|
|
(State of Incorporation)
|
(I.R.S. Employer Identification No.)
|
|
|
(Address of principal executive offices)
|
(ZIP Code)
|
|
|
|
(Title of each class)
|
(Trading Symbol)
|
(Name of each exchange on which registered)
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|||
|
Smaller reporting company
|
|||
Emerging growth company
|
Page Number
|
||
PART I.
|
FINANCIAL INFORMATION
|
|
Item 1.
|
Financial Statements (Unaudited)
|
|
Consolidated Balance Sheets
|
3
|
|
Consolidated Statements of Income
|
4
|
|
Consolidated Statements of Comprehensive Income
|
5
|
|
Consolidated Statements of Changes in Shareholders’ Equity
|
6
|
|
Condensed Consolidated Statements of Cash Flows
|
7
|
|
Notes to Unaudited Consolidated Financial Statements
|
8
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
29
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
39
|
Item 4.
|
Controls and Procedures
|
39
|
PART II.
|
OTHER INFORMATION
|
|
Item 1.
|
Legal Proceedings
|
39
|
Item 1A.
|
Risk Factors
|
39
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
40
|
Item 3.
|
Defaults Upon Senior Securities
|
40
|
Item 4.
|
Mine Safety Disclosures
|
40
|
Item 5.
|
Other Information
|
40
|
Item 6.
|
Exhibits
|
41
|
Signatures
|
42
|
March 31,
2023
|
December 31,
2022
|
|||||||
ASSETS
|
||||||||
Cash and noninterest-bearing deposits with banks
|
$
|
|
$
|
|
||||
Interest-bearing deposits with banks
|
|
|
||||||
Total cash and cash equivalents
|
|
|
||||||
Certificates of deposit in financial institutions
|
|
|
||||||
Securities available for sale
|
|
|
||||||
Securities held to maturity, net of allowance for credit losses of $
|
|
|
||||||
Restricted investments in bank stocks
|
|
|
||||||
Total loans
|
|
|
||||||
Less: Allowance for credit losses
|
(
|
)
|
(
|
)
|
||||
Net loans
|
|
|
||||||
Premises and equipment, net
|
|
|
||||||
Premises and equipment held for sale, net
|
|
|
||||||
Accrued interest receivable
|
|
|
||||||
Goodwill
|
|
|
||||||
Other intangible assets, net
|
|
|
||||||
Bank owned life insurance and annuity assets
|
|
|
||||||
Operating lease right-of-use asset, net
|
|
|
||||||
Deferred tax assets
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES
|
||||||||
Noninterest-bearing deposits
|
$
|
|
$
|
|
||||
Interest-bearing deposits
|
|
|
||||||
Total deposits
|
|
|
||||||
Other borrowed funds
|
|
|
||||||
Subordinated debentures
|
|
|
||||||
Operating lease liability
|
|
|
||||||
Allowance for credit losses on off-balance sheet commitments
|
|
|
||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 5)
|
|
|
||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Common stock ($
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive income (loss)
|
(
|
)
|
(
|
)
|
||||
Treasury stock, at cost (
|
(
|
)
|
(
|
)
|
||||
Total shareholders’ equity
|
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
Three months ended
March 31,
|
||||||||
2023
|
2022
|
|||||||
Interest and dividend income:
|
||||||||
Loans, including fees
|
$
|
|
$
|
|
||||
Securities
|
||||||||
Taxable
|
|
|
||||||
Tax exempt
|
|
|
||||||
Dividends
|
|
|
||||||
Interest-bearing deposits with banks
|
|
|
||||||
Other Interest
|
|
|
||||||
|
|
|||||||
Interest expense:
|
||||||||
Deposits
|
|
|
||||||
Other borrowed funds
|
|
|
||||||
Subordinated debentures
|
|
|
||||||
|
|
|||||||
Net interest income
|
|
|
||||||
Provision for (recovery of) credit losses
|
|
(
|
)
|
|||||
Net interest income after provision for (recovery of) credit losses
|
|
|
||||||
Noninterest income:
|
||||||||
Service charges on deposit accounts
|
|
|
||||||
Trust fees
|
|
|
||||||
Income from bank owned life insurance and annuity assets
|
|
|
||||||
Mortgage banking income
|
|
|
||||||
Electronic refund check / deposit fees
|
|
|
||||||
Debit / credit card interchange income
|
|
|
||||||
Tax preparation fees
|
|
|
||||||
Other
|
|
|
||||||
|
|
|||||||
Noninterest expense:
|
||||||||
Salaries and employee benefits
|
|
|
||||||
Occupancy
|
|
|
||||||
Furniture and equipment
|
|
|
||||||
Professional fees
|
|
|
||||||
Marketing expense
|
|
|
||||||
FDIC insurance
|
|
|
||||||
Data processing
|
|
|
||||||
Software
|
|
|
||||||
Foreclosed assets
|
|
|
||||||
Amortization of intangibles
|
|
|
||||||
Other
|
|
|
||||||
|
|
|||||||
Income before income taxes
|
|
|
||||||
Provision for income taxes
|
|
|
||||||
NET INCOME
|
$
|
|
$
|
|
||||
Earnings per share
|
$
|
|
$
|
|
Three months ended
March 31,
|
||||||||
2023
|
2022
|
|||||||
Net Income
|
$
|
|
$
|
|
||||
Other comprehensive income (loss):
|
||||||||
Change in unrealized gain (loss) on available for sale securities
|
|
(
|
)
|
|||||
Related tax (expense) benefit
|
(
|
)
|
|
|||||
Total other comprehensive (loss), net of tax
|
|
(
|
)
|
|||||
Total comprehensive income (loss)
|
$
|
|
$
|
(
|
)
|
Quarter-to-date
|
Common
Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Treasury
Stock
|
Total
Shareholders'
Equity
|
||||||||||||||||||
Balance at January 1, 2023
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||||
Cumulative change in adopting ASU 2016-13
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Balance at January 1, 2023 (as adjusted for change in adopting ASU 2016-13)
|
|
|
|
(
|
)
|
(
|
)
|
|
||||||||||||||||
Net income
|
|
|
|
|
|
|
||||||||||||||||||
Other comprehensive loss, net
|
|
|
|
|
|
|
||||||||||||||||||
Cash dividends, $
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Common Stock issued to ESOP,
|
|
|
|
|
|
|
||||||||||||||||||
Balance at March 31, 2023
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||||
Balance at January 1, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||
Net income
|
|
|
|
|
|
|
||||||||||||||||||
Other comprehensive loss, net
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Cash dividends, $
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Common Stock issued to ESOP,
|
|
|
|
|
|
|
||||||||||||||||||
Balance at March 31, 2022
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Three months ended
March 31,
|
||||||||
2023
|
2022
|
|||||||
Net cash provided by operating activities:
|
$
|
|
$
|
|
||||
Investing activities:
|
||||||||
Proceeds from maturities and paydowns of securities available for sale
|
|
|
||||||
Purchases of securities available for sale
|
|
(
|
)
|
|||||
Proceeds from calls and maturities of securities held to maturity
|
|
|
||||||
Purchase of securities held to maturity
|
|
(
|
)
|
|||||
Proceeds from maturities of certificates of deposit in financial institutions
|
|
|
||||||
Redemptions of restricted investments in bank stocks
|
|
|
||||||
Net change in loans
|
(
|
)
|
|
|||||
Purchases of premises and equipment
|
(
|
)
|
(
|
)
|
||||
Net cash (used in) investing activities
|
(
|
)
|
(
|
)
|
||||
Financing activities:
|
||||||||
Change in deposits
|
|
|
||||||
Cash dividends
|
(
|
)
|
(
|
)
|
||||
Repayment of Federal Home Loan Bank borrowings
|
(
|
)
|
(
|
)
|
||||
Change in other short-term borrowings
|
|
|
||||||
Net cash provided by financing activities
|
|
|
||||||
Change in cash and cash equivalents
|
|
|
||||||
Cash and cash equivalents at beginning of period
|
|
|
||||||
Cash and cash equivalents at end of period
|
$
|
|
$
|
|
||||
Supplemental disclosure:
|
||||||||
Cash paid for interest
|
$
|
|
$
|
|
|
January 1, 2023
|
|||||||||||
As Reported
Under ASC
326
|
Pre-ASC 326
Adoption
|
Impact of
ASC 326
Adoption
|
||||||||||
Assets:
|
||||||||||||
ACL - HTM debt securities
|
||||||||||||
Obligations of states and political subdivisions
|
$
|
|
$
|
|
$
|
|
||||||
ACL - Loans
|
||||||||||||
Residential real estate
|
|
|
|
|||||||||
Commercial real estate
|
|
|
|
|||||||||
Commercial and industrial
|
|
|
(
|
)
|
||||||||
Consumer
|
|
|
|
|||||||||
Total ACL - Loans
|
$
|
|
$
|
|
$
|
|
||||||
Deferred tax assets
|
$
|
|
$
|
|
$
|
|
||||||
Liabilities:
|
||||||||||||
ACL - Off-balance sheet commitments
|
$
|
|
$
|
|
$
|
|
Portfolio Segment
|
Measurement Method
|
Loss Driver
|
||
Residential real estate
|
Cumulative Undiscounted Expected Loss
|
National Unemployment, National GDP
|
||
Commercial real estate:
|
||||
Owner-occupied
|
Cumulative Undiscounted Expected Loss
|
National Unemployment, National GDP
|
||
Nonowner-occupied
|
Cumulative Undiscounted Expected Loss
|
National Unemployment, National GDP
|
||
Construction
|
Cumulative Undiscounted Expected Loss
|
National Unemployment, National GDP
|
||
Commercial and industrial
|
Cumulative Undiscounted Expected Loss
|
National Unemployment, National GDP
|
||
Consumer:
|
||||
Automobile
|
Cumulative Undiscounted Expected Loss
|
National Unemployment
|
||
Home equity
|
Cumulative Undiscounted Expected Loss
|
National Unemployment
|
||
Other
|
Cumulative Undiscounted Expected Loss, Remaining Life Method
|
National Unemployment
|
Fair Value Measurements at March 31,
2023 Using
|
||||||||||||
Quoted Prices in Active
Markets for Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||||
Assets:
|
||||||||||||
U.S. Government securities
|
$
|
|
$
|
|
$
|
|
||||||
U.S. Government sponsored entity securities
|
|
|
|
|||||||||
Agency mortgage-backed securities, residential
|
|
|
|
|||||||||
Interest rate swap derivatives
|
|
|
|
|||||||||
Liabilities:
|
||||||||||||
Interest rate swap derivatives
|
|
(
|
)
|
|
Fair Value Measurements at December 31,
2022 Using
|
||||||||||||
Quoted Prices in Active
Markets for Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||||
Assets:
|
||||||||||||
U.S. Government securities
|
$
|
|
$
|
|
$
|
|
||||||
U.S. Government sponsored entity securities
|
|
|
|
|||||||||
Agency mortgage-backed securities, residential
|
|
|
|
|||||||||
Interest rate swap derivatives
|
|
|
|
|||||||||
Liabilities:
|
||||||||||||
Interest rate swap derivatives
|
|
(
|
)
|
|
Carrying
|
Fair Value Measurements at March 31,
2023 Using
|
|||||||||||||||||||
Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Certificates of deposit in financial institutions
|
|
|
|
|
|
|||||||||||||||
Securities available for sale
|
|
|
|
|
|
|||||||||||||||
Securities held to maturity
|
|
|
|
|
|
|||||||||||||||
Loans, net
|
|
|
|
|
|
|||||||||||||||
Interest rate swap derivatives
|
|
|
|
|
|
|||||||||||||||
Accrued interest receivable
|
|
|
|
|
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Deposits
|
|
|
|
|
|
|||||||||||||||
Other borrowed funds
|
|
|
|
|
|
|||||||||||||||
Subordinated debentures
|
|
|
|
|
|
|||||||||||||||
Interest rate swap derivatives
|
|
|
|
|
|
|||||||||||||||
Accrued interest payable
|
|
|
|
|
|
Carrying
|
Fair Value Measurements at December 31,
2022 Using:
|
|||||||||||||||||||
Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Certificates of deposit in financial institutions
|
|
|
|
|
|
|||||||||||||||
Securities available for sale
|
|
|
|
|
|
|||||||||||||||
Securities held to maturity
|
|
|
|
|
|
|||||||||||||||
Loans, net
|
|
|
|
|
|
|||||||||||||||
Interest rate swap derivatives
|
|
|
|
|
|
|||||||||||||||
Accrued interest receivable
|
|
|
|
|
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Deposits
|
|
|
|
|
|
|||||||||||||||
Other borrowed funds
|
|
|
|
|
|
|||||||||||||||
Subordinated debentures
|
|
|
|
|
|
|||||||||||||||
Interest rate swap derivatives
|
|
|
|
|
|
|||||||||||||||
Accrued interest payable
|
|
|
|
|
|
Securities Available for Sale
|
Amortized
Cost
|
Gross Unrealized
Gains
|
Gross Unrealized
Losses
|
Estimated
Fair Value
|
||||||||||||
March 31, 2023
|
||||||||||||||||
U.S. Government securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
U.S. Government sponsored entity securities
|
|
|
(
|
)
|
|
|||||||||||
Agency mortgage-backed securities, residential
|
|
|
(
|
)
|
|
|||||||||||
Total securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
December 31, 2022
|
||||||||||||||||
U.S. Government securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
U.S. Government sponsored entity securities
|
|
|
(
|
)
|
|
|||||||||||
Agency mortgage-backed securities, residential
|
|
|
(
|
)
|
|
|||||||||||
Total securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Securities Held to Maturity
|
Amortized
Cost
|
Gross Unrecognized
Gains
|
Gross Unrecognized
Losses
|
Estimated
Fair Value
|
Allowance for Credit Losses
|
|||||||||||||||
March 31, 2023
|
||||||||||||||||||||
Obligations of states and political subdivisions
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||||
Agency mortgage-backed securities, residential
|
|
|
|
|
|
|||||||||||||||
Total securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||||
December 31, 2022
|
||||||||||||||||||||
Obligations of states and political subdivisions
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||
Agency mortgage-backed securities, residential
|
|
|
|
|
||||||||||||||||
Total securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Available for Sale
|
Held to Maturity
|
|||||||||||||||
Debt Securities:
|
Amortized
Cost
|
Estimated
Fair Value
|
Amortized
Cost
|
Estimated
Fair Value
|
||||||||||||
Due in one year or less
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Due in over one to five years
|
|
|
|
|
||||||||||||
Due in over five to ten years
|
|
|
|
|
||||||||||||
Due after ten years
|
|
|
|
|
||||||||||||
Agency mortgage-backed securities, residential
|
|
|
|
|
||||||||||||
Total debt securities
|
$
|
|
$
|
|
$
|
|
$
|
|
March 31, 2023
|
Less Than 12 Months
|
12 Months or More
|
Total
|
|||||||||||||||||||||
Fair Value
|
Unrealized
Loss
|
Fair Value
|
Unrealized
Loss
|
Fair Value
|
Unrealized
Loss
|
|||||||||||||||||||
Securities Available for Sale
|
||||||||||||||||||||||||
U.S. Government securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
U.S. Government sponsored entity
securities
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Agency mortgage-backed
|
||||||||||||||||||||||||
securities, residential
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Total available for sale
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
December 31, 2022
|
Less Than 12 Months
|
12 Months or More
|
Total
|
|||||||||||||||||||||
Fair Value
|
Unrealized
Loss
|
Fair Value
|
Unrealized
Loss
|
Fair Value
|
Unrealized
Loss
|
|||||||||||||||||||
Securities Available for Sale
|
||||||||||||||||||||||||
U.S. Government securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
U.S. Government sponsored entity
securities
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Agency mortgage-backed securities, residential
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Total available for sale
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
Held to Maturity Debt Securities
|
Three months ended
March 31, 2023
|
|||
Allowance for credit losses:
|
||||
Beginning balance
|
$
|
|
||
Impact of adopting ASC 326
|
|
|||
Credit loss expense
|
|
|||
Allowance for credit losses ending balance
|
$
|
|
March 31,
2023
|
December 31,
2022
|
|||||||
Residential real estate
|
$
|
|
$
|
|
||||
Commercial real estate:
|
||||||||
Owner-occupied
|
|
|
||||||
Nonowner-occupied
|
|
|
||||||
Construction
|
|
|
||||||
Commercial and industrial
|
|
|
||||||
Consumer:
|
||||||||
Automobile
|
|
|
||||||
Home equity
|
|
|
||||||
Other
|
|
|
||||||
|
|
|||||||
Less: Allowance for credit losses
|
(
|
)
|
(
|
)
|
||||
Loans, net
|
$
|
|
$
|
|
March 31,2023
|
Loans Past Due
90 Days And
Still Accruing
|
Nonaccrual
Loans With No
ACL
|
Nonaccrual
Loans With an
ACL
|
Total
Nonaccrual
Loans
|
||||||||||||
Residential real estate
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Commercial real estate:
|
||||||||||||||||
Owner-occupied
|
|
|
|
|
||||||||||||
Nonowner-occupied
|
|
|
|
|
||||||||||||
Construction
|
|
|
|
|
||||||||||||
Commercial and industrial
|
|
|
|
|
||||||||||||
Consumer:
|
||||||||||||||||
Automobile
|
|
|
|
|
||||||||||||
Home equity
|
|
|
|
|
||||||||||||
Other
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
Loans Past Due
90 Days And
Still Accruing
|
Nonaccrual
|
||||||
Residential real estate
|
$
|
|
$
|
|
||||
Commercial real estate:
|
||||||||
Owner-occupied
|
|
|
||||||
Nonowner-occupied
|
|
|
||||||
Construction
|
|
|
||||||
Commercial and industrial
|
|
|
||||||
Consumer:
|
||||||||
Automobile
|
|
|
||||||
Home equity
|
|
|
||||||
Other
|
|
|
||||||
Total
|
$
|
|
$
|
|
March 31, 2023
|
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
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Owner-occupied
|
|
|
|
|
|
|
||||||||||||||||||
Nonowner-occupied
|
|
|
|
|
|
|
||||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||
Commercial and industrial
|
|
|
|
|
|
|
||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Automobile
|
|
|
|
|
|
|
||||||||||||||||||
Home equity
|
|
|
|
|
|
|
||||||||||||||||||
Other
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
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
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Owner-occupied
|
|
|
|
|
|
|
||||||||||||||||||
Nonowner-occupied
|
|
|
|
|
|
|
||||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||
Commercial and industrial
|
|
|
|
|
|
|
||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Automobile
|
|
|
|
|
|
|
||||||||||||||||||
Home equity
|
|
|
|
|
|
|
||||||||||||||||||
Other
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Revolving
|
||||||||||||||||||||||||||||||||
Loans
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
March 31, 2023
|
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
Commercial real estate - Owner-occupied
|
||||||||||||||||||||||||||||||||
Risk Rating
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Revolving
|
||||||||||||||||||||||||||||||||
Loans
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
March 31, 2023
|
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
Commercial real estate - Nonowner-occupied
|
||||||||||||||||||||||||||||||||
Risk Rating
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Revolving
|
||||||||||||||||||||||||||||||||
Loans
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
March 31, 2023
|
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
Commercial real estate - Construction
|
||||||||||||||||||||||||||||||||
Risk Rating
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Revolving
|
||||||||||||||||||||||||||||||||
Loans
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
March 31, 2023
|
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
Commercial and Industrial
|
||||||||||||||||||||||||||||||||
Risk Rating
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
Pass
|
Criticized
|
Classified
|
Total
|
||||||||||||
Commercial real estate:
|
||||||||||||||||
Owner-occupied
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Nonowner-occupied
|
|
|
|
|
||||||||||||
Construction
|
|
|
|
|
||||||||||||
Commercial and industrial
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
Revolving
|
||||||||||||||||||||||||||||||||
Loans
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
March 31, 2023
|
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
Residential Real Estate:
|
||||||||||||||||||||||||||||||||
Payment Performance
|
||||||||||||||||||||||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Revolving
|
||||||||||||||||||||||||||||||||
Loans
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
March 31, 2023
|
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
Consumer - Automobile:
|
||||||||||||||||||||||||||||||||
Payment Performance
|
||||||||||||||||||||||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
Revolving
|
|||||||||||||||||||||||||||||||
Loans
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
March 31, 2023
|
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
Consumer - Home Equity:
|
||||||||||||||||||||||||||||||||
Payment Performance
|
||||||||||||||||||||||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Revolving
|
||||||||||||||||||||||||||||||||
Loans
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
March 31, 2023
|
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
Consumer - Other:
|
||||||||||||||||||||||||||||||||
Payment Performance
|
||||||||||||||||||||||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
Consumer
|
|||||||||||||||||||
December 31, 2022
|
Automobile
|
Home Equity
|
Other
|
Residential
Real Estate
|
Total
|
|||||||||||||||
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Nonperforming
|
|
|
|
|
|
|||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
March 31, 2023
|
Residential
Real Estate
|
Commercial
Real Estate
|
Commercial
and Industrial
|
Consumer
|
Total
|
|||||||||||||||
Allowance for credit losses:
|
||||||||||||||||||||
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Impact of adopting ASC 326
|
|
|
(
|
)
|
|
|
||||||||||||||
Provision for credit losses
|
|
|
|
|
|
|||||||||||||||
Loans charged-off
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||
Recoveries
|
|
|
|
|
|
|||||||||||||||
Total ending allowance balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
March 31, 2022
|
Residential
Real Estate
|
Commercial
Real Estate
|
Commercial
and Industrial
|
Consumer
|
Total
|
|||||||||||||||
Allowance for credit losses:
|
||||||||||||||||||||
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Provision for credit losses
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||
Loans charged-off
|
(
|
)
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||||
Recoveries
|
|
|
|
|
|
|||||||||||||||
Total ending allowance balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
Residential
Real Estate
|
Commercial
Real Estate
|
Commercial
and Industrial
|
Consumer
|
Total
|
|||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||
Ending allowance balance attributable to loans:
|
||||||||||||||||||||
Individually evaluated for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Collectively evaluated for impairment
|
|
|
|
|
|
|||||||||||||||
Total ending allowance balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Loans:
|
||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Loans collectively evaluated for impairment
|
|
|
|
|
|
|||||||||||||||
Total ending loans balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Collateral Type
|
||||||||||||
March 31, 2023
|
Real Esttate
|
Business Assets
|
Total
|
|||||||||
Commercial real estate:
|
||||||||||||
Owner-occupied
|
$
|
|
$
|
|
$
|
|
||||||
Consumer:
|
||||||||||||
Home equity
|
|
|
|
|||||||||
Total collateral dependent loans
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
Unpaid
Principal
Balance
|
Recorded
Investment
|
Allowance for
Loan Losses
Allocated
|
|||||||||
With an allowance recorded:
|
$
|
|
$
|
|
$
|
|
||||||
With no related allowance recorded:
|
||||||||||||
Commercial real estate:
|
||||||||||||
Owner-occupied
|
|
|
—
|
|||||||||
Nonowner-occupied
|
|
|
—
|
|||||||||
Consumer:
|
||||||||||||
Home equity
|
|
|
—
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
Three months ended
March 31, 2022
|
||||||||||||
Average
Impaired Loans
|
Interest Income
Recognized
|
Cash Basis
Interest Recognized
|
||||||||||
With an allowance recorded:
|
||||||||||||
Commercial and industrial
|
$
|
|
$
|
|
$
|
|
||||||
With no related allowance recorded:
|
||||||||||||
Commercial real estate:
|
||||||||||||
Owner-occupied
|
|
|
|
|||||||||
Nonowner-occupied
|
|
|
|
|||||||||
Commercial and industrial
|
|
|
|
|||||||||
Consumer:
|
||||||||||||
Home equity
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
FHLB
Borrowings
|
Promissory
Notes
|
Totals
|
||||||||||
March 31, 2023
|
$
|
|
$
|
|
$
|
|
||||||
December 31, 2022
|
$
|
|
$
|
|
$
|
|
FHLB
Borrowings
|
Promissory
Notes
|
Totals
|
||||||||||
2023
|
$
|
|
$
|
|
$
|
|
||||||
2024
|
|
|
|
|||||||||
2025
|
|
|
|
|||||||||
2026
|
|
|
|
|||||||||
2027
|
|
|
|
|||||||||
Thereafter
|
|
|
|
|||||||||
$
|
|
$
|
|
$
|
|
Three months ended March 31,
2023
|
||||||||||||
Banking
|
Consumer
Finance
|
Total
Company
|
||||||||||
Net interest income
|
$
|
|
$
|
|
$
|
|
||||||
Provision for (recovery of) credit losses
|
|
(
|
)
|
|
||||||||
Noninterest income
|
|
|
|
|||||||||
Noninterest expense
|
|
|
|
|||||||||
Provision for income taxes
|
|
|
|
|||||||||
Net income
|
|
|
|
|||||||||
Assets
|
|
|
|
Three months ended March 31,
2022
|
||||||||||||
Banking
|
Consumer
Finance
|
Total
Company
|
||||||||||
Net interest income
|
$
|
|
$
|
|
$
|
|
||||||
Provision for (recovery of) credit losses
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Noninterest income
|
|
|
|
|||||||||
Noninterest expense
|
|
|
|
|||||||||
Provision for income taxes
|
|
|
|
|||||||||
Net income
|
|
|
|
|||||||||
Assets
|
|
|
|
As of
March 31,
2023
|
As of
December 31,
2022
|
|||||||
Operating leases:
|
||||||||
Operating lease right-of-use assets
|
$
|
|
$
|
|
||||
Operating lease liabilities
|
|
|
Three months ended
March 31,
|
||||||||
2023
|
2022
|
|||||||
Operating lease cost
|
$
|
|
$
|
|
||||
Short-term lease expense
|
|
|
Operating
Leases
|
||||
2023
(remaining)
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Thereafter
|
|
|||
Total lease payments
|
|
|||
Less: Imputed Interest
|
(
|
)
|
||
Total operating leases
|
$
|
|
As of
March 31,
2023
|
As of
December 31,
2022
|
|||||||
Weighted-average remaining lease term for operating leases
|
|
|
||||||
Weighted-average discount rate for operating leases
|
|
%
|
|
%
|
Exhibit Number
|
Exhibit Description
|
|
3.1
|
||
3.2
|
||
4.1
|
||
31.1
|
||
31.2
|
||
32
|
||
101.INS #
|
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL
document.
|
|
101.SCH #
|
XBRL Taxonomy Extension Schema: Filed herewith. #
|
|
101.CAL #
|
XBRL Taxonomy Extension Calculation Linkbase: Filed herewith. #
|
|
101.DEF #
|
XBRL Taxonomy Extension Definition Linkbase: Filed herewith. #
|
|
101.LAB #
|
XBRL Taxonomy Extension Label Linkbase: Filed herewith. #
|
|
101.PRE #
|
XBRL Taxonomy Extension Presentation Linkbase: Filed herewith. #
|
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) Filed herewith #
|
# Attached as Exhibit 101 are the following documents formatted in Inline XBRL (eXtensive Business Reporting Language): (i) Unaudited Consolidated
Balance Sheets; (ii) Unaudited Consolidated Statements of Income; (iii) Unaudited Consolidated Statements of Comprehensive Income; (iv) Unaudited Consolidated Statements of Changes in Shareholders’ Equity; (v) Unaudited Condensed Consolidated
Statements of Cash Flows; and (vi) Notes to the Consolidated Financial Statements.
|
OHIO VALLEY BANC CORP.
|
|||
Date:
|
May 15, 2023
|
By:
|
/s/Larry E. Miller II
|
Larry E. Miller, II
|
|||
President and Chief Executive Officer
|
|||
Date:
|
May 15, 2023
|
By:
|
/s/Scott W. Shockey
|
Scott W. Shockey
|
|||
Senior Vice President and Chief Financial Officer
|
/s/Larry E. Miller, II |
Larry E. Miller, II |
President and Chief Executive Officer |
Ohio Valley Banc Corp. |
(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 |
(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: May 15, 2023 | By: | /s/Larry E. Miller, II |
Larry E. Miller, II, President and CEO | ||
(Principal Executive Officer) |
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: May 15, 2023 | By: | /s/ Scott W. Shockey | |
Scott W. Shockey, Senior Vice President and CFO | |||
(Principal Financial Officer) |
(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/ Larry E. Miller, II
|
*/s/ Scott W. Shockey
|
|
Larry E. Miller, II
|
Scott W. Shockey
|
|
President and Chief Executive Officer
|
Senior Vice President and Chief Financial Officer
|
|
Dated: May 15, 2023
|
Dated: May 15, 2023
|
* |
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.
|
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
ASSETS | ||
Securities held to maturity, net of allowance for credit losses | $ 3 | $ 0 |
Securities held to maturity, fair value | $ 8,398 | $ 8,460 |
SHAREHOLDERS' EQUITY | ||
Common stock, par 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) | 5,470,453 | 5,465,707 |
Treasury stock, shares (in shares) | 693,933 | 693,933 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) [Abstract] | ||
Net Income | $ 3,908 | $ 4,125 |
Other comprehensive income (loss): | ||
Change in unrealized gain (loss) on available for sale securities | 2,145 | (10,692) |
Related tax (expense) benefit | (450) | 2,245 |
Total other comprehensive (loss), net of tax | 1,695 | (8,447) |
Total comprehensive income (loss) | $ 5,603 | $ (4,322) |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands |
Common Stock [Member] |
Common Stock [Member]
Accounting Standards Update 2016-13 [Member]
|
Common Stock [Member]
Accounting Standards Update 2016-13 [Member]
Revision of Prior Period, Adjustment [Member]
|
Additional Paid-in Capital [Member] |
Additional Paid-in Capital [Member]
Accounting Standards Update 2016-13 [Member]
|
Additional Paid-in Capital [Member]
Accounting Standards Update 2016-13 [Member]
Revision of Prior Period, Adjustment [Member]
|
Retained Earnings [Member] |
Retained Earnings [Member]
Accounting Standards Update 2016-13 [Member]
|
Retained Earnings [Member]
Accounting Standards Update 2016-13 [Member]
Revision of Prior Period, Adjustment [Member]
|
Accumulated Other Comprehensive Income (Loss) [Member] |
Accumulated Other Comprehensive Income (Loss) [Member]
Accounting Standards Update 2016-13 [Member]
|
Accumulated Other Comprehensive Income (Loss) [Member]
Accounting Standards Update 2016-13 [Member]
Revision of Prior Period, Adjustment [Member]
|
Treasury Stock [Member] |
Treasury Stock [Member]
Accounting Standards Update 2016-13 [Member]
|
Treasury Stock [Member]
Accounting Standards Update 2016-13 [Member]
Revision of Prior Period, Adjustment [Member]
|
Total |
Accounting Standards Update 2016-13 [Member] |
Accounting Standards Update 2016-13 [Member]
Revision of Prior Period, Adjustment [Member]
|
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance, Beginning of period at Dec. 31, 2021 | $ 5,447 | $ 51,165 | $ 100,702 | $ 708 | $ (16,666) | $ 141,356 | ||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||
Net Income | 0 | 0 | 4,125 | 0 | 0 | 4,125 | ||||||||||||
Other comprehensive loss, net | 0 | 0 | 0 | (8,447) | 0 | (8,447) | ||||||||||||
Cash dividends | 0 | 0 | (998) | 0 | 0 | (998) | ||||||||||||
Common stock issued to ESOP | 18 | 557 | 0 | 0 | 0 | 575 | ||||||||||||
Balance, End of Period at Mar. 31, 2022 | 5,465 | 51,722 | 103,829 | (7,739) | (16,666) | 136,611 | ||||||||||||
Balance, Beginning of period at Dec. 31, 2022 | 5,465 | $ 5,465 | $ 0 | 51,722 | $ 51,722 | $ 0 | 109,320 | $ 107,111 | $ (2,209) | (14,813) | $ (14,813) | $ 0 | (16,666) | $ (16,666) | $ 0 | 135,028 | $ 132,819 | $ (2,209) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||
Net Income | 0 | 0 | 3,908 | 0 | 0 | 3,908 | ||||||||||||
Other comprehensive loss, net | 0 | 0 | 0 | 1,695 | 0 | 1,695 | ||||||||||||
Cash dividends | 0 | 0 | (1,002) | 0 | 0 | (1,002) | ||||||||||||
Common stock issued to ESOP | 5 | 120 | 0 | 0 | 0 | 125 | ||||||||||||
Balance, End of Period at Mar. 31, 2023 | $ 5,470 | $ 51,842 | $ 110,017 | $ (13,118) | $ (16,666) | $ 137,545 |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) [Abstract] | ||
Cash dividends, per share (in dollars per share) | $ 0.21 | $ 0.21 |
Common stock issued to ESOP, shares (in shares) | 4,746 | 18,522 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION: The
accompanying consolidated financial statements include the accounts of Ohio Valley Banc Corp. (“Ohio Valley”) and its wholly-owned subsidiaries, The Ohio Valley Bank Company (the “Bank”), Loan Central, Inc., a consumer finance company, Ohio Valley
Financial Services Agency, LLC, an insurance agency, and OVBC Captive, Inc., a limited purpose property and casualty insurance company. The Bank has two
wholly-owned subsidiaries, Race Day Mortgage, Inc., an Ohio corporation that provides online consumer mortgages, and Ohio Valley REO, LLC, an Ohio limited liability company (“Ohio Valley REO”), to which the Bank transfers certain real estate acquired
by the Bank through foreclosure for sale by Ohio Valley REO. In February 2023, Ohio Valley announced that it was taking steps toward closing Race Day. The decision to start this process was made due to low loan demand, issues retaining personnel, and
lack of profitability. Ohio Valley plans to see current loan applications in progress to completion. An exact date of closing is anticipated to be set once existing loan applications have been processed. 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 March 31, 2023, and its results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31,
2023, are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, 2023. The accompanying consolidated financial statements do not purport to contain all the necessary financial disclosures
required by U.S. generally accepted accounting principles (“US GAAP”) that might otherwise be necessary in the circumstances. The Annual Report of the Company for the year ended December 31, 2022, contains consolidated financial statements and related
notes which should be read in conjunction with the accompanying consolidated financial statements.
The consolidated financial statements for 2022 have been reclassified to conform to the presentation for 2023. These reclassifications had no effect on net
income or shareholders’ equity.
USE OF ESTIMATES
IN THE PREPARATION OF FINANCIAL STATEMENTS: 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.
ADOPTION OF NEW
ACCOUNTING PRONOUNCEMENTS: Effective January 1, 2023, the Company adopted ASU No. 2022-02 Financial Instruments - Credit Losses (Topic
326): TDR’s and Vintage Disclosures. This new accounting guidance eliminated the previous accounting guidance for troubled debt restructurings (“TDRs”) and resulted in additional disclosure requirements related to gross charge offs by year of
origination and the removal of TDR disclosures, replaced by additional disclosures on the types of modifications of loans to borrowers experiencing financial difficulties.
Effective January 1, 2023, the Company adopted ASU No. 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, (“ASU 2016-13”) (“ASC 326”) as amended. The
new accounting guidance replaces the “incurred loss” model with an “expected loss” model, which is referred to as the current expected credit loss
(“CECL”) model. The measurement of expected credit losses under the CECL model is applicable to financial assets measured at amortized cost, including loan receivables and HTM debt securities. It also applies to off-balance sheet credit exposures not
accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). In addition, ASC 326 made changes to the accounting for available for sale debt securities. One such change is to require
credit losses to be presented as an allowance rather than as a write-down on available for sale debt securities management does not intend to sell or believes that it is more likely than not they will be required to sell.
The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit
exposures. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable US GAAP. The Company recorded a net decrease to retained
earnings of $2,209 as of January 1, 2023 for the cumulative effect of adopting ASC 326.
The following table
illustrates the transition adjustment of adopting ASC 326:
DEBT SECURITIES: The Company
classifies securities into held to maturity (“HTM”) and available for sale (“AFS”) categories. HTM securities are those which the Company has the positive intent and ability to hold to maturity and are reported at amortized cost. Securities classified
as AFS include securities that could be sold for liquidity, investment management or similar reasons even if there is not a present intention of such a sale. AFS securities are reported at fair value, with unrealized gains or losses included in other
comprehensive income, net of tax.
Premium amortization is deducted from, and discount accretion is added to, interest income on securities using the level yield method without
anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated. Gains and losses are recognized upon the sale of specific identified securities on the completed trade date.
ALLOWANCE FOR CREDIT LOSSES (“ACL”) - AFS SECURITIES: For AFS debt securities in an unrealized position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the
security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For debt securities AFS that do not meet
the aforementioned criteria, the Company evaluates whether the decline in fair values has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any
changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected
from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by
the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income.
Changes in the ACL are recorded as credit loss expense (or reversal). Losses are charged against the allowance when management believes the
uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
Accrued interest receivable on AFS debt securities totaled $448 at March 31, 2023 and is excluded from the estimate of credit losses.
Management classifies the AFS portfolio into the following major security types: U.S. Government securities, U.S. Government sponsored entity
securities, and Agency mortgage-backed residential securities. These security types have an explicit government guarantee, and therefore, no ACL is recorded for these securities. As a result, there was no ACL related to AFS debt securities at March 31, 2023.
ACL - HTM SECURITIES:
Management measures expected credit losses on HTM debt securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current
conditions and reasonable and supportable forecasts. The ACL on securities HTM is a contra asset valuation account that is deducted from the carrying amount of HTM securities to present the net amount expected to be collected. HTM securities are
charged off against the ACL when deemed uncollectible. Adjustments to the ACL are reported in the Company’s consolidated statements of income in the provision for credit losses. Accrued interest receivable on HTM securities is excluded from the
estimate of credit losses. Management classifies the HTM portfolio into two major security types: Obligations of states and political subdivisions and Agency mortgage-backed residential securities. Agency mortgage-backed residential securities
consist of only two securities with balances that are not significant. With regard to obligations of states and political subdivisions, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial
condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. At March 31, 2023, there was $3 in the ACL related to HTM debt securities, with no corresponding provision expense during the first quarter of 2023.
LOANS: Loans that management has the intent and ability to hold
for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred loan fees and costs, and an ACL. Interest income is reported on an accrual basis using the interest method and
includes amortization of net deferred loan fees and costs over the loan term using the level yield method without anticipating prepayments. The amount of the Company’s recorded investment is not materially different than the amount of unpaid principal
balance for loans.
Interest income is discontinued and the loan moved to non-accrual status when full loan repayment is in doubt, typically when the loan
payments are past due 90 days or over unless the loan is well-secured or in process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if
collection of principal or interest is considered doubtful.
All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is
accounted for on the cash-basis method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
The Bank also originates long-term, fixed-rate mortgage loans, with the full intention of being sold to the secondary market. These loans
are considered held for sale during the period of time after the principal has been advanced to the borrower by the Bank, but before the Bank has been reimbursed by the Federal Home Loan Mortgage Corporation, typically within a few business days.
Loans sold to the secondary market are carried at the lower of aggregate cost or fair value. As of March 31, 2023, there were $124 in loans held
for sale by the Bank, as compared to no loans held for sale at December 31, 2022.
ACL – LOANS: The ACL for loans is a
contra asset valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible.
Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The ACL is adjusted through the provision for credit losses and reduced by net charge offs of loans.
The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers historical loss experience,
current conditions and forecasts of future economic conditions. Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period.
The methodology for determining the ACL has two main components: evaluation of expected credit losses for certain groups of loans that share
similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans.
The ACL is measured on a collective (pool) basis when similar risk characteristics exist. The Company has identified the
following portfolio segments and measures the ACL using the following methods:
Historical credit loss experience is the basis for the estimation of expected credit losses. We apply historical loss rates to pools of loans
with similar risk characteristics. In defining historical loss rates and the prepayment rates and curtailment rates used to determine the expected life of loans, the use of regional and national peer data was used. After consideration of the historic
loss calculation, management applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information at the balance sheet date. Our reasonable and supportable
forecast adjustment is based on the national unemployment rate and the national gross domestic product forecast for the first year. For periods beyond our reasonable and supportable forecast, we revert to historical loss rates utilizing a straight-line
method over a two-year reversion period. The qualitative adjustments for current conditions are based upon changes in lending policies and
practices, experience and ability of lending staff, quality of the Company’s loan review system, value of underlying collateral, the volume and severity of past due loans, the value of underlying collateral for collateral dependent loans, the existence
of and changes in concentrations and other external factors. Each factor is assigned a value to reflect improving, stable, or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation.
Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies:
management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower, or the extension of renewal options are included in the original or modified contract at the reporting date
and are not unconditionally cancellable by the Company.
The Company has elected to exclude accrued interest receivable from the measurement of its ACL. When a loan is placed on non-accrual status,
any outstanding accrued interest is reversed against interest income.
Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the
collective evaluation. We evaluate all loans that meet the following criteria: 1) when it is determined that foreclosure is probable; 2) substandard, doubtful and nonperforming loans when repayment is expected to be provided substantially through the
operation or sale of the collateral; 3) when it is determined by management that a loan does not share similar risk characteristics with other loans. Specific reserves are established based on the following three acceptable methods for measuring the
ACL: 1) the present value of expected future cash flows discounted at the loan’s original effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral when the loan is collateral dependent. Our individual loan
evaluations consist primarily of the fair value of collateral method because most of our loans are collateral dependent. Collateral values are discounted to consider disposition costs when appropriate. A specific reserve is established or a charge-off
is taken if the fair value of the loan is less than the loan balance.
At March 31, 2023, there was $7,607
in the ACL related to loans, with corresponding provision expense of $465 during the first quarter of 2023.
The Company’s loan portfolio segments have been identified as follows: Commercial and Industrial, Commercial Real Estate, Residential Real
Estate, and Consumer.
Commercial and industrial:
Portfolio segment consists of borrowings for commercial purposes to individuals, corporations, partnerships, sole proprietorships, and other business enterprises. Commercial and industrial loans are generally secured by business assets such as
equipment, accounts receivable, inventory, or any other asset excluding real estate and generally made to finance capital expenditures or operations. The Company’s risk exposure is related to deterioration in the value of collateral securing the loan
should foreclosure become necessary. Generally, business assets used or produced in operations do not maintain their value upon foreclosure, which may require the Company to write down the value significantly to sell.
Commercial real estate: Portfolio segment consists
of nonfarm, nonresidential loans secured by owner-occupied and nonowner-occupied commercial real estate as well as commercial construction loans. An owner-occupied loan relates to a borrower purchased building or space for which the repayment of
principal is dependent upon cash flows from the ongoing business operations conducted by the party, or an affiliate of the party, who owns the property. Owner-occupied loans that are dependent on cash flows from operations can be adversely affected by
current market conditions for their product or service. A nonowner-occupied loan is a property loan for which the repayment of principal is dependent upon rental income associated with the property or the subsequent sale of the
property. Nonowner-occupied loans that are dependent upon rental income are primarily impacted by local economic conditions which dictate occupancy rates and the amount of rent charged. Commercial construction loans consist of borrowings to purchase
and develop raw land into 1-4 family residential properties. Construction loans are extended to individuals as well as corporations for the construction of an individual or multiple properties and are secured by raw land and the subsequent
improvements. Repayment of the loans to real estate developers is dependent upon the sale of properties to third parties in a timely fashion upon completion. Should there be delays in construction or a downturn in the market for those properties,
there may be significant erosion in value that may be absorbed by the Company. At March 31, 2023, there was $655 in the ACL related to
off-balance sheet credit exposures, with corresponding provision expenses of $24 during the first quarter of 2023.
Residential real estate: Portfolio segment
consists of loans to individuals for the purchase of 1-4 family primary residences with repayment primarily through wage or other income sources of the individual borrower. The Company’s loss exposure to these loans is dependent on local market
conditions for residential properties as loan amounts are determined, in part, by the fair value of the property at origination.
Consumer: Portfolio segment consists of loans to
individuals secured by automobiles, open-end home equity loans and other loans to individuals for household, family, and other personal expenditures, both secured and unsecured. These loans typically have maturities of six years or less with repayment dependent on individual wages and income. The risk of loss on consumer loans is elevated as the collateral securing these
loans, if any, rapidly depreciate in value or may be worthless and/or difficult to locate if repossession is necessary. The Company has allocated the highest percentage of its allowance for loan losses as a percentage of loans to the other identified
loan portfolio segments due to the larger dollar balances associated with such portfolios.
ACL – OFF-BALANCE SHEET CREDIT
EXPOSURES: The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by
the Company. The ACL on off-balance sheet credit exposures is adjusted through credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be
funded over its estimated life.
EARNINGS PER SHARE: Earnings per share
are computed based on net income divided by the weighted average number of common shares outstanding during the quarter. The weighted average common shares outstanding were 4,773,461 and 4,761,072 for the three months ended March 31, 2023 and 2022, respectively. Ohio Valley had
no dilutive effect and no potential common shares issuable under stock options or other agreements for any period presented.
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FAIR VALUE OF FINANCIAL INSTRUMENTS |
NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1: Quoted prices (unadjusted)
for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable
inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable
inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The following is a description of the Company’s valuation methodologies used to measure and disclose the fair values of its financial assets
and liabilities on a recurring or nonrecurring basis:
Securities: The fair values for
securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or
market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). During times when trading is more liquid, broker quotes are used (if available) to validate the model.
Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.
Individually Evaluated Collateral Dependent
Loans: The fair value of individually evaluated collateral dependent loans is generally based on the fair value of collateral, less costs to sell. When carried at fair value, individually evaluated collateral dependent loans generally receive
specific allocations of the ACL. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the
income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a
Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s
historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. In some instances, fair value adjustments can be made based on a quoted price from an observable input, such as a purchase agreement. Such adjustments would be classified as a Level 2 classification. Individually
evaluated collateral dependent loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.
Other Real Estate Owned: Assets
acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to
sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the
appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining
fair value. In some instances, fair value adjustments can be made based on a quoted price from an observable input, such as a purchase agreement. Such adjustments would be classified as a Level 2 classification.
Appraisals for both collateral-dependent 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%.
Interest Rate Swap Agreements: The
fair value of interest rate swap agreements is determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments). The variable cash
receipts (or payments) are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves (Level 2).
Assets and Liabilities Measured on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis are summarized below:
There were no transfers between Level 1 and Level 2 during 2023 or 2022.
Assets and Liabilities Measured on a Nonrecurring Basis
There were no assets or
liabilities measured at fair value on a nonrecurring basis at March 31, 2023 and December 31, 2022.
There was no other real
estate owned that was measured at fair value less costs to sell at March 31, 2023 and December 31, 2022. Furthermore, there were no corresponding write downs during
the three months ended March 31, 2023 and 2022.
There was no quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a
non-recurring basis at March 31, 2023 and December 31, 2022.
The carrying amounts and estimated fair values of financial instruments at March 31, 2023 and December 31, 2022 are as follows:
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.
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SECURITIES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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SECURITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES |
NOTE 3 – SECURITIES
The following table summarizes the amortized cost and fair value of securities available for sale
and securities held to maturity at March 31, 2023
and December 31, 2022 and the
corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive (loss) and gross unrecognized gains and losses, and allowance for credit losses:
The amortized cost and estimated fair value of debt securities at March 31, 2023, by contractual maturity, are shown below. Actual maturities may
differ from contractual maturities because certain issuers may have the right to call or prepay the debt obligations prior to their contractual maturities. Securities not due at a single maturity are shown separately.
There were no sales of securities during the
three months ended March 31, 2023 and 2022.
Debt securities with a carrying value of approximately $134,382 at March 31, 2023 and $126,318 at December 31, 2022, respectively, were pledged to secure public deposits, repurchase agreements, and for other purposes required or permitted by law.
The following table summarizes debt securities available for sale in an unrealized loss position for which an allowance for credit losses has not
been recorded at March 31, 2023 and December 31, 2022, aggregated by major security type and length of time in a continuous unrealized loss position:
Management evaluates available for sale debt securities in unrealized positions to determine whether impairment is due to credit-related factors.
Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period
of time sufficient to allow for any anticipated recovery in fair value.
At March 31, 2023, the Company had 99 available
for sale debt securities in an unrealized position without an allowance for credit losses, of which 15 were from U.S. Government securities, 3 were from U.S. Government sponsored entity securities, and 81 were from Agency mortgage-backed residential securities.
Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the
securities approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of March 31, 2023, management believes that the unrealized losses detailed in the previous table are due to noncredit-related
factors, including changes in interest rates and other market conditions, and therefore the Company carried no allowance for credit losses on available for sale debt securities at March 31, 2023.
The following table presents the activity in the allowance for credit losses for held to maturity debt securities:
The Company’s held to maturity securities primarily consist of obligations
of states and political subdivisions. The ACL on held to maturity securities is estimated at each measurement date on a collective basis by major security type. Risk factors such as issuer bond ratings, historical loss rates, financial
condition of issuer, and timely principal and interest payments of issuer were evaluated to determine if a credit reserve was required within the portfolio. At March 31, 2023, there were no past due principal and interest payments related to held to
maturity securities. The Company identified a cumulative loss rate of .03% using historical loss data provided by S&P and Moody’s bond
rating service. This resulted in a $3 credit loss reserve for
held to maturity debt securities upon adoption of ASC 326 on January 1, 2023, with no provision expense during the three months ended March 31,
2023.
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LOANS AND ALLOWANCE FOR LOAN LOSSES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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LOANS AND ALLOWANCE FOR LOAN LOSSES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS AND ALLOWANCE FOR LOAN LOSSES |
NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES
Loans are comprised of the following:
At March 31, 2023 and December 31, 2022, net deferred loan
origination costs were $812 and $663, respectively. At March 31, 2023 and December 31, 2022, net unamortized
loan purchase premiums were $985 and $1,142, 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 March 31, 2023 and December 31, 2022:
The Company recognized $20 of
interest income in nonaccrual loans during the three months ended March 31, 2023.
The following table presents the aging of the recorded investment of past due loans by class of
loans as of March 31, 2023 and December 31, 2022:
Credit Quality Indicators:
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such
as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. These risk categories are represented by a loan grading scale from 1 through 11. The Company
analyzes loans individually with a higher credit risk rating and groups these loans into categories called “criticized” and ”classified” assets. The Company considers its criticized assets to be loans that are graded 8 and its classified assets to be
loans that are graded 9 through 11. The Company’s risk categories are reviewed at least annually on loans that have aggregate borrowing amounts that meet or exceed $1,000.
The Company uses the following definitions for its criticized loan risk ratings:
Special Mention. Loans classified as
“special mention” indicate considerable risk due to deterioration of repayment (in the earliest stages) due to potential weak primary repayment source, or payment delinquency. These loans will be under constant supervision, are not classified and do
not expose the institution to sufficient risks to warrant classification. These deficiencies should be correctable within the normal course of business, although significant changes in company structure or policy may be necessary to correct the
deficiencies. These loans are considered bankable assets with no apparent loss of principal or interest envisioned. The perceived risk in continued lending is considered to have increased beyond the level where such loans would normally be granted.
The Company uses the following definitions for its classified loan risk ratings:
Substandard. Loans classified as
“substandard” represent very high risk, serious delinquency, nonaccrual, or unacceptable credit. Repayment through the primary source of repayment is in jeopardy due to the existence of one or more well-defined weaknesses, and the collateral pledged
may inadequately protect collection of the loans. Loss of principal is not likely if weaknesses are corrected, although financial statements normally reveal significant weakness. Loans are still considered collectible, although loss of principal is
more likely than with special mention loans. Collateral liquidation is considered likely to satisfy debt.
Doubtful. Loans classified as
“doubtful” display a high probability of loss, although the amount of actual loss at the time of classification is undetermined. This classification should be temporary until such time that actual loss can be identified, or improvements are made to
reduce the seriousness of the classification. These loans exhibit all substandard characteristics with the addition that weaknesses make collection or liquidation in full highly questionable and improbable. This classification consists of loans where
the possibility of loss is high after collateral liquidation based upon existing facts, market conditions, and value. Loss is deferred until certain important and reasonable specific pending factors that may strengthen the credit can be more accurately
determined. 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.
As of March 31,
2023 and December 31, 2022, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:
The Company considers the performance of the loan portfolio and its impact on the allowance for credit
losses. 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 March 31, 2023 and December 31,2022:
The Company originates residential, consumer, and commercial loans to customers located primarily in the southeastern areas of Ohio as well
as the western counties of West Virginia. Approximately 4.61% of total loans were unsecured at March 31, 2023, up from 4.52% at December 31, 2022.
Modifications to Borrowers Experiencing Financial Difficulty:
Occasionally, the Company modifies loans to borrowers experiencing financial difficulty. These modifications may include one or a
combination of the following: 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. All modifications to borrowers experiencing financial difficulty are considered to be impaired.
During the three months ended March 31, 2023, the Company experienced no new modifications to borrowers experiencing financial difficulty.
The following table presents the activity in the allowance for credit losses by portfolio segment for
the three months ended March 31, 2023
and 2022:
The following table presents the balance in the
allowance for credit losses and the recorded investment of loans by portfolio segment and based on impairment method as of December 31, 2022:
The following table presents the amortized cost basis of collateral dependent loans by class of
loans as of March 31, 2023:
The following tables present information related to loans individually evaluated for impairment
by class of loans as of December 31, 2022:
The following tables present information related to loans individually evaluated for impairment by class of loans for the three months ended March 31, 2022:
The recorded investment of a loan excludes accrued interest and net deferred origination fees and costs due to immateriality.
Nonaccrual loans and loans past due 90 days or more and still accruing include both smaller balance homogenous loans that are collectively
evaluated for impairment and individually classified as impaired loans.
The Company transfers loans to other real estate owned, at fair value less cost to sell, in the period the Company obtains physical
possession of the property (through legal title or through a deed in lieu). The Company had no other real estate owned for residential real estate properties at March 31, 2023 and December 31, 2022. In addition, nonaccrual residential mortgage loans
that are in the process of foreclosure had a recorded investment of $455 and $370 as of March 31, 2023 and December 31, 2022, respectively.
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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK |
3 Months Ended |
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Mar. 31, 2023 | |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK [Abstract] | |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK |
NOTE 5 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees. The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for
commitments to extend credit and standby letters of credit, and financial guarantees written, is represented by the contractual amount of those instruments. The contract amounts of these instruments are not included in the consolidated financial
statements. At March 31, 2023,
the contract amounts of these instruments totaled approximately $103,786, compared to $103,413 at December 31, 2022. The Bank estimates expected credit losses over the contractual period in which the Bank is exposed to credit risk via a contractual obligation to extend credit. At March 31, 2023, the
estimated ACL related to off-balance sheet commitments was $655, which included $24 in provision expense during the first quarter of 2023. The Bank uses the same credit policies in making commitments and conditional obligations as it does for instruments recorded on the
balance sheet. Since many of these instruments are expected to expire without being drawn upon, the total contract amounts do not necessarily represent future cash requirements.
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OTHER BORROWED FUNDS |
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OTHER BORROWED FUNDS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER BORROWED FUNDS |
NOTE 6 - OTHER BORROWED FUNDS
Other borrowed funds at March 31, 2023 and December 31, 2022 are comprised of advances from the Federal Home Loan Bank (“FHLB”)
of Cincinnati and promissory notes.
Pursuant to collateral agreements with the FHLB, advances are secured by $284,657 in qualifying mortgage loans, $31,519 in commercial loans and $1,953 in FHLB stock at March 31, 2023. Fixed-rate FHLB advances of $14,936
mature through 2042 and have interest rates ranging from 1.53% to 2.97% and a year-to-date weighted average cost of 2.38% at March 31, 2023 and 2.39% at December 31, 2022. There were no
variable-rate FHLB borrowings at March 31, 2023.
At March 31, 2023, the Company had a cash management line of credit enabling it to borrow up to $100,000 from the FHLB, subject to the stock ownership and collateral limitations described in the next paragraph. All cash management advances have an original maturity of 90 days. The line of credit must be renewed on an annual basis. There was $100,000 available on this line of credit at March 31, 2023.
Based on the Company’s current FHLB stock ownership, total assets and pledgeable loans, the Company had the ability to obtain borrowings from
the FHLB up to a maximum of $188,384 at March 31,
2023. Of this maximum borrowing capacity, the Company had $101,748 available to use as additional borrowings, of which $100,000 could be used for
short term, cash management advances, as mentioned above.
Promissory notes, issued primarily by Ohio Valley, are due at various dates through a final maturity date of November 18, 2023, and have fixed rates ranging from 1.25%
to 4.75% and a year-to-date weighted average cost of 2.30% at March 31, 2023, as compared to 1.35% at December 31, 2022. At March 31, 2023 there were six promissory notes payable by Ohio Valley
to related parties totaling $2,394. There were no
promissory notes payable to other banks at March 31, 2023 and December 31, 2022, respectively.
Letters of credit issued on the Bank’s behalf by the FHLB to collateralize certain public unit deposits as required by law totaled $71,700 at March 31, 2023 and $75,140 at December 31, 2022.
Scheduled principal payments as of March 31, 2023:
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SEGMENT INFORMATION |
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SEGMENT INFORMATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION |
NOTE 7 – SEGMENT INFORMATION
The reportable segments are determined by the products and services offered, primarily distinguished between banking and consumer finance.
They are also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance,
products/services, and customers are similar. Loans, investments, and deposits provide the majority of the net revenues from the banking operation, while loans provide the majority of the net revenues for the consumer finance segment. All Company
segments are domestic.
Total revenues from the banking segment, which accounted for the majority of the Company’s total revenues, totaled 92.5% and 90.5% of total consolidated revenues
for the quarters end March 31, 2023 and 2022,
respectively.
The accounting policies used for the Company’s reportable segments are the same as those described in Note 1 - Summary of Significant
Accounting Policies. Income taxes are allocated based on income before tax expense. All goodwill is in the banking segment.
Information for the Company’s reportable segments is as follows:
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LEASES |
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LEASES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES |
NOTE 8 – LEASES
Substantially all of the Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities represent leases for branch
buildings and office space to conduct business. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. The lease expense for these leases are recorded on a straight-line basis over the lease term. Leases
with initial terms in excess of 12 months are recorded as either operating or financing leases on the consolidated balance sheet. The Company has no finance lease arrangements. Operating leases have remaining lease terms ranging from 1 month to 18 years, some of which include
options to extend the leases for up to 15 years. Operating lease ROU assets and operating lease liabilities are valued based on the present
value of future minimum lease payments, discounted with an incremental borrowing rate for the same term as the underlying lease. The Company has one lease arrangement that contains variable lease payments that are adjusted periodically for an index.
Balance sheet information related to leases is as follows:
The components of lease cost were as follows:
Future undiscounted lease payments for operating leases with initial terms of one year or more as of March 31, 2023 are as follows:
Other information was as follows:
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RISKS AND UNCERTAINTIES |
3 Months Ended |
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Mar. 31, 2023 | |
RISKS AND UNCERTAINTIES [Abstract] | |
RISKS AND UNCERTAINTIES |
NOTE 9 – RISKS AND UNCERTAINTIES
Over the past few months, certain banks were placed into receivership by the FDIC and one bank began to voluntarily dissolve. While the U.S.
government intervened to cover depositors, even those with balances exceeding FDIC insurance coverage, there can be no guarantee that the same coverage will be applied if there are future bank failures. Management believes that the conditions
impacting these banks do not present a significant risk to the Company, and the Company has not been directly impacted by the bank failures. Present economic conditions have caused disruption to the banking system and any additional implications are
uncertain. The Company believes that it has sufficient liquid assets and borrowing sources should there be a liquidity need.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION |
BASIS OF PRESENTATION: The
accompanying consolidated financial statements include the accounts of Ohio Valley Banc Corp. (“Ohio Valley”) and its wholly-owned subsidiaries, The Ohio Valley Bank Company (the “Bank”), Loan Central, Inc., a consumer finance company, Ohio Valley
Financial Services Agency, LLC, an insurance agency, and OVBC Captive, Inc., a limited purpose property and casualty insurance company. The Bank has two
wholly-owned subsidiaries, Race Day Mortgage, Inc., an Ohio corporation that provides online consumer mortgages, and Ohio Valley REO, LLC, an Ohio limited liability company (“Ohio Valley REO”), to which the Bank transfers certain real estate acquired
by the Bank through foreclosure for sale by Ohio Valley REO. In February 2023, Ohio Valley announced that it was taking steps toward closing Race Day. The decision to start this process was made due to low loan demand, issues retaining personnel, and
lack of profitability. Ohio Valley plans to see current loan applications in progress to completion. An exact date of closing is anticipated to be set once existing loan applications have been processed. 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 March 31, 2023, and its results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31,
2023, are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, 2023. The accompanying consolidated financial statements do not purport to contain all the necessary financial disclosures
required by U.S. generally accepted accounting principles (“US GAAP”) that might otherwise be necessary in the circumstances. The Annual Report of the Company for the year ended December 31, 2022, contains consolidated financial statements and related
notes which should be read in conjunction with the accompanying consolidated financial statements.
The consolidated financial statements for 2022 have been reclassified to conform to the presentation for 2023. These reclassifications had no effect on net
income or shareholders’ equity.
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USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS |
USE OF ESTIMATES
IN THE PREPARATION OF FINANCIAL STATEMENTS: The accounting and reporting policies followed by the Company conform to US GAAP established by the Financial Accounting Standards Board (“FASB”). The preparation of financial statements in
conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.
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INDUSTRY SEGMENT INFORMATION |
INDUSTRY SEGMENT INFORMATION:
Internal financial information is primarily reported and aggregated in two lines of business: banking and consumer finance.
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ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS |
ADOPTION OF NEW
ACCOUNTING PRONOUNCEMENTS: Effective January 1, 2023, the Company adopted ASU No. 2022-02 Financial Instruments - Credit Losses (Topic
326): TDR’s and Vintage Disclosures. This new accounting guidance eliminated the previous accounting guidance for troubled debt restructurings (“TDRs”) and resulted in additional disclosure requirements related to gross charge offs by year of
origination and the removal of TDR disclosures, replaced by additional disclosures on the types of modifications of loans to borrowers experiencing financial difficulties.
Effective January 1, 2023, the Company adopted ASU No. 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, (“ASU 2016-13”) (“ASC 326”) as amended. The
new accounting guidance replaces the “incurred loss” model with an “expected loss” model, which is referred to as the current expected credit loss
(“CECL”) model. The measurement of expected credit losses under the CECL model is applicable to financial assets measured at amortized cost, including loan receivables and HTM debt securities. It also applies to off-balance sheet credit exposures not
accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). In addition, ASC 326 made changes to the accounting for available for sale debt securities. One such change is to require
credit losses to be presented as an allowance rather than as a write-down on available for sale debt securities management does not intend to sell or believes that it is more likely than not they will be required to sell.
The following table
illustrates the transition adjustment of adopting ASC 326:
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DEBT SECURITIES |
DEBT SECURITIES: The Company
classifies securities into held to maturity (“HTM”) and available for sale (“AFS”) categories. HTM securities are those which the Company has the positive intent and ability to hold to maturity and are reported at amortized cost. Securities classified
as AFS include securities that could be sold for liquidity, investment management or similar reasons even if there is not a present intention of such a sale. AFS securities are reported at fair value, with unrealized gains or losses included in other
comprehensive income, net of tax.
Premium amortization is deducted from, and discount accretion is added to, interest income on securities using the level yield method without
anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated. Gains and losses are recognized upon the sale of specific identified securities on the completed trade date.
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ALLOWANCE FOR CREDIT LOSSES ("ACL") - AFS SECURITIES |
ALLOWANCE FOR CREDIT LOSSES (“ACL”) - AFS SECURITIES: For AFS debt securities in an unrealized position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the
security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For debt securities AFS that do not meet
the aforementioned criteria, the Company evaluates whether the decline in fair values has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any
changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected
from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by
the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income.
Changes in the ACL are recorded as credit loss expense (or reversal). Losses are charged against the allowance when management believes the
uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
Accrued interest receivable on AFS debt securities totaled $448 at March 31, 2023 and is excluded from the estimate of credit losses.
Management classifies the AFS portfolio into the following major security types: U.S. Government securities, U.S. Government sponsored entity
securities, and Agency mortgage-backed residential securities. These security types have an explicit government guarantee, and therefore, no ACL is recorded for these securities. As a result, there was no ACL related to AFS debt securities at March 31, 2023.
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ACL - HTM SECURITIES |
ACL - HTM SECURITIES:
Management measures expected credit losses on HTM debt securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current
conditions and reasonable and supportable forecasts. The ACL on securities HTM is a contra asset valuation account that is deducted from the carrying amount of HTM securities to present the net amount expected to be collected. HTM securities are
charged off against the ACL when deemed uncollectible. Adjustments to the ACL are reported in the Company’s consolidated statements of income in the provision for credit losses. Accrued interest receivable on HTM securities is excluded from the
estimate of credit losses. Management classifies the HTM portfolio into two major security types: Obligations of states and political subdivisions and Agency mortgage-backed residential securities. Agency mortgage-backed residential securities
consist of only two securities with balances that are not significant. With regard to obligations of states and political subdivisions, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial
condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. At March 31, 2023, there was $3 in the ACL related to HTM debt securities, with no corresponding provision expense during the first quarter of 2023.
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LOANS |
LOANS: Loans that management has the intent and ability to hold
for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred loan fees and costs, and an ACL. Interest income is reported on an accrual basis using the interest method and
includes amortization of net deferred loan fees and costs over the loan term using the level yield method without anticipating prepayments. The amount of the Company’s recorded investment is not materially different than the amount of unpaid principal
balance for loans.
Interest income is discontinued and the loan moved to non-accrual status when full loan repayment is in doubt, typically when the loan
payments are past due 90 days or over unless the loan is well-secured or in process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if
collection of principal or interest is considered doubtful.
All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is
accounted for on the cash-basis method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
The Bank also originates long-term, fixed-rate mortgage loans, with the full intention of being sold to the secondary market. These loans
are considered held for sale during the period of time after the principal has been advanced to the borrower by the Bank, but before the Bank has been reimbursed by the Federal Home Loan Mortgage Corporation, typically within a few business days.
Loans sold to the secondary market are carried at the lower of aggregate cost or fair value. As of March 31, 2023, there were $124 in loans held
for sale by the Bank, as compared to no loans held for sale at December 31, 2022.
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ACL - LOANS |
ACL – LOANS: The ACL for loans is a
contra asset valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible.
Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The ACL is adjusted through the provision for credit losses and reduced by net charge offs of loans.
The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers historical loss experience,
current conditions and forecasts of future economic conditions. Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period.
The methodology for determining the ACL has two main components: evaluation of expected credit losses for certain groups of loans that share
similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans.
The ACL is measured on a collective (pool) basis when similar risk characteristics exist. The Company has identified the
following portfolio segments and measures the ACL using the following methods:
Historical credit loss experience is the basis for the estimation of expected credit losses. We apply historical loss rates to pools of loans
with similar risk characteristics. In defining historical loss rates and the prepayment rates and curtailment rates used to determine the expected life of loans, the use of regional and national peer data was used. After consideration of the historic
loss calculation, management applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information at the balance sheet date. Our reasonable and supportable
forecast adjustment is based on the national unemployment rate and the national gross domestic product forecast for the first year. For periods beyond our reasonable and supportable forecast, we revert to historical loss rates utilizing a straight-line
method over a two-year reversion period. The qualitative adjustments for current conditions are based upon changes in lending policies and
practices, experience and ability of lending staff, quality of the Company’s loan review system, value of underlying collateral, the volume and severity of past due loans, the value of underlying collateral for collateral dependent loans, the existence
of and changes in concentrations and other external factors. Each factor is assigned a value to reflect improving, stable, or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation.
Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies:
management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower, or the extension of renewal options are included in the original or modified contract at the reporting date
and are not unconditionally cancellable by the Company.
The Company has elected to exclude accrued interest receivable from the measurement of its ACL. When a loan is placed on non-accrual status,
any outstanding accrued interest is reversed against interest income.
Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the
collective evaluation. We evaluate all loans that meet the following criteria: 1) when it is determined that foreclosure is probable; 2) substandard, doubtful and nonperforming loans when repayment is expected to be provided substantially through the
operation or sale of the collateral; 3) when it is determined by management that a loan does not share similar risk characteristics with other loans. Specific reserves are established based on the following three acceptable methods for measuring the
ACL: 1) the present value of expected future cash flows discounted at the loan’s original effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral when the loan is collateral dependent. Our individual loan
evaluations consist primarily of the fair value of collateral method because most of our loans are collateral dependent. Collateral values are discounted to consider disposition costs when appropriate. A specific reserve is established or a charge-off
is taken if the fair value of the loan is less than the loan balance.
At March 31, 2023, there was $7,607
in the ACL related to loans, with corresponding provision expense of $465 during the first quarter of 2023.
The Company’s loan portfolio segments have been identified as follows: Commercial and Industrial, Commercial Real Estate, Residential Real
Estate, and Consumer.
Commercial and industrial:
Portfolio segment consists of borrowings for commercial purposes to individuals, corporations, partnerships, sole proprietorships, and other business enterprises. Commercial and industrial loans are generally secured by business assets such as
equipment, accounts receivable, inventory, or any other asset excluding real estate and generally made to finance capital expenditures or operations. The Company’s risk exposure is related to deterioration in the value of collateral securing the loan
should foreclosure become necessary. Generally, business assets used or produced in operations do not maintain their value upon foreclosure, which may require the Company to write down the value significantly to sell.
Commercial real estate: Portfolio segment consists
of nonfarm, nonresidential loans secured by owner-occupied and nonowner-occupied commercial real estate as well as commercial construction loans. An owner-occupied loan relates to a borrower purchased building or space for which the repayment of
principal is dependent upon cash flows from the ongoing business operations conducted by the party, or an affiliate of the party, who owns the property. Owner-occupied loans that are dependent on cash flows from operations can be adversely affected by
current market conditions for their product or service. A nonowner-occupied loan is a property loan for which the repayment of principal is dependent upon rental income associated with the property or the subsequent sale of the
property. Nonowner-occupied loans that are dependent upon rental income are primarily impacted by local economic conditions which dictate occupancy rates and the amount of rent charged. Commercial construction loans consist of borrowings to purchase
and develop raw land into 1-4 family residential properties. Construction loans are extended to individuals as well as corporations for the construction of an individual or multiple properties and are secured by raw land and the subsequent
improvements. Repayment of the loans to real estate developers is dependent upon the sale of properties to third parties in a timely fashion upon completion. Should there be delays in construction or a downturn in the market for those properties,
there may be significant erosion in value that may be absorbed by the Company. At March 31, 2023, there was $655 in the ACL related to
off-balance sheet credit exposures, with corresponding provision expenses of $24 during the first quarter of 2023.
Residential real estate: Portfolio segment
consists of loans to individuals for the purchase of 1-4 family primary residences with repayment primarily through wage or other income sources of the individual borrower. The Company’s loss exposure to these loans is dependent on local market
conditions for residential properties as loan amounts are determined, in part, by the fair value of the property at origination.
Consumer: Portfolio segment consists of loans to
individuals secured by automobiles, open-end home equity loans and other loans to individuals for household, family, and other personal expenditures, both secured and unsecured. These loans typically have maturities of six years or less with repayment dependent on individual wages and income. The risk of loss on consumer loans is elevated as the collateral securing these
loans, if any, rapidly depreciate in value or may be worthless and/or difficult to locate if repossession is necessary. The Company has allocated the highest percentage of its allowance for loan losses as a percentage of loans to the other identified
loan portfolio segments due to the larger dollar balances associated with such portfolios.
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ACL - OFF-BALANCE SHEET CREDIT EXPOSURES |
ACL – OFF-BALANCE SHEET CREDIT
EXPOSURES: The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by
the Company. The ACL on off-balance sheet credit exposures is adjusted through credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be
funded over its estimated life.
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EARNINGS PER SHARE |
EARNINGS PER SHARE: Earnings per share
are computed based on net income divided by the weighted average number of common shares outstanding during the quarter. The weighted average common shares outstanding were 4,773,461 and 4,761,072 for the three months ended March 31, 2023 and 2022, respectively. Ohio Valley had
no dilutive effect and no potential common shares issuable under stock options or other agreements for any period presented.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transition Adjustment of Adopting ASC 326 |
The following table
illustrates the transition adjustment of adopting ASC 326:
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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured on Recurring Basis |
Assets and liabilities measured at fair value on a recurring basis are summarized below:
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Carrying Amounts and Estimated Fair Values of Financial Instruments |
The carrying amounts and estimated fair values of financial instruments at March 31, 2023 and December 31, 2022 are as follows:
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SECURITIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost and Fair Value of Securities Available-for-sale |
The following table summarizes the amortized cost and fair value of securities available for sale
and securities held to maturity at March 31, 2023
and December 31, 2022 and the
corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive (loss) and gross unrecognized gains and losses, and allowance for credit losses:
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Amortized Cost and Fair Value of Securities Held-to-maturity |
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Amortized Cost and Fair Value of Securities by Contractual Maturity |
The amortized cost and estimated fair value of debt securities at March 31, 2023, by contractual maturity, are shown below. Actual maturities may
differ from contractual maturities because certain issuers may have the right to call or prepay the debt obligations prior to their contractual maturities. Securities not due at a single maturity are shown separately.
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Securities with Unrealized Losses in Continuous Unrealized Loss Position |
The following table summarizes debt securities available for sale in an unrealized loss position for which an allowance for credit losses has not
been recorded at March 31, 2023 and December 31, 2022, aggregated by major security type and length of time in a continuous unrealized loss position:
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Allowance for Credit Losses for Held to Maturity Debt Securities |
The following table presents the activity in the allowance for credit losses for held to maturity debt securities:
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LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS AND ALLOWANCE FOR LOAN LOSSES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio Loans |
Loans are comprised of the following:
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Recorded Investment in Nonaccrual and Loans Past Due Over 90 Days Still on Accrual by Class of Loans |
The following table presents the recorded investment of
nonaccrual loans and loans past due 90 days or more and still accruing by class of loans as of March 31, 2023 and December 31, 2022:
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Aging of Recorded Investment in Past Due Loans by Class of Loans |
The following table presents the aging of the recorded investment of past due loans by class of
loans as of March 31, 2023 and December 31, 2022:
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Risk Category Loans by Class of Loans |
As of March 31,
2023 and December 31, 2022, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:
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Recorded Investment of Residential and Consumer Loans |
The Company considers the performance of the loan portfolio and its impact on the allowance for credit
losses. 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 March 31, 2023 and December 31,2022:
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Activity in Allowance for Loan Losses by Portfolio Segment |
The following table presents the activity in the allowance for credit losses by portfolio segment for
the three months ended March 31, 2023
and 2022:
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Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment Based on Impairment Method |
The following table presents the balance in the
allowance for credit losses and the recorded investment of loans by portfolio segment and based on impairment method as of December 31, 2022:
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Amortized Cost of Collateral Dependent Loans, by Class |
The following table presents the amortized cost basis of collateral dependent loans by class of
loans as of March 31, 2023:
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Loans Individually Evaluated for Impairment by Class of Loans |
The following tables present information related to loans individually evaluated for impairment
by class of loans as of December 31, 2022:
The following tables present information related to loans individually evaluated for impairment by class of loans for the three months ended March 31, 2022:
|
OTHER BORROWED FUNDS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER BORROWED FUNDS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Federal Home Loan Bank, Advances, by Branch of FHLB Bank |
Other borrowed funds at March 31, 2023 and December 31, 2022 are comprised of advances from the Federal Home Loan Bank (“FHLB”)
of Cincinnati and promissory notes.
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Schedule of Maturities of Long-term Debt |
Scheduled principal payments as of March 31, 2023:
|
SEGMENT INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
Information for the Company’s reportable segments is as follows:
|
LEASES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Information |
Balance sheet information related to leases is as follows:
|
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Components of Lease Cost |
The components of lease cost were as follows:
|
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Maturities of Lease Liabilities |
Future undiscounted lease payments for operating leases with initial terms of one year or more as of March 31, 2023 are as follows:
|
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Other Information |
Other information was as follows:
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Basis of Presentation (Details) |
Mar. 31, 2023
Subsidiaries
|
---|---|
BASIS OF PRESENTATION [Abstract] | |
Number of subsidiaries | 2 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Industry Segment Information (Details) |
3 Months Ended |
---|---|
Mar. 31, 2023
Segment
| |
INDUSTRY SEGMENT INFORMATION [Abstract] | |
Number of reported lines of business | 2 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Allowance for Loan Losses (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
ALLOWANCE FOR LOAN LOSSES [Abstract] | ||||
Accrued interest receivable on AFS debt securities | $ 448 | |||
ACL related to AFS debt securities | 0 | |||
ACL related to HTM debt securities | 3 | $ 0 | ||
ACL related to HTM debt securities, expenses | $ 0 | |||
Credit loss, revision period | 2 years | |||
ACL related to loans | $ 7,607 | $ 5,268 | 5,269 | $ 6,483 |
Provision expense | 465 | (1,126) | ||
ACL related to off-balance sheet credit | 655 | 0 | ||
ACL related to off-balance sheet credit with corresponding provision expense | 24 | |||
LOANS [Abstract] | ||||
Loans held for sale | 124 | 0 | ||
Consumer Loans [Member] | ||||
ALLOWANCE FOR LOAN LOSSES [Abstract] | ||||
ACL related to loans | 2,093 | 1,174 | $ 1,257 | $ 1,384 |
Provision expense | $ 180 | $ (82) | ||
Loans maturity period | 6 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Earnings per Share (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
EARNINGS PER SHARE [Abstract] | ||
Number of weighted average common shares outstanding (in shares) | 4,773,461 | 4,761,072 |
FAIR VALUE OF FINANCIAL INSTRUMENTS, Assets and Liabilities Measured on Nonrecurring Basis (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Nonrecurring [Member] | ||
Fair Value, Asset and Liabilities [Abstract] | ||
Assets, fair value | $ 0 | $ 0 |
FAIR VALUE OF FINANCIAL INSTRUMENTS, Quantitative Information about Level 3 Inputs (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |||
Other real estate | $ 0 | $ 0 | |
Other real estate, write-down | $ 0 | $ 0 |
SECURITIES, Amortized Cost and Fair Value of Securities Held-to-maturity (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Securities, Held-to-maturity, Maturity, Amortized Cost [Abstract] | ||
Amortized Cost | $ 9,004 | $ 9,226 |
Gross Unrealized Gains | 29 | 32 |
Gross Unrecognized Losses | (635) | (798) |
Estimated Fair Value | 8,398 | 8,460 |
Allowance for Credit Losses | (3) | 0 |
Obligations of States and Political Subdivisions [Member] | ||
Debt Securities, Held-to-maturity, Maturity, Amortized Cost [Abstract] | ||
Amortized Cost | 9,003 | 9,225 |
Gross Unrealized Gains | 29 | 32 |
Gross Unrecognized Losses | (635) | (798) |
Estimated Fair Value | 8,397 | 8,459 |
Allowance for Credit Losses | (3) | |
Agency Mortgage-backed Securities, Residential [Member] | ||
Debt Securities, Held-to-maturity, Maturity, Amortized Cost [Abstract] | ||
Amortized Cost | 1 | 1 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrecognized Losses | 0 | 0 |
Estimated Fair Value | 1 | $ 1 |
Allowance for Credit Losses | $ 0 |
SECURITIES, Held-to-Maturity Securities Allowance for Credit Losses (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Roll Forward] | ||
Allowance for credit losses beginning balance | $ 0 | |
Credit loss expense | 0 | |
Allowance for credit losses ending balance | $ 3 | |
Cumulative loss rate | 0.03% | |
Provision expense | $ 489 | $ (1,126) |
ASC 326 [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Roll Forward] | ||
Allowance for credit losses beginning balance | 3 | |
Provision expense | $ 0 |
LOANS AND ALLOWANCE FOR LOAN LOSSES, Credit Quality Indicators (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Troubled Debt Restructuring Loan Modifications [Abstract] | ||
Aggregate loan balances | $ 898,706 | $ 879,780 |
CARES Act [Member] | ||
Credit Quality Indicators [Abstract] | ||
Aggregate loan amount that are reviewed risk categories | $ 1,000 |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK [Abstract] | ||
Contract amounts | $ 103,786 | $ 103,413 |
Off-balance sheet commitments | 655 | $ 0 |
Provision expense | $ 24 |
LEASES, Balance Sheet Information (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Balance Sheet Information Related to Leases [Abstract] | ||
Operating lease right-of-use assets | $ 1,246 | $ 1,294 |
Operating lease liabilities | $ 1,246 | $ 1,294 |
Minimum [Member] | ||
Lessee, Operating Lease, Description [Abstract] | ||
Operating lease term | 1 month | |
Maximum [Member] | ||
Lessee, Operating Lease, Description [Abstract] | ||
Operating lease term | 18 years | |
Operating lease renewal term | 15 years |
LEASES, Components of Lease Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Lease, Cost [Abstract] | ||
Operating lease cost | $ 51 | $ 42 |
Short-term lease expense | $ 0 | $ 10 |
LEASES, Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
LEASES [Abstract] | ||
2023 (remaining) | $ 121 | |
2024 | 154 | |
2025 | 154 | |
2026 | 140 | |
2027 | 129 | |
Thereafter | 873 | |
Total lease payments | 1,571 | |
Less: Imputed Interest | (325) | |
Total operating leases | $ 1,246 | $ 1,294 |
LEASES, Other Information (Details) |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Other Information [Abstract] | ||
Weighted-average remaining lease term for operating leases | 11 years 10 months 24 days | 12 years 1 month 6 days |
Weighted-average discount rate for operating leases | 2.71% | 2.70% |
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