~~United States~~

~~Securities and Exchange Commission~~

~~Washington, D.C. 20549~~

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

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

EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2017~~2023

☐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 14, 2023 was ~~4,692,266.~~4,776,520.

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	2832
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4043
Item 4.	Controls and Procedures	4043

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	4144
Item 1A.	Risk Factors	4144
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4145
Item 3.	Defaults Upon Senior Securities	4145
Item 4.	Mine Safety Disclosures	4145
Item 5.	Other Information	4145
Item 6.	Exhibits	4246

Signatures		4347

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, 2023			December 31, 2022

ASSETS
Cash and noninterest-bearing deposits with banks	$	14,919		$	14,330
Interest-bearing deposits with banks		41,876			31,660
Total cash and cash equivalents		56,795			45,990

Certificates of deposit in financial institutions		245			1,862
Securities available for sale		174,508			184,074
Securities held to maturity, net of allowance for credit losses of $3 in 2023 and $0 in 2022; (estimated fair value: 2023 - $8,218; 2022 - $8,460)		8,964			9,226
Restricted investments in bank stocks		4,204			5,953

Total loans		949,952			885,049
Less: Allowance for credit losses		(7,571	)		(5,269	)
Net loans		942,381			879,780

Premises and equipment, net		21,091			20,436
Premises and equipment held for sale, net		583			593
Accrued interest receivable		3,164			3,112
Goodwill		7,319			7,319
Other intangible assets, net		16			29
Bank owned life insurance and annuity assets		40,045			39,627
Operating lease right-of-use asset, net		1,297			1,294
Deferred tax assets		6,412			6,266
Other assets		7,206			5,226
Total assets	$	1,274,230		$	1,210,787

LIABILITIES
Noninterest-bearing deposits	$	338,974		$	354,413
Interest-bearing deposits		737,598			673,242
Total deposits		1,076,572			1,027,655

Other borrowed funds		26,904			17,945
Subordinated debentures		8,500			8,500
Operating lease liability		1,297			1,294
Allowance for credit losses on off-balance sheet commitments		565		��	—
Other liabilities		22,320			20,365
Total liabilities		1,136,158			1,075,759

COMMITMENTS AND CONTINGENT LIABILITIES (See Note 5)		—			—

SHAREHOLDERS’ EQUITY
Common stock ($1.00 stated value per share, 10,000,000 shares authorized; 2023 - 5,470,453 shares issued; 2022 - 5,465,707 shares issued)		5,470			5,465
Additional paid-in capital		51,842			51,722
Retained earnings		111,499			109,320
Accumulated other comprehensive income (loss)		(14,073	)		(14,813	)
Treasury stock, at cost (693,933 shares)		(16,666	)		(16,666	)
Total shareholders’ equity		138,072			135,028
Total liabilities and shareholders’ equity	$	1,274,230		$	1,210,787

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,
	2023		2022		2023		2022

Interest and dividend income:
Loans, including fees	$	13,293	$	10,020	$	25,569	$	19,818
Securities
Taxable		934		851		1,892		1,546
Tax exempt		41		45		83		92
Dividends		75		69		165		127
Interest-bearing deposits with banks		671		232		1,097		286
Other interest		3		4		5		9
		15,017		11,221		28,811		21,878

Interest expense:
Deposits		3,091		507		4,923		1,026
Other borrowed funds		169		103		271		209
Subordinated debentures		143		58		281		100
		3,403		668		5,475		1,335
Net interest income		11,614		10,553		23,336		20,543
Provision for (recovery of) credit losses		24		813		513		(313	)
Net interest income after provision for (recovery of) credit losses		11,590		9,740		22,823		20,856

Noninterest income:
Service charges on deposit accounts		653		595		1,264		1,153
Trust fees		82		86		168		167
Income from bank owned life insurance and annuity assets		211		195		418		469
Mortgage banking income		44		220		91		455
Electronic refund check / deposit fees		135		135		675		675
Debit / credit card interchange income		1,215		1,177		2,388		2,312
Tax preparation fees		33		50		664		738
Other		340		178		812		387
		2,713		2,636		6,480		6,356
Noninterest expense:
Salaries and employee benefits		5,841		5,683		11,725		11,253
Occupancy		485		424		947		902
Furniture and equipment		330		279		628		545
Professional fees		433		498		866		987
Marketing expense		241		229		482		458
FDIC insurance		142		88		280		170
Data processing		726		688		1,446		1,360
Software		588		556		1,150		1,059
Foreclosed assets		7		36		9		37
Amortization of intangibles		6		10		13		20
Other		1,616		1,532		3,141		3,020
		10,415		10,023		20,687		19,811

Income before income taxes		3,888		2,353		8,616		7,401
Provision for income taxes		639		354		1,459		1,277

NET INCOME	$	3,249	$	1,999	$	7,157	$	6,124

Earnings per share	$	0.68	$	0.42	$	1.50	$	1.29

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,
	2023			2022			2023			2022

Net Income	$	3,249		$	1,999		$	7,157		$	6,124

Other comprehensive income (loss):
Change in unrealized gain (loss) on available for sale securities		(1,209	)		(5,472	)		936			(16,164	)
Related tax (expense) benefit		254			1,150			(196	)		3,395
Total other comprehensive income (loss), net of tax		(955	)		(4,322	)		740			(12,769	)

Total comprehensive income (loss)	$	2,294		$	(2,323	)	$	7,897		$	(6,645	)

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, 2023	$	5,470	$	51,842	$	110,017		$	(13,118	)	$	(16,666	)	$	137,545
Net income		—		—		3,249			—			—			3,249
Other comprehensive loss, net		—		—		—			(955	)		—			(955	)
Cash dividends, $0.37 per share		—		—		(1,767	)		—			—			(1,767	)
Balance at June 30, 2023	$	5,470	$	51,842	$	111,499		$	(14,073	)	$	(16,666	)	$	138,072

Balance at April 1, 2022	$	5,465	$	51,722	$	103,829		$	(7,739	)	$	(16,666	)	$	136,611
Net income		—		—		1,999			—			—			1,999
Other comprehensive loss, net		—		—		—			(4,322	)		—			(4,322	)
Cash dividends, $0.36 per share		—		—		(1,718	)		—			—			(1,718	)
Balance at June 30, 2022	$	5,465	$	51,722	$	104,110		$	(12,061	)	$	(16,666	)	$	132,570

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, 2023	$	5,465	$	51,722	$	109,320		$	(14,813	)	$	(16,666	)	$	135,028
Cumulative change in adopting ASU 2016-13		—		—		(2,209	)		—			—			(2,209	)
Balance at January 1, 2023 (as adjusted for change in adopting ASU 2016-13)		5,465		51,722		107,111			(14,813	)		(16,666	)		132,819
Net income		—		—		7,157			—			—			7,157
Other comprehensive loss, net		—		—		—			740			—			740
Cash dividends, $0.58 per share		—		—		(2,769	)		—			—			(2,769	)
Common Stock issued to ESOP, 4,746 shares		5		120		—			—			—			125
Balance at June 30, 2023	$	5,470	$	51,842	$	111,499		$	(14,073	)	$	(16,666	)	$	138,072

Balance at January 1, 2022	$	5,447	$	51,165	$	100,702		$	708		$	(16,666	)	$	141,356
Net income		—		—		6,124			—			—			6,124
Other comprehensive loss, net		—		—		—			(12,769	)		—			(12,769	)
Cash dividends, $0.57 per share		—		—		(2,716	)		—			—			(2,716	)
Common stock issued to ESOP, 18,522 shares		18		557		—			—			—			575
Balance at June 30, 2022	$	5,465	$	51,722	$	104,110		$	(12,061	)	$	(16,666	)	$	132,570

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,
	2023			2022

Net cash provided by operating activities:	$	8,176		$	5,117

Investing activities:
Proceeds from maturities and paydowns of securities available for sale		11,328			16,760
Purchases of securities available for sale		—			(49,271	)
Proceeds from calls and maturities of securities held to maturity		249			547
Purchase of securities held to maturity		(586	)		(384	)
Proceeds from maturities of certificates of deposit in financial institutions		1,855			445
Purchase of certificates of deposits in financial institutions		(245	)		—
Purchase of restricted investments in bank stocks		(111	)		—
Redemptions of restricted investments in bank stocks		1,860			—
Net change in loans		(65,406	)		(40,006	)
Purchases of premises and equipment		(1,422	)		(948	)
Proceeds from building grant		—			200
Net cash (used in) investing activities		(52,478	)		(72,657	)

Financing activities:
Change in deposits		48,917			13,446
Cash dividends		(2,769	)		(2,716	)
Proceeds from Federal Home Loan Bank borrowings		10,000			—
Repayment of Federal Home Loan Bank borrowings		(1,060	)		(1,130	)
Change in other short-term borrowings		19			—
Net cash provided by financing activities		55,107			9,600

Change in cash and cash equivalents		10,805			(57,940	)
Cash and cash equivalents at beginning of period		45,990			152,034
Cash and cash equivalents at end of period	$	56,795		$	94,094

Supplemental disclosure:
Cash paid for interest	$	2,859		$	1,443
Cash paid for income taxes		1,900			1,100
Operating lease liability arising from obtaining right-of-use asset		187			—

See accompanying notes to consolidated financial statements

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

NOTE 1-1 – 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, Ohio Valley Financial Services Agency, LLC, ~~("Ohio Valley Financial Services"),~~ an insurance agency, and OVBC Captive, Inc. ~~(the "Captive")~~, a limited purpose property and casualty insurance company. The Bank has ~~one~~two wholly-owned ~~subsidiary,~~subsidiaries, Race Day Mortgage, Inc., an Ohio corporation that provided 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. In February 2023, Ohio Valley announced that it was taking steps toward closing Race Day. The decision to start this process was made due to low loan demand, issues retaining personnel, and lack of profitability. All pending loan applications have been processed and a closing date will be determined upon termination of various contractual service agreements. 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,~~2023, 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~~2023, are not necessarily indicative of the operating results to be anticipated for the full fiscal year ending December 31, ~~2017.~~2023. The accompanying consolidated financial statements do not purport to contain all the necessary financial disclosures required by U.S. generally accepted accounting principles ("(“US ~~GAAP"~~GAAP”) that might otherwise be necessary in the circumstances. The Annual Report of the Company for the year ended December 31, ~~2016~~2022, contains consolidated financial statements and related notes which should be read in conjunction with the accompanying consolidated financial statements.

The consolidated financial statements for ~~2016~~2022 have been reclassified to conform to the presentation for ~~2017.~~2023. 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 lines of ~~business,~~business: banking and consumer finance.

ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS: Effective January 1, 2023, the Company adopted ASU No. 2022-02 Financial Instruments - Credit Losses (Topic 326): TDR’s and Vintage Disclosures. This new accounting guidance eliminated the previous accounting guidance for troubled debt restructurings (“TDRs”) and resulted in additional disclosure requirements related to gross charge offs by year of origination and the removal of TDR disclosures, replaced by additional disclosures on the types of modifications of loans to borrowers experiencing financial difficulties.

Effective January 1, 2023, the Company adopted ASU No. 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, (“ASU 2016-13”) (“ASC 326”) as amended. The new accounting guidance replaces the “incurred loss” model with an “expected loss” model, which is referred to as the current expected credit loss (“CECL”) model. The measurement of expected credit losses under the CECL model is applicable to financial assets measured at amortized cost, including loan receivables and HTM debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). In addition, ASC 326 made changes to the accounting for available for sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available for sale debt securities management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable US GAAP. The Company recorded a net decrease to retained earnings of $2,209 as of January 1, 2023 for the cumulative effect of adopting ASC 326.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The following table illustrates the transition adjustment of adopting ASC 326:

	January 1, 2023
	As Reported Under ASC 326		Pre-ASC 326 Adoption		Impact of ASC 326 Adoption
Assets:
ACL - HTM debt securities
Obligations of states and political subdivisions	$	3	$	—	$	3

ACL - Loans
Residential real estate		2,026		681		1,345
Commercial real estate		2,200		2,038		162
Commercial and industrial		1,177		1,293		(116	)
Consumer		2,028		1,257		771
Total ACL - Loans	$	7,431	$	5,269	$	2,162

Deferred tax assets	$	6,853	$	6,266	$	587

Liabilities:
ACL - Off-balance sheet commitments	$	631	$	—	$	631

DEBT SECURITIES: The Company classifies securities into held to maturity (“HTM”) and available for sale (“AFS”) categories. HTM securities are those which the Company has the positive intent and ability to hold to maturity and are reported at amortized cost. Securities classified as AFS include securities that could be sold for liquidity, investment management or similar reasons even if there is not a present intention of such a sale. AFS securities are reported at fair value, with unrealized gains or losses included in other comprehensive income, net of tax.

Premium amortization is deducted from, and discount accretion is added to, interest income on securities using the level yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated. Gains and losses are recognized upon the sale of specific identified securities on the completed trade date.

ALLOWANCE FOR CREDIT LOSSES (“ACL”) - AFS SECURITIES: For AFS debt securities in an unrealized position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For debt securities AFS that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair values has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income.

Changes in the ACL are recorded as credit loss expense (or reversal). Losses are charged against the allowance when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on AFS debt securities totaled $429 at June 30, 2023, and is excluded from the estimate of credit losses.

Management classifies the AFS portfolio into the following major security types: U.S. Government securities, U.S. Government sponsored entity securities, and Agency mortgage-backed residential securities. These security types have an explicit government guarantee, and therefore, no ACL is recorded for these securities. As a result, there was no ACL related to AFS debt securities at June 30, 2023.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

ACL - HTM SECURITIES: Management measures expected credit losses on HTM debt securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The ACL on securities HTM is a contra asset valuation account that is deducted from the carrying amount of HTM securities to present the net amount expected to be collected. HTM securities are charged off against the ACL when deemed uncollectible. Adjustments to the ACL are reported in the Company’s consolidated statements of income in the provision for credit losses. Accrued interest receivable on HTM securities is excluded from the estimate of credit losses. Management classifies the HTM portfolio into two major security types: Obligations of states and political subdivisions and Agency mortgage-backed residential securities. Agency mortgage-backed residential securities consist of only two securities with balances that are not significant. With regard to obligations of states and political subdivisions, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. At June 30, 2023, there was $3 in the ACL related to HTM debt securities, with no corresponding provision expense during the three and six months ended June 30, 2023.

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

Interest income is discontinued and the loan moved to non-accrual status when full loan repayment is in doubt, typically when the loan payments are past due 90 days or over unless the loan is well-secured or in process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

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

The Bank also originates long-term, fixed-rate mortgage loans, with the full intention of being sold to the secondary market. These loans are considered held for sale during the period of time after the principal has been advanced to the borrower by the Bank, but before the Bank has been reimbursed by the Federal Home Loan Mortgage Corporation, typically within a few business days. Loans sold to the secondary market are carried at the lower of aggregate cost or fair value. As of June 30, 2023 and December 31, 2022, there were no loans held for sale by the Bank.

ACL – LOANS: The ACL for loans is a contra asset valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The ACL is adjusted through the provision for credit losses and reduced by net charge offs of loans.

The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers historical loss experience, current conditions and forecasts of future economic conditions. Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period.

The methodology for determining the ACL has two main components: evaluation of expected credit losses for certain groups of loans that share similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The ACL is measured on a collective (pool) basis when similar risk characteristics exist. The Company has identified the following portfolio segments and measures the ACL using the following methods:

Portfolio Segment	Measurement Method	Loss Driver

Residential real estate	Cumulative Undiscounted Expected Loss	National Unemployment, National GDP

Commercial real estate:
Owner-occupied	Cumulative Undiscounted Expected Loss	National Unemployment, National GDP
Nonowner-occupied	Cumulative Undiscounted Expected Loss	National Unemployment, National GDP
Construction	Cumulative Undiscounted Expected Loss	National Unemployment, National GDP

Commercial and industrial	Cumulative Undiscounted Expected Loss	National Unemployment, National GDP

Consumer:
Automobile	Cumulative Undiscounted Expected Loss	National Unemployment
Home equity	Cumulative Undiscounted Expected Loss	National Unemployment
Other	Cumulative Undiscounted Expected Loss, Remaining Life Method	National Unemployment

Historical credit loss experience is the basis for the estimation of expected credit losses. We apply historical loss rates to pools of loans with similar risk characteristics. In defining historical loss rates and the prepayment rates and curtailment rates used to determine the expected life of loans, the use of regional and national peer data was used. After consideration of the historic loss calculation, management applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information at the balance sheet date. Our reasonable and supportable forecast adjustment is based on the national unemployment rate and the national gross domestic product forecast for the first year. For periods beyond our reasonable and supportable forecast, we revert to historical loss rates utilizing a straight-line method over a two-year reversion period. The qualitative adjustments for current conditions are based upon changes in lending policies and practices, experience and ability of lending staff, quality of the Company’s loan review system, value of underlying collateral, the volume and severity of past due loans, the value of underlying collateral for collateral dependent loans, the existence of and changes in concentrations and other external factors. Each factor is assigned a value to reflect improving, stable, or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower, or the extension of renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

The Company has elected to exclude accrued interest receivable from the measurement of its ACL. When a loan is placed on non-accrual status, any outstanding accrued interest is reversed against interest income.

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. We evaluate all loans that meet the following criteria: 1) when it is determined that foreclosure is probable; 2) substandard, doubtful and nonperforming loans when repayment is expected to be provided substantially through the operation or sale of the collateral; 3) when it is determined by management that a loan does not share similar risk characteristics with other loans. Specific reserves are established based on the following three acceptable methods for measuring the ACL: 1) the present value of expected future cash flows discounted at the loan’s original effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral when the loan is collateral dependent. Our individual loan evaluations consist primarily of the fair value of collateral method because most of our loans are collateral dependent. Collateral values are discounted to consider disposition costs when appropriate. A specific reserve is established or a charge-off is taken if the fair value of the loan is less than the loan balance.

At June 30, 2023, there was $7,571 in the ACL related to loans, with corresponding provision expense of $114 and $579 during the three and six months ended June 30, 2023, respectively.

The Company’s loan portfolio segments have been identified as follows: Commercial and Industrial, Commercial Real Estate, Residential Real Estate, and Consumer.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

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

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

Consumer: Portfolio segment consists of loans to individuals secured by automobiles, open-end home equity loans and other loans to individuals for household, family, and other personal expenditures, both secured and unsecured. These loans typically have maturities of six years or less with repayment dependent on individual wages and income. The risk of loss on consumer loans is elevated as the collateral securing these loans, if any, rapidly depreciate in value or may be worthless and/or difficult to locate if repossession is necessary. The Company has allocated the highest percentage of its allowance for credit losses as a percentage of loans to the other identified loan portfolio segments due to the larger dollar balances associated with such portfolios..

ACL – OFF-BALANCE SHEET CREDIT EXPOSURES: The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The ACL on off-balance sheet credit exposures is adjusted through credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. At June 30, 2023, there was $565 in the ACL related to off-balance sheet credit exposures, with a corresponding recovery of provision expense totaling $90 and $66 during the three and six months ended June 30, 2023, respectively.

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~~4,776,520 and ~~4,466,601~~4,771,774 for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively. The weighted average common shares outstanding were ~~4,680,846~~4,774,999 and ~~4,246,311~~4,766,453 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, 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.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses". ASU 2016-13 requires entities to report "expected" credit losses on financial instruments and other commitments to extend credit rather than the current "incurred loss" model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity's portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, for annual periods and interim periods within those annual periods, beginning after December 15, 2018. Management is currently in the developmental stages, collecting available historical information, in order to assess the expected credit losses. However, the impact to the financial statements are still yet to be determined.

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

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

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

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

Appraisals for both collateral-dependent 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, 2023 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							$	55,795	$	—		$	—
U.S. Government sponsored entity securities		----	$	13,579		----		—		5,874			—
Agency mortgage-backed securities, residential		----		92,966		----		—		112,839			—
Interest rate swap derivatives								—		1,375			—

Liabilities:
Interest rate swap derivatives								—		(1,375	)		—

	Fair Value Measurements at December 31, 2022 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
U.S. Government securities	$	54,792	$	—		$	—
U.S. Government sponsored entity securities		—		7,983			—
Agency mortgage-backed securities, residential		—		121,299			—
Interest rate swap derivatives		—		1,340			—

Liabilities:
Interest rate swap derivatives		—		(1,340	)		—

Fair Value Measurements at December 31, 2016 Using

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

Significant Other Observable
Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)

Assets:

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

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

Assets and Liabilities Measured on a Nonrecurring Basis

~~Assets and~~There were no assets or liabilities measured at fair value on a nonrecurring basis ~~are summarized below:~~

Fair Value Measurements at September 30, 2017, Using

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

Significant Other Observable
Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)

Assets:

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

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

Fair Value Measurements at December 31, 2016, Using

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

Significant Other Observable
Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)

Assets:

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

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

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

~~At September~~at June 30, 2017, the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled $2,838, with a corresponding valuation allowance of $142. This resulted in an increase of $142 to provision expense during the three2023 and nine months ended September 30, 2017, with no additional charge-offs recognized. This is compared to an increase of $819 in provision expense during the three months ended September 30, 2016, and an increase of $2,477 in provision expense during the nine months ended September 30, 2016, with no additional charge-offs recognized. At December 31, 2016, the recorded investment of impaired loans measured for impairment using the fair value of collateral for collateral-dependent loans totaled $8,732, with a corresponding valuation allowance of $2,913, resulting in an increase of $2,509 in provision expense during the year ended December 31, 2016, with2022.

There was no ~~additional charge-offs recognized.~~

~~Other~~other real estate owned ~~that was~~ measured at fair value less costs to sell at ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016 had a net carrying amount of $754, which is made up of the outstanding balance of $2,217, net of a valuation allowance of $1,463. There~~2022. Furthermore, there were no corresponding write downs during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016.~~2022.

~~The following table presents~~There was no 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~~2023 and December 31, ~~2016:~~2022.

September 30, 2017

Fair Value

Valuation Technique(s)

Unobservable
Input(s)

Range

(Weighted Average)

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

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

December 31, 2016

Fair Value

Valuation Technique(s)

Unobservable
Input(s)

Range

(Weighted Average)

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

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

NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The carrying amounts and estimated fair values of financial instruments at ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022 are as follows:

			Fair Value Measurements at September 30, 2017 Using:								Carrying		Fair Value Measurements at June 30, 2023 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	$	56,795	$	56,795	$	—	$	—	$	56,795
Certificates of deposit in financial institutions		1,820		----		1,820		----		1,820		245		—		245		—		245
Securities available for sale		106,545		----		106,545		----		106,545		174,508		55,795		118,713		—		174,508
Securities held to maturity		18,168		----		9,586		9,236		18,822		8,964		—		4,999		3,219		8,218
Restricted investments in bank stocks		7,506		N/A		N/A		N/A		N/A
Loans, net		770,644		----		----		772,063		772,063		942,381		—		—		909,492		909,492
Interest rate swap derivatives												1,375		—		1,375		—		1,375
Accrued interest receivable		2,532		----		394		2,138		2,532		3,164		—		440		2,724		3,164

Financial liabilities:
Deposits		849,181		233,178		616,081		----		849,259		1,076,572		812,691		261,679		—		1,074,370
Other borrowed funds		36,775		----		36,070		----		36,070		26,904		—		25,411		—		25,411
Subordinated debentures		8,500		----		6,377		----		6,377		8,500		—		8,500		—		8,500
Interest rate swap derivatives												1,375		—		1,375		—		1,375
Accrued interest payable		690		3		687		----		690		3,048		—		3,048		—		3,048

				Fair Value Measurements at December 31, 2016 Using:								Carrying		Fair Value Measurements at December 31, 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		$	40,166	$	40,166	$	----	$	----	$	40,166	$	45,990	$	45,990	$	—	$	—	$	45,990
Certificates of deposit in financial institutions			1,670		----		1,670		----		1,670		1,862		—		1,862		—		1,862
Securities available for sale			96,490		----		96,490		----		96,490		184,074		54,792		129,282		—		184,074
Securities held to maturity			18,665		----		9,541		9,630		19,171		9,226		—		4,987		3,473		8,460
Restricted investments in bank stocks			7,506		N/A		N/A		N/A		N/A
Loans, net			727,202		----		----		727,079		727,079		879,780		—		—		846,870		846,870
Interest rate swap derivatives													1,340		—		1,340		—		1,340
Accrued interest receivable			2,315		----		224		2,091		2,315		3,112		—		485		2,627		3,112

Financial liabilities:	��
Deposits			790,452		209,576		581,340		----		790,916		1,027,655		875,736		149,974		—		1,025,710
Other borrowed funds			37,085		----		35,948		----		35,948		17,945		—		16,364		—		16,364
Subordinated debentures			8,500		----		5,821		----		5,821		8,500		—		8,500		—		8,500
Interest rate swap derivatives													1,340		—		1,340		—		1,340
Accrued interest payable			513		4		509		----		513		432		1		431		—		432

~~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~~2023 and December 31, ~~2016~~2022, 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, 2023
U.S. Government securities										$	58,567	$	—	$	(2,772	)	$	55,795
U.S. Government sponsored entity securities	$	13,627	$	----	$	(48	)	$	13,579		6,680		—		(806	)		5,874
Agency mortgage-backed securities, residential		92,935		653		(622	)		92,966		127,076		—		(14,237	)		112,839
Total securities	$	106,562	$	653	$	(670	)	$	106,545	$	192,323	$	—	$	(17,815	)	$	174,508

December 31, 2016
December 31, 2022
U.S. Government securities										$	57,698	$	—	$	(2,906	)	$	54,792
U.S. Government sponsored entity securities	$	10,624	$	----	$	(80	)	$	10,544		8,845		—		(862	)		7,983
Agency mortgage-backed securities, residential		87,367		495		(1,916	)		85,946		136,282		—		(14,983	)		121,299
Total securities	$	97,991	$	495	$	(1,996	)	$	96,490	$	202,825	$	—	$	(18,751	)	$	184,074

Securities Held to Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Estimated Fair Value		Allowance for Credit Losses
June 30, 2023
Obligations of states and political subdivisions	$	8,966	$	21	$	(770	)	$	8,217	$	(3	)
Agency mortgage-backed securities, residential		1		—		—			1		—
Total securities	$	8,967	$	21	$	(770	)	$	8,218	$	(3	)

December 31, 2022
Obligations of states and political subdivisions	$	9,225	$	32	$	(798	)	$	8,459
Agency mortgage-backed securities, residential		1		—		—			1
Total securities	$	9,226	$	32	$	(798	)	$	8,460

~~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,~~2023, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay the debt obligations prior to their contractual maturities. Securities not due at a single maturity are shown separately.

	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	$	15,939	$	15,672	$	585	$	583
Due in over one to five years		6,025		5,996		6,764		7,000		49,308		45,997		3,890		3,725
Due in over five to ten years		3,000		2,990		8,055		8,482		—		—		3,780		1,943
Due after ten years		----		----		3,256		3,247		—		—		711		1,966
Agency mortgage-backed securities, residential		92,935		92,966		4		4		127,076		112,839		1		1
Total debt securities	$	106,562	$	106,545	$	18,168	$	18,822	$	192,323	$	174,508	$	8,967	$	8,218

There were no sales of securities during the three and six months ended June 30, 2023 and 2022.

Debt securities with a carrying value of approximately $133,093 at June 30, 2023 and $126,318 at December 31, 2022, were pledged to secure public deposits, repurchase agreements, and for other purposes required or permitted by law.

NOTE 3 – SECURITIES (Continued)

The following table summarizes debt securities ~~with~~available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded at ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, 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, 2023	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Securities Available for Sale
U.S. Government securities	$	17,784	$	(238	)	$	38,011	$	(2,534	)	$	55,795	$	(2,772	)
U.S. Government sponsored entity securities		—		—			5,874		(806	)		5,874		(806	)
Agency mortgage-backed securities,
residential		8,308		(524	)		104,531		(13,713	)		112,839		(14,237	)
Total available for sale	$	26,092	$	(762	)	$	148,416	$	(17,053	)	$	174,508	$	(17,815	)

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, 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	$	36,460	$	(977	)	$	18,332	$	(1,929	)	$	54,792	$	(2,906	)
U.S Government sponsored entity securities		2,786		(60	)		5,197		(802	)		7,983		(862	)
Agency mortgage-backed securities,
residential		71,510		(7,178	)		49,789		(7,805	)		121,299		(14,983	)
Total available for sale	$	110,756	$	(8,215	)	$	73,318	$	(10,536	)	$	184,074	$	(18,751	)

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 )

Management evaluates available for sale debt securities in unrealized positions to determine whether impairment is due to credit-related factors. Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

At June 30, 2023, the Company had 103 available for sale debt securities in an unrealized position without an allowance for credit losses, of which 19 were from U.S. Government securities, 3 were from U.S. Government sponsored entity securities, and 81 were from Agency mortgage-backed residential securities. Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of June 30, 2023, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in interest rates and other market conditions and, therefore, the Company carried no allowance for credit losses on available for sale debt securities at June 30, 2023.

NOTE 3 – SECURITIES (Continued)

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

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

There were no sales of investment securities during the three and nine months ended September 30, 2017 and 2016. Unrealized losses on the Company's debt securities have not been recognized into income because the issuers' securities are of high credit quality as of September 30, 2017, and management does not intend to sell, and it is likely that management will not be required to sell, the securities prior to their anticipated recovery. Management does not believe any individual unrealized loss at September 30, 2017 and December 31, 2016 represents an other-than-temporary impairment.

~~NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES~~

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

Loans, net $ 770,644 $ 727,202

The following table presents the activity in the allowance for ~~loan~~credit losses for held to maturity debt securities:

Held to Maturity Debt Securities	Six months ended June 30, 2023
Allowance for credit losses:
Beginning balance	$	—
Impact of adopting ASC 326		3
Credit loss expense		—
Allowance for credit losses ending balance	$	3

The Company’s held to maturity securities primarily consist of obligations of states and political subdivisions. The ACL on held to maturity securities is estimated at each measurement date on a collective basis by ~~portfolio segment~~major security type. Risk factors such as issuer bond ratings, historical loss rates, financial condition of issuer, and timely principal and interest payments of issuer were evaluated to determine if a credit reserve was required within the portfolio. At June 30, 2023, there were no past due principal and interest payments related to held to maturity securities. The Company identified a cumulative loss rate of .03% using historical loss data provided by S&P and Moody’s bond rating service. This resulted in a $3 credit loss reserve for held to maturity debt securities upon adoption of ASC 326 on January 1, 2023, with no provision expense during the three and six months ended ~~September~~June 30, ~~2017~~2023.

NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans are comprised of the following:

	June 30, 2023			December 31, 2022

Residential real estate	$	319,036		$	297,036
Commercial real estate:
Owner-occupied		71,486			72,719
Nonowner-occupied		184,304			182,831
Construction		45,432			33,205
Commercial and industrial		160,747			151,232
Consumer:
Automobile		60,230			54,837
Home equity		30,168			27,791
Other		78,549			65,398
		949,952			885,049
Less: Allowance for credit losses		(7,571	)		(5,269	)

Loans, net	$	942,381		$	879,780

At June 30, 2023 and ~~2016:~~December 31, 2022, net deferred loan origination costs were $903 and $663, respectively. At June 30, 2023 and December 31, 2022, net unamortized loan purchase premiums were $787 and $1,142, respectively.

September 30, 2017

Residential
Real Estate

Commercial
Real Estate

Commercial
and Industrial

Consumer

Total

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

September 30, 2016

Residential
Real Estate

Commercial
Real Estate

Commercial
and Industrial

Consumer

Total

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

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

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

September 30, 2017

Residential
Real Estate

Commercial
Real Estate

Commercial
and Industrial

Consumer

Total

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

September 30, 2016

Residential
Real Estate

Commercial
Real Estate

Commercial
and Industrial

Consumer

Total

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

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

September 30, 2017

Residential
Real Estate

Commercial
Real Estate

Commercial
and Industrial

Consumer

Total

Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment $ 127 $ 111 $ ---- $ 2 $ 240
Collectively evaluated for impairment 1,304 2,849 972 1,948 7,073
Total ending allowance balance $ 1,431 $ 2,960 $ 972 $ 1,950 $ 7,313

Loans:
Loans individually evaluated for impairment $ 1,153 $ 6,798 $ 9,522 $ 208 $ 17,681
Loans collectively evaluated for impairment 317,091 208,045 94,028 141,112 760,276
Total ending loans balance $ 318,244 $ 214,843 $ 103,550 $ 141,320 $ 777,957

December 31, 2016

Residential
Real Estate

Commercial
Real Estate

Commercial
and Industrial

Consumer

Total

Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment $ ---- $ 2,535 $ 241 $ 205 $ 2,981
Collectively evaluated for impairment 939 1,780 666 1,333 4,718
Total ending allowance balance $ 939 $ 4,315 $ 907 $ 1,538 $ 7,699

Loans:
Loans individually evaluated for impairment $ 717 $ 13,111 $ 8,465 $ 416 $ 22,709
Loans collectively evaluated for impairment 285,305 200,896 92,124 133,867 712,192
Total ending loans balance $ 286,022 $ 214,007 $ 100,589 $ 134,283 $ 734,901

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

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

September 30, 2017

Unpaid Principal Balance

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

December 31, 2016

Unpaid Principal Balance

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

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

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

Average
Impaired
Loans

Interest
Income Recognized
Cash Basis Interest Recognized
Average
Impaired
Loans

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

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

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

Average
Impaired
Loans

Interest
Income Recognized
Cash Basis Interest Recognized
Average
Impaired
Loans

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

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

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

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

The following table presents the recorded investment of nonaccrual loans and loans past due 90 days or more and still accruing by class of loans as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016:~~2022:

September 30, 2017	Loans Past Due 90 Days And Still Accruing		Nonaccrual
June 30,2023					Loans Past Due 90 Days And Still Accruing		Nonaccrual Loans With No ACL		Nonaccrual Loans With an ACL		Total Nonaccrual Loans

Residential real estate	$	316	$	4,452	$	39	$	—	$	1,246	$	1,246
Commercial real estate:
Owner-occupied		----		308		—		825		52		877
Nonowner-occupied		21		2,624		9		—		68		68
Construction		----		402		—		—		3		3
Commercial and industrial		15		345		—		—		145		145
Consumer:
Automobile		90		75		31		—		144		144
Home equity		390		35		—		—		99		99
Other		136		110		12		—		70		70
Total	$	968	$	8,351	$	91	$	825	$	1,827	$	2,652

December 31, 2022	Loans Past Due 90 Days And Still Accruing		Nonaccrual

Residential real estate	$	100	$	1,708
Commercial real estate:
Owner-occupied		—		938
Nonowner-occupied		—		70
Construction		—		75
Commercial and industrial		—		150
Consumer:
Automobile		27		82
Home equity		—		151
Other		411		59
Total	$	538	$	3,233

The Company recognized $67 and $87 of interest income in nonaccrual loans during the three and six months ended June 30, 2023.

NOTE 4 – LOANS AND ALLOWANCE FOR ~~LOAN~~CREDIT 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~~2023 and December 31, ~~2016:~~2022:

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, 2023													30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Loans Not Past Due		Total

Residential real estate	$	5,498	$	1,697	$	1,172	$	8,367	$	309,877	$	318,244	$	777	$	505	$	345	$	1,627	$	317,409	$	319,036
Commercial real estate:
Owner-occupied		198		282		142		622		71,903		72,525		76		77		873		1,026		70,460		71,486
Nonowner-occupied		358		----		2,645		3,003		96,963		99,966		270		—		77		347		183,957		184,304
Construction		----		----		231		231		42,121		42,352		-		—		—		-		45,432		45,432
Commercial and industrial		440		42		250		732		102,818		103,550		81		—		145		226		160,521		160,747
Consumer:
Automobile		982		206		112		1,300		66,699		67,999		828		182		161		1,171		59,059		60,230
Home equity		25		70		390		485		20,802		21,287		33		44		99		176		29,992		30,168
Other		609		243		137		989		51,045		52,034		428		100		65		593		77,956		78,549
Total	$	8,110	$	2,540	$	5,079	$	15,729	$	762,228	$	777,957	$	2,493	$	908	$	1,765	$	5,166	$	944,786	$	949,952

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, 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	$	3,728	$	953	$	2,201	$	6,882	$	279,140	$	286,022	$	1,799	$	701	$	497	$	2,997	$	294,039	$	297,036
Commercial real estate:
Owner-occupied		134		366		1,325		1,825		75,780		77,605		97		—		938		1,035		71,684		72,719
Nonowner-occupied		261		18		2,506		2,785		87,747		90,532		626		5		—		631		182,200		182,831
Construction		66		52		182		300		45,570		45,870		40		45		17		102		33,103		33,205
Commercial and industrial		1,283		483		800		2,566		98,023		100,589		21		—		150		171		151,061		151,232
Consumer:
Automobile		1,091		221		126		1,438		58,334		59,772		804		240		97		1,141		53,696		54,837
Home equity		349		45		----		394		20,467		20,861		204		—		151		355		27,436		27,791
Other		685		155		46		886		52,764		53,650		875		113		452		1,440		63,958		65,398
Total	$	7,597	$	2,293	$	7,186	$	17,076	$	717,825	$	734,901	$	4,466	$	1,104	$	2,302	$	7,872	$	877,177	$	885,049

~~Troubled Debt Restructurings:~~Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. These risk categories are represented by a loan grading scale from 1 through 11. The Company analyzes loans individually with a higher credit risk rating and groups these loans into categories called “criticized” and ”classified” assets. The Company considers its criticized assets to be loans that are graded 8 and its classified assets to be loans that are graded 9 through 11. The Company’s risk categories are reviewed at least annually on loans that have aggregate borrowing amounts that meet or exceed $1,000.

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

Special Mention. Loans classified as “special mention” indicate considerable risk due to deterioration of repayment (in the earliest stages) due to potential weak primary repayment source, or payment delinquency. These loans will be under constant supervision, are not classified and do not expose the institution to sufficient risks to warrant classification. These deficiencies should be correctable within the normal course of business, although significant changes in company structure or policy may be necessary to correct the deficiencies. These loans are considered bankable assets with no apparent loss of principal or interest envisioned. The perceived risk in continued lending is considered to have increased beyond the level where such loans would normally be granted.

NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT 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 are made to reduce the seriousness of the classification. These loans exhibit all substandard characteristics with the addition that weaknesses make collection or liquidation in full highly questionable and improbable. This classification consists of loans where the possibility of loss is high after collateral liquidation based upon existing facts, market conditions, and value. Loss is deferred until certain important and reasonable specific pending factors that may strengthen the credit can be more accurately determined. These factors may include proposed acquisitions, liquidation procedures, capital injection, receipt of additional collateral, mergers, or refinancing plans. A ~~troubled debt restructuring ("TDR") occurs~~doubtful classification for an entire credit should be avoided when collection of a specific portion appears highly probable with the adequately secured portion graded substandard.

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

As of June 30, 2023 and December 31, 2022, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:

													Revolving
													Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized
June 30, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		Total

Commercial real estate - Owner-occupied
Risk Rating
Pass	$	3,150	$	6,871	$	25,806	$	6,121	$	6,558	$	18,139	$	1,554	$	68,199
Special Mention		—		—		—		—		—		533		—		533
Substandard		—		—		—		—		490		1,964		300		2,754
Doubtful		—		—		—		—		—		—		—		—
Total	$	3,150	$	6,871	$	25,806	$	6,121	$	7,048	$	20,636	$	1,854	$	71,486

Current Period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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

													Revolving
													Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized
June 30, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		Total

Commercial real estate - Nonowner-occupied
Risk Rating
Pass	$	8,188	$	28,927	$	34,701	$	25,956	$	15,695	$	64,024	$	1,587	$	179,078
Special Mention		—		—		—		3,276		—		1,872		—		5,148
Substandard		—		—		78		—		—		—		—		78
Doubtful		—		—		—		—		—		—		—		—
Total	$	8,188	$	28,927	$	34,779	$	29,232	$	15,695	$	65,896	$	1,587	$	184,304

Current Period gross charge-offs	$	—	$	—	$	132	$	—	$	—	$	—	$	—	$	132

													Revolving
													Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized
June 30, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		Total

Commercial real estate - Construction
Risk Rating
Pass	$	4,262	$	30,932	$	5,911	$	331	$	451	$	3,484	$	61	$	45,432
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	4,262	$	30,932	$	5,911	$	331	$	451	$	3,484	$	61	$	45,432

Current Period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

													Revolving
													Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized
June 30, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		Total

Commercial and Industrial
Risk Rating
Pass	$	5,061	$	33,596	$	27,707	$	32,679	$	536	$	29,270	$	30,063	$	158,912
Special Mention		—		—		—		—		—		39		—		39
Substandard		—		—		—		1,491		—		305		—		1,796
Doubtful		—		—		—		—		—		—		—		—
Total	$	5,061	$	33,596	$	27,707	$	34,170	$	536	$	29,614	$	30,063	$	160,747

Current Period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	29	$	29

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

December 31, 2022	Pass		Criticized		Classified		Total
Commercial real estate:
Owner-occupied	$	68,236	$	3,545	$	938	$	72,719
Nonowner-occupied		177,479		5,352		—		182,831
Construction		33,143		—		62		33,205
Commercial and industrial		147,627		1,879		1,726		151,232
Total	$	426,485	$	10,776	$	2,726	$	439,987

The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses. For residential and consumer loan classes, the Company ~~has agreed~~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 June 30, 2023 and December 31, 2022:

													Revolving
													Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized
June 30, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		Total

Residential Real Estate:
Payment Performance
Performing	$	26,473	$	41,394	$	54,051	$	47,025	$	22,791	$	100,227	$	25,790	$	317,751
Nonperforming		—		—		—		8		120		1,157		—		1,285
Total	$	26,473	$	41,394	$	54,051	$	47,033	$	22,911	$	101,384	$	25,790	$	319,036

Current Period gross charge-offs	$	—	$	1	$	3	$	—	$	—	$	67	$	—	$	71

													Revolving
													Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized
June 30, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		Total

Consumer - Automobile:
Payment Performance
Performing	$	16,765	$	26,128	$	9,527	$	4,219	$	1,885	$	1,542	$	—	$	60,066
Nonperforming		64		42		26		1		19		12		—		164
Total	$	16,829	$	26,170	$	9,553	$	4,220	$	1,904	$	1,554	$	—	$	60,230

Current Period gross charge-offs	$	3	$	52	$	79	$	—	$	12	$	3	$	—	$	149

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

													Revolving
													Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized
June 30, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		Total

Consumer - Home Equity:
Payment Performance
Performing	$	—	$	161	$	—	$	—	$	—	$	39	$	29,869	$	30,069
Nonperforming		—		—		—		—		—		—		99		99
Total	$	—	$	161	$	—	$	—	$	—	$	39	$	29,968	$	30,168

Current Period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	43	$	43

														Revolving
														Loans
	Term Loans Amortized Cost Basis by Origination Year													Amortized
June 30, 2023	2023		2022		2021			2020		2019		Prior		Cost Basis		Total

Consumer - Other:							��
Payment Performance
Performing	$	13,238	$	29,701	$	13,263		$	5,890	$	1,648	$	1,341	$	13,396	$	78,477
Nonperforming		—		9		6			29		13		15		—		72
Total	$	13,238	$	29,710	$	13,269		$	5,919	$	1,661	$	1,356	$	13,396	$	78,549

Current Period gross charge-offs	$	154	$	54	$	75		$	38	$	21	$	15	$	92	$	449

	Consumer
December 31, 2022	Automobile			Home Equity			Other			Residential Real Estate			Total
Performing		$	54,728		$	27,640		$	64,928		$	295,228		$	442,524
Nonperforming			109			151			470			1,808			2,538
Total		$	54,837		$	27,791		$	65,398		$	297,036		$	445,062

The Company originates residential, consumer, and commercial loans to ~~a loan modification~~customers located primarily in the ~~form~~southeastern areas of ~~a concession for a borrower who is~~Ohio as well as the western counties of West Virginia. Approximately 4.36% of total loans were unsecured at June 30, 2023, down from 4.52% at December 31, 2022.

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

Modifications to Borrowers Experiencing Financial Difficulty:

Occasionally, the Company modifies loans to borrowers experiencing financial difficulty. ~~All TDR's are considered to be impaired. The modification of the terms of such loans included~~These modifications may include one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a reduction in the contractual principal and interest payments of the loan; or short-term interest-only payment terms. All modifications to borrowers experiencing financial difficulty are considered to be impaired.

During the six months ended June 30, 2023, the Company experienced no new modifications to borrowers experiencing financial difficulty.

The ~~Company has allocated reserves~~following table presents the activity in the allowance for ~~a portion of its TDR's to reflect~~credit losses by portfolio segment for the ~~fair values of~~three months ended June 30, 2023 and 2022:

June 30, 2023	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for credit losses:
Beginning balance	$	2,031		$	2,306		$	1,177		$	2,093		$	7,607
Provision for credit losses		89			(69	)		(176	)		270			114
Loans charged-off		(24	)		—			—			(393	)		(417	)
Recoveries		11			15			114			127			267
Total ending allowance balance	$	2,107		$	2,252		$	1,115		$	2,097		$	7,571

June 30, 2022	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for credit losses:
Beginning balance	$	714		$	1,991		$	1,389		$	1,174		$	5,268
Provision for credit losses		(77	)		(150	)		769			271			813
Loans charged-off		(39	)		(15	)		(618	)		(372	)		(1,044	)
Recoveries		16			20			8			133			177
Total ending allowance balance	$	614		$	1,846		$	1,548		$	1,206		$	5,214

The following table presents the ~~underlying collateral or~~activity in the ~~present value of~~allowance for credit losses by portfolio segment for the ~~concessionary terms granted to the customer.~~six months ended June 30, 2023 and 2022:

June 30, 2023	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for credit losses:
Beginning balance	$	681		$	2,038		$	1,293		$	1,257		$	5,269
Impact of adopting ASC 326		1,345			162			(116	)		771			2,162
Provision for credit losses		128			156			(155	)		450			579
Loans charged-off		(71	)		(132	)		(29	)		(641	)		(873	)
Recoveries		24			28			122			260			434
Total ending allowance balance	$	2,107		$	2,252		$	1,115		$	2,097		$	7,571

June 30, 2022	Residential Real Estate			Commercial Real Estate			Commercial and Industrial			Consumer			Total
Allowance for credit losses:
Beginning balance	$	980		$	2,548		$	1,571		$	1,384		$	6,483
Provision for credit losses		(356	)		(725	)		579			189			(313	)
Loans charged-off		(42	)		(16	)		(618	)		(702	)		(1,378	)
Recoveries		32			39			16			335			422
Total ending allowance balance	$	614		$	1,846		$	1,548		$	1,206		$	5,214

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

The following table presents the balance in the allowance for credit losses and the recorded investment of loans by portfolio segment and based on impairment method as of December 31, 2022:

December 31, 2022	Residential Real Estate		Commercial Real Estate		Commercial and Industrial		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		681		2,038		1,293		1,257		5,269
Total ending allowance balance	$	681	$	2,038	$	1,293	$	1,257	$	5,269

Loans:
Loans individually evaluated for impairment	$	—	$	1,986	$	—	$	28	$	2,014
Loans collectively evaluated for impairment		297,036		286,769		151,232		147,998		883,035
Total ending loans balance	$	297,036	$	288,755	$	151,232	$	148,026	$	885,049

The following table presents the ~~types~~amortized cost basis of ~~TDR loan modifications~~collateral dependent loans by class of loans as of ~~September~~June 30, ~~2017 and~~2023:

	Collateral Type
June 30, 2023	Real Estate		Business Assets		Total
Commercial real estate:
Owner-occupied	$	517	$	281	$	798
Consumer:
Home equity		27		—		27
Total collateral dependent loans	$	544	$	281	$	825

The following tables present information related to loans individually evaluated for impairment by class of loans as of December 31, ~~2016:~~2022:

September 30, 2017

TDR's
Performing to Modified Terms

TDR's Not
Performing to Modified Terms

Total
TDR's

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

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

December 31, 2022	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:	$	—	$	—	$	—
With no related allowance recorded:
Commercial real estate:
Owner-occupied		1,692		1,607		—
Nonowner-occupied		379		379		—
Consumer:
Home equity		28		28		—
Total	$	2,099	$	2,014	$	—

December 31, 2016

TDR's
Performing to Modified Terms

TDR's Not
Performing to Modified Terms

Total
TDR's

Residential real estate:
        Interest only payments $ 717 $ ---- $ 717
Commercial real estate:
    Owner-occupied
        Interest only payments 284 ---- 284
        Rate reduction ---- 232 232
        Reduction of principal and interest payments 579 ---- 579
        Maturity extension at lower stated rate than market rate 1,582 ---- 1,582
    Nonowner-occupied
      �� Interest only payments 600 2,210 2,810
        Rate reduction 384 ---- 384
        Credit extension at lower stated rate than market rate 574 ---- 574
Commercial and industrial:
        Interest only payments 8,074 ---- 8,074
        Credit extension at lower stated rate than market rate ---- 391 391
Consumer:
    Home equity
        Maturity extension at lower stated rate than market rate 213 ---- 213
        Credit extension at lower stated rate than market rate 203 ---- 203

            Total TDR's $ 13,210 $ 2,833 $ 16,043

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

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

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

~~There were no TDR loan modifications or defaults during the three months ended September 30, 2016.~~ The following ~~table presents the pre- and post-modification balances of TDR loan modifications~~tables present information related to loans individually evaluated for impairment by class of loans ~~that occurred during~~for the three and six months ended ~~September~~June 30, ~~2017:~~2022:

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 $ ---- $ ----

	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		Interest Income Recognized
With an allowance recorded:
Commercial and industrial	$	1,619	$	15	$	15	$	1,744	$	54	$	54
With no related allowance recorded:
Commercial real estate:
Owner-occupied		1,675		26		26		1,687		48		48
Nonowner-occupied		382		7		7		383		14		14
Total	$	3,676	$	48	$	48	$	3,814	$	116	$	116

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

TDR's
Performing to Modified Terms

TDR's Not
Performing to Modified Terms

Nine months ended September 30, 2017

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

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

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

TDR's
Performing to Modified Terms

TDR's Not
Performing to Modified Terms

Nine months ended September 30, 2016

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

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

All of the Company's loans that were restructured during the nine months ended September 30, 2017 were performing in accordance with their modified terms and have not experienced any payment defaults within twelve months following their loan modification. The Company's loans that were restructured during the nine months ended September 30, 2016 included a loan ~~for $226 that experienced a payment default within twelve months following the loan modification~~excludes accrued interest and ~~is not performing in accordance with the modified loan terms as of September 30, 2017. A default is considered~~net deferred origination fees and costs due to ~~have occurred once the TDR is~~immateriality.

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 it has been placed on nonaccrual. TDR loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. The loans modified during the nine months ended September 30, 2017 had no impact on the provision expense or the allowance for loan losses.through a deed in lieu). As of ~~September~~June 30, ~~2017,~~2023, the Company had ~~no allocation of reserves~~68 in other real estate owned for residential real estate properties compared to customers whose loan terms were modified during the first nine months of 2017. The loans modified during the nine months ended September 30, 2016 increased the provision expense and the allowance for loan losses by $11. As of September 30, 2016, the Company had no allocation of reserves to customers whose loan terms were modified during the first nine months of 2016.

~~Credit Quality Indicators:~~

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. These risk categories are represented by a loan grading scale from 1 through 10. The Company analyzes loans individually with a higher credit risk rating and groups these loans into categories called "criticized" and "classified" assets. The Company considers its criticized assets to benone at December 31, 2022. In addition, nonaccrual residential mortgage loans that are ~~graded 8~~in the process of foreclosure had a recorded investment of $455 and ~~its classified assets to be loans that are graded 9 through 11. The Company's risk categories are reviewed at least annually on loans that have aggregate borrowing amounts that meet or exceed $500.~~

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

~~Special Mention.~~ ~~Loans classified~~$370 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.

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

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

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

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

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

~~Criticized and classified loans will mostly consist~~ of commercial and industrial and commercial real estate loans. The Company considers its loans that do not meet the criteria for a criticized and classified asset rating as pass rated loans, which will include loans graded from 1 (Prime) to 7 (Watch). All commercial loans are categorized into a risk category either at the time of origination or reevaluation date. As of SeptemberJune 30, ~~2017~~2023 and December 31, ~~2016, and based on the most recent analysis performed, the risk category of commercial loans by class of loans was as follows:~~

September 30, 2017

Pass

Criticized

Classified

Total

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

December 31, 2016

Pass

Criticized

Classified

Total

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

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

2022, respectively.

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

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

September 30, 2017
Consumer

Automobile
Home Equity
Other

Residential
Real Estate

Total

Performing $ 67,834 $ 20,862 $ 51,788 $ 313,476 $ 453,960
Nonperforming 165 425 246 4,768 5,604
Total $ 67,999 $ 21,287 $ 52,034 $ 318,244 $ 459,564

December 31, 2016
Consumer

Automobile
Home Equity
Other

Residential
Real Estate

Total

Performing $ 59,646 $ 20,827 $ 53,598 $ 282,445 $ 416,516
Nonperforming 126 34 52 3,577 3,789
Total $ 59,772 $ 20,861 $ 53,650 $ 286,022 $ 420,305

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

NOTE 5 -– FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees. The ~~Bank's~~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,~~2023, the contract amounts of these instruments totaled approximately ~~$73,460,~~$110,924, compared to ~~$67,191~~$103,413 at December 31, ~~2016.~~2022. The Bank estimates expected credit losses over the contractual period in which the Bank is exposed to credit risk via a contractual obligation to extend credit. At June 30, 2023, the estimated ACL related to off-balance sheet commitments was $565, which includes a $90 recovery of provision during the three months ended June 30, 2023 and a $66 recovery of provision during the six months ended June 30, 2023. The Bank uses the same credit policies in making commitments and conditional obligations as it does for instruments recorded on the balance sheet. Since many of these instruments are expected to expire without being drawn upon, the total contract amounts do not necessarily represent future cash requirements.

NOTE 6 -– OTHER BORROWED FUNDS

Other borrowed funds at ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022 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, 2023	$	24,510	$	2,394	$	26,904
December 31, 2022	$	15,569	$	2,376	$	17,945

Pursuant to collateral agreements with the FHLB, advances ~~were~~are secured by ~~$305,490~~$312,680 in qualifying mortgage loans, ~~$75,032~~$32,359 in commercial loans and ~~$5,365~~$2,064 in FHLB stock at ~~September~~June 30, ~~2017.~~2023. Fixed-rate FHLB advances of ~~$29,195~~$24,510 mature through 2042 and have interest rates ranging from 1.53% to ~~3.31%~~4.68% and a year-to-date weighted average cost of ~~2.14%.~~2.70% at June 30, 2023 and 2.39% at December 31, 2022. There were no variable-rate FHLB borrowings at ~~September~~June 30, ~~2017.~~2023.

At ~~September~~June 30, ~~2017,~~2023, the Company had a cash management line of credit enabling it to borrow up to ~~$80,000~~$100,000 from the ~~FHLB.~~FHLB, subject to the stock ownership and collateral limitations described below. 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.~~2023.

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

Based on the ~~Company's~~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~~$191,392 at ~~September~~June 30, ~~2017.~~2023. Of this maximum borrowing capacity, the Company had ~~$146,529~~$106,932 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,~~November 18, 2024, and have fixed rates ranging from ~~1.25%~~3.15% to ~~4.09% through August 1, 2021~~5.00% and a year-to-date weighted average cost of ~~2.77%~~3.26% at ~~September~~June 30, ~~2017,~~2023, as compared to ~~2.34%~~1.35% at December 31, ~~2016. Promissory~~2022. At June 30, 2023, there were six promissory notes payable by Ohio Valley to related parties ~~totaled $360 at September 30, 2017 and December 31, 2016. Promissory~~ totaling $2,394. There were no promissory notes payable to other banks ~~totaled $3,556~~ at ~~September~~June 30, ~~2017, as compared to $3,899 at~~2023 or December 31, ~~2016.~~2022.

Letters of credit issued on the ~~Bank's~~Bank’s behalf by the FHLB to collateralize certain public unit deposits as required by law totaled ~~$46,000~~$59,950 at ~~September~~June 30, ~~2017~~2023 and ~~$45,000~~$75,140 at December 31, ~~2016.~~2022.

Scheduled principal payments as of ~~September~~June 30, ~~2017:~~2023:

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

2023	$	2,764	$	—	$	2,764
2024		4,959		2,394		7,353
2025		4,983		—		4,983
2026		2,908		—		2,908
2027		1,397		—		1,397
Thereafter		7,499		—		7,499
	$	24,510	$	2,394	$	26,904

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~~Company’s total revenues, totaled ~~92.2%~~94.4% and ~~90.9%~~92.9% of total consolidated revenues for the quarters ~~ended September~~end June 30, ~~2017~~2023 and ~~2016,~~2022, respectively.

The accounting policies used for the ~~Company's~~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, 2023
	Banking		Consumer Finance			Total Company		Banking		Consumer Finance			Total Company
Net interest income	$	9,681	$	587		$	10,268	$	11,070	$	544		$	11,614
Provision expense		1,615		(14	)		1,601
Provision for (recovery of) credit losses									40		(16	)		24
Noninterest income		2,224		58			2,282		2,618		95			2,713
Noninterest expense		8,579		643			9,222		9,784		631			10,415
Tax expense		69		5			74
Provision for income taxes									634		5			639
Net income		1,642		11			1,653		3,230		19			3,249
Assets		1,008,078		11,536			1,019,614		1,259,929		14,301			1,274,230

	Three Months Ended June 30, 2022
	Banking		Consumer Finance		Total Company
Net interest income	$	10,024	$	529	$	10,553
Provision for (recovery of) credit losses		800		13		813
Noninterest income		2,523		113		2,636
Noninterest expense		9,459		564		10,023
Provision for income taxes		341		13		354
Net income		1,947		52		1,999
Assets		1,240,072		13,814		1,253,886

	Six Months Ended June 30, 2023
	Banking		Consumer Finance			Total Company
Net interest income	$	22,254	$	1,082		$	23,336
Provision for (recovery of) credit losses		624		(111	)		513
Noninterest income		5,618		862			6,480
Noninterest expense		19,380		1,307			20,687
Provision for income taxes		1,303		156			1,459
Net income		6,565		592			7,157
Assets		1,259,929		14,301			1,274,230

	Six Months Ended June 30, 2022
	Banking			Consumer Finance			Total Company
Net interest income	$	19,492		$	1,051		$	20,543
Provision for (recovery of) credit 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

~~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 34 months to 18 years, some of which include options to extend the leases for up to 15 years. Operating lease ROU assets and operating lease liabilities are valued based on the present value of future minimum lease payments, discounted with an incremental borrowing rate for the ~~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, 2023		As of December 31, 2022
Operating leases:
Operating lease right-of-use assets	$	1,297	$	1,294
Operating lease liabilities		1,297		1,294

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,
	2023			2022			2023			2022
Operating lease cost		$	55		$	42		$	106		$	84
Short-term lease expense			—			8			—			18

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, 2023 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
2023 (remaining)	$	98
2024		195
2025		195
2026		140
2027		108
Thereafter		875
Total lease payments		1,611
Less: Imputed Interest		(314	)
Total operating leases	$	1,297

Other information is as follows:

	As of June 30, 2023			As of December 31, 2022
Weighted-average remaining lease term for operating leases	13.5 years			12.1 years
Weighted-average discount rate for operating leases		2.94	%		2.70	%

NOTE 9 – RISKS AND UNCERTAINTIES

The risks pertinent to our bank regarding liquidity and rising deposit costs have increased due to an elevated interest rate environment and increased deposit competition within our markets. Our liquidity position is supported by the management of liquid assets such as cash and interest-bearing deposits with banks, and liabilities such as core deposits. The bank can also access other sources of funds such as brokered deposits and FHLB advances. With the present economic conditions putting a strain on liquidity and higher borrowing costs, the Company believes it has sufficient liquid assets and funding sources should there be a liquidity need.

NOTE 10 – DEPOSITS

Deposits are comprised of the following:

	June 30, 2023		December 31, 2022

Noninterest-bearing deposits	$	338,974	$	354,413

Interest-bearing deposits:
NOW accounts		197,869		209,758
Savings and money market		275,848		311,565
Time deposits of $250,000 or less		208,975		115,049
Time deposits of more than $250,000		54,906		36,870
Total interest-bearing deposits		737,598		673,242

Total deposits	$	1,076,572	$	1,027,655

Brokered deposits, included in time deposits, were $62,648 and $3,999 at June 30, 2023 and December 31, 2022, respectively.

~~ITEM 2.~~

~~MANAGEMENT'S~~

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

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

Forward Looking Statements

~~Except for the historical statements and discussions contained herein,~~Certain statements contained in this report and other publicly available documents incorporated herein by reference constitute ~~"forward~~“forward looking ~~statements"~~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, 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: unexpected changes in interest rates or disruptions in the mortgage market; 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.~~2022. 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 provided online consumer mortgages (“Race Day”), and Ohio Valley REO, LLC, an Ohio limited liability company. In February 2023, Ohio Valley announced that it was taking steps toward closing Race Day. The decision to start this process was made due to low loan demand, issues retaining personnel, and lack of profitability. All pending loan applications have been processed and a closing date will be determined upon termination of various contractual service agreements. 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. Furthermore, the Bank offers Tax Refund Advance Loans (“TALs”) to Loan Central tax customers. A TAL represents a short-term loan offered by the Bank to tax preparation customers of Loan Central.

IMPACT OF ADOPTING NEW ACCOUNTING GUIDANCE:Effective January 1, 2023, the Company adopted ASU No. 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, (“ASU 2016-13”) (“ASC 326”) as amended. The new accounting guidance replaces the “incurred loss” model with an “expected loss” model, which is referred to as the current expected credit loss (“CECL”) model. The measurement of expected credit losses under the CECL model is applicable to financial assets measured at amortized cost, including loan receivables and held to maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). Upon adoption of ASC 326, the Company increased the allowance for credit losses by $2,162. In addition, a reserve for unfunded commitments and held to maturity securities was established totaling $631 and $3, respectively. The Company recorded a net charge to retained earnings of $2,209 as of January 1, 2023 for the ~~Bank is one~~cumulative effect of ~~a limited number~~adopting ASC 326. The adoption 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 refundASC 326 did not have an effect to the taxpayer after the Bank has received the refund from the federal/state government. ERC/ERD transactions occur primarily during the tax refund season, typically during the first quarter of each year. Loan Central also provides refund anticipation loans ("RALs") to its customers. RALs are short-term cash advances against a customer's anticipated income tax refund.net earnings on January 1, 2023.

FINANCIAL RESULTS OVERVIEW:Net income totaled ~~$1,653~~$3,249 during the ~~third~~second quarter of ~~2017, compared to $358 during~~2023, an increase of $1,250 from the ~~third quarter~~same period of ~~2016.~~2022. Earnings per share for the ~~third~~second quarter of ~~2017~~2023 finished at ~~$.35~~$.68 per share, compared to ~~$.08~~$.42 per share during the ~~third~~second quarter of ~~2016. The Company's net~~2022. Net income totaled $7,157 during the ~~nine~~six months ended ~~September~~June 30, ~~2017 totaled $6,611, compared to $4,896 during~~2023, an increase of $1,033 from the ~~nine months ended September 30, 2016.~~same period of 2022. Earnings per share during the first ~~nine~~six months of ~~2017~~2023 finished at ~~$1.41~~$1.50 per share, compared to ~~$1.15~~$1.29 per share during the first ~~nine~~six months of ~~2016. Higher earnings during~~2022. During both the quarterly and year-to-date periods, earnings were positively impacted ~~primarily~~ by ~~the benefits of~~ higher net interest and noninterest income ~~as well as~~that more than offset increases in noninterest expense. Net earnings were also positively impacted by lower provision ~~expense. These benefits were partially offset by general increases in various overhead expenses~~for credit loss expense during ~~both~~ the quarterly ~~and~~period, while higher provision for credit loss expense had a negative impact to net earnings during the year-to-date ~~periods.~~

period. The impact of higher net earnings during 2023 also had a direct impact to the Company’s annualized net income to average asset ratio, or return on assets, ~~("ROA"),~~which increased to ~~0.87% at September~~1.16% for the six months ended June 30, ~~2017,~~2023, compared to ~~0.74% at September~~0.98% for the six months ended June 30, ~~2016.~~2022. The ~~Company's~~Company’s net income to average equity ratio, or return on equity, ~~("ROE"),~~ also increased to ~~8.24% at September~~10.63% for the six months ended June 30, ~~2017,~~2023, compared to ~~6.85% at September~~8.87% for the six months ended June 30, ~~2016.~~2022. In addition, the Company recorded a $2,209 charge to retained earnings for the cumulative effect of adopting ASC 326 on January 1, 2023. This impact of adopting new accounting guidance reduced capital but had no corresponding impact to net earnings, which contributed to a portion of the increase in average return on equity during 2023 over 2022.

~~Net interest income for~~During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 showed positive growth~~2023, net interest income increased $1,061 and $2,793 over the same periods in ~~2016,~~2022, respectively. Growth in net interest income during both periods was impacted by increases in the net interest margin, which more than offset the effects of lower average earning assets. The Federal Reserve’s actions of increasing ~~14.3%~~market interest rates during 2022 and ~~18.9%,~~2023 have had a significant impact in growing the net interest margin, which finished at 4.03% and 4.12% for the three and six months ended June 30, 2023, compared to 3.64% and 3.58% for the three and six months ended June 30, 2022, respectively. The ~~increase came primarily from~~net interest ~~revenues associated with year-to-date average~~margin has responded positively due to the yield on earning ~~asset growth~~assets increasing more than the cost of ~~$119,910. The growth~~interest-bearing liabilities. Average earning assets decreased 0.3% during the second quarter of 2023, and 1.2% during the first half of 2023, compared to the same periods in ~~year-to-date~~2022. While average earning assets ~~came primarily from average loans, which contributed $129,968 to~~were down during both the ~~increase~~quarterly and year-to-date periods in ~~average earning assets. While~~2023, the Company ~~continues to experience growth~~benefited from ~~its existing markets, the large growth~~having higher relative balances maintained in loans, ~~came primarily from the Milton Bank merger, which resulted in the acquisition of $112 million in loans. Also contributing~~as opposed to ~~net interest income growth was higher interest recorded from the Company's interest-bearing Federal Reserve clearing account. While the average interest-bearing balances maintained at~~ the Federal Reserve, ~~have decreased 19.4% during~~which generally yields less than loans. During the ~~first nine~~three and six months ~~of 2017, it has been~~ended June 30, 2023, average loans increased $92,386 and $85,513, while average balances with the Federal ~~Reserve's action of increasing short-term interest rates that has contributed~~Reserve decreased $70,852 and $81,479, compared to ~~higher interest income.~~the same periods in 2022, respectively.

During the three ~~and nine~~ months ended ~~September~~June 30, ~~2017,~~2023, the ~~Company's~~Company’s provision ~~expense decreased $107 and $407 from the same periods in 2016, respectively. Lower provision expense during 2017~~for credit loss was ~~largely impacted by~~$24, which represented a ~~$2,741~~ decrease ~~in specific allocations from December 31, 2016 related to the financial performance improvement~~ of one commercial real estate loan relationship during the first quarter of 2017. The decrease in specific allocations was partially offset by a $2,355 increase in general allocations from December 31, 2016 related to specific loan portfolio risks that management determined were necessary. Provision expense during 2017 has also benefited from lower net charge-offs on loans without specific reserves. Impacted by a lower level of specific reserves, the allowance for loan losses decreased by $386 from year-end 2016 to finish at $7,313, or .94% of total loans at September 30, 2017, compared to 1.05% at December 31, 2016 and 1.04% at September 30, 2016.

Total noninterest income during the three months ended September 30, 2017 increased $589, or 34.8%, over the third quarter of 2016, and increased $718, or 10.6%, during the first nine months of 2017, as$789 when compared to the same period in ~~2016. Noninterest income improvement~~2022. The quarterly decrease in provision was ~~impacted~~ primarily ~~by bank owned life insurance~~associated with a $717 decrease in net charge-offs, mostly within the commercial and ~~annuity assets, which grew over $400~~industrial portfolio. During the six months ended June 30, 2023, provision for credit loss was $513 compared to negative provision of $313 during ~~both~~ the ~~quarterly and year-to-date periods. This~~six months ended June 30, 2022. Provision expense in 2023 was largely related to net charge-offs of $439, primarily from the ~~result~~consumer loan portfolio. The negative provision expense from 2022 was largely impacted by improvements in lower criticized and classified loans and the partial release of ~~net bank owned life insurance proceeds collected in~~ the ~~third quarter of 2017. Further impacting~~COVID reserve for the pandemic environment.

During the three and six months ended June 30, 2023, noninterest income ~~growth~~increased $77 and $124 over the same periods in 2022, respectively. The increases were ~~increases in fee income related to a~~largely from 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~~accounts, interchange on debit and credit cards, and higher commissions earned by Race Day during 2023 for mortgage application referrals. Increases in noninterest revenue were partially offset by decreases in mortgage banking income ~~were lower tax processing fees through ERC/ERD transactions during~~from loan sales to the ~~nine~~secondary market, which have been negatively impacted by elevated mortgage rates.

During the three and six months ended ~~September~~June 30, 2017. In addition to a reduced number of tax refunds being processed during the first nine months of 2017, the per item fees received by the Company were lower under the new contract with the third-party tax refund product provider. Comparing 2017 to 2016, the change in the remaining noninterest income categories was minimal during the third quarter, increasing $24, while the year-to-date change resulted in a decrease of $121 during the nine months ending September 30, primarily from higher losses on the sale of other real estate owned ("OREO").

~~Total~~2023, noninterest expense increased ~~$394~~$392 and $876 over the same periods in 2022, respectively. The increases were primarily related to salaries and employee benefit costs impacted by higher annual merit expenses. The Company also experienced increases in FDIC insurance premiums, software expense, and data processing costs, partially offset by decreases in professional fees and Race Day operating expenses.

The Company’s provision for ~~the third quarter of 2017,~~income taxes increased $285 and ~~increased $3,903~~$182 during the ~~first nine~~three and six months ~~of 2017, as~~ended June 30, 2023, compared to the same periods in ~~2016.~~2022, respectively. This was largely due to the changes in taxable income affected by the factors mentioned above.

At June 30, 2023, total assets were $1,274,230, an increase of $63,443 from year-end 2022. Higher assets were primarily impacted by increases in loans and cash and cash equivalents, which were collectively up $75,708, or 8.1%, from year-end 2022. Growth in total loans came from increases in the consumer loan segment (+14.1%), residential real estate loan segment (+7.4%), commercial and industrial loan segment (+6.3%), and commercial real estate loan segment (+4.3%). Growth in cash and cash equivalents came primarily from higher balances held at the Federal Reserve as a result of the growth in deposits.

At June 30, 2023, total liabilities were $1,136,158, up $60,399 from year-end 2022. Contributing most to this increase were higher deposit balances, which increased $48,917 from year-end 2022. The increase was impacted by the acquisition of Milton Bank, which contributed to general increases in most noninterest expense categories related to having a larger organization after the merger. Overhead expense has been impacted mostly by salaries and employee benefit costs, which decreased by $13, or 0.3%, during the third quarter of 2017, but increased $1,398, or 9.9%, during the first nine months of 2017, as compared to the same periods in 2016. Contributing to the decrease for the third quarter was a $316 reduction in non-qualified defined benefit expenses associated with the restructuring of and accounting for post-retirement benefits of a former employee. The year-to-date increase was largely the result of adding Milton Bank employees, as well as annual merit increases andfrom higher health insurance costs. Further contributing to higher overhead costs was fraud expense. During the second quarter of 2017, management discovered four fraudulent wire transfers with a single account relationship totaling $933. After recovering a portion of the money, the Company's net fraud expense totaled $842 as of September 30, 2017, which impacted other noninterest expense during the nine months ended September 30, 2017. These increases weretime deposits, partially offset by lower NOW, savings, money market, and noninterest-bearing demand deposits.

At June 30, 2023, total shareholders’ equity was $138,072, up $3,044 from December 31, 2022. This increase came from year-to-date net income, 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~~net unrealized losses on available for sale securities, partially offset by cash dividends paid. The increase 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'~~shareholders’ equity was ~~$109,962, up $5,434 since December 31, 2016.~~further limited by the adoption of new accounting guidance for measuring credit losses, which required a $2,209 charge to retained earnings. Regulatory capital ratios of the Company remained higher than the ~~"well capitalized"~~“well capitalized” minimums.

Comparison of Financial Condition

at ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~

2022

The following discussion focuses, in more detail, on the consolidated financial condition of the Company at ~~September~~June 30, ~~2017~~2023 compared to December 31, ~~2016.~~2022. 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,~~2023, cash and cash equivalents were ~~$50,402,~~$56,795, an increase of ~~$10,236~~$10,805, or 23.5%, from ~~$40,166 at~~ December 31, ~~2016.~~2022. The increase in cash and cash equivalents came mostly from higher interest-bearing deposits on hand with correspondent banks. Over 71% 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 increased $9,734, or 31.6%, from year-end ~~2016.~~2022. 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 2023, the Company experienced increases in funds from Bank deposits, primarily time deposits, which were maintained in the Federal Reserve account. Other funds also came from the maturities and ~~maturities~~paydowns of ~~retail certificates~~securities available for sale and proceeds from FHLB borrowings. A portion of these clearing account funds were used to reinvest in higher-yielding loans, and to also help cover deposit ~~("CD's").~~ runoff in noninterest-bearing demand and other interest-bearing deposit balances. 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~~2023, the rate associated with the Company’s Federal Reserve Bank clearing account ~~balances. The 1.25% interest rate is higher than the rate the Company would have received from its investments~~increased 75 basis points due to continued rising inflationary concerns, resulting in a target federal funds ~~sold. Furthermore,~~rate range of 5.00% to 5.25%. The interest-bearing deposit balances in the Federal Reserve Bank ~~balances~~account are 100% ~~secured.~~secured by the U.S. Government.

Certificates of ~~deposit~~Deposit

At ~~September~~June 30, ~~2017,~~2023, the Company had ~~$1,820~~$245 in certificates of deposit owned by the Captive, ~~up slightly~~down from $1,862 at year-end ~~2016.~~2022. The deposits on hand at ~~September~~June 30, ~~2017~~2023 consist of ~~eight certificates~~one certificate with a remaining maturity ~~terms ranging from~~term of less than ~~12 months up to 35~~five months.

The balance of total securities ~~increased $9,558,~~decreased $9,828, or ~~8.3%~~5.1%, compared to year-end ~~2016.~~2022. The ~~Company's~~decrease came mostly from U.S. Government agency (“Agency”) mortgage-backed securities, which were down $8,460, or 7.0%, from year-end 2022. 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%~~61.5% of total investments at ~~September~~June 30, ~~2017.~~2023. During the first ~~nine months~~half of ~~2017,~~2023, the Company ~~invested $18,105 in new Agency mortgage-backed securities, while receiving~~received proceeds from principal repayments of ~~$12,302.~~$9,162. 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 $2,000 in maturities from its Agency security portfolio, which further decreased investments from year-end 2022.

Partially offsetting these decreasing factors were changes in net unrealized losses associated with available for sale securities. During 2023, long-term reinvestment rates decreased, which led to a ~~$3,035, or 28.8%,~~$936 increase in ~~U.S. Government sponsored entity~~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 decreased, the unrealized loss in the portfolio was reduced causing the fair value to increase. These changes in rates are typical and do not impact earnings of the Company as long as the securities ~~primarily from new purchases during the second quarter of 2017.~~are held to full maturity.

~~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 $949,952 at ~~September~~June 30, ~~2017,~~2023, representing an increase of ~~$43,056,~~$64,903, or ~~5.9%~~7.3%, as compared to ~~$734,901~~$885,049 at December 31, ~~2016. Loans were positively impacted by growth~~2022. The Company recognized increases in ~~residential real estate, consumer automobile and commercial and industrial~~all of its loan ~~balances.~~segments from year-end 2022.

The Company’s residential real estate loan ~~segment comprises~~portfolio increased $22,000, or 7.4%, from year-end 2022. At June 30, 2023, residential real estate loans represented the largest ~~portion~~segment of the ~~Company's overall~~Company’s total loan portfolio at ~~40.9%~~33.6% and ~~consists~~consisted 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~~loans was largely related to short-term adjustable-rate mortgages, which increased ~~$32,222~~$15,759, or ~~11.3%~~9.6%, from year-end ~~2016. This~~2022. With elevated mortgage rates, mortgage customers are selecting more in-house variable rate mortgage products instead of long-term fixed-rate products. Also contributing to the increase in residential real estate loans was ~~largely from~~ 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,~~2022, warehouse lending balances increased ~~$9,630 to finish at $15,155 at September 30, 2017.~~ $5,622 during the first half of 2023.

The Company's growth in residential real estate loans was further impacted by higher balances in its Athens, Ohio and West Virginia markets, which were up $9,341 and $6,095, respectively. The real estate loan portfolio is also impacted by loan construction projects. During the period when a borrower's one- to four-family residential home is being built, it is first classified as a construction loan. At the completion of this construction phase, the loan is re-classified to a residential real estate loan. At September 30, 2017, construction loans were down 7.7%, indicating a higher transition ofCompany’s total consumer loan balances from year-end 2022 increased $20,921, or 14.1%. This change was impacted by a $13,151, or 20.1%, increase in other consumer loans. Growth in other consumer loans came largely from the purchase of a pool of unsecured loans in January 2023 that had a carrying amount of $13,124 at June 30, 2023. Growth in consumer loans also came from a $5,393, or 9.8%, increase in automobile loans, and a $2,377, or 8.6%, increase in home equity lines of credit.

Further increases in loans came from the Company’s commercial loan portfolio, which increased $21,982, or 5.0%, from year-end 2022. Contributing most to this increase were higher loan balances within the 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,~~$12,467, or ~~1.2%~~4.3%, from year-end ~~2016, which~~2022. The commercial real estate segment comprised the second largest portion of the Company’s total loan portfolio at June 30, 2023, at 31.7%. The increase from year-end 2022 came ~~mostly~~primarily from the construction loan segment.

Commercial loans were also positively impacted by an increase in the commercial and industrial ~~loan~~ portfolio, ~~which increased $2,961,~~up $9,515, or ~~2.9%~~6.3%, from year-end ~~2016.~~2022. 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 real estate loan segment comprises the largest portion of the Company's total commercial loan portfolio at September 30, 2017, representing 67.5%. At September 30, 2017, commercial real estate loans totaled $214,843, which were comparable to the $214,007 in commercial real estate loans at year-end 2016. Larger payoffs caused owner-occupied loans to decrease $5,080, or 6.5%, from year-end 2016, while a higher number of one- to four-family residential homes completed their building phase, causing construction loans to decrease $3,518, or 7.7%, from year-end 2016. Partially offsetting these decreases was an increase in loan originations causing nonowner-occupied loan balances to grow by $9,434, or 10.4%, from year-end 2016. While management believes lending opportunities exist in the ~~Company's~~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.

Allowance for Credit Losses

The Company maintains an allowance for credit losses (“ACL”) that represents management’s best estimate of the appropriate level of losses and risks inherent in our applicable financial assets under the current expected credit loss (“CECL”) model. The amount of the ACL should not be interpreted as an indication that charge-offs in future periods will necessarily occur in those amounts, or at all. The determination of the ACL involves a high degree of judgement and subjectivity. Please refer to Note 1 of the notes to the financial statements for discussion regarding our ACL methodologies for securities and loans.

For AFS debt securities, the Company evaluates the securities at each measurement date to determine whether the decline in the fair value below the amortized costs basis is due to credit-related factors or noncredit-related factors. Upon adoption of ASC 326 on January 1, 2023, and as of June 30, 2023, the Company determined that all AFS securities that experienced a decline in fair value below the amortized cost basis were due to non-credit related factors. Furthermore, the security types for all AFS debt securities contained explicit government guarantees. Therefore, no ACL was recorded, and no provision expense was recognized during the three and six months ended June 30, 2023.

For HTM debt securities, the Company evaluates the securities collectively by major security type at each measurement date to determine expected credit losses based on issuer’s bond rating, historical loss, financial condition, and timely principal and interest payments. Upon adoption of ASC 326 on January 1, 2023, a $3 ACL was recognized based on a .03% cumulative default rate taken from the S&P and Moody’s bond rating index. At June 30, 2023, the ACL for HTM debt securities remained unchanged at $3, resulting in no provision expense during the three and six months ended June 30, 2023.

For loans, the Company’s ACL is management’s estimate of expected lifetime credit losses, measured over the contractual life of a loan, ~~balances~~that considers historical loss experience, current conditions, and forecasts of future economic conditions. The ACL on loans is established through a provision for credit losses recognized in earnings. The ACL on loans is reduced by charge-offs on loans and is increased by recoveries of amounts previously charged off. Management employs a process and methodology to estimate the ACL on loans that evaluates both quantitative and qualitative factors within two main components. The first component involves pooling loans into portfolio segments for loans that share similar risk characteristics. The second component involves individually analyzed loans that do no share similar risk characteristics with loans that are pooled into portfolio segments. The ACL for loans with similar risk characteristics are collectively evaluated for expected credit losses based on certain quantitative information that include historical loss rates, prepayment rates, and curtailment rates. Expected credit losses on loans with similar characteristics are also determined by certain qualitative factors that include national unemployment rates, national gross domestic product forecasts, changes in lending policy, quality of loan review, and delinquency status. The ACL for loans that do not share similar risk characteristics are individually evaluated for expected credit losses primarily based on foreclosure status and whether a loan is collateral-dependent. Expected credit losses on individually evaluated loans are then determined using the present value of expected future cash flows based upon the loan’s original effective interest rate, at ~~September~~the loan’s observable market price, or if the loan was collateral dependent, at the fair value of the collateral.

As of June 30, ~~2017 represented an increase~~2023, the ACL for loans totaled $7,571, or 0.80%, of ~~$7,037,~~total loans. As of December 31, 2022, the ACL for loans totaled $5,269, or ~~5.2%~~0.60%, ~~from year-end 2016.~~of total loans. The increase in the ACL of $2,302, or 43.7%, was ~~largely~~primarily due to the ~~Company's automobile loan segment, which grew~~$2,162 impact of adopting ASC 326 on January 1, 2023, affected mostly by ~~$8,227, or 13.8%, from year-end 2016. Automobile loans represent~~ the ~~Company's largest~~residential real estate and consumer loan ~~segment at 48.1%~~portfolio segments. Upon transition to the CECL model, the Company’s ACL increased another $140 to finish with $7,571 in reserves, all from loans collectively evaluated. This increase was mostly impacted by a $66,092 increase in collectively evaluated loan balances during the first half of ~~total~~2023, primarily from the residential real estate and 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~~loan segments. This was partially offset by ~~decreases~~lower expected loss rates in ~~other consumer loans, which were down 3.0%. The Company will continue~~relation to ~~monitor its auto lending segment while maintaining strict loan underwriting processes to limit future loss exposure.~~an improved unemployment forecast.

~~Allowance for Loan Losses~~

The Company established a $7,313 allowance for loan losses at September 30, 2017, which was a decrease from the $7,699 allowance at year-end 2016. The allowance was impacted by a decrease of $2,741 in specific allocationsexperienced lower delinquency levels from year-end 2016. Specific allocations of the allowance for loan losses identify loan impairment by measuring fair value of the underlying collateral and the present value of estimated future cash flows. When re-evaluating the impaired loan balances to their corresponding collateral values at September 30, 2017, it was determined that a commercial real estate loan relationship was no longer impaired and no longer collateral dependent due to the borrower's financial performance improvement. This resulted in the removal of that borrower's specific allocation of $1,681 that had previously been identified as impairment. Further contributing to lower specific reserves during the first nine months of 2017 were the charge-offs of several collateral dependent specific allocations. Total charge-offs of $612 in commercial real estate loans and $399 in commercial and industrial loans were recorded as a result of asset impairment. However, these specific reserves had already been allocated for prior to 2017,2022, which resulted in ~~no corresponding~~lower provision ~~expense impact in 2017.~~

Partially offsetting the decrease in specific allocations was an increase in the Company's general allocations of the allowance for loan losses from year-end 2016. As part of the Company's quarterly analysis of the allowance for loan losses, management reviewed various factors that directly impact the general allocation need of the allowance, which include: historical loan losses, loan delinquency levels, local economic conditions and unemployment rates, criticized/classified asset coverage levels and loan loss recoveries. The Company maintained troubled loans at comparable levels to year-end 2016, which, when combined with a 5.9% growth in total loans, caused the ratio of nonperformingexpense. Nonperforming loans to total loans decreased to ~~decrease from 1.26%~~0.29% at June 30, 2023, compared to 0.43% 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~~2022, and nonperforming assets to total assets ~~finishing~~decreased to 0.22% at ~~1.13% at September~~June 30, ~~2017,~~2023, compared to ~~1.20%~~0.31% 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. 2022.

During the first ~~quarter~~half of ~~2017,~~2023, the Company ~~continued~~individually evaluated several loans with a single borrower relationship for expected credit loss. The fair value of the loans’ collateral was measured to ~~experience lower historical loan loss factors, which prompted management to evaluate~~ the ~~exposure to~~loans’ recorded investment and no expected 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.were identified as part of that review. As a result, ~~an economic risk factor was added, which contributed to additional general reserves.~~ there were no specific reserves recorded during the three and six months ended June 30, 2023.

~~The Company's allowance for loan losses to total loans ratio finished at 0.94% at September 30, 2017 and 1.05% at year-end 2016.~~ Management believes that the allowance for ~~loan~~credit losses at ~~September~~June 30, ~~2017~~2023 was ~~adequate and reflected probable incurred~~appropriate to absorb expected losses in the loan portfolio. ~~There can be no assurance, however, that adjustments to the allowance for loan losses will not be required in the future.~~ Changes in the circumstances of particular borrowers, as well as adverse developments in the economy, are factors that could change, and management will make adjustments to the allowance for ~~loan~~credit 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 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~~2023 increased ~~$58,729,~~$48,917, or ~~7.4%~~4.8%, from year-end ~~2016.~~2022. This ~~deposit growth~~change in deposits came primarily from interest-bearing deposit balances, which ~~increased $35,127,~~were up by $64,356, or ~~6.1%~~9.6%, from year-end ~~2016. While the Company's preference is to fund earning asset demand with retail core~~2022, 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 $15,439, or 4.4%, from year-end 2022.

The increase in interest-bearing deposits came primarily from time deposit balances, which increased $111,962, or 73.7%, from year-end ~~2016.~~2022. The increase came from brokered CD issuances, which were up collectively by $57,968, primarily to manage the Company’s tightened liquidity position during the first half of 2023. Further increases came from retail time deposits, which increased $53,994 from year-end 2022. As market rates increased during 2022, deposit rates began adjusting upward during the second half of 2022 and into 2023. This has contributed to higher rate offerings on CD products, influencing a consumer shift away from lower-cost savings and money market products and into more higher-cost time deposit products.

~~Interest-bearing~~Partially offsetting the increases in time deposits were decreases in savings deposits (down $15,164) and money market deposits (down $20,553) from year-end 2022. Elevated deposit rates on CD products and deposit rate competition were contributing factors to the deposit decreases.

The growth ~~was impacted~~in time deposit balances were also partially offset by lower interest-bearing NOW account balances from year-end 2022, which ~~increased $16,061,~~decreased $11,889, or ~~10.4%, during the first nine months of 2017 as compared to year-end 2016.~~5.7%. This ~~increase~~decrease was largely driven by ~~growth in~~lower 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.

The decrease in noninterest-bearing demand deposits came primarily from ~~year-end 2016. Noninterest deposits were also impacted by growth in incentive based~~the Company’s business and incentive-based checking account ~~balances from year-end 2016.~~balances.

While facing increased competition for deposits in its market areas, the Company will continue to emphasize growth and retention in its core deposit relationships during the remainder of ~~2017,~~2023, 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~~$26,904 at ~~September~~June 30, ~~2017, a decrease~~2023, an increase of ~~$310,~~$8,959, or ~~0.8%~~49.9%, from year-end ~~2016.~~2022. The ~~decrease~~increase was ~~due~~related to a $10,000 FHLB fixed-rate advance from the ~~maturity repayment of a $3,000 advance during the third~~second quarter ~~of 2017.~~that was used to help fund earning asset growth. 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'~~shareholders’ equity at ~~September~~June 30, ~~2017 of $109,962~~2023 increased ~~$5,434,~~$3,044, or ~~5.2%~~2.3%, to finish at $138,072, as compared to ~~$104,528~~$135,028 at December 31, ~~2016. Capital growth during 2017 came~~2022. This was primarily from year-to-date net income and an increase in the fair value of ~~$6,611.~~available for sale securities, partially offset by cash dividends paid and a transition adjustment related to the adoption of ASC 326. The after-tax change in fair value totaled $740 from year-end 2022, as long-term market rates decreased during the first half of 2023, causing an increase in the fair value of the Company’s available for sale investment portfolio. The after-tax impact from the adoption of ASC totaled $2,209 and was applied against retained earnings effective January 1, 2023.

Comparison of Results of Operations

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

~~September~~June 30, ~~2017~~2023 and ~~2016~~2022

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~~2023, compared to the same period in ~~2016.~~2022. This discussion should be read in conjunction with the interim consolidated financial statements and the footnotes included in this Form 10‑Q.

The most significant portion of the ~~Company's~~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, 2023, net interest income increased ~~$1,283,~~$1,061, or ~~14.3%~~10.1%, as compared to the ~~third quarter of 2016.~~same period in 2022. During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, net interest income ~~also~~ increased ~~$4,913,~~$2,793, or ~~18.7%~~13.6%, as compared to the ~~nine months ended September 30, 2016.~~same period in 2022. The improvement during both periods came ~~primarily~~ from ~~the acquisition of Milton Bank during the third quarter of 2016, which~~net interest margin improvement that contributed to higher ~~interest income~~earning asset yields. This, combined with a composition shift into higher-yielding loans, completely offset higher average costs paid on ~~acquired earning assets partially offset by interest expense on acquired interest-bearing~~ deposits. In total, the Company benefited from $3,495 in net interest income generated by the Milton Bank acquisition. Further contributions to net interest income came from higher interest income on interest-bearing deposits with banks as a result of short-term rate increases.

Total interest and fee income recognized on the ~~Company's~~Company’s earning assets increased ~~$1,493,~~$3,273, or ~~15.2%~~32.7%, during the ~~third~~second quarter of ~~2017, which contributed to a year-to-date increase~~2023, and $5,751, or 29.0%, during the first half of ~~$5,537, or 19.4%, as~~2023, compared to the same periods in ~~2016. While the Company generated loan~~2022. The earnings growth primarily through the Milton Bank merger, there were already trends of loan origination improvement making a positive impact to loan earnings. Warehouse lending balances are up $15,155 from a year ago at September 30, 2016. The West Virginia market areas have been successful in generating over $18 million in loans from a year ago at September 30, 2016. The Athens, Ohio loan production office has generated over $14 million in commercial and residential real estate loans from a year ago at September 30, 2016. Loan growth has also been improving within the automobile segment, as well as the commercial and industrial loan segment,was impacted by ~~loan participations~~interest on loans, which increased $3,313, or 35.4%, and ~~loans to states and political subdivisions from a year ago. With the merger and improved loan production, the Company's loan income increased $1,404,~~$5,818, or ~~15.5%~~31.6%, during the ~~third quarter of 2017, which contributed to a year-to-date increase of $5,263, or 20.1%, as~~three and six months ended June 30, 2023, compared to the same periods in ~~2016.~~

~~During~~2022, respectively. This improvement was largely related to average loan yield increases impacted by the ~~three~~aggressive actions taken by the Federal Reserve to increase rates during 2022 and ~~nine months ended September 30, 2017, total other~~2023. Since the end of June 2022, the Federal Reserve has increased rates by another 350 basis points, which contributed to the repricing of a portion of the Company’s loan portfolio. As a result, the average interest ~~income~~rate yield on loans increased ~~$21, or 31.3%,~~95 basis points to 5.81% during the second quarter of 2023 and ~~$140, or 41.7%, as~~increased 82 basis points to 5.71% during the first half of 2023, compared to the same periods in ~~2016,~~2022, respectively. Average loans increased $92,386, or 11.1%, and $88,513, or 10.3%, during the three and six months ended June 30, 2023, compared to the same periods in 2022, respectively. The increases were ~~primarily due~~largely impacted by growth in average commercial and consumer loans.

Total interest income from interest-bearing deposits with banks increased $439 during the second quarter of 2023, and $811 during the first half of 2023, compared to ~~higher interest revenue recorded~~the same periods in 2022, respectively. This growth in income was 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 2022 to ~~utilize its~~increase short-term rates due to rising inflationary concerns. Since the end of June 2022, the target federal funds rate has increased by another 350 basis points. This had a corresponding effect to the interest rate tied to the Federal Reserve clearing account, ~~to manage seasonal tax refund deposits and fund earning asset growth. This interest-bearing account carried an interest rate of 0.50%~~which also increased by 350 basis points during ~~most of 2016. In December 2016, the~~that time. The impact from higher rates was partially offset by lower average Federal Reserve Bank balances, which decreased $70,852 during the second quarter of 2023, and $81,479 during the first half of 2023, compared to the same periods in 2022, respectively. The Company utilized Federal Reserve Bank balances to help fund new loans and manage the net decrease in average deposits during that time.

Total interest on securities increased ~~short-term rates by 25~~$79, or 8.8%, during the second quarter of 2023, and $337, or 20.6%, during the first half of 2023, compared to the same periods in 2022, respectively. Contributing most to this increase was the average yield on securities increasing 37 basis points to reach 2.08% during the second quarter of 2023, and ~~then again in both March and June 2017 by another 25~~49 basis points ~~each. These short-term rate adjustments have increased the Federal Reserve clearing account's interest rate from 0.50% of a year ago~~ to ~~1.25%. The timing of the December 2016 and March 2017 rate adjustments benefited the Company, as it entered into~~reach 2.09% during the first ~~quarter~~half of ~~2017 experiencing significant levels of excess funds~~2023, compared to the same periods in 2022, respectively. The average yield increase was positively impacted by the ~~large volume~~reinvestment of ~~ERC/ERD transactions that~~maturities at market rates higher than the average portfolio yield. The average securities yield was ~~maintained~~also positively impacted by the Company’s decision to sell $12,500 in lower yielding securities during the fourth quarter of 2022 and use the proceeds to reinvest into higher-yielding securities. However, with the Company’s focus of reinvesting excess funds into higher-yielding loans and managing excess funds within ~~the~~its higher-yielding Federal Reserve ~~clearing account. Since~~deposit account, average security balances have decreased $21,837 and $15,452 during the second quarter and first ~~quarter~~half of 2017, these excess funds have been decreasing as a result of exiting the tax season, as well as funding earning asset growth. Even though this year's Federal Reserve clearing average balance has decreased 19.4%, the interest income remains up over the prior year due2023, compared to the ~~short-term rate increases.~~same periods in 2022, respectively.

Total interest expense incurred on the ~~Company's~~Company’s interest-bearing liabilities increased $2,735 during the ~~third~~second quarter of ~~2017 increased $210, or 25.0%,~~2023, and ~~increased $624, or 28.2%,~~$4,140 during the ~~nine months ended September 30, 2017, as~~first half of 2023, compared to the same periods in ~~2016. The increases were primarily from the Milton Bank acquired deposits that generated more interest expense. However, the Company's~~2022, respectively. Increases in interest expense ~~continues to be minimized~~were impacted by a ~~sustained low-rate environment that has impacted~~rise in average costs combined with increases in higher-costing average deposit balances. The elevated market rates in 2022 and 2023 had a more immediate impact to increasing rates on earning assets, while the ~~repricings~~average cost of ~~various Bank~~deposits did not increase until the second half of 2022. Entering 2023, rates on the Company’s retail CD offerings have adjusted to much higher levels than a year ago, leading to more of a consumer demand to reinvest from lower-cost NOW, savings and money market deposit products ~~including certain interest-bearing demand accounts. The low-rate environment has also limited~~(average cost at 0.62%) into more time deposit products (average cost at 2.92%). Furthermore, the ~~impact~~Company issued $62,707 in brokered CDs during the first quarter of ~~the Company's use of~~2023 at average costs ranging from 4.5% to 4.6%. These wholesale deposits ~~during 2017.~~were used to manage liquidity constraints, but also contributed to the growth in interest expense over 2022. With deposit rates on the rise, the Company experienced a composition shift from less lower-cost average NOW, savings, and money market account balances (down $52,256) into more higher-cost average time deposit balances (up $56,508). As a result ~~there has been minimal change to the weighted average cost~~ of the Company's core deposits, which finished at 0.26% at September 30, 2017, as compared to 0.23% at September 30, 2016. The Company continues to utilize more of its lower cost, core deposit funding sources to further reduce interest expense. In addition, over 60% of the acquired Milton Bank deposits consisted of core deposit funding sources. As a result, the Company's average interest- and non-interest bearing core deposits increased $79,665, or 13.7%, while the average balances of higher costingrate repricings on time deposits ~~increased $23,005, or 14.3%, during the first nine months of 2017, as compared to the same period in 2016. The minimal change in average market interest rates~~ and the ~~continued emphasis on utilizing lower costing~~ deposit ~~balances have caused~~shift into higher-cost deposits, the ~~Company's~~Company’s total weighted average costs on interest-bearing deposits ~~to increase~~increased by ~~only 4~~108 basis points from ~~0.42%~~0.29% at ~~September~~June 30, ~~2016~~2022, to ~~0.46%~~1.37% at ~~September~~June 30, ~~2017.~~2023.

~~During 2017, the Company's~~The Company’s net interest margin ~~results~~is defined as fully tax-equivalent net interest income as a percentage of average earning assets. During 2023, the Company’s second quarter net interest margin improved to 4.03%, compared to 2022’s second quarter net interest margin of 3.64%. The Company’s year-to-date net interest margin improved to 4.12% at June 30, 2023, compared to 2022’s year-to-date net interest margin of 3.58% at June 30, 2022. The margin increases were impacted by the actions taken by the Federal Reserve to increase rates during 2022 and 2023. This had a direct impact to the rate repricings on the loan and securities portfolios, and the Federal Reserve Bank account, which had a positive impact on the margin. Margin enhancement also came from the redeployment of Federal Reserve Bank balances into higher yielding loans. Partially offsetting these positive effects to the margin were increases in average deposit costs and the composition shift to higher-cost time deposit balances from a year ago. Although the net interest margin increased over the prior ~~year, finishing at 4.52% during~~year’s quarterly and year-to-date periods, on a linked quarter basis, the ~~third quarter of 2017, as compared to 4.29% during the third quarter of 2016. The~~4.03% net interest margin ~~also improved to 4.50%~~during the second quarter of 2023 represents a decrease from the 4.21% margin during the first ~~nine months~~quarter of ~~2017, as compared to 4.34%~~2023 and the 4.38% margin during the ~~first nine months~~fourth quarter of ~~2016. This improvement was due~~2022. The decrease is a result of the Company offering higher rates on deposit accounts as market competition increased and to ~~a 14.5% increase in average earning assets combined with a~~the higher ~~deposit mix~~utilization of ~~lower-costing core deposits and a sustained low rate environment that has helped~~wholesale funding sources to ~~minimize interest expense.~~fund asset growth. 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~~Credit Losses

~~During~~For the ~~third~~three months ended June 30, 2023, the Company’s provision for credit losses expense totaled $24, a decrease of $789 from the same period in 2022. Lower quarterly provision expense was primarily related to a $717 decrease in net loan 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, as2023 compared to the same period in ~~2016.~~2022. 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, 2023, the Company’s provision for credit losses expense totaled $513, an increase of $826 when compared to $313 in negative provision expense during the six months ended June 30, 2022. For 2023, the provision expense was impacted by $439 in net loan charge-offs, primarily in the commercial real estate and consumer loan portfolios. Further provision expense on loans in 2023 came from $140 in expected losses associated with the $66,092 increase in general loan balances from year-end 2022. For 2022, the negative provision expense was impacted by the release of general loan reserves within the allowance based on various credit quality improvements. During the first quarter of 2022, the Company released $645 in COVID-19 general reserves due to positive asset quality trends and lower net charge offs, which resulted in a corresponding decrease of $645 to provision expense in March 2022. Further contributing to negative provision expense during the first half of 2022 was the release of $911 in other general reserves. This reduction in other general reserves was affected by 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. This resulted in a corresponding decrease of $911 to provision expense during the first half of 2022. The impact of lower general reserves was partially offset by $956 in net charge-offs and $297 in specific allocations on loans individually evaluated for impairment, which increased provision expense during the first half of 2022.

Credit loss expense during 2023 also came from unfunded commitments on off-balance sheet liabilities. Upon adoption of ASC 326, the Company established $631 in reserves for unfunded commitments within total liabilities on the consolidated balance sheet. This transition adjustment was included as a charge to retained earnings on January 1, 2023. The Company re-evaluated its unfunded commitments to extend credit at June 30, 2023 and determined a reserve of $565 was required, which resulted in a $90 recovery of provision expense during the second quarter of 2023, and a $66 recovery of provision expense during the first half of 2023.

Future provisions to the allowance for ~~loan~~credit 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"~~Credit Losses” within this ~~Management's~~Management’s Discussion and ~~Analysis.~~Analysis (this “MD&A”).

Noninterest Income

Noninterest income ~~for~~increased $77, or 2.9%, during the three months ended ~~September~~June 30, ~~2017~~2023, and increased ~~$589,~~$124, or ~~34.8%~~2.0%, ~~when compared to~~during the ~~three~~six months ended ~~September~~June 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, as2023, compared to the same periods in ~~2016.~~ 2022, respectively. Higher noninterest revenue was largely impacted by increases in other noninterest income, which increased $162 and $425 during the three and six months ended June 30, 2023, compared to the same periods in 2022, respectively. Other noninterest income came primarily from broker fee income at Race Day. Beginning in the fourth quarter of 2022, Race Day transitioned from originating and selling loans to a broker that identifies and matches home borrowers with potential lenders, while also assisting in the underwriting process. This transition is a result of the Company’s decision to discontinue operations of Race Day, as discussed above. The broker fees represent commissions earned by Race Day for mortgage application referrals at the time the loan was funded by the lender. During the three and six months ended June 30, 2023, Race Day’s broker fee income totaled $16 and $247, respectively. The Company does not expect to receive further broker fee commissions during the remainder of 2023 as it is anticipated that Race Day will continue to wind down operations. Growth in other noninterest income also came from interest rate swaps, gains on the sale of OREO, and commissions from card merchants, which were collectively up $131 and $156 during the three and six months ended June 30, 2023, compared to the same periods in 2022, respectively.

~~Further impacting growth~~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,~~was further impacted by ~~the inclusion of Milton Bank's customer deposit base. The third quarter benefit from Milton Bank was much more comparable, providing $66~~increases 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%,~~$58 during the second quarter of 2023, and $111 during the first ~~nine months~~half 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, as2023, compared to the same periods in ~~2016. In~~2022, respectively. This included a higher volume of overdraft transactions during both the ~~fourth~~quarterly and year-to-date periods of 2023.

Increases in noninterest revenue also came from debit/credit card interchange income, which increased $38 during the second quarter of 2014, the Bank entered into a new agreement with a third-party tax refund product provider, which lowered the per-item fee associated with each refund facilitated. As a result, the lower fee structure has caused tax processing revenues to be lower than the year before. Furthermore, the Company experienced a decrease in the number of ERC/ERD transactions that were facilitated. As a result of ERC/ERD fee activity being mostly seasonal, a ~~minimal amount of income is expected during the remainder of 2017.~~

~~The Company's remaining noninterest income categories were collectively up by $24, or 8.7%, during the third quarter of 2017,~~2023, and ~~down by $121, or 13.5%,~~$76 during the first ~~nine months~~half of ~~2017, when~~2023, compared to the same periods in ~~2016. The year-to-date~~2022, respectively. This was impacted by an increase in consumer spending that led to a higher volume of transactions associated with the Company’s debit and credit card products.

Partially offsetting the increases in other noninterest income were decreases ~~were primarily~~in mortgage banking income affected by a lower volume of real estate loans sold to the secondary market in 2023. During periods of heavy refinancing due to ~~higher losses on OREO.~~

~~Noninterest Expense~~

~~Noninterest expense~~lower market rates, the Company will take opportunities to sell a portion of its real estate volume to the secondary market to satisfy consumer demand and help minimize the interest rate risk exposure to rising rates. However, market rates have continued to shift upward in 2023, causing long-term mortgage rates to increase and slow down the consumer demand for long-term, fixed-rate real estate mortgages. As a result, the Bank’s mortgage banking income decreased $48 and $140 during the ~~third quarter of 2017 increased $394, or 4.5%,~~three and ~~increased $3,903, or 15.9%,~~six months ended June 30, 2023, while Race Day’s mortgage banking income decreased $128 and $224 during the ~~nine~~three and six months ended ~~September~~June 30, ~~2017, as~~2023, compared to the same periods in ~~2016.~~2022, respectively. The ~~acquisition~~impact to Race Day was largely due to their transition to broker activity as previously discussed.

The remaining noninterest income categories decreased $5, or 1.1%, and $124, or 6.1%, during the three and six months ended June 30, 2023, compared to the same periods in 2022, respectively. The decreases came primarily from lower tax preparation fees during the quarter and year-to-date periods.

Noninterest expense increased $392, or 3.9%, during the second quarter of ~~Milton Bank contributed~~2023, and $876, or 4.4%, during the first half of 2023, compared to anthe same periods in 2022, respectively. Contributing most to the increase in ~~most of the~~ 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$158 and ~~higher health insurance costs. However,~~$472 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, as2023, compared to the same periods in ~~2016. Data processing charges grew as a result~~2022, respectively. The expense increases were largely from annual performance-based merit increases that were recorded in the first quarter of ~~higher transaction volume associated with debit and credit cards, as well as higher processing charges from the Company's Big Rewards customer incentive platform.~~2023.

~~Other~~Increases in noninterest expense were also impacted by higher building and equipment costs, which increased ~~$400, or 34.8%,~~$112 and $128 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, 2023, compared to the same periods in ~~2016. The quarterly increase was driven by consulting expenses associated with revenue enhancement and efficiency improvement strategies. The year-to-date increase~~2022, respectively. This was primarily related to ~~fraud~~building repair and maintenance costs, as well as utility costs.

Further impacting higher overhead costs was FDIC premium expense, that was recorded in the second quarter of 2017. At that time, the Company was made aware that the processing of four wire transfers associated with a single account relationship in May 2017 totaling $933 were fraudulently initiated. After recovering a portion of the fraudulent wire costswhich increased $54 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 $110 during the ~~fourth quarter of 2017.~~

~~Overhead expense was further impacted by increases in professional fees, which were up $92, or 26.9%, during the third quarter of 2017,~~three and ~~up $318, or 31.2%, during the first nine~~six months ~~of 2017, as~~ended June 30, 2023, compared to the same periods in ~~2016. Both~~2022, respectively. During the fourth quarter of 2022, the FDIC announced it was going to increase initial base deposit insurance assessment rate schedules uniformly by 2 basis points beginning in the first quarterly assessment period ~~increases~~of 2023. This action by the FDIC is in response to the Deposit Insurance Fund reserve falling below the 1.35% minimum level in the second quarter of 2020 following outsized growth in insured deposits in the first half of 2020. The Bank adjusted its premium expense accrual in anticipation of the 2-basis point adjustment increase to all quarterly assessments during 2023.

Also contributing to higher noninterest expense were ~~impacted by legal expense associated with the recovery efforts on loan deficiency balances.~~

~~Partially offsetting overhead expenses were lower merger related~~data processing expenses, which ~~decreased $410~~ increased $38 and $86 during the three and six months ended ~~September~~June 30, ~~2017, and decreased $744 during the first nine months of 2017, as~~2023, compared to the same periods in ~~2016. During~~2022, respectively. Higher costs in this category were the ~~first quarter~~direct result of ~~2016,~~special programming costs associated with enhancing mobile and desktop user platforms, as well as the ~~Company executed~~volume increase in debit card transactions, which increased processing costs.

Higher noninterest expense also came from software costs, which increased $32 and $91 during the ~~merger agreement~~three and six months ended June 30, 2023, compared to the same periods in 2022, respectively. The increase was largely impacted by various software purchases and enhancements at the Bank to further improve operational efficiencies in 2023.

Partially offsetting the increases in noninterest expense were lower professional fees, which decreased $65 and $121 during the three and six months ended June 30, 2023, compared to the same periods in 2022, respectively. Professional fees for the year were impacted by lower accounting expenses in relation to higher-than-normal costs in 2022 that were associated with ~~Milton Bancorp. The merger was eventually finalized on August 5, 2016.~~adhering to new regulatory guidance in 2022. The Company ~~anticipates~~also experienced a lower volume of collection costs during the ~~remaining merger related expenses in 2017 to be minimal.~~three and six months ended June 30, 2023.

The remaining noninterest expense categories increased ~~$141,~~$63, or ~~9.3%~~3.5%, and $110, or 3.1%, 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, 2023, compared to the same periods in ~~2016.~~2022, respectively. The ~~addition of Milton Bank contributed to the increases of various~~net increase came primarily from other noninterest expense, ~~areas that include software, building~~which was up $84 during the quarter and ~~equipment, customer incentives,~~$121 during the year-to-date period, impacted by higher loan closing costs, consulting expense, and ~~intangible asset amortization.~~interest rate swap expense, partially offset by decreases in various overhead expenses associated with Race Day resulting from the continued unwinding of business operations mentioned above.

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, 2023 to the same periods ~~ending September 30, 2017,~~in 2022, the Company ~~was successful~~has benefited from an increase in ~~generating more net interest income primarily~~earning asset yields due to market rate increases by the Federal Reserve, and a higher average earning assets while minimizing funding costs. The Company also realized additional earnings in the third quarter from $399 in BOLI proceeds combined with a $316 reduction in benefit expenses for a former employee.composition of higher-yielding loans. These positive factors have completely offset the negative effects ~~from lower tax processing fees, large fraudulent wire expense~~of higher average costs on interest-bearing liabilities and ~~higher personnel costs. This has caused the level of net revenues~~a deposit shift to ~~outpace overhead expenses during 2017.~~more higher-cost time deposit balances. As a result, net interest income during the ~~Company's efficiency numbers have improved, finishing at 72.3%~~three and ~~72.5% during both~~six months ended June 30, 2023 has outperformed the ~~quarterly and year-to-date periods ended September 30, 2017, compared to the 81.5% and 73.2% efficiency levels~~net interest income results during the same periods in ~~2016.~~

~~Capital Resources~~

~~Banks and bank holding companies are subject~~2022. Increases in overhead costs associated with annual merit increases have contributed to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. In addition, in order for a financial holding company to continue to engage in activities permitted only for financial holding companies, it must be "well capitalized". Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision's capital guidelines for U.S. banks (Basel III rules) became effective for the Company and the Bank on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. Under the final rules, minimum requirements increased forhigher noninterest expense during both the ~~quantity~~three and ~~quality of capital held by the Company and the Bank. The rules include a new common equity tier 1 capital~~six months ended June 30, 2023, compared to risk-weighted assets ratio of 4.5% and a capital conservation buffer of 2.5% of risk-weighted assets. The capital conservation buffer began to phase in on January 1, 2016 at 0.625%, and will be phased in over a four-year period, increasing by the same ~~amount on each subsequent January 1, until fully phased-in on January 1, 2019. Further, Basel III rules increased~~periods in 2022. However, the ~~minimum ratio~~increases in overhead expense, net of ~~tier 1 capital~~noninterest revenue, during the three and six months ended June 30, 2023 are only partially offsetting the benefits of higher net interest earnings. As a result, the Company’s quarterly efficiency number decreased (improved) to ~~risk-weighted assets increased~~71.9% during the three months ended June 30, 2023, from ~~4.0%~~75.3% during the same period in 2022. The Company’s year-to-date efficiency number also decreased (improved) to ~~6.0% and all banks are now subject to a 4.0% minimum leverage ratio. The required total risk-based capital ratio was unchanged. Failure to maintain~~68.7% during the ~~required common equity tier 1 capital conservation buffer will result~~six months ended June 30, 2023, from 73.0% during the same period 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~~Provision for income taxes

The Company’s income tax provision increased $285 and ~~critically undercapitalized, although~~$182 during the three and six months ended June 30, 2023, compared to the same periods in 2022, respectively. The changes in tax expense corresponded directly to the changes in associated taxable income during 2023 and 2022.

~~The following table summarizes the capital ratios~~first year of the ~~Company~~transition period, 50% of its CECL transition amount during the second year, and ~~Bank:~~25% of its CECL transitional amount during the third year of the transition period. The Bank’s transition amount from the adoption of CECL totaled $2,276, which resulted in the add-back of $1,707 to both Tier 1 capital and average assets as part of the CBLR calculation for June 30, 2023. As of June 30, 2023, the Bank’s CBLR was 11.13%.

Cash dividends paid by the Company were ~~$2,947~~$2,769 during the first ~~nine months~~half of ~~2017.~~2023. The year-to-date dividends paid totaled ~~$0.63~~$0.58 per ~~share for 2017.~~share.

Liquidity relates to the ~~Company's~~Company’s ability to meet the cash demands and credit needs of its customers and is provided by the ability to readily convert assets to cash and raise funds in the marketplace. Total cash and cash equivalents, held to maturity securities maturing within one year, and available for sale securities, ~~totaling $157,036,~~which totaled $231,888, represented ~~15.4%~~18.2% of total assets at ~~September~~June 30, ~~2017. In addition,~~2023 compared to $230,853 and 19.1% of total assets at December 31, 2022. This growth in liquid funds came primarily from increases in deposits, as well as increases in borrowings and net proceeds from maturities and paydowns of securities. A large portion of these dollars were used to fund the 7.3% growth in loans. Increases in deposits were largely impacted by growth in time deposits, which increased 73.7% from year-end 2022. Of the Company’s $263,881 in time deposit balances at June 30, 2023, only 20.8%, or $54,906, were deemed uninsured as per the $250 FDIC threshold. 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,~~2023, the Bank could borrow an additional ~~$146,529~~$106,932 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 30, 2017, this line~~Reserve, which had ~~total~~ availability of ~~$52,433.~~$60,804 at June 30, 2023. Lastly, the Bank also has the ability to purchase federal funds from a correspondent bank. As our liquidity position dictates, the preceding funding sources, or other sources such as brokered CD’s, may be utilized to supplement our liquidity position. 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.

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 2022 Annual Report to ~~Shareholders.~~Shareholders, as updated in Note 1 of the Notes to Unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q. 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~~credit losses ~~and business combinations~~ to be a critical accounting ~~policies.~~policy.

Allowance for ~~loan~~credit losses

The Company believes the determination of the allowance for credit losses involves a higher degree of judgment and complexity than its other significant accounting policies. The allowance for ~~loan~~credit losses is calculated with the objective of maintaining a ~~valuation allowance for probable incurred~~reserve level believed by management to be sufficient to absorb estimated credit ~~losses. Loan~~ losses ~~are charged against~~over the ~~allowance when management believes the uncollectibility~~life 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~~an asset or off-balance sheet credit exposure. Management’s determination of the ~~portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations~~adequacy of the allowance ~~may be made~~ for ~~specific loans, but the entire allowance~~credit losses 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 periodic evaluations of past events, including historical credit loss experience on financial assets with similar risk characteristics, current ~~information~~conditions, and ~~events, it is probable~~reasonable and supportable forecasts that affect the ~~Company will be unable to collect all amounts due according to~~collectability of the remaining cash flows over the contractual ~~terms~~term of the ~~loan agreement. Impaired loans generally consist~~financial assets. However, this evaluation has subjective components requiring material estimates, including expected default probabilities, the expected loss given default, the amounts and timing of loans with balances of $200 or more on nonaccrual status or nonperforming in nature. Loans for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.

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

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

~~The general component covers non-impaired~~on impaired loans, and ~~impaired loans that are not individually reviewed for impairment and is~~estimated losses based on historical loss experience ~~adjusted for current factors. The historical loss experience is determined by portfolio segment~~ and is based on the actual loss history experienced by the Company over the most recent 3 years for the consumer and real estate portfolio segment and 5 years for the commercial portfolio segment. The total loan portfolio's actual loss experience is supplemented with otherforecasted economic ~~factors based on the risks present for each portfolio segment. These economic factors include consideration~~conditions. All of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. The following portfolio segments have been identified: Commercial Real Estate, Commercial and Industrial, Residential Real Estate, and Consumer.

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

Commercial real estate consists of nonfarm, nonresidential loans secured by owner-occupied and nonowner-occupied commercial real estate as well as commercial construction loans. An owner-occupied loan relates to a borrower purchased building or space for which the repayment of principal is dependent upon cash flows from the ongoing business operations conducted by the party, or an affiliate of the party, who owns the property. Owner-occupied loans that are dependent on cash flows from operations can be adversely affected by current market conditions for their product or service. A nonowner-occupied loan is a property loan for which the repayment of principal is dependent upon rental income associated with the property or the subsequent sale of the property. Nonowner-occupied loans that are dependent upon rental income are primarily impacted by local economic conditions which dictate occupancy rates and the amount of rent charged. Commercial construction loans consist of borrowings to purchase and develop raw land into one- to four-family residential properties. Construction loans are extended to individuals as well as corporations for the construction of an individual or multiple properties and are secured by raw land and the subsequent improvements. Repayment of the loans to real estate developers is dependent upon the sale of properties to third parties in a timely fashion upon completion. Should there be delays in construction or a downturn in the market for those properties, therethese factors may be susceptible to significant ~~erosion in value which~~change. To the extent that actual results differ from management estimates, additional provisions for credit losses may be ~~absorbed by the Company.~~required that would adversely impact earnings in future periods. Refer to “Allowance for Credit Losses” and “Provision for Credit Losses” sections within this MD&A for additional discussion.

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

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

~~Business combinations~~

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

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

Percentage Change in

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, 2023. 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, 2023 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,~~2023, 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~~Other than the additional risk factors referenced below, there are no material changes to the risk factors as previously disclosed inunder Part I, Item ~~1.A. "Risk Factors"~~1A, “Risk Factors” in ~~Ohio Valley's Annual Report~~the 2022 Form 10-K.

Recent bank failures have created significant market volatility, regulatory uncertainty, and decreased confidence in the U.S. banking system.

Any downgrade in the ~~Annual Report~~credit rating of the U.S. government or default by the U.S. government as a result of political conflicts over legislation to raise the U.S. government’s debt limit may have a material adverse effect on ~~Form 10-K~~us.

Recent federal budget deficit concerns and political conflict over legislation to raise the U.S. government’s debt limit have increased the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession in the United States. Many of our investment securities are ~~not~~issued by the ~~only risks~~U.S. government, including certain government agencies and sponsored entities. As a result of uncertain domestic political conditions, including the possibility of the federal government defaulting on its obligations for a period of time due to debt ceiling limitations or other unresolved political issues, investments in financial instruments issued or guaranteed by the federal government may pose liquidity risks. In connection with prior political disputes over U.S. fiscal and budgetary issues leading to the U.S. government shutdown in 2011, Standard & Poor’s lowered its long-term sovereign credit rating on the U.S. from AAA to AA+. A downgrade, or a similar action by other rating agencies, in response to current political dynamics, as well as sovereign debt issues facing the ~~Company. Additional risks~~governments of other countries, could generally have a material adverse impact on financial markets and ~~uncertainties not currently known to~~economic conditions in the ~~Company or that management currently deems to be immaterial also may~~U.S. and worldwide and, therefore, materially adversely affect ~~the Company's~~our 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 representativeresults of ~~the Company unless and until any such revisions or updates are expressly required to be disclosed by applicable securities laws or regulations.~~operations.

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, 2023.

Ohio Valley did not purchase any of its shares during the three months ended ~~September~~June 30, ~~2017.~~2023.

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

ITEM 4. MINE SAFETY DISCLOSURES

ITEM 5. OTHER INFORMATION

~~(a)~~

(a) Exhibits:

# 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.

	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

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

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

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

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

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

	FHLB Borrowings		Promissory Notes		Totals

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

	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%)

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 #

			OHIO VALLEY BANC CORP.

Date:	~~November 9, 2017~~ August 14, 2023	By:	/s/~~Thomas~~Larry E. ~~Wiseman~~ Miller II
			~~Thomas~~Larry E. ~~Wiseman~~Miller, II
			President and Chief Executive Officer
			(Principal Executive Officer)

Date:	~~November 9, 2017~~ August 14, 2023	By:	/s/Scott W. Shockey
			Scott W. Shockey
			Senior Vice President and Chief Financial Officer
			(Principal Financial Officer)