Ohio Valley Banc Corp 10-Q for FY2025 Q1
Ohio Valley Banc Corp (OVBC)
10-Q
2025-05-15
For: 2025-03-31
View Original
Added on
April 09, 2026
About this 10-Q
Ohio Valley Banc Corp filed this 10-Q on May 15, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net income
- $4.41M
- up 57.8% from net income of $2.79M a year earlier
United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
OR
For the transition period from ____________ to ____________
Commission file number 000-20914
(Exact name of registrant as specified in its charter)
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(ZIP Code)
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(740 ) 446-2631
(Registrant’s telephone number, including area code)
_____________________
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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The
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒
No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or
an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Smaller reporting company
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Emerging growth company
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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 May 14, 2025 was 4,711,001 .
OHIO VALLEY BANC CORP.
Index
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Page Number
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PART I.
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FINANCIAL INFORMATION
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Item 1.
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Financial Statements (Unaudited)
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Consolidated Balance Sheets
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3
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Consolidated Statements of Income
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4
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Consolidated Statements of Comprehensive Income
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5
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Consolidated Statements of Changes in Shareholders’ Equity
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6
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Condensed Consolidated Statements of Cash Flows
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7
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Notes to Unaudited Consolidated Financial Statements
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8
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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30
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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42
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Item 4.
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Controls and Procedures
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42
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PART II.
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OTHER INFORMATION
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Item 1.
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Legal Proceedings
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42
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Item 1A.
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Risk Factors
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42
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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42
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Item 3.
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Defaults Upon Senior Securities
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42
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Item 4.
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Mine Safety Disclosures
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43
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Item 5.
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Other Information
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43
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Item 6.
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Exhibits
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44
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Signatures
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45
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2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OHIO VALLEY BANC CORP.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share and per share data)
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March 31,
2025
(Unaudited)
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December 31,
2024
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ASSETS
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Cash and noninterest-bearing deposits with banks
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$
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$
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Interest-bearing deposits with banks
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Total cash and cash equivalents
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Securities available for sale
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Securities held to maturity, net of allowance for credit losses of $
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Restricted investments in bank stocks
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Total loans
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Less: Allowance for credit losses
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(
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(
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Net loans
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Premises and equipment, net
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Premises and equipment held for sale, net
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Accrued interest receivable
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Goodwill
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Bank owned life insurance and annuity assets
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Operating lease right-of-use asset, net
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Deferred tax assets
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Other assets
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Total assets
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$
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$
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LIABILITIES
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Noninterest-bearing deposits
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$
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$
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Interest-bearing deposits
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Total deposits
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Other borrowed funds
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Subordinated debentures
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Operating lease liability
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Allowance for credit losses on off-balance sheet commitments
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Other liabilities
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Total liabilities
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CONTINGENT LIABILITIES
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SHAREHOLDERS’ EQUITY
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Common stock ($
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Additional paid-in capital
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Retained earnings
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Accumulated other comprehensive income (loss)
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(
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(
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Treasury stock, at cost (
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(
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(
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Total shareholders’ equity
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Total liabilities and shareholders’ equity
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$
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$
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See accompanying notes to consolidated financial statements
3
OHIO VALLEY BANC CORP.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands, except per share data)
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Three months ended
March 31,
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2025
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2024
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Interest and dividend income:
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Loans, including fees
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$
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$
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Securities
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Taxable
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Tax exempt
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Dividends
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Interest-bearing deposits with banks
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Interest expense:
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Deposits
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Other borrowed funds
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Subordinated debentures
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Net interest income
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Provision for (recovery of) credit losses
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Net interest income after provision for (recovery of) credit losses
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Noninterest income:
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Service charges on deposit accounts
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Trust fees
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Income from bank owned life insurance and annuity assets
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Mortgage banking income
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Electronic refund check / deposit fees
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Debit / credit card interchange income
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Tax preparation fees
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Other
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Noninterest expense:
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Salaries and employee benefits
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Occupancy
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Furniture and equipment
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Professional fees
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Marketing expense
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FDIC insurance
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Data processing
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Software
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Other
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Income before income taxes
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Provision for income taxes
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NET INCOME
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$
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$
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Earnings per share
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$
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$
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See accompanying notes to consolidated financial statements
4
OHIO VALLEY BANC CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(dollars in thousands)
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Three months ended
March 31,
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2025
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2024
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Net Income
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$
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$
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Other comprehensive income (loss):
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Change in unrealized gain (loss) on available for sale securities
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(
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)
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Related tax (expense) benefit
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(
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Total other comprehensive income (loss), net of tax
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(
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)
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Total comprehensive income (loss)
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$
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$
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See accompanying notes to consolidated financial statements
5
OHIO VALLEY BANC CORP.
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS’ EQUITY (UNAUDITED)
(dollars in thousands, except share and per share data)
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Quarter-to-date
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Common
Stock
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Additional
Paid-In
Capital
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Retained
Earnings
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Accumulated
Other
Comprehensive
Income (Loss)
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Treasury
Stock
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Total
Shareholders'
Equity
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Balance at January 1, 2025
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$
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$
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$
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$
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(
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)
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$
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(
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$
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Net income
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Other comprehensive income (loss), net
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Cash dividends, $
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(
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)
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(
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)
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||||||||||||||||
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Balance at March 31, 2025
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$
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$
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$
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$
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(
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)
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$
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(
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)
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$
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Balance at January 1, 2024
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$
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$
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$
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$
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(
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)
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$
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(
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)
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$
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Net income
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Other comprehensive income (loss), net
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(
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(
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Cash dividends, $
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(
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)
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(
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Common stock issued to ESOP,
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Balance at March 31, 2024
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$
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$
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$
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$
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(
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)
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$
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(
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)
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$
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See accompanying notes to consolidated financial statements
6
OHIO VALLEY BANC CORP.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(dollars in thousands)
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Three months ended
March 31,
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2025
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2024
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Net cash provided by operating activities
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$
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$
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Investing activities:
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Proceeds from maturities and paydowns of securities available for sale
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Purchases of securities available for sale
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(
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)
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(
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)
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Proceeds from calls and maturities of securities held to maturity
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Redemptions of restricted investments in bank stocks
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Net change in loans
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(
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)
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Purchases of premises and equipment
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(
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)
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(
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)
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Withdrawals from bank owned life insurance and annuity asset
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Net cash provided by (used in) investing activities
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(
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)
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Financing activities:
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Change in deposits
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Cash dividends
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(
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)
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(
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)
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Repayment of Federal Home Loan Bank borrowings
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(
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)
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(
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)
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Change in other short-term borrowings
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Net cash provided by financing activities
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Change in cash and cash equivalents
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Cash and cash equivalents at beginning of period
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Cash and cash equivalents at end of period
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$
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$
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Supplemental disclosure:
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Cash paid for interest
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$
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$
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See accompanying notes to consolidated financial statements
7
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION: The accompanying consolidated financial statements include the
accounts of Ohio Valley Banc Corp. (“Ohio Valley”) and its wholly-owned subsidiaries, The Ohio Valley Bank Company (the “Bank”), Loan Central, Inc., a consumer finance company, and Ohio Valley Financial Services Agency, LLC, an insurance agency. The
Bank has one active, wholly-owned subsidiary, Ohio Valley REO, LLC (“Ohio Valley REO”), an Ohio limited liability company, to which the Bank
transfers certain real estate acquired by the Bank through foreclosure for sale by Ohio Valley REO. Ohio Valley and its subsidiaries are collectively referred to as the “Company.” All material intercompany accounts and transactions have been
eliminated in consolidation.
These interim financial statements are prepared by the Company without audit and reflect all adjustments of a normal recurring nature which, in the opinion of management,
are necessary to present fairly the consolidated financial position of the Company at March 31, 2025, and its results of operations and cash
flows for the periods presented. The results of operations for the three months ended March 31, 2025, are not necessarily indicative of the
operating results to be anticipated for the full fiscal year ending December 31, 2025. The accompanying consolidated financial statements do not purport to contain all the necessary financial disclosures required by U.S. generally accepted accounting
principles (“US GAAP”) that might otherwise be necessary in the circumstances. The Annual Report of the Company for the year ended December 31, 2024,
contains consolidated financial statements and related notes which should be read in conjunction with the accompanying consolidated financial statements.
The consolidated financial statements for 2024 have been reclassified to conform to the presentation for 2025. These reclassifications had no effect on net income or
shareholders’ equity.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:
The accounting and reporting policies followed by the Company conform to US GAAP established by the Financial Accounting Standards Board (“FASB”). The preparation of financial statements in conformity with US GAAP requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.
INDUSTRY SEGMENT INFORMATION: We conduct our operations through a business segment, banking, which derives interest and noninterest income through our banking products and services and investment securities. All of
our income relates to our operations in the United States.
Pursuant to Financial Accounting Standards Codification 280, Segment Reporting, operating segments represent components of an enterprise for which separate
financial information is available that is regularly evaluated by the chief operating decision makers in determining how to allocate resources and assessing performance.
Our chief operating decision maker, which is our Chief Executive Officer, evaluates interest and noninterest income streams and credit losses from our
various products and services, while expense activities, including interest expense and noninterest expense, are managed, and financial performance is evaluated, on a Company-wide basis. As a result, detailed profitability information for each interest
and noninterest income stream is not used by our chief operating decision maker to allocate resources or in assessing performance. Rather, our chief operating decision maker uses consolidated net income to assess performance by comparing it to and
monitoring against budgeted and prior year results. This information is used to manage resources to drive business and net income growth, including investment in key strategic priorities, as well as determining our ability to return capital to
shareholders. Segment assets represent total assets on our Consolidated Balance Sheets and segment net income represents net income on our Consolidated Statements of Income.
NEW ACCOUNTING PRONOUNCEMENTS PENDING ADOPTION: In December 2023, the FASB issued ASU No. 2023-09, Income
Taxes (Topic 740): Improvements to Income Tax Disclosures. The updated accounting guidance requires enhanced income tax disclosures, including the disaggregation of existing disclosures related to the tax rate reconciliation and income taxes
paid. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the effect the updated guidance will have on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses. ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement to be presented in
a tabular format in the footnotes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The amendments in ASU 2024-03
should be applied on a prospective basis, although retrospective application is permitted. The Company is evaluating the effect the updated guidance will have on its consolidated financial statements and related disclosures.
8
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
on AFS debt
securities totaled $1,178 at March 31, 2025 and $1,294
at December 31, 2024, 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. At March 31, 2025 and at December 31, 2024, there was no
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 one major security type: Obligations of states and political subdivisions. With regard to obligations of states and political subdivisions,
management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of
the securities. At March 31, 2025, the ACL related to HTM debt securities was $1 no
on HTM debt
securities totaled $45 at March 31, 2025 and $24
at December 31, 2024, and is excluded from the estimate of credit losses.
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 nonaccrual 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.
9
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis
method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
The Bank also originates long-term, fixed-rate mortgage loans, with the full intention of being sold to the secondary market. These loans are considered
held for sale during the period of time after the principal has been advanced to the borrower by the Bank, but before the Bank has been reimbursed by the Federal Home Loan Mortgage Corporation, typically within a few business days. Loans sold to the
secondary market are carried at the lower of aggregate cost or fair value. As of March 31, 2025 and December 31, 2024, there were no
ACL – LOANS: The
ACL for loans is a contra asset valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the ACL when they are deemed
uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The ACL is adjusted through the provision for credit losses and reduced by net charge offs of loans.
The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers historical loss experience, current
conditions and forecasts of future economic conditions. Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period.
The methodology for determining the ACL has two main components: evaluation of expected credit losses for certain groups of loans that share similar risk
characteristics and evaluation of loans that do not share risk characteristics with other loans.
The ACL is measured on a collective (pool) basis when similar risk characteristics exist. The Company has identified the following portfolio segments and
measures the ACL using the following methods:
|
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 modification 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.
10
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Company has elected to exclude accrued interest receivable from the measurement of its ACL. When a loan is placed on nonaccrual 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.
on loans totaled
$1,178 at March 31, 2025 and $3,429 at
December 31, 2024, and is excluded from the estimate of credit losses.
At March 31, 2025, there was $10,139 in the ACL related to
loans, compared to $10,088 at December 31, 2024. This
resulted in corresponding provision expense of $476
during the three months ended March 31, 2025, compared to $857 in provision expense during the three months ended March 31, 2024.
The Company’s loan portfolio segments have been identified as follows: Commercial and Industrial, Commercial Real Estate, Residential Real Estate, and
Consumer.
Commercial and industrial: Portfolio segment consists of borrowings for
commercial purposes to individuals, corporations, partnerships, sole proprietorships, and other business enterprises. Commercial and industrial loans are generally secured by business assets such as equipment, accounts receivable, inventory, or any
other asset excluding real estate and generally made to finance capital expenditures or operations. The Company’s risk exposure is related to deterioration in the value of collateral securing the loan should foreclosure become necessary. Generally,
business assets used or produced in operations do not maintain their value upon foreclosure, which may require the Company to write down the value significantly to sell.
Commercial real estate: Portfolio segment consists of nonfarm, nonresidential
loans secured by owner-occupied and nonowner-occupied commercial real estate as well as commercial construction loans. An owner-occupied loan relates to a borrower purchased building or space for which the repayment of principal is dependent upon cash
flows from the ongoing business operations conducted by the party, or an affiliate of the party, who owns the property. Owner-occupied loans that are dependent on cash flows from operations can be adversely affected by current market conditions for
their product or service. A nonowner-occupied loan is a property loan for which the repayment of principal is dependent upon rental income associated with the property or the subsequent sale of the property. Nonowner-occupied loans that are dependent
upon rental income are primarily impacted by the level of interest rates associated with the debt and to local economic conditions, which dictate occupancy rates and the amount of rent charged. The increase in debt service due to higher interest rates
may not be able to be passed on to tenants. As part of the origination process, loan interest rates and occupancy rates are stressed to determine the impact on the borrower’s ability to maintain adequate debt service under different economic
conditions. Furthermore, the Company monitors the concentration in any one industry and has established limits relative to capital. In addition, credit quality trends are monitored by industry to determine if a change in the risk exposure to a certain
industry may warrant a change in our underwriting standards. 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 ACL as a percentage of loans to the other identified loan portfolio segments due to the larger
dollar balances associated with such portfolios.
11
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 March 31, 2025,
there was $522 in the ACL related to off-balance sheet credit exposures, compared to $582 at December 31, 2024. This resulted in corresponding provision expense recoveries of $60 and $106 during the three months ended March 31, 2025 and 2024, respectively.
EARNINGS PER SHARE: Earnings per share is based on net income divided by the weighted
average number of common shares outstanding during the quarter. The weighted average common shares outstanding were 4,711,001 and $4,785,773 for the three months ended March 31, 2025 and 2024,
respectively. Ohio Valley had no dilutive effect and no potential common shares issuable under stock options or other agreements for any period presented.
NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1: Quoted prices (unadjusted) for identical assets or
liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1
prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a company’s
own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The following is a description of the Company’s valuation methodologies used to measure and disclose the fair values of its financial assets and
liabilities on a recurring or nonrecurring basis:
Securities: The fair values for securities are determined by
quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar
securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry
research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.
Individually Evaluated Collateral Dependent Loans: The fair value
of individually evaluated collateral dependent loans is generally based on the fair value of collateral, less costs to sell. When carried at fair value, individually evaluated collateral dependent loans generally receive specific allocations of the
ACL. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments
are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the
inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in
market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. In some
instances, fair value adjustments can be made based on a quoted price from an observable input, such as a purchase agreement. Such adjustments would be classified as a Level 2
classification. Individually evaluated collateral dependent loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.
Other Real Estate Owned: Assets acquired through or instead of
loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based
on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent
appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. In some instances, fair
value adjustments can be made based on a quoted price from an observable input, such as a purchase agreement. Such adjustments would be classified as a Level 2 classification.
12
NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified
residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of management reviews the assumptions and approaches utilized in the appraisal as well as the
overall resulting fair value in comparison with management’s own assumptions of fair value based on factors that include recent market data or industry-wide statistics.
On an as-needed basis, the Company reviews the fair value of collateral, taking into consideration current market data, as well as all selling costs that
typically approximate 10 %.
Interest Rate Swap Agreements: The fair value of interest rate
swap agreements is determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments). The variable cash receipts (or payments) are based
on the expectation of future interest rates (forward curves) derived from observed market interest rate curves (Level 2).
Assets and
Liabilities Measured on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis are summarized below:
|
Fair Value Measurements at March 31, 2025 Using
|
||||||||||||
|
Quoted Prices in Active
Markets for Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||||
|
Assets:
|
||||||||||||
|
U.S. Government securities
|
$
|
|
$
|
|
$
|
|
||||||
|
U.S. Government sponsored entity securities
|
|
|
|
|||||||||
|
Agency mortgage-backed securities, residential
|
|
|
|
|||||||||
|
Interest rate swap derivatives
|
|
|
|
|||||||||
|
Liabilities:
|
||||||||||||
|
Interest rate swap derivatives
|
|
(
|
)
|
|
||||||||
|
Fair Value Measurements at December 31,
2024 Using
|
||||||||||||
|
Quoted Prices in Active
Markets for Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||||
|
Assets:
|
||||||||||||
|
U.S. Government securities
|
$
|
|
$
|
|
$
|
|
||||||
|
U.S. Government sponsored entity securities
|
|
|
|
|||||||||
|
Agency mortgage-backed securities, residential
|
|
|
|
|||||||||
|
Interest rate swap derivatives
|
|
|
|
|||||||||
|
Liabilities:
|
||||||||||||
|
Interest rate swap derivatives
|
|
(
|
)
|
|
||||||||
There were no transfers between Level 1 and Level 2 during the periods ended March 31, 2025 or 2024.
Assets and Liabilities Measured on a Nonrecurring Basis
There were no
13
NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
The carrying amounts and estimated fair values of financial instruments at March 31, 2025 and December 31, 2024 are as follows:
|
Carrying
|
Fair Value Measurements at March 31, 2025 Using
|
|||||||||||||||||||
|
Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
|
Financial Assets:
|
||||||||||||||||||||
|
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Securities available for sale
|
|
|
|
|
|
|||||||||||||||
|
Securities held to maturity
|
|
|
|
|
|
|||||||||||||||
|
Loans, net
|
|
|
|
|
|
|||||||||||||||
|
Interest rate swap derivatives
|
|
|
|
|
|
|||||||||||||||
|
Accrued interest receivable
|
|
|
|
|
|
|||||||||||||||
|
Financial liabilities:
|
||||||||||||||||||||
|
Deposits
|
|
|
|
|
|
|||||||||||||||
|
Other borrowed funds
|
|
|
|
|
|
|||||||||||||||
|
Subordinated debentures
|
|
|
|
|
|
|||||||||||||||
|
Interest rate swap derivatives
|
|
|
|
|
|
|||||||||||||||
|
Accrued interest payable
|
|
|
|
|
|
|||||||||||||||
|
Carrying
|
Fair Value Measurements at December 31,
2024 Using:
|
|||||||||||||||||||
|
Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
|
Financial Assets:
|
||||||||||||||||||||
|
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Securities available for sale
|
|
|
|
|
|
|||||||||||||||
|
Securities held to maturity
|
|
|
|
|
|
|||||||||||||||
|
Loans, net
|
|
|
|
|
|
|||||||||||||||
|
Interest rate swap derivatives
|
|
|
|
|
|
|||||||||||||||
|
Accrued interest receivable
|
|
|
|
|
|
|||||||||||||||
|
Financial liabilities:
|
||||||||||||||||||||
|
Deposits
|
|
|
|
|
|
|||||||||||||||
|
Other borrowed funds
|
|
|
|
|
|
|||||||||||||||
|
Subordinated debentures
|
|
|
|
|
|
|||||||||||||||
|
Interest rate swap derivatives
|
|
|
|
|
|
|||||||||||||||
|
Accrued interest payable
|
|
|
|
|
|
|||||||||||||||
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial
instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and
involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
14
NOTE 3 – SECURITIES
The following table summarizes the amortized cost and fair value of securities AFS and securities HTM at March 31, 2025 and December 31, 2024 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
|
||||||||||||
|
March 31, 2025
|
||||||||||||||||
|
U.S. Government securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
|
U.S. Government sponsored entity securities
|
|
|
(
|
)
|
|
|||||||||||
|
Agency mortgage-backed securities, residential
|
|
|
(
|
)
|
|
|||||||||||
|
Total securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
|
December 31, 2024
|
||||||||||||||||
|
U.S. Government securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
|
U.S. Government sponsored entity securities
|
|
|
(
|
)
|
|
|||||||||||
|
Agency mortgage-backed securities, residential
|
|
|
(
|
)
|
|
|||||||||||
|
Total securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
|
Securities Held to Maturity
|
Amortized
Cost
|
Gross Unrecognized
Gains
|
Gross Unrecognized
Losses
|
Estimated
Fair Value
|
Allowance for Credit Losses
|
|||||||||||||||
|
March 31, 2025
|
||||||||||||||||||||
|
Obligations of states and political subdivisions
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||||
|
Total securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||||
|
December 31, 2024
|
||||||||||||||||||||
|
Obligations of states and political subdivisions
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||||
|
Total securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||||
The amortized cost and estimated fair value of debt securities at March 31, 2025, by contractual maturity, are shown below. Actual maturities may differ from contractual
maturities because certain issuers may have the right to call or prepay the debt obligations prior to their contractual maturities. Securities not due at a single maturity are shown separately.
|
Available for Sale
|
Held to Maturity
|
|||||||||||||||
|
Debt Securities:
|
Amortized
Cost
|
Estimated
Fair Value
|
Amortized
Cost
|
Estimated
Fair Value
|
||||||||||||
|
Due in one year or less
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Due in over one to five years
|
|
|
|
|
||||||||||||
|
Due in over five to ten years
|
|
|
|
|
||||||||||||
|
Due after ten years
|
|
|
|
|
||||||||||||
|
Agency mortgage-backed securities, residential
|
|
|
|
|
||||||||||||
|
Total debt securities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
There were no
Debt securities with a carrying value of approximately $225,979 at March 31, 2025 and $223,484 at December 31, 2024, respectively, were pledged to secure public deposits, repurchase agreements, and for other purposes required or permitted by law.
15
NOTE 3 – SECURITIES (Continued)
The following table summarizes debt securities AFS in an unrealized loss position for which an ACL losses has not been recorded at March 31, 2025 and December 31, 2024,
aggregated by major security type and length of time in a continuous unrealized loss position:
|
March 31, 2025
|
Less Than 12 Months
|
12 Months or More
|
Total
|
|||||||||||||||||||||
|
Fair Value
|
Unrealized
Loss
|
Fair Value
|
Unrealized
Loss
|
Fair Value
|
Unrealized
Loss
|
|||||||||||||||||||
|
Securities Available for Sale
|
||||||||||||||||||||||||
|
U.S. Government securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
|
U.S. Government sponsored entity
securities
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
|
Agency mortgage-backed
|
||||||||||||||||||||||||
|
securities, residential
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
|
Total available for sale
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
|
December 31, 2024
|
Less Than 12 Months
|
12 Months or More
|
Total
|
|||||||||||||||||||||
|
Fair Value
|
Unrealized
Loss
|
Fair Value
|
Unrealized
Loss
|
Fair Value
|
Unrealized
Loss
|
|||||||||||||||||||
|
Securities Available for Sale
|
||||||||||||||||||||||||
|
U.S. Government securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
|
U.S. Government sponsored entity
securities
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
|
Agency mortgage-backed securities, residential
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
|
Total available for sale
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
Management evaluates AFS debt securities in unrealized positions to determine whether impairment is due to credit-related factors. Consideration is given to (1) the extent
to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any
anticipated recovery in fair value.
At March 31, 2025, the Company had 93 AFS debt securities in an unrealized position without an ACL, of which 13 were from U.S. Government securities, 3 were from U.S. Government sponsored entity securities, and 77 were from Agency mortgage-backed residential securities.
Comparatively at December 31, 2024, the Company had 96 AFS debt securities in an unrealized position without an ACL, of which 16 were from U.S. Government securities, 3 were
from U.S. Government sponsored entity securities, and 77
were from Agency mortgage-backed residential securities. Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a
recovery of cost. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of March 31, 2025 and December 31, 2024, 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 ACL on AFS debt securities at March 31, 2025 and December 31, 2024.
The following table presents the activity in the ACL for HTM debt securities:
|
Held to Maturity Debt Securities
|
Three months ended
March 31, 2025
|
Three months ended
March 31, 2024
|
||||||
|
Allowance for credit losses:
|
||||||||
|
Beginning balance
|
$
|
|
$
|
|
||||
|
Provision for (recovery of) credit loss expense
|
|
|
||||||
|
Allowance for credit losses ending balance
|
$
|
|
$
|
|
||||
The Company’s HTM securities consist of obligations of states and political subdivisions. The ACL on HTM securities is estimated at each measurement date on a collective
basis by major security type. Risk factors such as issuer bond ratings, historical loss rates, financial condition of issuer, and timely principal and interest payments of issuer were evaluated to determine if a credit reserve was required within the
portfolio. At March 31, 2025, there were no past due principal and interest payments related to HTM securities. During the first quarter of
2025 and 2024, the cumulative loss rate remained at 0.02 no
16
NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES
Loans are comprised of the following:
|
March 31,
2025
|
December 31,
2024
|
|||||||
|
Residential real estate
|
$
|
|
$
|
|
||||
|
Commercial real estate:
|
||||||||
|
Owner-occupied
|
|
|
||||||
|
Nonowner-occupied
|
|
|
||||||
|
Construction
|
|
|
||||||
|
Commercial and industrial
|
|
|
||||||
|
Consumer:
|
||||||||
|
Automobile
|
|
|
||||||
|
Home equity
|
|
|
||||||
|
Other
|
|
|
||||||
|
|
|
|||||||
|
Less: Allowance for credit losses
|
(
|
)
|
(
|
)
|
||||
|
Loans, net
|
$
|
|
$
|
|
||||
At March 31, 2025 and December 31, 2024, net deferred loan origination costs were $234 and $363 , respectively. At March 31, 2025 and December 31, 2024, net unamortized loan purchase premiums were $355 and $398 , respectively.
The following table presents the recorded investment of nonaccrual loans and loans past due 90
days or more and still accruing by class of loans as of March 31, 2025 and December 31, 2024:
|
March 31, 2025
|
Loans Past Due
90 Days And
Still Accruing
|
Nonaccrual
Loans With No
ACL
|
Nonaccrual
Loans With an
ACL
|
Total
Nonaccrual
Loans
|
||||||||||||
|
Residential real estate
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Commercial real estate:
|
||||||||||||||||
|
Owner-occupied
|
|
|
|
|
||||||||||||
|
Nonowner-occupied
|
|
|
|
|
||||||||||||
|
Construction
|
|
|
|
|
||||||||||||
|
Commercial and industrial
|
|
|
|
|
||||||||||||
|
Consumer:
|
||||||||||||||||
|
Automobile
|
|
|
|
|
||||||||||||
|
Home equity
|
|
|
|
|
||||||||||||
|
Other
|
|
|
|
|
||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
December 31, 2024
|
Loans Past Due
90 Days And
Still Accruing
|
Nonaccrual
Loans With No
ACL
|
Nonaccrual
Loans With an
ACL
|
Total
Nonaccrual
Loans
|
||||||||||||
|
Residential real estate
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Commercial real estate:
|
||||||||||||||||
|
Owner-occupied
|
|
|
|
|
||||||||||||
|
Nonowner-occupied
|
|
|
|
|
||||||||||||
|
Construction
|
|
|
|
|
||||||||||||
|
Commercial and industrial
|
|
|
|
|
||||||||||||
|
Consumer:
|
||||||||||||||||
|
Automobile
|
|
|
|
|
||||||||||||
|
Home equity
|
|
|
|
|
||||||||||||
|
Other
|
|
|
|
|
||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
The Company recognized $18 and $4 of interest income in nonaccrual loans during the three months ended March 31, 2025 and 2024, respectively.
17
NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)
The following table presents the aging of the recorded investment of past due loans by class of loans as of March 31, 2025 and December 31, 2024:
|
March 31, 2025
|
30-59
Days
Past Due
|
60-89
Days
Past Due
|
90 Days
Or More
Past Due
|
Total
Past Due
|
Loans Not
Past Due
|
Total
|
||||||||||||||||||
|
Residential real estate
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Commercial real estate:
|
||||||||||||||||||||||||
|
Owner-occupied
|
|
|
|
|
|
|
||||||||||||||||||
|
Nonowner-occupied
|
|
|
|
|
|
|
||||||||||||||||||
|
Construction
|
|
|
|
|
|
|
||||||||||||||||||
|
Commercial and industrial
|
|
|
|
|
|
|
||||||||||||||||||
|
Consumer:
|
||||||||||||||||||||||||
|
Automobile
|
|
|
|
|
|
|
||||||||||||||||||
|
Home equity
|
|
|
|
|
|
|
||||||||||||||||||
|
Other
|
|
|
|
|
|
|
||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
December 31, 2024
|
30-59
Days
Past Due
|
60-89
Days
Past Due
|
90 Days
Or More
Past Due
|
Total
Past Due
|
Loans Not
Past Due
|
Total
|
||||||||||||||||||
|
Residential real estate
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Commercial real estate:
|
||||||||||||||||||||||||
|
Owner-occupied
|
|
|
|
|
|
|
||||||||||||||||||
|
Nonowner-occupied
|
|
|
|
|
|
|
||||||||||||||||||
|
Construction
|
|
|
|
|
|
|
||||||||||||||||||
|
Commercial and industrial
|
|
|
|
|
|
|
||||||||||||||||||
|
Consumer:
|
||||||||||||||||||||||||
|
Automobile
|
|
|
|
|
|
|
||||||||||||||||||
|
Home equity
|
|
|
|
|
|
|
||||||||||||||||||
|
Other
|
|
|
|
|
|
|
||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
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.
The Company uses the following definitions for its criticized loan risk ratings:
Special Mention. Loans classified as “special mention” are
graded 8 and 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.
18
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” are graded 9 and
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” are graded 10 and
display a high probability of loss, although the amount of actual loss at the time of classification is undetermined. This classification should be temporary until such time that actual loss can be identified, or improvements are made to reduce the
seriousness of the classification. These loans exhibit all substandard characteristics with the addition that weaknesses make collection or liquidation in full highly questionable and improbable. This classification consists of loans where the
possibility of loss is high after collateral liquidation based upon existing facts, market conditions, and value. Loss is deferred until certain important and reasonable specific pending factors that may strengthen the credit can be more accurately
determined. These factors may include proposed acquisitions, liquidation procedures, capital injection, receipt of additional collateral, mergers, or refinancing plans. A doubtful classification for an entire credit should be avoided when collection of
a specific portion appears highly probable with the adequately secured portion graded substandard.
Loss. Loans classified as “loss” are graded 11 and are considered
uncollectible and are of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the credit has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer
writing off this asset yielding such a minimum value even though partial recovery may be affected in the future. Amounts classified as loss should be promptly charged off.
As of March 31, 2025 and December 31, 2024, 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
|
|||||||||||||||||||||||||||||||
|
March 31, 2025
|
2025
|
2024
|
2023
|
2022
|
2021
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Commercial real estate:
|
||||||||||||||||||||||||||||||||
|
Owner-occupied
|
||||||||||||||||||||||||||||||||
|
Risk Rating
|
||||||||||||||||||||||||||||||||
|
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
19
NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
March 31, 2025
|
2025
|
2024
|
2023
|
2022
|
2021
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Commercial real estate:
|
||||||||||||||||||||||||||||||||
|
Nonowner-occupied
|
||||||||||||||||||||||||||||||||
|
Risk Rating
|
||||||||||||||||||||||||||||||||
|
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
March 31, 2025
|
2025
|
2024
|
2023
|
2022
|
2021
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Commercial real estate:
|
||||||||||||||||||||||||||||||||
|
Construction
|
||||||||||||||||||||||||||||||||
|
Risk Rating
|
||||||||||||||||||||||||||||||||
|
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
March 31, 2025
|
2025
|
2024
|
2023
|
2022
|
2021
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Commercial and Industrial
|
||||||||||||||||||||||||||||||||
|
Risk Rating
|
||||||||||||||||||||||||||||||||
|
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
20
NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
December 31, 2024
|
2024
|
2023
|
2022
|
2021
|
2020
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Commercial real estate:
|
||||||||||||||||||||||||||||||||
|
Owner-occupied
|
||||||||||||||||||||||||||||||||
|
Risk Rating
|
||||||||||||||||||||||||||||||||
|
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
December 31, 2024
|
2024
|
2023
|
2022
|
2021
|
2020
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Commercial real estate:
|
||||||||||||||||||||||||||||||||
|
Nonowner-occupied
|
||||||||||||||||||||||||||||||||
|
Risk Rating
|
||||||||||||||||||||||||||||||||
|
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
December 31, 2024
|
2024
|
2023
|
2022
|
2021
|
2020
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Commercial real estate:
|
||||||||||||||||||||||||||||||||
|
Construction
|
||||||||||||||||||||||||||||||||
|
Risk Rating
|
||||||||||||||||||||||||||||||||
|
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
21
NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
December 31, 2024
|
2024
|
2023
|
2022
|
2021
|
2020
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Commercial and Industrial
|
||||||||||||||||||||||||||||||||
|
Risk Rating
|
||||||||||||||||||||||||||||||||
|
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses. For residential and consumer loan classes,
the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment of residential and consumer loans by class of
loans based on repayment activity as of March 31, 2025 and December 31, 2024:
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
March 31, 2025
|
2025
|
2024
|
2023
|
2022
|
2021
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Residential Real Estate
|
||||||||||||||||||||||||||||||||
|
Payment Performance
|
||||||||||||||||||||||||||||||||
|
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
March 31, 2025
|
2025
|
2024
|
2023
|
2022
|
2021
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Consumer:
|
||||||||||||||||||||||||||||||||
|
Automobile
|
||||||||||||||||||||||||||||||||
|
Payment Performance
|
||||||||||||||||||||||||||||||||
|
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
22
NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)
|
|
Revolving
|
|||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
March 31, 2025
|
2025
|
2024
|
2023
|
2022
|
2021
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Consumer:
|
||||||||||||||||||||||||||||||||
|
Home Equity
|
||||||||||||||||||||||||||||||||
|
Payment Performance
|
||||||||||||||||||||||||||||||||
|
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
| Revolving | ||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
March 31, 2025
|
2025
|
2024
|
2023
|
2022
|
2021
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Consumer:
|
||||||||||||||||||||||||||||||||
|
Other
|
||||||||||||||||||||||||||||||||
|
Payment Performance
|
||||||||||||||||||||||||||||||||
|
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
December 31, 2024
|
2024
|
2023
|
2022
|
2021
|
2020
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Residential Real Estate
|
||||||||||||||||||||||||||||||||
|
Payment Performance
|
||||||||||||||||||||||||||||||||
|
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
23
NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
December 31, 2024
|
2024
|
2023
|
2022
|
2021
|
2020
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Consumer:
|
||||||||||||||||||||||||||||||||
|
Automobile
|
||||||||||||||||||||||||||||||||
|
Payment Performance
|
||||||||||||||||||||||||||||||||
|
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
|
Revolving
|
|||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
December 31, 2024
|
2024
|
2023
|
2022
|
2021
|
2020
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Consumer:
|
||||||||||||||||||||||||||||||||
|
Home Equity
|
||||||||||||||||||||||||||||||||
|
Payment Performance
|
||||||||||||||||||||||||||||||||
|
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
December 31, 2024
|
2024
|
2023
|
2022
|
2021
|
2020
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Consumer:
|
||||||||||||||||||||||||||||||||
|
Other
|
||||||||||||||||||||||||||||||||
|
Payment Performance
|
||||||||||||||||||||||||||||||||
|
Performing
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Nonperforming
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
Current Period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
The Company originates residential, consumer, and commercial loans to customers located primarily in the southeastern areas of Ohio as well as the western
counties of West Virginia. Approximately 4.24 % of total loans were unsecured at March 31, 2025, up from 4.16 % at December 31, 2024.
Modifications to Borrowers Experiencing Financial Difficulty:
Occasionally, the Company modifies loans to borrowers experiencing financial difficulty. These modifications may include one or a combination of the
following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a reduction in the contractual principal and interest
payments of the loan; or short-term interest-only payment terms.
24
NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)
During the three months ended March 31, 2025
and 2024, the Company experienced no new modifications to borrowers experiencing financial difficulty.
The following table presents the activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2025 and 2024:
|
March 31, 2025
|
Residential
Real Estate
|
Commercial
Real Estate
|
Commercial
and Industrial
|
Consumer
|
Total
|
|||||||||||||||
|
Allowance for credit losses:
|
||||||||||||||||||||
|
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Provision for credit losses
|
(
|
)
|
|
|
|
|
||||||||||||||
|
Loans charged-off
|
(
|
)
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||
|
Recoveries
|
|
|
|
|
|
|||||||||||||||
|
Total ending allowance balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
March 31, 2024
|
Residential
Real Estate
|
Commercial
Real Estate
|
Commercial
and Industrial
|
Consumer
|
Total
|
|||||||||||||||
|
Allowance for credit losses:
|
||||||||||||||||||||
|
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Provision for credit losses
|
|
|
|
|
|
|||||||||||||||
|
Loans charged-off
|
(
|
)
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||
|
Recoveries
|
|
|
|
|
|
|||||||||||||||
|
Total ending allowance balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
The following table presents the amortized cost basis of collateral dependent loans by class of loans as of March 31, 2025 and December 31, 2024:
|
Collateral Type
|
||||||||||||
|
March 31, 2025
|
Real Estate
|
Business Assets
|
Total
|
|||||||||
|
Residential real estate
|
$
|
|
$
|
|
$
|
|
||||||
|
Commercial real estate:
|
||||||||||||
|
Owner-occupied
|
|
|
|
|||||||||
|
Non-owner occupied
|
|
|
|
|||||||||
|
Construction
|
|
|
|
|||||||||
|
Commercial and Industrial
|
|
|
|
|||||||||
|
Consumer:
|
||||||||||||
|
Automobile
|
|
|
|
|||||||||
|
Home equity
|
|
|
|
|||||||||
|
Other
|
|
|
|
|||||||||
|
Total collateral dependent loans
|
$
|
|
$
|
|
$
|
|
||||||
|
Collateral Type
|
||||||||||||
|
December 31, 2024
|
Real Estate
|
Business Assets
|
Total
|
|||||||||
|
Residential real estate
|
$
|
|
$
|
|
$
|
|
||||||
|
Commercial real estate:
|
||||||||||||
|
Owner-occupied
|
|
|
|
|||||||||
|
Non-Owner-occupied
|
|
|
|
|||||||||
|
Construction
|
|
|
|
|||||||||
|
Commercial & Industrial
|
|
|
|
|||||||||
|
Consumer:
|
||||||||||||
|
Automobile
|
|
|
|
|||||||||
|
Home equity
|
|
|
|
|||||||||
|
Other
|
|
|
|
|||||||||
|
Total collateral dependent loans
|
$
|
|
$
|
|
$
|
|
||||||
25
NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)
The recorded investment of a loan excludes accrued interest and net deferred origination fees and costs due to immateriality.
Nonaccrual loans and loans past due 90 days or more and still accruing include both smaller balance homogenous loans that are collectively evaluated for
impairment and individually classified as impaired loans.
The Company transfers loans to OREO, at fair value less cost to sell, in the period the Company obtains physical possession of the property (through legal
title or through a deed in lieu). The Company had no 352 and $342 as of March 31, 2025 and December 31, 2024, respectively.
NOTE 5 – FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees. The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to
extend credit and standby letters of credit, and financial guarantees written, is represented by the contractual amount of those instruments. The contract amounts of these instruments are not included in the consolidated financial statements. At March 31, 2025, the contract amounts of
these instruments totaled approximately $225,927 , compared to $203,019 at December 31, 2024. The Bank estimates expected credit losses over the contractual period in which the Bank is exposed to credit risk via a contractual obligation to extend credit. At March 31, 2025, the estimated ACL related to off-balance sheet commitments was $522 ,
which included a $60 and $106 recovery
of provision during the three months ended March 31, 2025 and 2024, respectively. 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 March 31,
2025 and December 31, 2024 are comprised of advances from the Federal Home Loan Bank (“FHLB”) of Cincinnati and promissory notes.
|
FHLB
Borrowings
|
Promissory
Notes
|
Totals
|
||||||||||
|
March 31,
2025
|
$
|
|
$
|
|
$
|
|
||||||
|
December 31,
2024
|
$
|
|
$
|
|
$
|
|
||||||
Pursuant to collateral agreements with the FHLB, advances are secured by $341,287 in qualifying mortgage loans, $40,465 in commercial loans and $2,866 in FHLB stock at March 31, 2025. Fixed-rate FHLB advances of $35,856 mature through 2042 and have
interest rates ranging from 1.53 % to 4.91 %
and a year-to-date weighted average cost of 4.05 % at March 31, 2025 and 4.02 % at December 31, 2024. There were no variable-rate FHLB borrowings at March 31, 2025.
At March 31, 2025, the Company had a cash management line of credit enabling it to borrow up to $100,000 from the FHLB, subject to the stock ownership and collateral limitations described 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 $100,000 available on this line of credit at March 31, 2025.
Based on the Company’s current FHLB stock ownership, total assets and pledgeable loans, the Company had the ability to obtain borrowings from the FHLB up
to a maximum of $189,134 at March 31,
2025. Of this maximum borrowing capacity, the Company had $89,603 available to use as additional borrowings, of which $89,603 could be used for short term, cash management
advances, as mentioned above.
At March 31, 2025, the Company had a federal
funds line of credit with two correspondent banks totaling $25,000 . The lines of credit are not committed and are provided at the discretion of the correspondent bank. No
collateral has been pledged to the lines of credit. Any advance is due to be repaid the next business day. At March 31, 2025, there was $25,000 available on these lines of credit.
26
NOTE 6 - OTHER BORROWED FUNDS (Continued)
Promissory notes, issued primarily by Ohio Valley, are due at various dates through a final maturity date of March 11, 2026 , and have fixed rates ranging from 4.35 % to 5.00 % and a year-to-date weighted average cost of 4.91 %
at March 31, 2025, as compared to 4.71 %
at December 31, 2024. At March 31, 2025
and December 31, 2024, there were six promissory notes payable by Ohio Valley to totaling $2,584 . There were no
Letters of credit issued on the Bank’s behalf by the FHLB to collateralize certain public unit deposits as required by law totaled $63,675 at March 31, 2025 and $58,500 at December 31, 2024.
Scheduled principal payments as of March 31, 2025:
|
FHLB
Borrowings
|
Promissory
Notes
|
Totals
|
||||||||||
|
2025
|
$
|
|
$
|
|
$
|
|
||||||
|
2026
|
|
|
|
|||||||||
|
2027
|
|
|
|
|||||||||
|
2028
|
|
|
|
|||||||||
|
2029
|
|
|
|
|||||||||
|
Thereafter
|
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
NOTE 7 – LEASES
Substantially all of the Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities represent leases for branch buildings and
office space to conduct business. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. The lease expense for these leases are recorded on a straight-line basis over the lease term. Leases with initial
terms in excess of 12 months are recorded as either operating or financing leases on the consolidated balance sheet. The Company has no finance lease arrangements. Operating leases have remaining lease terms ranging from 13 months to 16.4 years, some of which include
options to extend the leases for up to 15 years . Operating lease ROU assets and operating lease liabilities are valued based on the present
value of future minimum lease payments, discounted with an incremental borrowing rate for the same term as the underlying lease. The Company has one lease arrangement that contains variable lease payments that are adjusted periodically for an index.
Balance sheet information related to leases is as follows:
|
As of
March 31,
2025
|
As of
December 31,
2024
|
|||||||
|
Operating leases:
|
||||||||
|
Operating lease right-of-use assets
|
$
|
|
$
|
|
||||
|
Operating lease liabilities
|
|
|
||||||
The components of lease cost were as follows:
|
Three months ended
March 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Operating lease cost
|
$
|
|
$
|
|
||||
|
Short-term lease expense
|
|
|
||||||
27
NOTE 7 – LEASES (Continued)
Future undiscounted lease payments for operating leases with initial terms of one year or more as of March 31, 2025 are as follows:
|
Operating
Leases
|
||||
|
2025
(remaining)
|
$
|
|
||
|
2026
|
|
|||
|
2027
|
|
|||
|
2028
|
|
|||
|
2029
|
|
|||
|
Thereafter
|
|
|||
|
Total lease payments
|
|
|||
|
Less: Imputed Interest
|
(
|
)
|
||
|
Total operating leases
|
$
|
|
||
Other information was as follows:
|
As of
March 31,
2025
|
As of
December 31,
2024
|
|||||||
|
Weighted-average remaining lease term for operating leases
|
|
|
||||||
|
Weighted-average discount rate for operating leases
|
|
%
|
|
%
|
||||
NOTE 8 – RISKS AND UNCERTAINTIES
The risks pertinent to the 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 9 – DEPOSITS
Deposits are comprised of the following:
|
March 31,
2025
|
December 31,
2024
|
|||||||
|
Noninterest-bearing deposits
|
$
|
|
$
|
|
||||
|
Interest-bearing deposits:
|
||||||||
|
NOW accounts
|
|
|
||||||
|
Savings and money market
|
|
|
||||||
|
Time deposits of $250 or less
|
|
|
||||||
|
Time deposits of more than $250
|
|
|
||||||
|
Total interest-bearing deposits
|
|
|
||||||
|
Total deposits
|
$
|
|
$
|
|
||||
Brokered deposits, included in time deposits, were $48,519
and $48,395 at March 31, 2025 and December 31, 2024, respectively.
28
NOTE 10 – REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue is segregated based on the nature of products and services offered as part of contractual arrangements. Revenue from contracts with customers within the scope of
ASC 606 is broadly segregated within the following noninterest income categories:
• Service charges on deposit accounts – These include general service fees charged
for deposit account maintenance and activity and transaction-based fees charged for certain services, such as debit card, wire transfer, or overdraft activities. Revenue is recognized when the performance obligation is completed, which is generally
after a transaction is completed or monthly for account maintenance services.
• Trust fees - This includes periodic fees due from trust customers for managing
the customers' financial assets. Fees are generally charged on a quarterly or annual basis and are recognized ratably throughout the period, as the services are provided on an ongoing basis.
• Electronic refund check/deposit fees – A tax refund clearing agreement between
the Bank and a tax refund processor requires the Bank to process electronic refund checks and electronic refund deposits presented for payment on behalf of taxpayers through accounts containing taxpayer refunds. The Bank, in turn, receives a fee
paid by the third-party tax refund processor for each transaction that is processed. The amount of fees received are tiered based on the tax refund product selected. Since the
Bank acts as a sub servicer in the tax process relationship, a portion of the fee collected is passed on to the tax refund processor.
• Debit/credit card interchange income – This includes interchange income from
cardholder transactions conducted with merchants, throughout various interchange networks with which the Company participates. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are
recognized daily, as transaction processing services are provided to the deposit customer. Gross fees from interchange are recorded in operating income separately from gross network costs, which are recorded in operating expense.
• Tax preparation fees – This includes fees received by tax preparation customers of
Loan Central as part of the Bank’s TAL business. After Loan Central prepares a customer’s tax return, the customer is offered the opportunity to have immediate access to a portion of the anticipated tax refund by entering into a TAL with the Bank. As
part of the process, the tax customer completes a loan application and authorizes the expected tax refund to be deposited with the Bank once it is issued by the IRS. Once the Bank receives the tax refund, the refund is used to repay the TAL and Loan
Central’s tax preparation fees, then the remainder of the refund is remitted to Loan Central’s tax customer.
• Float income from tax product processor – This is associated with the tax refund
clearing agreement between the Bank and a third-party tax refund processor. The revenue earned is based on the estimated compensating balances associated with processing the
contractual minimum number of check items multiplied by the interest rate paid by the Federal Reserve on reserves for the respective period. The float income is paid by the tax refund product processor at the end of each year of the tax agreement,
which is to expire in 2025.
29
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(dollars in thousands, except share and per share data)
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this quarterly report on Form 10-Q (the
“report”) and other publicly available documents incorporated herein by reference constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as
amended (the “Exchange Act”), and as defined in the Private Securities Litigation Reform Act of 1995. Such statements are often, but not always, identified by the use of such words as “believes,” “anticipates,” “expects,” “intends,” “plan,” “goal,”
“seek,” “project,” “estimate,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and other similar expressions. Such statements involve various important assumptions, risks, uncertainties, and other factors, many of which are beyond our
control, particularly with regard to developments related to the current economic and geopolitical landscape, and which could cause actual results to differ materially from those expressed in such forward looking-statements. However, it is difficult
to predict the effect of known factors, and by Ohio Valley Banc Corp. (“Ohio Valley”) cannot anticipate all factors that could affect future results. Important factors that could cause actual results to differ materially from expectations expressed
in or implied in forward looking statements include, but are not limited to: the effects of fluctuating interest rates on our customers’ operations and financial condition; changes in political, economic or other factors, such as inflation rates,
recessionary or expansive trends, taxes, tariffs, the effects of implementation of legislation and the continuing economic uncertainty in various parts of the world; competitive pressures; the level of defaults and prepayment on loans made by Ohio
Valley and its direct and indirect subsidiaries (collectively, the “Company”); unanticipated litigation, claims, or assessments; fluctuations in the cost of obtaining funds to make loans; and regulatory changes. Additional detailed information
concerning such factors is available in the Company’s filings with the Securities and Exchange Commission, under the Exchange Act, including the disclosure under the heading “Item 1A. Risk Factors” of Part I of the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2024 and elsewhere in this document (including, without limitation, in conjunction with the forward looking statements themselves and under the heading “Critical Accounting Estimates”). All forward looking
statements are qualified in their entirety by these and other cautionary statements that the Company makes from time to time in its other SEC filings and public communications. 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 duty to update or revise any forward looking statements, whether as a result of new information, unanticipated future events or otherwise,
except as required by law.
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”), and Ohio Valley Financial Services Agency, LLC, an insurance agency. The Bank has one
active, wholly-owned subsidiary, Ohio Valley REO, LLC, an Ohio limited liability 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 and commercial 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 PARTICIPATING IN THE OHIO HOMEBUYER PLUS PROGRAM:
During the third quarter of 2024, the Company began participating in a program offered by the Ohio Treasurer (the “Treasurer”) called the Ohio Homebuyer Plus. The program is designed to encourage Ohio residents to save for the purchase of a home. As a
participant in the program, the Company developed the “Sweet Home Ohio” deposit account to offer participants an above-market interest rate of 5.83%, along with a deposit bonus to assist customers in achieving their home savings goals. For each Sweet
Home Ohio account that was opened, the Company received a deposit from the Treasurer at a subsidized interest rate of 0.86%. Accounts connected with Ohio Homebuyer Plus must be used within five years and the corresponding balance of Treasurer deposits
will fluctuate based upon active customer accounts. At March 31, 2025, the balance of Sweet Home Ohio accounts totaled $7,729 compared to $6,775 at December 31, 2024. At March 31, 2025, the amount of Treasurer deposits totaled $82,373 compared to
$97,366 at December 31, 2024. Since the Treasurer deposits are classified as public funds, which are required to be collateralized, the Company invested the funds in securities to be pledged as collateral to the Treasurer. At March 31, 2025, the
balance of securities used to collateralize the Treasurer deposits totaled $96,707 compared to $102,871 at December 31, 2024.
30
FINANCIAL RESULTS OVERVIEW: Net income totaled $4,406 during the first quarter of 2025, an
increase of $1,613 from the same period of 2024. Earnings per share for the first quarter of 2025 finished at $.94 per share, compared to $.58 per share during the first quarter of 2024. The positive results during the quarterly period were impacted by
a 10.8% increase in average earning assets, coming primarily from loans and securities, which contributed to a 17.4% increase in net interest income during the three months ended March 31, 2025, compared to the same period in 2024. Also contributing to
higher net earnings was a 44.6% decrease in provision for credit loss expense, impacted by a decrease in loan balances generally allocated for during 2025. The positive effects from higher net interest income and lower provision expense were partially
offset by a 1.4% decrease in noninterest income and a 0.7% increase in noninterest expense. Higher net earnings also had a corresponding impact to the Company’s annualized net income to average asset ratio, or return on assets, which increased 37 basis
points to 1.20% during the first quarter of 2025, compared to the same period in 2024. In addition, the Company’s net income to average equity ratio, or return on equity, increased 405 basis points to 11.82% during the first quarter of 2025, compared
to the same period in 2024.
During the three months ended March 31, 2025, net interest income increased $1,950, or 17.4%, over the same period in 2024. This growth came mostly from a $136,241
increase in average earning assets, led mostly by a 55.2% increase in average securities and a 7.0% increase in average loans. The growth in average securities came in large part to the increased pledging requirements on public fund deposits as part of
the Ohio Homebuyer Plus program. The growth in average loans was related to the commercial and residential real estate lending segments. Earnings were further enhanced by a higher net interest margin, increasing 24 basis points during the three months
ended March 31, 2025, compared to the same period in 2024. Margin growth was related to an increase in the yield on earning assets, while the cost of funding sources decreased. The improvement to earning asset yields was directly related to the growth
in higher-yielding securities and loans, while the cost of funding sources decreased as the composition of funding sources shifted to lower cost deposit sources, such as NOW, money market, checking and savings accounts.
During the three months ended March 31, 2025, the Company’s provision for credit loss expense decreased $335, when compared to the same period in 2024. The decrease during
the quarter came primarily from lower general reserves associated with a $18,529 decrease in loans from year-end 2024. The decrease in total loans was primarily related to a $31,473 decrease in a warehouse line of credit extended to another mortgage
lender. The Company also experienced lower reserves associated with select qualitative risk factors.
During the three months ended March 31, 2025, noninterest income decreased $50, or 1.4% from the same period in 2024. The decrease came mostly from a decline in swap asset
revenue and tax preparation fees, while changes in the remaining areas were minimal.
During the three months ended March 31, 2025, noninterest expense increased $77, or 0.7%, over the same period in 2024. Noninterest expenses were led by increases in data
processing, occupancy and equipment, and marketing costs, which collectively increased $240, or 13.1%. Data processing expenses were impacted by costs associated with the Company’s debit and credit card platforms. Occupancy and equipment costs were
impacted by various repair and maintenance items. Marketing cost increases were impacted by higher donation and advertising budgets for 2025. Partially offsetting the increases in overhead costs were decreases in salaries and employee benefits and
software expenses, which collectively decreased $235, or 3.5%. Cost savings in salaries and employee benefits was the direct result of a voluntary early retirement program implemented in 2024, while software expenses declined as a result of costs
associated with select service agreements from the first quarter of 2024 that was not as impactful in 2025. The remaining noninterest expenses increased $72 primarily from higher FDIC insurance assessment costs.
The $545 increase in the Company’s provision for income taxes during the three months ended March 31, 2025, compared to the same period in 2024, was largely due to the
increase in operating income affected by the factors mentioned above, as well as an increase in the effective tax rate.
At March 31, 2025, total assets were $1,513,105, an increase of $9,693 from year-end 2024. The increase in assets was primarily the result of a $34,634 increase in
balances maintained at the FRB, as total loans decreased $18,529 and total securities decreased $9,378. As previously mentioned, the decrease in loans was related to a $31,473 decrease in a warehouse line of credit extended to another mortgage lender.
Absent this decrease, the Company would have experienced loan growth of $12,944 during the first quarter of 2025 in the targeted commercial real estate and residential real estate loan portfolios. The decrease in securities was related to the lower
need for securities to pledge to the Treasurer due to a $14,993 balance decrease.
31
At March 31, 2025, total liabilities were $1,357,390, up $4,306 from year-end 2024. Contributing most to this increase were higher deposit balances, which increased $8,991
from year-end 2024. Leading deposit growth were interest-bearing deposit balances, up $10,510 from year-end 2024, consisting of higher balances from savings and money market accounts (+2.4%), and time deposits (+1.6%), partially offset by a decrease in
Negotiable Order of Withdrawal (“NOW”) accounts (-0.9%). At March 31, 2025, the Company experienced lower noninterest-bearing demand deposits, decreasing $1,519 from year-end 2024.
At March 31, 2025, total shareholders' equity was $155,715, up $5,387 from December 31, 2024. This increase came primarily from quarterly net income and an after-tax
increase in net unrealized gains on AFS securities, partially offset by quarterly cash dividends paid. Regulatory capital ratios of the Company remained higher than the "well capitalized" minimums.
Comparison of Financial Condition
at March 31, 2025 and December 31, 2024
at March 31, 2025 and December 31, 2024
The following discussion focuses in more detail on the consolidated financial condition of the Company at March 31, 2025 compared to December 31, 2024. This discussion
should be read in conjunction with the interim consolidated financial statements and the notes included in this Form 10‑Q.
Cash and Cash Equivalents
At March 31, 2025, cash and cash equivalents were $120,608, an increase of $37,501, or 45.1%, from December 31, 2024. The increase came primarily from interest-bearing
deposits with banks, which were up $34,634, or 51.4%, from year-end 2024. The Company’s interest-bearing FRB clearing account contributed most to the increase in interest-bearing deposits with banks, representing 84% of cash and cash equivalents at
March 31, 2025. The Company utilizes its interest-bearing FRB clearing account to manage excess funds, as well as to assist in funding earning asset growth. The increases in excess funds during the first quarter of 2025 came primarily from decreases in
both loans and securities, which were down $18,529 and $9,378, respectively, from year-end 2024. As previously mentioned, the decrease in loans was related to a $31,473 decrease in a warehouse line of credit extended to another mortgage lender. The
decrease in securities was related to the lower need for securities to pledge to the Treasurer deposits as part of the Homebuyer Plus program. The interest rate paid on both the required and excess reserve balances of the FRB is based on the targeted
federal funds rate established by the Federal Open Market Committee, which remained at a range of 4.25% to 4.50% at March 31, 2025 and December 31, 2024. The interest-bearing deposit balances in the FRB are 100% secured by the U.S. Government.
As liquidity levels continuously vary based on consumer activities, amounts of cash and cash equivalents can vary widely at any given point in time. The
Company’s focus during periods of heightened liquidity will be to invest excess funds into longer-term, higher-yielding assets, primarily loans, when opportunities arise.
Securities
The balance of total securities decreased $9,378, or 3.4% from year-end 2024. As previously mentioned, the decrease in securities was impacted by the lower need for
securities to pledge to the Treasurer deposits in relation to the Homebuyers Plus program. The Company’s U.S. Government securities portfolio decreased $33,860 from $168,030 at year-end 2024 to $134,170 at March 31, 2025, impacted by $35,000 in
scheduled maturities. The Company utilized a portion of its proceeds from maturities of U.S. Government securities to fund additional purchases in U.S. Government agency (“Agency”) mortgage-backed securities, which were up $24,918, or 26.5%, from
year-end 2024. During the first quarter of 2025, purchases of Agency mortgage-backed securities totaled $27,482, while being partially offset by $4,460 in principal repayments. 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. At March 31, 2025, the Company’s investment securities portfolio was comprised mostly of U.S. Government securities at
50.5% of total investments, while Agency mortgage-backed securities represented 44.8%.
32
Included in the increasing factors mentioned above were changes in net unrealized losses associated with AFS securities. During the first quarter of 2025, a decrease in
long-term market rates led to a $2,589 increase in the fair value associated with the Company’s AFS securities at March 31, 2025. The fair value of an investment security moves inversely to interest rates, so as rates decreased, the fair value
increased, causing the unrealized loss in the portfolio to decrease. These changes in rates are typical and do not impact earnings of the Company as long as the securities are held to full maturity.
Loans
The loan portfolio represents the Company’s largest asset category and is its most significant source of interest income. Loan segments have been identified as Commercial
Real Estate, Commercial and Industrial, Residential Real Estate, and Consumer.
Commercial real estate consists of owner-occupied, nonowner-occupied and construction loans. Owner-occupied loans consist of nonfarm, nonresidential properties. A
commercial owner-occupied loan is a borrower purchased building or space for which the repayment of principal is dependent upon cash flows from the ongoing operations conducted by the party, or an affiliate of the party, who owns the property.
Owner-occupied loans of the Company include loans secured by hospitals, churches, and hardware and convenience stores. Nonowner-occupied loans are property loans for which the repayment of principal is dependent upon rental income associated with the
property or the subsequent sale of the property, such as apartment buildings, condominiums, hotels, and motels. These loans are primarily impacted by the level of interest rates associated with the debt and to local economic conditions, which dictate
occupancy rates and the amount of rent charged. The increase in debt service due to higher interest rates may not be able to be passed on to tenants. As part of the origination process, loan interest rates and occupancy rates are stressed to determine
the impact on the borrower’s ability to maintain adequate debt service under different economic conditions. Furthermore, the Company monitors the concentration in any one industry and has established limits relative to capital. In addition, credit
quality trends are monitored by industry to determine if a change in the risk exposure to a certain industry may warrant a change in our underwriting standards. Table I has been provided to illustrate the industry composition of the commercial real
estate portfolio. Commercial construction loans are extended to individuals as well as corporations for the construction of an individual property or multiple properties and are secured by raw land and the subsequent improvements. Commercial real
estate also includes loan participations with other banks outside the Company’s primary market area. Although the Company is not actively seeking to participate in loans originated outside its primary market area, it has taken advantage of the
relationships it has with certain lenders in those areas where the Company believes it can profitably participate with an acceptable level of risk.
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.
COMMERCIAL REAL ESTATE BY INDUSTRY
As of March 31, 2025
Table I
The following table provides the composition of commercial real estate loans by industry classification (as defined by the North American Industry Classification System).
|
(dollars in thousands)
|
||||||||
|
|
Amount
|
% of Total
|
||||||
|
Real Estate Rental and Leasing
|
$
|
182,292
|
47.85
|
%
|
||||
|
Accommodation and Food Services
|
65,581
|
17.21
|
%
|
|||||
|
Retail Trade
|
29,536
|
7.75
|
%
|
|||||
|
Health Care and Social Assistance
|
23,655
|
6.21
|
%
|
|||||
|
Manufacturing
|
19,182
|
5.03
|
%
|
|||||
|
Construction
|
16,230
|
4.26
|
%
|
|||||
|
All Other
|
44,503
|
11.69
|
%
|
|||||
|
Total
|
$
|
380,979
|
100.00
|
%
|
||||
33
Residential real estate loans consist of loans to individuals for the purchase of 1-4 family primary residences with repayment primarily through wage or other income
sources of the individual borrower. The Company’s loss exposure to these loans is dependent on local market conditions for residential properties as loan amounts are determined, in part, by the fair value of the property at origination.
Consumer loans are primarily secured by automobiles, mobile homes, recreational vehicles, and other personal property. Personal loans and unsecured credit card receivables
are also included as consumer loans.
The Company’s loan balances decreased to $1,043,296 at March 31, 2025, representing a decrease of $18,529, or 1.7%, as compared to $1,061,825 at December 31, 2024. The
decrease in loans came primarily from the residential real estate loan and consumer loan portfolios, partially offset by increases in in the commercial real estate and commercial and industrial portfolios from year-end 2024.
The Company’s residential real estate loan portfolio decreased $24,708, or 6.6%, from year-end 2024. At March 31, 2025, residential real estate loans represented the
second largest segment of the Company’s total loan portfolio at 33.4%. As previously mentioned, the decrease was largely due to a $31,473 paydown in a warehouse line
of credit extended to another mortgage lender. The warehouse lending line is used by the mortgage lender to make loans for the purchase of one- to four-family residential real estate properties. The mortgage lender eventually sells the loan and repays
the Bank. The paydown was a result of lower mortgage volume due to higher mortgage rates and the increase in the lead bank’s internal capacity in relation to a capital infusion. The balance of this line of credit is expected to increase in future
periods if mortgage volume increases and the funding needs of the lead bank changes. The remaining residential real estate loan balances increased $6,765, or 1.8%, from year-end 2024. During 2025, as mortgage rates continued to increase, the Company
experienced less opportunities to sell long-term fixed rate loans to the secondary market. With elevated mortgage rates, mortgage customers were selecting more variable rate mortgage products instead of long-term fixed rate mortgage products. This had
a direct impact on lowering loan volume within the long-term fixed rate loan portfolio (down $1,435) and contributed to a shift into more short-term variable rate mortgages (up $7,947) as of March 31, 2025.
Further decreases in loans came from the Company’s consumer loan portfolio, which was down $8,003, or 5.1%, from year-end 2024. This change was impacted by a $4,651, or
9.3%, decrease in automobile loans. This was directly impacted by management’s strategy to place more emphasis on higher yielding loan portfolios (i.e. commercial, and to a smaller extent, residential real estate). Indirect automobile loans bear
additional costs from dealers that partially offset interest revenue and lower the rate of return. As a result, the Company exited the indirect lending business for automobiles and recreational vehicles during the fourth quarter of 2024. Decreases in
consumer loans also came from a $4,248, or 6.6%, decrease in other consumer loans from year-end 2024, impacted by principal repayments and payoffs. Decreases in consumer loans were partially offset by a $896, or 2.1%, increase in home equity lines of
credit.
The decreases in the Company’s residential real estate and consumer loan portfolios at March 31, 2025 were partially offset by an increase in commercial loans. The
Company’s commercial loan portfolio increased $14,182, or 2.7%, from year-end 2024. Contributing most to this increase were higher loan balances within the commercial real estate portfolio, which increased $7,992, or 2.1%, from year-end 2024. At March
31, 2025, commercial real estate loans represented the largest segment of the Company’s total loan portfolio at 36.5%. The increase from year-end 2025 came primarily from new originations within the owner- and nonowner-occupied loan segments.
Commercial loans were also positively impacted by an increase in the commercial and industrial portfolio, which was up $6,190, or 3.9%, from year-end 2024. The growth was
impacted by an increase in larger loan originations during the year. While management believes lending opportunities exist in the 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 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.
The Company maintains an 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.
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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. As of March 31, 2025, the Company determined that all AFS securities that experienced a decline in fair value below the amortized cost basis from year-end 2024 were due to non-credit
related factors. Furthermore, the Company 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. Therefore, no ACL was
recorded, and no provision expense was recognized during the three months ended March 31, 2025.
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. At March 31, 2025, a $1 ACL was recognized based on a .02% cumulative default rate taken from the S&P and Moody’s bond rating index. The $1 ACL
for HTM debt securities was unchanged from December 31, 2024, resulting in no provision expense during the three months ended March 31, 2025.
For loans, the Company’s ACL is management’s estimate of expected lifetime credit losses, measured over the contractual life of a loan, 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 not 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 the loan’s observable market price, or if the loan was collateral dependent, at the fair value of the collateral.
As of March 31, 2025, the ACL for loans totaled $10,139, or 0.97%, of total loans. As of December 31, 2024, the ACL for loans totaled $10,088, or 0.95%, of total loans.
All of the $51, or 0.5%, increase in the ACL came from loans collectively evaluated. The increase in ACL reserves was impacted primarily by a higher historical loss rate within the commercial real estate and commercial and industrial portfolios,
partially offset by a lower historical loss rate within the consumer loan portfolio. At March 31, 2025, there were no specific reserves on loans being individually evaluated for impairment, the same as year-end 2024.
The Company experienced minimal change in their delinquency levels from year-end 2024. Nonperforming loans to total loans increased slightly to 0.48% at March 31, 2025,
compared to 0.46% at December 31, 2024, while nonperforming assets to total assets remained unchanged at 0.33%. The increase in nonperforming loans to total loans resulted from a $124 increase in nonaccrual loans, coming mostly from the commercial and
industrial and residential real estate loan portfolios.
Management believes that the ACL at March 31, 2025 was appropriate to absorb expected losses in the loan portfolio. 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 ACL 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.
Deposits
Deposits are used as part of the Company’s liquidity management strategy to meet obligations for depositor withdrawals, fund the borrowing needs of loan customers, and
fund ongoing operations. Deposits continue to be the most significant source of funds used by the Company to support earning assets. Total deposits at March 31, 2025 increased $8,991, or 0.7%, from year-end 2024. This change in deposits came primarily
from interest-bearing deposit balances, which were up by $10,510, or 1.1%, from year-end 2024, while noninterest-bearing deposits decreased $1,519, or 0.5%, from year-end 2024.
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The increase in interest-bearing deposits came primarily from savings and money market account balances, which increased $6,948, or 2.4%, from year-end 2024. The increase
came primarily from savings accounts, which increased $6,590 from year-end 2024, impacted mostly by the Company’s statement savings account product. Money market account balances increased $358 from year-end 2024, impacted mostly by increases in the
Company’s tiered money market product (Money Fund) that was introduced in 2023 and offers a higher rate on tiered deposit balances.
Further increases in interest-bearing deposits came from time deposit balances, which increased $6,136, or 1.6%, from year-end 2024. The increase came from retail time
deposits, which increased $5,767 from year-end 2024. The surge in product rate increases on retail CDs continued to slow during 2025, which has limited the growth in time deposits from year-end 2024 compared to savings and money market deposits. The
Company’s wholesale time deposits increased $369, or 0.6%, from year-end 2024.
Partially offsetting the increases in savings, money market and time deposit balances were lower interest-bearing NOW account balances, which decreased $2,574, or 0.9%,
from year-end 2024. The decrease was largely from a $14,993 decrease in the Company’s municipal NOW account with the Treasurer in relation to the Homebuyer Plus program. Excluding this decrease in the Treasurer account balances, the Company would have
experienced a $16,216 increase in its other municipal NOW product balances, particularly within the Gallia County, Ohio, and Mason County, West Virginia, market areas.
The decrease in noninterest-bearing demand deposits was primarily from the Company’s business and incentive-based checking account 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 2025, reflecting the Company’s efforts to reduce its reliance on higher cost funding and improve net interest income.
Other Borrowed Funds
Other borrowed funds were $38,440 at March 31, 2025, a decrease of $1,300, or 3.3%, from year-end 2024. The decrease was related to the scheduled principal amortization
for applicable FHLB advances. While deposits continue to be the primary source of funding for growth in earning assets, management will continue to utilize FHLB advances and promissory notes to help manage interest rate sensitivity and liquidity.
Total shareholders' equity at March 31, 2025 increased $5,387, or 3.6%, to finish at $155,715, as compared to $150,328 at December 31, 2024. This was primarily from
quarterly net income and an increase in the fair value of AFS securities, partially offset by cash dividends paid. The after-tax increase in fair value on AFS securities totaled $2,018 from year-end 2024, as long-term market rates decreased during the
first quarter of 2025, causing an increase in the fair value of AFS securities.
Comparison of Results of Operations
For the Three Months Ended
March 31, 2025 and 2024
The following discussion focuses, in more detail, on the consolidated results of operations of the Company for the three months ended March 31, 2025, compared to the same
period in 2024. This discussion should be read in conjunction with the interim consolidated financial statements and the notes included in this Form 10‑Q.
Net Interest Income
The most significant portion of the Company's revenue, net interest income, results from properly managing the spread between interest income on earning assets and
interest expense incurred on interest-bearing liabilities. During the three months ended March 31, 2025, net interest income increased $1,950, or 17.4%, compared to the same period in 2024. The improvement during 2025 came from average earning asset
growth and the net interest margin. The average growth was impacted by a composition shift into higher-yielding loans and securities, combined with a consumer shift to more lower-cost deposit sources that helped reduce the higher average costs paid on
deposits and borrowings.
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Total interest and fee income recognized on the Company’s earning assets increased $2,116, or 12.0%, during the first quarter of 2025, compared to the same period in 2024.
The earnings growth was impacted by interest on loans, which increased $1,445, or 9.5%. This improvement was impacted by increases in both average loan balances and loan yields. Overall, average loans increased $68,219, or 7.0%, during the three months
ended March 31, 2025, compared to the same period in 2024. Balance increases were mostly realized within the commercial and residential real estate loan portfolios due to higher commercial loan volume and a consumer preference for short-term, variable
rate residential real estate loans. Loan revenue improvement also came from average loan yields increasing from 6.34% during the first quarter of 2024 to 6.53% during the first quarter of 2025. Loan yield increases were mostly impacted by the
commercial and residential real estate loan portfolios.
Total interest on securities increased $1,264, or 137.5%, during the first quarter of 2025, compared to the same period in 2024. The earnings growth was primarily from the
purchase of $100,497 in U.S. Government securities during the third quarter of 2024 as part of the Company’s participation in the state’s Homebuyer Plus program. The securities were purchased at a weighted average yield of 4.7% with maturity terms
ranging from 6 months to 18 months. The security purchases were used to collateralize $100,00 in public fund deposits received by the Treasurer as part of the program. This contributed to increases in average security balances, which were up $95,521
during the first quarter of 2025, compared to the same period in 2024. While securities have grown in large part due to the security purchases from the Homebuyer Plus program, the Company has placed more emphasis on growing its higher-yielding loan
portfolio during 2024 and 2025, utilizing proceeds from various maturities and repayments of securities to help fund loan growth. Earnings from securities were positively impacted by increases in the average yield on securities, impacted by the
$100,497 purchase of U.S Government securities at a weighted average yield of 4.7% that was higher than the 3.17% average yield on the total securities portfolio at March 31, 2025. Average security yields have also been positively impacted by the
elevated market rate environment during 2024 that continued into 2025. As a result, average security yields increased 119 basis points to 3.17% during the first quarter of 2025, compared to the same period in 2024.
Total interest income from interest-bearing deposits with banks decreased $591 during the first quarter of 2025, compared to the same period in 2024. This was largely from
average balance decreases with the Company’s interest-bearing FRB clearing account, which decreased $27,503 during the three months ended March 31, 2025, compared to the same period in 2024. FRB clearing balances were used to assist in funding loan
growth, which contributed to the average balance decrease of FRB funds during the first quarter of 2025, compared to the first quarter of 2024. Further impacting lower interest income from the FRB clearing account were short-term rate decreases during
2024. Between September and December 2024, the FRB took action to reduce the rate associated with the FRB clearing account by 100 basis points due to improvements in inflationary pressures. This action lowered the target federal funds rate to a range
of 4.25% to 4.50%, which had a negative impact on the FRB clearing account’s interest earnings.
Total interest expense incurred on the Company’s interest-bearing liabilities increased $166 during the first quarter of 2025, compared to the same period in 2024.
Increases in interest expense were impacted by growth in the Company’s average interest-bearing deposits, which increased $125,662 during the first quarter of 2025, compared to the same period in 2024. A large portion of this growth came from
lower-costing NOW and savings account balances related to the Company’s participation in the Homebuyers Plus program. With the additions of the municipal NOW Treasurer account and new Home Sweet Home savings accounts during the second half of 2024,
this contributed to an average balance increase of over $94,595 in interest-bearing deposits during the first quarter of 2025. Average interest-bearing deposit growth also came from a $31,770 increase in the Company’s lower-costing tiered money market
product (Money Fund).
The Company also experienced a $7,609 increase in its average time deposits during the first quarter of 2025, compared to the same period in 2024. While the movement of
higher time deposit balances had a corresponding impact to higher interest expense, the average cost associated with time deposits decreased during the first quarter of 2025, compared to the same period in 2024. During 2023, rate offerings on retail
CDs continued to adjust up as a result of market competition. The Company had offered various “short-term” CD rate specials with maturity terms of less than one year to attract and retain its core deposit funding during this time. Since then, product
rates on retail CDs have decreased, which has allowed a large portion of those short-term retail CDs to renew at lower rates, or in some cases, be reinvested into lower-costing savings or money market accounts. Furthermore, the Company’s average
wholesale funding balances decreased $20,172 during the first quarter of 2025, which included the use of brokered CDs (average cost of 4.70%) and FHLB advances (average cost of 4.05%). With the Company utilizing the growth in its lower-cost retail
deposit sources to fund earning asset growth, the reliance on higher-cost wholesale deposits to fund asset growth decreased, which helped to limit the growth in interest expense during 2025. As a result of the rate repricings on retail CDs and the
deposit shift into lower-cost funding sources, the Company’s total weighted average costs on interest-bearing liabilities decreased by 14 basis points from 2.15% at March 31, 2024 to 2.01% at March 31, 2025.
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The Company’s net interest margin is defined as fully tax-equivalent net interest income as a percentage of average earning assets. During 2025, the Company’s first
quarter net interest margin increased to 3.85%, compared to 2024’s first quarter net interest margin of 3.61%. Positive contributions to margin growth came from a 10.9% increase in the Company’s average earning assets, mostly from higher-yielding loans
and securities. The margin increase was also positively impacted by lower average costs associated with the Bank’s interest-bearing liabilities due to a deposit composition shift into more lower-cost NOW, savings, money market, and checking account
deposits. Furthermore, the Company has benefited from its retail CDs repricing at lower product rates, while also relying less on wholesale funding sources. The Company’s primary focus is to invest its funds into higher yielding assets, particularly
loans, as opportunities arise. However, if loan balances do not continue to expand and remain a larger component of overall earning assets, the Company will face pressure within its net interest income and margin improvement.
Provision for credit losses is recorded to achieve an ACL that is adequate to absorb estimated losses inherent in the Company’s loan portfolio, unfunded loans, and HTM
debt securities. Management performs, on a quarterly basis, a detailed analysis of the ACL that encompasses asset portfolio composition, asset quality, loss experience and other relevant economic factors. For the three months ended March 31, 2025, the
Company’s provision for credit losses expense totaled $416, a decrease of $335 when compared to $751 in provision expense during the three months ended March 31, 2024.
The decrease in credit loss expense came primarily from loans, which decreased by $381 during the first quarter of 2025, compared to the same period in 2024. Provision
expense on loans during 2025 was impacted primarily by decreases in loan balances generally allocated for during 2025. The risk associated with an $18,529 decrease in loans generated lower general reserves and a corresponding decrease to provision
expense.
Provision expense on loans during 2025 was also impacted by lower reserves associated with the improvements of certain qualitative risk factors that included commercial
real estate loan concentration risk, industry outlooks in farmland and agriculture, and delinquency levels associated within the consumer loan segment.
These decreasing effects to provision expense on loans were partially offset by the effects of higher net charge-offs and a higher historical loan loss factor that
increased reserves primarily from a regression in GDP and unemployment projections from year-end 2024.
Credit loss expense during 2025 was also impacted by unfunded commitments on off-balance sheet liabilities, which increased $46 during the three months ended March 31,
2025, compared to the same period in 2024. During the first quarter of 2025, credit loss expense on unfunded commitments was reduced by $60, compared to a reduction of $106 in credit loss expense during first quarter of 2024. The impact came mostly
from the commercial real estate construction segment.
Future provisions to the ACL will continue to be based on management’s quarterly in-depth evaluation that is discussed in further detail under the caption “Critical
Accounting Estimates” within this Management’s Discussion and Analysis.
Noninterest Income
Noninterest income decreased $50, or 1.4%, during the three months ended March 31, 2025, compared to the same period in 2024. The
decrease came mostly from a decline in swap asset revenue (down $37) and tax preparation fees (down $11), while the remaining areas of noninterest income were down $2.
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Noninterest Expense
Noninterest expense increased $77, or 0.7%, during the three months ended March 31, 2025, compared to the same period in 2024. The Company’s largest noninterest expense,
salaries and employee benefits, decreased $155, or 2.5%, during the three months ended March 31, 2025, compared to the same period in 2024. The expense decrease was largely
from the Company’s full-time equivalent employee base being down nineteen employees from 271 at March 31, 2024 to 252 at March 31, 2025. Furthermore, insurance premium costs saw a decrease in the first quarter, also coinciding with a smaller
full-time equivalent employee base. The primary reason for the decrease in employee base was due to the voluntary early retirement program that was implemented in 2024. The early retirement program was expected to reduce salary and employee benefit
expense. Partially offsetting the expense savings from the early retirement program were annual merit increases.
Lower noninterest expense also came from software expense, which decreased $80 during the first quarter of 2025, compared to the same period in 2024. Lower costs in this
category were the direct result of timing differences with two large service agreements during the first quarter of 2024, totaling $76 in expense.
Completely offsetting the decreases in noninterest expense listed above were various increases in noninterest expense, including data processing fees, which increased $118
during the first quarter of 2025, compared to the same period in 2024. Higher data processing fees were primarily related to debit and credit card processing due to higher transaction volume and conversion costs for the Company’s new reward platform.
Also contributing to higher noninterest expense was occupancy and equipment expenses, which increased $68 during the first quarter of 2025, compared to the same period in
2024. Increases in this category came primarily from building repairs and maintenance on bank owned ATM’s.
Higher noninterest expense also came from marketing costs, which increased $54 during the first quarter of 2025, compared to the same period in 2024. The increase was
largely impacted by an increase in donation and advertising budgets for 2025.
The remaining noninterest expense categories increased $72, or 3.4%, during the first quarter of 2025, compared to the same period in 2024. The increase was mostly a
result of higher FDIC insurance expenses (up $35), as well as a slight increase in professional fees (up $14).
Efficiency
The Company’s efficiency ratio is defined as noninterest expense as a percentage of fully tax-equivalent net interest income plus noninterest income. The effects from
provision expense are excluded from the efficiency ratio. Management continues to place emphasis on managing its balance sheet mix and interest rate sensitivity as well as developing more innovative ways to generate noninterest revenue. Comparing the
three months ended March 31, 2025 to the same period in 2024, the Company has benefited from an increase in average earning assets, primarily from higher-yielding loans and securities, a decrease in average costs on interest-bearing deposits, and a
deposit composition shift from higher-costing time deposits to lower-costing savings, NOW, money market and checking account deposits. While noninterest revenue is below the prior year, earnings have benefited from cost savings in salaries and employee
benefits that resulted from management’s implementation of a voluntary retirement program in 2024. This has helped to limit overhead expense to just a 0.7% increase over 2024. With a strong 17.4% increase in net interest income combined with minimal
overhead expense pickup from 2024, the Company’s year-to-date efficiency number decreased (improved) to 63.95% during the three months ended March 31, 2025, compared to 71.47% during the three months ended March 31, 2024.
Provision for income taxes
The Company’s income tax provision increased $545 during the three months ended March 31, 2025, compared to the same period in 2024. The increase in tax expense was
primarily associated with the 63.6% increase in operating income and an increase in the effective tax rate from 17.7% at March 31, 2024 to 20.6% at March 31, 2025. The effective rate increased primarily from lower tax-exempt earnings during the first
quarter of 2025.
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Capital Resources
Federal regulators have classified and defined capital into the following components: (i) Tier 1 capital, which includes tangible shareholders’ equity for
common stock, qualifying preferred stock and certain qualifying hybrid instruments, and (ii) Tier 2 capital, which includes a portion of the allowance for credit losses, certain qualifying long-term debt, preferred stock and hybrid instruments which do
not qualify as Tier 1 capital.
In September 2019, consistent with Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies issued
a final rule providing simplified capital requirements for certain community banking organizations (banks and holding companies). Under the rule, a qualifying community banking organization (“QCBO”) is eligible to opt into the Community Bank Leverage
Ratio (“CBLR”) framework in lieu of the Basel III capital requirements if it has less than $10 billion in total consolidated assets, limited amounts of certain trading assets and liabilities, limited amounts of off-balance sheet exposure and a leverage
ratio greater than 9.0%. The new rule took effect January 1, 2020, and QCBOs were allowed to opt into the new CBLR framework in their Call Report beginning the first quarter of 2020.
A QCBO opting into the CBLR framework must maintain a CBLR of 9.0%, subject to a two-quarter grace period to come back into compliance, provided that the
QCBO maintains a leverage ratio of more than 8.0% during the grace period. A QCBO failing to satisfy these requirements must comply with the existing Basel III capital requirements as implemented by the banking regulators in July 2013.
The Bank opted into the CBLR, and, therefore, is not required to comply with the Basel III capital requirements. The numerator of the CBLR is Tier 1
capital, as calculated under present rules. The denominator of the CBLR is the QCBO’s average assets, calculated in accordance with the QCBO’s Call Report instructions and less assets deducted from Tier 1 capital. The current rules and Call Report
instructions were impacted by the Company’s adoption of ASC 326 and its election to apply the 3-year CECL transition provision on January 1, 2023. By making this election, the Bank, in accordance with Section 301 of the regulatory capital rules, will
increase it retained earnings (Tier 1 Capital) and average assets by 75% of its CECL transition amount during the first year of the transition period, 50% of its CECL transition amount during the second year, and 25% of its CECL transitional amount
during the third year of the transition period. The Bank’s transition amount during year three of the transitional period totaled $2,276, which resulted in the add-back of $569 to both Tier 1 capital and average assets as part of the CBLR calculation
for March 31, 2025. As of March 31, 2025, the Bank’s CBLR was 10.13%.
Cash dividends paid by the Company were $1,037 during the first three months of 2025. The year-to-date dividends paid totaled $0.22 per share.
Liquidity relates to the Company's ability to meet the cash demands and credit needs of its customers in the short and long-term and is provided by the ability to readily
convert assets to cash and raise funds in the marketplace. The Company manages funding and liquidity based on point-in-time metrics as well as forward-looking projections, which incorporate different sources and uses of funds under base and stress
scenarios. Liquidity risk is monitored and managed by the Bank’s Asset Liability Committee using a series of policy limits and key risk indicators, which are established to ensure risks are managed within the Company’s risk tolerance. The Company
maintains a contingency funding plan that provides for liquidity stress testing, which assesses the liquidity needs under varying market conditions, time horizons and other events. The stress testing provides for ongoing monitoring of unused borrowing
capacity and available sources of contingent liquidity to prepare for unexpected liquidity needs and to cover unanticipated events that could affect liquidity.
Total cash and cash equivalents, HTM securities maturing within one year, and AFS securities, which totaled $380,702, represented 25.2% of total assets at March 31, 2025
compared to $352,563 and 23.5% of total assets at December 31, 2024. This growth in liquid funds came primarily from a decrease in loans that was impacted by a large $31,473 paydown on the Bank’s warehouse line of credit extended to another mortgage
lender. Liquid fund growth from year-end 2024 also came from an increase in net proceeds from maturities and paydowns of securities. Increases in deposits were largely impacted by growth in time, savings and money market deposits, which increased 1.9%
from year-end 2024, partially offset by lower interest-bearing and noninterest-bearing demand deposits, which decreased 0.7%, from year-end 2024.
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In addition to the on-balance sheet liquidity discussed above, the Bank has established multiple sources of funding to further enhance the Bank’s ability to meet liquidity
demands. The Bank has pledged collateral to the FHLB and the FRB to establish committed borrowing lines. At March 31, 2025, the Bank could borrow an additional $89,603 from the FHLB and the borrowing line with the FRB had availability of $50,738. For
each of these sources, the Bank has established an internal limit of 85% of our borrowing capacity. In addition to the committed borrowing lines, the Bank has access to several wholesale funding sources, such as, brokered CDs, a $25 million federal
funds purchase limit with two correspondent banks, and the ability to bid on available funds from select deposit placement services. The Bank has established limits for each respective funding source and a collective limit on all wholesale funding
sources. The Bank’s internal limit on brokered CDs is 10% of total assets. At March 31, 2025, the amount of brokered CDs outstanding was 3.24% of total assets, as compared to 3.25% at December 31, 2024. At March 31, 2025, the Bank had utilized 52.62%
of our FHLB capacity, an increase from 52.21% at December 31, 2024. The collective internal limit on all wholesale funding sources is 40% of total assets. At March 31, 2025, the Bank’s total wholesale funding sources represented 11.80% of total assets.
Based on the collective internal wholesale funding limit, the Bank had the capacity to borrow an additional $423 million in wholesale funds and the available funding from the respective wholesale funding sources exceeded this amount, which provides the
flexibility to utilize one source more than another due to pricing or availability.
As part of performing liquidity stress tests, the Bank monitors and evaluates the exposure to uninsured deposits. Of the Company’s $1,284,169 in total deposit balances at
March 31, 2025, only 38.7%, or $497,388, were deemed uninsured as per the $250 FDIC threshold. A portion of these deposits are on behalf of public entity customers, which require the Bank to pledge securities or FHLB letters of credit to cover the
amount of the deposit balance that is deemed uninsured. To the extent these deposits left the Bank, the level of unpledged securities and the borrowing capacity at the FHLB would increase or could be utilized to fund the deposit outflow. The sum of
current on-balance sheet liquidity and available wholesale funding sources exceeded the balance of uninsured deposits at March 31, 2025. Included in on-balance sheet liquidity are AFS securities in an unrealized loss position. Although management does
not intend to sell the securities before the recovery of its cost basis, they are a contingent resource from a liquidity perspective.
As our liquidity position dictates, the preceding funding sources may be utilized to supplement our liquidity position. If the utilization of wholesale funding increases
to fund asset growth or for liquidity management purposes, the net interest margin may be negatively impacted due to the higher relative cost of these sources as compared to core deposits. For further cash flow information, see the condensed
consolidated statement of cash flows. 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 customers, many of these commitments are expected to expire without being drawn upon. Therefore, the total amount of commitments does not
necessarily represent future cash requirements.
Critical Accounting Estimates
The preparation of financial statements and related disclosures requires management to use judgment and make estimates. The Company evaluates such estimates on an ongoing
basis. By their nature, these judgments are subject to uncertainty. We base our estimates on historical experience, current trends and other factors that we believe to be relevant and reasonable under the circumstances at the time the estimate was
made.
We believe our estimates, assumptions, and judgments are reasonable in that they were based on information available when the estimates, assumptions and judgments were
made. However, because future events and their effects cannot be determined with certainty, actual results could differ materially from those implied by our assumptions and estimates.
The Company believes the determination of the ACL involves a higher degree of judgment and complexity than its other significant accounting policies. The ACL is calculated
with the objective of maintaining a reserve level believed by management to be sufficient to absorb estimated credit losses over the life of an asset or off-balance sheet credit exposure. Management’s determination of the adequacy of the ACL is based
on periodic evaluations of past events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash
flows over the contractual term of the 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 expected
future cash flows on individually evaluated collateral dependent loans, and estimated losses based on historical loss experience and forecasted economic conditions. All of these factors may be susceptible to significant change. To the extent that
actual results differ from management estimates, additional provisions for credit losses may be required that would adversely impact earnings in future periods. Refer to “Allowance for Credit Losses” and “Provision for Credit Losses” sections within
this Management’s Discussion and Analysis for additional discussion.
41
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
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
With the participation of the President and Chief Executive Officer (the principal executive officer) and the Senior Vice President and Chief Financial Officer (the
principal financial officer and principal accounting officer) of Ohio Valley, Ohio Valley’s management has evaluated the effectiveness of Ohio Valley’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
Act) as of March 31, 2025. 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 March 31, 2025.
Changes in Internal Control over Financial Reporting
There was no change in Ohio Valley’s internal control over financial reporting (as defined in Rule 13a‑15(f) under the Exchange Act) that occurred during Ohio Valley’s
fiscal quarter ended March 31, 2025, that has materially affected, or is reasonably likely to materially affect, Ohio Valley’s internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various claims and legal actions, as both plaintiff and defendant, arising in the ordinary course of business. The Company does not believe that
any such proceedings, individually and in the aggregate, will have a material adverse effect on its business, financial position, results of operation or cash flows.
ITEM 1A. RISK FACTORS
There are no material changes from the risk factors set forth under Part I, Item 1A, “Risk Factors” in the 2024 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Ohio Valley did not sell any unregistered equity securities during the three months ended March 31, 2025.
Ohio Valley did not purchase any of its shares during the three months ended March 31, 2025.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
42
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the three months ended March 31, 2025, no director or officer of the Company adopted terminated
43
ITEM 6. EXHIBITS
(a) Exhibits:
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Exhibit Number
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Exhibit Description
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3.1
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3.2
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4.1
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31.1
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31.2
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32
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101.INS #
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XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
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101.SCH #
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XBRL Taxonomy Extension Schema: Filed herewith. #
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101.CAL #
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XBRL Taxonomy Extension Calculation Linkbase: Filed herewith. #
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101.DEF #
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XBRL Taxonomy Extension Definition Linkbase: Filed herewith. #
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101.LAB #
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XBRL Taxonomy Extension Label Linkbase: Filed herewith. #
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101.PRE #
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XBRL Taxonomy Extension Presentation Linkbase: Filed herewith. #
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104
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) Filed herewith #
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# Attached as Exhibit 101 are the following documents formatted in XBRL (eXtensive Business Reporting Language): (i) Unaudited Consolidated Balance Sheets; (ii)
Unaudited Consolidated Statements of Income; (iii) Unaudited Consolidated Statements of Comprehensive Income; (iv) Unaudited Consolidated Statements of Changes in Shareholders’ Equity; (v) Unaudited Condensed Consolidated Statements of Cash
Flows; and (vi) Notes to the Unaudited Consolidated Financial Statements.
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44
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
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OHIO VALLEY BANC CORP.
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Date:
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May 15, 2025
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By:
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/s/Larry E. Miller, II
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Larry E. Miller, II
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President and Chief Executive Officer
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Date:
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May 15, 2025
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By:
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/s/Scott W. Shockey
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Scott W. Shockey
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Senior Vice President and Chief Financial Officer
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45
EXHIBIT 4.1
OHIO VALLEY BANC CORP.
420 Third Avenue
Gallipolis, OH 45631
(740) 446-2631
May 15, 2025
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
RE: Ohio Valley Banc Corp. – Form 10-Q for the three months ended March 31, 2025
Gentlemen:
Ohio Valley Banc Corp., an Ohio corporation (“Ohio Valley”), is today filing a Quarterly Report on Form 10-Q for the three months ended March 31, 2025 (the “Form 10-Q”), as executed on May 15,
2025.
Pursuant to the instructions relating to the Exhibits in Item 601(b)(4)(iii) of Regulation S-K, Ohio Valley hereby agrees to furnish the Commission, upon
request, copies of instruments and agreements defining the rights of holders of its long-term debt and of the long-term debt of its consolidated subsidiaries, which are not being filed as exhibits to the Form 10-Q. No such instrument or agreement
represents long-term debt exceeding 10% of the total assets of Ohio Valley Banc Corp. and its subsidiaries on a consolidated basis.
Very truly yours,
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/s/Larry E. Miller, II
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Larry E. Miller, II
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President and Chief Executive Officer
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Ohio Valley Banc Corp.
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Exhibit 31.1
Rule 13a-14(a)/15d-14(a) Certification
I, Larry E. Miller, II, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Ohio Valley Banc Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| (a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| (a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 15, 2025 | By: | /s/Larry E. Miller, II |
Larry E. Miller, II, President and CEO | ||
(Principal Executive Officer) |
Exhibit 31.2
Rule 13a-14(a)/15d-14(a) Certification
I, Scott W. Shockey, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Ohio Valley Banc Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 15, 2025 | By: | /s/ Scott W. Shockey | |
Scott W. Shockey, Senior Vice President and CFO | |||
(Principal Financial Officer) |
Exhibit 32
SECTION 1350 CERTIFICATION
In connection with the Quarterly Report of Ohio Valley Banc Corp. (the “Corporation”) on Form 10-Q for the quarterly period ended March 31, 2025 (the “Report”), the undersigned Larry E. Miller, II, Chief Executive Officer of the Corporation, and Scott W. Shockey, Senior Vice President and Chief Financial Officer of the Corporation, each certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
*/s/ Larry E. Miller, II | */s/ Scott W. Shockey | |
Larry E. Miller, II | Scott W. Shockey | |
President and Chief Executive Officer | Senior Vice President and Chief Financial Officer | |
Dated: May 15, 2025 | Dated: May 15, 2025 |
| * | This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Corporation specifically incorporates it by reference in any such filing. |