Note B

–

Business Combinations

As of the close of business on

August

2016,

Ohio Valley completed its merger with Milton Bancorp, Inc. (“Milton Bancorp”) pursuant to the terms of the Agreement and Plan of Merger dated as of

January

2016,

by and between Ohio Valley and Milton Bancorp, as amended (the "Merger Agreement"). Pursuant to the terms of the Merger Agreement, Milton Bancorp was merged with and into Ohio Valley. Immediately following the Merger, The Milton Banking Company (“Milton Bank”) was merged with and into the Bank. As a result of the Merger and in accordance with the terms of the Merger Agreement, each Milton Bancorp share was converted into the right to receive either

1,636

Ohio Valley common shares,

par value, or cash in the amount of

$37,219,

subject to certain allocation procedures set forth in the Merger Agreement pursuant to which

80%

of the

400

outstanding Milton Bancorp common shares were converted into the right to receive Ohio Valley common shares and the remaining

20%

of the outstanding Milton Bancorp common shares were converted into the right to receive cash. Each of the

1,237

Milton Bancorp preferred shares issued and outstanding were converted into the right to receive a cash payment in the amount of

$3,600

per preferred share. The consideration paid for Milton Bancorp totaled

$18,875,

of which

$11,444

was the market value of the Company’s common shares and

$7,431

was cash. Ohio Valley financed part of the cash portion of the purchase price through

$5,000

in borrowed funds. Milton Bank's results of operations were included in the Company's results beginning

August

2016.

Merger-related expenses of

$930

were recorded to the Company’s income statement for the year ended

December

31,

2016.

The fair value of the common shares issued as part of the consideration paid for Milton Bancorp was determined in the basis of the closing price of the Company's common shares on the acquisition date. After the Merger, the Company's assets totaled approximately

$950

million and branches increased to

locations.

Goodwill of

$6,534

arising from the acquisition consisted largely of synergies from combining the operations of the companies. As the acquisition was treated as a nontaxable stock acquisition transaction, the goodwill was not deductible for tax purposes. The following table summarizes the consideration paid for Milton Bancorp and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date:

Consideration:
Cash	$	7,431
Equity instruments		11,444
Fair value of total consideration transferred	$	18,875

Recognized amounts of identifiable assets acquired and liabilities assumed :
Cash and cash equivalents	$	9,201
Securities		5,868
Restricted investments in bank stock		364
Loans		112,479
Premises and equipment		1,826
Other real estate owned		641
Bank owned life insurance		272
Core deposit intangible asset		738
Other assets		612
Total assets acquired		132,001

Deposits		119,669
Other liabilities		(9	)
Total liabilities assumed		119,660

Total identifiable net assets		12,341

Goodwill		6,534

	$	18,875

The fair value of net assets acquired includes fair value adjustments to certain receivables that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows. However, the Company believes that all contractual cash flows related to these financial instruments will be collected. As such,

these receivables were not considered impaired at the acquisition date and were not subject to the guidance relating to purchase credit impaired loans, which have shown evidence of credit deterioration since origination. Receivables acquired that were not subject to these requirements include non-impaired loans and customer receivables with a fair value and gross contractual amounts receivable of

$111,558

and

$112,249

on the date of acquisition. The Company also acquired purchase credit impaired loans that management deemed to be not material for disclosure. While the acquisition accounting adjustments have been recorded at year-end

2016,

we will continue to evaluate these adjustments, specifically in the area of income taxes. Amounts presented in the table above are subject to change.