United States

~~United States~~

~~Securities and Exchange Commission~~

~~Washington, D.C. 20549~~

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

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

EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2017~~2022

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

For the transition period from ____________ to ____________

Commission file number ~~0-20914~~000-20914

OHIO VALLEY BANC CORP.

(Exact name of registrant as specified in its charter)

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

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

(740) 446-2631

(~~Issuer's~~Registrant’s telephone number, including area code)

_____________________

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

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

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

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data ~~file~~File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒No ☐

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

Large accelerated filer	☐			Accelerated filer☐	☒
Non-accelerated filer☒	☐	~~(Do not check if a smaller reporting company)~~	Smaller reporting company☒	☐
Emerging growth company☐	☐

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

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

The number of common shares, without par value, of the registrant outstanding as of ~~November 9, 2017~~August 15, 2022 was ~~4,692,266.~~4,771,774.

OHIO VALLEY BANC CORP.

Index

		Page Number
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	3
	~~Condensed~~ Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	~~Condensed~~ Consolidated Statements of Changes in ~~Shareholders'~~Shareholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to ~~the~~Unaudited Consolidated Financial Statements	8
Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4039
Item 4.	Controls and Procedures	4039

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	4140
Item 1A.	Risk Factors	4140
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4140
Item 3.	Defaults Upon Senior Securities	4140
Item 4.	Mine Safety Disclosures	4140
Item 5.	Other Information	4140
Item 6.	Exhibits	4241

Signatures		4342

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

~~OHIO VALLEY BANC CORP.~~

~~CONSOLIDATED BALANCE SHEETS (UNAUDITED)~~

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

September 30,
2017

December 31,
2016

ASSETS
Cash and noninterest-bearing deposits with banks $ 11,610 $ 12,512
Interest-bearing deposits with banks 38,792 27,654
Total cash and cash equivalents 50,402 40,166

Certificates of deposit in financial institutions 1,820 1,670
Securities available for sale 106,545 96,490
Securities held to maturity (estimated fair value: 2017 - $18,822; 2016 - $19,171) 18,168 18,665
Restricted investments in bank stocks 7,506 7,506

Total loans 777,957 734,901
Less: Allowance for loan losses (7,313 ) (7,699 )
Net loans 770,644 727,202

Premises and equipment, net 13,205 12,783
Other real estate owned 2,219 2,129
Accrued interest receivable 2,532 2,315
Goodwill 7,371 7,801
Other intangible assets, net 550 670
Bank owned life insurance and annuity assets 26,576 29,349
Other assets 12,076 7,894
Total assets $ 1,019,614 $ 954,640

LIABILITIES
Noninterest-bearing deposits $ 233,178 $ 209,576
Interest-bearing deposits 616,003 580,876
Total deposits 849,181 790,452

Other borrowed funds 36,775 37,085
Subordinated debentures 8,500 8,500
Accrued liabilities 15,196 14,075
Total liabilities 909,652 850,112

COMMITMENTS AND CONTINGENT LIABILITIES (See Note 5)
---- ----

SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value per share, 10,000,000 shares authorized; 2017 - 5,352,005 shares issued; 2016 - 5,325,504 shares issued)
5,352

5,326

Additional paid-in capital 47,552 46,788
Retained earnings 72,781 69,117
Accumulated other comprehensive loss (11 ) (991 )
Treasury stock, at cost (659,739 shares) (15,712 ) (15,712 )
Total shareholders' equity 109,962 104,528
Total liabilities and shareholders' equity $ 1,019,614 $ 954,640

OHIO VALLEY BANC CORP.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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

	June 30, 2022			December 31, 2021

ASSETS
Cash and noninterest-bearing deposits with banks	$	14,942		$	14,111
Interest-bearing deposits with banks		79,152			137,923
Total cash and cash equivalents		94,094			152,034

Certificates of deposit in financial institutions		1,873			2,329
Securities available for sale		193,617			177,000
Securities held to maturity (estimated fair value: 2022 - $9,037; 2021 - $10,450)		9,735			10,294
Restricted investments in bank stocks		7,265			7,265

Total loans		870,252			831,191
Less: Allowance for loan losses		(5,214	)		(6,483	)
Net loans		865,038			824,708

Premises and equipment, net		20,742			20,730
Premises and equipment held for sale, net		432			438
Other real estate owned, net		15			15
Accrued interest receivable		2,940			2,695
Goodwill		7,319			7,319
Other intangible assets, net		44			64
Bank owned life insurance and annuity assets		37,750			37,281
Operating lease right-of-use asset, net		1,116			1,195
Deferred tax assets		5,296			2,217
Other assets		6,610			4,185
Total assets	$	1,253,886		$	1,249,769

LIABILITIES
Noninterest-bearing deposits	$	346,144		$	353,578
Interest-bearing deposits		727,210			706,330
Total deposits		1,073,354			1,059,908

Other borrowed funds		18,484			19,614
Subordinated debentures		8,500			8,500
Operating lease liability		1,116			1,195
Other liabilities		19,862			19,196
Total liabilities		1,121,316			1,108,413

COMMITMENTS AND CONTINGENT LIABILITIES (See Note 5)		0			0

SHAREHOLDERS’ EQUITY
Common stock ($1.00 stated value per share, 10,000,000 shares authorized; 2022 - 5,465,707 shares issued; 2021 - 5,447,185 shares issued)		5,465			5,447
Additional paid-in capital		51,722			51,165
Retained earnings		104,110			100,702
Accumulated other comprehensive income (loss)		(12,061	)		708
Treasury stock, at cost (693,933 shares)		(16,666	)		(16,666	)
Total shareholders’ equity		132,570			141,356
Total liabilities and shareholders’ equity	$	1,253,886		$	1,249,769

See accompanying notes to consolidated financial statements

~~OHIO VALLEY BANC CORP.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)~~

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

Three months ended
September 30,

Nine months ended
September 30,

2017 2016 2017 2016

Interest and dividend income:
Loans, including fees $ 10,489 $ 9,085 $ 31,410 $ 26,147
Securities
Taxable 535 486 1,559 1,465
Tax exempt 104 111 312 337
Dividends 101 75 287 222
Other Interest 88 67 476 336
11,317 9,824 34,044 28,507
Interest expense:
Deposits 757 597 1,985 1,605
Other borrowed funds 228 190 673 462
Subordinated debentures 64 52 182 149
1,049 839 2,840 2,216
Net interest income 10,268 8,985 31,204 26,291
Provision for loan losses 1,601 1,708 1,921 2,328
Net interest income after provision for loan losses 8,667 7,277 29,283 23,963

Noninterest income:
Service charges on deposit accounts 541 575 1,575 1,414
Trust fees 64 58 177 174
Income from bank owned life insurance and annuity assets 577 175 981 575
Mortgage banking income 59 44 164 162
Electronic refund check / deposit fees ---- 13 1,667 2,037
Debit / credit card interchange income 863 653 2,506 1,864
Gain (loss) on other real estate owned (23 ) (8 ) (94 ) ----
Other 201 183 531 563
2,282 1,693 7,507 6,789
Noninterest expense:
Salaries and employee benefits 5,019 5,032 15,528 14,130
Occupancy 449 466 1,331 1,300
Furniture and equipment 269 285 787 671
Professional fees 434 342 1,338 1,020
Marketing expense 273 249 785 744
FDIC insurance 99 81 366 378
Data processing 564 380 1,652 1,069
Software 365 368 1,102 962
Foreclosed assets 158 61 425 247
Amortization of intangibles 38 ---- 120 ----
Merger related expenses 6 416 33 777
Other 1,548 1,148 5,006 3,272
9,222 8,828 28,473 24,570

Income before income taxes 1,727 142 8,317 6,182
Provision for income taxes 74 (216 ) 1,706 1,286

NET INCOME $ 1,653 $ 358 $ 6,611 $ 4,896

Earnings per share $ .35 $ .08 $ 1.41 $ 1.15

OHIO VALLEY BANC CORP.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(dollars in thousands, except per share data)

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022			2021

Interest and dividend income:
Loans, including fees	$	10,020	$	10,562	$	19,818		$	21,127
Securities
Taxable		851		479		1,546			884
Tax exempt		45		60		92			119
Dividends		69		57		127			116
Interest-bearing deposits with banks		232		33		286			61
Other Interest		4		8		9			18
		11,221		11,199		21,878			22,325

Interest expense:
Deposits		507		799		1,026			1,682
Other borrowed funds		103		145		209			300
Subordinated debentures		58		40		100			80
		668		984		1,335			2,062
Net interest income		10,553		10,215		20,543			20,263
Provision for (recovery of) loan losses		813		27		(313	)		(25	)
Net interest income after provision for loan losses		9,740		10,188		20,856			20,288

Noninterest income:
Service charges on deposit accounts		595		390		1,153			795
Trust fees		86		70		167			142
Income from bank owned life insurance and annuity assets		195		200		469			448
Mortgage banking income		220		186		455			365
Electronic refund check / deposit fees		135		135		675			675
Debit / credit card interchange income		1,177		1,173		2,312			2,223
Gain on other real estate owned		0		0		7			1
Tax preparation fees		50		55		738			749
Other		178		297		380			447
		2,636		2,506		6,356			5,845
Noninterest expense:
Salaries and employee benefits		5,683		5,279		11,253			10,549
Occupancy		424		465		902			932
Furniture and equipment		279		269		545			565
Professional fees		498		427		987			857
Marketing expense		229		268		458			536
FDIC insurance		88		79		170			158
Data processing		688		660		1,360			1,235
Software		556		434		1,059			883
Foreclosed assets		36		8		37			22
Amortization of intangibles		10		14		20			27
Other		1,532		1,394		3,020			2,720
		10,023		9,297		19,811			18,484

Income before income taxes		2,353		3,397		7,401			7,649
Provision for income taxes		354		536		1,277			1,257

NET INCOME	$	1,999	$	2,861	$	6,124		$	6,392

Earnings per share	$	0.42	$	0.60	$	1.29		$	1.34

See accompanying notes to consolidated financial statements

OHIO VALLEY BANC CORP.

OHIO VALLEY BANC CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(dollars in thousands)

Three months ended
September 30,

Nine months ended
September 30,

2017 2016 2017 2016

Net Income $ 1,653 $ 358 $ 6,611 $ 4,896

Other comprehensive income:
Change in unrealized loss on available for sale securities 20 91 1,485 1,528
Related tax expense (7 ) (31 ) (505 ) (520 )
Total other comprehensive income, net of tax 13 60 980 1,008

Total comprehensive income $ 1,666 $ 418 $ 7,591 $ 5,904

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(dollars in thousands)

	Three months ended June 30,						Six months ended June 30,
	2022			2021			2022			2021

Net Income	$	1,999		$	2,861		$	6,124		$	6,392

Other comprehensive income (loss):
Change in unrealized gain (loss) on available for sale securities		(5,472	)		(217	)		(16,164	)		(1,621	)
Related tax (expense) benefit		1,150			46			3,395			340
Total other comprehensive income (loss), net of tax		(4,322	)		(171	)		(12,769	)		(1,281	)

Total comprehensive income (loss)	$	(2,323	)	$	2,690		$	(6,645	)	$	5,111

See accompanying notes to consolidated financial statements

OHIO VALLEY BANC CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY (UNAUDITED)
(dollars in thousands, except share and per share data)

Three months ended
September 30,

Nine months ended
September 30,

2017 2016 2017 2016

Balance at beginning of period $ 108,987 $ 94,796 $ 104,528 $ 90,470

Net income 1,653 358 6,611 4,896

Other comprehensive income, net of tax 13 60 980 1,008

Acquisition – Milton Bancorp, Inc., 523,518 shares ---- 11,444 ---- 11,444

Common stock issued through DRIP (2017 – 11,383 shares issued) 293 ---- 362 ----

Common stock issued to ESOP (2017 - 15,118 shares issued; 2016 - 24,572 shares issued) ---- ---- 428 575

Cash dividends (984 ) (870 ) (2,947 ) (2,605 )

Balance at end of period $ 109,962 $ 105,788 $ 109,962 $ 105,788

Cash dividends per share $ .21 $ .19 $ .63 $ .61

OHIO VALLEY BANC CORP.

CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS’ EQUITY (UNAUDITED)

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

Quarter-to-date	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Shareholders' Equity
Balance at April 1, 2022	$	5,465	$	51,722	$	103,829		$	(7,739	)	$	(16,666	)	$	136,611
Net income		0		0		1,999			0			0			1,999
Other comprehensive loss, net		0		0		0			(4,322	)		0			(4,322	)
Cash dividends, $0.36 per share		0		0		(1,718	)		0			0			(1,718	)
Balance at June 30, 2022	$	5,465	$	51,722	$	104,110		$	(12,061	)	$	(16,666	)	$	132,570

Balance at April 1, 2021	$	5,447	$	51,165	$	95,514		$	1,326		$	(15,712	)	$	137,740
Net income		0		0		2,861			0			0			2,861
Other comprehensive loss, net		0		0		0			(171	)		0			(171	)
Cash dividends, $0.21 per share		0		0		(1,006	)		0			0			(1,006	)
Balance at June 30, 2021	$	5,447	$	51,165	$	97,369		$	1,155		$	(15,712	)	$	139,424

Year-to-date	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Shareholders' Equity
Balance at January 1, 2022	$	5,447	$	51,165	$	100,702		$	708		$	(16,666	)	$	141,356
Net income		0		0		6,124			0			0			6,124
Other comprehensive loss, net		0		0		0			(12,769	)		0			(12,769	)
Cash dividends, $0.57 per share		0		0		(2,716	)		0			0			(2,716	)
Common Stock issued to ESOP, 18,522 shares		18		557		0			0			0			575
Balance at June 30, 2022	$	5,465	$	51,722	$	104,110		$	(12,061	)	$	(16,666	)	$	132,570

Balance at January 1, 2021	$	5,447	$	51,165	$	92,988		$	2,436		$	(15,712	)	$	136,324
Net income		0		0		6,392			0			0			6,392
Other comprehensive loss, net		0		0		0			(1,281	)		0			(1,281	)
Cash dividends, $0.42 per share		0		0		(2,011	)		0			0			(2,011	)
Balance at June 30, 2021	$	5,447	$	51,165	$	97,369		$	1,155		$	(15,712	)	$	139,424

See accompanying notes to consolidated financial statements

OHIO VALLEY BANC CORP.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(dollars in thousands)

Nine months ended
September 30,

2017 2016

Net cash provided by operating activities: $ 5,926 $ 9,761

Investing activities:
Net cash acquired from Milton Bancorp, Inc., acquisition ---- 1,686
Proceeds from maturities of securities available for sale 16,358 13,818
Purchases of securities available for sale (25,177 ) (17,691 )
Proceeds from maturities of securities held to maturity 846 1,218
Purchases of securities held to maturity (389 ) (3,193 )
Proceeds from maturities of certificates of deposit in financial institutions 245 490
Purchases of certificates of deposit in financial institutions (395 ) (445 )
Proceeds from restricted investments in bank stocks ---- 1
Net change in loans (46,281 ) (24,186 )
Proceeds from sale of other real estate owned 987 593
Purchases of premises and equipment (1,247 ) (633 )
Proceeds from bank owned life insurance 3,754 ----
Net cash used in investing activities (51,299 ) (28,342 )

Financing activities:
Change in deposits 58,867 25,822
Cash dividends (2,947 ) (2,605 )
Proceeds from Federal Home Loan Bank borrowings 4,785 8,202
Repayment of Federal Home Loan Bank borrowings (4,720 ) (1,450 )
Change in other long-term borrowings (343 ) 5,000
Change in other short-term borrowings (33 ) (33 )
Net cash provided by financing activities 55,609 34,936

Change in cash and cash equivalents 10,236 16,355
Cash and cash equivalents at beginning of period 40,166 45,530
Cash and cash equivalents at end of period $ 50,402 $ 61,885

Supplemental disclosure:

Cash paid for interest $ 2,665 $ 2,112
Cash paid for income taxes 2,236 1,675
Transfers from loans to other real estate owned 1,337 851
Other real estate owned sales financed by The Ohio Valley Bank Company 167 316
Issuance of common stock for Milton Bancorp, Inc., acquisition ---- 11,444

OHIO VALLEY BANC CORP.

CONDENSED CONSOLIDATED STATEMENTS OF

CASH FLOWS (UNAUDITED)

(dollars in thousands)

	Six months ended June 30,
	2022			2021

Net cash provided by operating activities:	$	5,110		$	4,072

Investing activities:
Proceeds from maturities and calls of securities available for sale		16,760			23,815
Purchases of securities available for sale		(49,271	)		(86,063	)
Proceeds from maturities and calls of securities held to maturity		547			501
Purchase of securities held to maturity		(384	)		(1,341	)
Proceeds from maturities of certificates of deposit in financial institutions		445			245
Redemptions of federal home loan bank stock		0			121
Net change in loans		(40,006	)		417
Proceeds from sale of other real estate owned		7			49
Purchases of premises and equipment		(948	)		(396	)
Disposals of premises and equipment		0			285
Proceeds from building grant		200			0
Purchases of bank owned life insurance and annuity assets		0			(550	)
Net cash provided by (used in) investing activities		(72,650	)		(62,917	)

Financing activities:
Change in deposits		13,446			51,352
Cash dividends		(2,716	)		(2,011	)
Proceeds from Federal Home Loan Bank borrowings		0			600
Repayment of Federal Home Loan Bank borrowings		(1,130	)		(3,099	)
Change in other short-term borrowings		0			(1,060	)
Net cash provided by financing activities		9,600			45,782

Change in cash and cash equivalents		(57,940	)		(13,063	)
Cash and cash equivalents at beginning of period		152,034			138,303
Cash and cash equivalents at end of period	$	94,094		$	125,240

Supplemental disclosure:
Cash paid for interest	$	1,443		$	2,519
Cash paid for income taxes		1,100			2,300
Operating lease liability arising from obtaining right-of-use asset		0			354

See accompanying notes to consolidated financial statements

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION:The accompanying consolidated financial statements include the accounts of Ohio Valley Banc Corp. ("(“Ohio ~~Valley"~~Valley”) and its wholly-owned subsidiaries, The Ohio Valley Bank Company (the ~~"Bank"~~“Bank”), Loan Central, Inc. ~~("Loan Central")~~, a consumer finance company (“Loan Central”), Ohio Valley Financial Services Agency, LLC, ~~("Ohio Valley Financial Services"),~~ an insurance agency, and OVBC Captive, Inc. ~~(the "Captive")~~, a limited purpose property and casualty insurance ~~company.~~company (the “Captive”). The Bank has ~~one~~2 wholly-owned ~~subsidiary,~~subsidiaries, Race Day Mortgage, Inc., an Ohio corporation that provides online consumer mortgages and Ohio Valley REO, LLC, ~~("Ohio Valley REO"),~~ an Ohio limited liability company (“Ohio Valley REO”), to which the Bank transfers certain real estate acquired by the Bank through foreclosure for sale by Ohio Valley REO. Ohio Valley and its subsidiaries are collectively referred to as the ~~"Company".~~“Company.” All material intercompany accounts and transactions have been eliminated in consolidation.

These interim financial statements are prepared by the Company without audit and reflect all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly the consolidated financial position of the Company at ~~September~~June 30, ~~2017,~~2022, and its results of operations and cash flows for the periods presented. The results of operations for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2022 are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, ~~2017.~~2022. 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"~~GAAP”) that might otherwise be necessary in the circumstances. The Annual Report of the Company for the year ended December 31, ~~2016~~2021 contains consolidated financial statements and related notes which should be read in conjunction with the accompanying consolidated financial statements.

The consolidated financial statements for ~~2016~~2021 have been reclassified to conform to the presentation for ~~2017.~~2022. These reclassifications had no effect on ~~the~~ net income or ~~shareholders'~~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"~~(“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~~2 lines of ~~business,~~business: banking and consumer finance.

LOANS: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred loan fees and costs, and an allowance for loan losses. Interest income is reported on an accrual basis using the interest method and includes amortization of net deferred loan fees and costs over the loan term using the level yield method without anticipating prepayments. The amount of the Company’s recorded investment is not materially different than the amount of unpaid principal balance for loans.

Interest income is discontinued and the loan moved to non-accrual status when full loan repayment is in doubt, typically when the loan is impaired or payments are past due 90 days or over unless the loan is well-secured or in process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days or over and still accruing include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Bank also originates long-term, fixed-rate mortgage loans, with full intention of being sold to the secondary market. These loans are considered held for sale during the period of time after the principal has been advanced to the borrower by the Bank, but before the Bank has been reimbursed by the Federal Home Loan Mortgage Corporation, typically within a few business days. Loans sold to the secondary market are carried at the lower of aggregate cost or fair value. As of June 30, 2022, there were $844 in loans held for sale by the Bank , as compared to $1,682 in loans held for sale at December 31, 2021.

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

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified and for which the borrower is experiencing financial difficulties are considered troubled debt restructurings ("TDRs") and are classified as impaired.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length and reasons for the delay, the borrower’s prior payment record, and the amount of shortfall in relation to the principal and interest owed.

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

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

Commercial and industrial loans consist of borrowings for commercial purposes to individuals, corporations, partnerships, sole proprietorships, and other business enterprises. Commercial and industrial loans are generally secured by business assets such as equipment, accounts receivable, inventory, or any other asset excluding real estate and generally made to finance capital expenditures or operations. The Company’s risk exposure is related to deterioration in the value of collateral securing the loan should foreclosure become necessary. Generally, business assets used or produced in operations do not maintain their value upon foreclosure, which may require the Company to write down the value significantly to sell.

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Commercial real estate consists of nonfarm, nonresidential loans secured by owner-occupied and nonowner-occupied commercial real estate as well as commercial construction loans. An owner-occupied loan relates to a borrower purchased building or space for which the repayment of principal is dependent upon cash flows from the ongoing business operations conducted by the party, or an affiliate of the party, who owns the property. Owner-occupied loans that are dependent on cash flows from operations can be adversely affected by current market conditions for their product or service. A nonowner- occupied loan is a property loan for which the repayment of principal is dependent upon rental income associated with the property or the subsequent sale of the property. Nonowner-occupied loans that are dependent upon rental income are primarily impacted by local economic conditions which dictate occupancy rates and the amount of rent charged. Commercial construction loans consist of borrowings to purchase and develop raw land into 1-4 family residential properties. Construction loans are extended to individuals as well as corporations for the construction of an individual or multiple properties and are secured by raw land and the subsequent improvements. Repayment of the loans to real estate developers is dependent upon the sale of properties to third parties in a timely fashion upon completion. Should there be delays in construction or a downturn in the market for those properties, there may be significant erosion in value which may be absorbed by the Company.

Residential real estate loans consist of loans to individuals for the purchase of 1-4 family primary residences with repayment primarily through wage or other income sources of the individual borrower. The Company’s loss exposure to these loans is dependent on local market conditions for residential properties as loan amounts are determined, in part, by the fair value of the property at origination.

Consumer loans are comprised of loans to individuals secured by automobiles, open-end home equity loans and other loans to individuals for household, family, and other personal expenditures, both secured and unsecured. These loans typically have maturities of 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.

At June 30, 2022, there were no changes to the accounting policies or methodologies within any of the Company’s loan portfolio segments from the prior quarter.

EARNINGS PER SHARE: Earnings per share are computed based on net income divided by the weighted average number of common shares outstanding during the ~~period.~~quarter. The weighted average common shares outstanding were ~~4,688,284~~4,771,774 and ~~4,466,601~~4,787,446 for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively. The weighted average common shares outstanding were ~~4,680,846~~4,766,453 and ~~4,246,311~~4,787,446 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively. Ohio Valley had no dilutive effect and no potential common shares issuable under stock options or other agreements for any period presented.

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

~~NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

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

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

GUIDANCE TO BE ADOPTED IN FUTURE PERIODS:In June 2016, the FASB issued ASU No. 2016-13, ~~"Financial~~“Financial Instruments - Credit ~~Losses"~~Losses”. ASU 2016-13 requires entities to ~~report "expected" credit losses on financial instruments and other commitments to extend credit rather than~~replace the current ~~"incurred loss"~~“incurred loss” model with an “expected loss” model, which is referred to as the current expected credit loss (“CECL”) model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an ~~entity's~~entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. ~~This~~The Bank’s CECL steering committee has developed a CECL model and is evaluating the source data, various credit loss methodologies and model results in relation to the new ASU guidance. Management expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective. For SEC filers who are smaller reporting companies, such as the Company, ASU 2016-13 is effective for ~~annual periods,~~fiscal years, and interim periods within those ~~annual periods,~~fiscal years, beginning after December 15, 2019. Early adoption is permitted, for annual periods and interim periods within those annual periods, beginning after December 15, 2018. Management is currently in the developmental stages, collecting available historical information, in order to assess the expected credit losses. However, the impact to the financial statements are still yet to be determined.2022.

In ~~August 2016,~~March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326). This standard: (i) eliminates the accounting guidance for TDRs, requiring entities to determine whether a modification results in a new loan or a continuation of an ~~update (ASU 2016-15, "Statement~~existing loan, (ii) expands disclosures related to modifications, and (iii) will require disclosure of ~~Cash Flows") (Topic 230), which addresses eight specific cash flow issues with~~current period gross write-offs of financing receivables within the ~~objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows.~~vintage disclosures table. The amendments in this update ~~apply to all entities, including business entities and not-for-profit entities that are required to present a statement of cash flows, and~~ are effective ~~for public business entities~~ for fiscal years beginning after December 15, ~~2017, and~~2022, including interim periods within those fiscal ~~years.~~years, and are applied prospectively, except with respect to the recognition and measurement of TDRs, where an entity has the option to apply a modified retrospective transition method. Early adoption ~~is permitted, including adoption in an interim period. Adoption by the Company is not expected to have a material impact on the consolidated financial statements and related disclosures.~~

~~In January 2017, the FASB issued an update (ASU 2017-04, Intangibles – Goodwill and Other) which is intended to simplify the measurement~~ of ~~goodwill in periods following the date on which the goodwill is initially recorded. Under~~ the amendments in this update ~~an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.~~is permitted if ASU 2016-13 has been previously adopted. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the loss recognized should not exceed the total amount of goodwill allocatedmay elect to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. A public business entity that is a U.S. Securities and Exchange Commission filer shouldearly adopt the amendments ~~in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Adoption by~~regarding TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures. The Company is ~~not expected to~~assessing the impact that the adoption of ASU 2022-02 will have ~~a material impact~~ on ~~the~~its consolidated financial statements ~~and related disclosures.~~

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~~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~~Company’s valuation methodologies used to measure and disclose the fair values of its financial assets and liabilities on a recurring or nonrecurring basis:

Securities: The fair values for securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

Impaired Loans: At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the ~~borrower's~~borrower’s financial statements, or aging reports, adjusted or discounted based on ~~management's~~management’s historical knowledge, changes in market conditions from the time of the valuation, and ~~management's~~management’s expertise and knowledge of the client and ~~client's~~client’s business, resulting in a Level 3 fair value classification. In some instances, fair value adjustments can be made based on a quoted price from an observable input, such as a purchase agreement. Such adjustments would be classified as a Level 2 classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Other Real Estate Owned: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. In some instances, fair value adjustments can be made based on a quoted price from an observable input, such as a purchase agreement. Such adjustments would be classified as a Level 2 classification.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of management reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with ~~management's~~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~~which typically ~~approximate~~amount to approximately 10% of the fair value of such collateral.

Interest Rate Swap Agreements: The fair value of interest rate swap agreements is determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments). The variable cash receipts (or payments) are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves (Level 2).

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Assets and Liabilities Measured on a Recurring Basis

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

	Fair Value Measurements at September 30, 2017 Using						Fair Value Measurements at June 30, 2022 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		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								0	$	38,337			0
U.S. Government sponsored entity securities		----	$	13,579		----		0		19,806			0
Agency mortgage-backed securities, residential		----		92,966		----		0		135,474			0
Interest rate swap derivatives								0		890			0

Liabilities:
Interest rate swap derivatives								0		(890	)		0

	Fair Value Measurements at December 31, 2021 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
U.S. Government securities		0	$	20,143			0
U.S. Government sponsored entity securities		0		25,916			0
Agency mortgage-backed securities, residential		0		130,941			0
Interest rate swap derivatives		0		599			0

Liabilities:
Interest rate swap derivatives		0		(599	)		0

Fair Value Measurements at December 31, 2016 Using

Quoted Prices in Active Markets for Identical Assets
(Level 1)

Significant Other Observable
Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)

Assets:

U.S. Government sponsored entity securities ---- $ 10,544 ----
Agency mortgage-backed securities, residential ---- 85,946 ----

There were no transfers between Level 1 and Level 2 during ~~2017~~2022 or ~~2016.~~2021.

Assets and Liabilities Measured on a Nonrecurring Basis

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

Fair Value Measurements at September 30, 2017, Using

Quoted Prices in Active Markets for Identical Assets
(Level 1)

Significant Other Observable
Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)

Assets:

Impaired loans:
  Residential real estate ---- ---- $ 94
  Commercial real estate:
     Nonowner-occupied ---- ---- 2,602

Other real estate owned:
  Commercial real estate:
     Construction ---- ---- 754

Fair Value Measurements at June 30, 2022 Using

Quoted Prices in Active

Markets for Identical Assets

(Level 1)

Significant Other

Observable Inputs

(Level 2)

Significant

Unobservable Inputs

(Level 3)

Assets:

Impaired loans:

Commercial and industrial

1,210

Fair Value Measurements at December 31, 2016, Using

Quoted Prices in Active Markets for Identical Assets
(Level 1)

Significant Other Observable
Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)

Assets:

Impaired loans:
  Commercial real estate:
     Owner-occupied ---- ---- $ 3,536
     Nonowner-occupied ---- ---- 1,985
  Commercial and industrial ---- ---- 298

Other real estate owned:
  Commercial real estate:
     Construction ---- ---- 754

Fair Value Measurements at December 31, 2021 Using

Quoted Prices in Active

Markets for Identical Assets

(Level 1)

Significant Other

Observable Inputs

(Level 2)

Significant

Unobservable Inputs

(Level 3)

Assets:

Impaired loans:

Commercial and industrial

1,983

~~NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)~~

At ~~September~~June 30, ~~2017,~~2022, the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled ~~$2,838,~~$1,507, with a corresponding valuation allowance of ~~$142. This resulted~~$297, resulting in an increase of ~~$142 to provision expense during the three and nine months ended September 30, 2017, with no additional charge-offs recognized. This is compared to an increase of $819~~$231 in provision expense during the three months ended ~~September~~June 30, ~~2016,~~2022, and an increase of ~~$2,477~~$287 in provision expense during the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2022, with ~~no additional~~0 corresponding charge-offs recognized. This is compared to a decrease of $30 in provision expense during the three months ended June 30, 2021, and an increase of $60 in provision expense during the six months ended June 30, 2021. At December 31, ~~2016,~~2021, the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled ~~$8,732,~~$1,993, with a corresponding valuation allowance of ~~$2,913,~~$10, resulting in an increase of ~~$2,509~~$10 in provision expense during the year ended December 31, ~~2016,~~2021, with ~~no additional~~0 corresponding charge-offs recognized.

~~Other~~There was 0 other real estate owned that was measured at fair value less costs to sell at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016 had a net carrying amount of $754, which is made up of the outstanding balance of $2,217, net of a valuation allowance of $1,463.~~2021. There were no0 corresponding write downs during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016.~~2021.

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at ~~September~~June 30, ~~2017~~2022 and December ~~31, 2016:~~31,2021:

June 30, 2022

Fair

Value

Valuation

Technique(s)

Unobservable

Input(s)

Range

Weighted Average

Impaired loans:

Adjustment to comparables

Commercial and industrial

1,210

Sales approach

and equipment comparables

0% to 25%

22.0%

September 30, 2017

Fair Value

Valuation Technique(s)

Unobservable
Input(s)

Range

(Weighted Average)

Impaired loans:
  Residential real estate: $ 94 Sales approach Adjustment to comparables 10% 10%
Commercial real estate:
      Nonowner-occupied 2,602 Sales approach Adjustment to comparables 0% to 250% 51.4%
Income approach Capitalization Rate 8% 8%

Other real estate owned:
  Commercial real estate:
      Construction 754 Sales approach Adjustment to comparables 0% to 30% 11.7%

December 31, 2021

Fair

Value

Valuation

Technique(s)

Unobservable

Input(s)

Range

Weighted Average

Impaired loans:

Adjustment to comparables

Commercial and industrial

1,983

Sales approach

and equipment comparables

0% to 25%

18.5%

December 31, 2016

Fair Value

Valuation Technique(s)

Unobservable
Input(s)

Range

(Weighted Average)

Impaired loans:
  Commercial real estate:
      Owner-occupied $ 3,536 Sales approach Adjustment to comparables 0% to 65% 13.7%
Cost approach Adjustment to comparables 0% to 29.5% 14.8%
      Nonowner-occupied 1,985 Sales approach Adjustment to comparables 0% to 250% 58.6%
  Commercial and industrial 298 Sales approach Adjustment to comparables 0.9% to 9.7% 5.2%

Other real estate owned:
  Commercial real estate:
      Construction 754 Sales approach Adjustment to comparables 0% to 30% 11.7%

~~NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)~~

The carrying amounts and estimated fair values of financial instruments at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 are as follows:

			Fair Value Measurements at September 30, 2017 Using:								Carrying		Fair Value Measurements at June 30, 2022 Using
	Carrying Value		Level 1		Level 2		Level 3		Total		Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	50,402	$	50,402	$	----	$	----	$	50,402	$	94,094	$	94,094	$	0	$	0	$	94,094
Certificates of deposit in financial institutions		1,820		----		1,820		----		1,820		1,873		0		1,873		0		1,873
Securities available for sale		106,545		----		106,545		----		106,545		193,617		0		193,617		0		193,617
Securities held to maturity		18,168		----		9,586		9,236		18,822		9,735		0		5,371		3,666		9,037
Restricted investments in bank stocks		7,506		N/A		N/A		N/A		N/A
Loans, net		770,644		----		----		772,063		772,063		865,038		0		0		843,990		843,990
Interest rate swap derivatives												890		0		890		0		890
Accrued interest receivable		2,532		----		394		2,138		2,532		2,940		0		435		2,505		2,940

Financial liabilities:
Deposits		849,181		233,178		616,081		----		849,259		1,073,354		902,445		170,951		0		1,073,396
Other borrowed funds		36,775		----		36,070		----		36,070		18,484		0		17,412		0		17,412
Subordinated debentures		8,500		----		6,377		----		6,377		8,500		0		7,171		0		7,171
Interest rate swap derivatives												890		0		890		0		890
Accrued interest payable		690		3		687		----		690		332		1		331		0		332

				Fair Value Measurements at December 31, 2016 Using:								Carrying		Fair Value Measurements at December 31, 2021 Using
		Carrying Value		Level 1		Level 2		Level 3		Total		Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents		$	40,166	$	40,166	$	----	$	----	$	40,166	$	152,034	$	152,034	$	0	$	0	$	152,034
Certificates of deposit in financial institutions			1,670		----		1,670		----		1,670		2,329		0		2,329		0		2,329
Securities available for sale			96,490		----		96,490		----		96,490		177,000		0		177,000		0		177,000
Securities held to maturity			18,665		----		9,541		9,630		19,171		10,294		0		6,063		4,387		10,450
Restricted investments in bank stocks			7,506		N/A		N/A		N/A		N/A
Loans, net			727,202		----		----		727,079		727,079		824,708		0		0		821,899		821,899
Interest rate swap derivatives													599		0		599		0		599
Accrued interest receivable			2,315		----		224		2,091		2,315		2,695		0		363		2,332		2,695

Financial liabilities:	��
Deposits			790,452		209,576		581,340		----		790,916		1,059,908		870,626		189,796		0		1,060,422
Other borrowed funds			37,085		----		35,948		----		35,948		19,614		0		20,279		0		20,279
Subordinated debentures			8,500		----		5,821		----		5,821		8,500		0		5,657		0		5,657
Interest rate swap derivatives													599		0		599		0		599
Accrued interest payable			513		4		509		----		513		439		1		438		0		439

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

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

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

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

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

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

~~NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)~~

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

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

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

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

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

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

NOTE 3 – SECURITIES

The following table summarizes the amortized cost and fair value of securities available for sale and securities held to maturity at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive ~~income~~ (loss) and gross unrecognized gains and losses:

Securities Available for Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2017
June 30, 2022
U.S. Government securities										$	40,426	$	0	$	(2,089	)	$	38,337
U.S. Government sponsored entity securities	$	13,627	$	----	$	(48	)	$	13,579		21,630		0		(1,824	)		19,806
Agency mortgage-backed securities, residential		92,935		653		(622	)		92,966		146,829		2		(11,357	)		135,474
Total securities	$	106,562	$	653	$	(670	)	$	106,545	$	208,885	$	2	$	(15,270	)	$	193,617

December 31, 2016
December 31, 2021
U.S. Government securities										$	20,182	$	0	$	(39	)	$	20,143
U.S. Government sponsored entity securities	$	10,624	$	----	$	(80	)	$	10,544		25,980		109		(173	)		25,916
Agency mortgage-backed securities, residential		87,367		495		(1,916	)		85,946		129,942		1,476		(477	)		130,941
Total securities	$	97,991	$	495	$	(1,996	)	$	96,490	$	176,104	$	1,585	$	(689	)	$	177,000

Securities Held to Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Estimated Fair Value
June 30, 2022
Obligations of states and political subdivisions	$	9,734	$	55	$	(753	)	$	9,036
Agency mortgage-backed securities, residential		1		0		0			1
Total securities	$	9,735	$	55	$	(753	)	$	9,037

December 31, 2021
Obligations of states and political subdivisions	$	10,292	$	200	$	(44	)	$	10,448
Agency mortgage-backed securities, residential		2		0		0			2
Total securities	$	10,294	$	200	$	(44	)	$	10,450

~~NOTE 3 – SECURITIES (Continued)~~

Securities Held to Maturity

Amortized
Cost
Gross Unrecognized Gains Gross Unrecognized Losses

Estimated
Fair Value

September 30, 2017

  Obligations of states and political subdivisions $ 18,164 $ 694 $ (40 ) $ 18,818
  Agency mortgage-backed securities, residential 4 ---- ---- 4
      Total securities $ 18,168 $ 694 $ (40 ) $ 18,822

December 31, 2016

  Obligations of states and political subdivisions $ 18,661 $ 654 $ (148 ) $ 19,167
  Agency mortgage-backed securities, residential 4 ---- ---- 4
      Total securities $ 18,665 $ 654 $ (148 ) $ 19,171

The amortized cost and estimated fair value of debt securities at ~~September~~June 30, ~~2017,~~2022, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay the debt obligations prior to their contractual maturities. Securities not due at a single maturity are shown separately.

	Available for Sale				Held to Maturity				Available for Sale				Held to Maturity
Debt Securities:	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value

Due in one year or less	$	4,602	$	4,593	$	89	$	89	$	1,996	$	1,996	$	434	$	438
Due in over one to five years		6,025		5,996		6,764		7,000		55,060		51,680		3,525		3,449
Due in over five to ten years		3,000		2,990		8,055		8,482		5,000		4,467		3,037		2,811
Due after ten years		----		----		3,256		3,247		0		0		2,738		2,338
Agency mortgage-backed securities, residential		92,935		92,966		4		4		146,829		135,474		1		1
Total debt securities	$	106,562	$	106,545	$	18,168	$	18,822	$	208,885	$	193,617	$	9,735	$	9,037

NOTE 3 – SECURITIES (Continued)

The following table summarizes securities with unrealized losses at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, aggregated by major security type and length of time in a continuous unrealized loss position:

September 30, 2017
Less Than 12 Months 12 Months or More Total
Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss
Securities Available for Sale

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

June 30, 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	$	38,337	$	(2,089	)	$	0	$	0	$	38,337	$	(2,089	)
U.S. Government sponsored entity securities		19,806		(1,824	)		0		0		19,806		(1,824	)
Agency mortgage-backed securities,
residential		135,357		(11,357	)		0		0		135,357		(11,357	)
Total available for sale	$	193,500	$	(15,270	)	$	0	$	0	$	193,500	$	(15,270	)

Less Than 12 Months 12 Months or More Total
Fair Value Unrecognized Loss Fair Value Unrecognized Loss Fair Value Unrecognized Loss
Securities Held to Maturity

Obligations of states and
political subdivisions $ 325 $ (2 ) $ 1,173 $ (38 ) $ 1,498 $ (40 )
Total held to maturity $ 325 $ (2 ) $ 1,173 $ (38 ) $ 1,498 $ (40 )

December 31, 2021	Less Than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Securities Available for Sale
U.S. Government securities	$	20,143	$	(39	)	$	0	$	0	$	20,143	$	(39	)
U.S. Government sponsored entity securities		18,307		(173	)		0		0		18,307		(173	)
Agency mortgage-backed securities,
residential		64,560		(477	)		0		0		64,560		(477	)
Total available for sale	$	103,010	$	(689	)	$	0	$	0	$	103,010	$	(689	)

December 31, 2016
Less Than 12 Months 12 Months or More Total
Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss
Securities Available for Sale

U.S. Government sponsored
entity securities $ 10,544 $ (80 ) $ ---- $ ---- $ 10,544 $ (80 )
Agency mortgage-backed
securities, residential 64,043 (1,916 ) ---- ---- 64,043 (1,916 )
Total available for sale $ 74,587 $ (1,996 ) $ ---- $ ---- $ 74,587 $ (1,996 )

June 30, 2022	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrecognized Loss			Fair Value		Unrecognized Loss			Fair Value		Unrecognized Loss
Securities Held to Maturity
Obligations of states and political subdivisions	$	3,859	$	(454	)	$	1,660	$	(299	)	$	5,519	$	(753	)
Total held to maturity	$	3,859	$	(454	)	$	1,660	$	(299	)	$	5,519	$	(753	)

December 31, 2021	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrecognized Loss			Fair Value		Unrecognized Loss			Fair Value		Unrecognized Loss
Securities Held to Maturity
Obligations of states and political subdivisions	$	2,617	$	(38	)	$	130	$	(6	)	$	2,747	$	(44	)
Total held to maturity	$	2,617	$	(38	)	$	130	$	(6	)	$	2,747	$	(44	)

~~NOTE 3 – SECURITIES (Continued)~~

Less Than 12 Months 12 Months or More Total
Fair Value Unrecognized Loss Fair Value Unrecognized Loss Fair Value Unrecognized Loss
Securities Held to Maturity

Obligations of states and
political subdivisions $ 3,813 $ (148 ) $ ---- $ ---- $ 3,813 $ (148 )
Total held to maturity $ 3,813 $ (148 ) $ ---- $ ---- $ 3,813 $ (148 )

There were no0 sales of investment securities during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016.~~2022 or 2021. Unrealized losses on the ~~Company's~~Company’s debt securities have not been recognized into income because the ~~issuers'~~issuers’ securities ~~are~~were of high credit quality as of ~~September~~June 30, ~~2017,~~2022, and management does not intend to sell, and it is likely that management will not be required to sell, the securities prior to their anticipated recovery. Management does ~~not~~0t believe any individual unrealized loss at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 represents an other-than-temporary impairment.

NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES

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

Loans, net $ 770,644 $ 727,202

Loans are comprised of the following:

	June 30, 2022			December 31, 2021

Residential real estate	$	308,141		$	274,425
Commercial real estate:
Owner-occupied		70,760			71,979
Nonowner-occupied		167,327			176,100
Construction		38,448			33,718
Commercial and industrial		148,577			141,525
Consumer:
Automobile		49,502			48,206
Home equity		24,958			22,375
Other		62,539			62,863
		870,252			831,191
Less: Allowance for loan losses		(5,214	)		(6,483	)

Loans, net	$	865,038		$	824,708

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law as a result of the coronavirus ("COVID-19"). The CARES Act provided assistance to small businesses through the establishment of the Paycheck Protection Program ("PPP"). The PPP provided small businesses with funds to use for payroll and certain other expenses. At June 30, 2022, there were 0 commercial and industrial loans originated under the PPP, as compared to $446 at December 31, 2021. These loans are guaranteed by the Small Business Administration.

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016:~~2021:

September 30, 2017	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
June 30, 2022																Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,300		$	2,813		$	932		$	1,907		$	6,952		$	714		$	1,991		$	1,389		$	1,174		$	5,268
Provision for loan losses		493			540			238			330			1,601			(77	)		(150	)		769			271			813
Loans charged off		(445	)		(434	)		(202	)		(420	)		(1,501	)		(39	)		(15	)		(618	)		(372	)		(1,044	)
Recoveries		83			41			4			133			261			16			20			8			133			177
Total ending allowance balance	$	1,431		$	2,960		$	972		$	1,950		$	7,313		$	614		$	1,846		$	1,548		$	1,206		$	5,214

September 30, 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
June 30, 2021																Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	906		$	3,464		$	1,416		$	1,148		$	6,934		$	1,377		$	2,346		$	1,791		$	1,373		$	6,887
Provision for loan losses		228			802			149			529			1,708			(293	)		219			(55	)		156			27
Loans charged-off		(151	)		(11	)		(587	)		(704	)		(1,453	)		(25	)		(42	)		0			(240	)		(307	)
Recoveries		30			19			1			298			348			29			15			4			144			192
Total ending allowance balance	$	1,013		$	4,274		$	979		$	1,271		$	7,537		$	1,088		$	2,538		$	1,740		$	1,433		$	6,799

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

The following table presents the activity in the allowance for loan losses by portfolio segment for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016:~~2021:

September 30, 2017	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
June 30, 2022																Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	939		$	4,315		$	907		$	1,538		$	7,699		$	980		$	2,548		$	1,571		$	1,384		$	6,483
Provision for loan losses		870			(636	)		588			1,099			1,921			(356	)		(725	)		579			189			(313	)
Loans charged off		(591	)		(1,046	)		(605	)		(1,125	)		(3,367	)
Loans charged-off																	(42	)		(16	)		(618	)		(702	)		(1,378	)
Recoveries		213			327			82			438			1,060			32			39			16			335			422
Total ending allowance balance	$	1,431		$	2,960		$	972		$	1,950		$	7,313		$	614		$	1,846		$	1,548		$	1,206		$	5,214

September 30, 2016	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
June 30, 2021																Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for loan losses:
Beginning balance	$	1,087		$	1,959		$	2,589		$	1,013		$	6,648		$	1,480		$	2,431		$	1,776		$	1,473		$	7,160
Provision for loan losses		10			2,264			(1,035	)		1,089			2,328			(409	)		117			(3	)		270			(25	)
Loans charged-off		(322	)		(63	)		(587	)		(1,540	)		(2,512	)		(26	)		(52	)		(71	)		(599	)		(748	)
Recoveries		238			114			12			709			1,073			43			42			38			289			412
Total ending allowance balance	$	1,013		$	4,274		$	979		$	1,271		$	7,537		$	1,088		$	2,538		$	1,740		$	1,433		$	6,799

The following table presents the balance in the allowance for loan losses and the recorded investment of loans by portfolio segment and based on impairment method as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016:~~2021:

September 30, 2017	Residential Real Estate		Commercial Real Estate		Commercial and Industrial		Consumer		Total
June 30, 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	$	127	$	111	$	----	$	2	$	240	$	0	$	0	$	297	$	0	$	297
Collectively evaluated for impairment		1,304		2,849		972		1,948		7,073		614		1,846		1,251		1,206		4,917
Total ending allowance balance	$	1,431	$	2,960	$	972	$	1,950	$	7,313	$	614	$	1,846	$	1,548	$	1,206	$	5,214

Loans:
Loans individually evaluated for impairment	$	1,153	$	6,798	$	9,522	$	208	$	17,681	$	0	$	2,042	$	1,507	$	0	$	3,549
Loans collectively evaluated for impairment		317,091		208,045		94,028		141,112		760,276		308,141		274,493		147,070		136,999		866,703
Total ending loans balance	$	318,244	$	214,843	$	103,550	$	141,320	$	777,957	$	308,141	$	276,535	$	148,577	$	136,999	$	870,252

December 31, 2016	Residential Real Estate		Commercial Real Estate		Commercial and Industrial		Consumer		Total
December 31, 2021											Residential Real Estate		Commercial Real Estate		Commercial and Industrial		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	----	$	2,535	$	241	$	205	$	2,981	$	0	$	0	$	10	$	0	$	10
Collectively evaluated for impairment		939		1,780		666		1,333		4,718		980		2,548		1,561		1,384		6,473
Total ending allowance balance	$	939	$	4,315	$	907	$	1,538	$	7,699	$	980	$	2,548	$	1,571	$	1,384	$	6,483

Loans:
Loans individually evaluated for impairment	$	717	$	13,111	$	8,465	$	416	$	22,709	$	0	$	5,411	$	4,531	$	81	$	10,023
Loans collectively evaluated for impairment		285,305		200,896		92,124		133,867		712,192		274,425		276,386		136,994		133,363		821,168
Total ending loans balance	$	286,022	$	214,007	$	100,589	$	134,283	$	734,901	$	274,425	$	281,797	$	141,525	$	133,444	$	831,191

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

The following tables present information related to loans individually evaluated for impairment by class of loans as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016:~~2021:

September 30, 2017	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
June 30, 2022							Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Residential real estate	$	224	$	221	$	127
Commercial real estate:
Nonowner-occupied		604		530		111
Consumer:
Home equity		208		208		2
Commercial and industrial							$	1,507	$	1,507	$	297
With no related allowance recorded:
Residential real estate		932		932		----
Commercial real estate:
Owner-occupied		2,563		2,563		----		1,714		1,660		—
Nonowner-occupied		4,995		3,548		----		382		382		—
Construction		635		157		----
Commercial and industrial		9,522		9,522		----
Total	$	19,683	$	17,681	$	240	$	3,603	$	3,549	$	297

December 31, 2016	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
December 31, 2021							Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial and industrial							$	1,993	$	1,993	$	10
With no related allowance recorded:
Commercial real estate:
Owner-occupied	$	5,477	$	5,477	$	2,435		5,052		5,027		—
Nonowner-occupied		384		384		100		384		384		—
Commercial and industrial		392		392		241		2,538		2,538		—
Consumer:
Home equity		416		416		205		31		31		—
With no related allowance recorded:
Residential real estate		717		717		----
Commercial real estate:
Owner-occupied		3,638		3,091		----
Nonowner-occupied		5,078		3,632		----
Construction		1,001		527		----
Commercial and industrial		8,073		8,073		----
Other								50		50		—
Total	$	25,176	$	22,709	$	2,981	$	10,048	$	10,023	$	10

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

The following tables present information related to loans individually evaluated for impairment by class of loans for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016:~~2021:

	Three months ended September 30, 2017						Nine months ended September 30, 2017						Three months ended June 30, 2022						Six months ended June 30, 2022
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Residential real estate	$	221	$	7	$	7	$	55	$	7	$	7
Commercial real estate:
Nonowner-occupied		563		3		3		584		12		12
Consumer:
Home equity		208		1		1		210		5		5
Commercial and industrial													$	1,619	$	15	$	15	$	1,744	$	54	$	54
With no related allowance recorded:
Residential real estate		935		10		10		824		37		37
Commercial real estate:
Owner-occupied		2,409		37		37		2,407		112		112		1,675		26		26		1,687		48		48
Nonowner-occupied		3,552		19		19		3,518		57		57		382		7		7		383		14		14
Construction		157		5		5		170		14		14
Commercial and industrial		9,260		135		135		8,776		358		358
Total	$	17,305	$	217	$	217	$	16,544	$	602	$	602	$	3,676	$	48	$	48	$	3,814	$	116	$	116

	Three months ended June 30, 2021						Six months ended June 30, 2021
	Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized		Average Impaired Loans		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial and industrial	$	268	$	5	$	5	$	274	$	9	$	9
Consumer:
Other		50		1		1		50		1		1
With no related allowance recorded:
Commercial real estate:
Owner-occupied		5,190		86		86		5,212		164		164
Nonowner-occupied		388		7		7		389		14		14
Commercial and industrial		2,636		33		33		3,224		81		81
Consumer:
Home equity		33		1		1		33		1		1
Other
Total	$	8,565	$	133	$	133	$	9,182	$	270	$	270

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

Three months ended September 30, 2016 Nine months ended September 30, 2016

Average
Impaired
Loans

Interest
Income Recognized
Cash Basis Interest Recognized
Average
Impaired
Loans

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

The recorded investment of a loan ~~is its carrying value excluding~~excludes accrued interest and net deferred ~~loan fees.~~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). AsOther real estate owned for residential real estate properties totaled $15 as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016, other real estate owned secured by residential real estate totaled $384 and $938, respectively.~~2021. In addition, nonaccrual residential mortgage loans that are in the process of foreclosure had a recorded investment of ~~$1,979~~$499 and ~~$1,492~~$316 as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, respectively.

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

The following table presents the recorded investment of nonaccrual loans and loans past due 90 days or more and still accruing by class of loans as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016:~~2021:

September 30, 2017	Loans Past Due 90 Days And Still Accruing		Nonaccrual
June 30, 2022					Loans Past Due 90 Days And Still Accruing		Nonaccrual

Residential real estate	$	316	$	4,452	$	91	$	2,195
Commercial real estate:
Owner-occupied		----		308		0		992
Nonowner-occupied		21		2,624		0		131
Construction		----		402		0		50
Commercial and industrial		15		345		0		149
Consumer:
Automobile		90		75		96		65
Home equity		390		35		0		146
Other		136		110		74		8
Total	$	968	$	8,351	$	261	$	3,736

December 31, 2021	Loans Past Due 90 Days And Still Accruing		Nonaccrual

Residential real estate	$	10	$	2,683
Commercial real estate:
Owner-occupied		0		1,055
Nonowner-occupied		0		0
Construction		0		146
Commercial and industrial		65		150
Consumer:
Automobile		55		147
Home equity		0		148
Other		160		17
Total	$	290	$	4,346

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

December 31, 2016

Loans Past Due
90 Days And
Still Accruing

Nonaccrual

Residential real estate $ 132 $ 3,445
Commercial real estate:
    Owner-occupied 28 1,571
    Nonowner-occupied ---- 2,506
    Construction ---- 527
Commercial and industrial ---- 867
Consumer:
    Automobile 121 5
    Home equity ---- 34
    Other 46 6
        Total $ 327 $ 8,961

The following table presents the aging of the recorded investment of past due loans by class of loans as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016:~~2021:

September 30, 2017	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
June 30, 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	$	5,498	$	1,697	$	1,172	$	8,367	$	309,877	$	318,244	$	2,309	$	792	$	570	$	3,671	$	304,470	$	308,141
Commercial real estate:
Owner-occupied		198		282		142		622		71,903		72,525		303		0		992		1,295		69,465		70,760
Nonowner-occupied		358		----		2,645		3,003		96,963		99,966		424		0		131		555		166,772		167,327
Construction		----		----		231		231		42,121		42,352		0		83		33		116		38,332		38,448
Commercial and industrial		440		42		250		732		102,818		103,550		1,250		0		149		1,399		147,178		148,577
Consumer:
Automobile		982		206		112		1,300		66,699		67,999		692		151		158		1,001		48,501		49,502
Home equity		25		70		390		485		20,802		21,287		85		0		125		210		24,748		24,958
Other		609		243		137		989		51,045		52,034		341		122		77		540		61,999		62,539
Total	$	8,110	$	2,540	$	5,079	$	15,729	$	762,228	$	777,957	$	5,404	$	1,148	$	2,235	$	8,787	$	861,465	$	870,252

December 31, 2016	30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total
December 31, 2021													30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total

Residential real estate	$	3,728	$	953	$	2,201	$	6,882	$	279,140	$	286,022	$	2,208	$	1,218	$	921	$	4,347	$	270,078	$	274,425
Commercial real estate:
Owner-occupied		134		366		1,325		1,825		75,780		77,605		895		0		153		1,048		70,931		71,979
Nonowner-occupied		261		18		2,506		2,785		87,747		90,532		100		0		0		100		176,000		176,100
Construction		66		52		182		300		45,570		45,870		36		53		33		122		33,596		33,718
Commercial and industrial		1,283		483		800		2,566		98,023		100,589		517		60		215		792		140,733		141,525
Consumer:
Automobile		1,091		221		126		1,438		58,334		59,772		656		148		194		998		47,208		48,206
Home equity		349		45		----		394		20,467		20,861		35		165		47		247		22,128		22,375
Other		685		155		46		886		52,764		53,650		401		133		177		711		62,152		62,863
Total	$	7,597	$	2,293	$	7,186	$	17,076	$	717,825	$	734,901	$	4,848	$	1,777	$	1,740	$	8,365	$	822,826	$	831,191

Troubled Debt Restructurings:

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

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

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

The following table presents the types of TDR loan modifications by class of loans as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016:~~2021:

September 30, 2017

TDR's
Performing to Modified Terms

TDR's Not
Performing to Modified Terms

Total
TDR's

Residential real estate:
        Interest only payments $ 702 $ ---- $ 702
        Maturity extension at lower stated rate than market rate 230 230
Commercial real estate:
    Owner-occupied
        Interest only payments 94 ---- 94
        Reduction of principal and interest payments 560 ---- 560
        Maturity extension at lower stated rate than market rate 1,497 ---- 1,497
        Credit extension at lower stated rate than market rate 412 ---- 412
    Nonowner-occupied
        Interest only payments 560 2,115 2,675
        Rate reduction 375 ---- 375
        Credit extension at lower stated rate than market rate 570 ---- 570
Commercial and industrial:
        Interest only payments 8,752 ---- 8,752
        Maturity extension at lower stated rate than market rate 770 ---- 770
Consumer:
    Home equity
        Maturity extension at lower stated rate than market rate ---- 208 208

            Total TDR's $ 14,522 $ 2,323 $ 16,845

June 30, 2022	TDRs Performing to Modified Terms		TDRs Not Performing to Modified Terms		Total TDRs
Commercial real estate:
Owner-occupied
Reduction of principal and interest payments	$	427	$	0	$	427
Credit extension at lower stated rate than market rate		367		0		367
Nonowner-occupied
Credit extension at lower stated rate than market rate		382		0		382

Total TDRs	$	1,176	$	0	$	1,176

December 31, 2016	TDR's Performing to Modified Terms		TDR's Not Performing to Modified Terms		Total TDR's
Residential real estate:
Interest only payments	$	717	$	----	$	717
December 31, 2021							TDRs Performing to Modified Terms		TDRs Not Performing to Modified Terms		Total TDRs
Commercial real estate:
Owner-occupied
Interest only payments		284		----		284
Rate reduction		----		232		232
Reduction of principal and interest payments		579		----		579	$	1,455	$	0	$	1,455
Maturity extension at lower stated rate than market rate		1,582		----		1,582		268		0		268
Credit extension at lower stated rate than market rate								375		0		375
Nonowner-occupied
�� Interest only payments		600		2,210		2,810
Rate reduction		384		----		384
Credit extension at lower stated rate than market rate		574		----		574		385		0		385
Commercial and industrial:
Commercial and industrial
Interest only payments		8,074		----		8,074		2,301		0		2,301
Credit extension at lower stated rate than market rate		----		391		391
Consumer:
Home equity
Maturity extension at lower stated rate than market rate		213		----		213
Credit extension at lower stated rate than market rate		203		----		203

Total TDR's	$	13,210	$	2,833	$	16,043
Total TDRs							$	4,784	$	0	$	4,784

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

~~During the three months ended September~~At June 30, ~~2017, the TDR's described above increased the provision expense~~2022 and the allowance for loan losses by $93, with corresponding charge-offs of $78. During the nine months ended September 30, 2017, the TDR's described above decreased the provision expense and the allowance for loan losses by $42, with corresponding charge-offs of $391. There was an increase of $14 in the provision expense and the allowance for loan losses during the three months ended September 30, 2016, with corresponding charge-offs of $11, and a decrease of $1,105 in the provision expense and the allowance for loan losses during the nine months ended September 30, 2016, with corresponding charge-offs of $11. During the year ended December 31, ~~2016,~~2021, the ~~TDR's described above decreased the allowance for loan losses and provision expense by $1,112 with corresponding charge-offs of $11.~~

~~At September 30, 2017, the balance in TDR loans increased $802, or 5.0%, from year-end 2016. The~~ Company had ~~86% of its TDR's performing according to their modified terms at September 30, 2017, compared to 82% at December 31, 2016. The Company's~~0 specific allocations in reserves to customers whose loan terms have been modified in ~~TDR's totaled $113 at September~~TDRs. At June 30, ~~2017, compared to $546 in reserves at December 31, 2016. At September 30, 2017,~~2022, the Company had ~~$1,747 in~~0 commitments to lend additional amounts to customers with outstanding loans that are classified as ~~TDR's,~~TDRs, as compared to ~~$2,427~~$3,199 at December 31, ~~2016.~~2021.

There were no0 TDR loan modifications ~~or defaults during the three months ended September 30, 2016. The following table presents the pre- and post-modification balances of TDR loan modifications by class of loans~~ that occurred during the three and six months ended ~~September~~June 30, ~~2017:~~2022 and 2021, and there was no resulting impact to provision expense or the allowance for loan losses.

TDR's
Performing to Modified Terms

TDR's Not
Performing to Modified Terms

Three months ended September 30, 2017

Number
of
Loans

Pre-Modification
Recorded Investment
Post-Modification Recorded Investment Pre-Modification Recorded Investment Post-Modification Recorded Investment

Commercial real estate:
    Owner-occupied
       Credit extension at lower stated rate than market rate 1 $ 412 $ 412 $ ---- $ ----
            Total TDR's 1 $ 412 $ 412 $ ---- $ ----

~~The following table presents~~During the ~~pre-~~three and ~~post-modification balances of TDR loan modifications by class of loans that occurred during the nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016:~~

TDR's
Performing to Modified Terms

TDR's Not
Performing to Modified Terms

Nine months ended September 30, 2017

Number
of
Loans
Pre-Modification Recorded Investment Post-Modification Recorded Investment Pre-Modification Recorded Investment Post-Modification Recorded Investment

Residential real estate 1 $ 231 $ 231 $ ---- $ ----
       Maturity extension at lower stated rate than market rate
Commercial real estate:
    Owner-occupied
       Credit extension at lower stated rate than market rate 1 412 412 ---- ----
Commercial and industrial 2 770 770 ---- ----
            Total TDR's 4 $ 1,413 $ 1,413 $ ---- $ ----

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

TDR's
Performing to Modified Terms

TDR's Not
Performing to Modified Terms

Nine months ended September 30, 2016

Number
of
Loans
Pre-Modification Recorded Investment Post-Modification Recorded Investment Pre-Modification Recorded Investment Post-Modification Recorded Investment

Commercial real estate:
    Nonowner-occupied
        Interest only payments 1 $ ---- $ ---- $ 226 $ 226
        Credit extension at lower stated rate than market rate 1 574 574 ---- ----
            Total TDR's 2 $ 574 $ 574 $ 226 $ 226

~~All of~~2021, the ~~Company's loans~~Company had no TDRs that ~~were restructured during the nine months ended September 30, 2017 were performing in accordance with their modified terms and have not~~ experienced any payment defaults within twelve months following their loan modification. The Company's loans that were restructured during the nine months ended September 30, 2016 included a loan for $226 that experienced a payment default within twelve months following the loan modification and is not performing in accordance with the modified loan terms as of September 30, 2017. A default is considered to have occurred once the TDR is past due 90 days or more or it has been placed on nonaccrual. TDR loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The ~~loans modified during the nine months ended September 30, 2017 had no impact~~CARES Act provided guidance on the ~~provision expense~~modification of loans as a result of COVID-19, which outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs. This includes short-term modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers are considered current if they are less than 30 days past due on their contractual payments at the ~~allowance for loan losses. As~~time of ~~September~~modification. Through June 30, ~~2017,~~2022, the Company had ~~no allocation~~modified 549 loans related to COVID-19 with an outstanding loan balance of ~~reserves to customers whose loan terms~~$100,093 that were ~~modified during the first nine months of 2017. The loans modified during the nine months ended September 30, 2016 increased the provision expense and the allowance for loan losses by $11.~~not reported as TDRs. As of ~~September~~June 30, ~~2016,~~2022, the Company had ~~no allocation~~7 of ~~reserves to customers whose~~those modified loans still operating under their COVID-19 related deferral terms with an outstanding loan ~~terms~~balance of $206 that were ~~modified during~~not reported as TDRs in the ~~first nine months of 2016.~~tables presented above.

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

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. These risk categories are represented by a loan grading scale from 1 through ~~10.~~11. The Company analyzes loans individually with a higher credit risk rating and groups these loans into categories called ~~"criticized"~~“criticized” and ~~"classified"~~”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~~Company’s risk categories are reviewed at least annually on loans that have aggregate borrowing amounts that meet or exceed ~~$500.~~$1,000.

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

~~Special Mention.~~ Loans classified as special mention indicate considerable risk due to deterioration of repayment (in the earliest stages) due to potential weak primary repayment source, or payment delinquency. These loans will be under constant supervision, are not classified and do not expose the institution to sufficient risks to warrant classification. These deficiencies should be correctable within the normal course of business, although significant changes in company structure or policy may be necessary to correct the deficiencies. These loans are considered bankable assets with no apparent loss of principal or interest envisioned. The perceived risk in continued lending is considered to have increased beyond the level where such loans would normally be granted. Credits that are defined as a troubled debt restructuring should be graded no higher than special mention until they have been reported as performing over one year after restructuring.

Special Mention. Loans classified as "special mention" indicate considerable risk due to deterioration of repayment (in the earliest stages) that results from potential weak primary repayment source or payment delinquency. These loans will be under constant supervision, and are not classified and do not expose the institution to sufficient risks to warrant classification. These deficiencies should be correctable within the normal course of business, although significant changes in company structure or policy may be necessary to correct the deficiencies. These loans are considered bankable assets with no apparent loss of principal or interest envisioned. The perceived risk in continued lending is considered to have increased beyond the level where such loans would normally be granted. Credits that are defined as TDRs should be graded no higher than special mention until they have been reported as performing over one year after restructuring.

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

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

Substandard. Loans classified as "substandard" represent very high risk, serious delinquency, nonaccrual, or unacceptable credit. Repayment through the primary source of repayment is in jeopardy due to the existence of one or more well defined weaknesses and the collateral pledged may inadequately protect collection of the loans. Loss of principal is not likely if weaknesses are corrected, although financial statements normally reveal significant weakness. Loans are still considered collectible, although loss of principal is more likely than with special mention loans. Collateral liquidation is considered likely to satisfy debt.

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

Loss. Loans classified as "loss" are considered uncollectible and are of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the credit has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset yielding such a minimum value even though partial recovery may be affected in the future. Amounts classified as loss should be promptly charged off.

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

~~Substandard.~~ Loans classified as substandard represent very high risk, serious delinquency, nonaccrual, or unacceptable credit. Repayment through the primary source of repayment is in jeopardy due to the existence of one or more well defined weaknesses and the collateral pledged may inadequately protect collection of the loans. Loss of principal is not likely if weaknesses are corrected, although financial statements normally reveal significant weakness. Loans are still considered collectible, although loss of principal is more likely than with special mention loan grade 8 loans. Collateral liquidation is considered likely to satisfy debt.

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

~~Loss.~~ Loans classified as loss are considered uncollectible and are of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the credit has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset yielding such a minimum value even though partial recovery may be affected in the future. Amounts classified as loss should be promptly charged off.

Criticized and classified loans will mostly consist of commercial and industrial and commercial real estate loans. The Company considers its loans that do not meet the criteria for a criticized and classified asset rating as pass rated loans, which will include loans graded from 1 (Prime) to 7 (Watch). All commercial loans are categorized into a risk category either at the time of origination or reevaluation date. As of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:

September 30, 2017	Pass		Criticized		Classified		Total
June 30, 2022									Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	63,913	$	955	$	7,657	$	72,525	$	67,196	$	2,572	$	992	$	70,760
Nonowner-occupied		93,831		2,223		3,912		99,966		167,080		0		247		167,327
Construction		41,936		----		416		42,352		38,415		0		33		38,448
Commercial and industrial		96,614		1,350		5,586		103,550		144,954		1,966		1,657		148,577
Total	$	296,294	$	4,528	$	17,571	$	318,393	$	417,645	$	4,538	$	2,929	$	425,112

December 31, 2016	Pass		Criticized		Classified		Total
December 31, 2021									Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	66,495	$	428	$	10,682	$	77,605	$	66,999	$	618	$	4,362	$	71,979
Nonowner-occupied		83,103		2,364		5,065		90,532		175,901		0		199		176,100
Construction		45,325		----		545		45,870		33,685		0		33		33,718
Commercial and industrial		94,091		188		6,310		100,589		134,983		1,862		4,680		141,525
Total	$	289,014	$	2,980	$	22,602	$	314,596	$	411,568	$	2,480	$	9,274	$	423,322

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

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

For residential and consumer loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment of residential and consumer loans by class of loans based on repayment activity as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016:~~2021:

September 30, 2017	Consumer
June 30, 2022											Consumer						Residential
	Automobile		Home Equity		Other		Residential Real Estate		Total		Automobile		Home Equity		Other		Real Estate		Total

Performing	$	67,834	$	20,862	$	51,788	$	313,476	$	453,960	$	49,341	$	24,812	$	62,457	$	305,855	$	442,465
Nonperforming		165		425		246		4,768		5,604		161		146		82		2,286		2,675
Total	$	67,999	$	21,287	$	52,034	$	318,244	$	459,564	$	49,502	$	24,958	$	62,539	$	308,141	$	445,140

December 31, 2016	Consumer
December 31, 2021											Consumer						Residential
	Automobile		Home Equity		Other		Residential Real Estate		Total		Automobile		Home Equity		Other		Real Estate		Total

Performing	$	59,646	$	20,827	$	53,598	$	282,445	$	416,516	$	48,004	$	22,227	$	62,686	$	271,732	$	404,649
Nonperforming		126		34		52		3,577		3,789		202		148		177		2,693		3,220
Total	$	59,772	$	20,861	$	53,650	$	286,022	$	420,305	$	48,206	$	22,375	$	62,863	$	274,425	$	407,869

The Company ~~through its subsidiaries,~~ originates residential, consumer, and commercial loans to customers located primarily in the southeastern areas of Ohio as well as the western counties of West Virginia. Approximately ~~4.92%~~4.59% of total loans were unsecured at ~~September~~June 30, ~~2017, down~~2022, up from ~~5.61%~~4.45% at December 31, ~~2016.~~2021.

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~~Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, and financial guarantees written, is represented by the contractual amount of those instruments. The contract amounts of these instruments are not included in the consolidated financial statements. At ~~September~~June 30, ~~2017,~~2022, the contract amounts of these instruments totaled approximately ~~$73,460,~~$98,489, compared to ~~$67,191~~$89,602 at December 31, ~~2016.~~2021. The Bank uses the same credit policies in making commitments and conditional obligations as it does for instruments recorded on the balance sheet. Since many of these instruments are expected to expire without being drawn upon, the total contract amounts do not necessarily represent future cash requirements.

NOTE 6 - OTHER BORROWED FUNDS

Other borrowed funds at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 are comprised of advances from the Federal Home Loan Bank ~~("FHLB"~~(“FHLB”) of Cincinnati and promissory notes. ~~At September 30, 2017 and December 31, 2016, FHLB Borrowings included $48 and $73 in capitalized lease obligations, respectively.~~

FHLB Borrowings Promissory Notes Totals

September 30, 2017 $ 29,235 $ 7,540 $ 36,775
December 31, 2016 $ 29,203 $ 7,882 $ 37,085

	FHLB Borrowings		Promissory Notes		Totals

June 30, 2022	$	16,345	$	2,139	$	18,484
December 31, 2021	$	17,476	$	2,138	$	19,614

Pursuant to collateral agreements with the FHLB, advances ~~were~~are secured by ~~$305,490~~$300,856 in qualifying mortgage loans, ~~$75,032~~$32,788 in commercial loans and ~~$5,365~~$5,125 in FHLB stock at ~~September~~June 30, ~~2017.~~2022. Fixed-rate FHLB advances of ~~$29,195~~$16,345 mature through 2042 and have interest rates ranging from 1.53% to ~~3.31%~~2.97% and a year-to-date weighted average cost of ~~2.14%.~~2.36% at June 30, 2022 and 2.39% at December 31, 2021. There were no0 variable-rate FHLB borrowings at ~~September~~June 30, ~~2017.~~2022.

At ~~September~~June 30, ~~2017,~~2022, the Company had a cash management line of credit enabling it to borrow up to ~~$80,000~~$100,000 from the FHLB. All cash management advances have an original maturity of 90 days. The line of credit must be renewed on an annual basis. There was ~~$80,000~~$100,000 available on this line of credit at ~~September~~June 30, ~~2017.~~2022.

~~NOTE 6 - OTHER BORROWED FUNDS (Continued)~~

Based on the Company's current FHLB stock ownership, total assets and pledgeable loans, the Company had the ability to obtain borrowings from the FHLB up to a maximum of ~~$221,723~~$198,114 at ~~September~~June 30, ~~2017.~~2022. Of this maximum borrowing capacity, the Company had ~~$146,529~~$116,069 available to use as additional borrowings, of which ~~$80,000~~$100,000 could be used for ~~short-term,~~short term, cash management advances, as mentioned above. .

Promissory notes, issued primarily by Ohio Valley, are due at various dates through a final maturity date of ~~August 1, 2026,~~April 13, 2023, and have fixed rates ranging from 1.25% to ~~4.09% through August 1, 2021~~1.30% and a year-to-date weighted average cost of ~~2.77%~~1.23% at ~~September~~June 30, ~~2017, as compared to 2.34% at~~2022 and December 31, ~~2016. Promissory~~2021. At June 30, 2022, there were 6 promissory notes payable by Ohio Valley to related parties ~~totaled $360 at September 30, 2017 and December 31, 2016. Promissory~~totaling $2,139. There were 0 promissory notes payable to other banks ~~totaled $3,556~~ at ~~September~~June 30, ~~2017, as compared to $3,899 at~~2022 and December 31, ~~2016.~~2021, respectively.

Letters of credit issued on the Bank's behalf by the FHLB to collateralize certain public unit deposits as required by law totaled ~~$46,000~~$65,700 at ~~September~~June 30, ~~2017~~2022 and ~~$45,000~~$68,380 at December 31, ~~2016.~~2021.

Scheduled principal payments as of ~~September~~June 30, ~~2017:~~2022:

FHLB
Borrowings

Promissory
Notes

Totals

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

	FHLB Borrowings		Promissory Notes		Totals

2022	$	978	$	531	$	1,509
2023		1,784		1,608		3,392
2024		1,693		0		1,693
2025		1,560		0		1,560
2026		1,434		0		1,434
Thereafter		8,896		0		8,896
	$	16,345	$	2,139	$	18,484

NOTE 7 – SEGMENT INFORMATION

The reportable segments are determined by the products and services offered, primarily distinguished between banking and consumer finance. They are also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar. Loans, investments, and deposits provide the majority of the net revenues from the banking operation, while loans provide the majority of the net revenues for the consumer finance segment. All Company segments are domestic.

Total revenues from the banking segment, which accounted for the majority of the Company's total revenues, totaled ~~92.2%~~92.9% and ~~90.9%~~93.1% of total consolidated revenues for the quarters ~~ended September~~end June 30, ~~2017~~2022 and ~~2016,~~2021, respectively.

The accounting policies used for the Company's reportable segments are the same as those described in Note 1 - Summary of Significant Accounting Policies. Income taxes are allocated based on income before tax expense.

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

	Three Months Ended September 30, 2017							Three Months Ended June 30, 2022
	Banking		Consumer Finance			Total Company		Banking		Consumer Finance		Total Company
Net interest income	$	9,681	$	587		$	10,268	$	10,024	$	529	$	10,553
Provision expense		1,615		(14	)		1,601
Provision for loan losses									800		13		813
Noninterest income		2,224		58			2,282		2,523		113		2,636
Noninterest expense		8,579		643			9,222		9,459		564		10,023
Tax expense		69		5			74
Provision for income taxes									341		13		354
Net income		1,642		11			1,653		1,947		52		1,999
Assets		1,008,078		11,536			1,019,614		1,240,072		13,814		1,253,886

	Three Months Ended June 30, 2021
	Banking		Consumer Finance		Total Company
Net interest income	$	9,727	$	488	$	10,215
Provision for loan losses		0		27		27
Noninterest income		2,384		122		2,506
Noninterest expense		8,737		560		9,297
Provision for income taxes		531		5		536
Net income		2,843		18		2,861
Assets		1,224,295		12,693		1,236,988

	Six Months Ended June 30, 2022
	Banking			Consumer Finance			Total Company
Net interest income	$	19,492		$	1,051		$	20,543
Provision for loan losses		(300	)		(13	)		(313	)
Noninterest income		5,414			942			6,356
Noninterest expense		18,553			1,258			19,811
Provision for income taxes		1,121			156			1,277
Net income		5,532			592			6,124
Assets		1,240,072			13,814			1,253,886

	Six Months Ended June 30, 2021
	Banking			Consumer Finance		Total Company
Net interest income	$	19,281		$	982	$	20,263
Provision for loan losses		(50	)		25		(25	)
Noninterest income		4,892			953		5,845
Noninterest expense		17,234			1,250		18,484
Provision for income taxes		1,119			138		1,257
Net income		5,870			522		6,392
Assets		1,224,295			12,693		1,236,988

~~NOTE 7 – SEGMENT INFORMATION (Continued)~~

Three Months Ended September 30, 2016

Banking

Consumer
Finance

Total Company

Net interest income $ 8,396 $ 589 $ 8,985
Provision expense 1,675 33 1,708
Noninterest income 1,655 38 1,693
Noninterest expense 8,167 661 8,828
Tax expense (193 ) (23 ) (216 )
Net income 402 (44 ) 358
Assets 957,889 12,341 970,230

Nine Months Ended September 30, 2017

Banking

Consumer
Finance

Total Company

Net interest income $ 28,558 $ 2,646 $ 31,204
Provision expense 1,815 106 1,921
Noninterest income 6,965 542 7,507
Noninterest expense 26,477 1,996 28,473
Tax expense 1,338 368 1,706
Net income 5,893 718 6,611
Assets 1,008,078 11,536 1,019,614

Nine Months Ended September 30, 2016

Banking

Consumer
Finance

Total Company

Net interest income $ 23,684 $ 2,607 $ 26,291
Provision expense 2,180 148 2,328
Noninterest income 6,220 569 6,789
Noninterest expense 22,460 2,110 24,570
Tax expense 975 311 1,286
Net income 4,289 607 4,896
Assets 957,889 12,341 970,230

NOTE 8 – ~~SUBSEQUENT EVENTS~~LEASES

~~On October 6, 2017,~~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 ~~received $730 in insurance proceeds~~has no finance lease arrangements. Operating leases have remaining lease terms ranging from ten months to 19 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 ~~reimbursement~~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:

	As of June 30, 2022		As of December 31, 2021
Operating leases:
Operating lease right-of-use assets	$	1,116	$	1,195
Operating lease liabilities		1,116		1,195

The components of fraudulent wire transactions. The losses were first recorded on May 9, 2017, when the Company was made aware that four wire transfers it had processed in May 2017 totaling $933 were fraudulently initiated. During the second quarterlease cost are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating lease cost	$	42	$	39	$	84	$	78
Short-term lease expense		8		8		18		16

Future undiscounted lease payments for operating leases with initial terms of ~~2017, the Company had recovered $103~~one year or more as of ~~the losses. The insurance proceeds will be recorded~~June 30, 2022 are as ~~a recovery in the fourth quarter of 2017 and will generate a $730 increase to pre-tax earnings on a consolidated basis.~~follows:

	Operating Leases
2022 (remaining)	$	84
2023		127
2024		106
2025		106
2026		107
Thereafter		866
Total lease payments		1,396
Less: Imputed Interest		(280	)
Total operating leases	$	1,116

Other information is as follows:

	As of June 30, 2022			As of December 31, 2021
Weighted-average remaining lease term for operating leases	13.2 years			13.7 years
Weighted-average discount rate for operating leases		2.30	%		2.29	%

ITEM 2.

~~MANAGEMENT'S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Forward Looking Statements

~~Except for the historical statements and discussions contained herein,~~

Certain statements contained in this report and other publicly available documents incorporated herein by reference constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended (the “Exchange Act”), and as defined in the Private Securities Litigation Reform Act of 1995. Such statements are often, but not always, identified by the use of such words as ~~"believes," "anticipates," "expects,"~~“believes,” “anticipates,” “expects,” “intends,” “plan,” “goal,” “seek,” “project,” “estimate,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and other similar expressions. Such statements involve various important assumptions, risks, uncertainties, and other factors, many of which are beyond our control, particularly with regard to developments related to the Coronavirus (“COVID-19”) pandemic, and which could cause actual results to differ materially from those expressed in such forward looking statements. These factors include, but are not limited to: the effects of COVID-19 on our business, operations, customers and capital position; higher default rates on loans made to our customers related to COVID-19 and its impact on our customers’ operations and financial condition; the impact of COVID-19 on local, national and global economic conditions; the effects of various governmental responses to COVID-19; unexpected changes in interest rates or disruptions in the mortgage market; the effects of various governmental responses to COVID-19; changes in political, economic or other factors, such as inflation rates, recessionary or expansive trends, taxes, the effects of implementation of legislation and the continuing economic uncertainty in various parts of the world; competitive pressures; fluctuations in interest rates; the level of defaults and prepayment on loans made by Ohio Valley Banc Corp. (“Ohio Valley”) and its direct and indirect subsidiaries (collectively, the ~~Company;~~“Company”); unanticipated litigation, claims, or assessments; fluctuations in the cost of obtaining funds to make loans; and regulatory changes. Additional detailed information concerning ~~a number of important~~such factors ~~which could cause actual results to differ materially from the forward-looking statements contained in management's discussion and analysis~~ is available in the ~~Company's~~Company’s filings with the Securities and Exchange Commission, under the ~~Securities~~ Exchange Act, ~~of 1934,~~ including the disclosure under the heading ~~"Item~~“Item 1A. Risk ~~Factors"~~Factors” of Part 1I of the ~~Company's~~Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2021. Readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. The Company undertakes no obligation and disclaims any intention to republish revised or updated forward looking statements, whether as a result of new information, unanticipated future events or otherwise.

BUSINESS OVERVIEW: The following discussion on consolidated financial statements include the accounts of Ohio Valley and its wholly-owned subsidiaries, The Ohio Valley Bank Company (the “Bank”), Loan Central, Inc., a consumer finance company (“Loan Central”), Ohio Valley Financial ~~Overview~~Services Agency, LLC, an insurance agency, and OVBC Captive, Inc., a limited purpose property and casualty insurance company (“the Captive”). The Bank has two wholly-owned subsidiaries, Race Day Mortgage, Inc., an Ohio corporation that provides online consumer mortgages (“Race Day”), and Ohio Valley REO, LLC, an Ohio limited liability company. Ohio Valley and its subsidiaries are collectively referred to as the “Company.”

The Company is primarily engaged in commercial and retail banking, offering a blend of commercial and consumer banking services within southeastern Ohio as well as western West Virginia. The banking services offered by the Bank include the acceptance of deposits in checking, savings, time and money market accounts; the making and servicing of personal, commercial, floor plan and student loans; the making of construction and real estate loans; and credit card services. The Bank also offers individual retirement accounts, safe deposit boxes, wire transfers and other standard banking products and services. ~~In addition,~~Furthermore, the Bank ~~is one of~~offers Tax Refund Advance Loans (“TALs”) to Loan Central tax customers. A TAL represents a limited number of financial institutions that facilitates the payment of tax refunds through a third-party tax refund product provider. The Bank has facilitated the payment of these tax refunds through electronic refund check/deposit ("ERC/ERD") transactions. ERC/ERD transactions involve the payment of a tax refund to the taxpayer aftershort-term loan offered by the Bank to tax preparation customers of Loan Central.

IMPACT of COVID-19:COVID-19 has ~~received~~caused significant disruption in the ~~refund from~~United States and international economies and financial markets. The primary markets served by the ~~federal/state government. ERC/ERD transactions occur primarily during~~Company in southeastern Ohio and western West Virginia have been significantly impacted by COVID-19, which has changed the ~~tax refund season, typically during~~way we live and work. The continued effects of COVID-19 on the ~~first quarter~~economy, supply chains, financial markets, unemployment levels, businesses and our customers are unknown and unpredictable.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law. The CARES Act provided assistance to small businesses through the establishment of ~~each year. Loan Central also provides refund anticipation~~the Paycheck Protection Program ("PPP"). The PPP provided small businesses with funds to use for payroll and certain other expenses. The funds were provided in the form of loans ~~("RALs"~~that would be fully forgiven if certain criteria were met. In 2021, Congress amended the PPP

by extending the authority of the Small Business Administration (“SBA”) to guarantee loans and the ability of PPP lenders to disburse PPP loans until May 31, 2021. The Company supported its ~~customers. RALs are short-term cash advances against a customer's anticipated income tax refund.~~

~~On August 5, 2016, the Company completed the merger of~~ Milton Bancorp, Inc. ("Milton Bancorp") into Ohio Valley. Immediately following the merger, Milton Bancorp's wholly-owned subsidiary, The Milton Banking Company ("Milton Bank"), was merged with and into the Bank. Milton Bank's results of operations were includedclients who experienced financial hardship due to COVID-19 through participation in the ~~Company's results beginning August 6, 2016.~~ ~~This transaction resulted in the addition~~PPP, assistance with expedited deposits of ~~$132 million in assets~~CARES Act stimulus payments, and ~~5 branch locations in Jackson, Madison and Pickaway counties in Ohio.~~loan modifications, as needed.

FINANCIAL RESULTS OVERVIEW:Net income totaled ~~$1,653~~$1,999 during the ~~third~~second quarter of ~~2017, compared to $358 during~~2022, a decrease of $862 from the ~~third quarter~~same period of ~~2016.~~2021. Earnings per share for the ~~third~~second quarter of ~~2017~~2022 finished at ~~$.35~~$.42 per share, compared to ~~$.08~~$.60 per share during the ~~third~~second quarter of ~~2016. The Company's net~~2021. Net income totaled $6,124 during the ~~nine~~six months ended ~~September~~June 30, ~~2017 totaled $6,611, compared to $4,896 during~~2022, a decrease of $268 from the ~~nine months ended September 30, 2016.~~same period of 2021. Earnings per share during the first ~~nine~~six months of ~~2017~~2022 finished at ~~$1.41~~$1.29 per share, compared to ~~$1.15~~$1.34 per share during the first ~~nine~~six months of ~~2016. Higher~~ 2021. Quarterly earnings were negatively impacted by increases in both provision and noninterest expense, being partially offset by growth in net interest and noninterest income. Earnings during ~~both~~ the ~~quarterly and year-to-date periods~~first six months of 2022 were negatively impacted ~~primarily~~ by ~~the benefits of~~ higher noninterest expense, being partially offset by improved net interest and noninterest income ~~as well as~~and lower provision expense. ~~These benefits were partially offset by general increases in various overhead expenses~~The impact of lower net earnings during ~~both~~2022 also had a direct impact to the ~~quarterly and year-to-date periods.~~

~~The~~Company’s annualized net income to average asset ratio, or return on assets, ~~("ROA"), increased~~which decreased to ~~0.87% at September~~0.98% for the six months ended June 30, ~~2017,~~2022, compared to ~~0.74% at September~~1.06% for the six months ended June 30, ~~2016.~~2021. The ~~Company's~~Company’s net income to average equity ratio, or return on equity, ~~("ROE"),~~ also ~~increased~~decreased to ~~8.24% at September~~8.87% for the six months ended June 30, ~~2017,~~2022, compared to ~~6.85% at September~~9.39% for the six months ended June 30, ~~2016.~~2021.

~~Net~~During the three months ended June 30, 2022, net interest income ~~for~~increased $338, or 3.3%, over the ~~three and nine~~same period in 2021. During the six months ended ~~September~~June 30, ~~2017 showed positive growth~~2022, net interest income increased $280, or 1.4%, over the same period in 2021. Growth in net interest income was generated by higher average earning assets, which increased by 1.5% during the second quarter of 2022, and 3.5% during the first half of 2022, compared to the same periods in ~~2016, increasing 14.3% and 18.9%, respectively.~~2021. The ~~increase came~~increases were primarily ~~from interest revenues associated with year-to-date average earning asset growth of $119,910. The~~due to growth in ~~year-to-date~~ average ~~earning assets came primarily from~~investment securities in relation to higher average deposit balances. Partially offsetting growth in securities were lower average loans, which ~~contributed $129,968~~decreased 1.2% during the second quarter of 2022, and 1.7% during the first half of 2022, compared to the ~~increase~~same periods in 2021. The decreases in average ~~earning assets.~~loans were largely the result of decreased residential real estate loans and payoffs of PPP loans. While average Federal Reserve balances were down, the ~~Company continues~~Federal Reserve’s actions in increasing rates by 150 basis points during the first half of 2022 contributed to ~~experience growth from its existing markets,~~higher associated interest income on those balances during the ~~large growth in loans came primarily from the Milton Bank merger, which resulted in the acquisition of $112 million in loans. Also contributing to net~~second quarter and year-to-date. Net interest income growth was ~~higher~~further impacted by lower interest ~~recorded~~expense on deposits, decreasing 36.5% and 39.0% during both the quarterly and year-to-date periods ended June 30, 2022, respectively, compared to the same periods in 2021. This is largely the result of a lower average cost of funds, as well as a composition shift from the Company's interest-bearing Federal Reserve clearing account. While the average interest-bearing balances maintained at the Federal Reserve have decreased 19.4% during the first nine months of 2017, it has been the Federal Reserve's action of increasing short-term interest rates that has contributedhigher-costing time deposits to ~~higher interest income.~~lower-costing demand and savings account balances.

During the three ~~and nine~~ months ended ~~September~~June 30, ~~2017,~~2022, the ~~Company's~~Company’s provision for loan loss was $813, which contributed to a $786 increase in provision expense decreased $107 and $407 from the same periods in 2016, respectively. Lower provision expense during 2017 was largely impacted by a $2,741 decrease in specific allocations from December 31, 2016 related to the financial performance improvement of one commercial real estate loan relationship during the first quarter of 2017. The decrease in specific allocations was partially offset by a $2,355 increase in general allocations from December 31, 2016 related to specific loan portfolio risks that management determined were necessary. Provision expense during 2017 has also benefited from lower net charge-offs on loans without specific reserves. Impacted by a lower level of specific reserves, the allowance for loan losses decreased by $386 from year-end 2016 to finish at $7,313, or .94% of total loans at September 30, 2017, compared to 1.05% at December 31, 2016 and 1.04% at September 30, 2016.

Total noninterest income during the three months ended September 30, 2017 increased $589, or 34.8%, over the third quarter of 2016, and increased $718, or 10.6%, during the first nine months of 2017, aswhen compared to the same period in ~~2016. Noninterest income improvement~~2021. This increase in provision expense was impacted by a $752 increase in quarterly net charge offs, related primarily to a single loan relationship. During the six months ended June 30, 2022, the Company experienced negative provision for loan loss, which contributed to a $288 decrease in provision expense when compared to the same period in 2021. The decrease from the prior year was related to improved economic risk factors impacted by ~~bank owned life insurance~~lower net charge-offs and ~~annuity assets, which grew~~criticized and classified loans, as well as the partial release of the COVID-19 reserve for the pandemic environment.

During the three months ended June 30, 2022, noninterest income increased $130, or 5.2%, from the same period in 2021. This increase came largely from increases in service charges on deposit accounts. During the six months ended June 30, 2022, noninterest income increased $511, or 8.7%, from the same period in 2021. This increase came largely from increases in service charges on deposit accounts, interchange income on debit and credit card transactions, and mortgage banking income in relation to Race Day, the Company’s new online mortgage company.

During the three months ended June 30, 2022, noninterest expense increased $726, or 7.8%, over ~~$400~~the same period in 2021. During the six months ended June 30, 2022, noninterest expense increased $1,327, or 7.2%, over the same period in 2021. The increases during both periods were primarily related to higher salaries and employee benefit costs impacted by the ~~quarterly~~staffing of Race Day, as well as higher annual merit expenses. The Company also experienced increases in data processing costs, professional fees, and ~~year-to-date periods.~~software expense, as well as various other overhead costs from Race Day.

The Company’s provision for income taxes decreased $182, or 34.0%, during the three months ended June 30, 2022, and increased $20, or 1.6%, during the six months ended June 30, 2022, compared to the same periods in 2021. This was largely due to the changes in taxable income affected by the factors mentioned above. At June 30, 2022, total assets were $1,253,886, an increase of $4,117 from year-end 2021. Higher assets were primarily impacted by increases in loans and investment securities, which were collectively up $55,119, or 5.4%, from year-end 2021. This was largely the result of ~~net bank owned life insurance proceeds collected in~~ the ~~third quarter~~deployment of ~~2017. Further impacting noninterest income growth were increases in fee income related~~a portion of the Company’s heightened cash balance to a higher deposit base from the Milton Bank acquisition. The higher deposit base contributed to year-to-date increases of over 30% in debit and credit card interchange income and over 11% in service charges on deposit accounts. Partially offsetting growth in noninterest income were lower tax processing fees through ERC/ERD transactions during the nine months ended September 30, 2017. In addition to a reduced number of tax refunds being processedyielding earning assets during the first ~~nine months~~half of 2017, the per item fees received by the Company were lower under the new contract with the third-party tax refund product provider. Comparing 2017 to 2016, the change in the remaining noninterest income categories was minimal during the third quarter, increasing $24, while the year-to-date change2022 and resulted in a decrease of ~~$121 during~~$58,012 in Federal Reserve Bank balances from year-end 2021. The Company’s loan portfolio experienced increases in the ~~nine months ending September 30, primarily from higher losses on the sale of other~~residential real estate ~~owned ("OREO"~~segment (+12.3%), the commercial segment (+0.4%) and the consumer loan segment (+2.7%).

~~Total noninterest expense~~29

At June 30, 2022, total liabilities were $1,121,316, up $12,903 from year-end 2021. Contributing most to this increase were higher deposit balances, which increased ~~$394 for the third quarter of 2017, and increased $3,903 during the first nine months of 2017, as compared to the same periods in 2016.~~$13,446 from year-end 2021. The increase was impacted mostly from higher interest-bearing demand deposits, partially offset by ~~the acquisition of Milton Bank, which contributed to general increases in most~~lower time deposits and noninterest expense categories related to having a larger organization after the merger. Overhead expense has been impacted mostly by salaries and employee benefit costs, which decreased by $13, or 0.3%, during the third quarter of 2017, but increased $1,398, or 9.9%, during the first nine months of 2017, as compared to the same periods in 2016. Contributing to the decrease for the third quarterbearing demand deposits.

At June 30, 2022, total shareholders' equity was ~~a $316 reduction in non-qualified defined benefit expenses associated with the restructuring of and accounting for post-retirement benefits of a former employee. The year-to-date increase~~$132,570, down $8,786 since December 31, 2021. This was largely the result of ~~adding Milton Bank employees, as well as annual merit increases~~cash dividends paid and ~~higher health insurance costs. Further contributing to higher overhead costs was fraud expense. During the second quarter of 2017, management discovered four fraudulent wire transfers with~~ a ~~single account relationship totaling $933. After recovering a portion of the money, the Company's~~decrease in net ~~fraud expense totaled $842 as of September 30, 2017, which impacted other noninterest expense during the nine months ended September 30, 2017. These increases were~~unrealized gains on available for sale securities being partially offset by a decrease in merger related expenses, which were down $410 and $744 during the three and nine months ended September 30, 2017, as compared to the same periods in 2016, respectively. The remaining noninterest categories increased $805, or 23.8%, during the three months ended September 30, 2017, and increased $2,407, or 24.9%, during the nine months ended September 30, 2017, as compared to 2016. This additional overhead expense came primarily from data processing, consulting costs, professional fees, and expenses associated with facilities.

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

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

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

Comparison of Financial Condition

at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~

2021

The following discussion focuses, in more detail, on the consolidated financial condition of the Company at ~~September~~June 30, ~~2017~~2022 compared to December 31, ~~2016.~~2021. This discussion should be read in conjunction with the interim consolidated financial statements and the footnotes included in this Form 10‑Q.

Cash and Cash Equivalents

At ~~September~~June 30, ~~2017,~~2022, cash and cash equivalents were ~~$50,402, an increase~~$94,094, a decrease of ~~$10,236~~$57,940, or 38.1%, from ~~$40,166 at~~ December 31, ~~2016.~~2021. The ~~increase~~decrease in cash and cash equivalents came mostly from lower interest-bearing deposits on hand with correspondent banks. Over 82% of cash and cash equivalents consisted of the ~~Company's~~Company’s interest-bearing Federal Reserve Bank clearing account, ~~impacted by excess funds associated with deposit liability growth~~which decreased $58,012, or 42.7%, from year-end ~~2016.~~2021. The Company utilizes its interest-bearing Federal Reserve Bank clearing account to ~~maintain seasonal tax refund deposits,~~manage excess funds, as well as to ~~fund~~assist in funding earning asset ~~growth~~growth. During the first half of 2022, the Company utilized a portion of its clearing account balances to reinvest in higher-yielding loans and ~~maturities~~investment securities. This shift into higher-yielding earning assets not only helped to minimize the dilutive effect that higher clearing account balances had on the net interest margin during the year, but also contributed to an increase in the net interest margin during the second quarter of ~~retail certificates~~2022 over the second quarter of ~~deposit ("CD's").~~ 2021. The interest rate paid on both the required and excess reserve balances of the Federal Reserve Bank account is based on the targeted federal funds rate established by the Federal Open Market Committee. Short-term rate increases of 25 basis points during each of December 2016, March 2017 and June 2017 caused the federal funds rate to finish at 1.25% at September 30, 2017. The interest rate increases had a corresponding effect on the interest revenue growth experienced duringDuring the first ~~nine months~~half of ~~2017 on~~2022, the rate associated with the Company’s Federal Reserve Bank clearing account ~~balances. The 1.25% interest~~increased 150 basis points due to rising inflationary concerns, resulting in a target federal funds rate range of 1.50% to 1.75%. Although interest-bearing deposits in the Federal Reserve Bank are the Company's lowest-yielding interest-earning asset, the investment rate is higher than the rate the Company would have received from its investments in federal funds sold. Furthermore, Federal Reserve ~~Bank~~ balances are 100% ~~secured.~~secured by the U.S. Government.

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

Certificates of ~~deposit~~Deposit

At ~~September~~June 30, ~~2017,~~2022, the Company had ~~$1,820~~$1,873 in certificates of deposit owned by the Captive, ~~up slightly~~down from $2,329 at year-end ~~2016.~~2021. The deposits on hand at ~~September~~June 30, ~~2017~~2022 consist of eight certificates with remaining maturity terms ranging from less than 1210 months up to 3515 months.

~~Securities~~30

Securities

The balance of total securities increased ~~$9,558,~~$16,058, or ~~8.3%~~8.6%, compared to year-end ~~2016.~~2021. The ~~Company's~~increase was primarily the result of investment security purchases funded by excess funds being maintained within the Federal Reserve Bank clearing account. The Company’s investment securities portfolio is made up mostly of U.S. Government agency ~~("Agency"~~(“Agency”) mortgage-backed securities, which ~~increased $7,020, or 8.2%, from year-end 2016 and~~ represented ~~74.6%~~66.6% of total investments at ~~September~~June 30, ~~2017.~~2022. During the first ~~nine months~~half of ~~2017,~~2022, the Company invested ~~$18,105~~$29,470 in new Agency mortgage-backed securities, while receiving principal repayments of ~~$12,302.~~$12,412. The monthly repayment of principal has been the primary advantage of Agency mortgage-backed securities as compared to other types of investment securities, which deliver proceeds upon maturity or call date. The Company also ~~experienced~~redeployed a ~~$3,035, or 28.8%, increase~~portion of its heightened excess funds to purchase $19,801 in U.S. Government ~~sponsored entity~~ securities ~~primarily from new purchases~~ during the ~~second quarter~~first half of ~~2017.~~2022.

In addition, the continued increases in long-term reinvestment rates during 2022 led to a $16,164 decrease in the fair value of the Company’s available for sale securities. The fair value of an investment security moves inversely to interest rates, so as rates increased, the unrealized gain in the portfolio decreased. These changes in rates are typical and do not impact earnings of the Company as long as the securities are held to full maturity.

30Loans

~~Loans~~

The loan portfolio represents the ~~Company's~~Company’s largest asset category and is its most significant source of interest income. Gross loan balances ~~totaled $777,957~~increased to $870,252 at ~~September~~June 30, ~~2017,~~2022, representing an increase of ~~$43,056,~~$39,061, or ~~5.9%~~4.7%, as compared to ~~$734,901~~$831,191 at December 31, ~~2016. Loans were positively impacted by growth~~2021. The increase in loans came primarily from the residential real estate ~~consumer automobile and~~portfolio, with other increases coming from the total commercial and ~~industrial~~consumer loan ~~balances.~~portfolios from year-end 2021.

The Company’s residential real estate loan portfolio increased $33,716, or 12.3%, from year-end 2021. The residential real estate loan segment comprises the largest portion of the ~~Company's~~Company’s overall loan portfolio at ~~40.9%~~35.4% and consists primarily of one- to four-family residential mortgages and carries many of the same customer and industry risks as the commercial loan portfolio. ~~Residential~~The increase in residential real estate ~~loan balances during the first nine months of 2017 increased $32,222 or 11.3%, from year-end 2016. This increase~~loans was largely ~~from~~related to the ~~Bank's warehouse lending volume. Warehouse lending consists~~funding of a warehouse line of credit ~~provided~~ by the Bank ~~to another~~for a mortgage lender. The warehouse lending line is used by the mortgage lender ~~that makes~~to make loans for the purchase of one- to four-family residential real estate properties. The mortgage lender eventually sells the ~~loans~~loan and repays the Bank. From year-end ~~2016,~~2021, warehouse lending balances increased ~~$9,630~~$37,236. Partially offsetting the increase in warehouse lending balances were the principal repayments and payoffs in both long-term fixed-rate and short-term adjustable-rate mortgages. A decrease in refinancing volume and an increase in long-term reinvestment rates have led to ~~finish at $15,155 at September 30, 2017. The Company's growth~~a slower demand for mortgage loans during 2022.

Further increases in ~~residential real estate~~ loans ~~was further impacted by higher balances in its Athens, Ohio and West Virginia markets, which were up $9,341 and $6,095, respectively. The real estate~~came from the Company’s total commercial loan portfolio, is also impacted by loan construction projects. During the period when a borrower's one- to four-family residential home is being built, it is first classified as a construction loan. At the completion of this construction phase, the loan is re-classified to a residential real estate loan. At September 30, 2017, construction loans were down 7.7%, indicating a higher transition of loan balances from commercial real estate to residential real estate. Total loan production within the real estate portfolio consists of increasing short-term adjustable-rate mortgages partially offset by decreasing long-term fixed-rate mortgages. As part of management's interest rate risk strategy, the Company continues to sell most of its long-term fixed-rate residential mortgages to the Federal Home Loan Mortgage Corporation, while maintaining the servicing rights for those mortgages. A customer that does not qualify for a long-term, secondary market loan may choose from one of the Company's other adjustable-rate mortgage products, which ~~contributed to higher balances of adjustable-rate mortgages from year-end 2016.~~

~~The commercial lending segment~~ increased ~~$3,797,~~$1,790, or ~~1.2%~~0.4%, from year-end ~~2016, which came mostly from~~2021. Contributing most to this increase were higher loan balances within the commercial and industrial ~~loan~~ portfolio, ~~which increased $2,961,~~up $7,052, or ~~2.9%~~5.0%, from year-end ~~2016.~~2021. The ~~increase~~growth was impacted by an increase in larger loan originations ~~from the West Virginia market area~~ during the ~~first quarter of 2017.~~year. Commercial and industrial loans consist of loans to corporate borrowers primarily in small to mid-sized industrial and commercial companies that include service, retail and wholesale merchants. Collateral securing these loans includes equipment, inventory, and stock. The commercial and industrial segment also includes PPP loan balances that had a significant impact on average earning asset growth in 2021. The Company’s remaining PPP loans of $446 that were outstanding at year-end 2021 were paid off during the first quarter of 2022.

Increases in commercial and industrial loans were partially offset by a $5,262, or 1.9%, decrease in the commercial real estate portfolio from year-end 2021. The commercial real estate ~~loan~~ segment ~~comprises~~comprised the largest portion of the ~~Company's~~Company’s total commercial loan portfolio at ~~September~~June 30, ~~2017, representing 67.5%~~2022 at 65.0%. ~~At September 30, 2017, commercial real estate loans totaled $214,843, which were comparable to~~Decreases came primarily from the ~~$214,007 in commercial real estate loans at year-end 2016. Larger~~principal payoffs ~~caused owner-occupied loans to decrease $5,080, or 6.5%, from year-end 2016, while~~of a ~~higher~~limited number of one- to four-family residential homes completed their building phase, causing construction loans to decrease $3,518, or 7.7%, from year-end 2016. Partially offsetting these decreases was an increase in loan originations causinglarge nonowner-occupied loan balances ~~to grow by $9,434, or 10.4%,~~ from year-end ~~2016.~~ 2021.

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

~~Consumer~~The Company’s loan portfolio at June 30, 2022 was also impacted by higher consumer loan balances ~~at September 30, 2017 represented an~~from year-end 2021, increasing $3,555, or 2.7%. This change was impacted by a $2,583, or 11.5%, increase in home equity lines of ~~$7,037,~~credit. The remaining consumer loan portfolio increased $972, or ~~5.2%~~0.9%, from year-end ~~2016. The increase was largely due to the Company's~~2021, mostly from automobile ~~loan segment, which grew by $8,227, or 13.8%, from year-end 2016. Automobile loans represent the Company's largest consumer loan segment at 48.1% of total consumer~~ loans. The Company continues to target more auto dealers within its market areas and offer interest rates that are more competitive with local banks. Growth in automobile loans was partially offset by decreases in other consumer loans, which were down 3.0%. The Company will continue to monitor its auto lending segment while maintaining strict loan underwriting processes to limit future loss exposure.

Allowance for Loan Losses

The Company established a ~~$7,313~~$5,214 allowance for loan losses at ~~September~~June 30, ~~2017,~~2022, which ~~was~~represents a decrease from the ~~$7,699~~$6,483 allowance at year-end ~~2016.~~2021. As part of the Company’s quarterly analysis of the allowance for loan losses, management will review various factors that directly impact the general allocation needs of the allowance, which include: historical loan losses, loan delinquency levels, local economic conditions and unemployment rates, criticized/classified asset coverage levels and loan loss recoveries. During the first half of 2022, the Company experienced a $1,556 decrease in its general allocations of the allowance for loan losses. Contributing to this decrease were lower reserves associated with the COVID-19 risk factor. The Company added a COVID-19 risk factor in 2020 due to the negative economic outlook of the pandemic. Based on positive asset quality trends and lower net charge offs, management released $645 of the reserve related to the COVID-19 risk factor during the first half of 2022, resulting in a corresponding decrease in both provision expense and general allocations of the allowance ~~was~~for loan loss.

Excluding the impact from the COVID-19 risk factor, the Company experienced a $1,059 decrease in general allocations of the allowance for loan losses related to improvements in various economic risk factors, including those associated with criticized and classified assets. During the second quarter of 2022, the Company experienced a payoff on one commercial loan relationship that had $6,500 in loans and committed balances, which reduced classified assets and released general reserves during the first half of 2022. Furthermore, the Company upgraded a single commercial loan relationship during the first quarter of 2022 totaling $2,232 from a classified to a criticized loan status, which also contributed to the release of general reserves during the first half of 2022. The loan upgrade came as a result of improvements in the borrower’s financial performance and ability to repay their loans. Additionally, the Company’s delinquency levels decreased from year-end 2021, with nonperforming loans to total loans of 0.46% at June 30, 2022, compared to 0.56% at December 31, 2021, and lower nonperforming assets to total assets of 0.32% at June 30, 2022, compared to 0.37% at year-end 2021. Lower general allocations during the first half of 2022 were also impacted by higher loan recoveries, while the historical loan loss factor remained at 0.18% at June 30, 2022, and year-end 2021.

Decreases in general allocations were partially offset by a ~~decrease of $2,741~~$287 increase in specific allocations from year-end ~~2016.~~2021. Specific allocations of the allowance for loan losses identify loan impairment by measuring fair value of the underlying collateral and the present value of estimated future cash flows. ~~When re-evaluating the impaired loan balances to their corresponding collateral values at September 30, 2017, it~~The change in specific reserves was ~~determined that a commercial real estate loan relationship was no longer impaired and no longer collateral dependent due~~primarily related to the ~~borrower's financial performance improvement. This resulted in the removal~~loan impairments of ~~that borrower's specific allocation of $1,681 that had previously been identified as impairment. Further contributing to lower specific reserves~~one borrower relationship during the first ~~nine months~~half of 2017 were the charge-offs of several collateral dependent specific allocations. Total charge-offs of $612 in commercial real estate loans and $399 in commercial and industrial loans were recorded as a result of asset impairment. However, these specific reserves had already been allocated for prior to 2017, which resulted in no corresponding provision expense impact in 2017. 2022.

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

The ~~Company's~~Company’s allowance for loan losses to total loans ratio finished at ~~0.94%~~0.60% at ~~September~~June 30, ~~2017~~2022, and ~~1.05%~~0.78% at year-end ~~2016.~~2021. Management believes that the allowance for loan losses at ~~September~~June 30, ~~2017~~2022 was adequate and reflected probable incurred losses in the loan portfolio. ~~There can be no assurance, however, that adjustments to the allowance for loan losses will not be required in the future.~~ Changes in the circumstances of particular borrowers, as well as adverse developments in the economy, particularly with respect to COVID-19, are factors that could change, and management will make adjustments to the allowance for loan losses ~~necessary.~~as needed. Asset quality will continue to remain a key focus of the Company, as management continues to stress not just loan growth, but quality in loan ~~underwriting as well.~~ underwriting.

Deposits

Deposits continue to be the most significant source of funds used by the Company to meet obligations for depositor withdrawals, to fund the borrowing needs of loan customers, and to fund ongoing operations. Total deposits at ~~September~~June 30, ~~2017~~2022 increased ~~$58,729,~~$13,446, or ~~7.4%~~1.3%, from year-end ~~2016.~~2021. This ~~deposit growth~~change in deposits came primarily from interest-bearing deposit balances, which ~~increased $35,127,~~were up by $20,880, or ~~6.1%~~3.0%, from year-end ~~2016. While the Company's preference is to fund earning asset demand with retail core~~2021, while noninterest-bearing deposits the use of wholesale deposits has been utilized to help satisfy earning asset growth. With market rates remaining at historically low levels, the Company considers wholesale deposits to be a cost-effective funding source to help manage the growing demand for loans. As a result, wholesale deposits contributed $21,688 to the growthdecreased $7,434, or 2.1%, from year-end 2021.

The increase in interest-bearing deposits ~~from year-end 2016.~~

~~Interest-bearing deposit growth~~ was ~~impacted by~~primarily a result of higher interest-bearing NOW account balances from year-end 2021, which increased ~~$16,061,~~$25,418, or ~~10.4%, during the first nine months of 2017 as compared to year-end 2016.~~12.4%. This increase was largely driven by ~~growth in~~higher municipal NOW ~~products. Interest-bearing deposit growth also came from money market account~~product balances, ~~which increased $2,645, or 2.0%, from year-end 2016, largely from brokered money market deposits partially offset by declines in~~particularly within the ~~Company's Market Watch account balances. Growth in interest-bearing deposits was further impacted by a $2,699, or 2.8%, increase in statement savings account balances from year-end 2016.~~

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

Also contributing to growth in deposits was the Company's noninterest-bearing deposits, which increased $23,602, or 11.3%, from year-end 2016. This growth was largely impacted by the Company's business checking account balances, which grew $17,125, or 15.3%, from year-end 2016. Business checking activity continues to be impacted by the seasonal ERC/ERD tax refund processing that occurs primarily during the first four months of the year. The Company facilitates a significant volume of tax items within several business checking accounts during this seasonal period, which resulted in over $4 million of retained funds. Growth in the Company's business checking accounts also came from the Mason County, West Virginia, market ~~area, increasing over $9 million~~areas. Growth in interest-bearing deposits also came from savings deposits, which increased $6,632, or 4.5%, from year-end ~~2016. Noninterest~~2021, primarily from higher statement savings account balances. Interest-bearing deposit growth was further impacted by higher money market balances from year-end 2021, which increased $7,203, or 4.3%.

Partially offsetting the increases in interest-bearing deposits were time deposit balances, which decreased $18,373, or 9.7%, from year-end 2021. The decrease came primarily from the Company’s retail time deposits, which decreased $12,891 from year-end 2021 due to the consumer shift to savings and money market products. Time deposits were also impacted by ~~growth~~lower brokered and internet CD issuances, down collectively by $5,482, as a result of the heightened liquidity position from year-end 2021.

The decrease in ~~incentive based~~noninterest-bearing deposits was primarily in the Company’s business and incentive-based checking account balances from year-end ~~2016.~~2021.

While facing increased competition for deposits in its market areas, the Company will continue to emphasize growth and retention in its core deposit relationships during the remainder of ~~2017,~~2022, reflecting the ~~Company's~~Company’s efforts to reduce its reliance on higher cost funding and ~~improving~~improve net interest income.

Other Borrowed Funds

Other borrowed funds were ~~$36,775~~$18,484 at ~~September~~June 30, ~~2017,~~2022, a decrease of ~~$310,~~$1,130, or ~~0.8%~~5.8%, from year-end ~~2016.~~2021. The decrease was ~~due~~related primarily to the ~~maturity repayment of a $3,000 advance~~principal repayments applied to various FHLB advances during the ~~third~~first quarter of ~~2017.~~2022. While deposits continue to be the primary source of funding for growth in earning assets, management will continue to utilize ~~Federal Home Loan Bank~~FHLB advances and promissory notes to help manage interest rate sensitivity and liquidity.

~~Shareholders'~~

Shareholders’ Equity

The Company maintains a capital level that exceeds regulatory requirements as a margin of safety for its depositors. At September 30, 2017, the Bank's capital exceeded the minimum requirements to be deemed "well capitalized" under applicable prompt corrective action regulations.

Total shareholders' equity at ~~September~~June 30, ~~2017 of $109,962 increased $5,434,~~2022 decreased $8,786, or ~~5.2%~~6.2%, to finish at $132,570, as compared to ~~$104,528~~$141,356 at December 31, ~~2016. Capital growth during 2017 came primarily~~2021. This was from ~~year-to-date~~quarterly net income being completely offset by cash dividends paid and a decrease in the fair value of ~~$6,611.~~available for sale securities. The after-tax change in fair value totaled $12,769 from year-end 2021, as market rate increases continued during the first half of 2022, causing a decrease in the fair value of the Company’s available for sale investment portfolio.

Comparison of Results of Operations

~~for~~For the Three and ~~Nine~~Six Months Ended

~~September~~June 30, ~~2017~~2022 and ~~2016~~2021

The following discussion focuses, in more detail, on the consolidated results of operations of the Company for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022, compared to the same period in ~~2016.~~2021. This discussion should be read in conjunction with the interim consolidated financial statements and the footnotes included in this Form 10‑Q.

Net Interest Income

The most significant portion of the Company's revenue, net interest income, results from properly managing the spread between interest income on earning assets and interest expense incurred on interest-bearing liabilities. During the ~~third quarter of 2017,~~three months ended June 30, 2022, net interest income increased ~~$1,283,~~$338, or ~~14.3%~~3.3%, as compared to the ~~third quarter of 2016.~~same period in 2021. During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, net interest income ~~also~~ increased ~~$4,913,~~$280, or ~~18.7%~~1.4%, as compared to the ~~nine months ended September 30, 2016.~~same period in 2021. The improvement ~~came primarily from~~during both periods was mostly attributable to an increase in average earning assets combined with a decrease in the ~~acquisition of Milton Bank during the third quarter of 2016, which contributed to higher interest income~~average costs paid on ~~acquired earning assets~~deposits, being partially offset by interest expense on acquired interest-bearing deposits. In total, the Company benefited from $3,495 in net interest income generated by the Milton Bank acquisition. Further contributions to net interest income came from higher interest income on interest-bearing deposits with banks as a result of short-term rate increases.lower earning asset yields and lower loan fees.

Total interest and fee income recognized on the ~~Company's~~Company’s earning assets increased ~~$1,493,~~just $22, or ~~15.2%~~0.2%, during the ~~third~~second quarter of ~~2017, which contributed to a year-to-date increase~~2022, and decreased $447, or 2.0%, during the first half of ~~$5,537, or 19.4%, as~~2022, compared to the same periods in ~~2016. While the Company generated loan growth primarily through the Milton Bank merger, there were already trends of loan origination improvement making a positive impact~~2021. The limited to loan earnings. Warehouse lending balances are up $15,155 from a year ago at September 30, 2016. The West Virginia market areas have been successful in generating over $18 million in loans from a year ago at September 30, 2016. The Athens, Ohio loan production office has generated over $14 million in commercial and residential real estate loans from a year ago at September 30, 2016. Loan growth has also been improving within the automobile segment, as well as the commercial and industrial loan segment,lower earnings during both periods was impacted by ~~loan participations~~interest and fees on loans, ~~to states and political subdivisions from a year ago. With the merger and improved loan production, the Company's loan income increased $1,404,~~which decreased $542, or ~~15.5%~~5.1%, during the ~~third~~second quarter of ~~2017, which contributed to a year-to-date increase~~2022, and $1,309, or 6.2%, during the first half of ~~$5,263, or 20.1%, as~~2022, compared to the same periods in ~~2016.~~

~~During~~2021. This was largely related to the ~~three~~decline in loan fees, which were down $310 and ~~nine months~~$649 during the quarterly and year-to-date periods ended ~~September~~June 30, ~~2017, total other interest income increased $21, or 31.3%, and $140, or 41.7%, as~~2022, compared to the same periods in ~~2016, respectively.~~2021. The decrease in loan fees was primarily a result of decreased PPP fees during both periods as a result of the payoffs of all PPP loans by the end of the first quarter of 2022. Interest on loans decreased $233 and $661 during the quarterly and year-to-date periods ended June 30, 2022, compared to the same periods in 2021, as a result of lower loan yields and lower average balances. The average interest rate yield on loans decreased 5 basis points during the second quarter of 2022, and decreased 8 basis points during the first half of 2022, compared to the same periods in 2021. While average loan rates were down, the actions taken by the Federal Reserve to increase rates during the first half of 2022 have had a positive impact on average loan yields. On a linked quarter basis, the average interest rate yield on loans was 4.55% during the second quarter of 2022 compared to 4.55% for the first quarter of 2022 and 4.59% for the fourth quarter of 2021. Average loans decreased $10,269 during the second quarter of 2022, and $14,184 during the first half of 2022, compared to the same periods in 2021. The decrease came mostly from the payoffs of all the Company’s PPP loans during 2021 and 2022, while a decrease in average real estate loan balances impacted by principal repayments and payoffs, combined with a lower volume of new originations, also contributed to the decrease.

Total interest income from interest-bearing deposits with banks increased $199, or 603.0%, during the second quarter of 2022, and increased $225, or 368.9%, during the first half of 2022, compared to the same periods in 2021. The increases during both periods were ~~primarily due to higher interest revenue recorded~~largely from the ~~Company's~~rate increases associated with the Company’s interest-bearing Federal Reserve Bank clearing account. ~~The Company continues~~As previously mentioned, the Federal Reserve took action during the first half of 2022 to ~~utilize its~~increase the target federal funds rate by 150 basis points due to rising inflationary concerns. This had a corresponding effect to the interest rate tied to the Federal Reserve clearing account, which also increased by 150 basis points. The impact from higher rates was partially offset by lower average Federal Reserve Bank balances, which decreased $17,673 during the second quarter of 2022, and $3,343 during the first half of 2022, compared to ~~manage seasonal tax refund~~the same periods in 2021. The Company utilized Federal Reserve Bank balances to help fund new loans and security purchases during the first half of 2022.

Total interest on securities increased $357, or 66.2%, during the second quarter of 2022, and increased $635, or 63.3%, during the first half of 2022, compared to the same periods in 2021. Due to the surge in deposits and ~~fund earning asset growth.~~proceeds from PPP loan payoffs, the Company has taken opportunities to reinvest a portion of these excess funds into new U.S. Government, Agency and Agency mortgage-backed securities. This ~~interest-bearing account carried an interest rate~~contributed to average security balance increases of ~~0.50%~~$47,173 during ~~most~~the second quarter of ~~2016. In December 2016,~~2022 and $58,104 during the ~~Federal Reserve~~first half of 2022, compared to the same periods in 2021. The average yield on securities also increased ~~short-term rates by 25~~38 basis points during the second quarter of 2022 and ~~then again in both March and June 2017 by another 25~~23 basis points each. These short-term rate adjustments have increased the Federal Reserve clearing account's interest rate from 0.50% of a year ago to 1.25%. The timing of the December 2016 and March 2017 rate adjustments benefited the Company, as it entered intoduring the first ~~quarter~~half of ~~2017 experiencing significant levels of excess funds~~2022, which contributed to growth in interest income. This change was partly impacted by the ~~large volume of ERC/ERD transactions that was maintained within~~Company’s decision to sell $48,732 in lower yielding securities during the ~~Federal Reserve clearing account. Since the first~~fourth quarter of ~~2017, these excess funds have been decreasing as a result~~2021 that carried an average yield of ~~exiting the tax season, as well as funding earning asset growth. Even though this year's Federal Reserve clearing~~0.89% and replace them with similar securities at an average ~~balance has decreased 19.4%, the interest income remains up over the prior year due to the short-term rate increases.~~yield of 1.30%.

Total interest expense incurred on the ~~Company's~~Company’s interest-bearing liabilities ~~during the third quarter of 2017 increased $210,~~decreased $316, or ~~25.0%, and increased $624, or 28.2%~~32.1%, during the ~~nine months ended September 30, 2017, as~~second quarter of 2022, and decreased $727, or 32.3%, during the first half of 2022, compared to the same periods in ~~2016. The~~2021. Interest expense decreased despite increases ~~were primarily from~~in average interest-bearing deposits of $11,169 during the Milton Bank acquired deposits that generated more interest expense. However, the Company's interest expense continues to be minimized by a sustained low-rate environment that has impacted the repricingssecond quarter of various Bank deposit products, including certain interest-bearing demand accounts. The low-rate environment has also limited the impact of the Company's use of wholesale deposits during 2017. As a result, there has been minimal change to the weighted average cost of the Company's core deposits, which finished at 0.26% at September 30, 2017, as compared to 0.23% at September 30, 2016. The Company continues to utilize more of its lower cost, core deposit funding sources to further reduce interest expense. In addition, over 60% of the acquired Milton Bank deposits consisted of core deposit funding sources. As a result, the Company's average interest-2022, and ~~non-interest bearing core deposits increased $79,665, or 13.7%, while the average balances of higher costing time deposits increased $23,005, or 14.3%,~~$21,321 during the first ~~nine months~~half of ~~2017, as~~2022, compared to the same ~~period~~periods in ~~2016.~~2021. The ~~minimal change~~converse relationship between increasing average interest-bearing liabilities to lower interest expense is related to the repricing efforts in a lower rate environment, which drove down average ~~market interest rates~~costs during 2020 and 2021. Lower deposit expense was mostly impacted by the continued ~~emphasis~~decline in CD rates, which contributed to a $296 decrease in time deposit interest expense during the second quarter of 2022, and a $646 decrease during the first half of 2022, compared to the same periods in 2021. As CD rates have repriced downward, the Company has benefited from lower interest expense on ~~utilizing~~newly issued CDs at lower ~~costing deposit balances have caused~~rates. As a result of the ~~Company's~~rate repricings on time deposits, the Company’s total weighted average costs on interest-bearing deposits ~~to increase~~has decreased by ~~only 4~~19 basis points from ~~0.42%~~0.48% at ~~September~~June 30, ~~2016~~2021, to ~~0.46%~~0.29% at ~~September~~June 30, ~~2017.~~2022.

~~During 2017, the Company's~~The Company’s net interest margin ~~results improved over~~is defined as fully tax-equivalent net interest income as a percentage of average earning assets. During 2022, the ~~prior year, finishing at 4.52% during the third~~Company’s second quarter ~~of 2017, as compared to 4.29% during the third quarter of 2016. The~~ net interest margin ~~also~~ improved to ~~4.50% during the first nine months of 2017, as~~3.64%, compared to ~~4.34% during~~2021’s second quarter net interest margin of 3.58%. The Company’s year-to-date net interest margin finished at 3.58% at June 30, 2022, compared to 2021’s year-to-date net interest margin of 3.65%. The year-to-date margin decrease was largely impacted by the ~~first nine months of 2016. This improvement was due to a 14.5% increase~~decrease in ~~average earning assets combined with a higher deposit mix of lower-costing core deposits~~PPP loan fees and a ~~sustained~~ low interest rate environment that ~~has helped~~impacted lower earning asset yields during 2022 combined with decreases in average loan balances. The quarterly margin increase was impacted by the redeployment of lower yielding Federal Reserve Bank balances into higher yielding loans and securities. This composition shift from lower yielding Federal Reserve clearing account balances limited the dilutive effect to ~~minimize~~the net interest ~~expense.~~margin during the second quarter of 2022. Furthermore, the actions taken by the Federal Reserve to increase rates by 125 basis points during the second quarter of 2022 had a direct impact to the rate repricings of the Federal Reserve Bank account and a portion of the loan portfolio, which had a positive impact on the margin. The ~~Company's~~Company’s primary focus is to invest its funds into higher yielding assets, particularly loans, as opportunities arise. However, if loan balances do not continue to expand and remain a larger component of overall earning assets, the Company will face pressure within its net interest income and margin improvement.

Provision for Loan Losses

~~During~~

For the ~~third~~three months ended June 30, 2022, the Company’s provision expense increased $786 over the same period in 2021. The increase was directly related to a $752 increase in net charge offs during the second quarter of 2017, the Company experienced a decrease in provision expense of $107, or 6.3%, as compared to the third quarter of 2016. During the first nine months of 2017, the Company experienced a decrease in provision expense of $407, or 17.5%, as compared to the first nine months of 2016. The decreases in provision expense during both periods were primarily due to a $2,741 decrease in specific allocations, which was mostly due to one commercial real estate loan relationship. As previously mentioned, the financial improvement of this commercial borrower contributed to the removal of $1,681 in specific allocations, which lowered provision expense during the first nine months of 2017. The benefit of lower specific reserves was partially offset by a $2,355 increase in general allocations from year-end 2016. As previously mentioned, management further evaluated the risks associated with loan loss history and loan underwriting that resulted in additional risk factors being added to the allowance for loan loss determination during the first quarter of 2017.

Net charge-offs increased $135 during the third quarter of 2017, and increased $868 during the first nine months of 2017, as compared to the same periods in 2016. The year-to-date increase was largely related to charge-offs of specific reserves for which allocations had been made prior to 2017, which resulted in specific reserve charge-offs of $1,011 during the first nine months of 2017. Due to these allocations being made prior to 2017, there was no corresponding provision expense associated with these charge-offs that impacted the current year. As a result, net charge-offs for loans without specific reserves decreased $143 during the first nine months of 2017, as2022 compared to the same period in ~~2016.~~2021. In June 2022, the Company charged off two commercial and industrial loans totaling $613 as part of a single borrower relationship, which required a corresponding increase to provision expense. For the six months ended June 30, 2022, the Company’s provision expense decreased $288 from the same period in 2021. The year-to-date improvement came primarily from a decrease in general allocations. As previously discussed, the Company’s general allocations of the allowance for loan losses were impacted by the release of $645 in COVID-19 general reserves during the first quarter of 2022. The Company removed a portion of its COVID-19 reserves due to positive asset quality trends and lower net charge offs, which resulted in a corresponding decrease of $645 to provision expense during the first half of 2022. Further contributing to lower provision expense were the impacts of the Company’s other general reserve allocations. During the first half of 2022, the Company decreased its general allocations, excluding the COVID-19 risk factor, from $3,840 at December 31, 2021, to $2,781 at June 30, 2022. Lower general reserves were a result of various improvements within the economic risk factor calculation that included: lower criticized and classified assets, lower delinquency levels, and higher annualized level of loan recoveries. Decreases in provision expense were partially offset by increases in net charge offs and specific allocations during the year, which required corresponding increases to provision expense. During the first half of 2022, net charge offs increased $620 compared to the same period in 2021, due in large part to the charge off of a single borrower relationship discussed above. An increase in specific allocations also increased provision expense during the first half of 2022 to $297 at June 30, 2022, compared to $60 in specific allocations at June 30, 2021.

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

Noninterest Income

Noninterest income ~~for~~increased $130, or 5.2%, during the three months ended ~~September~~June 30, ~~2017~~2022, and increased $589, or 34.8%, when compared to the three months ended September 30, 2016. Noninterest income for the nine months ended September 30, 2017 increased $718, or 10.6%, when compared to the nine months ended September 30, 2016.The increase in quarterly noninterest revenue was largely due to the Company's earnings from tax-free bank owned life insurance ("BOLI") investments. BOLI investments are maintained by the Company in association with various benefit plans, including deferred compensation plans, director retirement plans and supplemental retirement plans. During the third quarter of 2017, the Company recorded $3,530 in anticipated cash proceeds related to four BOLI policies, which yielded net BOLI proceeds of $399 that was recorded to income. This amount contributed to the quarterly and year-to-date increase in BOLI and annuity asset income of $402 and $406, respectively, as compared to the same periods in 2016.

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

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

~~The Company's remaining noninterest income categories were collectively up by $24,~~$511, or 8.7%, during the ~~third quarter of 2017, and down by $121, or 13.5%, during the first nine~~six months ~~of 2017,~~ended June 30, 2022, when compared to the same periods in ~~2016. The year-to-date decreases~~2021. Higher noninterest revenue was largely impacted by increases in service charges on deposit accounts, which were ~~primarily due to higher losses on OREO.~~

~~Noninterest Expense~~

~~Noninterest expense~~up $205 and $358 during the ~~third quarter of 2017 increased $394, or 4.5%,~~three and ~~increased $3,903, or 15.9%, during the nine~~six months ended ~~September~~June 30, ~~2017, as~~2022, compared to the same periods in ~~2016. The acquisition~~2021, respectively. This included a higher volume of ~~Milton Bank~~overdraft transactions during both the quarterly and year-to-date periods of 2022.

Further impacting growth in noninterest revenue was mortgage banking income, which increased $34 and $90 during the three and six months ended June 30, 2022, compared to the same periods in 2021, respectively. Mortgage banking income increased largely due to Race Day. Race Day was formed in April 2021 and began conducting business during the third quarter of 2021. During the second quarter of 2022, Race Day experienced loan sales that yielded $127 in mortgage banking revenue, which contributed to $223 in mortgage banking revenue during the first half of 2022. These increases were partially offset by decreases in the Bank’s secondary market income due to less volume of mortgage refinancings.

Increases in noninterest revenue also came from interchange income, which increased $4 during the second quarter of 2022, and increased $89 during the first half of 2022, compared to the same periods in 2021. This was impacted by an increase in ~~most~~consumer spending that led to a higher volume of transactions associated with the Company’s debit and credit card products.

Partially offsetting increases to noninterest income were decreases in other noninterest income. During the second quarter of 2022, other noninterest income decreased $119, or 40.1%, compared to the same period in 2021. During the first half of 2022, other noninterest income decreased $67, or 15.0%, compared to the same period in 2021. The decreases were largely impacted by a $70 non-recurring gain on the sale of a branch building in Jackson, Ohio, that was sold in June 2021. The building had been acquired as part of the merger with the Milton Banking Company in 2016.

The remaining noninterest income categories increased $6, or 1.3%, during the second quarter of 2022, and $41, or 2.0%, during the first half of 2022, compared to the same periods in 2021. The increases came primarily from growth in trust division income and higher earnings on bank owned life insurance and annuity assets.

Noninterest Expense

Noninterest expense increased $726, or 7.8%, during the three months ended June 30, 2022, and increased $1,327, or 7.2%, during the six months ended June 30, 2022, compared to the same periods in 2021. Contributing most to the increase in noninterest expense ~~categories related to having a larger organization after the merger. A significant contributor to noninterest expense was~~were salaries and employee benefits, which increased by $1,398, or 9.9%, during the nine months ended September 30, 2017, as compared to the same period in 2016. Higher employee costs continue to be impacted by the addition of Milton Bank employees, as well as annual merit increases$404 and ~~higher health insurance costs. However,~~$704 during the three and six months ended ~~September~~June 30, 2017, salaries and employee benefits decreased $34, or 5.9%, as compared to the same period in 2016. This was due to a $316 reduction in non-qualified defined benefit expenses associated with the restructuring of and accounting for post-retirement benefits of a former employee.

The Company also experienced increases in data processing expense, which increased $184, or 48.4%, during the third quarter of 2017, and increased $583, or 54.5%, during the first nine months of 2017, as2022, compared to the same periods in ~~2016. Data processing charges grew as a result of higher transaction volume associated with debit and credit cards, as well as higher processing charges~~2021, respectively. The expense increase was largely from the ~~Company's Big Rewards customer incentive platform.~~staffing of Race Day employees in 2021, which led to higher salaries expense in 2022. Other expense increases in this category also came from annual merit increases and higher retirement plan costs in 2022.

~~Other~~Higher noninterest expense also came from software costs, which increased ~~$400, or 34.8%,~~$122 and $176 during the ~~third quarter of 2017,~~three and ~~increased $1,734, or 53.0%, during the first nine~~six months ~~of 2017, as~~ended June 30, 2022, compared to the same periods in ~~2016.~~2021, respectively. The quarterly increase was driven by consulting expenses associated with revenue enhancement and efficiency improvement strategies. The year-to-date increase was primarily related to fraud expense that was recorded in the second quarter of 2017. At that time, the Company was made aware that the processing of four wire transfers associated with a single account relationship in May 2017 totaling $933increases were fraudulently initiated. After recovering a portion of the fraudulent wire costs and incurring some additional legal expense, the Company's net loss exposure at September 30, 2017 was $842. Since the fraud event, the Company had been in contact with several insurance providers to determine whether or not existing insurance policies would cover all or part of the remaining losses. Subsequent to the report date, the Company learned that its commercial insurance policy would cover $730 of the fraudulent wire expense. This resulted in the collection of $730 in net insurance proceeds in October 2017, which will be recorded as a recovery during the fourth quarter of 2017.

~~Overhead expense was further~~largely impacted by ~~increases in~~the associated software costs from Race Day, which included various software platforms and resources that were necessary to begin conducting business.

Further impacting higher overhead costs were professional fees, which ~~were up $92, or 26.9%,~~increased $71 and $130 during the ~~third quarter of 2017,~~three and ~~up $318, or 31.2%, during the first nine~~six months ~~of 2017, as~~ended June 30, 2022, compared to the same periods in ~~2016. Both period increases~~2021, respectively. Professional fees were impacted by ~~legal expense~~higher accounting expenses associated with ~~the recovery efforts on loan deficiency balances.~~adhering to regulatory guidance.

~~Partially offsetting overhead~~Data processing expenses ~~were lower merger related expenses, which decreased $410~~increased $28 and $125 during the three and six months ended ~~September~~June 30, ~~2017, and decreased $744 during the first nine months of 2017, as~~2022, compared to the same periods in ~~2016. During~~2021, respectively. Higher costs in this category were the ~~first quarter~~direct result of ~~2016,~~ the ~~Company executed~~volume increase in debit and credit card transactions, which increased processing costs.

Other noninterest expense also increased $138 and $300 during the ~~merger agreement~~three and six months ended June 30, 2022, compared to the same periods in 2021, respectively. This was primarily impacted by various other overhead costs associated with ~~Milton Bancorp. The merger was eventually finalized on August 5, 2016. The Company anticipates the remaining merger related~~Race Day, including loan expenses ~~in 2017 to be minimal.~~and employee recruiting costs.

The remaining noninterest expense categories ~~increased $141, or 9.3%,~~decreased $37 and $108 during the ~~third quarter of 2017,~~three and ~~increased $614, or 14.3%, during the first nine~~six months ~~of 2017, as~~ended June 30, 2022, compared to the same periods in ~~2016. The addition of Milton Bank contributed~~2021, respectively. These decreases were impacted mostly from expense savings related to ~~the increases of various noninterest expense areas that include software, building~~lower marketing and furniture and equipment ~~customer incentives, and intangible asset amortization.~~costs.

Efficiency

The ~~Company's~~Company’s efficiency ratio is defined as noninterest expense as a percentage of fully tax-equivalent net interest income plus noninterest income. The effects from provision expense are excluded from the efficiency ratio. Management continues to place emphasis on managing its balance sheet mix and interest rate sensitivity as well as developing more innovative ways to generate noninterest revenue. ~~During~~Comparing the ~~quarterly~~three and ~~year-to-date~~six months ended June 30, 2022, to the same periods ~~ending September 30, 2017,~~in 2021, the Company ~~was successful~~continues to benefit from a larger decrease in ~~generating~~the average cost on interest-bearing liabilities than the decrease on earning asset yields. The composition shift from lower yielding Federal Reserve Bank balances to higher yielding loans and securities, combined with the Federal Reserve’s rate increases during the first half of 2022 has had a positive impact to the net interest margin. These factors more than offset the decrease in PPP loan fees that were more impactful during 2021 than 2022. As a result, net interest income ~~primarily due to higher average earning assets while minimizing funding costs. The Company also realized additional earnings in~~during the ~~third quarter from $399 in BOLI proceeds combined with a $316 reduction in benefit expenses for a former employee. These factors have completely offset~~three and six months ended June 30, 2022, has outperformed the ~~negative effects from lower tax processing fees, large fraudulent wire expense and higher personnel costs. This has caused the level of~~ net revenues to outpace overhead expenses during 2017. As a result, the Company's efficiency numbers have improved, finishing at 72.3% and 72.5% during both the quarterly and year-to-date periods ended September 30, 2017, compared to the 81.5% and 73.2% efficiency levelsinterest income results during the same periods in ~~2016.~~2021. However, it has been the increases in overhead costs that have completely offset the benefits of higher net interest earnings. Increases in overhead costs associated with Race Day have contributed to higher noninterest expense, which have increased over 7.0% during both the three and six months ended June 30, 2022, compared to the same periods in 2021. Furthermore, the Company’s increases in quarterly and year-to-date overhead expense were only partially offset by increases in noninterest income during both periods. As a result, the Company’s quarterly efficiency number increased (regressed) to 75.3% during the three months ended June 30, 2022 from 72.4% during the same period in 2021. The Company’s year-to-date efficiency number also increased (regressed) to 73.0% during the first half of 2022 from 70.2% during the same period in 2021.

Provision for income taxes

The Company’s income tax provision decreased $182 during the three months ended June 30, 2022, and increased $20 during the six months ended June 30, 2022, when compared to the same periods in 2021. The changes in tax expense corresponded directly to the change in associated taxable income during 2022 and 2021.

Capital Resources

~~Banks~~Federal regulators have classified and ~~bank holding companies are subject to regulatory~~defined capital into the following components: (i) Tier 1 capital, which includes tangible shareholders’ equity for common stock, qualifying preferred stock and certain qualifying hybrid instruments, and (ii) Tier 2 capital, which includes a portion of the allowance for loan losses, certain qualifying long-term debt, preferred stock and hybrid instruments which do not qualify as Tier 1 capital.

In September 2019, consistent with Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies issued a final rule providing simplified capital requirements ~~administered by federal~~for certain community banking ~~agencies. Capital adequacy guidelines~~organizations (banks and ~~additionally for banks, prompt corrective action regulations, involve quantitative measures~~holding companies). Under the rule, a qualifying community banking organization (“QCBO”) is eligible to opt into the Community Bank Leverage Ratio (“CBLR”) framework in lieu of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. In addition, in order for a financial holding company to continue to engage in activities permitted only for financial holding companies, it must be "well capitalized". Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meetthe Basel III capital requirements ~~can initiate regulatory action.~~if it has less than $10 billion in total consolidated assets, limited amounts of certain trading assets and liabilities, limited amounts of off-balance sheet exposure and a leverage ratio greater than 9.0%. The ~~final rules implementing Basel Committee on Banking Supervision's capital guidelines for U.S. banks (Basel III rules) became effective for the Company and the Bank on~~new rule took effect January 1, ~~2015 with full compliance with all~~2020, and QCBOs were allowed to opt into the new CBLR framework in their Call Report beginning the first quarter of 2020.

A QCBO opting into the ~~requirements being phased in over~~CBLR framework must maintain a ~~multi-year schedule, and fully phased in by January 1, 2019. Under the final rules, minimum requirements increased for both the quantity and quality~~CBLR of capital held by the Company and the Bank. The rules include a new common equity tier 1 capital to risk-weighted assets ratio of 4.5% and a capital conservation buffer of 2.5% of risk-weighted assets. The capital conservation buffer began to phase in on January 1, 2016 at 0.625%9.0%, and will be phased in over a four-year period, increasing by the same amount on each subsequent January 1, until fully phased-in on January 1, 2019. Further, Basel III rules increased the minimum ratio of tier 1 capital to risk-weighted assets increased from 4.0% to 6.0% and all banks are now subject to a ~~4.0% minimum~~two quarter grace period to come back into compliance, provided that the QCBO maintains a leverage ~~ratio.~~ ratio of more than 8.0% during the grace period. A QCBO failing to satisfy these requirements must comply with the existing Basel III capital requirements as implemented by the banking regulators in July 2013.

The ~~required total risk-based capital ratio was unchanged. Failure to maintain~~numerator of the ~~required common equity tier~~CBLR is Tier 1 capital, ~~conservation buffer~~as calculated under present rules. The denominator of the CBLR is the QCBO’s average assets, calculated in accordance with the QCBO’s Call Report instructions and less assets deducted from Tier 1 capital.

The Bank opted into the CBLR, and will, ~~result in potential restrictions on a bank's ability to pay dividends, repurchase stock and/or pay discretionary compensation to its employees.~~

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms aretherefore, not ~~used to represent overall financial condition. If adequately capitalized, regulatory approval is~~be required to ~~accept brokered deposits. If undercapitalized,~~comply with the Basel III capital ~~distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At September~~requirements. As of June 30, ~~2017 and year-end 2016,~~2022, the ~~Bank met~~Bank’s CBLR was 10.43%.

Pursuant to the ~~capital requirements~~CARES Act, the federal banking regulators in April 2020 issued interim final rules to ~~be deemed well capitalized under~~set the ~~regulatory framework~~CBLR at 8% beginning in the second quarter of 2020 through the end of 2020. The CBLR was then increased to 8.5% in 2021 until it was returned to 9% for ~~prompt corrective action. The Company's capital also met the requirements for the Company to be deemed well capitalized~~all community banks beginning January 1, 2022.

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

9/30/17 12/31/16
Regulatory
Minimum

Common equity tier 1 risk-based capital ratio
Company 14.1% 14.0% 4.5%
Bank 14.1% 14.2% 4.5%

Tier 1 risk-based capital ratio
Company 15.3% 15.3% 6.0%
Bank 14.1% 14.2% 6.0%

Total risk-based capital ratio
Company 16.3% 16.4% 8.0%
Bank 15.1% 15.3% 8.0%

Leverage ratio
Company 11.3% 11.2% 4.0%
Bank 10.5% 10.4% 4.0%

Cash dividends paid by the Company were ~~$2,947~~$2,716 during the first ~~nine months~~half of ~~2017.~~2022. The year-to-date dividends paid totaled ~~$0.63~~$0.57 per ~~share for 2017.~~share.

Liquidity

Liquidity relates to the Company's ability to meet the cash demands and credit needs of its customers and is provided by the ability to readily convert assets to cash and raise funds in the ~~marketplace.~~market place. Total cash and cash equivalents, held to maturity securities maturing within one year, and available for sale securities, ~~totaling $157,036,~~which totaled $288,145, represented ~~15.4%~~23.0% of total assets at ~~September~~June 30, ~~2017. In addition,~~2022 compared to $329,264 and 26.3% of total assets at December 31, 2021. To further enhance the Bank’s ability to meet liquidity demands, the FHLB offers advances to the ~~Bank, which further enhances the Bank's ability to meet liquidity demands.~~Bank. At ~~September~~June 30, ~~2017,~~2022, the Bank could borrow an additional ~~$146,529~~$116,069 from the ~~FHLB, of which $80,000 could be used for short-term, cash management advances.~~FHLB. Furthermore, the Bank has established a borrowing line with the Federal Reserve. At ~~September~~June 30, ~~2017,~~2022, this line had total availability of ~~$52,433.~~$51,567. Lastly, the Bank also has the ability to purchase federal funds from a correspondent bank. For further cash flow information, see the condensed consolidated statement of cash flows above. Management does not rely on any single source of liquidity and monitors the level of liquidity based on many factors affecting the Company’s financial condition.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

The most significant accounting policies followed by the Company are presented in Note A to the financial statements in the ~~Company's 2016~~Company’s 2021 Annual Report to Shareholders. These policies, along with the disclosures presented in the other financial statement notes, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Management views critical accounting policies to be those which are highly dependent on subjective or complex judgments, estimates and assumptions, and where changes inthose estimates and assumptions could have a significant impact on the financial statements. Management currently views the adequacy of the allowance for loan losses ~~and business combinations~~ to be a critical accounting ~~policies.~~policy.

Allowance for loan losses

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

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans generally consist of loans with balances of $200 or more on nonaccrual status or nonperforming in nature. Loans for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered ~~troubled debt restructurings~~TDRs and classified as impaired.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length and reasons for the delay, the ~~borrower's~~borrower’s prior payment record, and the amount of shortfall in relation to the principal and interest owed.

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

The general component covers non-impaired loans and impaired loans that are not individually reviewed for impairment and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent 3 years for the consumer and real estate portfolio segment and 5 years for the commercial portfolio segment. The total loan ~~portfolio's~~portfolio’s actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. During the second quarter of 2022, the Company established a new economic risk factor for certain risks that may impact the loan portfolio, such as elevated inflation, increasing interest rates, slowing housing starts, declining GDP, and negative employment trends.The following portfolio segments have been identified: Commercial Real Estate, Commercial and Industrial, Residential Real Estate, and Consumer.

Commercial and industrial loans consist of borrowings for commercial purposes by individuals, corporations, partnerships, sole proprietorships, and other business enterprises. Commercial and industrial loans are generally secured by business assets such as equipment, accounts receivable, inventory, or any other asset excluding real estate and generally made to finance capital expenditures or operations. The ~~Company's~~Company’s risk exposure is related to deterioration in the value of collateral securing the loan should foreclosure become necessary. Generally, business assets used or produced in operations do not maintain their value upon foreclosure, which may require the Company to write down the value significantly to sell.

Commercial real estate consists of nonfarm, nonresidential loans secured by owner-occupied and nonowner-occupied commercial real estate as well as commercial construction loans. An owner-occupied loan relates to a borrower purchased building or space for which the repayment of principal is dependent upon cash flows from the ongoing business operations conducted by the party, or an affiliate of the party, who owns the property. Owner-occupied loans that are dependent on cash flows from operations can be adversely affected by current market conditions for their product or service. A nonowner-occupied loan is a property loan for which the repayment of principal is dependent upon rental income associated with the property or the subsequent sale of the property. Nonowner-occupied loans that are dependent upon rental income are primarily impacted by local economic conditions which dictate occupancy rates and the amount of rent charged. Commercial construction loans consist of borrowings to purchase and develop raw land into one- to four-family residential properties. Construction loans are extended to individuals as well as corporations for the construction of an individual or multiple properties and are secured by raw land and the subsequent improvements. Repayment of the loans to real estate developers is dependent upon the sale of properties to third parties in a timely fashion upon completion. Should there be delays in construction or a downturn in the market for those properties, there may be significant erosion in value which may be absorbed by the Company.

Residential real estate loans consist of loans to individuals for the purchase of one- to four-family primary residences with repayment primarily through wage or other income sources of the individual borrower. The ~~Company's~~Company’s loss exposure to these loans is dependent on local market conditions for residential properties as loan amounts are determined, in part, by the fair value of the property at origination.

Consumer loans are comprised of loans to individuals secured by automobiles, open-end home equity loans and other loans to individuals for household, family, and other personal expenditures, both secured and unsecured. These loans typically have maturities of 6 years or less with repayment dependent on individual wages and income. The risk of loss on consumer loans is elevated as the collateral securing these loans, if any, rapidly depreciate in value or may be worthless and/or difficult to locate if repossession is necessary. During the last several years, one of the most significant portions of the ~~Company's~~Company’s net loan charge-offs have been from consumer loans. Nevertheless, the Company has allocated the highest percentage of its allowance for loan losses as a percentage of loans to the other identified loan portfolio segments due to the larger dollar balances and inherent risk associated with such portfolios.

~~Business combinations~~

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

Concentration of Credit Risk

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's goal for interest rate sensitivity management is to maintain a balance between steady net interest income growth and the risks associated with interest rate fluctuations. Interest rate risk ("IRR") is the exposure of the Company's financial condition to adverse movements in interest rates. Accepting this risk can be an important source of profitability, but excessive levels of IRR can threaten the Company's earnings and capital.Not applicable.

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

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

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

Change in Interest Rates
        in Basis Points

September 30, 2017
Percentage Change in
  Net Interest Income

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

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

With the participation of the Chief Executive Officer (the principal executive officer) and the Senior Vice President and Chief Financial Officer (the principal financial officer) of Ohio Valley, Ohio ~~Valley's~~Valley’s management has evaluated the effectiveness of Ohio ~~Valley's~~Valley’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the "Exchange Act"))~~Act) as of the end of the quarterly period covered by this Quarterly Report on Form 10‑Q. Based on that evaluation, Ohio Valley's Chief Executive Officer and Vice President and Chief Financial Officer have concluded that Ohio Valley's disclosure controls and procedures are effective as of the end of the quarterly period covered by this Quarterly Report on Form 10‑Q to ensure that information required to be disclosed by Ohio Valley in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.June 30, 2022. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by Ohio Valley in the reports that it files or submits under the Exchange Act is accumulated and communicated to Ohio ~~Valley's~~Valley’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, Ohio Valley’s Chief Executive Officer and Senior Vice President and Chief Financial Officer have concluded that Ohio Valley’s disclosure controls and procedures were effective as of June 30, 2022 to ensure that information required to be disclosed by Ohio Valley in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

There was no change in Ohio ~~Valley's~~Valley’s internal control over financial reporting (as defined in Rule 13a‑15(f) under the Exchange Act) that occurred during Ohio ~~Valley's~~Valley’s fiscal quarter ended ~~September~~June 30, ~~2017,~~2022, that has materially affected, or is reasonably likely to materially affect, Ohio ~~Valley's~~Valley’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~Not applicable.~~From time to time, the Company may be involved in various claims and legal actions in the ordinary course of business. The Company is not currently involved in any material legal proceedings outside the ordinary course of the Company’s business.

ITEM 1A. RISK FACTORS

~~You should carefully consider~~There are no material changes from the risk factors ~~disclosed in~~set forth under Part I, Item 1.A. "Risk Factors" in Ohio Valley's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the Securities and Exchange Commission. These risk factors could materially affect the Company's business, financial condition or future results. The risk factors described1A, “Risk Factors” in the ~~Annual Report on~~2021 Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that management currently deems to be immaterial also may materially adversely affect the Company's business, financial condition and/or operating results. Moreover, the Company undertakes no obligation and disclaims any intention to publish revised information or updates to forward looking statements contained in such risk factors or in any other statement made at any time by any director, officer, employee or other representative of the Company unless and until any such revisions or updates are expressly required to be disclosed by applicable securities laws or regulations.10-K.

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

Ohio Valley did not sell any unregistered equity securities during the three months ended June 30, 2022.

Ohio Valley did not purchase any of its shares during the three months ended ~~September~~June 30, ~~2017.~~2022.

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

~~(a)~~

(a) Exhibits:

Exhibit Number		Exhibit Description

~~2(a)~~		Agreement and Plan of Merger between Ohio Valley Banc Corp. and Milton Bancorp, Inc. dated January 7, 2016: Incorporated herein by reference to Exhibit 2.1 to Ohio Valley's Current Report on Form 8-K filed on January 7, 2016 (SEC File No. 0-20914).

~~2(b)~~		Amendment to Agreement and Plan of Merger by and between Ohio Valley Banc Corp. and Milton Bancorp, Inc., dated April 20, 2016: Incorporated herein by reference to Exhibit 2.1 to Ohio Valley's Current Report on Form 8-K filed on April 21, 2016 (SEC File No. 0-20914).

~~3(a)~~3.1		Amended Articles of Incorporation of Ohio Valley (reflects amendments through April 7, 1999) [for SEC reporting compliance only - - not filed with the Ohio Secretary of State].: Incorporated herein by reference to Exhibit 3(a) to Ohio ~~Valley's~~Valley’s Annual Report on Form 10-K for fiscal year ended December 31, 2007 ~~(SEC File~~(File No. ~~0-20914)~~000-20914).

~~3(b)~~3.2		Code of Regulations of Ohio ~~Valley (as amended by the shareholders on May 12, 2010):~~Valley: Incorporated herein by reference to Exhibit 3(b) to Ohio ~~Valley's~~Valley’s Quarterly Report on Form 10-Q for the ~~quarterly period~~quarter ended June 30, 2010 ~~(SEC File~~(File No. ~~0-20914)~~000-20914).

44.1		Agreement to furnish instruments and agreements defining rights of holders of long-term debt: Filed ~~herewith~~herewith..

31.1		Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer): Filed herewith.

31.2		Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer): Filed herewith.

32		Section 1350 Certifications (Principal Executive Officer and Principal ~~Accounting~~Financial Officer): Filed ~~herewith~~herewith..

101.INS #		XBRL Instance ~~Document: Filed herewith. #~~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 ~~Condensed~~ Consolidated Statements of Income; (iii) Unaudited Consolidated Statements of Comprehensive Income; (iv) Unaudited ~~Condensed~~ Consolidated Statements of Changes in ~~Stockholders'~~Shareholders’ Equity; (v) Unaudited Condensed Consolidated Statements of Cash Flows; and (vi) Notes to the Consolidated Financial Statements.

SIGNATURES

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

			OHIO VALLEY BANC CORP.

Date:	~~November 9, 2017~~August 15, 2022	By:	/s/~~Thomas~~Larry E. ~~Wiseman~~ Miller, II
			~~Thomas~~Larry E. ~~Wiseman~~Miller, II
			President and Chief Executive Officer

Date:	~~November 9, 2017~~August 15, 2022	By:	/s/Scott W. Shockey
			Scott W. Shockey
			Senior Vice President and Chief Financial Officer

4342

	September 30, 2017			December 31, 2016

ASSETS
Cash and noninterest-bearing deposits with banks	$	11,610		$	12,512
Interest-bearing deposits with banks		38,792			27,654
Total cash and cash equivalents		50,402			40,166

Certificates of deposit in financial institutions		1,820			1,670
Securities available for sale		106,545			96,490
Securities held to maturity (estimated fair value: 2017 - $18,822; 2016 - $19,171)		18,168			18,665
Restricted investments in bank stocks		7,506			7,506

Total loans		777,957			734,901
Less: Allowance for loan losses		(7,313	)		(7,699	)
Net loans		770,644			727,202

Premises and equipment, net		13,205			12,783
Other real estate owned		2,219			2,129
Accrued interest receivable		2,532			2,315
Goodwill		7,371			7,801
Other intangible assets, net		550			670
Bank owned life insurance and annuity assets		26,576			29,349
Other assets		12,076			7,894
Total assets	$	1,019,614		$	954,640

LIABILITIES
Noninterest-bearing deposits	$	233,178		$	209,576
Interest-bearing deposits		616,003			580,876
Total deposits		849,181			790,452

Other borrowed funds		36,775			37,085
Subordinated debentures		8,500			8,500
Accrued liabilities		15,196			14,075
Total liabilities		909,652			850,112

COMMITMENTS AND CONTINGENT LIABILITIES (See Note 5)		----			----

SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value per share, 10,000,000 shares authorized; 2017 - 5,352,005 shares issued; 2016 - 5,325,504 shares issued)		5,352			5,326
Additional paid-in capital		47,552			46,788
Retained earnings		72,781			69,117
Accumulated other comprehensive loss		(11	)		(991	)
Treasury stock, at cost (659,739 shares)		(15,712	)		(15,712	)
Total shareholders' equity		109,962			104,528
Total liabilities and shareholders' equity	$	1,019,614		$	954,640

	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016

Interest and dividend income:
Loans, including fees	$	10,489		$	9,085		$	31,410		$	26,147
Securities
Taxable		535			486			1,559			1,465
Tax exempt		104			111			312			337
Dividends		101			75			287			222
Other Interest		88			67			476			336
		11,317			9,824			34,044			28,507
Interest expense:
Deposits		757			597			1,985			1,605
Other borrowed funds		228			190			673			462
Subordinated debentures		64			52			182			149
		1,049			839			2,840			2,216
Net interest income		10,268			8,985			31,204			26,291
Provision for loan losses		1,601			1,708			1,921			2,328
Net interest income after provision for loan losses		8,667			7,277			29,283			23,963

Noninterest income:
Service charges on deposit accounts		541			575			1,575			1,414
Trust fees		64			58			177			174
Income from bank owned life insurance and annuity assets		577			175			981			575
Mortgage banking income		59			44			164			162
Electronic refund check / deposit fees		----			13			1,667			2,037
Debit / credit card interchange income		863			653			2,506			1,864
Gain (loss) on other real estate owned		(23	)		(8	)		(94	)		----
Other		201			183			531			563
		2,282			1,693			7,507			6,789
Noninterest expense:
Salaries and employee benefits		5,019			5,032			15,528			14,130
Occupancy		449			466			1,331			1,300
Furniture and equipment		269			285			787			671
Professional fees		434			342			1,338			1,020
Marketing expense		273			249			785			744
FDIC insurance		99			81			366			378
Data processing		564			380			1,652			1,069
Software		365			368			1,102			962
Foreclosed assets		158			61			425			247
Amortization of intangibles		38			----			120			----
Merger related expenses		6			416			33			777
Other		1,548			1,148			5,006			3,272
		9,222			8,828			28,473			24,570

Income before income taxes		1,727			142			8,317			6,182
Provision for income taxes		74			(216	)		1,706			1,286

NET INCOME	$	1,653		$	358		$	6,611		$	4,896

Earnings per share	$	.35		$	.08		$	1.41		$	1.15

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

December 31, 2016
Obligations of states and political subdivisions	$	18,661	$	654	$	(148	)	$	19,167
Agency mortgage-backed securities, residential		4		----		----			4
Total securities	$	18,665	$	654	$	(148	)	$	19,171

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

Loans, net	$	770,644		$	727,202

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

	9/30/17		12/31/16		Regulatory Minimum

Common equity tier 1 risk-based capital ratio
Company		14.1%		14.0%		4.5%
Bank		14.1%		14.2%		4.5%

Tier 1 risk-based capital ratio
Company		15.3%		15.3%		6.0%
Bank		14.1%		14.2%		6.0%

Total risk-based capital ratio
Company		16.3%		16.4%		8.0%
Bank		15.1%		15.3%		8.0%

Leverage ratio
Company		11.3%		11.2%		4.0%
Bank		10.5%		10.4%		4.0%

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