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, 2017

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

(Issuer's telephone number, including area code)

_____________________

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 and posted on its corporate web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post 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.  (Check one):

Large accelerated filer	☐		Accelerated filer	☒
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	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 of the registrant outstanding as of November 9, 2017 was 4,692,266.

OHIO VALLEY BANC CORP.

Index

		Page Number
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Condensed 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	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
Signatures		43

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, 2017			December 31, 2016
ASSETS
Cash and noninterest-bearing deposits with banks	$	11,610		$	12,512
Interest-bearing deposits with banks		38,792			27,654
Total cash and cash equivalents		50,402			40,166
Certificates of deposit in financial institutions		1,820			1,670
Securities available for sale		106,545			96,490
Securities held to maturity (estimated fair value: 2017 - $18,822; 2016 - $19,171)		18,168			18,665
Restricted investments in bank stocks		7,506			7,506
Total loans		777,957			734,901
Less: Allowance for loan losses		(7,313	)		(7,699	)
Net loans		770,644			727,202
Premises and equipment, net		13,205			12,783
Other real estate owned		2,219			2,129
Accrued interest receivable		2,532			2,315
Goodwill		7,371			7,801
Other intangible assets, net		550			670
Bank owned life insurance and annuity assets		26,576			29,349
Other assets		12,076			7,894
Total assets	$	1,019,614		$	954,640
LIABILITIES
Noninterest-bearing deposits	$	233,178		$	209,576
Interest-bearing deposits		616,003			580,876
Total deposits		849,181			790,452
Other borrowed funds		36,775			37,085
Subordinated debentures		8,500			8,500
Accrued liabilities		15,196			14,075
Total liabilities		909,652			850,112
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 5)		----			----
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value per share, 10,000,000 shares authorized; 2017 - 5,352,005 shares issued; 2016 - 5,325,504 shares issued)		5,352			5,326
Additional paid-in capital		47,552			46,788
Retained earnings		72,781			69,117
Accumulated other comprehensive loss		(11	)		(991	)
Treasury stock, at cost (659,739 shares)		(15,712	)		(15,712	)
Total shareholders' equity		109,962			104,528
Total liabilities and shareholders' equity	$	1,019,614		$	954,640

See accompanying notes to consolidated financial statements

3

OHIO VALLEY BANC CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(dollars in thousands, except per share data)

	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
Interest and dividend income:
Loans, including fees	$	10,489		$	9,085		$	31,410		$	26,147
Securities
Taxable		535			486			1,559			1,465
Tax exempt		104			111			312			337
Dividends		101			75			287			222
Other Interest		88			67			476			336
		11,317			9,824			34,044			28,507
Interest expense:
Deposits		757			597			1,985			1,605
Other borrowed funds		228			190			673			462
Subordinated debentures		64			52			182			149
		1,049			839			2,840			2,216
Net interest income		10,268			8,985			31,204			26,291
Provision for loan losses		1,601			1,708			1,921			2,328
Net interest income after provision for loan losses		8,667			7,277			29,283			23,963
Noninterest income:
Service charges on deposit accounts		541			575			1,575			1,414
Trust fees		64			58			177			174
Income from bank owned life insurance and annuity assets		577			175			981			575
Mortgage banking income		59			44			164			162
Electronic refund check / deposit fees		----			13			1,667			2,037
Debit / credit card interchange income		863			653			2,506			1,864
Gain (loss) on other real estate owned		(23	)		(8	)		(94	)		----
Other		201			183			531			563
		2,282			1,693			7,507			6,789
Noninterest expense:
Salaries and employee benefits		5,019			5,032			15,528			14,130
Occupancy		449			466			1,331			1,300
Furniture and equipment		269			285			787			671
Professional fees		434			342			1,338			1,020
Marketing expense		273			249			785			744
FDIC insurance		99			81			366			378
Data processing		564			380			1,652			1,069
Software		365			368			1,102			962
Foreclosed assets		158			61			425			247
Amortization of intangibles		38			----			120			----
Merger related expenses		6			416			33			777
Other		1,548			1,148			5,006			3,272
		9,222			8,828			28,473			24,570
Income before income taxes		1,727			142			8,317			6,182
Provision for income taxes		74			(216	)		1,706			1,286
NET INCOME	$	1,653		$	358		$	6,611		$	4,896
Earnings per share	$	.35		$	.08		$	1.41		$	1.15

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,
	2017			2016			2017			2016
Net Income	$	1,653		$	358		$	6,611		$	4,896
Other comprehensive income:
Change in unrealized loss on available for sale securities		20			91			1,485			1,528
Related tax expense		(7	)		(31	)		(505	)		(520	)
Total other comprehensive income, net of tax		13			60			980			1,008
Total comprehensive income	$	1,666		$	418		$	7,591		$	5,904

See accompanying notes to consolidated financial statements

5

OHIO VALLEY BANC CORP. CONDENSED CONSOLIDATED STATEMENTS OF CHANGESIN SHAREHOLDERS' EQUITY (UNAUDITED) (dollars in thousands, except share and per share data)
	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
Balance at beginning of period	$	108,987		$	94,796		$	104,528		$	90,470
Net income		1,653			358			6,611			4,896
Other comprehensive income, net of tax		13			60			980			1,008
Acquisition – Milton Bancorp, Inc., 523,518 shares		----			11,444			----			11,444
Common stock issued through DRIP (2017 – 11,383 shares issued)		293			----			362			----
Common stock issued to ESOP (2017 - 15,118 shares issued; 2016 - 24,572 shares issued)		----			----			428			575
Cash dividends		(984	)		(870	)		(2,947	)		(2,605	)
Balance at end of period	$	109,962		$	105,788		$	109,962		$	105,788
Cash dividends per share	$	.21		$	.19		$	.63		$	.61

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,
	2017			2016
Net cash provided by operating activities:	$	5,926		$	9,761
Investing activities:
Net cash acquired from Milton Bancorp, Inc., acquisition		----			1,686
Proceeds from maturities of securities available for sale		16,358			13,818
Purchases of securities available for sale		(25,177	)		(17,691	)
Proceeds from maturities of securities held to maturity		846			1,218
Purchases of securities held to maturity		(389	)		(3,193	)
Proceeds from maturities of certificates of deposit in financial institutions		245			490
Purchases of certificates of deposit in financial institutions		(395	)		(445	)
Proceeds from restricted investments in bank stocks		----			1
Net change in loans		(46,281	)		(24,186	)
Proceeds from sale of other real estate owned		987			593
Purchases of premises and equipment		(1,247	)		(633	)
Proceeds from bank owned life insurance		3,754			----
Net cash used in investing activities		(51,299	)		(28,342	)
Financing activities:
Change in deposits		58,867			25,822
Cash dividends		(2,947	)		(2,605	)
Proceeds from Federal Home Loan Bank borrowings		4,785			8,202
Repayment of Federal Home Loan Bank borrowings		(4,720	)		(1,450	)
Change in other long-term borrowings		(343	)		5,000
Change in other short-term borrowings		(33	)		(33	)
Net cash provided by financing activities		55,609			34,936
Change in cash and cash equivalents		10,236			16,355
Cash and cash equivalents at beginning of period		40,166			45,530
Cash and cash equivalents at end of period	$	50,402		$	61,885
Supplemental disclosure:
Cash paid for interest	$	2,665		$	2,112
Cash paid for income taxes		2,236			1,675
Transfers from loans to other real estate owned		1,337			851
Other real estate owned sales financed by The Ohio Valley Bank Company		167			316
Issuance of common stock for Milton Bancorp, Inc., acquisition		----			11,444

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. ("Loan Central"), a consumer finance company, Ohio Valley Financial Services Agency, LLC ("Ohio Valley Financial Services"), an insurance agency, and OVBC Captive, Inc. (the "Captive"), a limited purpose property and casualty insurance company.  The Bank has one wholly-owned subsidiary, Ohio Valley REO, LLC ("Ohio Valley REO"), an Ohio limited liability company, to which the Bank transfers certain real estate acquired by the Bank through foreclosure for sale by Ohio Valley REO.  Ohio Valley and its subsidiaries are collectively referred to as the "Company".  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, 2017, and its results of operations and cash flows for the periods presented.  The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, 2017.  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, 2016 contains consolidated financial statements and related notes which should be read in conjunction with the accompanying consolidated financial statements.

The consolidated financial statements for 2016 have been reclassified to conform to the presentation for 2017.  These reclassifications had no effect on the net income or shareholders' equity.

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

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

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 4,688,284 and 4,466,601 for the three months ended September 30, 2017 and 2016, respectively.  The weighted average common shares outstanding were 4,680,846 and 4,246,311 for the nine months ended September 30, 2017 and 2016, respectively.  Ohio Valley had no dilutive effect and no potential common shares issuable under stock options or other agreements for any period presented.

NEW ACCOUNTING PRONOUNCEMENTS:  In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)". The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2017, with early adoption permitted on January 1, 2017. Management is currently evaluating the impact of this update on its consolidated financial statements and related disclosures, however, adoption by the Company is not expected to have a material impact.  The Company's primary sources of revenues are derived from interest and dividends earned on loans, investment securities and other financial instruments that are not within the scope of ASU 2014-09.

8

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In January 2016, the FASB issued ASU No. 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities".  The update provides updated accounting and reporting requirements for both public and non-public entities.  The most significant provisions that will impact the Company are: 1) equity securities available for sale will be measured at fair value, with the changes in fair value recognized in the income statement; 2) eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments at amortized cost on the balance sheet; 3) utilization of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and 4) require separate presentation of both financial assets and liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements.  The update will be effective for interim and annual periods beginning after December 15, 2017, using a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption.  Early adoption is not permitted. Management is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued an update (ASU 2016-02, Leases) which will require lessees to record most leases on their balance sheets and recognize leasing expenses in the income statement. Operating leases, except for short-term leases that are subject to an accounting policy election, will be recorded on the balance sheet for lessees by establishing a lease liability and corresponding right-of-use asset. The guidance in this ASU will become effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. Management is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses". ASU 2016-13 requires entities to report "expected" credit losses on financial instruments and other commitments to extend credit rather than the current "incurred loss" 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. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, for annual periods and interim periods within those annual periods, beginning after December 15, 2018.  Management is currently in the developmental stages, collecting available historical information, in order to assess the expected credit losses.  However, the impact to the financial statements are still yet to be determined.

In August 2016, FASB issued an update (ASU 2016-15, "Statement of Cash Flows") (Topic 230), which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this update apply to all entities, including business entities and not-for-profit entities that are required to present a statement of cash flows, and are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.  Adoption by the Company is not expected to have a material impact on the consolidated financial statements and related disclosures.

In January 2017, the FASB issued an update (ASU 2017-04, Intangibles – Goodwill and Other) which is intended to simplify the measurement of goodwill in periods following the date on which the goodwill is initially recorded.  Under the amendments in this update, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.  An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value.  However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.  Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.  A public business entity that is a U.S. Securities and Exchange Commission filer should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.  Adoption by the Company is not expected to have a material impact on the consolidated financial statements and related disclosures.

9

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. 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. 

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 that typically approximate 10%.

10

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

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, 2017 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		----	$	13,579		----
Agency mortgage-backed securities, residential		----		92,966		----

	Fair Value Measurements at December 31, 2016 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		----	$	10,544		----
Agency mortgage-backed securities, residential		----		85,946		----

There were no transfers between Level 1 and Level 2 during 2017 or 2016.

Assets and Liabilities Measured on a Nonrecurring Basis

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

	Fair Value Measurements at September 30, 2017, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Residential real estate		----		----	$	94
Commercial real estate:
Nonowner-occupied		----		----		2,602
Other real estate owned:
Commercial real estate:
Construction		----		----		754

	Fair Value Measurements at December 31, 2016, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial real estate:
Owner-occupied		----		----	$	3,536
Nonowner-occupied		----		----		1,985
Commercial and industrial		----		----		298
Other real estate owned:
Commercial real estate:
Construction		----		----		754

11

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

At September 30, 2017, the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled $2,838, with a corresponding valuation allowance of $142.  This resulted in an increase of $142 to provision expense during the three and nine months ended September 30, 2017, with no additional charge-offs recognized.  This is compared to an increase of $819 in provision expense during the three months ended September 30, 2016, and an increase of $2,477 in provision expense during the nine months ended September 30, 2016, with no additional charge-offs recognized.  At December 31, 2016, the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled $8,732, with a corresponding valuation allowance of $2,913, resulting in an increase of $2,509 in provision expense during the year ended December 31, 2016, with no additional charge-offs recognized.

Other real estate owned that was measured at fair value less costs to sell at September 30, 2017 and December 31, 2016 had a net carrying amount of $754, which is made up of the outstanding balance of $2,217, net of a valuation allowance of $1,463. There were no corresponding write downs during the three and nine months ended September 30, 2017 and 2016.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2017 and December 31, 2016:

September 30, 2017	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range	(Weighted Average)
Impaired loans:
Residential real estate:	$	94	Sales approach	Adjustment to comparables	10%		10%
Commercial real estate:
Nonowner-occupied		2,602	Sales approach	Adjustment to comparables	0% to 250%		51.4%
			Income approach	Capitalization Rate	8%		8%
Other real estate owned:
Commercial real estate:
Construction		754	Sales approach	Adjustment to comparables	0% to 30%		11.7%

December 31, 2016	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range	(Weighted Average)
Impaired loans:
Commercial real estate:
Owner-occupied	$	3,536	Sales approach	Adjustment to comparables	0% to 65%		13.7%
			Cost approach	Adjustment to comparables	0% to 29.5%		14.8%
Nonowner-occupied		1,985	Sales approach	Adjustment to comparables	0% to 250%		58.6%
Commercial and industrial		298	Sales approach	Adjustment to comparables	0.9% to 9.7%		5.2%
Other real estate owned:
Commercial real estate:
Construction		754	Sales approach	Adjustment to comparables	0% to 30%		11.7%

12

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The carrying amounts and estimated fair values of financial instruments at September 30, 2017 and December 31, 2016 are as follows:

			Fair Value Measurements at September 30, 2017 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	50,402	$	50,402	$	----	$	----	$	50,402
Certificates of deposit in financial institutions		1,820		----		1,820		----		1,820
Securities available for sale		106,545		----		106,545		----		106,545
Securities held to maturity		18,168		----		9,586		9,236		18,822
Restricted investments in bank stocks		7,506		N/A		N/A		N/A		N/A
Loans, net		770,644		----		----		772,063		772,063
Accrued interest receivable		2,532		----		394		2,138		2,532
Financial liabilities:
Deposits		849,181		233,178		616,081		----		849,259
Other borrowed funds		36,775		----		36,070		----		36,070
Subordinated debentures		8,500		----		6,377		----		6,377
Accrued interest payable		690		3		687		----		690

			Fair Value Measurements at December 31, 2016 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	40,166	$	40,166	$	----	$	----	$	40,166
Certificates of deposit in financial institutions		1,670		----		1,670		----		1,670
Securities available for sale		96,490		----		96,490		----		96,490
Securities held to maturity		18,665		----		9,541		9,630		19,171
Restricted investments in bank stocks		7,506		N/A		N/A		N/A		N/A
Loans, net		727,202		----		----		727,079		727,079
Accrued interest receivable		2,315		----		224		2,091		2,315
Financial liabilities:
Deposits		790,452		209,576		581,340		----		790,916
Other borrowed funds		37,085		----		35,948		----		35,948
Subordinated debentures		8,500		----		5,821		----		5,821
Accrued interest payable		513		4		509		----		513

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

Cash and Cash Equivalents: The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

Certificates of Deposit in Financial Institutions: The carrying amounts of certificates of deposit in financial institutions approximate fair values and are classified as Level 2.

Securities Held to Maturity:  The fair values for securities held to maturity are determined in the same manner as securities held for sale and discussed earlier in this note.  Level 3 securities consist of nonrated municipal bonds and tax credit ("QZAB") bonds.

Restricted Investments in Bank Stocks: It is not practical to determine the fair value of Federal Home Loan Bank, Federal Reserve Bank and United Bankers Bank stock due to restrictions placed on their transferability.

Loans: Fair values of loans are estimated as follows:  The fair value of fixed rate loans is estimated by discounting future cash flows using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.  For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

13

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Deposits: The fair values disclosed for noninterest-bearing deposits are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. The carrying amounts of variable rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date resulting in a Level 2 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

Other Borrowed Funds: The carrying values of the Company's short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification. The fair values of the Company's long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Subordinated Debentures: The fair values of the Company's Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Accrued Interest Receivable and Payable: The carrying amount of accrued interest approximates fair value, resulting in a classification that is consistent with the earning assets and interest-bearing liabilities with which it is associated.

Off-balance Sheet Instruments:  Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. The fair value of commitments is not material.

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.

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, 2017 and December 31, 2016 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses:

Securities Available for Sale	Amortized  Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2017
U.S. Government sponsored entity securities	$	13,627	$	----	$	(48	)	$	13,579
Agency mortgage-backed securities, residential		92,935		653		(622	)		92,966
Total securities	$	106,562	$	653	$	(670	)	$	106,545
December 31, 2016
U.S. Government sponsored entity securities	$	10,624	$	----	$	(80	)	$	10,544
Agency mortgage-backed securities, residential		87,367		495		(1,916	)		85,946
Total securities	$	97,991	$	495	$	(1,996	)	$	96,490

14

NOTE 3 – SECURITIES (Continued)

Securities Held to Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Estimated Fair Value
September 30, 2017
Obligations of states and political subdivisions	$	18,164	$	694	$	(40	)	$	18,818
Agency mortgage-backed securities, residential		4		----		----			4
Total securities	$	18,168	$	694	$	(40	)	$	18,822
December 31, 2016
Obligations of states and political subdivisions	$	18,661	$	654	$	(148	)	$	19,167
Agency mortgage-backed securities, residential		4		----		----			4
Total securities	$	18,665	$	654	$	(148	)	$	19,171

The amortized cost and estimated fair value of debt securities at September 30, 2017, 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	$	4,602	$	4,593	$	89	$	89
Due in over one to five years		6,025		5,996		6,764		7,000
Due in over five to ten years		3,000		2,990		8,055		8,482
Due after ten years		----		----		3,256		3,247
Agency mortgage-backed securities, residential		92,935		92,966		4		4
Total debt securities	$	106,562	$	106,545	$	18,168	$	18,822

The following table summarizes securities with unrealized losses at September 30, 2017 and December 31, 2016, aggregated by major security type and length of time in a continuous unrealized loss position:

September 30, 2017	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 sponsored
entity securities		$	10,987		$	(24	)		$	2,592		$	(24	)		$	13,579		$	(48	)
Agency mortgage-backed
securities, residential			42,408			(355	)			10,231			(267	)			52,639			(622	)
Total available for sale		$	53,395		$	(379	)		$	12,823		$	(291	)		$	66,218		$	(670	)

	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		$	325		$	(2	)		$	1,173		$	(38	)		$	1,498		$	(40	)
Total held to maturity		$	325		$	(2	)		$	1,173		$	(38	)		$	1,498		$	(40	)

December 31, 2016	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 sponsored
entity securities		$	10,544		$	(80	)		$	----		$	----		$	10,544		$	(80	)
Agency mortgage-backed
securities, residential			64,043			(1,916	)			----			----			64,043			(1,916	)
Total available for sale		$	74,587		$	(1,996	)		$	----		$	----		$	74,587		$	(1,996	)

15

NOTE 3 – SECURITIES (Continued)

	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		$	3,813		$	(148	)		$	----		$	----		$	3,813		$	(148	)
Total held to maturity		$	3,813		$	(148	)		$	----		$	----		$	3,813		$	(148	)

There were no sales of investment securities during the three and nine months ended September 30, 2017 and 2016. Unrealized losses on the Company's debt securities have not been recognized into income because the issuers' securities are of high credit quality as of September 30, 2017, 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, 2017 and December 31, 2016 represents an other-than-temporary impairment.

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are comprised of the following:	September 30,			December 31,
	2017			2016
Residential real estate	$	318,244		$	286,022
Commercial real estate:
Owner-occupied		72,525			77,605
Nonowner-occupied		99,966			90,532
Construction		42,352			45,870
Commercial and industrial		103,550			100,589
Consumer:
Automobile		67,999			59,772
Home equity		21,287			20,861
Other		52,034			53,650
		777,957			734,901
Less:  Allowance for loan losses		(7,313	)		(7,699	)
Loans, net	$	770,644		$	727,202

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2017 and 2016:

September 30, 2017	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,300		$	2,813		$	932		$	1,907		$	6,952
Provision for loan losses		493			540			238			330			1,601
Loans charged off		(445	)		(434	)		(202	)		(420	)		(1,501	)
Recoveries		83			41			4			133			261
Total ending allowance balance	$	1,431		$	2,960		$	972		$	1,950		$	7,313

September 30, 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	906		$	3,464		$	1,416		$	1,148		$	6,934
Provision for loan losses		228			802			149			529			1,708
Loans charged-off		(151	)		(11	)		(587	)		(704	)		(1,453	)
Recoveries		30			19			1			298			348
Total ending allowance balance	$	1,013		$	4,274		$	979		$	1,271		$	7,537

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, 2017 and 2016:

September 30, 2017	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	939		$	4,315		$	907		$	1,538		$	7,699
Provision for loan losses		870			(636	)		588			1,099			1,921
Loans charged off		(591	)		(1,046	)		(605	)		(1,125	)		(3,367	)
Recoveries		213			327			82			438			1,060
Total ending allowance balance	$	1,431		$	2,960		$	972		$	1,950		$	7,313

September 30, 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,087		$	1,959		$	2,589		$	1,013		$	6,648
Provision for loan losses		10			2,264			(1,035	)		1,089			2,328
Loans charged-off		(322	)		(63	)		(587	)		(1,540	)		(2,512	)
Recoveries		238			114			12			709			1,073
Total ending allowance balance	$	1,013		$	4,274		$	979		$	1,271		$	7,537

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, 2017 and December 31, 2016:

September 30, 2017	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	$	127	$	111	$	----	$	2	$	240
Collectively evaluated for impairment		1,304		2,849		972		1,948		7,073
Total ending allowance balance	$	1,431	$	2,960	$	972	$	1,950	$	7,313
Loans:
Loans individually evaluated for impairment	$	1,153	$	6,798	$	9,522	$	208	$	17,681
Loans collectively evaluated for impairment		317,091		208,045		94,028		141,112		760,276
Total ending loans balance	$	318,244	$	214,843	$	103,550	$	141,320	$	777,957

December 31, 2016	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	$	----	$	2,535	$	241	$	205	$	2,981
Collectively evaluated for impairment		939		1,780		666		1,333		4,718
Total ending allowance balance	$	939	$	4,315	$	907	$	1,538	$	7,699
Loans:
Loans individually evaluated for impairment	$	717	$	13,111	$	8,465	$	416	$	22,709
Loans collectively evaluated for impairment		285,305		200,896		92,124		133,867		712,192
Total ending loans balance	$	286,022	$	214,007	$	100,589	$	134,283	$	734,901

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, 2017 and December 31, 2016:

September 30, 2017	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Residential real estate	$	224	$	221	$	127
Commercial real estate:
Nonowner-occupied		604		530		111
Consumer:
Home equity		208		208		2
With no related allowance recorded:
Residential real estate		932		932		----
Commercial real estate:
Owner-occupied		2,563		2,563		----
Nonowner-occupied		4,995		3,548		----
Construction		635		157		----
Commercial and industrial		9,522		9,522		----
Total	$	19,683	$	17,681	$	240

December 31, 2016	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	5,477	$	5,477	$	2,435
Nonowner-occupied		384		384		100
Commercial and industrial		392		392		241
Consumer:
Home equity		416		416		205
With no related allowance recorded:
Residential real estate		717		717		----
Commercial real estate:
Owner-occupied		3,638		3,091		----
Nonowner-occupied		5,078		3,632		----
Construction		1,001		527		----
Commercial and industrial		8,073		8,073		----
Total	$	25,176	$	22,709	$	2,981

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, 2017 and 2016:

	Three months ended September 30, 2017						Nine months ended September 30, 2017
	Average  Impaired Loans		Interest  Income Recognized		Cash Basis Interest Recognized		Average  Impaired Loans		Interest  Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Residential real estate	$	221	$	7	$	7	$	55	$	7	$	7
Commercial real estate:
Nonowner-occupied		563		3		3		584		12		12
Consumer:
Home equity		208		1		1		210		5		5
With no related allowance recorded:
Residential real estate		935		10		10		824		37		37
Commercial real estate:
Owner-occupied		2,409		37		37		2,407		112		112
Nonowner-occupied		3,552		19		19		3,518		57		57
Construction		157		5		5		170		14		14
Commercial and industrial		9,260		135		135		8,776		358		358
Total	$	17,305	$	217	$	217	$	16,544	$	602	$	602

18

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

	Three months ended September 30, 2016						Nine months ended September 30, 2016
	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:
Owner-occupied	$	5,427	$	94	$	94	$	2,815	$	241	$	241
Nonowner-occupied		389		5		5		392		15		15
Commercial and industrial		391		----		----		391		----		----
Consumer:
Home equity		217		1		1		218		5		5
With no related allowance recorded:
Residential real estate		725		4		4		728		20		20
Commercial real estate:
Owner-occupied		2,797		37		37		2,879		120		120
Nonowner-occupied		3,680		33		33		3,557		75		75
Construction		363		11		11		521		108		108
Commercial and industrial		8,575		103		103		8,234		290		290
Total	$	22,564	$	288	$	288	$	19,735	$	874	$	874

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

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

The Company transfers loans to other real estate owned, at fair value less cost to sell, in the period the Company obtains physical possession of the property (through legal title or through a deed in lieu). As of September 30, 2017 and December 31, 2016, other real estate owned secured by residential real estate totaled $384 and $938, respectively. In addition, nonaccrual residential mortgage loans that are in the process of foreclosure had a recorded investment of $1,979 and $1,492 as of September 30, 2017 and December 31, 2016, 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, 2017 and December 31, 2016:

September 30, 2017	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	316	$	4,452
Commercial real estate:
Owner-occupied		----		308
Nonowner-occupied		21		2,624
Construction		----		402
Commercial and industrial		15		345
Consumer:
Automobile		90		75
Home equity		390		35
Other		136		110
Total	$	968	$	8,351

19

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

December 31, 2016	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	132	$	3,445
Commercial real estate:
Owner-occupied		28		1,571
Nonowner-occupied		----		2,506
Construction		----		527
Commercial and industrial		----		867
Consumer:
Automobile		121		5
Home equity		----		34
Other		46		6
Total	$	327	$	8,961

The following table presents the aging of the recorded investment of past due loans by class of loans as of September 30, 2017 and December 31, 2016:

September 30, 2017	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	$	5,498	$	1,697	$	1,172	$	8,367	$	309,877	$	318,244
Commercial real estate:
Owner-occupied		198		282		142		622		71,903		72,525
Nonowner-occupied		358		----		2,645		3,003		96,963		99,966
Construction		----		----		231		231		42,121		42,352
Commercial and industrial		440		42		250		732		102,818		103,550
Consumer:
Automobile		982		206		112		1,300		66,699		67,999
Home equity		25		70		390		485		20,802		21,287
Other		609		243		137		989		51,045		52,034
Total	$	8,110	$	2,540	$	5,079	$	15,729	$	762,228	$	777,957

December 31, 2016	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	$	3,728	$	953	$	2,201	$	6,882	$	279,140	$	286,022
Commercial real estate:
Owner-occupied		134		366		1,325		1,825		75,780		77,605
Nonowner-occupied		261		18		2,506		2,785		87,747		90,532
Construction		66		52		182		300		45,570		45,870
Commercial and industrial		1,283		483		800		2,566		98,023		100,589
Consumer:
Automobile		1,091		221		126		1,438		58,334		59,772
Home equity		349		45		----		394		20,467		20,861
Other		685		155		46		886		52,764		53,650
Total	$	7,597	$	2,293	$	7,186	$	17,076	$	717,825	$	734,901

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 TDR's 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 TDR's to reflect the fair values of the underlying collateral or the present value of the concessionary terms granted to the customer.

20

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, 2017 and December 31, 2016:

September 30, 2017	TDR's Performing to Modified Terms		TDR's Not Performing to Modified Terms		Total TDR's
Residential real estate:
Interest only payments	$	702	$	----	$	702
Maturity extension at lower stated rate than market rate		230				230
Commercial real estate:
Owner-occupied
Interest only payments		94		----		94
Reduction of principal and interest payments		560		----		560
Maturity extension at lower stated rate than market rate		1,497		----		1,497
Credit extension at lower stated rate than market rate		412		----		412
Nonowner-occupied
Interest only payments		560		2,115		2,675
Rate reduction		375		----		375
Credit extension at lower stated rate than market rate		570		----		570
Commercial and industrial:
Interest only payments		8,752		----		8,752
Maturity extension at lower stated rate than market rate		770		----		770
Consumer:
Home equity
Maturity extension at lower stated rate than market rate		----		208		208
Total TDR's	$	14,522	$	2,323	$	16,845

December 31, 2016	TDR's Performing to Modified Terms		TDR's Not Performing to Modified Terms		Total TDR's
Residential real estate:
Interest only payments	$	717	$	----	$	717
Commercial real estate:
Owner-occupied
Interest only payments		284		----		284
Rate reduction		----		232		232
Reduction of principal and interest payments		579		----		579
Maturity extension at lower stated rate than market rate		1,582		----		1,582
Nonowner-occupied
Interest only payments		600		2,210		2,810
Rate reduction		384		----		384
Credit extension at lower stated rate than market rate		574		----		574
Commercial and industrial:
Interest only payments		8,074		----		8,074
Credit extension at lower stated rate than market rate		----		391		391
Consumer:
Home equity
Maturity extension at lower stated rate than market rate		213		----		213
Credit extension at lower stated rate than market rate		203		----		203
Total TDR's	$	13,210	$	2,833	$	16,043

21

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

During the three months ended September 30, 2017, the TDR's described above increased the provision expense and the allowance for loan losses by $93, with corresponding charge-offs of $78.  During the nine months ended September 30, 2017, the TDR's described above decreased the provision expense and the allowance for loan losses by $42, with corresponding charge-offs of $391.  There was an increase of $14 in the provision expense and the allowance for loan losses during the three months ended September 30, 2016, with corresponding charge-offs of $11, and a decrease of $1,105 in the provision expense and the allowance for loan losses during the nine months ended September 30, 2016, with corresponding charge-offs of $11.  During the year ended December 31, 2016, the TDR's described above decreased the allowance for loan losses and provision expense by $1,112 with corresponding charge-offs of $11.

At September 30, 2017, the balance in TDR loans increased $802, or 5.0%, from year-end 2016.  The Company had 86% of its TDR's performing according to their modified terms at September 30, 2017, compared to 82% at December 31, 2016.  The Company's specific allocations in reserves to customers whose loan terms have been modified in TDR's totaled $113 at September 30, 2017, compared to $546 in reserves at December 31, 2016.  At September 30, 2017, the Company had $1,747 in commitments to lend additional amounts to customers with outstanding loans that are classified as TDR's, compared to $2,427 at December 31, 2016.

There were no TDR loan modifications or defaults during the three months ended September 30, 2016.  The following table presents the pre- and post-modification balances of TDR loan modifications by class of loans that occurred during the three months ended September 30, 2017:

			TDR's Performing to Modified Terms				TDR's Not Performing to Modified Terms
Three months ended September 30, 2017	Number  of Loans		Pre-Modification  Recorded Investment		Post-Modification Recorded Investment		Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Commercial real estate:
Owner-occupied
Credit extension at lower stated rate than market rate		1	$	412	$	412	$	----	$	----
Total TDR's		1	$	412	$	412	$	----	$	----

The following table presents the pre- and post-modification balances of TDR loan modifications by class of loans that occurred during the nine months ended September 30, 2017 and 2016:

			TDR's Performing to Modified Terms				TDR's Not Performing to Modified Terms
Nine months ended September 30, 2017	Number  of Loans		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Residential real estate		1	$	231	$	231	$	----	$	----
Maturity extension at lower stated rate than market rate
Commercial real estate:
Owner-occupied
Credit extension at lower stated rate than market rate		1		412		412		----		----
Commercial and industrial		2		770		770		----		----
Total TDR's		4	$	1,413	$	1,413	$	----	$	----

22

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

			TDR's Performing to Modified Terms				TDR's Not Performing to Modified Terms
Nine months ended September 30, 2016	Number of Loans		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Commercial real estate:
Nonowner-occupied
Interest only payments		1	$	----	$	----	$	226	$	226
Credit extension at lower stated rate than market rate		1		574		574		----		----
Total TDR's		2	$	574	$	574	$	226	$	226

All of the Company's loans that were restructured during the nine months ended September 30, 2017 were performing in accordance with their modified terms and have not experienced any payment defaults within twelve months following their loan modification.  The Company's loans that were restructured during the nine months ended September 30, 2016 included a loan for $226 that experienced a payment default within twelve months following the loan modification and is not performing in accordance with the modified loan terms as of September 30, 2017.  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 principal and interest amounts contractually due are brought current and future payments are reasonably assured.  The loans modified during the nine months ended September 30, 2017 had no impact on the provision expense or the allowance for loan losses.  As of September 30, 2017, the Company had no allocation of reserves to customers whose loan terms were modified during the first nine months of 2017. The loans modified during the nine months ended September 30, 2016 increased the provision expense and the allowance for loan losses by $11.  As of September 30, 2016, the Company had no allocation of reserves to customers whose loan terms were modified during the first nine months of 2016.

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 10. 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 $500.

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 troubled debt restructuring should be graded no higher than special mention until they have been reported as performing over one year after restructuring.

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

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 loan grade 8 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 which 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, 2017 and December 31, 2016, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:

September 30, 2017	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	63,913	$	955	$	7,657	$	72,525
Nonowner-occupied		93,831		2,223		3,912		99,966
Construction		41,936		----		416		42,352
Commercial and industrial		96,614		1,350		5,586		103,550
Total	$	296,294	$	4,528	$	17,571	$	318,393

December 31, 2016	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	66,495	$	428	$	10,682	$	77,605
Nonowner-occupied		83,103		2,364		5,065		90,532
Construction		45,325		----		545		45,870
Commercial and industrial		94,091		188		6,310		100,589
Total	$	289,014	$	2,980	$	22,602	$	314,596

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, 2017 and December 31, 2016:

September 30, 2017	Consumer
	Automobile		Home Equity		Other		Residential Real Estate		Total
Performing	$	67,834	$	20,862	$	51,788	$	313,476	$	453,960
Nonperforming		165		425		246		4,768		5,604
Total	$	67,999	$	21,287	$	52,034	$	318,244	$	459,564

December 31, 2016	Consumer
	Automobile		Home Equity		Other		Residential Real Estate		Total
Performing	$	59,646	$	20,827	$	53,598	$	282,445	$	416,516
Nonperforming		126		34		52		3,577		3,789
Total	$	59,772	$	20,861	$	53,650	$	286,022	$	420,305

The Company, through its subsidiaries, 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 4.92% of total loans were unsecured at September 30, 2017, down from 5.61% at December 31, 2016.

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, 2017, the contract amounts of these instruments totaled approximately $73,460, compared to $67,191 at December 31, 2016.  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, 2017 and December 31, 2016 are comprised of advances from the Federal Home Loan Bank ("FHLB") of Cincinnati and promissory notes.  At September 30, 2017 and December 31, 2016, FHLB Borrowings included $48 and $73 in capitalized lease obligations, respectively.

	FHLB Borrowings		Promissory Notes		Totals
September 30, 2017	$	29,235	$	7,540	$	36,775
December 31, 2016	$	29,203	$	7,882	$	37,085

Pursuant to collateral agreements with the FHLB, advances were secured by $305,490 in qualifying mortgage loans, $75,032 in commercial loans and $5,365 in FHLB stock at September 30, 2017.  Fixed-rate FHLB advances of $29,195 mature through 2042 and have interest rates ranging from 1.53% to 3.31% and a year-to-date weighted average cost of 2.14%.  There were no variable-rate FHLB borrowings at September 30, 2017.

At September 30, 2017, the Company had a cash management line of credit enabling it to borrow up to $80,000 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 $80,000 available on this line of credit at September 30, 2017.

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NOTE 6 - OTHER BORROWED FUNDS (Continued)

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 $221,723 at September 30, 2017.  Of this maximum borrowing capacity, the Company had $146,529 available to use as additional borrowings, of which $80,000 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 August 1, 2026, and have fixed rates ranging from 1.25% to 4.09% through August 1, 2021 and a year-to-date weighted average cost of 2.77% at September 30, 2017, as compared to 2.34% at December 31, 2016.  Promissory notes payable by Ohio Valley to related parties totaled $360 at September 30, 2017 and December 31, 2016.  Promissory notes payable to other banks totaled $3,556 at September 30, 2017, as compared to $3,899 at December 31, 2016.

Letters of credit issued on the Bank's behalf by the FHLB to collateralize certain public unit deposits as required by law totaled $46,000 at September 30, 2017 and $45,000 at December 31, 2016.

Scheduled principal payments as of September 30, 2017:

	FHLB Borrowings		Promissory Notes		Totals
2017	$	973	$	964	$	1,937
2018		2,891		2,261		5,152
2019		2,724		1,852		4,576
2020		2,541		519		3,060
2021		2,240		541		2,781
Thereafter		17,866		1,403		19,269
	$	29,235	$	7,540	$	36,775

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 92.2% and 90.9% of total consolidated revenues for the quarters ended September 30, 2017 and 2016, 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, 2017
	Banking		Consumer Finance			Total Company
Net interest income	$	9,681	$	587		$	10,268
Provision expense		1,615		(14	)		1,601
Noninterest income		2,224		58			2,282
Noninterest expense		8,579		643			9,222
Tax expense		69		5			74
Net income		1,642		11			1,653
Assets		1,008,078		11,536			1,019,614

26

NOTE 7 – SEGMENT INFORMATION (Continued)

	Three Months Ended September 30, 2016
	Banking			Consumer Finance			Total Company
Net interest income	$	8,396		$	589		$	8,985
Provision expense		1,675			33			1,708
Noninterest income		1,655			38			1,693
Noninterest expense		8,167			661			8,828
Tax expense		(193	)		(23	)		(216	)
Net income		402			(44	)		358
Assets		957,889			12,341			970,230

	Nine Months Ended September 30, 2017
	Banking		Consumer Finance		Total Company
Net interest income	$	28,558	$	2,646	$	31,204
Provision expense		1,815		106		1,921
Noninterest income		6,965		542		7,507
Noninterest expense		26,477		1,996		28,473
Tax expense		1,338		368		1,706
Net income		5,893		718		6,611
Assets		1,008,078		11,536		1,019,614

	Nine Months Ended September 30, 2016
	Banking		Consumer Finance		Total Company
Net interest income	$	23,684	$	2,607	$	26,291
Provision expense		2,180		148		2,328
Noninterest income		6,220		569		6,789
Noninterest expense		22,460		2,110		24,570
Tax expense		975		311		1,286
Net income		4,289		607		4,896
Assets		957,889		12,341		970,230

NOTE 8 – SUBSEQUENT EVENTS

On October 6, 2017, the Company received $730 in insurance proceeds for the reimbursement of fraudulent wire transactions.  The losses were first recorded on May 9, 2017, when the Company was made aware that four wire transfers it had processed in May 2017 totaling $933 were fraudulently initiated. During the second quarter of 2017, the Company had recovered $103 of the losses.  The insurance proceeds will be recorded as a recovery in the fourth quarter of 2017 and will generate a $730 increase to pre-tax earnings on a consolidated basis.

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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

Except for the historical statements and discussions contained herein, statements contained in this report constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 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," and similar expressions.  Such statements involve various important assumptions, risks, uncertainties, and other factors, many of which are beyond our control 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:  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 a number of important factors which could cause actual results to differ materially from the forward-looking statements contained in management's discussion and analysis is available in the Company's filings with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, including the disclosure under the heading "Item 1A. Risk Factors" of Part 1 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016. 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

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.  In addition, the Bank is one of a limited number of financial institutions that facilitates the payment of tax refunds through a third-party tax refund product provider.  The Bank has facilitated the payment of these tax refunds through electronic refund check/deposit ("ERC/ERD") transactions.  ERC/ERD transactions involve the payment of a tax refund to the taxpayer after the Bank has received the refund from the federal/state government.  ERC/ERD transactions occur primarily during the tax refund season, typically during the first quarter of each year.  Loan Central also provides refund anticipation loans ("RALs") to its customers.  RALs are short-term cash advances against a customer's anticipated income tax refund.

On August 5, 2016, the Company completed the merger of Milton Bancorp, Inc. ("Milton Bancorp") into Ohio Valley.  Immediately following the merger, Milton Bancorp's wholly-owned subsidiary, The Milton Banking Company ("Milton Bank"), was merged with and into the Bank.  Milton Bank's results of operations were included in the Company's results beginning August 6, 2016.  This transaction resulted in the addition of $132 million in assets and 5 branch locations in Jackson, Madison and Pickaway counties in Ohio.

Net income totaled $1,653 during the third quarter of 2017, compared to $358 during the third quarter of 2016.  Earnings per share for the third quarter of 2017 finished at $.35 per share, compared to $.08 per share during the third quarter of 2016.  The Company's net income during the nine months ended September 30, 2017 totaled $6,611, compared to $4,896 during the nine months ended September 30, 2016.  Earnings per share during the first nine months of 2017 finished at $1.41 per share, compared to $1.15 per share during the first nine months of 2016.  Higher earnings during both the quarterly and year-to-date periods were impacted primarily by the benefits of higher net interest and noninterest income, as well as lower provision expense.  These benefits were partially offset by general increases in various overhead expenses during both the quarterly and year-to-date periods.

28

The annualized net income to average asset ratio, or return on assets ("ROA"), increased to 0.87% at September 30, 2017, compared to 0.74% at September 30, 2016.  The Company's net income to average equity ratio, or return on equity ("ROE"), also increased to 8.24% at September 30, 2017, compared to 6.85% at September 30, 2016.

Net interest income for the three and nine months ended September 30, 2017 showed positive growth over the same periods in 2016, increasing 14.3% and 18.9%, respectively. The increase came primarily from interest revenues associated with year-to-date average earning asset growth of $119,910.   The growth in year-to-date average earning assets came primarily from average loans, which contributed $129,968 to the increase in average earning assets.  While the Company continues to experience growth from its existing markets, the large growth in loans came primarily from the Milton Bank merger, which resulted in the acquisition of $112 million in loans.  Also contributing to net interest income growth was higher interest recorded from the Company's interest-bearing Federal Reserve clearing account.  While the average interest-bearing balances maintained at the Federal Reserve have decreased 19.4% during the first nine months of 2017, it has been the Federal Reserve's action of increasing short-term interest rates that has contributed to higher interest income.

During the three and nine months ended September 30, 2017, the Company's provision expense decreased $107 and $407 from the same periods in 2016, respectively.  Lower provision expense during 2017 was largely impacted by a $2,741 decrease in specific allocations from December 31, 2016 related to the financial performance improvement of one commercial real estate loan relationship during the first quarter of 2017.  The decrease in specific allocations was partially offset by a $2,355 increase in general allocations from December 31, 2016 related to specific loan portfolio risks that management determined were necessary.  Provision expense during 2017 has also benefited from lower net charge-offs on loans without specific reserves.  Impacted by a lower level of specific reserves, the allowance for loan losses decreased by $386 from year-end 2016 to finish at $7,313, or .94% of total loans at September 30, 2017, compared to 1.05% at December 31, 2016 and 1.04% at September 30, 2016.

Total noninterest income during the three months ended September 30, 2017 increased $589, or 34.8%, over the third quarter of 2016, and increased $718, or 10.6%, during the first nine months of 2017, as compared to the same period in 2016.  Noninterest income improvement was impacted primarily by bank owned life insurance and annuity assets, which grew over $400 during both the quarterly and year-to-date periods.  This was largely the result of net bank owned life insurance proceeds collected in the third quarter of 2017.  Further impacting noninterest income growth were increases in fee income related to a higher deposit base from the Milton Bank acquisition.  The higher deposit base contributed to year-to-date increases of over 30% in debit and credit card interchange income and over 11% in service charges on deposit accounts.  Partially offsetting growth in noninterest income were lower tax processing fees through ERC/ERD transactions during the nine months ended September 30, 2017.  In addition to a reduced number of tax refunds being processed during the first nine months of 2017, the per item fees received by the Company were lower under the new contract with the third-party tax refund product provider. Comparing 2017 to 2016, the change in the remaining noninterest income categories was minimal during the third quarter, increasing $24, while the year-to-date change resulted in a decrease of $121 during the nine months ending September 30, primarily from higher losses on the sale of other real estate owned ("OREO").

Total noninterest expense increased $394 for the third quarter of 2017, and increased $3,903 during the first nine months of 2017, as compared to the same periods in 2016.  The increase was impacted by the acquisition of Milton Bank, which contributed to general increases in most noninterest expense categories related to having a larger organization after the merger.  Overhead expense has been impacted mostly by salaries and employee benefit costs, which decreased by $13, or 0.3%, during the third quarter of 2017, but increased $1,398, or 9.9%, during the first nine months of 2017, as compared to the same periods in 2016.  Contributing to the decrease for the third quarter was a $316 reduction in non-qualified defined benefit expenses associated with the restructuring of and accounting for post-retirement benefits of a former employee.  The year-to-date increase was largely the result of adding Milton Bank employees, as well as annual merit increases and higher health insurance costs. Further contributing to higher overhead costs was fraud expense.  During the second quarter of 2017, management discovered four fraudulent wire transfers with a single account relationship totaling $933.  After recovering a portion of the money, the Company's net fraud expense totaled $842 as of September 30, 2017, which impacted other noninterest expense during the nine months ended September 30, 2017.  These increases were partially offset by a decrease in merger related expenses, which were down $410 and $744 during the three and nine months ended September 30, 2017, as compared to the same periods in 2016, respectively.  The remaining noninterest categories increased $805, or 23.8%, during the three months ended September 30, 2017, and increased $2,407, or 24.9%, during the nine months ended September 30, 2017, as compared to 2016.  This additional overhead expense came primarily from data processing, consulting costs, professional fees, and expenses associated with facilities.

29

At September 30, 2017, total assets were $1,019,614, compared to $954,640 at year-end 2016.  Asset growth was impacted mostly by gross loan balances, which were up by $43,056 from year-end 2016, driven by higher residential real estate and consumer auto loan originations, as well as commercial loan balance increases from the West Virginia market area. Total investment securities also increased 8.3% from year-end 2016, due mostly to new purchases of mortgage-backed securities.  The growth experienced in loans and securities was partially funded by deposits, which increased 7.4% from year-end 2016.

Total liabilities were $909,652 at September 30, 2017, up $59,540 from December 31, 2016. Total deposit balances experienced continued growth during 2017, increasing $58,729 compared to year-end 2016.  Noninterest-bearing deposits accounted for $23,602 of the increase, coming mostly from business checking and incentive-based checking account transactions.  Interest-bearing deposits increased by $35,127, coming mostly from public fund accounts and wholesale deposits.

At September 30, 2017, total shareholders' equity was $109,962, up $5,434 since December 31, 2016.  Regulatory capital ratios of the Company remained higher than the "well capitalized" minimums.

Comparison of Financial Conditionat September 30, 2017 and December 31, 2016

The following discussion focuses, in more detail, on the consolidated financial condition of the Company at September 30, 2017 compared to December 31, 2016.  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, 2017, cash and cash equivalents were $50,402, an increase of $10,236 from $40,166 at December 31, 2016.  The increase in cash and cash equivalents came mostly from the Company's interest-bearing Federal Reserve Bank clearing account, impacted by excess funds associated with deposit liability growth from year-end 2016. The Company utilizes its interest-bearing Federal Reserve Bank clearing account to maintain seasonal tax refund deposits, as well as to fund earning asset growth and maturities of retail certificates of deposit ("CD's").  The interest rate paid on both the required and excess reserve balances is based on the targeted federal funds rate established by the Federal Open Market Committee.  Short-term rate increases of 25 basis points during each of December 2016, March 2017 and June 2017 caused the federal funds rate to finish at 1.25% at September 30, 2017.  The interest rate increases had a corresponding effect on the interest revenue growth experienced during the first nine months of 2017 on Federal Reserve Bank clearing account balances. The 1.25% interest rate is higher than the rate the Company would have received from its investments in federal funds sold. Furthermore, Federal Reserve Bank balances are 100% secured.

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

Certificates of deposit

At September 30, 2017, the Company had $1,820 in certificates of deposit owned by the Captive, up slightly from year-end 2016.  The deposits on hand at September 30, 2017 consist of eight certificates with remaining maturity terms ranging from less than 12 months up to 35 months.

Securities

The balance of total securities increased $9,558, or 8.3%, compared to year-end 2016.  The Company's investment securities portfolio is made up mostly of U.S. Government agency ("Agency") mortgage-backed securities, which increased $7,020, or 8.2%, from year-end 2016 and represented 74.6% of total investments at September 30, 2017.  During the first nine months of 2017, the Company invested $18,105 in new Agency mortgage-backed securities, while receiving principal repayments of $12,302.  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 experienced a $3,035, or 28.8%, increase in U.S. Government sponsored entity securities, primarily from new purchases during the second quarter of 2017.

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Loans

The loan portfolio represents the Company's largest asset category and is its most significant source of interest income. Gross loan balances totaled $777,957 at September 30, 2017, representing an increase of $43,056, or 5.9%, as compared to $734,901 at December 31, 2016.  Loans were positively impacted by growth in residential real estate, consumer automobile and commercial and industrial loan balances.

The residential real estate loan segment comprises the largest portion of the Company's overall loan portfolio at 40.9% 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.  Residential real estate loan balances during the first nine months of 2017 increased $32,222 or 11.3%, from year-end 2016.  This increase was 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.  From year-end 2016, warehouse lending balances increased $9,630 to finish at $15,155 at September 30, 2017.  The Company's growth in residential real estate loans was further impacted by higher balances in its Athens, Ohio and West Virginia markets, which were up $9,341 and $6,095, respectively.  The real estate loan portfolio is also impacted by loan construction projects.  During the period when a borrower's one- to four-family residential home is being built, it is first classified as a construction loan.  At the completion of this construction phase, the loan is re-classified to a residential real estate loan.  At September 30, 2017, construction loans were down 7.7%, indicating a higher transition of loan balances from commercial real estate to residential real estate.  Total loan production within the real estate portfolio consists of increasing short-term adjustable-rate mortgages partially offset by decreasing long-term fixed-rate mortgages. As part of management's interest rate risk strategy, the Company continues to sell most of its long-term fixed-rate residential mortgages to the Federal Home Loan Mortgage Corporation, while maintaining the servicing rights for those mortgages.  A customer that does not qualify for a long-term, secondary market loan may choose from one of the Company's other adjustable-rate mortgage products, which contributed to higher balances of adjustable-rate mortgages from year-end 2016.

The commercial lending segment increased $3,797, or 1.2%, from year-end 2016, which came mostly from the commercial and industrial loan portfolio, which increased $2,961, or 2.9%, from year-end 2016.  The increase was impacted by loan originations from the West Virginia market area during the first quarter of 2017.  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 real estate loan segment comprises the largest portion of the Company's total commercial loan portfolio at September 30, 2017, representing 67.5%.  At September 30, 2017, commercial real estate loans totaled $214,843, which were comparable to the $214,007 in commercial real estate loans at year-end 2016.  Larger payoffs caused owner-occupied loans to decrease $5,080, or 6.5%, from year-end 2016, while a higher number of one- to four-family residential homes completed their building phase, causing construction loans to decrease $3,518, or 7.7%, from year-end 2016.  Partially offsetting these decreases was an increase in loan originations causing nonowner-occupied loan balances to grow by $9,434, or 10.4%, from year-end 2016. While management believes lending opportunities exist in the Company's markets, future commercial lending activities will depend upon economic and 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.

Consumer loan balances at September 30, 2017 represented an increase of $7,037, or 5.2%, from year-end 2016.  The increase was largely due to the Company's automobile loan segment, which grew by $8,227, or 13.8%, from year-end 2016.  Automobile loans represent the Company's largest consumer loan segment at 48.1% of total consumer loans.  The Company continues to target more auto dealers within its market areas and offer interest rates that are more competitive with local banks.  Growth in automobile loans was partially offset by decreases in other consumer loans, which were down 3.0%.  The Company will continue to monitor its auto lending segment while maintaining strict loan underwriting processes to limit future loss exposure.

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Allowance for Loan Losses

The Company established a $7,313 allowance for loan losses at September 30, 2017, which was a decrease from the $7,699 allowance at year-end 2016. The allowance was impacted by a decrease of $2,741 in specific allocations from year-end 2016. 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.  When re-evaluating the impaired loan balances to their corresponding collateral values at September 30, 2017, it was determined that a commercial real estate loan relationship was no longer impaired and no longer collateral dependent due to the borrower's financial performance improvement.  This resulted in the removal of that borrower's specific allocation of $1,681 that had previously been identified as impairment. Further contributing to lower specific reserves during the first nine months of 2017 were the charge-offs of several collateral dependent specific allocations.  Total charge-offs of $612 in commercial real estate loans and $399 in commercial and industrial loans were recorded as a result of asset impairment.  However, these specific reserves had already been allocated for prior to 2017, which resulted in no corresponding provision expense impact in 2017. 

Partially offsetting the decrease in specific allocations was an increase in the Company's general allocations of the allowance for loan losses from year-end 2016.  As part of the Company's quarterly analysis of the allowance for loan losses, management reviewed various factors that directly impact the general allocation need 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. The Company maintained troubled loans at comparable levels to year-end 2016, which, when combined with  a 5.9% growth in total loans, caused the ratio of nonperforming loans to total loans to decrease from 1.26% at December 31, 2016 to 1.20% at September 30, 2017.  Comparable levels of nonperforming assets combined with a 6.8% growth in total assets contributed to a decrease in the ratio of nonperforming assets to total assets, finishing at 1.13% at September 30, 2017, compared to 1.20% at December 31, 2016.  General risks in the portfolio were also positively impacted by lower impaired loans at September 30, 2017, which decreased $5,028, or 22.1%, from year-end 2016.  However, it was the addition of new risk factors during the first quarter of 2017 that caused the general allocation component of the allowance for loan losses to increase $2,355, or 49.9%, from year-end 2016.  During the first quarter of 2017, the Company continued to experience lower historical loan loss factors, which prompted management to evaluate the exposure to losses incurred during an economic downturn.  Based on historical losses incurred outside the Company's lookback period, management determined it would be necessary to include an economic risk factor to add general reserves for losses based upon the difference in the Company's current historical loss factors and risks in the portfolio.  Furthermore, management evaluated recent changes in loan underwriting standards, which may expose the loan portfolio to additional credit risk.  As a result, an economic risk factor was added, which contributed to additional general reserves. 

The Company's allowance for loan losses to total loans ratio finished at 0.94% at September 30, 2017 and 1.05% at year-end 2016.  Management believes that the allowance for loan losses at September 30, 2017 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, are factors that could change and make adjustments to the allowance for loan losses necessary.  Asset quality will continue to remain a key focus, as management continues to stress not just loan growth, but quality in loan underwriting as well. 

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, 2017 increased $58,729, or 7.4%, from year-end 2016.  This deposit growth came primarily from interest-bearing deposit balances, which increased $35,127, or 6.1%, from year-end 2016.  While the Company's preference is to fund earning asset demand with retail core deposits, the use of wholesale deposits has been utilized to help satisfy earning asset growth.  With market rates remaining at historically low levels, the Company considers wholesale deposits to be a cost-effective funding source to help manage the growing demand for loans.  As a result, wholesale deposits contributed $21,688 to the growth in interest-bearing deposits from year-end 2016.

Interest-bearing deposit growth was impacted by interest-bearing NOW account balances, which increased $16,061, or 10.4%, during the first nine months of 2017 as compared to year-end 2016. This increase was largely driven by growth in municipal NOW products. Interest-bearing deposit growth also came from money market account balances, which increased $2,645, or 2.0%, from year-end 2016, largely from brokered money market deposits partially offset by declines in the Company's Market Watch account balances.  Growth in interest-bearing deposits was further impacted by a $2,699, or 2.8%, increase in statement savings account balances from year-end 2016.

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During the first nine months of 2017, time deposits increased $12,853, or 6.8%, from year-end 2016. This was largely driven by the Company's use of wholesale funding, which saw its brokered CD's increase by $11,648, or 48.4%, from year-end 2016.  Retail time deposits have increased just 0.7% from year-end 2016.  Based on the minimal spread between a short-term CD rate and a statement savings rate, many customers choose to invest balances into a more liquid product, perhaps hoping for rising rates in the near future. This change in retail time deposits from year-end 2016 fits within management's strategy of focusing on more "core" deposit balances, while utilizing wholesale deposit sources as needed.

Also contributing to growth in deposits was the Company's noninterest-bearing deposits, which increased $23,602, or 11.3%, from year-end 2016.  This growth was largely impacted by the Company's business checking account balances, which grew $17,125, or 15.3%, from year-end 2016.  Business checking activity continues to be impacted by the seasonal ERC/ERD tax refund processing that occurs primarily during the first four months of the year.  The Company facilitates a significant volume of tax items within several business checking accounts during this seasonal period, which resulted in over $4 million of retained funds.  Growth in the Company's business checking accounts also came from the Mason County, West Virginia market area, increasing over $9 million from year-end 2016.  Noninterest deposits were also impacted by growth in incentive based checking account balances from year-end 2016.

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 2017, reflecting the Company's efforts to reduce its reliance on higher cost funding and improving net interest income.

Other Borrowed Funds

Other borrowed funds were $36,775 at September 30, 2017, a decrease of $310, or 0.8%, from year-end 2016. The decrease was due to the maturity repayment of a $3,000 advance during the third quarter of 2017.  While deposits continue to be the primary source of funding for growth in earning assets, management will continue to utilize Federal Home Loan Bank advances and promissory notes to help manage interest rate sensitivity and liquidity.

Shareholders' Equity

The Company maintains a capital level that exceeds regulatory requirements as a margin of safety for its depositors. At September 30, 2017, the Bank's capital exceeded the minimum requirements to be deemed "well capitalized" under applicable prompt corrective action regulations. Total shareholders' equity at September 30, 2017 of $109,962 increased $5,434, or 5.2%, as compared to $104,528 at December 31, 2016. Capital growth during 2017 came primarily from year-to-date net income of $6,611.

Comparison of Results of Operations

for the Three and Nine Months Ended

September 30, 2017 and 2016

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, 2017 compared to the same period in 2016. 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 third quarter of 2017, net interest income increased $1,283, or 14.3%, as compared to the third quarter of 2016. During the nine months ended September 30, 2017, net interest income also increased $4,913, or 18.7%, as compared to the nine months ended September 30, 2016. The improvement came primarily from the acquisition of Milton Bank during the third quarter of 2016, which contributed to higher interest income on acquired earning assets partially offset by interest expense on acquired interest-bearing deposits.  In total, the Company benefited from $3,495 in net interest income generated by the Milton Bank acquisition.  Further contributions to net interest income came from higher interest income on interest-bearing deposits with banks as a result of short-term rate increases.

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Total interest and fee income recognized on the Company's earning assets increased $1,493, or 15.2%, during the third quarter of 2017, which contributed to a year-to-date increase of $5,537, or 19.4%, as compared to the same periods in 2016.  While the Company generated loan growth primarily through the Milton Bank merger, there were already trends of loan origination improvement making a positive impact to loan earnings.  Warehouse lending balances are up $15,155 from a year ago at September 30, 2016.  The West Virginia market areas have been successful in generating over $18 million in loans from a year ago at September 30, 2016.  The Athens, Ohio loan production office has generated over $14 million in commercial and residential real estate loans from a year ago at September 30, 2016.  Loan growth has also been improving within the automobile segment, as well as the commercial and industrial loan segment, impacted by loan participations and loans to states and political subdivisions from a year ago. With the merger and improved loan production, the Company's loan income increased $1,404, or 15.5%, during the third quarter of 2017, which contributed to a year-to-date increase of $5,263, or 20.1%, as compared to the same periods in 2016.

During the three and nine months ended September 30, 2017, total other interest income increased $21, or 31.3%, and $140, or 41.7%, as compared to the same periods in 2016, respectively.  The increases were primarily due to higher interest revenue recorded from the Company's interest-bearing Federal Reserve clearing account.  The Company continues to utilize its Federal Reserve clearing account to manage seasonal tax refund deposits and fund earning asset growth.  This interest-bearing account carried an interest rate of 0.50% during most of 2016.  In December 2016, the Federal Reserve increased short-term rates by 25 basis points, and then again in both March and June 2017 by another 25 basis points each.  These short-term rate adjustments have increased the Federal Reserve clearing account's interest rate from 0.50% of a year ago to 1.25%.  The timing of the December 2016 and March 2017 rate adjustments benefited the Company, as it entered into the first quarter of 2017 experiencing significant levels of excess funds impacted by the large volume of ERC/ERD transactions that was maintained within the Federal Reserve clearing account.  Since the first quarter of 2017, these excess funds have been decreasing as a result of exiting the tax season, as well as funding earning asset growth.  Even though this year's Federal Reserve clearing average balance has decreased 19.4%, the interest income remains up over the prior year due to the short-term rate increases.

Total interest expense incurred on the Company's interest-bearing liabilities during the third quarter of 2017 increased $210, or 25.0%, and increased $624, or 28.2%, during the nine months ended September 30, 2017, as compared to the same periods in 2016.  The increases were primarily from the Milton Bank acquired deposits that generated more interest expense.  However, the Company's interest expense continues to be minimized by a sustained low-rate environment that has impacted the repricings of various Bank deposit products, including certain interest-bearing demand accounts.  The low-rate environment has also limited the impact of the Company's use of wholesale deposits during 2017.  As a result, there has been minimal change to the weighted average cost of the Company's core deposits, which finished at 0.26% at September 30, 2017, as compared to 0.23% at September 30, 2016. The Company continues to utilize more of its lower cost, core deposit funding sources to further reduce interest expense.  In addition, over 60% of the acquired Milton Bank deposits consisted of core deposit funding sources.  As a result, the Company's average interest- and non-interest bearing core deposits increased $79,665, or 13.7%, while the average balances of higher costing time deposits increased $23,005, or 14.3%, during the first nine months of 2017, as compared to the same period in 2016.  The minimal change in average market interest rates and the continued emphasis on utilizing lower costing deposit balances have caused the Company's total weighted average costs on interest-bearing deposits to increase by only 4 basis points from 0.42% at September 30, 2016 to 0.46% at September 30, 2017.

During 2017, the Company's net interest margin results improved over the prior year, finishing at 4.52% during the third quarter of 2017, as compared to 4.29% during the third quarter of 2016.  The net interest margin also improved to 4.50% during the first nine months of 2017, as compared to 4.34% during the first nine months of 2016.  This improvement was due to a 14.5% increase in average earning assets combined with a higher deposit mix of lower-costing core deposits and a sustained low rate environment that has helped to minimize interest expense. 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

During the third quarter of 2017, the Company experienced a decrease in provision expense of $107, or 6.3%, as compared to the third quarter of 2016. During the first nine months of 2017, the Company experienced a decrease in provision expense of $407, or 17.5%, as compared to the first nine months of 2016. The decreases in provision expense during both periods were primarily due to a $2,741 decrease in specific allocations, which was mostly due to one commercial real estate loan relationship.  As previously mentioned, the financial improvement of this commercial borrower contributed to the removal of $1,681 in specific allocations, which lowered provision expense during the first nine months of 2017.  The benefit of lower specific reserves was partially offset by a $2,355 increase in general allocations from year-end 2016.  As previously mentioned, management further evaluated the risks associated with loan loss history and loan underwriting that resulted in additional risk factors being added to the allowance for loan loss determination during the first quarter of 2017. 

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Net charge-offs increased $135 during the third quarter of 2017, and increased $868 during the first nine months of 2017, as compared to the same periods in 2016.  The year-to-date increase was largely related to charge-offs of specific reserves for which allocations had been made prior to 2017, which resulted in specific reserve charge-offs of $1,011 during the first nine months of 2017.  Due to these allocations being made prior to 2017, there was no corresponding provision expense associated with these charge-offs that impacted the current year. As a result, net charge-offs for loans without specific reserves decreased $143 during the first nine months of 2017, as compared to the same period in 2016.

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.

Noninterest Income

Noninterest income for the three months ended September 30, 2017 increased $589, or 34.8%, when compared to the three months ended September 30, 2016.  Noninterest income for the nine months ended September 30, 2017 increased $718, or 10.6%, when compared to the nine months ended September 30, 2016.The increase in quarterly noninterest revenue was largely due to the Company's earnings from tax-free bank owned life insurance ("BOLI") investments. BOLI investments are maintained by the Company in association with various benefit plans, including deferred compensation plans, director retirement plans and supplemental retirement plans. During the third quarter of 2017, the Company recorded $3,530 in anticipated cash proceeds related to four BOLI policies, which yielded net BOLI proceeds of $399 that was recorded to income. This amount contributed to the quarterly and year-to-date increase in BOLI and annuity asset income of $402 and $406, respectively, as compared to the same periods in 2016. 

Further impacting growth in noninterest income were the effects from the Milton Bank merger in the third quarter of 2016.  When compared to 2016,the Company benefited from $422 in additional noninterest income during the nine months ended September 30, 2017, impacted by the inclusion of Milton Bank's customer deposit base.  The third quarter benefit from Milton Bank was much more comparable, providing $66 in additional noninterest income when compared to 2016.  The larger deposit base contributed to year-to-date improvements in debit and credit card interchange income and service charges on deposit accounts, which increased collectively by $803, or 24.5%, during the first nine months of 2017, as compared to the same period in 2016.  The volume of transactions utilizing the Company's credit card and Jeanie Plus debit card continue to increase from a year ago, which are being impacted by cash and merchandise incentives that promote customer use of electronic payments. 

During the three months ended September 30, 2017, the Company did not record any seasonal ERC/ERD fees, as compared to $13 in fees during the same period in 2016.  This contributed to a decrease of $370, or 18.2%, in ERC/ERD fees during the nine months ended September 30, 2017, as compared to the same periods in 2016.  In the fourth quarter of 2014, the Bank entered into a new agreement with a third-party tax refund product provider, which lowered the per-item fee associated with each refund facilitated.  As a result, the lower fee structure has caused tax processing revenues to be lower than the year before. Furthermore, the Company experienced a decrease in the number of ERC/ERD transactions that were facilitated.  As a result of ERC/ERD fee activity being mostly seasonal, a minimal amount of income is expected during the remainder of 2017.

The Company's remaining noninterest income categories were collectively up by $24, or 8.7%, during the third quarter of 2017, and down by $121, or 13.5%, during the first nine months of 2017, when compared to the same periods in 2016. The year-to-date decreases were primarily due to higher losses on OREO.

Noninterest Expense

Noninterest expense during the third quarter of 2017 increased $394, or 4.5%, and increased $3,903, or 15.9%, during the nine months ended September 30, 2017, as compared to the same periods in 2016.  The acquisition of Milton Bank contributed to an increase in most of the noninterest expense categories related to having a larger organization after the merger.  A significant contributor to noninterest expense was salaries and employee benefits, which increased by $1,398, or 9.9%, during the nine months ended September 30, 2017, as compared to the same period in 2016.  Higher employee costs continue to be impacted by the addition of Milton Bank employees, as well as annual merit increases and higher health insurance costs.  However, during the three months ended September 30, 2017, salaries and employee benefits decreased $34, or 5.9%, as compared to the same period in 2016.  This was due to a $316 reduction in non-qualified defined benefit expenses associated with the restructuring of and accounting for post-retirement benefits of a former employee.

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The Company also experienced increases in data processing expense, which increased $184, or 48.4%, during the third quarter of 2017, and increased $583, or 54.5%, during the first nine months of 2017, as compared to the same periods in 2016.  Data processing charges grew as a result of higher transaction volume associated with debit and credit cards, as well as higher processing charges from the Company's Big Rewards customer incentive platform.

Other noninterest expense increased $400, or 34.8%, during the third quarter of 2017, and increased $1,734, or 53.0%, during the first nine months of 2017, as compared to the same periods in 2016.  The quarterly increase was driven by consulting expenses associated with revenue enhancement and efficiency improvement strategies.  The year-to-date increase was primarily related to fraud expense that was recorded in the second quarter of 2017.  At that time, the Company was made aware that the processing of four wire transfers associated with a single account relationship in May 2017 totaling $933 were fraudulently initiated.  After recovering a portion of the fraudulent wire costs and incurring some additional legal expense, the Company's net loss exposure at September 30, 2017 was $842.  Since the fraud event, the Company had been in contact with several insurance providers to determine whether or not existing insurance policies would cover all or part of the remaining losses.  Subsequent to the report date, the Company learned that its commercial insurance policy would cover $730 of the fraudulent wire expense.  This resulted in the collection of $730 in net insurance proceeds in October 2017, which will be recorded as a recovery during the fourth quarter of 2017.

Overhead expense was further impacted by increases in professional fees, which were up $92, or 26.9%, during the third quarter of 2017, and up $318, or 31.2%, during the first nine months of 2017, as compared to the same periods in 2016.  Both period increases were impacted by legal expense associated with the recovery efforts on loan deficiency balances.

Partially offsetting overhead expenses were lower merger related expenses, which decreased $410 during the three months ended September 30, 2017, and decreased $744 during the first nine months of 2017, as compared to the same periods in 2016.  During the first quarter of 2016, the Company executed the merger agreement with Milton Bancorp.  The merger was eventually finalized on August 5, 2016.  The Company anticipates the remaining merger related expenses in 2017 to be minimal.

The remaining noninterest expense categories increased $141, or 9.3%, during the third quarter of 2017, and increased $614, or 14.3%, during the first nine months of 2017, as compared to the same periods in 2016.  The addition of Milton Bank contributed to the increases of various noninterest expense areas that include software, building and equipment, customer incentives, and intangible asset amortization.

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.  During the quarterly and year-to-date periods ending September 30, 2017, the Company was successful in generating more net interest income primarily due to higher average earning assets while minimizing funding costs.  The Company also realized additional earnings in the third quarter from $399 in BOLI proceeds combined with a $316 reduction in benefit expenses for a former employee.  These factors have completely offset the negative effects from lower tax processing fees, large fraudulent wire expense and higher personnel costs.  This has caused the level of net revenues to outpace overhead expenses during 2017.  As a result, the Company's efficiency numbers have improved, finishing at 72.3% and 72.5% during both the quarterly and year-to-date periods ended September 30, 2017, compared to the 81.5% and 73.2% efficiency levels during the same periods in 2016.

Capital Resources

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies.  Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices.  In addition, in order for a financial holding company to continue to engage in activities permitted only for financial holding companies, it must be "well capitalized".  Capital amounts and classifications are also subject to qualitative judgments by regulators.  Failure to meet capital requirements can initiate regulatory action.  The final rules implementing Basel Committee on Banking Supervision's capital guidelines for U.S. banks (Basel III rules) became effective for the Company and the Bank on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019.   Under the final rules, minimum requirements increased for both the quantity and quality of capital held by the Company and the Bank. The rules include a new common equity tier 1 capital to risk-weighted assets ratio of 4.5% and a capital conservation buffer of 2.5% of risk-weighted assets. The capital conservation buffer began to phase in on January 1, 2016 at 0.625%, and will be phased in over a four-year period, increasing by the same amount on each subsequent January 1, until fully phased-in on January 1, 2019.  Further, Basel III rules increased the minimum ratio of tier 1 capital to risk-weighted assets increased from 4.0% to 6.0% and all banks are now subject to a 4.0% minimum leverage ratio. The required total risk-based capital ratio was unchanged. Failure to maintain the required common equity tier 1 capital conservation buffer will result in potential restrictions on a bank's ability to pay dividends, repurchase stock and/or pay discretionary compensation to its employees.

.

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Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At September 30, 2017 and year-end 2016, the Bank met the capital requirements to be deemed well capitalized under the regulatory framework for prompt corrective action.  The Company's capital also met the requirements for the Company to be deemed well capitalized

The following table summarizes the capital ratios of the Company and Bank:

	9/30/17		12/31/16		Regulatory Minimum
Common equity tier 1 risk-based capital ratio
Company		14.1%		14.0%		4.5%
Bank		14.1%		14.2%		4.5%
Tier 1 risk-based capital ratio
Company		15.3%		15.3%		6.0%
Bank		14.1%		14.2%		6.0%
Total risk-based capital ratio
Company		16.3%		16.4%		8.0%
Bank		15.1%		15.3%		8.0%
Leverage ratio
Company		11.3%		11.2%		4.0%
Bank		10.5%		10.4%		4.0%

Cash dividends paid by the Company were $2,947 during the first nine months of 2017.  The year-to-date dividends paid totaled $0.63 per share for 2017.

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 $157,036, represented 15.4% of total assets at September 30, 2017. In addition, the FHLB offers advances to the Bank, which further enhances the Bank's ability to meet liquidity demands. At September 30, 2017, the Bank could borrow an additional $146,529 from the FHLB, of which $80,000 could be used for short-term, cash management advances. Furthermore, the Bank has established a borrowing line with the Federal Reserve. At September 30, 2017, this line had total availability of $52,433. 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.

37

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 2016 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 inthose estimates and assumptions could have a significant impact on the financial statements. Management currently views the adequacy of the allowance for loan losses and business combinations to be critical accounting policies.

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

38

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.

Business combinations

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred and the amount of any noncontrolling interest in the acquiree.  Acquisition related transaction costs are expensed and included in other operational result. When a business is acquired, the Company assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.  We are required to record the assets acquired, including identified intangible assets, and the liabilities assumed at their fair value. These often involve estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques that may include estimates of attrition, inflation, asset growth rates, or other relevant factors. In addition, the determination of the useful lives over which an intangible asset will be amortized is subjective. Under FASB ASC 350 (SFAS No. 142 Goodwill and Other Intangible Assets), goodwill and indefinite-lived assets recorded must be reviewed for impairment on an annual basis, as well as on an interim basis if events or changes indicate that the asset might be impaired. An impairment loss must be recognized for any excess of carrying value over fair value of the goodwill or the indefinite-lived intangible asset.

39

 

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

The Company's goal for interest rate sensitivity management is to maintain a balance between steady net interest income growth and the risks associated with interest rate fluctuations. Interest rate risk ("IRR") is the exposure of the Company's financial condition to adverse movements in interest rates.  Accepting this risk can be an important source of profitability, but excessive levels of IRR can threaten the Company's earnings and capital.

The Company evaluates IRR through the use of an earnings simulation model to analyze net interest income sensitivity to changing interest rates.  The modeling process starts with a base case simulation, which assumes a static balance sheet and flat interest rates.  The base case scenario is compared to rising and falling interest rate scenarios assuming a parallel shift in all interest rates.  Comparisons of net interest income and net income fluctuations from the flat rate scenario illustrate the risks associated with the current balance sheet structure.

The Company's Asset/Liability Committee monitors and manages IRR within Board approved policy limits.  The current IRR policy limits anticipated changes in net interest income to an instantaneous increase or decrease in market interest rates over a 12 month horizon to +/- 5% for a 100 basis point rate shock, +/- 7.5% for a 200 basis point rate shock and +/- 10% for a 300 basis point rate shock.  Based on the level of interest rates, management did not test interest rates down 200 or 300 basis points.

The following table presents the Company's estimated net interest income sensitivity:

Change in Interest Rates         in Basis Points	September 30, 2017 Percentage Change in   Net Interest Income	December 31, 2016 Percentage Change in   Net Interest Income
+300	.93%	(.39%)
+200	.81%	(.05%)
+100	.50%	.09%
-100	(1.54%)	(1.72%)

The estimated percentage change in net interest income due to a change in interest rates was within the policy guidelines established by the Board.  With the historical low interest rate environment, management generally has been focused on limiting the duration of assets, while trying to extend the duration of our funding sources to the extent customer preferences will permit the Company to do so.  At September 30, 2017, the interest rate risk profile reflects a modest asset sensitive position, which produces higher net interest income due to an increase in interest rates.  In a declining rate environment, net interest income is impacted by the interest rate on many deposit accounts not being able to adjust downward.  With interest rates so low, deposit accounts are perceived to be at or near an interest rate floor.  As a result, net interest income decreases in a declining interest rate environment.  Overall, management is comfortable with the current interest rate risk profile which reflects minimal exposure to interest rate changes.

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 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 the end of the quarterly period covered by this Quarterly Report on Form 10‑Q.  Based on that evaluation, Ohio Valley's Chief Executive Officer and Vice President and Chief Financial Officer have concluded that Ohio Valley's disclosure controls and procedures are effective as of the end of the quarterly period covered by this Quarterly Report on Form 10‑Q 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.  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.

40

 

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, 2017, 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

Not applicable.

ITEM 1A.  RISK FACTORS

You should carefully consider the risk factors disclosed in Part I, Item 1.A. "Risk Factors" in Ohio Valley's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the Securities and Exchange Commission.  These risk factors could materially affect the Company's business, financial condition or future results.  The risk factors described in the Annual Report on Form 10-K are not the only risks facing the Company.  Additional risks and uncertainties not currently known to the Company or that management currently deems to be immaterial also may materially adversely affect the Company's business, financial condition and/or operating results.  Moreover, the Company undertakes no obligation and disclaims any intention to publish revised information or updates to forward looking statements contained in such risk factors or in any other statement made at any time by any director, officer, employee or other representative of the Company unless and until any such revisions or updates are expressly required to be disclosed by applicable securities laws or regulations.

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

Ohio Valley did not purchase any of its shares during the three months ended September 30, 2017.

Ohio Valley did not sell any unregistered equity securities during the three months ended September 30, 2017.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.  OTHER INFORMATION

Not applicable.

41

ITEM 6.  EXHIBITS

(a) Exhibits:

Exhibit Number	Exhibit Description
2(a)	Agreement and Plan of Merger between Ohio Valley Banc Corp. and Milton Bancorp, Inc. dated January 7, 2016:  Incorporated herein by reference to Exhibit 2.1 to Ohio Valley's Current Report on Form 8-K filed on January 7, 2016 (SEC File No. 0-20914).
2(b)	Amendment to Agreement and Plan of Merger by and between Ohio Valley Banc Corp. and Milton Bancorp, Inc., dated April 20, 2016: Incorporated herein by reference to Exhibit 2.1 to Ohio Valley's Current Report on Form 8-K filed on April 21, 2016 (SEC File No. 0-20914).
3(a)	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 (SEC File No. 0-20914).
3(b)	Code of Regulations of Ohio Valley (as amended by the shareholders on May 12, 2010): Incorporated herein by reference to Exhibit 3(b) to Ohio Valley's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010 (SEC File No. 0-20914).
4	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: Filed herewith. #
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. #

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

42

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 9, 2017	By:	/s/Thomas E. Wiseman
			Thomas E. Wiseman
			President and Chief Executive Officer
Date:	November 9, 2017	By:	/s/Scott W. Shockey
			Scott W. Shockey
			Senior Vice President and Chief Financial Officer

43

EX-4

EXHIBIT 4

OHIO VALLEY BANC CORP.

420 Third Avenue

Gallipolis, OH  45631

(740) 446-2631

November 9, 2017

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, 2017

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, 2017 (the "Form 10-Q"), as executed on November 9, 2017.

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

President and 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 9, 2017	By:	/s/Thomas E. Wiseman
		Thomas E. Wiseman, President and 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 9, 2017	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, 2017 (the "Report"), the undersigned Thomas E. Wiseman, President and 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
President and Chief Executive Officer	Senior Vice President and Chief Financial Officer
Dated:  November 9, 2017	Dated:  November 9, 2017

* 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, 2017	Nov. 09, 2017
Document Information [Line Items]
Entity Registrant Name	OHIO VALLEY BANC CORP
Entity Central Index Key	0000894671
Trading Symbol	ovbc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		4,692,266
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
ASSETS
Cash and noninterest-bearing deposits with banks	$ 11,610	$ 12,512
Interest-bearing deposits with banks	38,792	27,654
Total cash and cash equivalents	50,402	40,166
Certificates of deposit in financial institutions	1,820	1,670
Securities available for sale	106,545	96,490
Securities held to maturity (estimated fair value: 2017 - $18,822; 2016 - $19,171)	18,168	18,665
Restricted investments in bank stocks	7,506	7,506
Total loans	777,957	734,901
Less: Allowance for loan losses	(7,313)	(7,699)
Net loans	770,644	727,202
Premises and equipment, net	13,205	12,783
Other real estate owned	2,219	2,129
Accrued interest receivable	2,532	2,315
Goodwill	7,371	7,801
Other intangible assets, net	550	670
Bank owned life insurance and annuity assets	26,576	29,349
Other assets	12,076	7,894
Total assets	1,019,614	954,640
LIABILITIES
Noninterest-bearing deposits	233,178	209,576
Interest-bearing deposits	616,003	580,876
Total deposits	849,181	790,452
Other borrowed funds	36,775	37,085
Subordinated debentures	8,500	8,500
Accrued liabilities	15,196	14,075
Total liabilities	909,652	850,112
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 5)
SHAREHOLDERS’ EQUITY
Common stock ($1.00 stated value per share, 10,000,000 shares authorized; 2017 - 5,352,005 shares issued; 2016 - 5,325,504 shares issued)	5,352	5,326
Additional paid-in capital	47,552	46,788
Retained earnings	72,781	69,117
Accumulated other comprehensive loss	(11)	(991)
Treasury stock, at cost (659,739 shares)	(15,712)	(15,712)
Total shareholders’ equity	109,962	104,528
Total liabilities and shareholders’ equity	$ 1,019,614	$ 954,640

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Securities held to maturity, fair value	$ 18,822	$ 19,171
Common stock, stated value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	5,352,005	5,325,504
Treasury stock, shares (in shares)	659,739	659,739

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Interest and dividend income:
Loans, including fees	$ 10,489	$ 9,085	$ 31,410	$ 26,147
Securities
Taxable	535	486	1,559	1,465
Tax exempt	104	111	312	337
Dividends	101	75	287	222
Other Interest	88	67	476	336
	11,317	9,824	34,044	28,507
Interest expense:
Deposits	757	597	1,985	1,605
Other borrowed funds	228	190	673	462
Subordinated debentures	64	52	182	149
	1,049	839	2,840	2,216
Net interest income	10,268	8,985	31,204	26,291
Provision for loan losses	1,601	1,708	1,921	2,328
Net interest income after provision for loan losses	8,667	7,277	29,283	23,963
Noninterest income:
Service charges on deposit accounts	541	575	1,575	1,414
Trust fees	64	58	177	174
Income from bank owned life insurance and annuity assets	577	175	981	575
Mortgage banking income	59	44	164	162
Electronic refund check / deposit fees		13	1,667	2,037
Debit / credit card interchange income	863	653	2,506	1,864
Gain (loss) on other real estate owned	(23)	(8)	(94)
Other	201	183	531	563
	2,282	1,693	7,507	6,789
Noninterest expense:
Salaries and employee benefits	5,019	5,032	15,528	14,130
Occupancy	449	466	1,331	1,300
Furniture and equipment	269	285	787	671
Professional fees	434	342	1,338	1,020
Marketing expense	273	249	785	744
FDIC insurance	99	81	366	378
Data processing	564	380	1,652	1,069
Software	365	368	1,102	962
Foreclosed assets	158	61	425	247
Amortization of intangibles	38		120
Merger related expenses	6	416	33	777
Other	1,548	1,148	5,006	3,272
	9,222	8,828	28,473	24,570
Income before income taxes	1,727	142	8,317	6,182
Provision for income taxes	74	(216)	1,706	1,286
NET INCOME	$ 1,653	$ 358	$ 6,611	$ 4,896
Earnings per share (in dollars per share)	$ 0.35	$ 0.08	$ 1.41	$ 1.15

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net Income	$ 1,653	$ 358	$ 6,611	$ 4,896
Other comprehensive income:
Change in unrealized loss on available for sale securities	20	91	1,485	1,528
Related tax expense	(7)	(31)	(505)	(520)
Total other comprehensive income, net of tax	13	60	980	1,008
Total comprehensive income	$ 1,666	$ 418	$ 7,591	$ 5,904

XML

Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) $ in Thousands	USD ($) $ / shares
Balance at beginning of period at Dec. 31, 2015	$ 90,470
Net Income	4,896
Other comprehensive income, net of tax	1,008
Acquisition – Milton Bancorp, Inc., 523,518 shares	11,444
Common stock issued through DRIP (2017 – 11,383 shares issued)
Common stock issued to ESOP (2017 - 15,118 shares issued; 2016 - 24,572 shares issued)	575
Cash dividends	(2,605)
Balance at end of period at Sep. 30, 2016	$ 105,788
Cash dividends per share (in dollars per share) | $ / shares	$ 0.61
Balance at beginning of period at Jun. 30, 2016	$ 94,796
Net Income	358
Other comprehensive income, net of tax	60
Acquisition – Milton Bancorp, Inc., 523,518 shares	11,444
Common stock issued through DRIP (2017 – 11,383 shares issued)
Common stock issued to ESOP (2017 - 15,118 shares issued; 2016 - 24,572 shares issued)
Cash dividends	(870)
Balance at end of period at Sep. 30, 2016	$ 105,788
Cash dividends per share (in dollars per share) | $ / shares	$ 0.19
Balance at beginning of period at Dec. 31, 2016	$ 104,528
Net Income	6,611
Other comprehensive income, net of tax	980
Acquisition – Milton Bancorp, Inc., 523,518 shares
Common stock issued through DRIP (2017 – 11,383 shares issued)	362
Common stock issued to ESOP (2017 - 15,118 shares issued; 2016 - 24,572 shares issued)	428
Cash dividends	(2,947)
Balance at end of period at Sep. 30, 2017	$ 109,962
Cash dividends per share (in dollars per share) | $ / shares	$ 0.63
Balance at beginning of period at Jun. 30, 2017	$ 108,987
Net Income	1,653
Other comprehensive income, net of tax	13
Acquisition – Milton Bancorp, Inc., 523,518 shares
Common stock issued through DRIP (2017 – 11,383 shares issued)	293
Common stock issued to ESOP (2017 - 15,118 shares issued; 2016 - 24,572 shares issued)
Cash dividends	(984)
Balance at end of period at Sep. 30, 2017	$ 109,962
Cash dividends per share (in dollars per share) | $ / shares	$ 0.21

XML

Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parentheticals) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Acquisition – Milton Bancorp, Inc. (in shares)		523,518		523,518
Common stock issued through DRIP (in shares)	11,383		11,383
Common stock issued to ESOP (in shares)	15,118	24,572	15,118	24,572

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Net cash provided by operating activities:	$ 5,926	$ 9,761
Investing activities:
Net cash acquired from Milton Bancorp, Inc., acquisition		1,686
Proceeds from maturities of securities available for sale	16,358	13,818
Purchases of securities available for sale	(25,177)	(17,691)
Proceeds from maturities of securities held to maturity	846	1,218
Purchases of securities held to maturity	(389)	(3,193)
Proceeds from maturities of certificates of deposit in financial institutions	245	490
Purchases of certificates of deposit in financial institutions	(395)	(445)
Proceeds from restricted investments in bank stocks		1
Net change in loans	(46,281)	(24,186)
Proceeds from sale of other real estate owned	987	593
Purchases of premises and equipment	(1,247)	(633)
Proceeds from bank owned life insurance	3,754
Net cash used in investing activities	(51,299)	(28,342)
Financing activities:
Change in deposits	58,867	25,822
Cash dividends	(2,947)	(2,605)
Proceeds from Federal Home Loan Bank borrowings	4,785	8,202
Repayment of Federal Home Loan Bank borrowings	(4,720)	(1,450)
Change in other long-term borrowings	(343)	5,000
Change in other short-term borrowings	(33)	(33)
Net cash provided by financing activities	55,609	34,936
Change in cash and cash equivalents	10,236	16,355
Cash and cash equivalents at beginning of period	40,166	45,530
Cash and cash equivalents at end of period	50,402	61,885
Supplemental disclosure:
Cash paid for interest	2,665	2,112
Cash paid for income taxes	2,236	1,675
Transfers from loans to other real estate owned	1,337	851
Other real estate owned sales financed by The Ohio Valley Bank Company	167	316
Milton Bancorp, Inc [Member]
Supplemental disclosure:
Issuance of common stock for Milton Bancorp, Inc., acquisition		$ 11,444

XML

Note 1 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Significant Accounting Policies [Text Block]

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. (“Loan Central”), a consumer finance company, Ohio Valley Financial Services Agency, LLC (“Ohio Valley Financial Services”), an insurance agency, and OVBC Captive, Inc. (the “Captive”), a limited purpose property and casualty insurance company. The Bank has

one

wholly-owned subsidiary, Ohio Valley REO, LLC (“Ohio Valley REO”), an Ohio limited liability company, to which the Bank transfers certain real estate acquired by the Bank through foreclosure for sale by Ohio Valley REO. Ohio Valley and its subsidiaries are collectively referred to as the “Company”. 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, 2017,

and its results of operations and cash flows for the periods presented. The results of operations for the

nine

months ended

September 30, 2017

are

not

necessarily indicative of the operating results to be anticipated for the full fiscal year ending

December 31, 2017.

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, 2016

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

The consolidated financial

statements for

2016

have been reclassified to conform to the presentation for

2017.

These reclassifications had

no

effect on the net income or shareholders’ equity.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:

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

INDUSTRY SEGMENT INFORMATION:

Internal financial information is primarily reported and aggregated in

two

lines of business, banking and consumer finance.

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

4,688,284

and

4,466,601

for the

three

months ended

September 30, 2017

and

2016,

respectively. The weighted average common shares outstanding were

4,680,846

and

4,117,675

for the

nine

months ended

September 30, 2017

and

2016,

respectively. Ohio Valley had

no

dilutive effect and

no

potential common shares issuable under stock options or other agreements for any period presented.

NEW ACCOUNTING PRONOUNCEMENTS:

In

May 2014,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2014

-

09,

“Revenue from Contracts with Customers (Topic

606

)”. The ASU creates a new topic, Topic

606,

to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after

December 15, 2017,

with early adoption permitted on

January 1, 2017.

Management is currently evaluating the impact of this update on its consolidated financial statements and related disclosures, however, adoption by the Company is

not

expected to have a material impact. The Company’s primary sources of revenues are derived from interest and dividends earned on loans, investment securities and other financial instruments that are

not

within the scope of ASU

2014

-

09.

In

January 2016,

the FASB issued ASU

No.

2016

-

01,

“Recognition and Measurement of Financial Assets and Financial Liabilities”. The update provides updated accounting and reporting requirements for both public and non-public entities. The most significant provisions that will impact the Company are:

1

) equity securities available for sale will be measured at fair value, with the changes in fair value recognized in the income statement;

2

) eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments at amortized cost on the balance sheet;

3

) utilization of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and

4

) require separate presentation of both financial assets and liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements. The update will be effective for interim and annual periods beginning after

December 15, 2017,

using a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption. Early adoption is

not

permitted. Management is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In

February 2016,

the FASB issued an update (ASU

2016

-

02,

Leases) which will require lessees to record most leases on their balance sheet

s and recognize leasing expenses in the income statement. Operating leases, except for short-term leases that are subject to an accounting policy election, will be recorded on the balance sheet for lessees by establishing a lease liability and corresponding right-of-use asset. The guidance in this ASU will become effective for interim and annual reporting periods beginning after

December 15, 2018,

with early adoption permitted. Management is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In

June 2016,

the FASB issued ASU

No.

2016

-

13,

“Financial Instruments

 - Credit Losses”. ASU

2016

-

13

requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” 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. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after

December 15, 2019.

Early adoption is permitted, for annual periods and interim periods within those annual periods, beginning after

December 15, 2018.

Management is currently in the developmental stages, collecting available historical information, in order to assess the expected credit losses. However, the impact to the financial statements are still yet to be determined.

In

August 2016,

FASB issued

an update (ASU

2016

-

15,

“Statement of Cash Flows”) (Topic

230

), which addresses

eight

specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this update apply to all entities, including business entities and

not

-for-profit entities that are required to present a statement of cash flows, and are effective for public business entities for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. Adoption by the Company is

not

expected to have a material impact on the consolidated financial statements and related disclosures.

In

January 2017,

the FASB issued an update (ASU

2017

-

04,

Intangibles

– Goodwill and Other) which is intended to simplify the measurement of goodwill in periods following the date on which the goodwill is initially recorded. Under the amendments in this update, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the loss recognized should

not

exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. A public business entity that is a U.S. Securities and Exchange Commission filer should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after

December 15, 2019.

Adoption by the Company is

not

expected to have a material impact on the consolidated financial statements and related disclosures.

XML

Note 2 - Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Fair Value Disclosures [Text Block]

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. 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. 

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 that typically approximate

10%.

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, 2017 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		----	$	13,579		----
Agency mortgage-backed securities, residential		----		92,966		----

	Fair Value Measurements at December 31, 2016 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		----	$	10,544		----
Agency mortgage-backed securities, residential		----		85,946		----

There were

no

transfers between Level

1

and Level

2

during

201

7

or

2016.

Assets

and Liabilities

Measured on a Nonrecurring Basis

Assets and

liabilities measured at fair value on a nonrecurring basis are summarized below:

	Fair Value Measurements at September 30, 2017, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Residential real estate		----		----	$	94
Commercial real estate:
Nonowner-occupied		----		----		2,602
Other real estate owned:
Commercial real estate:
Construction		----		----		754

	Fair Value Measurements at December 31, 2016, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans :
Commercial real estate :
Owner-occupied		----		----	$	3,536
Nonowner-occupied		----		----		1,985
Commercial and industrial		----		----		298
Other real estate owned :
Commercial real estate :
Construction		----		----		754

At

September 30, 2017,

the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled

$2,838,

with a corresponding valuation allowance of

$142.

This resulted in an increase of

$142

to provision expense during the

three

and

nine

months ended

September 30, 2017,

with

no

additional charge-offs recognized. This is compared to an increase of

$819

in provision expense during the

three

months ended

September 30, 2016,

and an increase of

$2,477

in provision expense during the

nine

months ended

September 30, 2016,

with

no

additional charge-offs recognized. At

December 31, 2016,

the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled

$8,732,

with a corresponding valuation allowance of

$2,913,

resulting in an increase of

$2,509

in provision expense during the year ended

December 31, 2016,

with

no

additional charge-offs recognized.

Other real estate owned that was measured at fair value less costs to sell at

September 30, 2017

and

December 31, 2016

had a net carrying amount of

$754

,

which is made up of the outstanding balance of

$2,217

,

net of a valuation allowance of

$1,463

.

There were

no

corresponding write downs during the

three

and

nine

months ended

September 30, 2017

and

2016.

The following table presents quantitative information about

Level

3

fair value measurements for financial instruments measured at fair value on a non-recurring basis at

September 30, 2017

and

December 31, 2016:

September 30, 2017	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range			(Weighted Average)
Impaired loans:
Residential real estate	$	94	Sales approach	Adjustment to comparables		10%			10%
Commercial real estate:
Nonowner-occupied		2,602	Sales approach	Adjustment to comparables	0%	to	250%		51.4%
			Income approach	Capitalization Rate		8%			8%
Other real estate owned:
Commercial real estate:
Construction		754	Sales approach	Adjustment to comparables	0%	to	30%		11.7%

December 31, 2016	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range			(Weighted Average)
Impaired loans:
Commercial real estate:
Owner-occupied	$	3,536	Sales approach	Adjustment to comparables	0%	to	65%		13.7%
			Cost approach	Adjustment to comparables	0%	to	29.5%		14.8%
Nonowner-occupied		1,985	Sales approach	Adjustment to comparables	0%	to	250%		58.6%
Commercial and industrial		298	Sales approach	Adjustment to comparables	0.9%	to	9.7%		5.2%
Other real estate owned:
Commercial real estate:
Construction		754	Sales approach	Adjustment to comparables	0%	to	30%		11.7%

The carrying amounts and estimated fair values of financial instruments at

September 30, 2017

and

December 

31,

2016

are as follows:

			Fair Value Measurements at September 30, 2017 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	50,402	$	50,402	$	----	$	----	$	50,402
Certificates of deposit in financial institutions		1,820		----		1,820		----		1,820
Securities available for sale		106,545		----		106,545		----		106,545
Securities held to maturity		18,168		----		9,586		9,236		18,822
Restricted investments in bank stocks		7,506		N/A		N/A		N/A		N/A
Loans, net		770,644		----		----		772,063		772,063
Accrued interest receivable		2,532		----		394		2,138		2,532
Financial liabilities:
Deposits		849,181		233,178		616,081		----		849,259
Other borrowed funds		36,775		----		36,070		----		36,070
Subordinated debentures		8,500		----		6,377		----		6,377
Accrued interest payable		690		3		687		----		690

			Fair Value Measurements at December 31, 201 6 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	40,166	$	40,166	$	----	$	----	$	40,166
Certificates of deposit in financial institutions		1,670		----		1,670		----		1,670
Securities available for sale		96,490		----		96,490		----		96,490
Securities held to maturity		18,665		----		9,541		9,630		19,171
Restricted investments in bank stocks		7,506		N/A		N/A		N/A		N/A
Loans, net		727,202		----		----		727,079		727,079
Accrued interest receivable		2,315		----		224		2,091		2,315
Financial liabilities:
Deposits		790,452		209,576		581,340		----		790,916
Other borrowed funds		37,085		----		35,948		----		35,948
Subordinated debentures		8,500		----		5,821		----		5,821
Accrued interest payable		513		4		509		----		513

The methods and assumptions,

not

previously presented, used to estimate fair values are described as follows:

Cash and Cash Equivalents

: The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level

1.

Certificates of

Deposit

in Financial Institutions

: The carrying amounts of certificates of deposit in financial institutions approximate fair values and are classified as Level

2.

Securities Held to Maturity:

  The fair values for securities held to maturity are determined in the same manner as securities held for sale and discussed earlier in this note.  Level

3

securities consist of nonrated municipal bonds and tax credit (“QZAB”) bonds.

Restricted Investments in Bank Stocks

: It is

not

practical to determine the fair value of Federal Home Loan Bank, Federal Reserve Bank and United Bankers Bank stock due to restrictions placed on their transferability.

Loans

: Fair values of loans are estimated as follows:  The fair value of fixed rate loans is estimated by discounting future cash flows using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level

3

classification.  For variable rate loans that reprice frequently and with

no

significant change in credit risk, fair values are based on carrying values resulting in a Level

3

classification.  Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do

not

necessarily represent an exit price.

Deposit

s

: The fair values disclosed for noninterest-bearing deposits are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level

1

classification. The carrying amounts of variable rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date resulting in a Level

2

classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level

2

classification.

Other Borrowed Funds

: The carrying values of the Company’s short-term borrowings, generally maturing within

ninety

days, approximate their fair values resulting in a Level

2

classification. The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level

2

classification.

Subordinated Debentures

: The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level

2

classification.

Accrued Interest Receivable and Payable

: The carrying amount of accrued interest approximates fair value

, resulting in a classification that is consistent with the earning assets and interest-bearing liabilities with which it is associated.

Off-balance Sheet Instruments

:  Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is

not

material.

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

Note 3 - Securities

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

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, 2017

and

December 31, 2016

and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses:

Securities Available for Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2017
U.S. Government sponsored entity securities	$	13,627	$	----	$	(48	)	$	13,579
Agency mortgage-backed securities, residential		92,935		653		(622	)		92,966
Total securities	$	106,562	$	653	$	(670	)	$	106,545
December 31, 201 6
U.S. Government sponsored entity securities	$	10,624	$	----	$	(80	)	$	10,544
Agency mortgage-backed securities, residential		87,367		495		(1,916	)		85,946
Total securities	$	97,991	$	495	$	(1,996	)	$	96,490

Securities Held to Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Estimated Fair Value
September 30, 2017
Obligations of states and political subdivisions	$	18,164	$	694	$	(40	)	$	18,818
Agency mortgage-backed securities, residential		4		----		----			4
Total securities	$	18,168	$	694	$	(40	)	$	18,822
December 31, 201 6
Obligations of states and political subdivisions	$	18,661	$	654	$	(148	)	$	19,167
Agency mortgage-backed securities, residential		4		----		----			4
Total securities	$	18,665	$	654	$	(148	)	$	19,171

The amortized cost and estimated fair value of

debt securities at

September 30, 2017,

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	$	4,602	$	4,593	$	89	$	89
Due in over one to five years		6,025		5,996		6,764		7,000
Due in over five to ten years		3,000		2,990		8,055		8,482
Due after ten years		----		----		3,256		3,247
Agency mortgage-backed securities, residential		92,935		92,966		4		4
Total debt securities	$	106,562	$	106,545	$	18,168	$	18,822

The following table summarizes securities with unrealized losses at

September 30, 2017

and

December 31, 2016,

aggregated by major security type and length of time in a continuous unrealized loss position:

September 3 0 , 2017	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 sponsored entity securities	$	10,987	$	(24	)	$	2,592	$	(24	)	$	13,579	$	(48	)
Agency mortgage-backed securities, residential		42,408		(355	)		10,231		(267	)		52,639		(622	)
Total available for sale	$	53,395	$	(379	)	$	12,823	$	(291	)	$	66,218	$	(670	)

	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	$	325	$	(2	)	$	1,173	$	(38	)	$	1,498	$	(40	)
Total held to maturity	$	325	$	(2	)	$	1,173	$	(38	)	$	1,498	$	(40	)

December 31, 2016	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 sponsored entity securities	$	10,544	$	(80	)	$	----	$	----	$	10,544	$	(80	)
Agency mortgage-backed securities, residential		64,043		(1,916	)		----		----		64,043		(1,916	)
Total available for sale	$	74,587	$	(1,996	)	$	----	$	----	$	74,587	$	(1,996	)

	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	$	3,813	$	(148	)	$	----	$	----	$	3,813	$	(148	)
Total held to maturity	$	3,813	$	(148	)	$	----	$	----	$	3,813	$	(148	)

There were

no

sales of investment securities during the

three

and

nine

months ended

September 30, 2017

and

2016.

Unrealized losses on the Company’s debt securities have

not

been recognized into income because the issuers’ securities are of high credit quality as of

September 30, 2017,

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, 2017

and

December 31, 2016

represents an other-than-temporary impairment.

XML

Note 4 - Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

N

OTE

4

–

LOANS

AND ALLOWANCE FOR LOAN LOSSES

Loans are comprised of the following:	September 30,			December 31,
	201 7			201 6
Residential real estate	$	318,244		$	286,022
Commercial real estate:
Owner-occupied		72,525			77,605
Nonowner-occupied		99,966			90,532
Construction		42,352			45,870
Commercial and industrial		103,550			100,589
Consumer:
Automobile		67,999			59,772
Home equity		21,287			20,861
Other		52,034			53,650
		777,957			734,901
Less: Allowance for loan losses		(7,313	)		(7,699	)
Loans, net	$	770,644		$	727,202

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

three

months ended

September 30, 2017

and

2016:

September 30, 2017	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,300		$	2,813		$	932		$	1,907		$	6,952
Provision for loan losses		493			540			238			330			1,601
Loans charged off		(445	)		(434	)		(202	)		(420	)		(1,501	)
Recoveries		83			41			4			133			261
Total ending allowance balance	$	1,431		$	2,960		$	972		$	1,950		$	7,313

September 30, 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	906		$	3,464		$	1,416		$	1,148		$	6,934
Provision for loan losses		228			802			149			529			1,708
Loans charged-off		(151	)		(11	)		(587	)		(704	)		(1,453	)
Recoveries		30			19			1			298			348
Total ending allowance balance	$	1,013		$	4,274		$	979		$	1,271		$	7,537

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

nine

months ended

September 30, 2017

and

2016:

September 30, 2017	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	939		$	4,315		$	907		$	1,538		$	7,699
Provision for loan losses		870			(636	)		588			1,099			1,921
Loans charged off		(591	)		(1,046	)		(605	)		(1,125	)		(3,367	)
Recoveries		213			327			82			438			1,060
Total ending allowance balance	$	1,431		$	2,960		$	972		$	1,950		$	7,313

September 30 , 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,087		$	1,959		$	2,589		$	1,013		$	6,648
Provision for loan losses		10			2,264			(1,035	)		1,089			2,328
Loans charged-off		(322	)		(63	)		(587	)		(1,540	)		(2,512	)
Recoveries		238			114			12			709			1,073
Total ending allowance balance	$	1,013		$	4,274		$	979		$	1,271		$	7,537

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, 2017

and

December 31, 2016:

September 30, 2017	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	$	127	$	111	$	----	$	2	$	240
Collectively evaluated for impairment		1,304		2,849		972		1,948		7,073
Total ending allowance balance	$	1,431	$	2,960	$	972	$	1,950	$	7,313
Loans:
Loans individually evaluated for impairment	$	1,153	$	6,798	$	9,522	$	208	$	17,681
Loans collectively evaluated for impairment		317,091		208,045		94,028		141,112		760,276
Total ending loans balance	$	318,244	$	214,843	$	103,550	$	141,320	$	777,957

December 31, 201 6	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	$	----	$	2,535	$	241	$	205	$	2,981
Collectively evaluated for impairment		939		1,780		666		1,333		4,718
Total ending allowance balance	$	939	$	4,315	$	907	$	1,538	$	7,699
Loans:
Loans individually evaluated for impairment	$	717	$	13,111	$	8,465	$	416	$	22,709
Loans collectively evaluated for impairment		285,305		200,896		92,124		133,867		712,192
Total ending loans balance	$	286,022	$	214,007	$	100,589	$	134,283	$	734,901

The following tables present information related to loans individually evaluated for impairment by class of loans as of

September 30, 2017

and

December 31, 2016:

September 30, 2017	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Residential real estate
Commercial real estate:	$	224	$	221	$	127
Nonowner-occupied		604		530		111
Consumer:
Home equity		208		208		2
With no related allowance recorded:
Residential real estate		932		932		----
Commercial real estate:
Owner-occupied		2,563		2,563		----
Nonowner-occupied		4,995		3,548		----
Construction		635		157		----
Commercial and industrial		9,522		9,522		----
Total	$	19,683	$	17,681	$	240

December 31, 201 6	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	5,477	$	5,477	$	2,435
Nonowner-occupied		384		384		100
Commercial and industrial		392		392		241
Consumer:
Home equity		416		416		205
With no related allowance recorded:
Residential real estate		717		717		----
Commercial real estate:
Owner-occupied		3,638		3,091		----
Nonowner-occupied		5,078		3,632		----
Construction		1,001		527		----
Commercial and industrial		8,073		8,073		----
Total	$	25,176	$	22,709	$	2,981

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, 2017

and

2016:

	Three months ended September 30, 2017						Nine months ended September 30, 2017
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Residential real estate	$	221	$	7	$	7	$	55	$	7	$	7
Commercial real estate:
Nonowner-occupied		563		3		3		584		12		12
Consumer:
Home equity		208		1		1		210		5		5
With no related allowance recorded:
Residential real estate		935		10		10		824		37		37
Commercial real estate:
Owner-occupied		2,409		37		37		2,407		112		112
Nonowner-occupied		3,552		19		19		3,518		57		57
Construction		157		5		5		170		14		14
Commercial and industrial		9,260		135		135		8,776		358		358
Total	$	17,305	$	217	$	217	$	16,544	$	602	$	602

	Three months ended September 30, 2016						Nine months ended September 30, 2016
	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:
Owner-occupied	$	5,427	$	94	$	94	$	2,815	$	241	$	241
Nonowner-occupied		389		5		5		392		15		15
Commercial and industrial		391		----		----		391		----		----
Consumer:
Home equity		217		1		1		218		5		5
With no related allowance recorded:
Residential real estate		725		4		4		728		20		20
Commercial real estate:
Owner-occupied		2,797		37		37		2,879		120		120
Nonowner-occupied		3,680		33		33		3,557		75		75
Construction		363		11		11		521		108		108
Commercial and industrial		8,575		103		103		8,234		290		290
Total	$	22,564	$	288	$	288	$	19,735	$	874	$	874

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

Nonaccrual loans and loans past due

90

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

The Company transfers loans to other real estate owned, at fair value less cost to sell, in the period the Company obtains physical possession of the property (through legal title or through a deed in lieu). As of

September 30, 2017

and

December 31, 2016,

other real estate owned secured by residential real estate totaled

$384

and

$938,

respectively. In addition, nonaccrual residential mortgage loans that are in the process of foreclosure had a recorded investment of

$1,979

and

$1,492

as of

September 30, 2017

and

December 31, 2016,

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, 2017

and

December 31, 2016:

September 30, 2017	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	316	$	4,452
Commercial real estate:
Owner-occupied		----		308
Nonowner-occupied		21		2,624
Construction		----		402
Commercial and industrial		15		345
Consumer:
Automobile		90		75
Home equity		390		35
Other		136		110
Total	$	968	$	8,351

December 31, 201 6	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	132	$	3,445
Commercial real estate:
Owner-occupied		28		1,571
Nonowner-occupied		----		2,506
Construction		----		527
Commercial and industrial		----		867
Consumer:
Automobile		121		5
Home equity		----		34
Other		46		6
Total	$	327	$	8,961

The following table presents the aging of the

recorded investment of past due loans by class of loans as of

September 30, 2017

and

December 31, 2016:

September 30, 2017	30-59 Days Past D ue		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	5,498	$	1,697	$	1,172	$	8,367	$	309,877	$	318,244
Commercial real estate:
Owner-occupied		198		282		142		622		71,903		72,525
Nonowner-occupied		358		----		2,645		3,003		96,963		99,966
Construction		----		----		231		231		42,121		42,352
Commercial and industrial		440		42		250		732		102,818		103,550
Consumer:
Automobile		982		206		112		1,300		66,699		67,999
Home equity		25		70		390		485		20,802		21,287
Other		609		243		137		989		51,045		52,034
Total	$	8,110	$	2,540	$	5,079	$	15,729	$	762,228	$	777,957

December 31, 201 6	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	$	3,728	$	953	$	2,201	$	6,882	$	279,140	$	286,022
Commercial real estate:
Owner-occupied		134		366		1,325		1,825		75,780		77,605
Nonowner-occupied		261		18		2,506		2,785		87,747		90,532
Construction		66		52		182		300		45,570		45,870
Commercial and industrial		1,283		483		800		2,566		98,023		100,589
Consumer:
Automobile		1,091		221		126		1,438		58,334		59,772
Home equity		349		45		----		394		20,467		20,861
Other		685		155		46		886		52,764		53,650
Total	$	7,597	$	2,293	$	7,186	$	17,076	$	717,825	$	734,901

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 TDR’s 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 TDR

’s 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, 2017

and

December 31, 2016:

September 30, 2017	TDR ’s Performing to Modified Terms		TDR ’s Not Perform ing to Modified Terms		Total TDR ’s
Residential real estate :
Interest only payments	$	702	$	----	$	702
Maturity extension at lower stated rate than market rate		230				230
Commercial real estate:
Owner-occupied
Interest only payments		94		----		94
Reduction of principal and interest payments		560		----		560
Maturity extension at lower stated rate than market rate		1,497		----		1,497
Credit extension at lower stated rate than market rate		412		----		412
Nonowner-occupied
Interest only payments		560		2,115		2,675
Rate reduction		375		----		375
Credit extension at lower stated rate than market rate		570		----		570
Commercial and industrial :
Interest only payments		8,752		----		8,752
Maturity extension at lower stated rate than market rate		770		----		770
Consumer:
Home equity
Maturity extension at lower stated rate than market rate		----		208		208
Total TDR ’s	$	14,522	$	2,323	$	16,845

December 31, 201 6	TDR ’s Performing to Modified Terms		TDR ’s Not Performing to Modified Terms		Total TDR ’s
Residential real estate :
Interest only payments	$	717	$	----	$	717
Commercial real estate:
Owner-occupied
Interest only payments		284		----		284
Rate reduction		----		232		232
Reduction of principal and interest payments		579		----		579
Maturity extension at lower stated rate than market rate		1,582		----		1,582
Nonowner-occupied
Interest only payments		600		2,210		2,810
Rate reduction		384		----		384
Credit extension at lower stated rate than market rate		574		----		574
Commercial and industrial :
Interest only payments		8,074		----		8,074
Credit extension at lower stated rate than market rate		----		391		391
Consumer:
Home equity
Maturity extension at lower stated rate than market rate		213		----		213
Credit extension at lower stated rate than market rate		203		----		203
Total TDR ’s	$	13,210	$	2,833	$	16,043

During the

three

months ended

September 30, 2017,

the TDR's described above increased the provision expense and the allowance for loan losses by

$93,

with corresponding charge-offs of

$78.

During the

nine

months ended

September 30, 2017,

the TDR's described above decreased the provision expense and the allowance for loan losses by

$42,

with corresponding charge-offs of

$391.

There was an increase of

$14

in the provision expense and the allowance for loan losses during the

three

months ended

September 30, 2016,

with corresponding charge-offs of

$11,

and a decrease of

$1,105

in the provision expense and the allowance for loan losses during the

nine

months ended

September 30, 2016,

with corresponding charge-offs of

$11.

During the year ended

December 31, 2016,

the TDR's described above decreased the allowance for loan losses and provision expense by

$1,112

with corresponding charge-offs of

$11.

At

September 30, 2017,

the balance in TDR loans increased

$802,

or

5.0%,

from year-end

2016.

The Company had

86%

of its TDR's performing according to their modified terms at

September 30, 2017,

compared to

82%

at

December 31, 2016.

The Company's specific allocations in reserves to customers whose loan terms have been modified in TDR’s totaled

$113

at

September 30, 2017,

compared to

$546

in reserves at

December 31, 2016.

At

September 30, 2017,

the Company had

$1,747

in commitments to lend additional amounts to customers with outstanding loans that are classified as TDR’s, compared to

$2,427

at

December 31, 2016.

There were

no

TDR loan modifications

or defaults during the

three

months ended

September 30, 2016.

The following table presents the pre- and post-modification balances of TDR loan modifications by class of loans that occurred during the

three

months ended

September 30, 2017:

			TDR ’s Performing to Modified Terms				TDR ’s Not Performing to Modified Terms
Three months ended September 30, 2017	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial real estate:
Owner-occupied
Credit extension at lower stated rate than m arket rate		1		412		412	$	----	$	----
Total TDR ’s		1	$	412	$	412	$	----	$	----

The following table presents the pre- and post-modification balances of TDR loan modifications by class of loans that

occurred during the

nine

months ended

September 30, 2017

and

2016:

			TDR ’s Performing to Modified Terms				TDR ’s Not Performing to Modified Terms
Nine months ended September 30, 2017	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Residential real estate		1	$	231	$	231	$	----	$	----
Maturity extension at lower stated rate than market rate
Commercial real estate:
Owner-occupied
Credit extension at lower stated rate than market rate		1		412		412		----		----
Commercial and industrial		2		770		770		----		----
Total TDR ’s		4	$	1,413	$	1,413	$	----	$	----

			TDR ’s Performing to Modified Terms				TDR ’s Not Performing to Modified Terms
Nine months ended September 30, 2016	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial real estate:
Nonowner-occupied
Interest only payments		1	$	----	$	----	$	226	$	226
Credit extension at lower stated rate than m arket rate		1		574		574		----		----
Total TDR ’s		2	$	574	$	574	$	226	$	226

All of the Company

’s loans that were restructured during the

nine

months ended

September 30, 2017

were performing in accordance with their modified terms and have

not

experienced any payment defaults within

twelve

months following their loan modification. The Company’s loans that were restructured during the

nine

months ended

September 30, 2016

included a loan for

$226

that experienced a payment default within

twelve

months following the loan modification and is

not

performing in accordance with the modified loan terms as of

September 30, 2017.

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 principal and interest amounts contractually due are brought current and future payments are reasonably assured. The loans modified during the

nine

months ended

September 30, 2017

had

no

impact on the provision expense or the allowance for loan losses. As of

September 30, 2017,

the Company had

no

allocation of reserves to customers whose loan terms were modified during the

first

nine

months of

2017.

The loans modified during the

nine

months ended

September 30, 2016

increased the provision expense and the allowance for loan losses by

$11.

As of

September 30, 2016,

the Company had

no

allocation of reserves to customers whose loan terms were modified during the

first

nine

months of

2016.

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

10.

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

1

1.

The Company’s risk categories are reviewed at least annually on loans that have aggregate borrowing amounts that meet or exceed

$500.

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 troubled debt restructuring 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 loan grade

8

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 which

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, 2017

and

December 31, 2016,

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

September 30, 2017	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	63,913	$	955	$	7,657	$	72,525
Nonowner-occupied		93,831		2,223		3,912		99,966
Construction		41,936		----		416		42,352
Commercial and industrial		96,614		1,350		5,586		103,550
Total	$	296,294	$	4,528	$	17,571	$	318,393

December 31, 2016	Pass		C riticized		Classified		Total
Commercial real estate:
Owner-occupied	$	66,495	$	428	$	10,682	$	77,605
Nonowner-occupied		83,103		2,364		5,065		90,532
Construction		45,325		----		545		45,870
Commercial and industrial		94,091		188		6,310		100,589
Total	$	289,014	$	2,980	$	22,602	$	314,596

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, t

he 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, 2017

and

December 31, 2016:

September 30, 2017	Consumer
	Automobile		Home Equity		Other		Residential Real Estate		Total
Performing	$	67,834	$	20,862	$	51,788	$	313,476	$	453,960
Nonperforming		165		425		246		4,768		5,604
Total	$	67,999	$	21,287	$	52,034	$	318,244	$	459,564

December 31, 201 6	Consumer
	Automobile		Home Equity		Other		Residential Real Estate		Total
Performing	$	59,646	$	20,827	$	53,598	$	282,445	$	416,516
Nonperforming		126		34		52		3,577		3,789
Total	$	59,772	$	20,861	$	53,650	$	286,022	$	420,305

The Company, through its subsidiaries,

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

4.92%

of total loans were unsecured at

September 30, 2017,

down from

5.61%

at

December 31, 2016.

XML

Note 5 - Financial Instruments With Off-balance Sheet Risk

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

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, 2017,

the contract amounts of these instruments totaled approximately

$73,460,

compared to

$67,191

at

December 31, 2016.

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

Note 6 - Other Borrowed Funds

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Federal Home Loan Bank Advances, Disclosure [Text Block]

NOTE

6

- OTHER BORROWED FUNDS

Other borrowed funds at

September 30, 2017

and

December 31, 2016

are comprised of advances from the Federal Home Loan Bank (“FHLB”) of Cincinnati and promissory notes. At

September 30, 2017

and

December 31, 2016,

FHLB Borrowings included

$48

and

$73

in capitalized lease obligations, respectively.

	FHLB Borrowings		Promissory Notes		Totals
September 30, 2017	$	29,235	$	7,540	$	36,775
December 31, 20 16	$	29,203	$	7,882	$	37,085

Pursuant to collateral agreements with the FHLB, advances

were secured by

$305,490

in qualifying mortgage loans,

$75,032

in commercial loans and

$5,365

in FHLB stock at

September 30, 2017.

Fixed-rate FHLB advances of

$29,195

mature through

2042

and have interest rates ranging from

1.53%

to

3.31%

and a year-to-date weighted average cost of

2.14%.

There were

no

variable-rate FHLB borrowings at

September 30, 2017.

At

September 30, 2017,

the Company had a cash management line of credit enabling it to borrow up to

$80,000

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

$80,000

available on this line of credit at

September 30, 2017.

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

$221,723

at

September 30, 2017.

Of this maximum borrowing capacity, the Company had

$146,529

available to use as additional borrowings, of which

$80,000

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

August 1, 2026,

and have fixed rates ranging from

1.25%

to

4.09%

through

August 1, 2021

and a year-to-date weighted average cost of

2.77%

at Septe

mber

30,

2017,

as compared to

2.34%

at

December 31, 2016.  

Promissory notes payable by Ohio Valley to related parties totaled

$360

at

September 30, 2017

and

December 31, 2016. 

Promissory notes payable to other banks totaled

$3,556

at

September 30, 2017,

as compared to

$3,899

at

December 31, 2016.

Letters of credit issued on the Bank's behalf by the FHLB to collateralize certain public unit deposits as required

by law totaled

$46,000

at

September 30, 2017

and

$45,000

at

December 31, 2016.

Scheduled principal payments as of

September 30, 2017:

	FHLB Borrowings		Promissory Notes		Totals
20 17	$	973	$	964	$	1,937
201 8		2,891		2,261		5,152
2 019		2,724		1,852		4,576
2 020		2,541		519		3,060
20 21		2,240		541		2,781
Thereafter		17,866		1,403		19,269
	$	29,235	$	7,540	$	36,775

XML

Note 7 - Segment Information

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

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

92.2%

and

90.9%

of total consolidated revenues for the quarters ended

September 30, 2017

and

2016,

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, 2017
	Banking		Consumer Finance			Total Company
Net interest income	$	9,681	$	587		$	10,268
Provision expense		1,615		(14	)		1,601
Noninterest income		2,224		58			2,282
Noninterest expense		8,579		643			9,222
Tax expense		69		5			74
Net income		1,642		11			1,653
Assets		1,008,078		11,536			1,019,614

	Three Months Ended September 30, 2016
	Banking			Consumer Finance			Total Company
Net interest income	$	8,396		$	589		$	8,985
Provision expense		1,675			33			1,708
Noninterest income		1,655			38			1,693
Noninterest expense		8,167			661			8,828
Tax expense		(193	)		(23	)		(216	)
Net income		402			(44	)		358
Assets		957,889			12,341			970,230

	Nine Months Ended September 30, 2017
	Banking		Consumer Finance		Total Company
Net interest income	$	28,558	$	2,646	$	31,204
Provision expense		1,815		106		1,921
Noninterest income		6,965		542		7,507
Noninterest expense		26,477		1,996		28,473
Tax expense		1,338		368		1,706
Net income		5,893		718		6,611
Assets		1,008,078		11,536		1,019,614

	Nine Months Ended September 30, 2016
	Banking		Consumer Finance		Total Company
Net interest income	$	23,684	$	2,607	$	26,291
Provision expense		2,180		148		2,328
Noninterest income		6,220		569		6,789
Noninterest expense		22,460		2,110		24,570
Tax expense		975		311		1,286
Net income		4,289		607		4,896
Assets		957,889		12,341		970,230

XML

Note 8 - Subsequent Events

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE

8

– SUBSEQUENT EVENTS

On

October 6, 2017,

the Company received

$730

in insurance proceeds for the reimbursement of fraudulent wire transactions.

  The losses were

first

recorded on

May 9, 2017,

when the Company was made aware that

four

wire transfers it had processed in

May 2017

totaling

$933

were fraudulently initiated. During the

second

quarter of

2017,

the Company had recovered

$103

of the losses.  The insurance proceeds will be recorded as a recovery in the

fourth

quarter of

2017

and will generate a

$730

increase to pre-tax earnings on a consolidated basis.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

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. (“Loan Central”), a consumer finance company, Ohio Valley Financial Services Agency, LLC (“Ohio Valley Financial Services”), an insurance agency, and OVBC Captive, Inc. (the “Captive”), a limited purpose property and casualty insurance company. The Bank has

one

wholly-owned subsidiary, Ohio Valley REO, LLC (“Ohio Valley REO”), an Ohio limited liability company, to which the Bank transfers certain real estate acquired by the Bank through foreclosure for sale by Ohio Valley REO. Ohio Valley and its subsidiaries are collectively referred to as the “Company”. 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, 2017,

and its results of operations and cash flows for the periods presented. The results of operations for the

nine

months ended

September 30, 2017

are

not

necessarily indicative of the operating results to be anticipated for the full fiscal year ending

December 31, 2017.

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, 2016

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

The consolidated financial

statements for

2016

have been reclassified to conform to the presentation for

2017.

These reclassifications had

no

effect on the net income or shareholders’ equity.

Use of Estimates, Policy [Policy Text Block]

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.

Segment Reporting, Policy [Policy Text Block]

INDUSTRY SEGMENT INFORMATION:

Internal financial information is primarily reported and aggregated in

two

lines of business, banking and consumer finance.

Earnings Per Share, Policy [Policy Text Block]

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

4,688,284

and

4,466,601

for the

three

months ended

September 30, 2017

and

2016,

respectively. The weighted average common shares outstanding were

4,680,846

and

4,117,675

for the

nine

months ended

September 30, 2017

and

2016,

respectively. Ohio Valley had

no

dilutive effect and

no

potential common shares issuable under stock options or other agreements for any period presented.

New Accounting Pronouncements, Policy [Policy Text Block]

NEW ACCOUNTING PRONOUNCEMENTS:

In

May 2014,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2014

-

09,

“Revenue from Contracts with Customers (Topic

606

)”. The ASU creates a new topic, Topic

606,

to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after

December 15, 2017,

with early adoption permitted on

January 1, 2017.

Management is currently evaluating the impact of this update on its consolidated financial statements and related disclosures, however, adoption by the Company is

not

expected to have a material impact. The Company’s primary sources of revenues are derived from interest and dividends earned on loans, investment securities and other financial instruments that are

not

within the scope of ASU

2014

-

09.

In

January 2016,

the FASB issued ASU

No.

2016

-

01,

“Recognition and Measurement of Financial Assets and Financial Liabilities”. The update provides updated accounting and reporting requirements for both public and non-public entities. The most significant provisions that will impact the Company are:

1

) equity securities available for sale will be measured at fair value, with the changes in fair value recognized in the income statement;

2

) eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments at amortized cost on the balance sheet;

3

) utilization of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and

4

) require separate presentation of both financial assets and liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements. The update will be effective for interim and annual periods beginning after

December 15, 2017,

using a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption. Early adoption is

not

permitted. Management is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In

February 2016,

the FASB issued an update (ASU

2016

-

02,

Leases) which will require lessees to record most leases on their balance sheet

s and recognize leasing expenses in the income statement. Operating leases, except for short-term leases that are subject to an accounting policy election, will be recorded on the balance sheet for lessees by establishing a lease liability and corresponding right-of-use asset. The guidance in this ASU will become effective for interim and annual reporting periods beginning after

December 15, 2018,

with early adoption permitted. Management is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In

June 2016,

the FASB issued ASU

No.

2016

-

13,

“Financial Instruments

 - Credit Losses”. ASU

2016

-

13

requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” 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. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after

December 15, 2019.

Early adoption is permitted, for annual periods and interim periods within those annual periods, beginning after

December 15, 2018.

Management is currently in the developmental stages, collecting available historical information, in order to assess the expected credit losses. However, the impact to the financial statements are still yet to be determined.

In

August 2016,

FASB issued

an update (ASU

2016

-

15,

“Statement of Cash Flows”) (Topic

230

), which addresses

eight

specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this update apply to all entities, including business entities and

not

-for-profit entities that are required to present a statement of cash flows, and are effective for public business entities for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. Adoption by the Company is

not

expected to have a material impact on the consolidated financial statements and related disclosures.

In

January 2017,

the FASB issued an update (ASU

2017

-

04,

Intangibles

– Goodwill and Other) which is intended to simplify the measurement of goodwill in periods following the date on which the goodwill is initially recorded. Under the amendments in this update, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the loss recognized should

not

exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. A public business entity that is a U.S. Securities and Exchange Commission filer should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after

December 15, 2019.

Adoption by the Company is

not

expected to have a material impact on the consolidated financial statements and related disclosures.

XML

Note 2 - Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Table Text Block]

	Fair Value Measurements at September 30, 2017 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		----	$	13,579		----
Agency mortgage-backed securities, residential		----		92,966		----

	Fair Value Measurements at December 31, 2016 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		----	$	10,544		----
Agency mortgage-backed securities, residential		----		85,946		----

	Fair Value Measurements at September 30, 2017, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Residential real estate		----		----	$	94
Commercial real estate:
Nonowner-occupied		----		----		2,602
Other real estate owned:
Commercial real estate:
Construction		----		----		754

	Fair Value Measurements at December 31, 2016, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans :
Commercial real estate :
Owner-occupied		----		----	$	3,536
Nonowner-occupied		----		----		1,985
Commercial and industrial		----		----		298
Other real estate owned :
Commercial real estate :
Construction		----		----		754

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

September 30, 2017	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range			(Weighted Average)
Impaired loans:
Residential real estate	$	94	Sales approach	Adjustment to comparables		10%			10%
Commercial real estate:
Nonowner-occupied		2,602	Sales approach	Adjustment to comparables	0%	to	250%		51.4%
			Income approach	Capitalization Rate		8%			8%
Other real estate owned:
Commercial real estate:
Construction		754	Sales approach	Adjustment to comparables	0%	to	30%		11.7%

December 31, 2016	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range			(Weighted Average)
Impaired loans:
Commercial real estate:
Owner-occupied	$	3,536	Sales approach	Adjustment to comparables	0%	to	65%		13.7%
			Cost approach	Adjustment to comparables	0%	to	29.5%		14.8%
Nonowner-occupied		1,985	Sales approach	Adjustment to comparables	0%	to	250%		58.6%
Commercial and industrial		298	Sales approach	Adjustment to comparables	0.9%	to	9.7%		5.2%
Other real estate owned:
Commercial real estate:
Construction		754	Sales approach	Adjustment to comparables	0%	to	30%		11.7%

Fair Value, by Balance Sheet Grouping [Table Text Block]

			Fair Value Measurements at September 30, 2017 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	50,402	$	50,402	$	----	$	----	$	50,402
Certificates of deposit in financial institutions		1,820		----		1,820		----		1,820
Securities available for sale		106,545		----		106,545		----		106,545
Securities held to maturity		18,168		----		9,586		9,236		18,822
Restricted investments in bank stocks		7,506		N/A		N/A		N/A		N/A
Loans, net		770,644		----		----		772,063		772,063
Accrued interest receivable		2,532		----		394		2,138		2,532
Financial liabilities:
Deposits		849,181		233,178		616,081		----		849,259
Other borrowed funds		36,775		----		36,070		----		36,070
Subordinated debentures		8,500		----		6,377		----		6,377
Accrued interest payable		690		3		687		----		690

			Fair Value Measurements at December 31, 201 6 Using:
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	40,166	$	40,166	$	----	$	----	$	40,166
Certificates of deposit in financial institutions		1,670		----		1,670		----		1,670
Securities available for sale		96,490		----		96,490		----		96,490
Securities held to maturity		18,665		----		9,541		9,630		19,171
Restricted investments in bank stocks		7,506		N/A		N/A		N/A		N/A
Loans, net		727,202		----		----		727,079		727,079
Accrued interest receivable		2,315		----		224		2,091		2,315
Financial liabilities:
Deposits		790,452		209,576		581,340		----		790,916
Other borrowed funds		37,085		----		35,948		----		35,948
Subordinated debentures		8,500		----		5,821		----		5,821
Accrued interest payable		513		4		509		----		513

XML

Note 3 - Securities (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Available-for-sale Securities [Table Text Block]

Securities Available for Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2017
U.S. Government sponsored entity securities	$	13,627	$	----	$	(48	)	$	13,579
Agency mortgage-backed securities, residential		92,935		653		(622	)		92,966
Total securities	$	106,562	$	653	$	(670	)	$	106,545
December 31, 201 6
U.S. Government sponsored entity securities	$	10,624	$	----	$	(80	)	$	10,544
Agency mortgage-backed securities, residential		87,367		495		(1,916	)		85,946
Total securities	$	97,991	$	495	$	(1,996	)	$	96,490

Held-to-maturity Securities [Table Text Block]

Securities Held to Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Estimated Fair Value
September 30, 2017
Obligations of states and political subdivisions	$	18,164	$	694	$	(40	)	$	18,818
Agency mortgage-backed securities, residential		4		----		----			4
Total securities	$	18,168	$	694	$	(40	)	$	18,822
December 31, 201 6
Obligations of states and political subdivisions	$	18,661	$	654	$	(148	)	$	19,167
Agency mortgage-backed securities, residential		4		----		----			4
Total securities	$	18,665	$	654	$	(148	)	$	19,171

Investments Classified by Contractual Maturity Date [Table Text Block]

	Available for Sale				Held to Maturity
Debt Securities:	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	4,602	$	4,593	$	89	$	89
Due in over one to five years		6,025		5,996		6,764		7,000
Due in over five to ten years		3,000		2,990		8,055		8,482
Due after ten years		----		----		3,256		3,247
Agency mortgage-backed securities, residential		92,935		92,966		4		4
Total debt securities	$	106,562	$	106,545	$	18,168	$	18,822

Schedule of Unrealized Loss on Investments [Table Text Block]

September 3 0 , 2017	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 sponsored entity securities	$	10,987	$	(24	)	$	2,592	$	(24	)	$	13,579	$	(48	)
Agency mortgage-backed securities, residential		42,408		(355	)		10,231		(267	)		52,639		(622	)
Total available for sale	$	53,395	$	(379	)	$	12,823	$	(291	)	$	66,218	$	(670	)

December 31, 2016	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 sponsored entity securities	$	10,544	$	(80	)	$	----	$	----	$	10,544	$	(80	)
Agency mortgage-backed securities, residential		64,043		(1,916	)		----		----		64,043		(1,916	)
Total available for sale	$	74,587	$	(1,996	)	$	----	$	----	$	74,587	$	(1,996	)

Held-to-maturity Securities [Member]

Notes Tables

Schedule of Unrealized Loss on Investments [Table Text Block]

	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	$	325	$	(2	)	$	1,173	$	(38	)	$	1,498	$	(40	)
Total held to maturity	$	325	$	(2	)	$	1,173	$	(38	)	$	1,498	$	(40	)

	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	$	3,813	$	(148	)	$	----	$	----	$	3,813	$	(148	)
Total held to maturity	$	3,813	$	(148	)	$	----	$	----	$	3,813	$	(148	)

XML

Note 4 - Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Loans are comprised of the following:	September 30,			December 31,
	201 7			201 6
Residential real estate	$	318,244		$	286,022
Commercial real estate:
Owner-occupied		72,525			77,605
Nonowner-occupied		99,966			90,532
Construction		42,352			45,870
Commercial and industrial		103,550			100,589
Consumer:
Automobile		67,999			59,772
Home equity		21,287			20,861
Other		52,034			53,650
		777,957			734,901
Less: Allowance for loan losses		(7,313	)		(7,699	)
Loans, net	$	770,644		$	727,202

Schedule of Credit Losses Related to Financing Receivables, Current and Noncurrent [Table Text Block]

September 30, 2017	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,300		$	2,813		$	932		$	1,907		$	6,952
Provision for loan losses		493			540			238			330			1,601
Loans charged off		(445	)		(434	)		(202	)		(420	)		(1,501	)
Recoveries		83			41			4			133			261
Total ending allowance balance	$	1,431		$	2,960		$	972		$	1,950		$	7,313

September 30, 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	906		$	3,464		$	1,416		$	1,148		$	6,934
Provision for loan losses		228			802			149			529			1,708
Loans charged-off		(151	)		(11	)		(587	)		(704	)		(1,453	)
Recoveries		30			19			1			298			348
Total ending allowance balance	$	1,013		$	4,274		$	979		$	1,271		$	7,537

September 30, 2017	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	939		$	4,315		$	907		$	1,538		$	7,699
Provision for loan losses		870			(636	)		588			1,099			1,921
Loans charged off		(591	)		(1,046	)		(605	)		(1,125	)		(3,367	)
Recoveries		213			327			82			438			1,060
Total ending allowance balance	$	1,431		$	2,960		$	972		$	1,950		$	7,313

September 30 , 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,087		$	1,959		$	2,589		$	1,013		$	6,648
Provision for loan losses		10			2,264			(1,035	)		1,089			2,328
Loans charged-off		(322	)		(63	)		(587	)		(1,540	)		(2,512	)
Recoveries		238			114			12			709			1,073
Total ending allowance balance	$	1,013		$	4,274		$	979		$	1,271		$	7,537

Allowance For Loan Losses And The Recorded Investment Of Loans [Table Text Block]

September 30, 2017	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	$	127	$	111	$	----	$	2	$	240
Collectively evaluated for impairment		1,304		2,849		972		1,948		7,073
Total ending allowance balance	$	1,431	$	2,960	$	972	$	1,950	$	7,313
Loans:
Loans individually evaluated for impairment	$	1,153	$	6,798	$	9,522	$	208	$	17,681
Loans collectively evaluated for impairment		317,091		208,045		94,028		141,112		760,276
Total ending loans balance	$	318,244	$	214,843	$	103,550	$	141,320	$	777,957

December 31, 201 6	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	$	----	$	2,535	$	241	$	205	$	2,981
Collectively evaluated for impairment		939		1,780		666		1,333		4,718
Total ending allowance balance	$	939	$	4,315	$	907	$	1,538	$	7,699
Loans:
Loans individually evaluated for impairment	$	717	$	13,111	$	8,465	$	416	$	22,709
Loans collectively evaluated for impairment		285,305		200,896		92,124		133,867		712,192
Total ending loans balance	$	286,022	$	214,007	$	100,589	$	134,283	$	734,901

Schedule of Loans Individually Evaluated for Impairment [Table Text Block]

September 30, 2017	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Residential real estate
Commercial real estate:	$	224	$	221	$	127
Nonowner-occupied		604		530		111
Consumer:
Home equity		208		208		2
With no related allowance recorded:
Residential real estate		932		932		----
Commercial real estate:
Owner-occupied		2,563		2,563		----
Nonowner-occupied		4,995		3,548		----
Construction		635		157		----
Commercial and industrial		9,522		9,522		----
Total	$	19,683	$	17,681	$	240

December 31, 201 6	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial real estate:
Owner-occupied	$	5,477	$	5,477	$	2,435
Nonowner-occupied		384		384		100
Commercial and industrial		392		392		241
Consumer:
Home equity		416		416		205
With no related allowance recorded:
Residential real estate		717		717		----
Commercial real estate:
Owner-occupied		3,638		3,091		----
Nonowner-occupied		5,078		3,632		----
Construction		1,001		527		----
Commercial and industrial		8,073		8,073		----
Total	$	25,176	$	22,709	$	2,981

	Three months ended September 30, 2017						Nine months ended September 30, 2017
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Residential real estate	$	221	$	7	$	7	$	55	$	7	$	7
Commercial real estate:
Nonowner-occupied		563		3		3		584		12		12
Consumer:
Home equity		208		1		1		210		5		5
With no related allowance recorded:
Residential real estate		935		10		10		824		37		37
Commercial real estate:
Owner-occupied		2,409		37		37		2,407		112		112
Nonowner-occupied		3,552		19		19		3,518		57		57
Construction		157		5		5		170		14		14
Commercial and industrial		9,260		135		135		8,776		358		358
Total	$	17,305	$	217	$	217	$	16,544	$	602	$	602

	Three months ended September 30, 2016						Nine months ended September 30, 2016
	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:
Owner-occupied	$	5,427	$	94	$	94	$	2,815	$	241	$	241
Nonowner-occupied		389		5		5		392		15		15
Commercial and industrial		391		----		----		391		----		----
Consumer:
Home equity		217		1		1		218		5		5
With no related allowance recorded:
Residential real estate		725		4		4		728		20		20
Commercial real estate:
Owner-occupied		2,797		37		37		2,879		120		120
Nonowner-occupied		3,680		33		33		3,557		75		75
Construction		363		11		11		521		108		108
Commercial and industrial		8,575		103		103		8,234		290		290
Total	$	22,564	$	288	$	288	$	19,735	$	874	$	874

Schedule of Recorded Investment In Nonaccrual Loans [Table Text Block]

September 30, 2017	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	316	$	4,452
Commercial real estate:
Owner-occupied		----		308
Nonowner-occupied		21		2,624
Construction		----		402
Commercial and industrial		15		345
Consumer:
Automobile		90		75
Home equity		390		35
Other		136		110
Total	$	968	$	8,351

December 31, 201 6	Loans Past Due 90 Days And Still Accruing		Nonaccrual
Residential real estate	$	132	$	3,445
Commercial real estate:
Owner-occupied		28		1,571
Nonowner-occupied		----		2,506
Construction		----		527
Commercial and industrial		----		867
Consumer:
Automobile		121		5
Home equity		----		34
Other		46		6
Total	$	327	$	8,961

Past Due Financing Receivables [Table Text Block]

September 30, 2017	30-59 Days Past D ue		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate	$	5,498	$	1,697	$	1,172	$	8,367	$	309,877	$	318,244
Commercial real estate:
Owner-occupied		198		282		142		622		71,903		72,525
Nonowner-occupied		358		----		2,645		3,003		96,963		99,966
Construction		----		----		231		231		42,121		42,352
Commercial and industrial		440		42		250		732		102,818		103,550
Consumer:
Automobile		982		206		112		1,300		66,699		67,999
Home equity		25		70		390		485		20,802		21,287
Other		609		243		137		989		51,045		52,034
Total	$	8,110	$	2,540	$	5,079	$	15,729	$	762,228	$	777,957

December 31, 201 6	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	$	3,728	$	953	$	2,201	$	6,882	$	279,140	$	286,022
Commercial real estate:
Owner-occupied		134		366		1,325		1,825		75,780		77,605
Nonowner-occupied		261		18		2,506		2,785		87,747		90,532
Construction		66		52		182		300		45,570		45,870
Commercial and industrial		1,283		483		800		2,566		98,023		100,589
Consumer:
Automobile		1,091		221		126		1,438		58,334		59,772
Home equity		349		45		----		394		20,467		20,861
Other		685		155		46		886		52,764		53,650
Total	$	7,597	$	2,293	$	7,186	$	17,076	$	717,825	$	734,901

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

September 30, 2017	TDR ’s Performing to Modified Terms		TDR ’s Not Perform ing to Modified Terms		Total TDR ’s
Residential real estate :
Interest only payments	$	702	$	----	$	702
Maturity extension at lower stated rate than market rate		230				230
Commercial real estate:
Owner-occupied
Interest only payments		94		----		94
Reduction of principal and interest payments		560		----		560
Maturity extension at lower stated rate than market rate		1,497		----		1,497
Credit extension at lower stated rate than market rate		412		----		412
Nonowner-occupied
Interest only payments		560		2,115		2,675
Rate reduction		375		----		375
Credit extension at lower stated rate than market rate		570		----		570
Commercial and industrial :
Interest only payments		8,752		----		8,752
Maturity extension at lower stated rate than market rate		770		----		770
Consumer:
Home equity
Maturity extension at lower stated rate than market rate		----		208		208
Total TDR ’s	$	14,522	$	2,323	$	16,845

December 31, 201 6	TDR ’s Performing to Modified Terms		TDR ’s Not Performing to Modified Terms		Total TDR ’s
Residential real estate :
Interest only payments	$	717	$	----	$	717
Commercial real estate:
Owner-occupied
Interest only payments		284		----		284
Rate reduction		----		232		232
Reduction of principal and interest payments		579		----		579
Maturity extension at lower stated rate than market rate		1,582		----		1,582
Nonowner-occupied
Interest only payments		600		2,210		2,810
Rate reduction		384		----		384
Credit extension at lower stated rate than market rate		574		----		574
Commercial and industrial :
Interest only payments		8,074		----		8,074
Credit extension at lower stated rate than market rate		----		391		391
Consumer:
Home equity
Maturity extension at lower stated rate than market rate		213		----		213
Credit extension at lower stated rate than market rate		203		----		203
Total TDR ’s	$	13,210	$	2,833	$	16,043

Troubled Debt Restructurings on Financing Receivables Pre And Post Modification [Table Text Block]

			TDR ’s Performing to Modified Terms				TDR ’s Not Performing to Modified Terms
Three months ended September 30, 2017	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial real estate:
Owner-occupied
Credit extension at lower stated rate than m arket rate		1		412		412	$	----	$	----
Total TDR ’s		1	$	412	$	412	$	----	$	----

			TDR ’s Performing to Modified Terms				TDR ’s Not Performing to Modified Terms
Nine months ended September 30, 2017	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Residential real estate		1	$	231	$	231	$	----	$	----
Maturity extension at lower stated rate than market rate
Commercial real estate:
Owner-occupied
Credit extension at lower stated rate than market rate		1		412		412		----		----
Commercial and industrial		2		770		770		----		----
Total TDR ’s		4	$	1,413	$	1,413	$	----	$	----

			TDR ’s Performing to Modified Terms				TDR ’s Not Performing to Modified Terms
Nine months ended September 30, 2016	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial real estate:
Nonowner-occupied
Interest only payments		1	$	----	$	----	$	226	$	226
Credit extension at lower stated rate than m arket rate		1		574		574		----		----
Total TDR ’s		2	$	574	$	574	$	226	$	226

Financing Receivable Credit Quality Indicators [Table Text Block]

September 30, 2017	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	63,913	$	955	$	7,657	$	72,525
Nonowner-occupied		93,831		2,223		3,912		99,966
Construction		41,936		----		416		42,352
Commercial and industrial		96,614		1,350		5,586		103,550
Total	$	296,294	$	4,528	$	17,571	$	318,393

December 31, 2016	Pass		C riticized		Classified		Total
Commercial real estate:
Owner-occupied	$	66,495	$	428	$	10,682	$	77,605
Nonowner-occupied		83,103		2,364		5,065		90,532
Construction		45,325		----		545		45,870
Commercial and industrial		94,091		188		6,310		100,589
Total	$	289,014	$	2,980	$	22,602	$	314,596

Performing and Nonperforming Loans [Table Text Block]

September 30, 2017	Consumer
	Automobile		Home Equity		Other		Residential Real Estate		Total
Performing	$	67,834	$	20,862	$	51,788	$	313,476	$	453,960
Nonperforming		165		425		246		4,768		5,604
Total	$	67,999	$	21,287	$	52,034	$	318,244	$	459,564

December 31, 201 6	Consumer
	Automobile		Home Equity		Other		Residential Real Estate		Total
Performing	$	59,646	$	20,827	$	53,598	$	282,445	$	416,516
Nonperforming		126		34		52		3,577		3,789
Total	$	59,772	$	20,861	$	53,650	$	286,022	$	420,305

XML

Note 6 - Other Borrowed Funds (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Federal Home Loan Bank, Advances, by Branch of FHLB Bank [Table Text Block]

	FHLB Borrowings		Promissory Notes		Totals
September 30, 2017	$	29,235	$	7,540	$	36,775
December 31, 20 16	$	29,203	$	7,882	$	37,085

Schedule of Maturities of Long-term Debt [Table Text Block]

	FHLB Borrowings		Promissory Notes		Totals
20 17	$	973	$	964	$	1,937
201 8		2,891		2,261		5,152
2 019		2,724		1,852		4,576
2 020		2,541		519		3,060
20 21		2,240		541		2,781
Thereafter		17,866		1,403		19,269
	$	29,235	$	7,540	$	36,775

XML

Note 7 - Segment Information (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended September 30, 2017
	Banking		Consumer Finance			Total Company
Net interest income	$	9,681	$	587		$	10,268
Provision expense		1,615		(14	)		1,601
Noninterest income		2,224		58			2,282
Noninterest expense		8,579		643			9,222
Tax expense		69		5			74
Net income		1,642		11			1,653
Assets		1,008,078		11,536			1,019,614

	Three Months Ended September 30, 2016
	Banking			Consumer Finance			Total Company
Net interest income	$	8,396		$	589		$	8,985
Provision expense		1,675			33			1,708
Noninterest income		1,655			38			1,693
Noninterest expense		8,167			661			8,828
Tax expense		(193	)		(23	)		(216	)
Net income		402			(44	)		358
Assets		957,889			12,341			970,230

	Nine Months Ended September 30, 2017
	Banking		Consumer Finance		Total Company
Net interest income	$	28,558	$	2,646	$	31,204
Provision expense		1,815		106		1,921
Noninterest income		6,965		542		7,507
Noninterest expense		26,477		1,996		28,473
Tax expense		1,338		368		1,706
Net income		5,893		718		6,611
Assets		1,008,078		11,536		1,019,614

	Nine Months Ended September 30, 2016
	Banking		Consumer Finance		Total Company
Net interest income	$	23,684	$	2,607	$	26,291
Provision expense		2,180		148		2,328
Noninterest income		6,220		569		6,789
Noninterest expense		22,460		2,110		24,570
Tax expense		975		311		1,286
Net income		4,289		607		4,896
Assets		957,889		12,341		970,230

XML

Note 1 - Summary of Significant Accounting Policies (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2017 shares	Sep. 30, 2016 shares	Sep. 30, 2017 shares	Sep. 30, 2016 shares
Number of Reportable Segments			2
Weighted Average Number of Shares Outstanding, Basic	4,688,284	4,466,601	4,680,846	4,117,675
Weighted Average Number Diluted Shares Outstanding Adjustment	0	0	0	0

XML

Note 2 - Fair Value of Financial Instruments (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Selling Costs, Percentage			10.00%
Impaired Financing Receivable, Related Allowance	$ 240		$ 240		$ 2,981
Other Real Estate	754		754		754
Other Real Estate, Gross	2,217		2,217		2,217
Real Estate Owned, Valuation Allowance	1,463		1,463		1,463
SEC Schedule III, Real Estate, Write-down or Reserve, Amount	0	$ 0	0	$ 0
Collateral Dependent Loans [Member]
Impaired Financing Receivable, with Related Allowance, Recorded Investment	2,838		2,838		8,732
Impaired Financing Receivable, Related Allowance	142		142		2,913
Provision for Loan Losses Expensed	$ 142	$ 819	142	2,477	2,509
Financing Receivables, Impaired, Troubled Debt Restructuring, Write-down			$ 0	$ 0	$ 0

XML

Note 2 - Fair Value of Financial Instruments - Assets and Liabilities Measured at Fair Value on a Recurring and Nonrecurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Inputs, Level 1 [Member] | US Government-sponsored Enterprises Debt Securities [Member]
Assets measured on a recurring basis
Fair Value, Inputs, Level 1 [Member] | Impaired Loans [Member] | Residential Portfolio Segment [Member]
Assets measured on a nonrecurring basis
Fair Value, Inputs, Level 1 [Member] | Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Assets measured on a nonrecurring basis
Fair Value, Inputs, Level 1 [Member] | Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Assets measured on a nonrecurring basis
Fair Value, Inputs, Level 1 [Member] | Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Assets measured on a nonrecurring basis
Fair Value, Inputs, Level 1 [Member] | Impaired Loans [Member] | Commercial Portfolio Segment [Member]
Assets measured on a nonrecurring basis
Fair Value, Inputs, Level 1 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Assets measured on a recurring basis
Fair Value, Inputs, Level 1 [Member] | Other Real Estate Owned [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Assets measured on a nonrecurring basis
Fair Value, Inputs, Level 2 [Member] | US Government-sponsored Enterprises Debt Securities [Member]
Assets measured on a recurring basis	13,579	10,544
Fair Value, Inputs, Level 2 [Member] | Impaired Loans [Member] | Residential Portfolio Segment [Member]
Assets measured on a nonrecurring basis
Fair Value, Inputs, Level 2 [Member] | Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Assets measured on a nonrecurring basis
Fair Value, Inputs, Level 2 [Member] | Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Assets measured on a nonrecurring basis
Fair Value, Inputs, Level 2 [Member] | Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Assets measured on a nonrecurring basis
Fair Value, Inputs, Level 2 [Member] | Impaired Loans [Member] | Commercial Portfolio Segment [Member]
Assets measured on a nonrecurring basis
Fair Value, Inputs, Level 2 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Assets measured on a recurring basis	92,966	85,946
Fair Value, Inputs, Level 2 [Member] | Other Real Estate Owned [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Assets measured on a nonrecurring basis
Fair Value, Inputs, Level 3 [Member] | US Government-sponsored Enterprises Debt Securities [Member]
Assets measured on a recurring basis
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Residential Portfolio Segment [Member]
Assets measured on a nonrecurring basis	94
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Assets measured on a nonrecurring basis		3,536
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Assets measured on a nonrecurring basis	2,602	1,985
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Assets measured on a nonrecurring basis	754
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Commercial Portfolio Segment [Member]
Assets measured on a nonrecurring basis		298
Fair Value, Inputs, Level 3 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Assets measured on a recurring basis
Fair Value, Inputs, Level 3 [Member] | Other Real Estate Owned [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Assets measured on a nonrecurring basis		$ 754

XML

Note 2 - Fair Value of Financial Instruments - Level 3 Fair Value Measurements (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Income Approach Valuation Technique [Member]
Valuation Technique	Income approach
Range	8.00%
Income Approach Valuation Technique [Member] | Weighted Average [Member]
Range	8.00%
Residential Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member]
Fair Value	$ 94
Valuation Technique	Sales approach
Range	10.00%
Residential Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Weighted Average [Member]
Range	10.00%
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Commercial Real Estate Owner Occupied [Member]
Fair Value		$ 3,536
Valuation Technique		Sales approach
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Commercial Real Estate Owner Occupied [Member] | Minimum [Member]
Range		0.00%
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Commercial Real Estate Owner Occupied [Member] | Weighted Average [Member]
Range		13.70%
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Commercial Real Estate Owner Occupied [Member] | Maximum [Member]
Range		65.00%
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Commercial Real Estate Nonowner Occupied [Member]
Fair Value	$ 2,602	$ 1,985
Valuation Technique	Sales approach	Sales approach
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Commercial Real Estate Nonowner Occupied [Member] | Minimum [Member]
Range	0.00%	0.00%
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Commercial Real Estate Nonowner Occupied [Member] | Weighted Average [Member]
Range	51.40%	58.60%
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Commercial Real Estate Nonowner Occupied [Member] | Maximum [Member]
Range	250.00%	250.00%
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Construction Loans [Member]
Fair Value	$ 754
Valuation Technique	Sales approach
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Construction Loans [Member] | Minimum [Member]
Range	0.00%
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Construction Loans [Member] | Weighted Average [Member]
Range	11.70%
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Construction Loans [Member] | Maximum [Member]
Range	30.00%
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Cost Approach Valuation Technique [Member] | Commercial Real Estate Owner Occupied [Member]
Valuation Technique		Cost approach
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Cost Approach Valuation Technique [Member] | Commercial Real Estate Owner Occupied [Member] | Minimum [Member]
Range		0.00%
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Cost Approach Valuation Technique [Member] | Commercial Real Estate Owner Occupied [Member] | Weighted Average [Member]
Range		14.80%
Commercial Real Estate Portfolio Segment [Member] | Impaired Loans [Member] | Cost Approach Valuation Technique [Member] | Commercial Real Estate Owner Occupied [Member] | Maximum [Member]
Range		29.50%
Commercial Real Estate Portfolio Segment [Member] | Other Real Estate Owned [Member] | Market Approach Valuation Technique [Member] | Construction Loans [Member]
Fair Value		$ 754
Valuation Technique		Sales approach
Commercial Real Estate Portfolio Segment [Member] | Other Real Estate Owned [Member] | Market Approach Valuation Technique [Member] | Construction Loans [Member] | Minimum [Member]
Range		0.00%
Commercial Real Estate Portfolio Segment [Member] | Other Real Estate Owned [Member] | Market Approach Valuation Technique [Member] | Construction Loans [Member] | Weighted Average [Member]
Range		11.70%
Commercial Real Estate Portfolio Segment [Member] | Other Real Estate Owned [Member] | Market Approach Valuation Technique [Member] | Construction Loans [Member] | Maximum [Member]
Range		30.00%
Commercial and Industrial Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member]
Fair Value		$ 298
Valuation Technique		Sales approach
Commercial and Industrial Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Minimum [Member]
Range		0.90%
Commercial and Industrial Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Weighted Average [Member]
Range		5.20%
Commercial and Industrial Portfolio Segment [Member] | Impaired Loans [Member] | Market Approach Valuation Technique [Member] | Maximum [Member]
Range		9.70%

XML

Note 2 - Fair Value of Financial Instruments - Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Securities available for sale	$ 106,545	$ 96,490
Securities held to maturity	18,822	19,171
Reported Value Measurement [Member]
Cash and cash equivalents	50,402	40,166
Certificates of deposit in financial institutions	1,820	1,670
Securities available for sale	106,545	96,490
Securities held to maturity	18,168	18,665
Restricted investments in bank stocks	7,506	7,506
Loans, net	770,644	727,202
Accrued interest receivable	2,532	2,315
Deposits	849,181	790,452
Other borrowed funds	36,775	37,085
Subordinated debentures	8,500	8,500
Accrued interest payable	690	513
Estimate of Fair Value Measurement [Member]
Cash and cash equivalents	50,402	40,166
Certificates of deposit in financial institutions	1,820	1,670
Securities available for sale	106,545	96,490
Securities held to maturity	18,822	19,171
Restricted investments in bank stocks
Loans, net	772,063	727,079
Accrued interest receivable	2,532	2,315
Deposits	849,259	790,916
Other borrowed funds	36,070	35,948
Subordinated debentures	6,377	5,821
Accrued interest payable	690	513
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Cash and cash equivalents	50,402	40,166
Certificates of deposit in financial institutions
Securities available for sale
Securities held to maturity
Restricted investments in bank stocks
Loans, net
Accrued interest receivable
Deposits	233,178	209,576
Other borrowed funds
Subordinated debentures
Accrued interest payable	3	4
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Cash and cash equivalents
Certificates of deposit in financial institutions	1,820	1,670
Securities available for sale	106,545	96,490
Securities held to maturity	9,586	9,541
Restricted investments in bank stocks
Loans, net
Accrued interest receivable	394	224
Deposits	616,081	581,340
Other borrowed funds	36,070	35,948
Subordinated debentures	6,377	5,821
Accrued interest payable	687	509
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Cash and cash equivalents
Certificates of deposit in financial institutions
Securities available for sale
Securities held to maturity	9,236	9,630
Restricted investments in bank stocks
Loans, net	772,063	727,079
Accrued interest receivable	2,138	2,091
Deposits
Other borrowed funds
Subordinated debentures
Accrued interest payable

XML

Note 3 - Securities (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Proceeds from Sale of Available-for-sale Securities	$ 0	$ 0	$ 0	$ 0
Other than Temporary Impairment Losses, Investments			$ 0		$ 0

XML

Note 3 - Securities - Securities Available-for-sale (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Securities available for sale, amortized cost	$ 106,562	$ 97,991
Securities available for sale, gross unrealized gains	653	495
Securities available for sale, gross unrealized losses	(670)	(1,996)
Securities available for sale	106,545	96,490
US Government-sponsored Enterprises Debt Securities [Member]
Securities available for sale, amortized cost	13,627	10,624
Securities available for sale, gross unrealized gains
Securities available for sale, gross unrealized losses	(48)	(80)
Securities available for sale	13,579	10,544
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Securities available for sale, amortized cost	92,935	87,367
Securities available for sale, gross unrealized gains	653	495
Securities available for sale, gross unrealized losses	(622)	(1,916)
Securities available for sale	$ 92,966	$ 85,946

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Note 3 - Securities - Securities Held-to-maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Securities held to maturity, amortized cost	$ 18,168	$ 18,665
Securities held to maturity, gross unrecognized gains	694	654
Securities held to maturity, gross unrecognized losses	(40)	(148)
Securities held to maturity	18,822	19,171
US States and Political Subdivisions Debt Securities [Member]
Securities held to maturity, amortized cost	18,164	18,661
Securities held to maturity, gross unrecognized gains	694	654
Securities held to maturity, gross unrecognized losses	(40)	(148)
Securities held to maturity	18,818	19,167
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Securities held to maturity, amortized cost	4	4
Securities held to maturity, gross unrecognized gains
Securities held to maturity, gross unrecognized losses
Securities held to maturity	$ 4	$ 4

XML

Note 3 - Securities - Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Due in one year or less, available for sale, amortized cost	$ 4,602
Due in one year or less, available for sale, fair value	4,593
Due in one year or less, held to maturity, amortized cost	89
Due in one year or less, held to maturity, fair value	89
Due in over one to five years, available for sale, amortized cost	6,025
Due in over one to five years, available for sale, fair value	5,996
Due in over one to five years, held to maturity, amortized cost	6,764
Due in over one to five years, held to maturity, fair value	7,000
Due in over five to ten years, available for sale, amortized cost	3,000
Due in over five to ten years, available for sale, fair value	2,990
Due in over five to ten years, held to maturity, amortized cost	8,055
Due in over five to ten years, held to maturity, fair value	8,482
Due after ten years, available for sale, amortized cost
Due after ten years, available for sale, fair value
Due after ten years, held to maturity, amortized cost	3,256
Due after ten years, held to maturity, fair value	3,247
Agency mortgage-backed securities, residential, available for sale, amortized cost	92,935
Agency mortgage-backed securities, residential, available for sale, fair value	92,966
Agency mortgage-backed securities, residential, held to maturity, amortized cost	4
Agency mortgage-backed securities, residential, held to maturity, fair value	4
Total debt securities, available for sale, amortized cost	106,562
Total debt securities, available for sale, fair value	106,545
Total debt securities, held to maturity, amortized cost	18,168	$ 18,665
Securities held to maturity	$ 18,822	$ 19,171

XML

Note 3 - Securities - Securities Available-for-sale With Unrealized Losses (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Less than 12 Months - Fair Value	$ 53,395	$ 74,587
Less than 12 Months - Unrealized Loss	(379)	(1,996)
12 Months or More - Fair Value	12,823
12 Months or More - Unrealized Loss	(291)
Fair Value	66,218	74,587
Unrealized Loss	(670)	(1,996)
US Government-sponsored Enterprises Debt Securities [Member]
Less than 12 Months - Fair Value	10,987	10,544
Less than 12 Months - Unrealized Loss	(24)	(80)
12 Months or More - Fair Value	2,592
12 Months or More - Unrealized Loss	(24)
Fair Value	13,579	10,544
Unrealized Loss	(48)	(80)
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Less than 12 Months - Fair Value	42,408	64,043
Less than 12 Months - Unrealized Loss	(355)	(1,916)
12 Months or More - Fair Value	10,231
12 Months or More - Unrealized Loss	(267)
Fair Value	52,639	64,043
Unrealized Loss	$ (622)	$ (1,916)

XML

Note 3 - Securities - Securities Held to Maturity With Unrealized Losses (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Less Than 12 Months - Fair Value	$ 325	$ 3,813
Less Than 12 Months - Unrecognized Loss	(2)	(148)
12 Months or More - Fair Value	1,173
12 Months or More - Unrecognized Loss	(38)
Fair Value	1,498	3,813
Unrecognized Loss	(40)	(148)
US States and Political Subdivisions Debt Securities [Member]
Less Than 12 Months - Fair Value	325	3,813
Less Than 12 Months - Unrecognized Loss	(2)	(148)
12 Months or More - Fair Value	1,173
12 Months or More - Unrecognized Loss	(38)
Fair Value	1,498	3,813
Unrecognized Loss	$ (40)	$ (148)

XML

Note 4 - Loans and Allowance for Loan Losses (Details Textual) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Allowance for Loan and Lease Losses, Period Increase (Decrease)	$ 93	$ 14	$ (42)	$ (1,105)	$ (1,112)
Allowance for Loan and Lease Losses, Write-offs	78	$ 11	391	11	11
Increase (Decrease) in Other Loans			$ 802
Change In Troubled Debt Restructurings			5.00%
Impaired Financing Receivable, Related Allowance	240		$ 240		2,981
Loans and Leases Receivable, Impaired, Commitment to Lend	$ 1,747		$ 1,747		$ 2,427
Financing Receivable, Modifications, Number of Contracts	1	0	4
Financing Receivable, Modifications, Subsequent Default, Number of Contracts			0
Financing Receivable, Modifications, Subsequent Default, Recorded Investment				$ 226
Minimum Loan Balance For Loans Evaluated by Risk Categories	$ 500		$ 500
Troubled Debt Restructurings [Member]
Percentage of Loan Portfolio	86.00%		86.00%		82.00%
Impaired Financing Receivable, Related Allowance	$ 113		$ 113		$ 546
Unsecured [Member]
Percentage of Loan Portfolio	4.92%		4.92%		5.61%
Residential Portfolio Segment [Member]
Real Estate Acquired Through Foreclosure	$ 384		$ 384		$ 938
Mortgage Loans in Process of Foreclosure, Amount	1,979		1,979		$ 1,492
Impaired Financing Receivable, Related Allowance	$ 127		$ 127
Financing Receivable, Modifications, Number of Contracts			1

XML

Note 4 - Loans and Allowance for Loan Losses - Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Loans	$ 777,957	$ 734,901
Less: Allowance for loan losses	(7,313)	(7,699)
Loans, net	770,644	727,202
Residential Portfolio Segment [Member]
Loans	318,244	286,022
Commercial Real Estate Portfolio Segment [Member]
Loans	214,843	214,007
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans	72,525	77,605
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans	99,966	90,532
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans	42,352	45,870
Commercial and Industrial Portfolio Segment [Member]
Loans	103,550	100,589
Consumer Portfolio Segment [Member]
Loans	141,320	134,283
Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans	67,999	59,772
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans	21,287	20,861
Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans	$ 52,034	$ 53,650

XML

Note 4 - Loans and Allowance for Loan Losses - Allowance for Loan Losses Activity by Portfolio Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Balance	$ 6,952	$ 6,934	$ 7,699	$ 6,648
Provision for loan losses	1,601	1,708	1,921	2,328
Loans charged off	(1,501)	(1,453)	(3,367)	(2,512)
Recoveries	261	348	1,060	1,073
Balance	7,313	7,537	7,313	7,537
Residential Portfolio Segment [Member]
Balance	1,300	906	939	1,087
Provision for loan losses	493	228	870	10
Loans charged off	(445)	(151)	(591)	(322)
Recoveries	83	30	213	238
Balance	1,431	1,013	1,431	1,013
Commercial Real Estate Portfolio Segment [Member]
Balance	2,813	3,464	4,315	1,959
Provision for loan losses	540	802	(636)	2,264
Loans charged off	(434)	(11)	(1,046)	(63)
Recoveries	41	19	327	114
Balance	2,960	4,274	2,960	4,274
Commercial and Industrial Portfolio Segment [Member]
Balance	932	1,416	907	2,589
Provision for loan losses	238	149	588	(1,035)
Loans charged off	(202)	(587)	(605)	(587)
Recoveries	4	1	82	12
Balance	972	979	972	979
Consumer Portfolio Segment [Member]
Balance	1,907	1,148	1,538	1,013
Provision for loan losses	330	529	1,099	1,089
Loans charged off	(420)	(704)	(1,125)	(1,540)
Recoveries	133	298	438	709
Balance	$ 1,950	$ 1,271	$ 1,950	$ 1,271

XML

Note 4 - Loans and Allowance for Loan Losses - Allowance for Loan Losses and the Recorded Investment of Loans Based on Impairment Method (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Individually evaluated for impairment	$ 240		$ 2,981
Collectively evaluated for impairment	7,073		4,718
Total ending allowance balance	7,313	$ 6,952	7,699	$ 7,537	$ 6,934	$ 6,648
Loans individually evaluated for impairment	17,681		22,709
Loans collectively evaluated for impairment	760,276		712,192
Total ending loans balance	777,957		734,901
Residential Portfolio Segment [Member]
Individually evaluated for impairment	127
Collectively evaluated for impairment	1,304		939
Total ending allowance balance	1,431	1,300	939	1,013	906	1,087
Loans individually evaluated for impairment	1,153		717
Loans collectively evaluated for impairment	317,091		285,305
Total ending loans balance	318,244		286,022
Commercial Real Estate Portfolio Segment [Member]
Individually evaluated for impairment	111		2,535
Collectively evaluated for impairment	2,849		1,780
Total ending allowance balance	2,960	2,813	4,315	4,274	3,464	1,959
Loans individually evaluated for impairment	6,798		13,111
Loans collectively evaluated for impairment	208,045		200,896
Total ending loans balance	214,843		214,007
Commercial and Industrial Portfolio Segment [Member]
Individually evaluated for impairment			241
Collectively evaluated for impairment	972		666
Total ending allowance balance	972	932	907	979	1,416	2,589
Loans individually evaluated for impairment	9,522		8,465
Loans collectively evaluated for impairment	94,028		92,124
Total ending loans balance	103,550		100,589
Consumer Portfolio Segment [Member]
Individually evaluated for impairment	2		205
Collectively evaluated for impairment	1,948		1,333
Total ending allowance balance	1,950	$ 1,907	1,538	$ 1,271	$ 1,148	$ 1,013
Loans individually evaluated for impairment	208		416
Loans collectively evaluated for impairment	141,112		133,867
Total ending loans balance	$ 141,320		$ 134,283

XML

Note 4 - Loans and Allowance for Loan Losses - Loans Individually Evaluated for Impairment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Allowance for Loan Losses Allocated	$ 240		$ 240		$ 2,981
Unpaid principal balance	19,683		19,683		25,176
Recorded investment	17,681		17,681		22,709
Average impaired loans - with no allowance recorded		$ 22,564		$ 19,735
Interest income recognized - with no allowance recorded		288		874
Cash basis interest recognized - with no allowance recorded		288		874
Average impaired loans	17,305		16,544
Interest income recognized	217		602
Cash basis interest recognized	217		602
Residential Portfolio Segment [Member]
Unpaid principal balance - with allowance recorded	224		224
Recorded investment - with allowance recorded	221		221
Allowance for Loan Losses Allocated	127		127
Unpaid principal balance - with no allowance recorded	932		932		717
Recorded investment - with no allowance recorded	932		932		717
Average impaired loans - with allowance recorded	221		55
Interest income recognized - with allowance recorded	7		7
Cash basis interest recognized - with allowance recorded	7		7
Average impaired loans - with no allowance recorded	935	725	824	728
Interest income recognized - with no allowance recorded	10	4	37	20
Cash basis interest recognized - with no allowance recorded	10	4	37	20
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Unpaid principal balance - with allowance recorded					5,477
Recorded investment - with allowance recorded					5,477
Allowance for Loan Losses Allocated					2,435
Unpaid principal balance - with no allowance recorded	2,563		2,563		3,638
Recorded investment - with no allowance recorded	2,563		2,563		3,091
Average impaired loans - with allowance recorded		5,427		2,815
Interest income recognized - with allowance recorded		94		241
Cash basis interest recognized - with allowance recorded		94		241
Average impaired loans - with no allowance recorded	2,409	2,797	2,407	2,879
Interest income recognized - with no allowance recorded	37	37	112	120
Cash basis interest recognized - with no allowance recorded	37	37	112	120
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Unpaid principal balance - with allowance recorded	604		604		384
Recorded investment - with allowance recorded	530		530		384
Allowance for Loan Losses Allocated	111		111		100
Unpaid principal balance - with no allowance recorded	4,995		4,995		5,078
Recorded investment - with no allowance recorded	3,548		3,548		3,632
Average impaired loans - with allowance recorded	563	389	584	392
Interest income recognized - with allowance recorded	3	5	12	15
Cash basis interest recognized - with allowance recorded	3	5	12	15
Average impaired loans - with no allowance recorded	3,552	3,680	3,518	3,557
Interest income recognized - with no allowance recorded	19	33	57	75
Cash basis interest recognized - with no allowance recorded	19	33	57	75
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Unpaid principal balance - with no allowance recorded	635		635		1,001
Recorded investment - with no allowance recorded	157		157		527
Average impaired loans - with allowance recorded	157		170
Interest income recognized - with allowance recorded	5		14
Cash basis interest recognized - with allowance recorded	5		14
Average impaired loans - with no allowance recorded		363		521
Interest income recognized - with no allowance recorded		11		108
Cash basis interest recognized - with no allowance recorded		11		108
Commercial and Industrial Portfolio Segment [Member]
Unpaid principal balance - with allowance recorded					392
Recorded investment - with allowance recorded					392
Allowance for Loan Losses Allocated					241
Unpaid principal balance - with no allowance recorded	9,522		9,522		8,073
Recorded investment - with no allowance recorded	9,522		9,522		8,073
Average impaired loans - with allowance recorded	9,260	391	8,776	391
Interest income recognized - with allowance recorded	135		358
Cash basis interest recognized - with allowance recorded	135		358
Average impaired loans - with no allowance recorded		8,575		8,234
Interest income recognized - with no allowance recorded		103		290
Cash basis interest recognized - with no allowance recorded		103		290
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Unpaid principal balance - with allowance recorded	208		208		416
Recorded investment - with allowance recorded	208		208		416
Allowance for Loan Losses Allocated	2		2		$ 205
Average impaired loans - with allowance recorded	208	217	210	218
Interest income recognized - with allowance recorded	1	1	5	5
Cash basis interest recognized - with allowance recorded	$ 1	$ 1	$ 5	$ 5

XML

Note 4 - 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, 2017	Dec. 31, 2016
Loans past due 90 days and still accruing	$ 968	$ 327
Nonaccrual	8,351	8,961
Residential Portfolio Segment [Member]
Loans past due 90 days and still accruing	316	132
Nonaccrual	4,452	3,445
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans past due 90 days and still accruing		28
Nonaccrual	308	1,571
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans past due 90 days and still accruing	21
Nonaccrual	2,624	2,506
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans past due 90 days and still accruing
Nonaccrual	402	527
Commercial and Industrial Portfolio Segment [Member]
Loans past due 90 days and still accruing	15
Nonaccrual	345	867
Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans past due 90 days and still accruing	90	121
Nonaccrual	75	5
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans past due 90 days and still accruing	390
Nonaccrual	35	34
Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans past due 90 days and still accruing	136	46
Nonaccrual	$ 110	$ 6

XML

Note 4 - Loans and Allowance for Loan Losses - Past Due Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Loans past due	$ 15,729	$ 17,076
Loans, current	762,228	717,825
Loans	777,957	734,901
Residential Portfolio Segment [Member]
Loans past due	8,367	6,882
Loans, current	309,877	279,140
Loans	318,244	286,022
Commercial Real Estate Portfolio Segment [Member]
Loans	214,843	214,007
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans past due	622	1,825
Loans, current	71,903	75,780
Loans	72,525	77,605
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans past due	3,003	2,785
Loans, current	96,963	87,747
Loans	99,966	90,532
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans past due	231	300
Loans, current	42,121	45,570
Loans	42,352	45,870
Commercial and Industrial Portfolio Segment [Member]
Loans past due	732	2,566
Loans, current	102,818	98,023
Loans	103,550	100,589
Consumer Portfolio Segment [Member]
Loans	141,320	134,283
Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans past due	1,300	1,438
Loans, current	66,699	58,334
Loans	67,999	59,772
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans past due	485	394
Loans, current	20,802	20,467
Loans	21,287	20,861
Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans past due	989	886
Loans, current	51,045	52,764
Loans	52,034	53,650
Financing Receivables, 30 to 59 Days Past Due [Member]
Loans past due	8,110	7,597
Financing Receivables, 30 to 59 Days Past Due [Member] | Residential Portfolio Segment [Member]
Loans past due	5,498	3,728
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans past due	198	134
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans past due	358	261
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans past due		66
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans past due	440	1,283
Financing Receivables, 30 to 59 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans past due	982	1,091
Financing Receivables, 30 to 59 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans past due	25	349
Financing Receivables, 30 to 59 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans past due	609	685
Financing Receivables, 60 to 89 Days Past Due [Member]
Loans past due	2,540	2,293
Financing Receivables, 60 to 89 Days Past Due [Member] | Residential Portfolio Segment [Member]
Loans past due	1,697	953
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans past due	282	366
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans past due		18
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans past due		52
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans past due	42	483
Financing Receivables, 60 to 89 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans past due	206	221
Financing Receivables, 60 to 89 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans past due	70	45
Financing Receivables, 60 to 89 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans past due	243	155
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans past due	5,079	7,186
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member]
Loans past due	1,172	2,201
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans past due	142	1,325
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans past due	2,645	2,506
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans past due	231	182
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans past due	250	800
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans past due	112	126
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans past due	390
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans past due	$ 137	$ 46

XML

Note 4 - Loans and Allowance for Loan Losses - TDR Loan Modifications (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Troubled Debt Restructuring	$ 16,845	$ 16,043
Residential Portfolio Segment [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring	702	717
Residential Portfolio Segment [Member] | Extended Maturity [Member]
Troubled Debt Restructuring	230
Residential Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member]
Troubled Debt Restructuring	412
Commercial Real Estate Portfolio Segment [Member] | Interest Only Payments [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	94	284
Commercial Real Estate Portfolio Segment [Member] | Interest Only Payments [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	2,675	2,810
Commercial Real Estate Portfolio Segment [Member] | Extended Maturity [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	1,497	1,582
Commercial Real Estate Portfolio Segment [Member] | Contractual Interest Rate Reduction [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		232
Commercial Real Estate Portfolio Segment [Member] | Contractual Interest Rate Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	375	384
Commercial Real Estate Portfolio Segment [Member] | Reduction of Principal and Interest Payments [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	560	579
Commercial Real Estate Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		574
Commercial Real Estate Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	570
Commercial and Industrial Portfolio Segment [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring	8,752	8,074
Commercial and Industrial Portfolio Segment [Member] | Extended Maturity [Member]
Troubled Debt Restructuring	770
Commercial and Industrial Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member]
Troubled Debt Restructuring		391
Consumer Portfolio Segment [Member] | Extended Maturity [Member] | Home Equity Loan [Member]
Troubled Debt Restructuring	208	213
Consumer Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member] | Home Equity Loan [Member]
Troubled Debt Restructuring		203
Performing Financial Instruments [Member]
Troubled Debt Restructuring	14,522	13,210
Performing Financial Instruments [Member] | Residential Portfolio Segment [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring	702	717
Performing Financial Instruments [Member] | Residential Portfolio Segment [Member] | Extended Maturity [Member]
Troubled Debt Restructuring	230
Performing Financial Instruments [Member] | Residential Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member]
Troubled Debt Restructuring	412
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Interest Only Payments [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	94	284
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Interest Only Payments [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	560	600
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Extended Maturity [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	1,497	1,582
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Contractual Interest Rate Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	375	384
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Reduction of Principal and Interest Payments [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring	560	579
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		574
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	570
Performing Financial Instruments [Member] | Commercial and Industrial Portfolio Segment [Member] | Interest Only Payments [Member]
Troubled Debt Restructuring	8,752	8,074
Performing Financial Instruments [Member] | Commercial and Industrial Portfolio Segment [Member] | Extended Maturity [Member]
Troubled Debt Restructuring	770
Performing Financial Instruments [Member] | Commercial and Industrial Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member]
Troubled Debt Restructuring
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Extended Maturity [Member] | Home Equity Loan [Member]
Troubled Debt Restructuring		213
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member] | Home Equity Loan [Member]
Troubled Debt Restructuring		203
Nonperforming Financial Instruments [Member]
Troubled Debt Restructuring	2,323	2,833
Nonperforming Financial Instruments [Member] | Residential Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member]
Troubled Debt Restructuring
Nonperforming Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Interest Only Payments [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring	2,115	2,210
Nonperforming Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Contractual Interest Rate Reduction [Member] | Commercial Real Estate Owner Occupied [Member]
Troubled Debt Restructuring		232
Nonperforming Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Contractual Interest Rate Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring
Nonperforming Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member] | Commercial Real Estate Nonowner Occupied [Member]
Troubled Debt Restructuring
Nonperforming Financial Instruments [Member] | Commercial and Industrial Portfolio Segment [Member] | Extended Maturity [Member]
Troubled Debt Restructuring
Nonperforming Financial Instruments [Member] | Commercial and Industrial Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member]
Troubled Debt Restructuring		391
Nonperforming Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Extended Maturity [Member] | Home Equity Loan [Member]
Troubled Debt Restructuring	$ 208
Nonperforming Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Interest Rate Below Market Reduction [Member] | Home Equity Loan [Member]
Troubled Debt Restructuring

XML

Note 4 - Loans and Allowance for Loan Losses - TDRs Pre-modification and Post-modification (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)
Number of loans	1	0	4
Performing Financial Instruments [Member]
Pre-modification recorded investment	$ 412		$ 1,413
Post-modification recorded investment	412		1,413
Nonperforming Financial Instruments [Member]
Pre-modification recorded investment
Post-modification recorded investment
Residential Portfolio Segment [Member]
Number of loans			1
Residential Portfolio Segment [Member] | Performing Financial Instruments [Member]
Pre-modification recorded investment			$ 231
Post-modification recorded investment			231
Residential Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Pre-modification recorded investment
Post-modification recorded investment
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Number of loans				2
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member] | Interest Rate Below Market Reduction [Member]
Number of loans	1		1	1
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member] | Interest Only Payments [Member]
Number of loans				1
Commercial Real Estate Portfolio Segment [Member] | Performing Financial Instruments [Member] | Commercial Real Estate Nonowner Occupied [Member]
Pre-modification recorded investment				$ 574
Post-modification recorded investment				574
Commercial Real Estate Portfolio Segment [Member] | Performing Financial Instruments [Member] | Commercial Real Estate Nonowner Occupied [Member] | Interest Rate Below Market Reduction [Member]
Pre-modification recorded investment	$ 412		$ 412	574
Post-modification recorded investment	412		412	574
Commercial Real Estate Portfolio Segment [Member] | Performing Financial Instruments [Member] | Commercial Real Estate Nonowner Occupied [Member] | Interest Only Payments [Member]
Pre-modification recorded investment
Post-modification recorded investment
Commercial Real Estate Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Commercial Real Estate Nonowner Occupied [Member]
Pre-modification recorded investment				226
Post-modification recorded investment				226
Commercial Real Estate Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Commercial Real Estate Nonowner Occupied [Member] | Interest Rate Below Market Reduction [Member]
Pre-modification recorded investment
Post-modification recorded investment
Commercial Real Estate Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Commercial Real Estate Nonowner Occupied [Member] | Interest Only Payments [Member]
Pre-modification recorded investment				226
Post-modification recorded investment				$ 226
Commercial and Industrial Portfolio Segment [Member]
Number of loans			2
Commercial and Industrial Portfolio Segment [Member] | Performing Financial Instruments [Member]
Pre-modification recorded investment			$ 770
Post-modification recorded investment			770
Commercial and Industrial Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Pre-modification recorded investment
Post-modification recorded investment

XML

Note 4 - Loans and Allowance for Loan Losses - Risk Category of Commercial Loans by Class of Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Loans receivable	$ 777,957	$ 734,901
Commercial Real Estate Portfolio Segment [Member]
Loans receivable	214,843	214,007
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans receivable	72,525	77,605
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans receivable	99,966	90,532
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	42,352	45,870
Commercial and Industrial Portfolio Segment [Member]
Loans receivable	103,550	100,589
Commercial Portfolio Segment [Member]
Loans receivable	318,393	314,596
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans receivable	63,913	66,495
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans receivable	93,831	83,103
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	41,936	45,325
Pass [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans receivable	96,614	94,091
Pass [Member] | Commercial Portfolio Segment [Member]
Loans receivable	296,294	289,014
Criticized [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans receivable	955	428
Criticized [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans receivable	2,223	2,364
Criticized [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable
Criticized [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans receivable	1,350	188
Criticized [Member] | Commercial Portfolio Segment [Member]
Loans receivable	4,528	2,980
Classified [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Loans receivable	7,657	10,682
Classified [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Nonowner Occupied [Member]
Loans receivable	3,912	5,065
Classified [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	416	545
Classified [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans receivable	5,586	6,310
Classified [Member] | Commercial Portfolio Segment [Member]
Loans receivable	$ 17,571	$ 22,602

XML

Note 4 - Loans and Allowance for Loan Losses - Recorded Investment of Residential and Consumer Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Loans receivable	$ 777,957	$ 734,901
Consumer Portfolio Segment [Member]
Loans receivable	141,320	134,283
Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans receivable	67,999	59,772
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans receivable	21,287	20,861
Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans receivable	52,034	53,650
Residential Portfolio Segment [Member]
Loans receivable	318,244	286,022
Consumer and Residential Portfolio Segment [Member]
Loans receivable	459,564	420,305
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans receivable	67,834	59,646
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans receivable	20,862	20,827
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans receivable	51,788	53,598
Performing Financial Instruments [Member] | Residential Portfolio Segment [Member]
Loans receivable	313,476	282,445
Performing Financial Instruments [Member] | Consumer and Residential Portfolio Segment [Member]
Loans receivable	453,960	416,516
Nonperforming Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Automobile Loan [Member]
Loans receivable	165	126
Nonperforming Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loans receivable	425	34
Nonperforming Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Other Consumer Loans [Member]
Loans receivable	246	52
Nonperforming Financial Instruments [Member] | Residential Portfolio Segment [Member]
Loans receivable	4,768	3,577
Nonperforming Financial Instruments [Member] | Consumer and Residential Portfolio Segment [Member]
Loans receivable	$ 5,604	$ 3,789

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Note 5 - Financial Instruments With Off-balance Sheet Risk (Details Textual) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure	$ 73,460	$ 67,191

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Note 6 - Other Borrowed Funds (Details Textual) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Federal Home Loan Bank, Advances, Maturities Summary, Fixed Rate	$ 29,195
Federal Home Loan Bank, Advances, Maturities Summary, Floating Rate	0
Federal Home Loan Bank, Advances, General Debt Obligations, Maximum Amount Available	221,723
Federal Home Loan Bank, Advances, General Debt Obligations, Amount of Available, Unused Funds	$ 146,529
Debt, Weighted Average Interest Rate	2.77%	2.34%
Notes Payable, Related Parties	$ 360
Notes Payable to Bank	3,556	$ 3,899
FHLB Line of Credit [Member]
Federal Home Loan Bank, Advances, General Debt Obligations, Maximum Amount Available	80,000
Federal Home Loan Bank, Advances, General Debt Obligations, Amount of Available, Unused Funds	80,000
Letters of Credit Outstanding, Amount	$ 46,000	45,000
Minimum [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Interest Rate	1.53%
Debt Instrument, Interest Rate, Stated Percentage	1.25%
Maximum [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Interest Rate	3.31%
Debt Instrument, Interest Rate, Stated Percentage	4.09%
Weighted Average [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Interest Rate	2.14%
Residential Mortgage [Member]
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged	$ 305,490
Commercial Loan [Member]
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged	75,032
FHLB Stock [Member]
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged	5,365
Federal Home Loan Bank Advances [Member]
Capital Lease Obligations	$ 48	$ 73

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Note 6 - Other Borrowed Funds - Other Borrowed Funds (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Other borrowed funds	$ 36,775	$ 37,085
Federal Home Loan Bank Advances [Member]
Other borrowed funds	29,235	29,203
Promissory Notes [Member]
Other borrowed funds	$ 7,540	$ 7,882

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Note 6 - Other Borrowed Funds - Scheduled Principal Payments (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
2017	$ 1,937
2018	5,152
2019	4,576
2020	3,060
2021	2,781
Thereafter	19,269
	36,775	$ 37,085
Federal Home Loan Bank Advances [Member]
2017	973
2018	2,891
2019	2,724
2020	2,541
2021	2,240
Thereafter	17,866
	29,235	29,203
Promissory Notes [Member]
2017	964
2018	2,261
2019	1,852
2020	519
2021	541
Thereafter	1,403
	$ 7,540	$ 7,882

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Note 7 - Segment Information (Details Textual)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Customer Concentration Risk [Member] | Sales Revenue, Goods, Net [Member] | Banking [Member]
Concentration Risk, Percentage	92.20%	90.90%

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Note 7 - Segment Information - Segment Reporting (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Net interest income	$ 10,268	$ 8,985	$ 31,204	$ 26,291
Provision expense	1,601	1,708	1,921	2,328
Noninterest income	2,282	1,693	7,507	6,789
Noninterest expense	9,222	8,828	28,473	24,570
Tax expense	74	(216)	1,706	1,286
Net income	1,653	358	6,611	4,896
Assets	1,019,614	970,230	1,019,614	970,230	$ 954,640
Banking [Member]
Net interest income	9,681	8,396	28,558	23,684
Provision expense	1,615	1,675	1,815	2,180
Noninterest income	2,224	1,655	6,965	6,220
Noninterest expense	8,579	8,167	26,477	22,460
Tax expense	69	(193)	1,338	975
Net income	1,642	402	5,893	4,289
Assets	1,008,078	957,889	1,008,078	957,889
Consumer Finance [Member]
Net interest income	587	589	2,646	2,607
Provision expense	(14)	33	106	148
Noninterest income	58	38	542	569
Noninterest expense	643	661	1,996	2,110
Tax expense	5	(23)	368	311
Net income	11	(44)	718	607
Assets	$ 11,536	$ 12,341	$ 11,536	$ 12,341

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Note 8 - Subsequent Events (Details Textual) - Fraudulent Wire Transactions [Member] - USD ($) $ in Thousands		3 Months Ended
	Oct. 06, 2017	Dec. 31, 2017	Jun. 30, 2017	May 09, 2017
Loss Contingency, Estimate of Possible Loss				$ 933
Insurance Recoveries			$ 103
Scenario, Forecast [Member]
Insurance Recoveries		$ 730
Subsequent Event [Member]
Proceeds from Insurance Settlement, Operating Activities	$ 730