			561
Subordinated debentures		39			44			119			166
		867			1,492			2,929			4,877
Net interest income		10,359			10,082			30,622			29,881
Provision for loan losses		(93	)		(2	)		(118	)		3,451
Net interest income after provision for loan losses		10,452			10,084			30,740			26,430
Noninterest income:
Service charges on deposit accounts		514			423			1,309			1,249
Trust fees		70			64			212			193
Income from bank owned life insurance and annuity assets		253			207			701			616
Mortgage banking income		179			445			544			966
Electronic refund check / deposit fees		—			—			675			—
Debit / credit card interchange income		1,237			1,130			3,460			3,003
Gain (loss) on other real estate owned		—			(1	)		1			(84	)
Tax preparation fees		3			9			752			643
Litigation settlement		—			—			—			2,000
Other		356			157			803			539
		2,612			2,434			8,457			9,125
Noninterest expense:
Salaries and employee benefits		5,476			5,973			16,025			16,854
Occupancy		483			481			1,415			1,362
Furniture and equipment		287			284			852			824
Professional fees		425			525			1,282			1,596
Marketing expense		128			306			664			867
FDIC insurance		84			69			242			93
Data processing		667			538			1,902			1,841
Software		464			318			1,347			1,111
Foreclosed assets		10			38			32			117
Amortization of intangibles		11			14			38			48
Other		1,434			1,345			4,154			4,299
		9,469			9,891			27,953			29,012
Income before income taxes		3,595			2,627			11,244			6,543
Provision for income taxes		559			333			1,816			984
NET INCOME	$	3,036		$	2,294		$	9,428		$	5,559
Earnings per share	$	0.63		$	0.48		$	1.97		$	1.16

See accompanying notes to consolidated financial statements

4

OHIO VALLEY BANC CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(dollars in thousands)

	Three months ended September 30,						Nine months ended September 30,
	2021			2020			2021			2020
Net Income	$	3,036		$	2,294		$	9,428		$	5,559
Other comprehensive income (loss):
Change in unrealized gain (loss) on available for sale securities		(85	)		(267	)		(1,706	)		2,755
Related tax (expense) benefit		18			56			358			(579	)
Total other comprehensive income (loss), net of tax		(67	)		(211	)		(1,348	)		2,176
Total comprehensive income	$	2,969		$	2,083		$	8,080		$	7,735

See accompanying notes to consolidated financial statements

5

OHIO VALLEY BANC CORP.

CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS’ EQUITY (UNAUDITED)

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

Quarter-to-date	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Shareholders' Equity
Balance at July 1, 2021	$	5,447	$	51,165	$	97,369		$	1,155		$	(15,712	)	$	139,424
Net income		—		—		3,036			—			—			3,036
Other comprehensive loss, net		—		—		—			(67	)		—			(67	)
Cash dividends, $0.21 per share		—		—		(1,005	)		—			—			(1,005	)
Shares acquired for treasury, 16,569 shares		—		—		—			—			(458	)		(458	)
Balance at September 30, 2021	$	5,447	$	51,165	$	99,400		$	1,088		$	(16,170	)	$	140,930
Balance at July 1, 2020	$	5,447	$	51,165	$	88,006		$	2,915		$	(15,712	)	$	131,821
Net income		—		—		2,294			—			—			2,294
Other comprehensive loss, net		—		—		—			(211	)		—			(211	)
Cash dividends, $0.21 per share		—		—		(1,006	)		—			—			(1,006	)
Balance at September 30, 2020	$	5,447	$	51,165	$	89,294		$	2,704		$	(15,712	)	$	132,898

Year-to-date	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Shareholders' Equity
Balance at January 1, 2021	$	5,447	$	51,165	$	92,988		$	2,436		$	(15,712	)	$	136,324
Net income		—		—		9,428			—			—			9,428
Other comprehensive income, net		—		—		—			(1,348	)		—			(1,348	)
Cash dividends, $0.63 per share		—		—		(3,016	)		—			—			(3,016	)
Shares acquired for treasury, 16,569 shares		—		—		—			—			(458	)		(458	)
Balance at September 30, 2021	$	5,447	$	51,165	$	99,400		$	1,088		$	(16,170	)	$	140,930
Balance at January 1, 2020	$	5,447	$	51,165	$	86,751		$	528		$	(15,712	)	$	128,179
Net income		—		—		5,559			—			—			5,559
Other comprehensive income, net		—		—		—			2,176			—			2,176
Cash dividends, $0.63 per share		—		—		(3,016	)		—			—			(3,016	)
Balance at September 30, 2020	$	5,447	$	51,165	$	89,294		$	2,704		$	(15,712	)	$	132,898

See accompanying notes to consolidated financial statements

6

OHIO VALLEY BANC CORP.

CONDENSED CONSOLIDATED STATEMENTS OF

CASH FLOWS (UNAUDITED)

(dollars in thousands)

	Nine months ended September 30,
	2021			2020
Net cash provided by operating activities:	$	8,080		$	7,530
Investing activities:
Proceeds from maturities of securities available for sale		32,814			23,344
Purchases of securities available for sale		(96,240	)		(25,884	)
Proceeds from maturities of securities held to maturity		1,586			328
Purchase of securities held to maturity		(1,341	)		—
Proceeds from maturities of certificates of deposit in financial institutions		735			735
Purchase of certificates of deposit in financial institutions		(735	)		(1,120	)
Redemptions of federal home loan bank stock		241			—
Net change in loans		2,548			(82,347	)
Proceeds from sale of other real estate owned		49			446
Purchases of premises and equipment		(797	)		(3,101	)
Disposals of premises and equipment		486			—
Purchases of bank owned life insurance and annuity assets		(550	)		(4,583	)
Net cash (used in) investing activities		(61,204	)		(92,182	)
Financing activities:
Change in deposits		57,937			123,536
Cash dividends		(3,016	)		(3,016	)
Purchases of treasury stock		(458	)		—
Proceeds from Federal Home Loan Bank borrowings		600			—
Repayment of Federal Home Loan Bank borrowings		(4,118	)		(3,994	)
Change in other long-term borrowings		—			(406	)
Change in other short-term borrowings		(1,060	)		(270	)
Net cash provided by financing activities		49,885			115,850
Change in cash and cash equivalents		(3,239	)		31,198
Cash and cash equivalents at beginning of period		138,303			52,356
Cash and cash equivalents at end of period	$	135,064		$	83,554
Supplemental disclosure:
Cash paid for interest	$	3,525		$	5,117
Cash paid for income taxes		2,400			1,950
Transfers from loans to other real estate owned		—			86
Proceeds from bank owned life insurance and annuity assets not settled		173			—

See accompanying notes to consolidated financial statements

7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 (“Loan Central”), Ohio Valley Financial Services Agency, LLC, an insurance agency, and OVBC Captive, Inc., a limited purpose property and casualty insurance company (the “Captive”).  The Bank has two wholly-owned subsidiaries, Race Day Mortgage, Inc., a mortgage banking company, 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.  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 September 30, 2021, 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, 2021 are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, 2021.  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, 2020 contains consolidated financial statements and related notes which should be read in conjunction with the accompanying consolidated financial statements.

The consolidated financial statements for 2020 have been reclassified to conform to the presentation for 2021.  These reclassifications had no effect on net income or shareholders’ equity.

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 volatility, disrupt financial markets, and increase unemployment levels.

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. These effects may include an increase in the Company’s allowance for loan losses and valuation impairments on the Company’s securities, impaired loans, goodwill, other real estate owned, and interest rate swap agreements.

8

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:  The accounting and reporting policies followed by the Company conform to US GAAP established by the Financial Accounting Standards Board (“FASB”). The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

INDUSTRY SEGMENT INFORMATION:  Internal financial information is primarily reported and aggregated in two lines of business: banking and consumer finance.

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 September 30, 2021, there were $858 in loans held for sale by the Bank, as compared to $70 in loans held for sale at December 31, 2020.

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.

9

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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 September 30, 2021, there were no changes to the accounting policies or methodologies within any of the Company’s loan portfolio segments from the prior period.

EARNINGS PER SHARE:  Earnings per share are computed based on net income divided by the weighted average number of common shares outstanding during the period.  The weighted average common shares outstanding were 4,783,886 and 4,787,446 for the three months ended September 30, 2021 and 2020, respectively.  The weighted average common shares outstanding were 4,786,246 and 4,787,446 for the nine months ended September 30,2021 and 2020, respectively.  Ohio Valley had no dilutive effect and no potential common shares issuable under stock options or other agreements for any period presented.

10

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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. The Bank's 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.  For SEC filers who are smaller reporting companies, such as the Company, ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

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.

Level 2: 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.

Level 3: 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:

Securities:  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). 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.

Impaired Loans:  At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses. 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. 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.  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. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

11

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Other Real Estate Owned:  Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. 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. 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.

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).

Assets and Liabilities Measured on a Recurring Basis

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

	Fair Value Measurements at September 30, 2021 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
U.S. Government securities		—	$	17,724			—
U.S. Government sponsored entity securities		—		29,992			—
Agency mortgage-backed securities, residential		—		125,732			—
Interest rate swap derivatives		—		699			—
Liabilities:
Interest rate swap derivatives		—		(699	)		—

	Fair Value Measurements at December 31, 2020 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
U.S. Government sponsored entity securities		—	$	18,153			—
Agency mortgage-backed securities, residential		—		94,169			—
Interest rate swap derivatives		—		928			—
Liabilities:
Interest rate swap derivatives		—		(928	)		—

There were no transfers between Level 1 and Level 2 during 2021 or 2020.

Assets and Liabilities Measured on a Nonrecurring Basis

There were no assets or liabilities measured at fair value on a nonrecurring basis at September 30, 2021 and December 31, 2020.

There was no other real estate owned that was measured at fair value less costs to sell at September 30, 2021 and December 31, 2020. There were no corresponding write downs during the three and nine months ended September 30, 2021 and 2020.

There was no quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at September 30, 2021 and December 31, 2020.

12

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The carrying amounts and estimated fair values of financial instruments at September 30, 2021 and December 31, 2020 are as follows:

	Carrying		Fair Value Measurements at September 30, 2021 Using
	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	135,064	$	135,064	$	—	$	—	$	135,064
Certificates of deposit in financial institutions		2,500		—		2,500		—		2,500
Securities available for sale		173,448		—		173,448		—		173,448
Securities held to maturity		9,753		—		5,993		3,956		9,949
Loans, net		839,069		—		—		836,161		836,161
Interest rate swap derivatives		699		—		699		—		699
Accrued interest receivable		3,118		—		444		2,674		3,118
Financial liabilities:
Deposits		1,051,675		331,195		721,283		—		1,052,478
Other borrowed funds		23,285		—		24,442		—		24,442
Subordinated debentures		8,500		—		5,522		—		5,522
Interest rate swap derivatives		699		—		699		—		699
Accrued interest payable		503		1		502		—		503

	Carrying		Fair Value Measurements at December 31, 2020 Using
	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	138,303	$	138,303	$	—	$	—	$	138,303
Certificates of deposit in financial institutions		2,500		—		2,500		—		2,500
Securities available for sale		112,322		—		112,322		—		112,322
Securities held to maturity		10,020		—		4,989		5,355		10,344
Loans, net		841,504		—		—		837,387		837,387
Interest rate swap derivatives		928		—		928		—		928
Accrued interest receivable		3,319		—		283		3,036		3,319
Financial liabilities:
Deposits		993,739		314,777		680,904		—		995,681
Other borrowed funds		27,863		—		29,807		—		29,807
Subordinated debentures		8,500		—		5,556		—		5,556
Interest rate swap derivatives		928		—		928		—		928
Accrued interest payable		1,100		1		1,099		—		1,100

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

13

NOTE 3 – SECURITIES

The following table summarizes the amortized cost and fair value of securities available for sale and securities held to maturity at September 30, 2021 and December 31, 2020, 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	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2021
U.S. Government securities	$	17,800	$	—	$	(76	)	$	17,724
U.S. Government sponsored entity securities		29,980		171		(159	)		29,992
Agency mortgage-backed securities, residential		124,291		1,960		(519	)		125,732
Total securities	$	172,071	$	2,131	$	(754	)	$	173,448
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

Securities Held to Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Estimated Fair Value
September 30, 2021
Obligations of states and political subdivisions	$	9,751	$	232	$	(36	)	$	9,947
Agency mortgage-backed securities, residential		2		—		—			2
Total securities	$	9,753	$	232	$	(36	)	$	9,949
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

The amortized cost and estimated fair value of debt securities at September 30, 2021, 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	$	4,001	$	4,037	$	1,093	$	1,117
Due in over one to five years		11,187		11,266		3,752		3,863
Due in over five to ten years		32,592		32,413		4,579		4,648
Due after ten years		—		—		327		319
Agency mortgage-backed securities, residential		124,291		125,732		2		2
Total debt securities	$	172,071	$	173,448	$	9,753	$	9,949

14

NOTE 3 – SECURITIES (Continued)

The following table summarizes securities with unrealized losses at September 30, 2021 and December 31, 2020, aggregated by major security type and length of time in a continuous unrealized loss position:

September 30, 2021	Less Than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Securities Available for Sale
U.S. Government securities	$	17,724	$	(76	)	$	—	$	—	$	17,724	$	(76	)
U.S. Government sponsored entity securities		17,340		(159	)		—		—		17,340		(159	)
Agency mortgage-backed securities,
residential		66,278		(519	)		—		—		66,278		(519	)
Total available for sale	$	101,342	$	(754	)	$	—	$	—	$	101,342	$	(754	)

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

September 30, 2021	Less Than 12 Months							12 Months or More						Total
	Fair Value			Unrecognized Loss				Fair Value			Unrecognized Loss			Fair Value			Unrecognized Loss
Securities Held to Maturity
Obligations of states and political subdivisions		$	1,621		$	(36	)		$	—		$	—		$	1,621		$	(36	)
Total held to maturity		$	1,621		$	(36	)		$	—		$	—		$	1,621		$	(36	)

There were no sales of investment securities during the three and nine months ended September 30, 2021 or 2020. Unrealized losses on the Company’s debt securities have not been recognized into income because the issuers’ securities were of high credit quality as of September 30, 2021, 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 September 30, 2021 and December 31, 2020 represents an other-than-temporary impairment.

15

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are comprised of the following:

	September 30, 2021			December 31, 2020
Residential real estate	$	280,104		$	305,478
Commercial real estate:
Owner-occupied		74,340			51,863
Nonowner-occupied		174,627			164,523
Construction		33,605			37,063
Commercial and industrial		144,154			157,692
Consumer:
Automobile		53,022			55,241
Home equity		21,521			19,993
Other		64,360			56,811
		845,733			848,664
Less:  Allowance for loan losses		(6,664	)		(7,160	)
Loans, net	$	839,069		$	841,504

Commercial and industrial loans include $5,611 of loans originated under the PPP at September 30, 2021.  These loans are guaranteed by the SBA.

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2021 and 2020:

September 30, 2021	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,088		$	2,532		$	1,746		$	1,433		$	6,799
Provision for loan losses		(34	)		10			(263	)		194			(93	)
Loans charged off		(49	)		(63	)		(25	)		(280	)		(417	)
Recoveries		40			115			113			107			375
Total ending allowance balance	$	1,045		$	2,594		$	1,571		$	1,454		$	6,664

September 30, 2020	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	2,024		$	2,700		$	1,649		$	1,608		$	7,981
Provision for loan losses		(275	)		(98	)		230			141			(2	)
Loans charged-off		(90	)		—			(96	)		(398	)		(584	)
Recoveries		110			15			44			166			335
Total ending allowance balance	$	1,769		$	2,617		$	1,827		$	1,517		$	7,730

16

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

The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2021 and 2020:

September 30, 2021	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,480		$	2,431		$	1,776		$	1,473		$	7,160
Provision for loan losses		(443	)		121			(260	)		464			(118	)
Loans charged-off		(75	)		(115	)		(96	)		(879	)		(1,165	)
Recoveries		83			157			151			396			787
Total ending allowance balance	$	1,045		$	2,594		$	1,571		$	1,454		$	6,664

September 30, 2020	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,250		$	1,928		$	1,447		$	1,647		$	6,272
Provision for loan losses		715			1,131			505			1,100			3,451
Loans charged-off		(340	)		(516	)		(185	)		(1,677	)		(2,718	)
Recoveries		144			74			60			447			725
Total ending allowance balance	$	1,769		$	2,617		$	1,827		$	1,517		$	7,730

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 September 30, 2021 and December 31, 2020:

September 30, 2021	Residential Real Estate		Commercial Real Estate		Commercial and Industrial		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	34	$	34
Collectively evaluated for impairment		1,045		2,594		1,571		1,420		6,630
Total ending allowance balance	$	1,045	$	2,594	$	1,571	$	1,454	$	6,664
Loans:
Loans individually evaluated for impairment	$	—	$	5,479	$	3,850	$	79	$	9,408
Loans collectively evaluated for impairment		280,104		277,093		140,304		138,824		836,325
Total ending loans balance	$	280,104	$	282,572	$	144,154	$	138,903	$	845,733

December 31, 2020	Residential Real Estate		Commercial Real Estate		Commercial and 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

17

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

The following tables present information related to loans individually evaluated for impairment by class of loans as of September 30, 2021 and December 31, 2020:

September 30, 2021	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Consumer:
Other	$	48	$	48	$	34
With no related allowance recorded:
Commercial real estate:
Owner-occupied		5,108		5,093		—
Nonowner-occupied		386		386		—
Commercial and industrial		3,850		3,850		—
Consumer:
Home equity		31		31		—
Total	$	9,423	$	9,408	$	34

December 31, 2020	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:	$	—	$	—	$	—
With no related allowance recorded:
Residential real estate		418		411		—
Commercial real estate:
Owner-occupied		5,256		5,256		—
Nonowner-occupied		632		589		—
Commercial and industrial		4,686		4,686		—
Consumer:
Home equity		34		34		—
Other		50		50		—
Total	$	11,076	$	11,026	$	—

18

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

The following tables present information related to loans individually evaluated for impairment by class of loans for the three and nine months ended September 30, 2021 and 2020:

	Three months ended September 30, 2021						Nine months ended September 30, 2021
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Consumer:
Other	$	49	$	1	$	1	$	49	$	2	$	2
With no related allowance recorded:
Commercial real estate:
Owner-occupied		5,128		74		74		5,183		239		239
Nonowner-occupied		386		7		7		388		21		21
Commercial and industrial		3,174		111		111		3,586		200		200
Consumer:
Home equity		32		1		1		33		2		2
Total	$	8,769	$	194	$	194	$	9,239	$	464	$	464

	Three months ended September 30, 2020						Nine months ended September 30, 2020
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial real estate:
Nonowner-occupied	$	242	$	—	$	—	$	242	$	—	$	—
With no related allowance recorded:
Residential real estate		420		7		7		426		15		15
Commercial real estate:
Owner-occupied		3,161		23		23		2,957		124		124
Nonowner-occupied		753		15		15		772		39		39
Commercial and industrial		2,807		20		20		3,543		149		149
Consumer:
Home equity		444		3		3		415		12		12
Total	$	7,827	$	68	$	68	$	8,355	$	339	$	339

Accrued interest and net deferred loan fees have been excluded from the recorded investment of loans 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 September 30, 2021, there were no other real estate owned for residential real estate properties, as compared to $43 at December 31, 2020. In addition, nonaccrual residential mortgage loans that are in the process of foreclosure had a recorded investment of $415 and $1,097 as of September 30, 2021 and December 31, 2020, respectively.

19

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

The following table presents the recorded investment of nonaccrual loans and loans past due 90 days or more and still accruing by class of loans as of September 30, 2021 and December 31, 2020:

September 30, 2021	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	2	$	4,081
Commercial real estate:
Owner-occupied		—		1,095
Nonowner-occupied		—		83
Construction		—		155
Commercial and industrial		—		149
Consumer:
Automobile		135		134
Home equity		—		132
Other		99		27
Total	$	236	$	5,856

December 31, 2020	Loans Past Due 90 Days And Still Accruing		Nonaccrual
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	$	424	$	6,503

20

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

The following table presents the aging of the recorded investment of past due loans by class of loans as of September 30, 2021 and December 31, 2020:

September 30, 2021	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	2,149	$	669	$	701	$	3,519	$	276,585	$	280,104
Commercial real estate:
Owner-occupied		20		—		180		200		74,140		74,340
Nonowner-occupied		100		—		83		183		174,444		174,627
Construction		37		—		33		70		33,535		33,605
Commercial and industrial		13		—		149		162		143,992		144,154
Consumer:
Automobile		554		138		242		934		52,088		53,022
Home equity		29		81		110		220		21,301		21,521
Other		527		24		126		677		63,683		64,360
Total	$	3,429	$	912	$	1,624	$	5,965	$	839,768	$	845,733

December 31, 2020	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	2,845	$	496	$	1,663	$	5,004	$	300,474	$	305,478
Commercial real estate:
Owner-occupied		470		1,003		193		1,666		50,197		51,863
Nonowner-occupied		94		—		362		456		164,067		164,523
Construction		—		82		—		82		36,981		37,063
Commercial and industrial		1,112		11		164		1,287		156,405		157,692
Consumer:
Automobile		831		131		258		1,220		54,021		55,241
Home equity		204		81		113		398		19,595		19,993
Other		446		76		172		694		56,117		56,811
Total	$	6,002	$	1,880	$	2,925	$	10,807	$	837,857	$	848,664

Troubled Debt Restructurings:

A troubled debt restructuring (“TDR”) occurs when the Company has agreed to a loan modification in the form of a concession for a borrower who is experiencing financial difficulty. All TDRs are considered to be impaired. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a reduction in the contractual principal and interest payments of the loan; or short-term interest-only payment terms.

The Company has allocated reserves for a portion of its TDRs to reflect the fair values of the underlying collateral or the present value of the concessionary terms granted to the customer.

21

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

The following table presents the types of TDR loan modifications by class of loans as of September 30, 2021 and December 31, 2020:

September 30, 2021	TDRs Performing to Modified Terms		TDRs Not Performing to Modified Terms		Total TDRs
Commercial real estate:
Owner-occupied
Reduction of principal and interest payments	$	1,463	$	—	$	1,463
Maturity extension at lower stated rate than market rate		289		—		289
Credit extension at lower stated rate than market rate		377		—		377
Nonowner-occupied
Credit extension at lower stated rate than market rate		386		—		386
Commercial and industrial:
Interest only payments		1,622		—		1,622
Total TDRs	$	4,137	$	—	$	4,137

December 31, 2020	TDRs Performing to Modified Terms		TDRs Not Performing to Modified Terms		Total TDRs
Residential real estate:
Interest only payments	$	202	$	—	$	202
Commercial real estate:
Owner-occupied
Reduction of principal and interest payments		1,486		—		1,486
Maturity extension at lower stated rate than market rate		351		—		351
Credit extension at lower stated rate than market rate		384		—		384
Nonowner-occupied
Credit extension at lower stated rate than market rate		390		—		390
Commercial and industrial:
Interest only payments		4,400		—		4,400
Total TDRs	$	7,213	$	—	$	7,213

The Company had no specific allocations in reserves to customers whose loan terms have been modified in TDRs at September 30, 2021 and December 31, 2020. At September 30, 2021, the Company had $3,878 in commitments to lend additional amounts to customers with outstanding loans that are classified as TDRs, as compared to $1,100 at December 31, 2020.

22

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

There were no new TDR loan modifications that occurred during the three and nine months ended September 30, 2021 and 2020, which resulted in no impact to provision expense or the allowance for loan losses.

During the three and nine months ended September 30, 2021 and 2020, the Company had no TDRs that experienced any payment defaults within twelve months following their loan modification. A default is considered to have occurred once the TDR is past due 90 days or more or it has been placed on nonaccrual.  TDR loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020 and provided guidance on the modification of loans as a result of COVID-19, which outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs. This includes short-term modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers are considered current if they are less than 30 days past due on their contractual payments at the time of modification.  As of September 30, 2021, the Company had modified 674 loans related to COVID-19 with an outstanding loan balance of $130,365 that were not reported as TDRs.  As of September 30, 2021, the Company had 18 of those modified loans still operating under their deferral terms that were related to COVID-19 with an outstanding loan balance of $156 that were not reported as TDRs in the tables presented above.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. 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. The Company’s risk categories are reviewed at least annually on loans that have aggregate borrowing amounts that meet or exceed $1,000.

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

Special Mention.  Loans classified as "special mention" indicate considerable risk due to deterioration of repayment (in the earliest stages) due to potential weak primary repayment source, or payment delinquency.  These loans will be under constant supervision, are not classified and do not expose the institution to sufficient risks to warrant classification.  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.  The perceived risk in continued lending is considered to have increased beyond the level where such loans would normally be granted.  Credits that are defined as a TDR should be graded no higher than special mention until they have been reported as performing over one year after restructuring.

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

Substandard.  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. Collateral liquidation is considered likely to satisfy debt.

23

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

Doubtful.  Loans classified as "doubtful" display a high probability of loss, although the amount of actual loss at the time of classification is undetermined. This classification should be temporary until such time that actual loss can be identified, or improvements made to reduce the seriousness of the classification. These loans exhibit all substandard characteristics with the addition that weaknesses make collection or liquidation in full highly questionable and improbable. This classification consists of loans where the possibility of loss is high after collateral liquidation based upon existing facts, market conditions, and value. Loss is deferred until certain important and reasonable specific pending factors that may strengthen the credit can be more accurately determined. These factors may include proposed acquisitions, liquidation procedures, capital injection, receipt of additional collateral, mergers, or refinancing plans. A doubtful classification for an entire credit should be avoided when collection of a specific portion appears highly probable with the adequately secured portion graded substandard.

Loss.  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.

Criticized and classified loans will mostly consist of commercial and industrial and commercial real estate loans. The Company considers its loans that do not meet the criteria for a criticized and classified asset rating as pass rated loans, which will include loans graded from 1 (Prime) to 7 (Watch). All commercial loans are categorized into a risk category either at the time of origination or reevaluation date. As of September 30, 2021 and December 31, 2020, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:

September 30, 2021	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	70,971	$	631	$	2,738	$	74,340
Nonowner-occupied		172,341		2,003		283		174,627
Construction		33,605		—		—		33,605
Commercial and industrial		138,498		1,905		3,751		144,154
Total	$	415,415	$	4,539	$	6,772	$	426,726

December 31, 2020	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	46,604	$	669	$	4,590	$	51,863
Nonowner-occupied		160,324		3,629		570		164,523
Construction		37,063		—		—		37,063
Commercial and industrial		150,786		2,064		4,842		157,692
Total	$	394,777	$	6,362	$	10,002	$	411,141

The Company also obtains the credit scores of its borrowers upon origination (if available by the credit bureau), but the scores are not updated. The Company focuses mostly on the performance and repayment ability of the borrower as an indicator of credit risk and does not consider a borrower's credit score to be a significant influence in the determination of a loan's credit risk grading.

24

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

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 September 30, 2021 and December 31, 2020:

September 30, 2021	Consumer						Residential
	Automobile		Home Equity		Other		Real Estate		Total
Performing	$	52,753	$	21,389	$	64,234	$	276,021	$	414,397
Nonperforming		269		132		126		4,083		4,610
Total	$	53,022	$	21,521	$	64,360	$	280,104	$	419,007

December 31, 2020	Consumer						Residential
	Automobile		Home Equity		Other		Real Estate		Total
Performing	$	54,966	$	19,783	$	56,639	$	300,095	$	431,483
Nonperforming		275		210		172		5,383		6,040
Total	$	55,241	$	19,993	$	56,811	$	305,478	$	437,523

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 4.10% of total loans were unsecured at September 30, 2021, down from 4.22% at December 31, 2020.

NOTE 5 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees.  The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, and financial guarantees written, is represented by the contractual amount of those instruments.  The contract amounts of these instruments are not included in the consolidated financial statements.  At September 30, 2021, the contract amounts of these instruments totaled approximately $89,645, compared to $88,456 at December 31, 2020.  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.

NOTE 6 - OTHER BORROWED FUNDS

Other borrowed funds at September 30, 2021 and December 31, 2020 are comprised of advances from the Federal Home Loan Bank (“FHLB”) of Cincinnati and promissory notes.

	FHLB Borrowings		Promissory Notes		Totals
September 30, 2021	$	21,147	$	2,138	$	23,285
December 31, 2020	$	24,665	$	3,198	$	27,863

Pursuant to collateral agreements with the FHLB, advances are secured by $272,922 in qualifying mortgage loans, $73,204 in commercial loans and $5,125 in FHLB stock at September 30, 2021.  Fixed-rate FHLB advances of $21,147 mature through 2042 and have interest rates ranging from 1.53% to 3.31% and a year-to-date weighted average cost of 2.40% at September 30, 2021 and December 31, 2020, respectively.  There were no variable-rate FHLB borrowings at September 30, 2021.

25

NOTE 6 - OTHER BORROWED FUNDS (Continued)

At September 30, 2021, the Company had a cash management line of credit enabling it to borrow up to $100,000 from the FHLB.  All cash management advances have an original maturity of 90 days.  The line of credit must be renewed on an annual basis.  There was $100,000 available on this line of credit at September 30, 2021.

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 $195,703 at September 30, 2021.  Of this maximum borrowing capacity, the Company had $109,438 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 April 13, 2022, and have fixed rates of 1.00% and a year-to-date weighted average cost of 1.24% at September 30, 2021, as compared to 2.20% at December 31, 2020.  At September 30, 2021 there were four promissory notes payable by Ohio Valley to related parties totaling $2,138 as compared to six totaling $3,198 at December 31, 2020.  There were no promissory notes payable to other banks at September 30, 2021 and December 31, 2020, respectively.

Letters of credit issued on the Bank's behalf by the FHLB to collateralize certain public unit deposits as required by law totaled $65,118 at September 30, 2021 and $76,740 at December 31, 2020.

Scheduled principal payments as of September 30, 2021:

	FHLB Borrowings		Promissory Notes		Totals
2021	$	735	$	1,638	$	2,373
2022		2,497		500		2,997
2023		2,352		—		2,352
2024		2,062		—		2,062
2025		1,824		—		1,824
Thereafter		11,677		—		11,677
	$	21,147	$	2,138	$	23,285

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. 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 94.0% of total consolidated revenues for the quarters end September 30, 2021 and 2020, 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.

26

NOTE 7 – SEGMENT INFORMATION (Continued)

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

	Three Months Ended September 30, 2021
	Banking			Consumer Finance			Total Company
Net interest income	$	9,843		$	516		$	10,359
Provision expense		(100	)		7			(93	)
Noninterest income		2,582			30			2,612
Noninterest expense		8,861			608			9,469
Tax expense		574			(15	)		559
Net income		3,090			(54	)		3,036
Assets		1,232,353			13,025			1,245,378

	Three Months Ended September 30, 2020
	Banking		Consumer Finance			Total Company
Net interest income	$	9,562	$	520		$	10,082
Provision expense		—		(2	)		(2	)
Noninterest income		2,385		49			2,434
Noninterest expense		9,295		596			9,891
Tax expense		339		(6	)		333
Net income		2,313		(19	)		2,294
Assets		1,126,202		11,736			1,137,938

	Nine Months Ended September 30, 2021
	Banking			Consumer Finance		Total Company
Net interest income	$	29,124		$	1,498	$	30,622
Provision expense		(150	)		32		(118	)
Noninterest income		7,474			983		8,457
Noninterest expense		26,095			1,858		27,953
Tax expense		1,693			123		1,816
Net income		8,960			468		9,428
Assets		1,232,353			13,025		1,245,378

	Nine Months Ended September 30, 2020
	Banking		Consumer Finance		Total Company
Net interest income	$	28,350	$	1,531	$	29,881
Provision expense		3,445		6		3,451
Noninterest income		8,073		1,052		9,125
Noninterest expense		27,110		1,902		29,012
Tax expense		843		141		984
Net income		5,025		534		5,559
Assets		1,126,202		11,736		1,137,938

27

NOTE 8 – LEASES

Substantially all of the Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities represent leases for branch buildings and office space to conduct business.  Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. 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. The Company has no finance lease arrangements. Operating leases have remaining lease terms ranging from 19 months to 20 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 was as follows:

	As of September 30, 2021		As of December 31, 2020
Operating leases:
Operating lease right-of-use assets	$	1,235	$	880
Operating lease liabilities		1,235		880

The components of lease cost were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Operating lease cost		$	41		$	32		$	119		$	127
Short-term lease expense			8			7			24			23

Future undiscounted lease payments for operating leases with initial terms of one year or more as of September 30, 2021 are as follows:

	Operating Leases
2021 (remaining)	$	42
2022		168
2023		127
2024		106
2025		106
Thereafter		973
Total lease payments		1,522
Less: Imputed Interest		(287	)
Total operating leases	$	1,235

Other information was as follows:

	As of September 30, 2021			As of December 31, 2020
Weighted-average remaining lease term for operating leases	13.9 years			9.6 years
Weighted-average discount rate for operating leases		2.29	%		2.79	%

28

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Forward Looking Statements

Certain statements contained in this report and other publicly available documents incorporated herein by reference constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended (the “Exchange Act”), and as defined in the Private Securities Litigation Reform Act of 1995.  Such statements are often, but not always, identified by the use of such words as “believes,” “anticipates,” “expects,” “intends,” “plan,” “goal,” “seek,” “project,” “estimate,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and other similar expressions. Such statements involve various important assumptions, risks, uncertainties, and other factors, many of which are beyond our control, particularly with regard to developments related to the Coronavirus (“COVID-19”) pandemic, and which could cause actual results to differ materially from those expressed in such forward looking statements.  These factors include, but are not limited to:  the effects of COVID-19 on our business, operations, customers and capital position; higher default rates on loans made to our customers related to COVID-19 and its impact on our customers’ operations and financial condition; the impact of COVID-19 on local, national and global economic conditions; unexpected changes in interest rates or disruptions in the mortgage market; the effects of various governmental responses to COVID-19; changes in political, economic or other factors, such as inflation rates, recessionary or expansive trends, taxes, the effects of implementation of legislation and the continuing economic uncertainty in various parts of the world; competitive pressures; fluctuations in interest rates; the level of defaults and prepayment on loans made by the Company; unanticipated litigation, claims, or assessments; fluctuations in the cost of obtaining funds to make loans; and regulatory changes.  Additional detailed information concerning such factors is available in the Company’s filings with the Securities and Exchange Commission, under the Exchange Act, including the disclosure under the heading “Item 1A. Risk Factors” of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. Readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof.  The Company undertakes no obligation and disclaims any intention to republish revised or updated forward looking statements, whether as a result of new information, unanticipated future events or otherwise.

Financial Overview

BUSINESS OVERVIEW: The Company is primarily engaged in commercial and retail banking, offering a blend of commercial and consumer banking services within southeastern Ohio as well as western West Virginia.  The banking services offered by the Bank include the acceptance of deposits in checking, savings, time and money market accounts; the making and servicing of personal, commercial, floor plan and student loans; the making of construction and real estate loans; and credit card services.  The Bank also offers individual retirement accounts, safe deposit boxes, wire transfers and other standard banking products and services.  Furthermore, the Bank offers Tax Refund Advance Loans (“TALs”) to Loan Central tax customers. A TAL represents a short-term loan offered by the Bank to tax preparation customers of Loan Central.  TAL originations began in 2020 in response to a state law enacted in 2019 that placed various restrictions on Loan Central’s short-term and small loan originations. As a result, the Company changed its business model beginning in 2020 from assessing TAL fees to assessing tax preparation fees.

IMPACT of COVID-19: COVID-19 has caused significant disruption in the United States and international economies and financial markets. The primary markets served by the Company in southeastern Ohio and western West Virginia were significantly impacted by COVID-19, which changed the way we live and work. The continued effects of COVID-19 on the economy, supply chains, financial markets, unemployment levels, businesses and our customers is unknown and unpredictable.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law. The CARES Act provides assistance to small businesses through the establishment of the Paycheck Protection Program ("PPP"). The PPP provides small businesses with funds to use for payroll and certain other expenses. The funds were provided in the form of loans that will be fully forgiven if certain criteria are met. In 2021, Congress amended the PPP by extending the authority of the SBA to guarantee loans and the ability of PPP lenders to disburse PPP loans until May 31, 2021. The Company supported its clients who experienced financial hardship due to COVID-19 through participation in the PPP, assistance with expedited deposits of CARES Act stimulus payments, and loan modifications, as needed.

29

FINANCIAL RESULTS OVERVIEW: Net income totaled $3,036 during the third quarter of 2021, an increase of $742 over the same period of 2020. Earnings per share for the third quarter of 2021 finished at $.63 per share, compared to $.48 per share during the third quarter of 2020. The Company’s net income during the nine months ended September 30, 2021 totaled $9,428, an increase of $3,869 over the same period of 2020. Earnings per share during the first nine months of 2021 finished at $1.97 per share, compared to $1.16 per share during the first nine months of 2020. Higher earnings during both the quarterly and year-to-date periods were impacted by minimal provision expense recognized during both periods in 2021, as well as growth in net interest income and lower noninterest expenses. The impact of higher net earnings during 2021 also had a direct impact to the Company’s annualized net income to average asset ratio, or return on assets, which increased to 1.03% at September 30, 2021, compared to 0.69% at September 30, 2020.  The Company’s net income to average equity ratio, or return on equity, also increased to 9.13% at September 30, 2021, compared to 5.70% at September 30, 2020.

During the three months ended September 30, 2021, net interest income increased $277, or 2.7%, over the same period in 2020.  During the nine months ended September 30, 2021, net interest income increased $741, or 2.5%, over the same period in 2020. The increases were impacted by growth in average earning assets, which increased $120,249 and $145,233 during the three and nine months ended September 30, 2021, compared to the same periods in 2020, respectively. Average earning asset growth came mostly from increases in loans and investment securities, as well as higher balances maintained in the Company’s interest-bearing Federal Reserve clearing account. Growth in loans benefited from positive commercial loan demand in our markets, as well as the Company’s participation in the PPP to assist various businesses in our market during the pandemic. Growth in investment securities and Federal Reserve balances came from excess deposits impacted by the various stimulus payments received by customers. The earnings contribution from higher average earning assets was mostly offset by a decline in the fully tax-equivalent (“FTE”) net interest margin, which decreased 31 basis points and 42 basis points during the three and nine months ended September 30, 2021, compared to the same periods in 2020, respectively. The margin was negatively impacted by the actions of the Federal Reserve to reduce interest rates by 150 basis points in March 2020 due to concerns about the impact of COVID-19 on the economy. This has led to a sustained low-rate interest environment over the past year. The change in asset mix during 2020 and 2021 into more PPP loans and elevated deposits at the Federal Reserve has had a dilutive effect on the net interest margin, with PPP loans carrying a 1.0% interest rate and the rate on balances maintained at the Federal Reserve currently at 15 basis points.

During the three and nine months ended September 30, 2021, the Company experienced negative provision for loan loss, which contributed to a $91 and $3,569 decrease in provision expense when compared to the same periods in 2020, respectively. The decreases in provision expense from 2020 came mostly from the economic effects of the COVID-19 pandemic, which resulted in a higher general allocation of the allowance for loan losses during the first quarter of 2020. Based on declining economic conditions and increasing unemployment levels, management increased general reserves by $2,287 during the first nine months of 2020 to reflect higher anticipated losses due to the expected financial impact of COVID-19 on its customers.  Further impacting lower provision expense for the year was a $1,113 decrease in net charge-offs on loans that had not been specifically allocated for, primarily from the consumer and residential real estate loan portfolios.

During the three months ended September 30, 2021, noninterest income increased $178, or 7.3%, from the same period in 2020. The increase in quarterly noninterest revenue came largely from higher interchange income on debit and credit card transactions, as well as increases in service charges on deposit accounts and other noninterest income related to sales of bank owned property. These contributing factors to higher noninterest income for the quarter were partially offset by lower mortgage banking revenue. During the nine months ended September 30, 2021, noninterest income decreased $668, or 7.3%, from the same period in 2020. While lower mortgage banking income was a factor, the year-to-date decrease in noninterest revenue came primarily from proceeds of $2,000 received in a litigation settlement with a third-party during the first quarter of 2020.  As part of the settlement agreement, the Bank is processing a certain amount of tax items, which started in 2021 and will end in 2025. As a result, the Bank recognized $675 in electronic refund check/electronic refund deposit ("ERC/ERD") income during the first half of 2021. This, along with higher interchange income and tax preparation fees, combined with lower losses on other real estate owned and gains on sale of bank owned property, helped to partially offset the year-to-date decrease in noninterest income related to 2020’s litigation settlement proceeds and lower mortgage banking income.

30

During the three months ended September 30, 2021, noninterest expense decreased $422, or 4.3%, from the same period in 2020. During the nine months ended September 30, 2021, noninterest expense decreased $1,059, or 3.7%, from the same period in 2020. The decreases were primarily related to the expense savings associated with a lower number of employees and the severance package payout of an employee during the third quarter of 2020, which contributed to a $497 decrease in salaries and employee benefits expense from the prior quarter and an $829 decrease from the prior year.  The Company also experienced a decrease in professional fees during both periods due in large part to lower legal fees associated with collecting troubled loans. Expense savings during both periods also came from lower marketing expenses impacted by the pandemic environment which limited the Company’s marketing initiatives. Partially offsetting the expense decreases were higher software, FDIC insurance, and data processing costs during 2021.

The Company’s provision for income taxes increased $226 during the three months ended September 30, 2021, and increased $832 during the nine months ended September 30, 2021, compared to the same periods in 2020. This was largely due to the changes in taxable income affected by the factors mentioned above.   

At September 30, 2021, total assets were $1,245,378, an increase of $58,446 from total assets of $1,186,932 at year-end 2020.  Higher assets were primarily impacted by increases in investment securities, which were up $60,859, or 49.7%, from year-end 2020. The growth in securities was related to investing the heightened deposit balances received during the first nine months of 2021 as a result of the various stimulus payments received by customers.  Securities growth from year-end 2020 was partially offset by a $2,931, or 0.3%, decrease in loans and a $2,578, or 2.1%, decrease in interest-bearing deposits with banks. The loan portfolio experienced decreases in the residential real estate segment (-8.3%) and commercial and industrial segment (-8.6%), partially offset by increases in the commercial real estate segment (+11.5%) and consumer loan segment (+5.2%).  Lower interest-bearing deposits with banks came primarily from the reinvestment of Federal Reserve Bank clearing account balances into securities.

At September 30, 2021, total liabilities were $1,104,448, up $53,840 from year-end 2020. Contributing most to this increase were higher deposit balances, which increased $57,936 from year-end 2020.  The increase was largely a result of customers receiving stimulus funds and the customer’s perceived desire to preserve cash during this uncertain economic environment. The Company also utilized the excess funds to pay down a portion of its Federal Home Loan Bank borrowings, which contributed to a $4,578 decrease in other borrowed funds.

At September 30, 2021, total shareholders' equity was $140,930, up $4,606 since December 31, 2020.  Regulatory capital ratios of the Company remained higher than the "well capitalized" minimums.

Comparison of Financial Condition
at September 30, 2021 and December 31, 2020

The following discussion focuses, in more detail, on the consolidated financial condition of the Company at September 30, 2021 compared to December 31, 2020.  This discussion should be read in conjunction with the interim consolidated financial statements and the footnotes included in this Form 10‑Q.

Cash and Cash Equivalents

At September 30, 2021, cash and cash equivalents were $135,064, a decrease of $3,239, or 2.3%, from December 31, 2020.  The decrease in cash and cash equivalents came mostly from lower interest-bearing deposits on hand with correspondent banks.  Over 87% of cash and cash equivalents consist of the Company’s interest-bearing Federal Reserve Bank clearing account, which decreased $3,561, or 2.9%, from year-end 2020. The Company utilizes its interest-bearing Federal Reserve Bank clearing account to manage excess funds, as well as to assist in funding earning asset growth. Prior to the second quarter of 2021, clearing account balances had been increasing from year-end 2020, primarily from the investment of heightened deposit balances received during 2021 as a result of the pandemic environment. This was in relation to customers receiving stimulus funds from various government programs and their perceived desire to preserve cash during this uncertain economic environment. Furthermore, several congressional acts led to the extension of the PPP loan program during the first half of 2021. Under the reopened PPP, commercial business customers received loan proceeds, which helped to generate higher levels of investable deposits during the first quarter of 2021.  During the second quarter of 2021, the Company utilized a portion of its clearing account balances and proceeds from the payoffs of PPP loans to reinvest in higher-yielding investment securities.  While this redeployment of assets reduced clearing account balances from year-end 2020, the shift into higher-yielding investment securities lowered the dilutive effect that higher clearing account balances was having on the net interest margin. The interest rate paid on both the required and excess reserve balances of the Federal Reserve Bank account is based on the targeted federal funds rate established by the Federal Open Market Committee.  During the first quarter of 2020, the rate associated with the Company’s Federal Reserve Bank clearing account decreased 150 basis points due to concerns about the impact of COVID-19 on the economy, resulting in a target federal funds rate range of 0% to 0.25%.  Although interest-bearing deposits in the Federal Reserve Bank are the Company's lowest-yielding interest-earning asset, the investment rate is higher than the rate the Company would have received from its investments in federal funds sold. Furthermore, Federal Reserve balances are guaranteed by the U.S. Government.

31

As liquidity levels continuously vary based on consumer activities, amounts of cash and cash equivalents can vary widely at any given point in time. The Company’s focus during periods of heightened liquidity will be to invest excess funds into longer-term, higher-yielding assets, primarily loans, when the opportunities arise.

Certificates of deposit

The Company had $2,500 in certificates of deposit owned by the Captive at September 30, 2021 and year-end 2020.  The deposits on hand at September 30, 2021 consist of eleven certificates with remaining maturity terms ranging from less than 3 months up to 24 months.

Securities

The balance of total securities increased $60,859, or 49.7%, compared to year-end 2020.  The Company’s investment securities portfolio is made up mostly of U.S. Government agency (“Agency”) mortgage-backed securities, which increased $31,563, or 33.5%, from year-end 2020 and represented 68.6% of total investments at September 30, 2021.  During 2021, the Company redeployed a portion of its heightened excess deposits to purchase $60,910 in new Agency mortgage-backed securities, while receiving principal repayments of $27,315. The monthly repayment of principal has been the primary advantage of Agency mortgage-backed securities as compared to other types of investment securities, which deliver proceeds upon maturity or call date. The Company also utilized a portion of excess deposits to purchase $17,832 in U.S. Government securities, as well as $12,899 in Agency securities, net of maturities, during the first nine months of 2021.  The shift from lower-yielding Federal Reserve Bank balances into higher-yielding securities has contributed positively to the net interest margin.

Loans

The loan portfolio represents the Company’s largest asset category and is its most significant source of interest income. Gross loan balances at September 30, 2021 finished at $845,733, a decrease of $2,931, or 0.3%, as compared to $848,664 at December 31, 2020.  The decrease in loans came primarily from the residential real estate and commercial and industrial portfolios, with increases coming from the total commercial real estate and consumer loan portfolios from year-end 2020.

The majority of the Company’s decrease in loans came from the residential real estate loan segment, which decreased $25,374, or 8.3%, from year-end 2020.  Although down, the residential real estate loan portfolio still represents the largest class of the Company’s overall loans at 33.1% and consists primarily of one- to four-family residential mortgages and carries many of the same customer and industry risks as the commercial loan portfolio.  The decrease in residential real estate loans came largely from the Bank's warehouse lending volume. Warehouse lending consists of a line of credit provided by the Bank to another mortgage lender that makes loans for the purchase of one- to four-family residential real estate properties. The mortgage lender eventually sells the loans and repays the Bank. As mortgage refinancings reached their peak during the second half of 2020, the volume of warehouse lending balances decreased to zero by the end of the second quarter 2021, as compared to $19,365 at year-end 2020. Furthermore, the low rate environment has contributed to a shift into more long-term fixed-rate mortgages (up $837) and less short-term adjustable-rate mortgages (down $11,002) at September 30, 2021.

The Company’s commercial loan portfolio, consisting of commercial real estate and commercial and industrial loans, increased $15,585, or 3.8%, from year-end 2020. Contributing most to the increase were higher loan balances within the commercial real estate portfolio, increasing $29,123, or 11.5%, from year-end 2020.  The commercial real estate segment comprised the largest portion of the Company’s total commercial loan portfolio at September 30, 2021 at 66.2%. Increases were largely from new originations of both owner-occupied and nonowner-occupied loan balances from year-end 2020.  In general, commercial real estate loan demand has been positive in the Company’s market areas, particularly in the counties of Pike and Athens in Ohio and Cabell County in West Virginia.

Increases in commercial real estate loans were partially offset by a $13,538, or 8.6%, decrease in the commercial and industrial portfolio from year-end 2020. Commercial and industrial loans consist of loans to corporate borrowers primarily in small to mid-sized industrial and commercial companies that include service, retail and wholesale merchants.  Collateral securing these loans includes equipment, inventory, and stock. The commercial and industrial segment also includes PPP loan balances that have had an impact on average earning asset growth in 2021. Although a second round of PPP loans were initiated by the Bank during the first half of 2021, the Bank experienced a $22,322 decrease in its PPP loan portfolio from year-end 2020. This was because the payoffs of PPP loans from the initial round of originations in 2020 completely offset the new PPP loan originations in 2021. PPP loans are forgiven by the SBA as long as the small business borrower meets certain criteria on the use of loan proceeds. As of September 30, 2021, all of the initial round of PPP originations from 2020 were paid off. As a result, the Company’s PPP loans totaled $5,611 at September 30, 2021 as compared to $27,933 at year-end 2020.

32

While management believes lending opportunities exist in the Company’s markets, future commercial lending activities will depend upon economic and other related conditions, such as general demand for loans in the Company’s primary markets, interest rates offered by the Company, the effects of competitive pressure and normal underwriting considerations.  Management will continue to place emphasis on its commercial lending, which generally yields a higher return on investment as compared to other types of loans.

The Company’s loan portfolio at September 30, 2021 was also impacted by higher consumer loan balances from year-end 2020, increasing $6,858, or 5.2%. This change was driven by an increase in unsecured loan balances. As part of the Company’s efforts to invest the heightened cash provided by the various stimulus programs, the Company purchased multiple pools of loans issued to healthcare professionals during the first half of 2021. In relation to the purchase of these loans, the other consumer loan segment increased $7,549, or 13.3%, from year-end 2020. Partially offsetting this increase was a decline in automobile loan balances.  Automobile loans represent the Company’s largest consumer loan segment at 38.2% of total consumer loans.  Automobile loans decreased primarily as a result of COVID-19 and the stay-at-home orders that resulted in limited automobile sales within the Company’s market areas during 2020. The pandemic environment continued to have a negative impact on auto loan originations in 2021 in part due to supply constraints that were impacted by a chip shortage. Further limiting the volume of automobile loan originations were heightened incentives being offered from the captive auto finance companies in response to the pandemic. The remaining consumer loan portfolio increased $1,528, or 7.6%, from year-end 2020, from higher home equity lines of credit. The Company will continue to attempt to increase its auto lending segment while maintaining strict loan underwriting processes to limit future loss exposure. However, the Company will place more emphasis on loan portfolios (i.e. commercial and, to a smaller extent, residential real estate) with higher returns than auto loans.  Indirect automobile loans bear additional costs from dealers that partially offset interest revenue and lower the rate of return.

Allowance for Loan Losses

The Company established a $6,664 allowance for loan losses at September 30, 2021, which represents a decrease from the $7,160 allowance at year-end 2020. As part of the Company’s quarterly analysis of the allowance for loan losses, management will review various factors that directly impact the general allocation needs of the allowance, which include:  historical loan losses, loan delinquency levels, local economic conditions and unemployment rates, criticized/classified asset coverage levels and loan loss recoveries.  During the first nine months of 2021, the Company experienced a $530 decrease in its general allocations of the allowance for loan losses.  A lower historical loan loss factor and lower criticized and classified assets were the key factors to the year-to-date drop in general allocations. The historical loan loss factor decreased from 0.24% at year-end 2020 to 0.19% at September 30, 2021, while both the criticized and classified risk factors decreased as a result of various commercial loan upgrades from improvements in the financial performance of certain borrowers’ ability to repay their loans. This contributed to lower criticized and classified assets from year-end 2020, particularly within the commercial real estate segment. Additionally, the Company’s delinquency levels decreased from year-end 2020, with nonperforming loans to total loans of 0.72% at September 30, 2021 compared to 0.82% at December 31, 2020, and lower nonperforming assets to total assets of 0.49% at September 30, 2021 compared to 0.59% at year-end 2020.

During the first quarter of 2020, the Company added a new risk factor to the evaluation of the allowance for loan losses pertaining to the COVID-19 pandemic. The risk factor was necessary to account for the changes in economic conditions resulting from increases in unemployment that would produce higher anticipated losses as a result of COVID-19. The general reserve allocation related to COVID-19 totaled $2,599 at September 30, 2021 as compared to $2,315 at December 31, 2020. While the Company has yet to experience any significant charge-offs related to COVID-19, the continued uncertainty regarding the severity and duration of the pandemic and related economic effects will continue to impact the Company’s estimate of its allowance for loan losses and resulting provision expense going forward.

33

Decreases in general allocations were partially offset by a $34 increase in specific allocations from year-end 2020.  Specific allocations of the allowance for loan losses identify loan impairment by measuring fair value of the underlying collateral and the present value of estimated future cash flows. The change in specific reserves was primarily related to the loan impairments of one borrower relationship during the first nine months of 2021.

The Company’s allowance for loan losses to total loans ratio finished at 0.79% at September 30, 2021 and 0.84% at year-end 2020.  Management believes that the allowance for loan losses at September 30, 2021 was adequate and reflected probable incurred losses in the loan portfolio.  There can be no assurance, however, that adjustments to the allowance for loan losses will not be required in the future.  Changes in the circumstances of particular borrowers, as well as adverse developments in the economy, particularly with respect to COVID-19, are factors that could change, and management will make adjustments to the allowance for loan losses as needed. Asset quality will continue to remain a key focus of the Company, as management continues to stress not just loan growth, but quality in loan underwriting.

Deposits

Deposits continue to be the most significant source of funds used by the Company to meet obligations for depositor withdrawals, to fund the borrowing needs of loan customers, and to fund ongoing operations.  Total deposits at September 30, 2021 increased $57,936, or 5.8%, from year-end 2020.  This change in deposits came primarily from interest-bearing deposit balances, which were up by $41,518, or 6.1%, from year-end 2020, while noninterest-bearing deposits increased $16,418, or 5.2%, from year-end 2020. The Company attributes much of this increase to retention of proceeds from government stimulus programs, such as the PPP and consumer economic impact payments received, and a more cautious consumer.

The increase in interest-bearing deposits came mostly from higher interest-bearing NOW account balances from year-end 2020, which increased $35,383, or 19.1%. This increase was largely driven by higher municipal NOW product balances, particularly within the Gallia County, Ohio and Mason County, West Virginia market areas. Growth in interest-bearing deposits also came from savings deposits, which increased $19,082, or 15.9%, from year-end 2020, primarily from higher statement savings account balances impacted by the government stimulus proceeds previously mentioned. Interest-bearing deposit growth was partially offset by lower money market balances from year-end 2020, which decreased $917, or 0.6%. The deposit rate on the Company’s Prime Investment money market account was reduced during the first quarter of 2021 in response to decreasing market rates in 2020.  This contributed to a consumer shift from money market deposits into savings and noninterest-bearing deposit accounts.

Partially offsetting the increases in interest-bearing deposits were time deposit balances, which decreased $12,031, or 5.8%, from year-end 2020.  The decrease came largely from lower brokered and internet CD issuances as a result of the heightened liquidity position from year-end 2020.  The Company’s retail time deposits were down $1,412 from year-end 2020.

The increase in noninterest-bearing deposits since year-end 2020 came mostly from the Company’s business and incentive-based checking account balances.

While facing increased competition for deposits in its market areas, the Company will continue to emphasize growth and retention in its core deposit relationships during the remainder of 2021, reflecting the Company’s efforts to reduce its reliance on higher cost funding and improve net interest income.

Other Borrowed Funds

Other borrowed funds were $23,285 at September 30, 2021, a decrease of $4,578, or 16.4%, from year-end 2020. The decrease was related primarily to the principal repayments applied to various FHLB advances during the second and third quarters of 2021. While deposits continue to be the primary source of funding for growth in earning assets, management will continue to utilize FHLB advances and promissory notes to help manage interest rate sensitivity and liquidity.

34

Shareholders’ Equity

Total shareholders' equity at September 30, 2021 increased $4,606, or 3.4%, to finish at $140,930, as compared to $136,324 at December 31, 2020. The increase was from year-to-date net income, which was partially offset by cash dividends paid, a decrease in net unrealized gain on available for sale securities, and the purchase of treasury shares under the Company’s recently announced stock buyback plan.

Comparison of Results of Operations

For the Three and Nine Months Ended

September 30, 2021 and 2020

The following discussion focuses, in more detail, on the consolidated results of operations of the Company for the three and nine months ended September 30, 2021 compared to the same period in 2020. This discussion should be read in conjunction with the interim consolidated financial statements and the footnotes included in this Form 10‑Q.

Net Interest Income

The most significant portion of the Company's revenue, net interest income, results from properly managing the spread between interest income on earning assets and interest expense incurred on interest-bearing liabilities. During the three months ended September 30, 2021, net interest income increased $277, or 2.7%, compared to the same period in 2020. During the nine months ended September 30, 2021, net interest income increased $741, or 2.5%, compared to the same period in 2020. The increases during both periods were mostly attributable to higher average earning assets providing favorable increases to interest revenue being partially offset by a net interest margin compression in relation to decreases in market rates that contributed to lower earning asset yields.

Total interest and fee income recognized on the Company’s earning assets decreased $348, or 3.0%, during the third quarter of 2021, and decreased $1,207, or 3.5%, during the first nine months of 2021, compared to the same periods in 2020.  The quarterly and year-to-date decreases were impacted by interest and fees on loans, which decreased $355, or 3.3%, and $740, or 2.3%, during the three and nine months ended September 30, 2021, compared to the same periods in 2020. These results were directly related to the decline in loan yields, which decreased from 5.24% to 4.98% when comparing the third quarters of 2020 to 2021, and decreased from 5.47% to 5.07% when comparing the first nine months of 2020 to 2021. Loan yields were impacted by interest rate reductions from the Federal Reserve Bank in March 2020. This trend of decreasing market rates led to lower yields on the Company’s loan portfolio and lower loan interest revenue. Partially offsetting the effects from lower loan yields was average growth in loans. Average loans for the third quarter of 2021 compared to the third quarter of 2020 increased $13,890, or 1.7%, while average loans for the first nine months of 2021 compared to the first nine months of 2020 increased $44,793, or 5.6%. These increases came mostly from the growing commercial loan demand within the Company’s market areas. Commercial loan growth was also impacted by the origination of PPP loans during 2020 and 2021. While PPP loans contributed to higher earning asset balances, they also had a dilutive effect to loan yields as a result of the 1% interest rate associated with each loan. These factors contributed to decreases of $456 and $1,318 in loan interest income during the three and nine months ended September 30, 2021, compared to the same periods in 2020.

Loan revenue was positively impacted by loan fees, which increased $101 during the third quarter of 2021, and $578 during the first nine months of 2021, compared to the same periods in 2020. The increases were largely impacted by loan fees earned on the origination of government-guaranteed PPP loans, which increased $120 and $502 during the third quarter and first nine months of 2021, as a result of normal amortization and loan forgiveness. As of September 30, 2021, there were $273 in deferred PPP loan fees yet to be recognized.

During the three months ended September 30, 2021, interest income from interest-bearing deposits with banks increased $30, or 150.0%, when compared to the same period in 2020. During the nine months ended September 30, 2021, interest income from interest-bearing deposits with banks decreased $89, or 44.5%, when compared to the same period in 2020. These changes in interest revenue came primarily from the Company’s interest-bearing Federal Reserve Bank clearing account. The year-to-date decrease in interest income was primarily due to the interest rate tied to this interest-bearing clearing account, which was 0.15% at September 30, 2021 compared to 0.25% at September 30, 2020. The increase in liquidity from the surge in deposit liabilities allowed the Company to maintain higher average balances within the account, which increased $64,185 during the first nine months of 2021, compared to the same period in 2020. The quarterly increase in interest income was the result of a $49,895 increase in average clearing balances during the third quarter of 2021, as well as a more comparable quarterly interest rate tied to the account after the Federal Reserve reduced rates during the first quarter of 2020.

35

Total interest on securities decreased $20, or 3.3%, during the third quarter of 2021, and $352, or 18.1%, during the first nine months of 2021, compared to the same periods in 2020. The Company has taken opportunities to reinvest a portion of excess deposits into new U.S. Government, Agency and Agency mortgage-backed securities, contributing to a $35,968 increase in average securities during the first nine months of 2021 over the first nine months of 2020.  However, the increase in average securities was completely offset by a decline in securities yield of 82 basis points from 2.19% to 1.37%.

Total interest expense incurred on the Company’s interest-bearing liabilities decreased $625, or 41.9%, during the third quarter of 2021, and decreased $1,948, or 39.9%, during the first nine months of 2021, compared to the same periods in 2020. Interest expense decreased despite increases in average interest-bearing deposits of $57,340 during the third quarter of 2021, and $69,037 during the first nine months of 2021, compared to the same periods in 2020. The converse relationship between increasing average interest-bearing liabilities to lower interest expense is related to the repricing efforts in a lower rate environment which drove down average costs during 2020. This included the rate reduction to the Company’s Prime Investment deposit account, which contributed to a $156 decrease in money market interest expense during the third quarter of 2021, and a $518 decrease during the first nine months of 2021, compared to the same periods in 2020.  Deposit expense was further impacted by lower CD rates, which have contributed to a $448 decrease in time deposit interest expense during the third quarter of 2021, and a $1,276 decrease during the first nine months of 2021, compared to the same periods in 2020.  As CD rates have repriced downward, the Company has benefited from lower interest expense on newly issued CDs at lower rates. As a result of the rate repricings on money market accounts and time deposits, the Company’s total weighted average costs on interest-bearing deposits has decreased by 42 basis points from 0.87% at September 30, 2020 to 0.45% at September 30, 2021.

The Company’s net interest margin is defined as fully tax-equivalent net interest income as a percentage of average earning assets.  During 2021, the Company’s third quarter net interest margin finished at 3.57%, compared to 2020’s third quarter net interest margin of 3.88%. The year-to-date net interest margin at September 30, 2021 finished at 3.62%, compared to 4.04% at September 30, 2020. The decreases in margin was largely impacted by the decreasing market rates that impacted lower earning asset yields primarily during 2020. Interest rates were reduced at the end of the first quarter of 2020 because of the growing concern of the COVID-19 pandemic. The Company’s primary focus is to invest its funds into higher yielding assets, particularly loans, as opportunities arise. However, if loan balances do not continue to expand and remain a larger component of overall earning assets, the Company will face pressure within its net interest income and margin improvement.

Provision for Loan Losses

For the three months ended September 30, 2021, the Company’s provision expense decreased $91, and for the nine months ended September 30, 2021, provision expense decreased $3,569, compared to the same periods in 2020. The quarterly provision decrease was largely impacted by a decline in net charge offs that contributed to a lower historical loss factor resulting in lower general reserves. The year-to-date provision decrease was primarily impacted by the addition of a new risk reserve allocation in 2020 that was less impactful in 2021.  As previously discussed, the Company’s general reserves during 2020 were significantly impacted by a $2,287 allocation of the allowance for loan losses as a result of the expected financial impact of COVID-19 on its customers. The allocation resulted in corresponding entries to provision expense during the nine months ended September 2020. Further impacting lower provision expense was a $1,113 decrease in net loan charge-offs during the nine months ended September 30, 2021, compared to the same period in 2020. This was primarily from lower charge-offs on loans that were not previously allocated for within the commercial real estate and consumer loan portfolios.  Further contributing to lower provision expense were the impacts of lower general reserve allocations, exclusive of the allocation for the impact of COVID-19. During the first nine months of 2021, the Company decreased its general allocation from $7,160 at December 31, 2020 to $6,630 at September 30, 2021.  Conversely, this is compared to a $280 general allocation increase during the same period in 2020, excluding the COVID-19 risk factor. Lower general reserves have been affected by various improvements within the economic risk factor calculation that included:  lower criticized and classified assets, lower delinquency levels, and a lower historical loan loss factor.

Future provisions to the allowance for loan losses will continue to be based on management’s quarterly in-depth evaluation that is discussed in further detail under the caption “Critical Accounting Policies - Allowance for Loan Losses” within this Management’s Discussion and Analysis.

36

Noninterest Income

Noninterest income for the three months ended September 30, 2021 increased $178, or 7.3%, when compared to the three months ended September 30, 2020. Conversely, noninterest income for the nine months ended September 30, 2021 decreased $668, or 7.3%, when compared to the nine months ended September 30, 2020. A significant factor leading to lower revenue for 2021 was the proceeds received in a litigation settlement with a third-party in 2020. During the first quarter of 2020, the Bank entered into a settlement agreement related to the previously disclosed litigation the Bank had filed against a third-party tax software product provider for breach of contract. Under the settlement agreement, the third-party paid a $2,000 settlement payment to the Bank in March 2020, which was recorded as noninterest income.  As part of the settlement agreement, the Bank is processing a certain amount of tax items, which started in 2021 and will end in 2025. As a result, the Bank recognized $675 in ERC/ERD income during the first half of 2021, which helped to partially offset the effects of the settlement proceeds received in 2020.

Noninterest revenue was also impacted by interchange income, which increased $107, or 9.5%, during the third quarter of 2021, and $457, or 15.2%, during the first nine months of 2021 compared to the same periods in 2020.  This was largely impacted by the economic stimulus proceeds received by customers due to the COVID-19 pandemic that has increased consumer spending.

Other noninterest income also increased $199, or 126.7%, during the third quarter of 2021, and $264, or 49.0%, during the first nine months of 2021, compared to the same periods in 2020. This was primarily impacted by the sale of bank owned property during 2021. This contributed to increases in the gains on property sales of $123 during the third quarter of 2021 and $193 during the first nine months of 2021, compared to the same periods in 2020.  The increases were impacted by the sale of vacant land in Lawrence County, Ohio and a branch building in Jackson, Ohio that had been acquired as part of the merger with the Milton Banking Company back in 2016.

Tax preparation fee income also increased noninterest revenue during 2021.  As previously discussed, the Company changed its business model in 2020 for assessing fees related to tax refund advance loans. By charging for the tax preparation services, the Company recorded an increase of $109 in tax preparation fee income for the first nine months of 2021, while experiencing a decrease of $6 in tax preparation fees during the third quarter of 2021, compared to the same periods in 2020.

Partially offsetting increases to noninterest revenue was lower mortgage banking income. Mortgage banking income is highly influenced by mortgage interest rates and housing market conditions.  With mortgage rates at record lows during 2020 impacted by the COVID-19 pandemic, the consumer demand to refinance long-term, fixed-rate real estate mortgages significantly increased. With the heavy volume of refinancing having slowed since 2020, the amount of loans sold during the three and nine months ended September 30, 2021 has decreased from the volume of loan sales experienced during the same periods in 2020. As a result, mortgage banking income decreased $266, or 59.8%, during the third quarter of 2021, and decreased $422, or 43.7%, during the first nine months of 2021, compared to the same periods in 2020.

The remaining noninterest income categories increased $144, or 20.8%, during the third quarter of 2021, and $249, or 12.6%, during the first nine months of 2021, compared to the same periods in 2020. The increases were largely impacted by increases in service charges on deposit accounts, earnings on bank owned life insurance, and lower losses on the sale of OREO properties.

Noninterest Expense

Noninterest expense during the third quarter of 2021 decreased $422, or 4.3% compared to the same period in 2020. Noninterest expense during the first nine months of 2021 decreased $1,059, or 3.6% compared to the same period in 2020. Contributing most to the decline in noninterest expense was salaries and employee benefits, which decreased $497, or 8.3%, and $829, or 4.9%, during the three and nine months ended September 30, 2021, compared to the same periods in 2020. The decreases were partly impacted by the expense associated with the severance package payout of an employee in September 2020 that had a reverse effect in 2021. The expense savings during both periods was also impacted by a lower employee base, with the Bank’s average full-time equivalent employee base at 234 employees for the nine months ended September 30, 2021 compared to 243 employees for the nine months ended September 30, 2020. The impact of a lower employee base has more than offset the expense increases associated with annual merit increases in 2021.

37

Further impacting lower overhead costs were professional fees, which decreased $100, or 19.1%, during the third quarter of 2021, and $314, or 19.7%, during the first nine months of 2021, compared to the same periods in 2020. These decreases were largely from lower litigation costs related to a fewer number of bankruptcy-related loan cases in 2021 impacted by the COVID-19 pandemic environment.

Marketing expenses have also decreased $178, or 58.2%, during the three months ended September 30, 2021, and decreased $203, or 23.4%, during the nine months ended September 30, 2021, compared to the same periods in 2020.  With COVID-19 still having a disruptive effect to consumer behavior, the opportunities to advertise and promote the brand of the Company have been limited in 2021.

Decreases in noninterest expense were partially offset by higher occupancy, furniture, equipment and software expenses, which were collectively up $151, or 13.9%, during the third quarter of 2021, and $317, or 9.6%, during the first nine months of 2021, compared the same periods in 2020. Building and equipment costs were driven by increases in depreciable assets associated with the new OVB On the Square facility.  Higher software costs were associated with the platform used to increase loan processing efficiencies.

Further impacting overhead costs was an increase in FDIC assessment costs.  During 2020, the Bank utilized its remaining FDIC credits that were issued in September 2019. The Bank’s FDIC assessments during the first half of 2020 were reduced by $115 in credits. This contributed to a $149 increase in assessment costs during the nine months ended September 30, 2021, with third quarter costs up $15 for 2021, compared to the same periods in 2020. The Bank fully exhausted all of its credits as of June 30, 2020 and did not recognize any premium expense discounts during the rest of 2020.

The remaining noninterest expense categories increased $187, or 9.7%, during the third quarter of 2021, but decreased $179, or 2.8%, during the first nine months of 2021, compared to the same periods in 2020.  The quarter-to-date increase was in large part to higher data processing expense associated with debit and credit card volume. The year-to-date decrease was primarily impacted by lower customer incentive expenses paid on deposit accounts and use of credit cards.

Efficiency

The Company’s efficiency ratio is defined as noninterest expense as a percentage of fully tax-equivalent net interest income plus noninterest income. The effects from provision expense are excluded from the efficiency ratio. Management continues to place emphasis on managing its balance sheet mix and interest rate sensitivity as well as developing more innovative ways to generate noninterest revenue. Comparing the third quarters of 2021 and 2020, the Company’s asset yields were negatively impacted by market rate reductions related to COVID-19, which resulted in a greater decrease in yield on earning assets than the average cost on interest-bearing liabilities. However, average earning asset growth, including a composition shift from less Federal Reserve Bank balances to higher-yielding investment securities, helped to completely offset the negative effects from the net interest margin compression. Further positive contributions came from noninterest expense savings of 4.3% combined with noninterest revenue improvement of 7.3% for the quarter. As a result, the Company’s efficiency number decreased (improved) to 72.3% during the quarterly period ended September 30, 2021 compared to 78.3% during the same period in 2020. Comparing the first nine months of 2021 to the first nine months of 2020, average earning asset yields remained lower due to the reduction in market rates. Growth in average earning assets, higher loan fees, and redeploying excess Federal Reserve Bank balances into securities helped to generate a 2.5% increase in net interest income. Combining the net interest income improvement with the 3.6% savings in noninterest expense was enough to completely offset the 7.3% decrease in noninterest income. As a result, the Company’s efficiency number decreased (improved) to 70.9% during the first nine months of 2021 compared to 73.8% during the same period in 2020.

Provision for income taxes

The Company’s income tax provision increased $226 during the three months ended September 30, 2021 compared to the same period in 2020.  The Company’s income tax provision increased $832 during the nine months ended September 30, 2021 compared to the same period in 2020.  The change in tax expense corresponded directly to the change in associated taxable income during 2021 and 2020.

38

Capital Resources

Federal regulators have classified and defined capital into the following components: (1) tier 1 capital, which includes tangible shareholders’ equity for common stock, qualifying preferred stock and certain qualifying hybrid instruments, and (2) tier 2 capital, which includes a portion of the allowance for loan losses, certain qualifying long-term debt, preferred stock and hybrid instruments which do not qualify as tier 1 capital.

In September 2019, consistent with Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies issued a final rule providing simplified capital requirements for certain community banking organizations (banks and holding companies). Under the rule, a qualifying community banking organization (“QCBO”) is eligible to opt into the Community Bank Leverage Ratio (“CBLR”) framework in lieu of the Basel III capital requirements if it has less than $10 billion in total consolidated assets, limited amounts of certain trading assets and liabilities, limited amounts of off-balance sheet exposure and a leverage ratio greater than 9.0%. The new rule took effect January 1, 2020, and QCBOs were allowed to opt into the new CBLR framework in their Call Report beginning the first quarter of 2020.

A QCBO opting into the CBLR framework must maintain a CBLR of 9.0%, subject to a two quarter grace period to come back into compliance, provided that the QCBO maintains a leverage ratio of more than 8.0% during the grace period. A QCBO failing to satisfy these requirements must comply with the existing Basel III capital requirements as implemented by the banking regulators in July 2013.

The numerator of the CBLR is Tier 1 capital, as calculated under present rules. The denominator of the CBLR is the QCBO’s average assets, calculated in accordance with the QCBO’s Call Report instructions and less assets deducted from Tier 1 capital.

The Bank opted into the CBLR, and will, therefore, not be required to comply with the Basel III capital requirements. As of September 30, 2021, the Bank’s CBLR was 10.32%, and the Company’s CBLR was 11.35%.

Pursuant to the CARES Act, the federal banking regulators in April 2020 issued interim final rules to set the CBLR at 8% beginning in the second quarter of 2020 through the end of 2020. Beginning in 2021, the CBLR increased to 8.5% for the calendar year. Community banks will have until January 1, 2022 before the CBLR requirement will return to 9%.

Cash dividends paid by the Company were $3,016 during the first nine months of 2021.  The year-to-date dividends paid totaled $0.63 per share.

Liquidity

Liquidity relates to the Company's ability to meet the cash demands and credit needs of its customers and is provided by the ability to readily convert assets to cash and raise funds in the marketplace. Total cash and cash equivalents, held to maturity securities maturing within one year and available for sale securities, totaling $309,605, represented 24.9% of total assets at September 30, 2021. The COVID-19 pandemic had a significant impact on higher levels of excess funds in 2021, which included customer deposits of stimulus monies from various government relief programs.  In addition, the FHLB offers advances to the Bank, which further enhances the Bank's ability to meet liquidity demands. At September 30, 2021, the Bank could borrow an additional $109,438 from the FHLB. Furthermore, the Bank has established a borrowing line with the Federal Reserve. At September 30, 2021, this line had total availability of $58,118. Lastly, the Bank also has the ability to purchase federal funds from a correspondent bank.

Off-Balance Sheet Arrangements

As discussed in Note 5 – Financial Instruments with Off-Balance Sheet Risk, the Company engages in certain off-balance sheet credit-related activities, including commitments to extend credit and standby letters of credit, which could require the Company to make cash payments in the event that specified future events occur. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Standby letters of credit are conditional commitments to guarantee the performance of a customer to a third party. While these commitments are necessary to meet the financing needs of the Company’s customers, many of these commitments are expected to expire without being drawn upon. Therefore, the total amount of commitments does not necessarily represent future cash requirements.

39

Critical Accounting Policies

The most significant accounting policies followed by the Company are presented in Note A to the financial statements in the Company’s 2020 Annual Report to Shareholders. These policies, along with the disclosures presented in the other financial statement notes, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Management views critical accounting policies to be those which are highly dependent on subjective or complex judgments, estimates and assumptions, and where changes in those estimates and assumptions could have a significant impact on the financial statements. Management currently views the adequacy of the allowance for loan losses to be a critical accounting policy.

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. Impaired loans generally consist of loans with balances of $200 or more on nonaccrual status or nonperforming in nature. Loans for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered TDRs 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. TDRs are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a TDR is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For TDRs 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 Real Estate, Commercial and Industrial, Residential Real Estate, and Consumer.

40

Commercial and industrial loans consist of borrowings for commercial purposes by 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.

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 one- to four-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 one- to four-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. During the last several years, one of the most significant portions of the Company’s net loan charge-offs have been from consumer loans. Nevertheless, 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 and inherent risk associated with such portfolios.

Concentration of Credit Risk

The Company maintains a diversified credit portfolio, with residential real estate loans currently comprising the most significant portion. Credit risk is primarily subject to loans made to businesses and individuals in southeastern Ohio and western West Virginia. Management believes this risk to be general in nature, as there are no material concentrations of loans to any industry or consumer group. To the extent possible, the Company diversifies its loan portfolio to limit credit risk by avoiding industry concentrations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

With the participation of the Chief Executive Officer (the principal executive officer) and the Senior Vice President and Chief Financial Officer (the principal financial officer) of Ohio Valley, Ohio Valley’s management has evaluated the effectiveness of Ohio Valley’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2021. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by Ohio Valley in the reports that it files or submits under the Exchange Act is accumulated and communicated to Ohio Valley’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, Ohio Valley’s Chief Executive Officer and Senior Vice President and Chief Financial Officer have concluded that Ohio Valley’s disclosure controls and procedures were effective as of September 30, 2021 to ensure that information required to be disclosed by Ohio Valley in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

41

Changes in Internal Control over Financial Reporting

There was no change in Ohio Valley’s internal control over financial reporting (as defined in Rule 13a‑15(f) under the Exchange Act) that occurred during Ohio Valley’s fiscal quarter ended September 30, 2021, that has materially affected, or is reasonably likely to materially affect, Ohio Valley’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Ohio Valley is not currently subject to any material legal proceedings.

ITEM 1A.  RISK FACTORS

There are no material changes from the risk factors set forth under Part I, Item 1A, “Risk Factors” in the 2020 Form 10-K.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) There were no sales of unregistered equity securities during the three months ended September 30, 2021.

(b) Not Applicable.

(c) In July 2021, the Company announced the approval by the Board of Directors (“the Board”) of a stock repurchase program to purchase up to $5,000 of its common shares in the open market. Any shares of common stock repurchased are held by the Company as treasury shares and will be available for general corporate purposes. The exact number of shares to be repurchased by the Company is not guaranteed. The stock repurchase program has an expiration date of August 31, 2022 and may be terminated or amended by the Board at any time prior to the expiration date.

The following table provides information regarding Ohio Valley’s repurchases of its common shares during the three months ended September 30, 2021:

Period	Total number of common shares purchased		Average price paid per common share		Total number of shares purchased as part of publicly announced plans or programs		Maximum approximate dollar value of shares that may yet be purchased under publicly announced plans or programs
July 1 - 31, 2021		----		----		----	$	5,000
August 1 - 31, 2021		5,621	$	27.19		5,621	$	4,847
September 1 - 30, 2021		10,948	$	27.91		10,948	$	4,542
TOTAL		16,569	$	27.67		16,569	$	4,542

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.  OTHER INFORMATION

None.

42

ITEM 6.  EXHIBITS

(a) Exhibits:

Exhibit Number	Exhibit Description
3.1	Amended Articles of Incorporation of Ohio Valley (reflects amendments through April 7, 1999) [for SEC reporting compliance only - -  not filed with the Ohio Secretary of State]:  Incorporated herein by reference to Exhibit 3(a) to Ohio Valley’s Annual Report on Form 10-K for fiscal year ended December 31, 2007 (File No. 000-20914).
3.2	Code of Regulations of Ohio Valley: Incorporated herein by reference to Exhibit 3(b) to Ohio Valley’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 (File No. 000-20914).
4.1	Agreement to furnish instruments and agreements defining rights of holders of long-term debt: Filed herewith.
31.1	Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer):  Filed herewith.
31.2	Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer):  Filed herewith.
32	Section 1350 Certifications (Principal Executive Officer and Principal Accounting Officer): Filed herewith.
101.INS #	XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH #	XBRL Taxonomy Extension Schema: Filed herewith. #
101.CAL #	XBRL Taxonomy Extension Calculation Linkbase: Filed herewith. #
101.DEF #	XBRL Taxonomy Extension Definition Linkbase: Filed herewith. #
101.LAB #	XBRL Taxonomy Extension Label Linkbase: Filed herewith. #
101.PRE #	XBRL Taxonomy Extension Presentation Linkbase: Filed herewith. #
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)  Filed herewith #

# Attached as Exhibit 101 are the following documents formatted in Inline XBRL (eXtensive Business Reporting Language): (i) Unaudited Consolidated Balance Sheets; (ii) Unaudited Consolidated Statements of Income; (iii) Unaudited Consolidated Statements of Comprehensive Income; (iv) Unaudited Consolidated Statements of Changes in Shareholders’ Equity; (v) Unaudited Condensed Consolidated Statements of Cash Flows; and (vi) Notes to the Consolidated Financial Statements.

43

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			OHIO VALLEY BANC CORP.
Date:	November 15, 2021	By:	/s/Thomas E. Wiseman
			Thomas E. Wiseman
			Chief Executive Officer
Date:	November 15, 2021	By:	/s/Scott W. Shockey
			Scott W. Shockey
			Senior Vice President and Chief Financial Officer

44

EX-4

EXHIBIT 4

OHIO VALLEY BANC CORP.

420 Third Avenue

Gallipolis, OH  45631

(740) 446-2631

November 15,2021

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

RE: Ohio Valley Banc Corp. – Form 10-Q for the nine months ended September 30, 2021

Gentlemen:

Ohio Valley Banc Corp., an Ohio corporation (“Ohio Valley”), is today filing a Quarterly Report on Form 10-Q for the nine months ended September 30, 2021 (the “Form 10-Q”), as executed on November 15, 2021.

Pursuant to the instructions relating to the Exhibits in Item 601(b)(4)(iii) of Regulation S-K, Ohio Valley hereby agrees to furnish the Commission, upon request, copies of instruments and agreements defining the rights of holders of its long-term debt and of the long-term debt of its consolidated subsidiaries, which are not being filed as exhibits to the Form 10-Q.  No such instrument or agreement represents long-term debt exceeding 10% of the total assets of Ohio Valley Banc Corp. and its subsidiaries on a consolidated basis.

Very truly yours,

/s/Thomas E. Wiseman

Thomas E. Wiseman

Chief Executive Officer

Ohio Valley Banc Corp.

EX-31.1

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification

I, Thomas E. Wiseman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Ohio Valley Banc Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 15,2021	By:	/s/ Thomas E. Wiseman
		Thomas E. Wiseman, CEO
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification

I, Scott W. Shockey, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Ohio Valley Banc Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 15, 2021	By:	/s/ Scott W. Shockey
		Scott W. Shockey, Senior Vice President and CFO
		(Principal Financial Officer)

EX-32

Exhibit 32

SECTION 1350 CERTIFICATION

In connection with the Quarterly Report of Ohio Valley Banc Corp. (the “Corporation”) on Form 10-Q for the quarterly period ended September 30, 2021 (the “Report”), the undersigned Thomas E. Wiseman, Chief Executive Officer of the Corporation, and Scott W. Shockey, Senior Vice President and Chief Financial Officer of the Corporation, each certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

*/s/ Thomas E. Wiseman	*/s/ Scott W. Shockey
Thomas E. Wiseman	Scott W. Shockey
Chief Executive Officer	Senior Vice President and Chief Financial Officer
Dated:  November 15, 2021	Dated:  November 15, 2021

* This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section.  This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Corporation specifically incorporates it by reference in any such filing.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2021	Nov. 15, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity Registrant Name	OHIO VALLEY BANC CORP
Entity Incorporation, State or Country Code	OH
Entity File Number	0-20914
Entity Tax Identification Number	31-1359191
Entity Address, Address Line One	420 Third Avenue
Entity Address, Address Line Two	PO BOX 240
Entity Address, City or Town	Gallipolis
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	45631
City Area Code	740
Local Phone Number	446-2631
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		4,770,877
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Entity Central Index Key	0000894671
Title of 12(b) Security	Common shares, without par value
Trading Symbol	OVBC
Security Exchange Name	NASDAQ

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
ASSETS
Cash and noninterest-bearing deposits with banks	$ 14,328	$ 14,989
Interest-bearing deposits with banks	120,736	123,314
Total cash and cash equivalents	135,064	138,303
Certificates of deposit in financial institutions	2,500	2,500
Securities available for sale	173,448	112,322
Securities held to maturity (estimated fair value: 2021 - $9,949; 2020 - $10,344)	9,753	10,020
Restricted investments in bank stocks	7,265	7,506
Total loans	845,733	848,664
Less: Allowance for loan losses	(6,664)	(7,160)
Net loans	839,069	841,504
Premises and equipment, net	20,811	21,312
Premises and equipment held for sale, net	441	637
Other real estate owned, net	0	49
Accrued interest receivable	3,118	3,319
Goodwill	7,319	7,319
Other intangible assets, net	74	112
Bank owned life insurance and annuity assets	37,078	35,999
Operating lease right-of-use asset, net	1,235	880
Other assets	8,203	5,150
Total assets	1,245,378	1,186,932
LIABILITIES
Noninterest-bearing deposits	331,195	314,777
Interest-bearing deposits	720,480	678,962
Total deposits	1,051,675	993,739
Other borrowed funds	23,285	27,863
Subordinated debentures	8,500	8,500
Operating lease liability	1,235	880
Accrued liabilities	19,753	19,626
Total liabilities	1,104,448	1,050,608
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 5)
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value per share, 10,000,000 shares authorized; 5,447,185 shares issued)	5,447	5,447
Additional paid-in capital	51,165	51,165
Retained earnings	99,400	92,988
Accumulated other comprehensive income	1,088	2,436
Treasury stock, at cost (2021 - 676,308 shares, 2020 - 659,739 shares)	(16,170)	(15,712)
Total shareholders' equity	140,930	136,324
Total liabilities and shareholders' equity	$ 1,245,378	$ 1,186,932

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
ASSETS
Securities held to maturity, fair value	$ 9,949	$ 10,344
SHAREHOLDERS' EQUITY
Common stock, par value (in dollars per share)	$ 1.00	$ 1.00
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	5,447,185	5,447,185
Treasury stock, shares (in shares)	676,308	659,739

XML

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Interest and dividend income:
Loans, including fees	$ 10,522	$ 10,877	$ 31,649	$ 32,389
Securities
Taxable	527	535	1,411	1,723
Tax exempt	61	73	180	220
Dividends	58	58	174	188
Interest-bearing deposits with banks	50	20	111	200
Other Interest	8	11	26	38
Total interest and dividend income	11,226	11,574	33,551	34,758
Interest expense:
Deposits	692	1,274	2,374	4,150
Other borrowed funds	136	174	436	561
Subordinated debentures	39	44	119	166
Total interest expense	867	1,492	2,929	4,877
Net interest income	10,359	10,082	30,622	29,881
Provision for loan losses	(93)	(2)	(118)	3,451
Net interest income after provision for loan losses	10,452	10,084	30,740	26,430
Noninterest income:
Service charges on deposit accounts	514	423	1,309	1,249
Trust fees	70	64	212	193
Income from bank owned life insurance and annuity assets	253	207	701	616
Mortgage banking income	179	445	544	966
Electronic refund check / deposit fees	0	0	675	0
Debit / credit card interchange income	1,237	1,130	3,460	3,003
Gain (loss) on other real estate owned	0	(1)	1	(84)
Tax preparation fees	3	9	752	643
Litigation settlement	0	0	0	2,000
Other	356	157	803	539
Total noninterest income	2,612	2,434	8,457	9,125
Noninterest expense:
Salaries and employee benefits	5,476	5,973	16,025	16,854
Occupancy	483	481	1,415	1,362
Furniture and equipment	287	284	852	824
Professional fees	425	525	1,282	1,596
Marketing expense	128	306	664	867
FDIC insurance	84	69	242	93
Data processing	667	538	1,902	1,841
Software	464	318	1,347	1,111
Foreclosed assets	10	38	32	117
Amortization of intangibles	11	14	38	48
Other	1,434	1,345	4,154	4,299
Total noninterest expense	9,469	9,891	27,953	29,012
Income before income taxes	3,595	2,627	11,244	6,543
Provision for income taxes	559	333	1,816	984
NET INCOME	$ 3,036	$ 2,294	$ 9,428	$ 5,559
Earnings per share (in dollars per share)	$ 0.63	$ 0.48	$ 1.97	$ 1.16

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) [Abstract]
Net Income	$ 3,036	$ 2,294	$ 9,428	$ 5,559
Other comprehensive income (loss):
Change in unrealized gain (loss) on available for sale securities	(85)	(267)	(1,706)	2,755
Related tax (expense) benefit	18	56	358	(579)
Total other comprehensive income (loss), net of tax	(67)	(211)	(1,348)	2,176
Total comprehensive income	$ 2,969	$ 2,083	$ 8,080	$ 7,735

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Total
Beginning balance at Dec. 31, 2019	$ 5,447	$ 51,165	$ 86,751	$ 528	$ (15,712)	$ 128,179
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	5,559	0	0	5,559
Other comprehensive income (loss), net	0	0	0	2,176	0	2,176
Cash dividends, $.63 per share	0	0	(3,016)	0	0	(3,016)
Ending balance at Sep. 30, 2020	5,447	51,165	89,294	2,704	(15,712)	132,898
Beginning balance at Jun. 30, 2020	5,447	51,165	88,006	2,915	(15,712)	131,821
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	2,294	0	0	2,294
Other comprehensive income (loss), net	0	0	0	(211)	0	(211)
Cash dividends, $.63 per share	0	0	(1,006)	0	0	(1,006)
Ending balance at Sep. 30, 2020	5,447	51,165	89,294	2,704	(15,712)	132,898
Beginning balance at Dec. 31, 2020	5,447	51,165	92,988	2,436	(15,712)	136,324
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	9,428	0	0	9,428
Other comprehensive income (loss), net	0	0	0	(1,348)	0	(1,348)
Cash dividends, $.63 per share	0	0	(3,016)	0	0	(3,016)
Shares acquired for treasury, 16,569 shares	0	0	0	0	(458)	(458)
Ending balance at Sep. 30, 2021	5,447	51,165	99,400	1,088	(16,170)	140,930
Beginning balance at Jun. 30, 2021	5,447	51,165	97,369	1,155	(15,712)	139,424
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	3,036	0	0	3,036
Other comprehensive income (loss), net	0	0	0	(67)	0	(67)
Cash dividends, $.63 per share	0	0	(1,005)	0	0	(1,005)
Shares acquired for treasury, 16,569 shares	0	0	0	0	(458)	(458)
Ending balance at Sep. 30, 2021	$ 5,447	$ 51,165	$ 99,400	$ 1,088	$ (16,170)	$ 140,930

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) [Abstract]
Cash dividends, per share (in dollars per share)	$ 0.21	$ 0.21	$ 0.63	$ 0.63
Shares acquired for treasury (in shares)	16,569		16,569

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) [Abstract]
Net cash provided by operating activities:	$ 8,080	$ 7,530
Investing activities:
Proceeds from maturities of securities available for sale	32,814	23,344
Purchases of securities available for sale	(96,240)	(25,884)
Proceeds from maturities of securities held to maturity	1,586	328
Purchase of securities held to maturity	(1,341)	0
Proceeds from maturities of certificates of deposit in financial institutions	735	735
Purchases of certificates of deposit in financial institutions	(735)	(1,120)
Redemptions of federal home loan bank stock	241	0
Net change in loans	2,548	(82,347)
Proceeds from sale of other real estate owned	49	446
Purchases of premises and equipment	(797)	(3,101)
Disposals of premises and equipment	486	0
Purchases of bank owned life insurance and annuity assets	(550)	(4,583)
Net cash (used in) investing activities	(61,204)	(92,182)
Financing activities:
Change in deposits	57,937	123,536
Cash dividends	(3,016)	(3,016)
Purchases of treasury stock	(458)	0
Proceeds from Federal Home Loan Bank borrowings	600	0
Repayment of Federal Home Loan Bank borrowings	(4,118)	(3,994)
Change in other long-term borrowings	0	(406)
Change in other short-term borrowings	(1,060)	(270)
Net cash provided by financing activities	49,885	115,850
Change in cash and cash equivalents	(3,239)	31,198
Cash and cash equivalents at beginning of period	138,303	52,356
Cash and cash equivalents at end of period	135,064	83,554
Supplemental disclosure:
Cash paid for interest	3,525	5,117
Cash paid for income taxes	2,400	1,950
Transfers from loans to other real estate owned	0	86
Proceeds from bank owned life insurance and annuity assets not settled	$ 173	$ 0

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2021

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 (“Loan Central”), Ohio Valley Financial Services Agency, LLC, an insurance agency, and OVBC Captive, Inc., a limited purpose property and casualty insurance company (the “Captive”).  The Bank has two wholly-owned subsidiaries, Race Day Mortgage, Inc., a mortgage banking company, 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.  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 September 30, 2021, 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, 2021 are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, 2021.  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, 2020 contains consolidated financial statements and related notes which should be read in conjunction with the accompanying consolidated financial statements.

The consolidated financial statements for 2020 have been reclassified to conform to the presentation for 2021.  These reclassifications had no effect on net income or shareholders’ equity.

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 volatility, disrupt financial markets, and increase unemployment levels.

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. These effects may include an increase in the Company’s allowance for loan losses and valuation impairments on the Company’s securities, impaired loans, goodwill, other real estate owned, and interest rate swap agreements.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:  The accounting and reporting policies followed by the Company conform to US GAAP established by the Financial Accounting Standards Board (“FASB”). The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

INDUSTRY SEGMENT INFORMATION:  Internal financial information is primarily reported and aggregated in two lines of business: banking and consumer finance.

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 September 30, 2021, there were $858 in loans held for sale by the Bank, as compared to $70 in loans held for sale at December 31, 2020.

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.

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 September 30, 2021, there were no changes to the accounting policies or methodologies within any of the Company’s loan portfolio segments from the prior period.

EARNINGS PER SHARE:  Earnings per share are computed based on net income divided by the weighted average number of common shares outstanding during the period.  The weighted average common shares outstanding were 4,783,886 and 4,787,446 for the three months ended September 30, 2021 and 2020, respectively.  The weighted average common shares outstanding were 4,786,246 and 4,787,446 for the nine months ended September 30,2021 and 2020, respectively.  Ohio Valley had no dilutive effect and no potential common shares issuable under stock options or other agreements for any period presented.

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. The Bank's 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.  For SEC filers who are smaller reporting companies, such as the Company, ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2021

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

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.

Level 2: 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.

Level 3: 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:

Securities:  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). 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.

Impaired Loans:  At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses. 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. 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.  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. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

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. 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. 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.

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).

Assets and Liabilities Measured on a Recurring Basis

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

	Fair Value Measurements at September 30, 2021 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
U.S. Government securities		—	$	17,724			—
U.S. Government sponsored entity securities		—		29,992			—
Agency mortgage-backed securities, residential		—		125,732			—
Interest rate swap derivatives		—		699			—
Liabilities:
Interest rate swap derivatives		—		(699	)		—

	Fair Value Measurements at December 31, 2020 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
U.S. Government sponsored entity securities		—	$	18,153			—
Agency mortgage-backed securities, residential		—		94,169			—
Interest rate swap derivatives		—		928			—
Liabilities:
Interest rate swap derivatives		—		(928	)		—

There were no transfers between Level 1 and Level 2 during 2021 or 2020.

Assets and Liabilities Measured on a Nonrecurring Basis

There were no assets or liabilities measured at fair value on a nonrecurring basis at September 30, 2021 and December 31, 2020.

There was no other real estate owned that was measured at fair value less costs to sell at September 30, 2021 and December 31, 2020. There were no corresponding write downs during the three and nine months ended September 30, 2021 and 2020.

There was no quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at September 30, 2021 and December 31, 2020.

The carrying amounts and estimated fair values of financial instruments at September 30, 2021 and December 31, 2020 are as follows:

	Carrying		Fair Value Measurements at September 30, 2021 Using
	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	135,064	$	135,064	$	—	$	—	$	135,064
Certificates of deposit in financial institutions		2,500		—		2,500		—		2,500
Securities available for sale		173,448		—		173,448		—		173,448
Securities held to maturity		9,753		—		5,993		3,956		9,949
Loans, net		839,069		—		—		836,161		836,161
Interest rate swap derivatives		699		—		699		—		699
Accrued interest receivable		3,118		—		444		2,674		3,118
Financial liabilities:
Deposits		1,051,675		331,195		721,283		—		1,052,478
Other borrowed funds		23,285		—		24,442		—		24,442
Subordinated debentures		8,500		—		5,522		—		5,522
Interest rate swap derivatives		699		—		699		—		699
Accrued interest payable		503		1		502		—		503

	Carrying		Fair Value Measurements at December 31, 2020 Using
	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	138,303	$	138,303	$	—	$	—	$	138,303
Certificates of deposit in financial institutions		2,500		—		2,500		—		2,500
Securities available for sale		112,322		—		112,322		—		112,322
Securities held to maturity		10,020		—		4,989		5,355		10,344
Loans, net		841,504		—		—		837,387		837,387
Interest rate swap derivatives		928		—		928		—		928
Accrued interest receivable		3,319		—		283		3,036		3,319
Financial liabilities:
Deposits		993,739		314,777		680,904		—		995,681
Other borrowed funds		27,863		—		29,807		—		29,807
Subordinated debentures		8,500		—		5,556		—		5,556
Interest rate swap derivatives		928		—		928		—		928
Accrued interest payable		1,100		1		1,099		—		1,100

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

XML

SECURITIES

9 Months Ended

Sep. 30, 2021

SECURITIES [Abstract]

SECURITIES

NOTE 3 – SECURITIES

The following table summarizes the amortized cost and fair value of securities available for sale and securities held to maturity at September 30, 2021 and December 31, 2020, 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	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2021
U.S. Government securities	$	17,800	$	—	$	(76	)	$	17,724
U.S. Government sponsored entity securities		29,980		171		(159	)		29,992
Agency mortgage-backed securities, residential		124,291		1,960		(519	)		125,732
Total securities	$	172,071	$	2,131	$	(754	)	$	173,448
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

Securities Held to Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Estimated Fair Value
September 30, 2021
Obligations of states and political subdivisions	$	9,751	$	232	$	(36	)	$	9,947
Agency mortgage-backed securities, residential		2		—		—			2
Total securities	$	9,753	$	232	$	(36	)	$	9,949
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

The amortized cost and estimated fair value of debt securities at September 30, 2021, 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	$	4,001	$	4,037	$	1,093	$	1,117
Due in over one to five years		11,187		11,266		3,752		3,863
Due in over five to ten years		32,592		32,413		4,579		4,648
Due after ten years		—		—		327		319
Agency mortgage-backed securities, residential		124,291		125,732		2		2
Total debt securities	$	172,071	$	173,448	$	9,753	$	9,949

The following table summarizes securities with unrealized losses at September 30, 2021 and December 31, 2020, aggregated by major security type and length of time in a continuous unrealized loss position:

September 30, 2021	Less Than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Securities Available for Sale
U.S. Government securities	$	17,724	$	(76	)	$	—	$	—	$	17,724	$	(76	)
U.S. Government sponsored entity securities		17,340		(159	)		—		—		17,340		(159	)
Agency mortgage-backed securities,
residential		66,278		(519	)		—		—		66,278		(519	)
Total available for sale	$	101,342	$	(754	)	$	—	$	—	$	101,342	$	(754	)

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

September 30, 2021	Less Than 12 Months							12 Months or More						Total
	Fair Value			Unrecognized Loss				Fair Value			Unrecognized Loss			Fair Value			Unrecognized Loss
Securities Held to Maturity
Obligations of states and political subdivisions		$	1,621		$	(36	)		$	—		$	—		$	1,621		$	(36	)
Total held to maturity		$	1,621		$	(36	)		$	—		$	—		$	1,621		$	(36	)

There were no sales of investment securities during the three and nine months ended September 30, 2021 or 2020. Unrealized losses on the Company’s debt securities have not been recognized into income because the issuers’ securities were of high credit quality as of September 30, 2021, 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 September 30, 2021 and December 31, 2020 represents an other-than-temporary impairment.

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2021

LOANS AND ALLOWANCE FOR LOAN LOSSES [Abstract]

LOANS AND ALLOWANCE FOR LOAN LOSSES

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are comprised of the following:

	September 30, 2021			December 31, 2020
Residential real estate	$	280,104		$	305,478
Commercial real estate:
Owner-occupied		74,340			51,863
Nonowner-occupied		174,627			164,523
Construction		33,605			37,063
Commercial and industrial		144,154			157,692
Consumer:
Automobile		53,022			55,241
Home equity		21,521			19,993
Other		64,360			56,811
		845,733			848,664
Less:  Allowance for loan losses		(6,664	)		(7,160	)
Loans, net	$	839,069		$	841,504

Commercial and industrial loans include $5,611 of loans originated under the PPP at September 30, 2021.  These loans are guaranteed by the SBA.

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2021 and 2020:

September 30, 2021	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,088		$	2,532		$	1,746		$	1,433		$	6,799
Provision for loan losses		(34	)		10			(263	)		194			(93	)
Loans charged off		(49	)		(63	)		(25	)		(280	)		(417	)
Recoveries		40			115			113			107			375
Total ending allowance balance	$	1,045		$	2,594		$	1,571		$	1,454		$	6,664

September 30, 2020	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	2,024		$	2,700		$	1,649		$	1,608		$	7,981
Provision for loan losses		(275	)		(98	)		230			141			(2	)
Loans charged-off		(90	)		—			(96	)		(398	)		(584	)
Recoveries		110			15			44			166			335
Total ending allowance balance	$	1,769		$	2,617		$	1,827		$	1,517		$	7,730

The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2021 and 2020:

September 30, 2021	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,480		$	2,431		$	1,776		$	1,473		$	7,160
Provision for loan losses		(443	)		121			(260	)		464			(118	)
Loans charged-off		(75	)		(115	)		(96	)		(879	)		(1,165	)
Recoveries		83			157			151			396			787
Total ending allowance balance	$	1,045		$	2,594		$	1,571		$	1,454		$	6,664

September 30, 2020	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,250		$	1,928		$	1,447		$	1,647		$	6,272
Provision for loan losses		715			1,131			505			1,100			3,451
Loans charged-off		(340	)		(516	)		(185	)		(1,677	)		(2,718	)
Recoveries		144			74			60			447			725
Total ending allowance balance	$	1,769		$	2,617		$	1,827		$	1,517		$	7,730

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 September 30, 2021 and December 31, 2020:

September 30, 2021	Residential Real Estate		Commercial Real Estate		Commercial and Industrial		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	34	$	34
Collectively evaluated for impairment		1,045		2,594		1,571		1,420		6,630
Total ending allowance balance	$	1,045	$	2,594	$	1,571	$	1,454	$	6,664
Loans:
Loans individually evaluated for impairment	$	—	$	5,479	$	3,850	$	79	$	9,408
Loans collectively evaluated for impairment		280,104		277,093		140,304		138,824		836,325
Total ending loans balance	$	280,104	$	282,572	$	144,154	$	138,903	$	845,733

December 31, 2020	Residential Real Estate		Commercial Real Estate		Commercial and 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

The following tables present information related to loans individually evaluated for impairment by class of loans as of September 30, 2021 and December 31, 2020:

September 30, 2021	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Consumer:
Other	$	48	$	48	$	34
With no related allowance recorded:
Commercial real estate:
Owner-occupied		5,108		5,093		—
Nonowner-occupied		386		386		—
Commercial and industrial		3,850		3,850		—
Consumer:
Home equity		31		31		—
Total	$	9,423	$	9,408	$	34

December 31, 2020	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:	$	—	$	—	$	—
With no related allowance recorded:
Residential real estate		418		411		—
Commercial real estate:
Owner-occupied		5,256		5,256		—
Nonowner-occupied		632		589		—
Commercial and industrial		4,686		4,686		—
Consumer:
Home equity		34		34		—
Other		50		50		—
Total	$	11,076	$	11,026	$	—

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, 2021 and 2020:

	Three months ended September 30, 2021						Nine months ended September 30, 2021
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Consumer:
Other	$	49	$	1	$	1	$	49	$	2	$	2
With no related allowance recorded:
Commercial real estate:
Owner-occupied		5,128		74		74		5,183		239		239
Nonowner-occupied		386		7		7		388		21		21
Commercial and industrial		3,174		111		111		3,586		200		200
Consumer:
Home equity		32		1		1		33		2		2
Total	$	8,769	$	194	$	194	$	9,239	$	464	$	464

	Three months ended September 30, 2020						Nine months ended September 30, 2020
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial real estate:
Nonowner-occupied	$	242	$	—	$	—	$	242	$	—	$	—
With no related allowance recorded:
Residential real estate		420		7		7		426		15		15
Commercial real estate:
Owner-occupied		3,161		23		23		2,957		124		124
Nonowner-occupied		753		15		15		772		39		39
Commercial and industrial		2,807		20		20		3,543		149		149
Consumer:
Home equity		444		3		3		415		12		12
Total	$	7,827	$	68	$	68	$	8,355	$	339	$	339

Accrued interest and net deferred loan fees have been excluded from the recorded investment of loans 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 September 30, 2021, there were no other real estate owned for residential real estate properties, as compared to $43 at December 31, 2020. In addition, nonaccrual residential mortgage loans that are in the process of foreclosure had a recorded investment of $415 and $1,097 as of September 30, 2021 and December 31, 2020, 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 September 30, 2021 and December 31, 2020:

September 30, 2021	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	2	$	4,081
Commercial real estate:
Owner-occupied		—		1,095
Nonowner-occupied		—		83
Construction		—		155
Commercial and industrial		—		149
Consumer:
Automobile		135		134
Home equity		—		132
Other		99		27
Total	$	236	$	5,856

December 31, 2020	Loans Past Due 90 Days And Still Accruing		Nonaccrual
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	$	424	$	6,503

The following table presents the aging of the recorded investment of past due loans by class of loans as of September 30, 2021 and December 31, 2020:

September 30, 2021	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	2,149	$	669	$	701	$	3,519	$	276,585	$	280,104
Commercial real estate:
Owner-occupied		20		—		180		200		74,140		74,340
Nonowner-occupied		100		—		83		183		174,444		174,627
Construction		37		—		33		70		33,535		33,605
Commercial and industrial		13		—		149		162		143,992		144,154
Consumer:
Automobile		554		138		242		934		52,088		53,022
Home equity		29		81		110		220		21,301		21,521
Other		527		24		126		677		63,683		64,360
Total	$	3,429	$	912	$	1,624	$	5,965	$	839,768	$	845,733

December 31, 2020	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	2,845	$	496	$	1,663	$	5,004	$	300,474	$	305,478
Commercial real estate:
Owner-occupied		470		1,003		193		1,666		50,197		51,863
Nonowner-occupied		94		—		362		456		164,067		164,523
Construction		—		82		—		82		36,981		37,063
Commercial and industrial		1,112		11		164		1,287		156,405		157,692
Consumer:
Automobile		831		131		258		1,220		54,021		55,241
Home equity		204		81		113		398		19,595		19,993
Other		446		76		172		694		56,117		56,811
Total	$	6,002	$	1,880	$	2,925	$	10,807	$	837,857	$	848,664

Troubled Debt Restructurings:

A troubled debt restructuring (“TDR”) occurs when the Company has agreed to a loan modification in the form of a concession for a borrower who is experiencing financial difficulty. All TDRs are considered to be impaired. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a reduction in the contractual principal and interest payments of the loan; or short-term interest-only payment terms.

The Company has allocated reserves for a portion of its TDRs to reflect the fair values of the underlying collateral or the present value of the concessionary terms granted to the customer.

The following table presents the types of TDR loan modifications by class of loans as of September 30, 2021 and December 31, 2020:

September 30, 2021	TDRs Performing to Modified Terms		TDRs Not Performing to Modified Terms		Total TDRs
Commercial real estate:
Owner-occupied
Reduction of principal and interest payments	$	1,463	$	—	$	1,463
Maturity extension at lower stated rate than market rate		289		—		289
Credit extension at lower stated rate than market rate		377		—		377
Nonowner-occupied
Credit extension at lower stated rate than market rate		386		—		386
Commercial and industrial:
Interest only payments		1,622		—		1,622
Total TDRs	$	4,137	$	—	$	4,137

December 31, 2020	TDRs Performing to Modified Terms		TDRs Not Performing to Modified Terms		Total TDRs
Residential real estate:
Interest only payments	$	202	$	—	$	202
Commercial real estate:
Owner-occupied
Reduction of principal and interest payments		1,486		—		1,486
Maturity extension at lower stated rate than market rate		351		—		351
Credit extension at lower stated rate than market rate		384		—		384
Nonowner-occupied
Credit extension at lower stated rate than market rate		390		—		390
Commercial and industrial:
Interest only payments		4,400		—		4,400
Total TDRs	$	7,213	$	—	$	7,213

The Company had no specific allocations in reserves to customers whose loan terms have been modified in TDRs at September 30, 2021 and December 31, 2020. At September 30, 2021, the Company had $3,878 in commitments to lend additional amounts to customers with outstanding loans that are classified as TDRs, as compared to $1,100 at December 31, 2020.

There were no new TDR loan modifications that occurred during the three and nine months ended September 30, 2021 and 2020, which resulted in no impact to provision expense or the allowance for loan losses.

During the three and nine months ended September 30, 2021 and 2020, the Company had no TDRs that experienced any payment defaults within twelve months following their loan modification. A default is considered to have occurred once the TDR is past due 90 days or more or it has been placed on nonaccrual.  TDR loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020 and provided guidance on the modification of loans as a result of COVID-19, which outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs. This includes short-term modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers are considered current if they are less than 30 days past due on their contractual payments at the time of modification.  As of September 30, 2021, the Company had modified 674 loans related to COVID-19 with an outstanding loan balance of $130,365 that were not reported as TDRs.  As of September 30, 2021, the Company had 18 of those modified loans still operating under their deferral terms that were related to COVID-19 with an outstanding loan balance of $156 that were not reported as TDRs in the tables presented above.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. 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. The Company’s risk categories are reviewed at least annually on loans that have aggregate borrowing amounts that meet or exceed $1,000.

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

Special Mention.  Loans classified as "special mention" indicate considerable risk due to deterioration of repayment (in the earliest stages) due to potential weak primary repayment source, or payment delinquency.  These loans will be under constant supervision, are not classified and do not expose the institution to sufficient risks to warrant classification.  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.  The perceived risk in continued lending is considered to have increased beyond the level where such loans would normally be granted.  Credits that are defined as a TDR should be graded no higher than special mention until they have been reported as performing over one year after restructuring.

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

Substandard.  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. Collateral liquidation is considered likely to satisfy debt.

Doubtful.  Loans classified as "doubtful" display a high probability of loss, although the amount of actual loss at the time of classification is undetermined. This classification should be temporary until such time that actual loss can be identified, or improvements made to reduce the seriousness of the classification. These loans exhibit all substandard characteristics with the addition that weaknesses make collection or liquidation in full highly questionable and improbable. This classification consists of loans where the possibility of loss is high after collateral liquidation based upon existing facts, market conditions, and value. Loss is deferred until certain important and reasonable specific pending factors that may strengthen the credit can be more accurately determined. These factors may include proposed acquisitions, liquidation procedures, capital injection, receipt of additional collateral, mergers, or refinancing plans. A doubtful classification for an entire credit should be avoided when collection of a specific portion appears highly probable with the adequately secured portion graded substandard.

Loss.  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.

Criticized and classified loans will mostly consist of commercial and industrial and commercial real estate loans. The Company considers its loans that do not meet the criteria for a criticized and classified asset rating as pass rated loans, which will include loans graded from 1 (Prime) to 7 (Watch). All commercial loans are categorized into a risk category either at the time of origination or reevaluation date. As of September 30, 2021 and December 31, 2020, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:

September 30, 2021	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	70,971	$	631	$	2,738	$	74,340
Nonowner-occupied		172,341		2,003		283		174,627
Construction		33,605		—		—		33,605
Commercial and industrial		138,498		1,905		3,751		144,154
Total	$	415,415	$	4,539	$	6,772	$	426,726

December 31, 2020	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	46,604	$	669	$	4,590	$	51,863
Nonowner-occupied		160,324		3,629		570		164,523
Construction		37,063		—		—		37,063
Commercial and industrial		150,786		2,064		4,842		157,692
Total	$	394,777	$	6,362	$	10,002	$	411,141

The Company also obtains the credit scores of its borrowers upon origination (if available by the credit bureau), but the scores are not updated. The Company focuses mostly on the performance and repayment ability of the borrower as an indicator of credit risk and does not consider a borrower's credit score to be a significant influence in the determination of a loan's credit risk grading.

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 September 30, 2021 and December 31, 2020:

September 30, 2021	Consumer						Residential
	Automobile		Home Equity		Other		Real Estate		Total
Performing	$	52,753	$	21,389	$	64,234	$	276,021	$	414,397
Nonperforming		269		132		126		4,083		4,610
Total	$	53,022	$	21,521	$	64,360	$	280,104	$	419,007

December 31, 2020	Consumer						Residential
	Automobile		Home Equity		Other		Real Estate		Total
Performing	$	54,966	$	19,783	$	56,639	$	300,095	$	431,483
Nonperforming		275		210		172		5,383		6,040
Total	$	55,241	$	19,993	$	56,811	$	305,478	$	437,523

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 4.10% of total loans were unsecured at September 30, 2021, down from 4.22% at December 31, 2020.

XML

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

9 Months Ended

Sep. 30, 2021

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK [Abstract]

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

NOTE 5 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees.  The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, and financial guarantees written, is represented by the contractual amount of those instruments.  The contract amounts of these instruments are not included in the consolidated financial statements.  At September 30, 2021, the contract amounts of these instruments totaled approximately $89,645, compared to $88,456 at December 31, 2020.  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.

XML

OTHER BORROWED FUNDS

9 Months Ended

Sep. 30, 2021

OTHER BORROWED FUNDS [Abstract]

OTHER BORROWED FUNDS

NOTE 6 - OTHER BORROWED FUNDS

Other borrowed funds at September 30, 2021 and December 31, 2020 are comprised of advances from the Federal Home Loan Bank (“FHLB”) of Cincinnati and promissory notes.

	FHLB Borrowings		Promissory Notes		Totals
September 30, 2021	$	21,147	$	2,138	$	23,285
December 31, 2020	$	24,665	$	3,198	$	27,863

Pursuant to collateral agreements with the FHLB, advances are secured by $272,922 in qualifying mortgage loans, $73,204 in commercial loans and $5,125 in FHLB stock at September 30, 2021.  Fixed-rate FHLB advances of $21,147 mature through 2042 and have interest rates ranging from 1.53% to 3.31% and a year-to-date weighted average cost of 2.40% at September 30, 2021 and December 31, 2020, respectively.  There were no variable-rate FHLB borrowings at September 30, 2021.

At September 30, 2021, the Company had a cash management line of credit enabling it to borrow up to $100,000 from the FHLB.  All cash management advances have an original maturity of 90 days.  The line of credit must be renewed on an annual basis.  There was $100,000 available on this line of credit at September 30, 2021.

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 $195,703 at September 30, 2021.  Of this maximum borrowing capacity, the Company had $109,438 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 April 13, 2022, and have fixed rates of 1.00% and a year-to-date weighted average cost of 1.24% at September 30, 2021, as compared to 2.20% at December 31, 2020.  At September 30, 2021 there were four promissory notes payable by Ohio Valley to related parties totaling $2,138 as compared to six totaling $3,198 at December 31, 2020.  There were no promissory notes payable to other banks at September 30, 2021 and December 31, 2020, respectively.

Letters of credit issued on the Bank's behalf by the FHLB to collateralize certain public unit deposits as required by law totaled $65,118 at September 30, 2021 and $76,740 at December 31, 2020.

Scheduled principal payments as of September 30, 2021:

	FHLB Borrowings		Promissory Notes		Totals
2021	$	735	$	1,638	$	2,373
2022		2,497		500		2,997
2023		2,352		—		2,352
2024		2,062		—		2,062
2025		1,824		—		1,824
Thereafter		11,677		—		11,677
	$	21,147	$	2,138	$	23,285

XML

SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2021

SEGMENT INFORMATION [Abstract]

SEGMENT INFORMATION

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. 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 94.0% of total consolidated revenues for the quarters end September 30, 2021 and 2020, 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 September 30, 2021
	Banking			Consumer Finance			Total Company
Net interest income	$	9,843		$	516		$	10,359
Provision expense		(100	)		7			(93	)
Noninterest income		2,582			30			2,612
Noninterest expense		8,861			608			9,469
Tax expense		574			(15	)		559
Net income		3,090			(54	)		3,036
Assets		1,232,353			13,025			1,245,378

	Three Months Ended September 30, 2020
	Banking		Consumer Finance			Total Company
Net interest income	$	9,562	$	520		$	10,082
Provision expense		—		(2	)		(2	)
Noninterest income		2,385		49			2,434
Noninterest expense		9,295		596			9,891
Tax expense		339		(6	)		333
Net income		2,313		(19	)		2,294
Assets		1,126,202		11,736			1,137,938

	Nine Months Ended September 30, 2021
	Banking			Consumer Finance		Total Company
Net interest income	$	29,124		$	1,498	$	30,622
Provision expense		(150	)		32		(118	)
Noninterest income		7,474			983		8,457
Noninterest expense		26,095			1,858		27,953
Tax expense		1,693			123		1,816
Net income		8,960			468		9,428
Assets		1,232,353			13,025		1,245,378

	Nine Months Ended September 30, 2020
	Banking		Consumer Finance		Total Company
Net interest income	$	28,350	$	1,531	$	29,881
Provision expense		3,445		6		3,451
Noninterest income		8,073		1,052		9,125
Noninterest expense		27,110		1,902		29,012
Tax expense		843		141		984
Net income		5,025		534		5,559
Assets		1,126,202		11,736		1,137,938

XML

LEASES

9 Months Ended

Sep. 30, 2021

LEASES [Abstract]

LEASES

NOTE 8 – LEASES

Substantially all of the Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities represent leases for branch buildings and office space to conduct business.  Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. 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. The Company has no finance lease arrangements. Operating leases have remaining lease terms ranging from 19 months to 20 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 was as follows:

	As of September 30, 2021		As of December 31, 2020
Operating leases:
Operating lease right-of-use assets	$	1,235	$	880
Operating lease liabilities		1,235		880

The components of lease cost were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Operating lease cost		$	41		$	32		$	119		$	127
Short-term lease expense			8			7			24			23

Future undiscounted lease payments for operating leases with initial terms of one year or more as of September 30, 2021 are as follows:

	Operating Leases
2021 (remaining)	$	42
2022		168
2023		127
2024		106
2025		106
Thereafter		973
Total lease payments		1,522
Less: Imputed Interest		(287	)
Total operating leases	$	1,235

Other information was as follows:

	As of September 30, 2021			As of December 31, 2020
Weighted-average remaining lease term for operating leases	13.9 years			9.6 years
Weighted-average discount rate for operating leases		2.29	%		2.79	%

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2021

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

BASIS OF PRESENTATION

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 (“Loan Central”), Ohio Valley Financial Services Agency, LLC, an insurance agency, and OVBC Captive, Inc., a limited purpose property and casualty insurance company (the “Captive”).  The Bank has two wholly-owned subsidiaries, Race Day Mortgage, Inc., a mortgage banking company, 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.  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 September 30, 2021, 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, 2021 are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, 2021.  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, 2020 contains consolidated financial statements and related notes which should be read in conjunction with the accompanying consolidated financial statements.

The consolidated financial statements for 2020 have been reclassified to conform to the presentation for 2021.  These reclassifications had no effect on net income or shareholders’ equity.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:  The accounting and reporting policies followed by the Company conform to US GAAP established by the Financial Accounting Standards Board (“FASB”). The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

INDUSTRY SEGMENT INFORMATION

INDUSTRY SEGMENT INFORMATION:  Internal financial information is primarily reported and aggregated in two lines of business: banking and consumer finance.

LOANS

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 September 30, 2021, there were $858 in loans held for sale by the Bank, as compared to $70 in loans held for sale at December 31, 2020.

ALLOWANCE FOR LOAN LOSSES

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.

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 September 30, 2021, there were no changes to the accounting policies or methodologies within any of the Company’s loan portfolio segments from the prior period.

EARNINGS PER SHARE

EARNINGS PER SHARE:  Earnings per share are computed based on net income divided by the weighted average number of common shares outstanding during the period.  The weighted average common shares outstanding were 4,783,886 and 4,787,446 for the three months ended September 30, 2021 and 2020, respectively.  The weighted average common shares outstanding were 4,786,246 and 4,787,446 for the nine months ended September 30,2021 and 2020, respectively.  Ohio Valley had no dilutive effect and no potential common shares issuable under stock options or other agreements for any period presented.

ACCOUNTING GUIDANCE TO BE ADOPTED IN FUTURE PERIODS

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. The Bank's 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.  For SEC filers who are smaller reporting companies, such as the Company, ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2021

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

Assets and Liabilities Measured on Recurring Basis

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

	Fair Value Measurements at September 30, 2021 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
U.S. Government securities		—	$	17,724			—
U.S. Government sponsored entity securities		—		29,992			—
Agency mortgage-backed securities, residential		—		125,732			—
Interest rate swap derivatives		—		699			—
Liabilities:
Interest rate swap derivatives		—		(699	)		—

	Fair Value Measurements at December 31, 2020 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
U.S. Government sponsored entity securities		—	$	18,153			—
Agency mortgage-backed securities, residential		—		94,169			—
Interest rate swap derivatives		—		928			—
Liabilities:
Interest rate swap derivatives		—		(928	)		—

Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments at September 30, 2021 and December 31, 2020 are as follows:

	Carrying		Fair Value Measurements at September 30, 2021 Using
	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	135,064	$	135,064	$	—	$	—	$	135,064
Certificates of deposit in financial institutions		2,500		—		2,500		—		2,500
Securities available for sale		173,448		—		173,448		—		173,448
Securities held to maturity		9,753		—		5,993		3,956		9,949
Loans, net		839,069		—		—		836,161		836,161
Interest rate swap derivatives		699		—		699		—		699
Accrued interest receivable		3,118		—		444		2,674		3,118
Financial liabilities:
Deposits		1,051,675		331,195		721,283		—		1,052,478
Other borrowed funds		23,285		—		24,442		—		24,442
Subordinated debentures		8,500		—		5,522		—		5,522
Interest rate swap derivatives		699		—		699		—		699
Accrued interest payable		503		1		502		—		503

	Carrying		Fair Value Measurements at December 31, 2020 Using
	Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	138,303	$	138,303	$	—	$	—	$	138,303
Certificates of deposit in financial institutions		2,500		—		2,500		—		2,500
Securities available for sale		112,322		—		112,322		—		112,322
Securities held to maturity		10,020		—		4,989		5,355		10,344
Loans, net		841,504		—		—		837,387		837,387
Interest rate swap derivatives		928		—		928		—		928
Accrued interest receivable		3,319		—		283		3,036		3,319
Financial liabilities:
Deposits		993,739		314,777		680,904		—		995,681
Other borrowed funds		27,863		—		29,807		—		29,807
Subordinated debentures		8,500		—		5,556		—		5,556
Interest rate swap derivatives		928		—		928		—		928
Accrued interest payable		1,100		1		1,099		—		1,100

XML

SECURITIES (Tables)

9 Months Ended

Sep. 30, 2021

SECURITIES [Abstract]

Amortized Cost and Fair Value of Securities Available-for-sale

The following table summarizes the amortized cost and fair value of securities available for sale and securities held to maturity at September 30, 2021 and December 31, 2020, 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	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2021
U.S. Government securities	$	17,800	$	—	$	(76	)	$	17,724
U.S. Government sponsored entity securities		29,980		171		(159	)		29,992
Agency mortgage-backed securities, residential		124,291		1,960		(519	)		125,732
Total securities	$	172,071	$	2,131	$	(754	)	$	173,448
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

Amortized Cost and Fair Value of Securities Held-to-maturity

Securities Held to Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Estimated Fair Value
September 30, 2021
Obligations of states and political subdivisions	$	9,751	$	232	$	(36	)	$	9,947
Agency mortgage-backed securities, residential		2		—		—			2
Total securities	$	9,753	$	232	$	(36	)	$	9,949
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

Amortized Cost and Fair Value of Securities by Contractual Maturity

The amortized cost and estimated fair value of debt securities at September 30, 2021, 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	$	4,001	$	4,037	$	1,093	$	1,117
Due in over one to five years		11,187		11,266		3,752		3,863
Due in over five to ten years		32,592		32,413		4,579		4,648
Due after ten years		—		—		327		319
Agency mortgage-backed securities, residential		124,291		125,732		2		2
Total debt securities	$	172,071	$	173,448	$	9,753	$	9,949

Securities with Unrealized Losses in Continuous Unrealized Loss Position

The following table summarizes securities with unrealized losses at September 30, 2021 and December 31, 2020, aggregated by major security type and length of time in a continuous unrealized loss position:

September 30, 2021	Less Than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Securities Available for Sale
U.S. Government securities	$	17,724	$	(76	)	$	—	$	—	$	17,724	$	(76	)
U.S. Government sponsored entity securities		17,340		(159	)		—		—		17,340		(159	)
Agency mortgage-backed securities,
residential		66,278		(519	)		—		—		66,278		(519	)
Total available for sale	$	101,342	$	(754	)	$	—	$	—	$	101,342	$	(754	)

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

September 30, 2021	Less Than 12 Months							12 Months or More						Total
	Fair Value			Unrecognized Loss				Fair Value			Unrecognized Loss			Fair Value			Unrecognized Loss
Securities Held to Maturity
Obligations of states and political subdivisions		$	1,621		$	(36	)		$	—		$	—		$	1,621		$	(36	)
Total held to maturity		$	1,621		$	(36	)		$	—		$	—		$	1,621		$	(36	)

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)

9 Months Ended

Sep. 30, 2021

LOANS AND ALLOWANCE FOR LOAN LOSSES [Abstract]

Portfolio Loans

Loans are comprised of the following:

	September 30, 2021			December 31, 2020
Residential real estate	$	280,104		$	305,478
Commercial real estate:
Owner-occupied		74,340			51,863
Nonowner-occupied		174,627			164,523
Construction		33,605			37,063
Commercial and industrial		144,154			157,692
Consumer:
Automobile		53,022			55,241
Home equity		21,521			19,993
Other		64,360			56,811
		845,733			848,664
Less:  Allowance for loan losses		(6,664	)		(7,160	)
Loans, net	$	839,069		$	841,504

Activity in Allowance for Loan Losses by Portfolio Segment

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2021 and 2020:

September 30, 2021	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,088		$	2,532		$	1,746		$	1,433		$	6,799
Provision for loan losses		(34	)		10			(263	)		194			(93	)
Loans charged off		(49	)		(63	)		(25	)		(280	)		(417	)
Recoveries		40			115			113			107			375
Total ending allowance balance	$	1,045		$	2,594		$	1,571		$	1,454		$	6,664

September 30, 2020	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	2,024		$	2,700		$	1,649		$	1,608		$	7,981
Provision for loan losses		(275	)		(98	)		230			141			(2	)
Loans charged-off		(90	)		—			(96	)		(398	)		(584	)
Recoveries		110			15			44			166			335
Total ending allowance balance	$	1,769		$	2,617		$	1,827		$	1,517		$	7,730

The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2021 and 2020:

September 30, 2021	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,480		$	2,431		$	1,776		$	1,473		$	7,160
Provision for loan losses		(443	)		121			(260	)		464			(118	)
Loans charged-off		(75	)		(115	)		(96	)		(879	)		(1,165	)
Recoveries		83			157			151			396			787
Total ending allowance balance	$	1,045		$	2,594		$	1,571		$	1,454		$	6,664

September 30, 2020	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,250		$	1,928		$	1,447		$	1,647		$	6,272
Provision for loan losses		715			1,131			505			1,100			3,451
Loans charged-off		(340	)		(516	)		(185	)		(1,677	)		(2,718	)
Recoveries		144			74			60			447			725
Total ending allowance balance	$	1,769		$	2,617		$	1,827		$	1,517		$	7,730

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment Based on Impairment Method

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 September 30, 2021 and December 31, 2020:

September 30, 2021	Residential Real Estate		Commercial Real Estate		Commercial and Industrial		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	34	$	34
Collectively evaluated for impairment		1,045		2,594		1,571		1,420		6,630
Total ending allowance balance	$	1,045	$	2,594	$	1,571	$	1,454	$	6,664
Loans:
Loans individually evaluated for impairment	$	—	$	5,479	$	3,850	$	79	$	9,408
Loans collectively evaluated for impairment		280,104		277,093		140,304		138,824		836,325
Total ending loans balance	$	280,104	$	282,572	$	144,154	$	138,903	$	845,733

December 31, 2020	Residential Real Estate		Commercial Real Estate		Commercial and 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

Loans Individually Evaluated for Impairment by Class of Loans

The following tables present information related to loans individually evaluated for impairment by class of loans as of September 30, 2021 and December 31, 2020:

September 30, 2021	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Consumer:
Other	$	48	$	48	$	34
With no related allowance recorded:
Commercial real estate:
Owner-occupied		5,108		5,093		—
Nonowner-occupied		386		386		—
Commercial and industrial		3,850		3,850		—
Consumer:
Home equity		31		31		—
Total	$	9,423	$	9,408	$	34

December 31, 2020	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:	$	—	$	—	$	—
With no related allowance recorded:
Residential real estate		418		411		—
Commercial real estate:
Owner-occupied		5,256		5,256		—
Nonowner-occupied		632		589		—
Commercial and industrial		4,686		4,686		—
Consumer:
Home equity		34		34		—
Other		50		50		—
Total	$	11,076	$	11,026	$	—

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, 2021 and 2020:

	Three months ended September 30, 2021						Nine months ended September 30, 2021
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Consumer:
Other	$	49	$	1	$	1	$	49	$	2	$	2
With no related allowance recorded:
Commercial real estate:
Owner-occupied		5,128		74		74		5,183		239		239
Nonowner-occupied		386		7		7		388		21		21
Commercial and industrial		3,174		111		111		3,586		200		200
Consumer:
Home equity		32		1		1		33		2		2
Total	$	8,769	$	194	$	194	$	9,239	$	464	$	464

	Three months ended September 30, 2020						Nine months ended September 30, 2020
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial real estate:
Nonowner-occupied	$	242	$	—	$	—	$	242	$	—	$	—
With no related allowance recorded:
Residential real estate		420		7		7		426		15		15
Commercial real estate:
Owner-occupied		3,161		23		23		2,957		124		124
Nonowner-occupied		753		15		15		772		39		39
Commercial and industrial		2,807		20		20		3,543		149		149
Consumer:
Home equity		444		3		3		415		12		12
Total	$	7,827	$	68	$	68	$	8,355	$	339	$	339

Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans

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, 2021 and December 31, 2020:

September 30, 2021	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	2	$	4,081
Commercial real estate:
Owner-occupied		—		1,095
Nonowner-occupied		—		83
Construction		—		155
Commercial and industrial		—		149
Consumer:
Automobile		135		134
Home equity		—		132
Other		99		27
Total	$	236	$	5,856

December 31, 2020	Loans Past Due 90 Days And Still Accruing		Nonaccrual
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	$	424	$	6,503

Aging of Recorded Investment in Past Due Loans by Class of Loans

The following table presents the aging of the recorded investment of past due loans by class of loans as of September 30, 2021 and December 31, 2020:

September 30, 2021	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	2,149	$	669	$	701	$	3,519	$	276,585	$	280,104
Commercial real estate:
Owner-occupied		20		—		180		200		74,140		74,340
Nonowner-occupied		100		—		83		183		174,444		174,627
Construction		37		—		33		70		33,535		33,605
Commercial and industrial		13		—		149		162		143,992		144,154
Consumer:
Automobile		554		138		242		934		52,088		53,022
Home equity		29		81		110		220		21,301		21,521
Other		527		24		126		677		63,683		64,360
Total	$	3,429	$	912	$	1,624	$	5,965	$	839,768	$	845,733

December 31, 2020	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	2,845	$	496	$	1,663	$	5,004	$	300,474	$	305,478
Commercial real estate:
Owner-occupied		470		1,003		193		1,666		50,197		51,863
Nonowner-occupied		94		—		362		456		164,067		164,523
Construction		—		82		—		82		36,981		37,063
Commercial and industrial		1,112		11		164		1,287		156,405		157,692
Consumer:
Automobile		831		131		258		1,220		54,021		55,241
Home equity		204		81		113		398		19,595		19,993
Other		446		76		172		694		56,117		56,811
Total	$	6,002	$	1,880	$	2,925	$	10,807	$	837,857	$	848,664

Troubled Debt Restructuring Loan Modifications

The following table presents the types of TDR loan modifications by class of loans as of September 30, 2021 and December 31, 2020:

September 30, 2021	TDRs Performing to Modified Terms		TDRs Not Performing to Modified Terms		Total TDRs
Commercial real estate:
Owner-occupied
Reduction of principal and interest payments	$	1,463	$	—	$	1,463
Maturity extension at lower stated rate than market rate		289		—		289
Credit extension at lower stated rate than market rate		377		—		377
Nonowner-occupied
Credit extension at lower stated rate than market rate		386		—		386
Commercial and industrial:
Interest only payments		1,622		—		1,622
Total TDRs	$	4,137	$	—	$	4,137

December 31, 2020	TDRs Performing to Modified Terms		TDRs Not Performing to Modified Terms		Total TDRs
Residential real estate:
Interest only payments	$	202	$	—	$	202
Commercial real estate:
Owner-occupied
Reduction of principal and interest payments		1,486		—		1,486
Maturity extension at lower stated rate than market rate		351		—		351
Credit extension at lower stated rate than market rate		384		—		384
Nonowner-occupied
Credit extension at lower stated rate than market rate		390		—		390
Commercial and industrial:
Interest only payments		4,400		—		4,400
Total TDRs	$	7,213	$	—	$	7,213

Financing Receivable Credit Quality Indicators

Criticized and classified loans will mostly consist of commercial and industrial and commercial real estate loans. The Company considers its loans that do not meet the criteria for a criticized and classified asset rating as pass rated loans, which will include loans graded from 1 (Prime) to 7 (Watch). All commercial loans are categorized into a risk category either at the time of origination or reevaluation date. As of September 30, 2021 and December 31, 2020, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:

September 30, 2021	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	70,971	$	631	$	2,738	$	74,340
Nonowner-occupied		172,341		2,003		283		174,627
Construction		33,605		—		—		33,605
Commercial and industrial		138,498		1,905		3,751		144,154
Total	$	415,415	$	4,539	$	6,772	$	426,726

December 31, 2020	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	46,604	$	669	$	4,590	$	51,863
Nonowner-occupied		160,324		3,629		570		164,523
Construction		37,063		—		—		37,063
Commercial and industrial		150,786		2,064		4,842		157,692
Total	$	394,777	$	6,362	$	10,002	$	411,141

Recorded Investment of Residential and Consumer Loans

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 September 30, 2021 and December 31, 2020:

September 30, 2021	Consumer						Residential
	Automobile		Home Equity		Other		Real Estate		Total
Performing	$	52,753	$	21,389	$	64,234	$	276,021	$	414,397
Nonperforming		269		132		126		4,083		4,610
Total	$	53,022	$	21,521	$	64,360	$	280,104	$	419,007

December 31, 2020	Consumer						Residential
	Automobile		Home Equity		Other		Real Estate		Total
Performing	$	54,966	$	19,783	$	56,639	$	300,095	$	431,483
Nonperforming		275		210		172		5,383		6,040
Total	$	55,241	$	19,993	$	56,811	$	305,478	$	437,523

XML

OTHER BORROWED FUNDS (Tables)

9 Months Ended

Sep. 30, 2021

OTHER BORROWED FUNDS [Abstract]

Schedule of Federal Home Loan Bank, Advances, by Branch of FHLB Bank

Other borrowed funds at September 30, 2021 and December 31, 2020 are comprised of advances from the Federal Home Loan Bank (“FHLB”) of Cincinnati and promissory notes.

	FHLB Borrowings		Promissory Notes		Totals
September 30, 2021	$	21,147	$	2,138	$	23,285
December 31, 2020	$	24,665	$	3,198	$	27,863

Schedule of Maturities of Long-term Debt

Scheduled principal payments as of September 30, 2021:

	FHLB Borrowings		Promissory Notes		Totals
2021	$	735	$	1,638	$	2,373
2022		2,497		500		2,997
2023		2,352		—		2,352
2024		2,062		—		2,062
2025		1,824		—		1,824
Thereafter		11,677		—		11,677
	$	21,147	$	2,138	$	23,285

XML

SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2021

SEGMENT INFORMATION [Abstract]

Segment Information

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

	Three Months Ended September 30, 2021
	Banking			Consumer Finance			Total Company
Net interest income	$	9,843		$	516		$	10,359
Provision expense		(100	)		7			(93	)
Noninterest income		2,582			30			2,612
Noninterest expense		8,861			608			9,469
Tax expense		574			(15	)		559
Net income		3,090			(54	)		3,036
Assets		1,232,353			13,025			1,245,378

	Three Months Ended September 30, 2020
	Banking		Consumer Finance			Total Company
Net interest income	$	9,562	$	520		$	10,082
Provision expense		—		(2	)		(2	)
Noninterest income		2,385		49			2,434
Noninterest expense		9,295		596			9,891
Tax expense		339		(6	)		333
Net income		2,313		(19	)		2,294
Assets		1,126,202		11,736			1,137,938

	Nine Months Ended September 30, 2021
	Banking			Consumer Finance		Total Company
Net interest income	$	29,124		$	1,498	$	30,622
Provision expense		(150	)		32		(118	)
Noninterest income		7,474			983		8,457
Noninterest expense		26,095			1,858		27,953
Tax expense		1,693			123		1,816
Net income		8,960			468		9,428
Assets		1,232,353			13,025		1,245,378

	Nine Months Ended September 30, 2020
	Banking		Consumer Finance		Total Company
Net interest income	$	28,350	$	1,531	$	29,881
Provision expense		3,445		6		3,451
Noninterest income		8,073		1,052		9,125
Noninterest expense		27,110		1,902		29,012
Tax expense		843		141		984
Net income		5,025		534		5,559
Assets		1,126,202		11,736		1,137,938

XML

LEASES (Tables)

9 Months Ended

Sep. 30, 2021

LEASES [Abstract]

Balance Sheet Information

Balance sheet information related to leases was as follows:

	As of September 30, 2021		As of December 31, 2020
Operating leases:
Operating lease right-of-use assets	$	1,235	$	880
Operating lease liabilities		1,235		880

Components of Lease Cost

The components of lease cost were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Operating lease cost		$	41		$	32		$	119		$	127
Short-term lease expense			8			7			24			23

Maturities of Lease Liabilities

Future undiscounted lease payments for operating leases with initial terms of one year or more as of September 30, 2021 are as follows:

	Operating Leases
2021 (remaining)	$	42
2022		168
2023		127
2024		106
2025		106
Thereafter		973
Total lease payments		1,522
Less: Imputed Interest		(287	)
Total operating leases	$	1,235

Other Information

Other information was as follows:

	As of September 30, 2021			As of December 31, 2020
Weighted-average remaining lease term for operating leases	13.9 years			9.6 years
Weighted-average discount rate for operating leases		2.29	%		2.79	%

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021 USD ($) shares	Sep. 30, 2020 shares	Sep. 30, 2021 USD ($) Segment shares	Sep. 30, 2020 shares	Dec. 31, 2020 USD ($)
INDUSTRY SEGMENT INFORMATION [Abstract]
Number of reported lines of business | Segment			2
LOANS [Abstract]
Loans held for sale | $	$ 858		$ 858		$ 70
EARNINGS PER SHARE [Abstract]
Number of weighted average common shares outstanding (in shares) | shares	4,783,886	4,787,446	4,786,246	4,787,446

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Dec. 31, 2020	Sep. 30, 2020
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]
Selling costs percentage	10.00%
Fair Value, Asset and Liabilities [Abstract]
Assets, transfers from Level 1 to Level 2	$ 0		$ 0
Assets, transfers from Level 2 to Level 1	0		0
Liabilities, transfers from Level 1 to Level 2	0		0
Liabilities, transfers from Level 2 to Level 1	0		$ 0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Interest Rate Swap Derivatives [Member]
Fair Value, Asset and Liabilities [Abstract]
Assets, fair value	0	$ 0
Liabilities, fair value	0	0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Government Securities [Member]
Fair Value, Asset and Liabilities [Abstract]
Assets, fair value	0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Government Sponsored Entity Securities [Member]
Fair Value, Asset and Liabilities [Abstract]
Assets, fair value	0	0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Agency Mortgage-backed Securities, Residential [Member]
Fair Value, Asset and Liabilities [Abstract]
Assets, fair value	0	0
Recurring [Member] | Significant Other Observable (Level 2) [Member] | Interest Rate Swap Derivatives [Member]
Fair Value, Asset and Liabilities [Abstract]
Assets, fair value	699	928
Liabilities, fair value	(699)	(928)
Recurring [Member] | Significant Other Observable (Level 2) [Member] | U.S. Government Securities [Member]
Fair Value, Asset and Liabilities [Abstract]
Assets, fair value	17,724
Recurring [Member] | Significant Other Observable (Level 2) [Member] | U.S. Government Sponsored Entity Securities [Member]
Fair Value, Asset and Liabilities [Abstract]
Assets, fair value	29,992	18,153
Recurring [Member] | Significant Other Observable (Level 2) [Member] | Agency Mortgage-backed Securities, Residential [Member]
Fair Value, Asset and Liabilities [Abstract]
Assets, fair value	125,732	94,169
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Interest Rate Swap Derivatives [Member]
Fair Value, Asset and Liabilities [Abstract]
Assets, fair value	0	0
Liabilities, fair value	0	0
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Government Securities [Member]
Fair Value, Asset and Liabilities [Abstract]
Assets, fair value	0
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Government Sponsored Entity Securities [Member]
Fair Value, Asset and Liabilities [Abstract]
Assets, fair value	0	0
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Agency Mortgage-backed Securities, Residential [Member]
Fair Value, Asset and Liabilities [Abstract]
Assets, fair value	$ 0	$ 0

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS, Assets and Liabilities Measured on Nonrecurring Basis (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Other real estate	$ 0		$ 0		$ 0
Other real estate, write-down	$ 0	$ 0	$ 0	$ 0

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS, Carrying Amounts and Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Financial Assets [Abstract]
Securities available for sale	$ 173,448	$ 112,322
Carrying Amount [Member]
Financial Assets [Abstract]
Cash and cash equivalents	135,064	138,303
Certificates of deposit in financial institutions	2,500	2,500
Securities available for sale	173,448	112,322
Securities held to maturity	9,753	10,020
Loans, net	839,069	841,504
Interest rate swap derivatives	699	928
Accrued interest receivable	3,118	3,319
Financial Liabilities [Abstract]
Deposits	1,051,675	993,739
Other borrowed funds	23,285	27,863
Subordinated debentures	8,500	8,500
Interest rate swap derivatives	699	928
Accrued interest payable	503	1,100
Estimated Fair Value [Member]
Financial Assets [Abstract]
Cash and cash equivalents	135,064	138,303
Certificates of deposit in financial institutions	2,500	2,500
Securities available for sale	173,448	112,322
Securities held to maturity	9,949	10,344
Loans, net	836,161	837,387
Interest rate swap derivatives	699	928
Accrued interest receivable	3,118	3,319
Financial Liabilities [Abstract]
Deposits	1,052,478	995,681
Other borrowed funds	24,442	29,807
Subordinated debentures	5,522	5,556
Interest rate swap derivatives	699	928
Accrued interest payable	503	1,100
Estimated Fair Value [Member] | Level 1 [Member]
Financial Assets [Abstract]
Cash and cash equivalents	135,064	138,303
Certificates of deposit in financial institutions	0	0
Securities available for sale	0	0
Securities held to maturity	0	0
Loans, net	0	0
Interest rate swap derivatives	0	0
Accrued interest receivable	0	0
Financial Liabilities [Abstract]
Deposits	331,195	314,777
Other borrowed funds	0	0
Subordinated debentures	0	0
Interest rate swap derivatives	0	0
Accrued interest payable	1	1
Estimated Fair Value [Member] | Level 2 [Member]
Financial Assets [Abstract]
Cash and cash equivalents	0	0
Certificates of deposit in financial institutions	2,500	2,500
Securities available for sale	173,448	112,322
Securities held to maturity	5,993	4,989
Loans, net	0	0
Interest rate swap derivatives	699	928
Accrued interest receivable	444	283
Financial Liabilities [Abstract]
Deposits	721,283	680,904
Other borrowed funds	24,442	29,807
Subordinated debentures	5,522	5,556
Interest rate swap derivatives	699	928
Accrued interest payable	502	1,099
Estimated Fair Value [Member] | Level 3 [Member]
Financial Assets [Abstract]
Cash and cash equivalents	0	0
Certificates of deposit in financial institutions	0	0
Securities available for sale	0	0
Securities held to maturity	3,956	5,355
Loans, net	836,161	837,387
Interest rate swap derivatives	0	0
Accrued interest receivable	2,674	3,036
Financial Liabilities [Abstract]
Deposits	0	0
Other borrowed funds	0	0
Subordinated debentures	0	0
Interest rate swap derivatives	0	0
Accrued interest payable	$ 0	$ 0

XML

SECURITIES, Amortized Cost and Fair Value of Securities Available-for-sale (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Available-for-sale Investment Securities [Abstract]
Amortized Cost	$ 172,071	$ 109,239
Gross Unrealized Gains	2,131	3,087
Gross Unrealized Losses	(754)	(4)
Estimated Fair Value	173,448	112,322
U.S. Government Securities [Member]
Available-for-sale Investment Securities [Abstract]
Amortized Cost	17,800
Gross Unrealized Gains	0
Gross Unrealized Losses	(76)
Estimated Fair Value	17,724
US Government-sponsored Entity Securities [Member]
Available-for-sale Investment Securities [Abstract]
Amortized Cost	29,980	17,814
Gross Unrealized Gains	171	339
Gross Unrealized Losses	(159)	0
Estimated Fair Value	29,992	18,153
Agency Mortgage-backed Securities, Residential [Member]
Available-for-sale Investment Securities [Abstract]
Amortized Cost	124,291	91,425
Gross Unrealized Gains	1,960	2,748
Gross Unrealized Losses	(519)	(4)
Estimated Fair Value	$ 125,732	$ 94,169

XML

SECURITIES, Amortized Cost and Fair Value of Securities Held-to-maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Debt Securities, Held-to-maturity, Maturity, Amortized Cost [Abstract]
Amortized Cost	$ 9,753	$ 10,020
Gross Unrealized Gains	232	324
Gross Unrecognized Losses	(36)	0
Estimated Fair Value	9,949	10,344
Obligations of States and Political Subdivisions [Member]
Debt Securities, Held-to-maturity, Maturity, Amortized Cost [Abstract]
Amortized Cost	9,751	10,018
Gross Unrealized Gains	232	324
Gross Unrecognized Losses	(36)	0
Estimated Fair Value	9,947	10,342
Agency Mortgage-backed Securities, Residential [Member]
Debt Securities, Held-to-maturity, Maturity, Amortized Cost [Abstract]
Amortized Cost	2	2
Gross Unrealized Gains	0	0
Gross Unrecognized Losses	0	0
Estimated Fair Value	$ 2	$ 2

XML

SECURITIES, Amortized Cost and Fair Value of Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Amortized cost of Available-for-sale Securities by Contractual Maturity [Abstract]
Due in one year or less	$ 4,001
Due in over one to five years	11,187
Due in over five to ten years	32,592
Due after ten years	0
Agency mortgage-backed securities, residential	124,291
Amortized Cost	172,071	$ 109,239
Fair Value of Available-for-sale Securities by Contractual Maturity [Abstract]
Due in one year or less	4,037
Due in over one to five years	11,266
Due in over five to ten years	32,413
Due after ten years	0
Agency mortgage-backed securities, residential	125,732
Estimated Fair Value	173,448	112,322
Debt Securities, Held-to-maturity, Maturity, Amortized Cost, Net [Abstract]
Due in one year or less	1,093
Due in over one to five years	3,752
Due in over five to ten years	4,579
Due after ten years	327
Agency mortgage-backed securities, residential	2
Amortized Cost	9,753	10,020
Debt Securities, Held-to-maturity, Maturity, Fair Value [Abstract]
Due in one year or less	1,117
Due in over one to five years	3,863
Due in over five to ten years	4,648
Due after ten years	319
Agency mortgage-backed securities, residential	2
Estimated Fair Value	9,949	10,344
Agency Mortgage-backed Securities, Residential [Member]
Amortized cost of Available-for-sale Securities by Contractual Maturity [Abstract]
Amortized Cost	124,291	91,425
Fair Value of Available-for-sale Securities by Contractual Maturity [Abstract]
Estimated Fair Value	125,732	94,169
Debt Securities, Held-to-maturity, Maturity, Amortized Cost, Net [Abstract]
Amortized Cost	2	2
Debt Securities, Held-to-maturity, Maturity, Fair Value [Abstract]
Estimated Fair Value	$ 2	$ 2

XML

SECURITIES, Available-for-sale Securities with Unrealized Losses in Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Available-for-sale Securities with Continuous Unrealized Loss Position, Fair Value [Abstract]
Less than 12 Months - Fair Value	$ 101,342	$ 14,517
12 Months or More - Fair Value	0	0
Fair Value	101,342	14,517
Available-for-sale Securities with Continuous Unrealized Loss Position, Unrealized Loss [Abstract]
Less than 12 Months - Unrealized Loss	(754)	(4)
12 Months or More - Unrealized Loss	0	0
Unrealized Loss	(754)	(4)
U.S. Government Securities [Member]
Available-for-sale Securities with Continuous Unrealized Loss Position, Fair Value [Abstract]
Less than 12 Months - Fair Value	17,724
12 Months or More - Fair Value	0
Fair Value	17,724
Available-for-sale Securities with Continuous Unrealized Loss Position, Unrealized Loss [Abstract]
Less than 12 Months - Unrealized Loss	(76)
12 Months or More - Unrealized Loss	0
Unrealized Loss	(76)
US Government-sponsored Entity Securities [Member]
Available-for-sale Securities with Continuous Unrealized Loss Position, Fair Value [Abstract]
Less than 12 Months - Fair Value	17,340
12 Months or More - Fair Value	0
Fair Value	17,340
Available-for-sale Securities with Continuous Unrealized Loss Position, Unrealized Loss [Abstract]
Less than 12 Months - Unrealized Loss	(159)
12 Months or More - Unrealized Loss	0
Unrealized Loss	(159)
Agency Mortgage-backed Securities, Residential [Member]
Available-for-sale Securities with Continuous Unrealized Loss Position, Fair Value [Abstract]
Less than 12 Months - Fair Value	66,278	14,517
12 Months or More - Fair Value	0	0
Fair Value	66,278	14,517
Available-for-sale Securities with Continuous Unrealized Loss Position, Unrealized Loss [Abstract]
Less than 12 Months - Unrealized Loss	(519)	(4)
12 Months or More - Unrealized Loss	0	0
Unrealized Loss	$ (519)	$ (4)

XML

SECURITIES, Held-to-Maturity Securities with Unrealized Losses in Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Held-to-maturity Securities with Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than 12 Months - Fair Value	$ 1,621		$ 1,621
12 Months or More - Fair Value	0		0
Fair Value	1,621		1,621
Held-to-maturity Securities with Unrealized Loss Position, Unrealized Loss [Abstract]
Less Than 12 Months - Unrecognized Loss	(36)		(36)
12 Months or More - Unrecognized Loss	0		0
Unrecognized Loss	(36)		(36)
Unrealized Losses and Other-than-temporary Impairment [Abstract]
Proceeds from sale of investment securities	0	$ 0	0	$ 0
Other than temporary impairment losses			0		$ 0
Obligations of States and Political Subdivisions [Member]
Held-to-maturity Securities with Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than 12 Months - Fair Value	1,621		1,621
12 Months or More - Fair Value	0		0
Fair Value	1,621		1,621
Held-to-maturity Securities with Unrealized Loss Position, Unrealized Loss [Abstract]
Less Than 12 Months - Unrecognized Loss	(36)		(36)
12 Months or More - Unrecognized Loss	0		0
Unrecognized Loss	$ (36)		$ (36)

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES, Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Loans [Abstract]
Total loans	$ 845,733		$ 848,664
Less: Allowance for loan losses	(6,664)	$ (6,799)	(7,160)	$ (7,730)	$ (7,981)	$ (6,272)
Net loans	839,069		841,504
Residential Real Estate [Member]
Loans [Abstract]
Total loans	280,104		305,478
Less: Allowance for loan losses	(1,045)	(1,088)	(1,480)	(1,769)	(2,024)	(1,250)
Commercial Real Estate [Member]
Loans [Abstract]
Total loans	282,572		253,449
Less: Allowance for loan losses	(2,594)	(2,532)	(2,431)	(2,617)	(2,700)	(1,928)
Commercial Real Estate [Member] | Owner-occupied [Member]
Loans [Abstract]
Total loans	74,340		51,863
Commercial Real Estate [Member] | Nonowner-occupied [Member]
Loans [Abstract]
Total loans	174,627		164,523
Commercial Real Estate [Member] | Construction [Member]
Loans [Abstract]
Total loans	33,605		37,063
Commercial and Industrial [Member]
Loans [Abstract]
Total loans	144,154		157,692
Less: Allowance for loan losses	(1,571)	(1,746)	(1,776)	(1,827)	(1,649)	(1,447)
Commercial and Industrial [Member] | PPP [Member]
Loans [Abstract]
Total loans	5,611
Consumer [Member]
Loans [Abstract]
Total loans	138,903		132,045
Less: Allowance for loan losses	(1,454)	$ (1,433)	(1,473)	$ (1,517)	$ (1,608)	$ (1,647)
Consumer [Member] | Automobile [Member]
Loans [Abstract]
Total loans	53,022		55,241
Consumer [Member] | Home Equity [Member]
Loans [Abstract]
Total loans	21,521		19,993
Consumer [Member] | Other [Member]
Loans [Abstract]
Total loans	$ 64,360		$ 56,811

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES, Allowance for Loan Losses by Portfolio Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	$ 6,799	$ 7,981	$ 7,160	$ 6,272
Provision for loan losses	(93)	(2)	(118)	3,451
Loans charged-off	(417)	(584)	(1,165)	(2,718)
Recoveries	375	335	787	725
Ending balance	6,664	7,730	6,664	7,730
Residential Real Estate [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,088	2,024	1,480	1,250
Provision for loan losses	(34)	(275)	(443)	715
Loans charged-off	(49)	(90)	(75)	(340)
Recoveries	40	110	83	144
Ending balance	1,045	1,769	1,045	1,769
Commercial Real Estate [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	2,532	2,700	2,431	1,928
Provision for loan losses	10	(98)	121	1,131
Loans charged-off	(63)	0	(115)	(516)
Recoveries	115	15	157	74
Ending balance	2,594	2,617	2,594	2,617
Commercial and Industrial [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,746	1,649	1,776	1,447
Provision for loan losses	(263)	230	(260)	505
Loans charged-off	(25)	(96)	(96)	(185)
Recoveries	113	44	151	60
Ending balance	1,571	1,827	1,571	1,827
Consumer [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,433	1,608	1,473	1,647
Provision for loan losses	194	141	464	1,100
Loans charged-off	(280)	(398)	(879)	(1,677)
Recoveries	107	166	396	447
Ending balance	$ 1,454	$ 1,517	$ 1,454	$ 1,517

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES, Allowance for Loans Losses and Recorded Investment in Loans by Portfolio Segment Based on Impairment Method (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Ending allowance balance attributable to loans [Abstract]
Individually evaluated for impairment	$ 34		$ 0
Collectively evaluated for impairment	6,630		7,160
Total ending allowance balance	6,664	$ 6,799	7,160	$ 7,730	$ 7,981	$ 6,272
Loans [Abstract]
Loans individually evaluated for impairment	9,408		11,026
Loans collectively evaluated for impairment	836,325		837,638
Total ending loans balance	845,733		848,664
Residential Real Estate [Member]
Ending allowance balance attributable to loans [Abstract]
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	1,045		1,480
Total ending allowance balance	1,045	1,088	1,480	1,769	2,024	1,250
Loans [Abstract]
Loans individually evaluated for impairment	0		411
Loans collectively evaluated for impairment	280,104		305,067
Total ending loans balance	280,104		305,478
Commercial Real Estate [Member]
Ending allowance balance attributable to loans [Abstract]
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	2,594		2,431
Total ending allowance balance	2,594	2,532	2,431	2,617	2,700	1,928
Loans [Abstract]
Loans individually evaluated for impairment	5,479		5,845
Loans collectively evaluated for impairment	277,093		247,604
Total ending loans balance	282,572		253,449
Commercial and Industrial [Member]
Ending allowance balance attributable to loans [Abstract]
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	1,571		1,776
Total ending allowance balance	1,571	1,746	1,776	1,827	1,649	1,447
Loans [Abstract]
Loans individually evaluated for impairment	3,850		4,686
Loans collectively evaluated for impairment	140,304		153,006
Total ending loans balance	144,154		157,692
Consumer [Member]
Ending allowance balance attributable to loans [Abstract]
Individually evaluated for impairment	34		0
Collectively evaluated for impairment	1,420		1,473
Total ending allowance balance	1,454	$ 1,433	1,473	$ 1,517	$ 1,608	$ 1,647
Loans [Abstract]
Loans individually evaluated for impairment	79		84
Loans collectively evaluated for impairment	138,824		131,961
Total ending loans balance	$ 138,903		$ 132,045

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES, Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Total [Abstract]
Unpaid principal balance	$ 9,423		$ 9,423		$ 11,076
Recorded investment	9,408		9,408		11,026
Allowance for Loan Losses Allocated	34		34		0
Impaired loans [Abstract]
Average impaired loans	8,769	$ 7,827	9,239	$ 8,355
Interest income recognized	194	68	464	339
Cash basis interest recognized	194	68	464	339
Residential Real Estate [Member]
With no related allowance recorded [Abstract]
Unpaid principal balance					418
Recorded investment					411
Impaired loans [Abstract]
Average impaired loans - with no allowance recorded		420		426
Interest income recognized - with no allowance recorded		7		15
Cash basis interest recognized - with no allowance recorded		7		15
Commercial Real Estate [Member] | Owner-occupied [Member]
With no related allowance recorded [Abstract]
Unpaid principal balance	5,108		5,108		5,256
Recorded investment	5,093		5,093		5,256
Impaired loans [Abstract]
Average impaired loans - with no allowance recorded	5,128	3,161	5,183	2,957
Interest income recognized - with no allowance recorded	74	23	239	124
Cash basis interest recognized - with no allowance recorded	74	23	239	124
Commercial Real Estate [Member] | Nonowner-occupied [Member]
With no related allowance recorded [Abstract]
Unpaid principal balance	386		386		632
Recorded investment	386		386		589
Impaired loans [Abstract]
Average impaired loans - with an allowance recorded		242		242
Interest income recognized - with an allowance recorded		0		0
Cash basis interest recognized - with an allowance recorded		0		0
Average impaired loans - with no allowance recorded	386	753	388	772
Interest income recognized - with no allowance recorded	7	15	21	39
Cash basis interest recognized - with no allowance recorded	7	15	21	39
Commercial and Industrial [Member]
With no related allowance recorded [Abstract]
Unpaid principal balance	3,850		3,850		4,686
Recorded investment	3,850		3,850		4,686
Impaired loans [Abstract]
Average impaired loans - with no allowance recorded	3,174	2,807	3,586	3,543
Interest income recognized - with no allowance recorded	111	20	200	149
Cash basis interest recognized - with no allowance recorded	111	20	200	149
Consumer [Member] | Home Equity [Member]
With no related allowance recorded [Abstract]
Unpaid principal balance	31		31		34
Recorded investment	31		31		34
Impaired loans [Abstract]
Average impaired loans - with no allowance recorded	32	444	33	415
Interest income recognized - with no allowance recorded	1	3	2	12
Cash basis interest recognized - with no allowance recorded	1	$ 3	2	$ 12
Consumer [Member] | Other [Member]
With an allowance recorded [Abstract]
Unpaid principal balance	48		48
Recorded investment	48		48
With no related allowance recorded [Abstract]
Unpaid principal balance					50
Recorded investment					$ 50
Total [Abstract]
Allowance for Loan Losses Allocated	34		34
Impaired loans [Abstract]
Average impaired loans - with an allowance recorded	49		49
Interest income recognized - with an allowance recorded	1		2
Cash basis interest recognized - with an allowance recorded	$ 1		$ 2

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES, Nonaccrual Loans and Loans Past Due 90 Days or More and Still Accruing (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Recorded Investment in Nonaccrual and Loans Past Due Over90 Days Still on Accrual by Class of Loans [Abstract]
Loans past due 90 days and still accruing	$ 236	$ 424
Nonaccrual	5,856	6,503
Residential Real Estate [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over90 Days Still on Accrual by Class of Loans [Abstract]
Real estate acquired		43
Mortgage loans in process of foreclosure	415	1,097
Loans past due 90 days and still accruing	2	127
Nonaccrual	4,081	5,256
Commercial Real Estate [Member] | Owner-occupied [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over90 Days Still on Accrual by Class of Loans [Abstract]
Loans past due 90 days and still accruing	0	0
Nonaccrual	1,095	205
Commercial Real Estate [Member] | Nonowner-occupied [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over90 Days Still on Accrual by Class of Loans [Abstract]
Loans past due 90 days and still accruing	0	0
Nonaccrual	83	362
Commercial Real Estate [Member] | Construction [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over90 Days Still on Accrual by Class of Loans [Abstract]
Loans past due 90 days and still accruing	0	0
Nonaccrual	155	156
Commercial and Industrial [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over90 Days Still on Accrual by Class of Loans [Abstract]
Loans past due 90 days and still accruing	0	15
Nonaccrual	149	149
Consumer [Member] | Automobile [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over90 Days Still on Accrual by Class of Loans [Abstract]
Loans past due 90 days and still accruing	135	146
Nonaccrual	134	129
Consumer [Member] | Home Equity [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over90 Days Still on Accrual by Class of Loans [Abstract]
Loans past due 90 days and still accruing	0	0
Nonaccrual	132	210
Consumer [Member] | Other [Member]
Recorded Investment in Nonaccrual and Loans Past Due Over90 Days Still on Accrual by Class of Loans [Abstract]
Loans past due 90 days and still accruing	99	136
Nonaccrual	$ 27	$ 36

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES, Past Due Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	$ 845,733	$ 848,664
Residential Real Estate [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	280,104	305,478
Commercial Real Estate [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	282,572	253,449
Commercial Real Estate [Member] | Owner-occupied [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	74,340	51,863
Commercial Real Estate [Member] | Nonowner-occupied [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	174,627	164,523
Commercial Real Estate [Member] | Construction [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	33,605	37,063
Commercial and Industrial [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	144,154	157,692
Consumer [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	138,903	132,045
Consumer [Member] | Automobile [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	53,022	55,241
Consumer [Member] | Home Equity [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	21,521	19,993
Consumer [Member] | Other [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	64,360	56,811
Total Past Due [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	5,965	10,807
Total Past Due [Member] | Residential Real Estate [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	3,519	5,004
Total Past Due [Member] | Commercial Real Estate [Member] | Owner-occupied [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	200	1,666
Total Past Due [Member] | Commercial Real Estate [Member] | Nonowner-occupied [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	183	456
Total Past Due [Member] | Commercial Real Estate [Member] | Construction [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	70	82
Total Past Due [Member] | Commercial and Industrial [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	162	1,287
Total Past Due [Member] | Consumer [Member] | Automobile [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	934	1,220
Total Past Due [Member] | Consumer [Member] | Home Equity [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	220	398
Total Past Due [Member] | Consumer [Member] | Other [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	677	694
30 to 59 Days Past Due [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	3,429	6,002
30 to 59 Days Past Due [Member] | Residential Real Estate [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	2,149	2,845
30 to 59 Days Past Due [Member] | Commercial Real Estate [Member] | Owner-occupied [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	20	470
30 to 59 Days Past Due [Member] | Commercial Real Estate [Member] | Nonowner-occupied [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	100	94
30 to 59 Days Past Due [Member] | Commercial Real Estate [Member] | Construction [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	37	0
30 to 59 Days Past Due [Member] | Commercial and Industrial [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	13	1,112
30 to 59 Days Past Due [Member] | Consumer [Member] | Automobile [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	554	831
30 to 59 Days Past Due [Member] | Consumer [Member] | Home Equity [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	29	204
30 to 59 Days Past Due [Member] | Consumer [Member] | Other [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	527	446
60 to 89 Days Past Due [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	912	1,880
60 to 89 Days Past Due [Member] | Residential Real Estate [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	669	496
60 to 89 Days Past Due [Member] | Commercial Real Estate [Member] | Owner-occupied [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	0	1,003
60 to 89 Days Past Due [Member] | Commercial Real Estate [Member] | Nonowner-occupied [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	0	0
60 to 89 Days Past Due [Member] | Commercial Real Estate [Member] | Construction [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	0	82
60 to 89 Days Past Due [Member] | Commercial and Industrial [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	0	11
60 to 89 Days Past Due [Member] | Consumer [Member] | Automobile [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	138	131
60 to 89 Days Past Due [Member] | Consumer [Member] | Home Equity [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	81	81
60 to 89 Days Past Due [Member] | Consumer [Member] | Other [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	24	76
90 Days or More Past Due [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	1,624	2,925
90 Days or More Past Due [Member] | Residential Real Estate [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	701	1,663
90 Days or More Past Due [Member] | Commercial Real Estate [Member] | Owner-occupied [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	180	193
90 Days or More Past Due [Member] | Commercial Real Estate [Member] | Nonowner-occupied [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	83	362
90 Days or More Past Due [Member] | Commercial Real Estate [Member] | Construction [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	33	0
90 Days or More Past Due [Member] | Commercial and Industrial [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	149	164
90 Days or More Past Due [Member] | Consumer [Member] | Automobile [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	242	258
90 Days or More Past Due [Member] | Consumer [Member] | Home Equity [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	110	113
90 Days or More Past Due [Member] | Consumer [Member] | Other [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	126	172
Loans Not Past Due [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	839,768	837,857
Loans Not Past Due [Member] | Residential Real Estate [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	276,585	300,474
Loans Not Past Due [Member] | Commercial Real Estate [Member] | Owner-occupied [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	74,140	50,197
Loans Not Past Due [Member] | Commercial Real Estate [Member] | Nonowner-occupied [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	174,444	164,067
Loans Not Past Due [Member] | Commercial Real Estate [Member] | Construction [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	33,535	36,981
Loans Not Past Due [Member] | Commercial and Industrial [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	143,992	156,405
Loans Not Past Due [Member] | Consumer [Member] | Automobile [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	52,088	54,021
Loans Not Past Due [Member] | Consumer [Member] | Home Equity [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	21,301	19,595
Loans Not Past Due [Member] | Consumer [Member] | Other [Member]
Aging of Recorded Investment in Past Due Loans by Class of Loans [Abstract]
Total loans balance	$ 63,683	$ 56,117

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES, TDR Loan Modifications (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	$ 4,137	$ 7,213
Specific allocations in reserves to customers	0
Commitments to lend additional amounts to customers	3,878	1,100
Residential Real Estate [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring		202
Commercial Real Estate [Member] | Owner-occupied [Member] | Reduction of Principal and Interest Payments [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	1,463	1,486
Commercial Real Estate [Member] | Owner-occupied [Member] | Maturity Extension at Lower Stated Rate than Market Rate [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	289	351
Commercial Real Estate [Member] | Owner-occupied [Member] | Credit Extension at Lower Stated Rate than Market Rate [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	377	384
Commercial Real Estate [Member] | Nonowner-occupied [Member] | Credit Extension at Lower Stated Rate than Market Rate [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	386	390
Commercial and Industrial [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	1,622	4,400
Performing to Modified Terms [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	4,137	7,213
Performing to Modified Terms [Member] | Residential Real Estate [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring		202
Performing to Modified Terms [Member] | Commercial Real Estate [Member] | Owner-occupied [Member] | Reduction of Principal and Interest Payments [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	1,463	1,486
Performing to Modified Terms [Member] | Commercial Real Estate [Member] | Owner-occupied [Member] | Maturity Extension at Lower Stated Rate than Market Rate [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	289	351
Performing to Modified Terms [Member] | Commercial Real Estate [Member] | Owner-occupied [Member] | Credit Extension at Lower Stated Rate than Market Rate [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	377	384
Performing to Modified Terms [Member] | Commercial Real Estate [Member] | Nonowner-occupied [Member] | Credit Extension at Lower Stated Rate than Market Rate [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	386	390
Performing to Modified Terms [Member] | Commercial and Industrial [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	1,622	4,400
Not Performing to Modified Terms [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	0	0
Not Performing to Modified Terms [Member] | Residential Real Estate [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring		0
Not Performing to Modified Terms [Member] | Commercial Real Estate [Member] | Owner-occupied [Member] | Reduction of Principal and Interest Payments [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	0	0
Not Performing to Modified Terms [Member] | Commercial Real Estate [Member] | Owner-occupied [Member] | Maturity Extension at Lower Stated Rate than Market Rate [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	0	0
Not Performing to Modified Terms [Member] | Commercial Real Estate [Member] | Owner-occupied [Member] | Credit Extension at Lower Stated Rate than Market Rate [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	0	0
Not Performing to Modified Terms [Member] | Commercial Real Estate [Member] | Nonowner-occupied [Member] | Credit Extension at Lower Stated Rate than Market Rate [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	0	0
Not Performing to Modified Terms [Member] | Commercial and Industrial [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Troubled Debt Restructuring	$ 0	$ 0

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES, TDRs Pre-modification and Post-modification (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021 USD ($) Loan	Sep. 30, 2020 Loan	Sep. 30, 2021 USD ($) Loan	Sep. 30, 2020 Loan	Dec. 31, 2020 USD ($)
Troubled Debt Restructuring Loan Modifications [Abstract]
Number of loan modifications | Loan	0	0	0	0
Aggregate loan balances	$ 839,069		$ 839,069		$ 841,504
CARES Act [Member]
Troubled Debt Restructuring Loan Modifications [Abstract]
Total number of loans modified related to COVID 19 | Loan			674
Total Loans Modified, Non-trouble Debt Restructuring	130,365		$ 130,365
Number of remaining loans modified related to COVID 19 | Loan			18
Aggregate loan balances	156		$ 156
Aggregate loan amount that are reviewed risk categories	$ 1,000		$ 1,000

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES, Risk Category of Commercial Loans by Class of Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Loans Receivable [Abstract]
Loans receivable	$ 845,733	$ 848,664
Commercial Real Estate [Member]
Loans Receivable [Abstract]
Loans receivable	282,572	253,449
Commercial Real Estate [Member] | Owner-occupied [Member]
Loans Receivable [Abstract]
Loans receivable	74,340	51,863
Commercial Real Estate [Member] | Nonowner-occupied [Member]
Loans Receivable [Abstract]
Loans receivable	174,627	164,523
Commercial Real Estate [Member] | Construction [Member]
Loans Receivable [Abstract]
Loans receivable	33,605	37,063
Commercial and Industrial [Member]
Loans Receivable [Abstract]
Loans receivable	144,154	157,692
Commercial [Member]
Loans Receivable [Abstract]
Loans receivable	426,726	411,141
Pass [Member] | Commercial Real Estate [Member] | Owner-occupied [Member]
Loans Receivable [Abstract]
Loans receivable	70,971	46,604
Pass [Member] | Commercial Real Estate [Member] | Nonowner-occupied [Member]
Loans Receivable [Abstract]
Loans receivable	172,341	160,324
Pass [Member] | Commercial Real Estate [Member] | Construction [Member]
Loans Receivable [Abstract]
Loans receivable	33,605	37,063
Pass [Member] | Commercial and Industrial [Member]
Loans Receivable [Abstract]
Loans receivable	138,498	150,786
Pass [Member] | Commercial [Member]
Loans Receivable [Abstract]
Loans receivable	415,415	394,777
Criticized [Member] | Commercial Real Estate [Member] | Owner-occupied [Member]
Loans Receivable [Abstract]
Loans receivable	631	669
Criticized [Member] | Commercial Real Estate [Member] | Nonowner-occupied [Member]
Loans Receivable [Abstract]
Loans receivable	2,003	3,629
Criticized [Member] | Commercial Real Estate [Member] | Construction [Member]
Loans Receivable [Abstract]
Loans receivable	0	0
Criticized [Member] | Commercial and Industrial [Member]
Loans Receivable [Abstract]
Loans receivable	1,905	2,064
Criticized [Member] | Commercial [Member]
Loans Receivable [Abstract]
Loans receivable	4,539	6,362
Classified [Member] | Commercial Real Estate [Member] | Owner-occupied [Member]
Loans Receivable [Abstract]
Loans receivable	2,738	4,590
Classified [Member] | Commercial Real Estate [Member] | Nonowner-occupied [Member]
Loans Receivable [Abstract]
Loans receivable	283	570
Classified [Member] | Commercial Real Estate [Member] | Construction [Member]
Loans Receivable [Abstract]
Loans receivable	0	0
Classified [Member] | Commercial and Industrial [Member]
Loans Receivable [Abstract]
Loans receivable	3,751	4,842
Classified [Member] | Commercial [Member]
Loans Receivable [Abstract]
Loans receivable	$ 6,772	$ 10,002

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES, Recorded Investment of Residential and Consumer Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Loans Receivable [Abstract]
Loans receivable	$ 845,733	$ 848,664
Percentage of unsecured loans	4.10%	4.22%
Consumer [Member]
Loans Receivable [Abstract]
Loans receivable	$ 138,903	$ 132,045
Consumer [Member] | Automobile [Member]
Loans Receivable [Abstract]
Loans receivable	53,022	55,241
Consumer [Member] | Home Equity [Member]
Loans Receivable [Abstract]
Loans receivable	21,521	19,993
Consumer [Member] | Other [Member]
Loans Receivable [Abstract]
Loans receivable	64,360	56,811
Residential Real Estate [Member]
Loans Receivable [Abstract]
Loans receivable	280,104	305,478
Consumer and Residential [Member]
Loans Receivable [Abstract]
Loans receivable	419,007	437,523
Performing [Member] | Consumer [Member] | Automobile [Member]
Loans Receivable [Abstract]
Loans receivable	52,753	54,966
Performing [Member] | Consumer [Member] | Home Equity [Member]
Loans Receivable [Abstract]
Loans receivable	21,389	19,783
Performing [Member] | Consumer [Member] | Other [Member]
Loans Receivable [Abstract]
Loans receivable	64,234	56,639
Performing [Member] | Residential Real Estate [Member]
Loans Receivable [Abstract]
Loans receivable	276,021	300,095
Performing [Member] | Consumer and Residential [Member]
Loans Receivable [Abstract]
Loans receivable	414,397	431,483
Nonperforming [Member] | Consumer [Member] | Automobile [Member]
Loans Receivable [Abstract]
Loans receivable	269	275
Nonperforming [Member] | Consumer [Member] | Home Equity [Member]
Loans Receivable [Abstract]
Loans receivable	132	210
Nonperforming [Member] | Consumer [Member] | Other [Member]
Loans Receivable [Abstract]
Loans receivable	126	172
Nonperforming [Member] | Residential Real Estate [Member]
Loans Receivable [Abstract]
Loans receivable	4,083	5,383
Nonperforming [Member] | Consumer and Residential [Member]
Loans Receivable [Abstract]
Loans receivable	$ 4,610	$ 6,040

XML

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK [Abstract]
Contract amounts	$ 89,645	$ 88,456

XML

OTHER BORROWED FUNDS (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2021 USD ($) Promissorynote	Dec. 31, 2020 USD ($) Promissorynote
Other Borrowed Funds [Abstract]
Other borrowed funds	$ 23,285	$ 27,863
FHLB Advances - variable rate loans	0
Cash management advances, maximum borrowing amount	$ 100,000
Cash management advances, maturity period	90 days
Cash management advances, available borrowing amount	$ 100,000
Number of promissory notes payable to related parties | Promissorynote	4	6
Scheduled Repayments of FHLB Advances [Abstract]
2021	$ 2,373
2022	2,997
2023	2,352
2024	2,062
2025	1,824
Thereafter	11,677
Other borrowings	$ 23,285	$ 27,863
Minimum [Member]
Other Borrowed Funds [Abstract]
Fixed-rate FHLB advances interest rate	1.53%
Maximum [Member]
Other Borrowed Funds [Abstract]
Fixed-rate FHLB advances interest rate	3.31%
Weighted Average [Member]
Other Borrowed Funds [Abstract]
Fixed-rate FHLB advances interest rate	2.40%	2.40%
Mortgage Loans [Member]
Other Borrowed Funds [Abstract]
Collateral pledged for FHLB Advances	$ 272,922
Commercial Loans [Member]
Other Borrowed Funds [Abstract]
Collateral pledged for FHLB Advances	73,204
FHLB Stock [Member]
Other Borrowed Funds [Abstract]
Collateral pledged for FHLB Advances	5,125
Cash management advances, maximum borrowing amount	195,703
Cash management advances, available borrowing amount	109,438
FHLB Borrowings [Member]
Other Borrowed Funds [Abstract]
Other borrowed funds	21,147	$ 24,665
Scheduled Repayments of FHLB Advances [Abstract]
2021	735
2022	2,497
2023	2,352
2024	2,062
2025	1,824
Thereafter	11,677
Other borrowings	21,147	24,665
Promissory Notes [Member]
Other Borrowed Funds [Abstract]
Other borrowed funds	$ 2,138	3,198
Maturity date of promissory notes issued	Apr. 13, 2022
Notes payable to related parties	$ 2,138	3,198
Notes payable to other banks	0	0
Scheduled Repayments of FHLB Advances [Abstract]
2021	1,638
2022	500
2023	0
2024	0
2025	0
Thereafter	0
Other borrowings	$ 2,138	$ 3,198
Promissory Notes [Member] | Minimum [Member]
Other Borrowed Funds [Abstract]
Interest rate	1.00%
Promissory Notes [Member] | Weighted Average [Member]
Other Borrowed Funds [Abstract]
Interest rate	1.24%	2.20%
FHLB Line of Credit [Member]
Other Borrowed Funds [Abstract]
Letter of credit issued	$ 65,118	$ 76,740

XML

SEGMENT INFORMATION (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Segment Information [Abstract]
Net interest income	$ 10,359	$ 10,082	$ 30,622	$ 29,881
Provision expense	(93)	(2)	(118)	3,451
Noninterest income	2,612	2,434	8,457	9,125
Noninterest expense	9,469	9,891	27,953	29,012
Tax expense	559	333	1,816	984
Net income	3,036	2,294	9,428	5,559
Assets	1,245,378	1,137,938	1,245,378	1,137,938	$ 1,186,932
Banking [Member]
Segment Information [Abstract]
Net interest income	9,843	9,562	29,124	28,350
Provision expense	(100)	0	(150)	3,445
Noninterest income	2,582	2,385	7,474	8,073
Noninterest expense	8,861	9,295	26,095	27,110
Tax expense	574	339	1,693	843
Net income	3,090	2,313	8,960	5,025
Assets	$ 1,232,353	$ 1,126,202	1,232,353	1,126,202
Banking [Member] | Revenues [Member] | Customer Concentration Risk [Member]
Segment Information [Abstract]
Concentration percentage	94.00%	94.00%
Consumer Finance [Member]
Segment Information [Abstract]
Net interest income	$ 516	$ 520	1,498	1,531
Provision expense	7	(2)	32	6
Noninterest income	30	49	983	1,052
Noninterest expense	608	596	1,858	1,902
Tax expense	(15)	(6)	123	141
Net income	(54)	(19)	468	534
Assets	$ 13,025	$ 11,736	$ 13,025	$ 11,736

XML

LEASES, Balance Sheet Information (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Balance Sheet Information Related to Leases [Abstract]
Operating lease right-of-use assets	$ 1,235	$ 880
Operating lease liabilities	$ 1,235	$ 880
Minimum [Member]
Lessee, Operating Lease, Description [Abstract]
Operating lease term	19 months
Maximum [Member]
Lessee, Operating Lease, Description [Abstract]
Operating lease term	20 years
Operating lease renewal term	15 years

XML

LEASES, Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Lease, Cost [Abstract]
Operating lease cost	$ 41	$ 32	$ 119	$ 127
Short-term lease expense	$ 8	$ 7	$ 24	$ 23

XML

LEASES, Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
LEASES [Abstract]
2021 (remaining)	$ 42
2022	168
2023	127
2024	106
2025	106
Thereafter	973
Total lease payments	1,522
Less: Imputed Interest	(287)
Total operating leases	$ 1,235	$ 880

XML

LEASES, Other Information (Details)	Sep. 30, 2021	Dec. 31, 2020
Other Information [Abstract]
Weighted-average remaining lease term for operating leases	13 years 10 months 24 days	9 years 7 months 6 days
Weighted-average discount rate for operating leases	2.29%	2.79%