OHIO VALLEY BANC CORP
10-Ks and 10-Qs
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United States
Securities and Exchange Commission
Washington, D.C. 20549
Form
10-Q
EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 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 November 13, 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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31
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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45
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Item 4.
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Controls and Procedures
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45
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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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45
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Item 1A.
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Risk Factors
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45
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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46
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Item 3.
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Defaults Upon Senior Securities
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46
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Item 4.
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Mine Safety Disclosures
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46
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Item 5.
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Other Information
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46
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Item 6.
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Exhibits
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47
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Signatures
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48
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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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September 30,
2025
(Unaudited)
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December 31,
2024
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|||||||
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ASSETS
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||||||||
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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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(
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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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(
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)
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Treasury stock, at cost (
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(
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)
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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
September 30,
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Nine months ended
September 30,
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|||||||||||||||
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2025
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2024
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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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$
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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 credit losses
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Net interest income after provision for 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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Loss on sale of securities
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(
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)
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(
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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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$
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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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$
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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)
|
Three months ended
September 30,
|
Nine months ended
September 30,
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|||||||||||||||
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2025
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2024
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2025
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2024
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|||||||||||||
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Net Income
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$
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$
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$
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$
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||||||||
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Other comprehensive income (loss):
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||||||||||||||||
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Change in unrealized gain (loss) on available for sale securities
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Reclassification adjustment for realized losses on available for sale securities
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Related tax (expense) benefit
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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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Total other comprehensive income (loss), net of tax
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||||||||||||
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Total comprehensive income (loss)
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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
5
OHIO VALLEY BANC CORP.
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS’ EQUITY (UNAUDITED)
(dollars in thousands, except share and per share data)
|
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)
|
Treasury
Stock
|
Total
Shareholders’
Equity
|
||||||||||||||||||
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Balance at
July 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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$
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||||||||||
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Net income
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Other comprehensive income, 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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Balance at
September 30
,
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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Balance at
July 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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Net income
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||||||||||||||||||
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Other comprehensive income, 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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Balance at
September 30
,
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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Year-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)
|
Treasury
Stock
|
Total
Shareholders’
Equity
|
||||||||||||||||||
|
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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||||||||||
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Net income
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Other comprehensive income, 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
September 30
,
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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||||||||||
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Net income
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||||||||||||||||||
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Other comprehensive income, net
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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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||||||||||||||||||
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Shares acquired for treasury,
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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
September 30
,
2024
|
$
|
|
$
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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)
|
Nine months ended
September 30,
|
||||||||
|
2025
|
2024
|
|||||||
|
Net cash provided by operating activities
|
$
|
|
$
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|
||||
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Investing activities:
|
||||||||
|
Proceeds from sales of securities available for sale
|
|
|
||||||
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Proceeds from maturities and paydowns of securities available for sale
|
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|
||||||
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Purchases of securities available for sale
|
(
|
)
|
(
|
)
|
||||
|
Proceeds from calls and maturities of securities held to maturity
|
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|
||||||
|
Purchases of restricted investments in bank stocks
|
|
(
|
)
|
|||||
|
Redemptions of restricted investments in bank stocks
|
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|
||||||
|
Net increase in loans
|
(
|
)
|
(
|
)
|
||||
|
Purchases of premises and equipment
|
(
|
)
|
(
|
)
|
||||
|
Purchases of bank owned life insurance and annuity assets
|
|
(
|
)
|
|||||
|
Withdrawals from bank owned life insurance and annuity asset
|
|
|
||||||
|
Net cash (used in) investing activities
|
(
|
)
|
(
|
)
|
||||
|
Financing activities:
|
||||||||
|
Net increase in deposits
|
|
|
||||||
|
Cash dividends
|
(
|
)
|
(
|
)
|
||||
|
Purchases of treasury stock
|
|
(
|
)
|
|||||
|
Repayment of Federal Home Loan Bank borrowings
|
(
|
)
|
(
|
)
|
||||
|
Change in other short-term borrowings
|
|
|
||||||
|
Net cash provided by financing activities
|
|
|
||||||
|
Change in cash and cash equivalents
|
|
(
|
)
|
|||||
|
Cash and cash equivalents at beginning of period
|
|
|
||||||
|
Cash and cash equivalents at end of period
|
$
|
|
$
|
|
||||
|
Supplemental disclosure:
|
||||||||
|
Cash paid for interest
|
$
|
|
$
|
|
||||
|
Cash paid for income taxes
|
|
|
||||||
|
Operating lease liability arising from obtaining right-of-use asset
|
|
|
||||||
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
wholly-owned subsidiary, Ohio Valley REO, LLC (“Ohio Valley REO”), an Ohio limited liability company, to
which the Bank transfers certain real estate acquired by the Bank through foreclosure for sale by Ohio Valley REO. Ohio Valley and its subsidiaries are collectively referred to as the “Company.” All material intercompany accounts and transactions have
been eliminated in consolidation.
These interim financial statements are prepared by the Company without audit and reflect all adjustments of a normal recurring nature which, in the opinion
of management, are necessary to present fairly the consolidated financial position of the Company at September 30, 2025, and its results of operations and cash flows for the periods presented. The results of operations for the three and nine months
ended September 30, 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, filed with the SEC on March 14,
2025 (the “2024 Annual Report”), 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 Accounting Standards Update (“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 20204-03 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 $
1,114
at September 30, 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 September 30, 2025 and at December 31, 2024, there was
no
ACL related to
AFS debt securities.
ACL - HTM SECURITIES:
Management measures expected credit
losses on HTM debt securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable
forecasts. The ACL on securities HTM is a contra asset valuation account that is deducted from the carrying amount of HTM securities to present the net amount expected to be collected. HTM securities are charged off against the ACL when deemed
uncollectible. Adjustments to the ACL are reported in the Company’s consolidated statements of income in the provision for credit losses. Accrued interest receivable on HTM securities is excluded from the estimate of credit losses. Management
classifies the HTM portfolio into 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 September 30, 2025, the ACL related to HTM debt securities
was $
1
, unchanged from December 31, 2024. Furthermore, there was
no
corresponding provision expense during the three and nine months ended September 30, 2025 and 2024.
on
HTM debt securities totaled $
55
at September 30, 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 September 30, 2025 and December 31, 2024, there were
no
loans held for sale by the Bank.
ACL – LOANS:
The ACL for loans is a contra asset valuation account that is
deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. Expected recoveries do not exceed the
aggregate of amounts previously charged-off and expected to be charged-off. The ACL is adjusted through the provision for credit losses and reduced by net charge offs of loans.
The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers historical loss experience,
current conditions and forecasts of future economic conditions. Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period.
The methodology for determining the ACL has two main components: evaluation of expected credit losses for certain groups of loans that share
similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans.
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 $
4,214
at September 30, 2025 and $
3,429
at December 31, 2024, and is excluded from the estimate of credit losses.
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.
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
for both the three months ended September 30, 2025 and 2024, respectively. The weighted average common shares outstanding were
4,711,001
and
4,745,489
for the nine months
ended September 30, 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 reporting entity has the ability to access as of the measurement date.
Level 2:
Significant other observable
inputs other than Level 1 quoted 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 with specific allocations of the ACL is generally based on the fair value of collateral, less costs to sell, 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. I
ndividually evaluated collateral dependent loans are
evaluated on a quarterly basis for additional impairment and adjusted accordingly.
12
NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
Other Real Estate Owned ("OREO"):
Assets acquired
through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair
value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal
process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.
In some instances, fair value adjustments can be made based on a quoted price from an observable input, such as a purchase agreement. Such adjustments would be classified as a Level 2 classification.
Appraisals for collateral securing both individually evaluated collateral dependent loans and OREO 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, which typically amount to approximately
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 September 30, 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 into or out of Level 3 during the periods ended September 30, 2025 or 2024.
13
NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
Assets and Liabilities Measured on a Nonrecurring Basis
There were
no
assets or
liabilities measured at fair value on a nonrecurring basis at September 30, 2025 or December 31, 2024.
The carrying amounts and estimated fair values of financial instruments at September 30, 2025 and December 31, 2024 are as follows:
|
Carrying
|
Fair Value Measurements at September 30, 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 September 30, 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
|
||||||||||||
|
September 30
,
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
|
|||||||||||||||
|
September 30
,
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 September 30, 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
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
During the three and nine months ended September 30, 2025,
proceeds from the sale of debt securities totaled $
9,808
with gross losses of $
1,219
recognized. There were
no
sales of securities during the three and nine months ended September 30,
2024.
Debt securities with a carrying value of approximately $
206,502
at
September 30, 2025
and $
223,484
at
December 31, 2024
, 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 has not been recorded at September 30, 2025 and December 31, 2024,
aggregated by major security type and length of time in a continuous unrealized loss position:
|
September 30
,
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 September 30, 2025, the
Company had
84
AFS debt securities in an unrealized position without an ACL, of which
5
were from U.S. Government securities,
3
were from U.S. Government
sponsored entity securities, and
76
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 September 30, 2025, 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 September 30, 2025.
16
NOTE 3 – SECURITIES (Continued)
The following table presents the activity in the ACL for HTM debt securities:
|
Held to Maturity Debt Securities
|
Nine months ended
September 30, 2025
|
Nine months ended
September 30, 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 September 30, 2025, there were no past due principal and interest payments related to HTM securities. During
the third quarter of 2025, the cumulative loss rate remained at
0.02
%, resulting in
no
change to provision expense during the three and nine months ended September 30, 2025. During the third quarter of 2024, the cumulative loss rate remained at
0.02
%, resulting in
no
change to provision expense during the three and nine months ended September 30, 2024.
NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES
Loans are comprised of the following:
|
September 30,
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
September 30, 2025
, net deferred loan origination fees were $
235
. At December 31, 2024, net deferred loan origination costs were $
363
. At
September 30, 2025
net unaccreted loan purchase discounts were $
1,616
. At December 31, 2024 net unamortized loan purchase premiums were $
398
.
17
NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)
The following table presents the recorded investment of nonaccrual loans and
loans past due 90 days or more and still accruing by class of loans as of September 30, 2025 and December 31, 2024:
|
September 30
,
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 $
10
and $
56
of interest income in nonaccrual loans during the three and nine months ended September 30, 2025, respectively. This is compared to $
50
and $
69
of interest income in nonaccrual loans
during the three and nine months ended September 30, 2024, respectively.
18
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 September 30, 2025 and December 31, 2024:
|
September 30
,
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 $
1,000
.
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.
19
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 September 30, 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
|
|||||||||||||||||||||||||||||||
|
September 30
,
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
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
20
NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
September 30
,
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
|
|||||||||||||||||||||||||||||||
|
September 30
,
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
|
|||||||||||||||||||||||||||||||
|
September 30
,
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
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
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 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
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
22
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 ACL. For residential and consumer loan
classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment of residential and consumer loans by class of loans based
on repayment activity as of September 30, 2025
and December 31, 2024:
|
Revolving
|
||||||||||||||||||||||||||||||||
|
Loans
|
||||||||||||||||||||||||||||||||
|
Term Loans Amortized Cost Basis by Origination Year
|
Amortized
|
|||||||||||||||||||||||||||||||
|
September 30
,
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
|
|||||||||||||||||||||||||||||||
|
September 30
,
2025
|
2025
|
2024
|
2023
|
2022
|
2021
|
Prior
|
Cost Basis
|
Total
|
||||||||||||||||||||||||
|
Consumer:
|
||||||||||||||||||||||||||||||||
|
Automobile
|
||||||||||||||||||||||||||||||||
|
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
|
|||||||||||||||||||||||||||||||
|
September 30
,
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
|
|||||||||||||||||||||||||||||||
|
September 30
,
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
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
24
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
3.65
% of total loans were unsecured at September 30, 2025, down from
4.16
% at December 31, 2024.
25
N
OTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES (Continued)
Modifications to Borrowers Experiencing Financial Difficulty:
Occasionally, the Company modifies loans to borrowers experiencing financial difficulty. These modifications may include one or a
combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a reduction in the contractual
principal and interest payments of the loan; or short-term interest-only payment terms. All modifications to borrowers experiencing financial difficulty are considered to be impaired.
During the three and nine months ended September 30, 2025 and
2024, the Company experienced no new modifications to borrowers experiencing financial difficulty.
The following table presents the activity in the ACL by portfolio segment for the three months ended September 30, 2025 and 2024:
|
September 30
,
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
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
September 30
,
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 activity in the ACL by portfolio segment for the nine months ended September 30, 2025 and 2024:
|
September 30
,
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
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
September 30
,
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
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
26
N
OTE 4 – LOANS AND ALLOWANCE FOR CREDIT
LOSSES (Continued)
The following table presents the amortized cost basis of collateral dependent loans by class of loans as of September 30, 2025 and December 31, 2024:
|
Collateral Type
|
||||||||||||
|
September 30, 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
|
$
|
|
$
|
|
$
|
|
||||||
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 evaluated collateral dependent 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
OREO for residential real estate properties at September 30, 2025 and
December 31, 2024. In addition, nonaccrual residential mortgage loans that are in the process of foreclosure had a recorded investment of $
836
and $
342
as of September 30, 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 September 30, 2025,
the contract amounts of these instruments totaled approximately $
267,264
, 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 September 30, 2025, the estimated ACL related to off-balance sheet commitments was $
817
, which included $
180
and $
235
in provision during the three and nine months ended September 30, 2025.
This is compared to $
63
and $
126
in
recoveries of provision during the three and nine months ended September 30, 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.
27
NOTE 6 – OTHER BORROWED FUNDS
Other borrowed funds at September 30, 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
|
||||||||||
|
September 30
,
2025
|
$
|
|
$
|
|
$
|
|
||||||
|
December 31,
2024
|
$
|
|
$
|
|
$
|
|
||||||
Pursuant to collateral agreements with the FHLB, advances are secured by $
365,406
in qualifying mortgage loans, $
36,416
in commercial loans and $
2,866
in FHLB stock at September 30, 2025. Fixed-rate FHLB advances of $
33,436
mature through 2042 and have interest rates ranging from
1.53
% to
4.91
% and a year-to-date weighted average cost of
4.04
% at September 30, 2025 and
4.02
% at December 31, 2024. There were
no
variable-rate FHLB borrowings at September 30, 2025.
At September 30, 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 September 30, 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 $
209,154
at September 30, 2025. Of this maximum borrowing capacity, the Company had $
116,143
available to use as additional borrowings, of which $
116,143
could be used for short term, cash management advances, as mentioned above.
At September 30, 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 September 30, 2025, there was $
25,000
available on these lines of credit.
Promissory notes, issued primarily by Ohio Valley, are due at various dates through a final maturity date of
June 15, 2026
, and have fixed rates ranging from
4.25
%
to
4.60
% and a year-to-date weighted average cost of
4.59
% at September 30, 2025, as compared to
4.71
% at December 31, 2024. At September 30, 2025, there were
six
promissory notes payable by Ohio
Valley to related parties totaling $
2,588
. There were
no
promissory notes payable to other banks at September 30, 2025 or December 31, 2024, respectively.
Letters of credit issued on the Bank’s behalf by the FHLB to collateralize certain public unit deposits as required by law totaled $
59,575
at September 30, 2025 and $
58,500
at December 31, 2024.
Scheduled principal payments as of September 30,
2025:
|
FHLB
Borrowings
|
Promissory
Notes
|
Totals
|
||||||||||
|
2025
|
$
|
|
$
|
|
$
|
|
||||||
|
2026
|
|
|
|
|||||||||
|
2027
|
|
|
|
|||||||||
|
2028
|
|
|
|
|||||||||
|
2029
|
|
|
|
|||||||||
|
Thereafter
|
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
28
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
7
months to
15.8
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
September 30, 2025
|
As of
December 31, 2024
|
|||||||
|
Operating leases:
|
||||||||
|
Operating lease right-of-use assets
|
$
|
|
$
|
|
||||
|
Operating lease liabilities
|
|
|
||||||
The components of lease cost are as follows:
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
|
2025
|
2024
|
2025
|
2024
|
|||||||||||||
|
Operating lease cost
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Short-term lease expense
|
|
|
|
|
||||||||||||
Future undiscounted lease payments for operating leases with initial terms of one year or more as of September 30, 2025 are as follows:
|
Operating Leases
|
||||
|
2025
(remaining)
|
$
|
|
||
|
2026
|
|
|||
|
2027
|
|
|||
|
2028
|
|
|||
|
2029
|
|
|||
|
Thereafter
|
|
|||
|
Total lease payments
|
|
|||
|
Less: Imputed Interest
|
(
|
)
|
||
|
Total operating leases
|
$
|
|
||
Other information is as follows:
|
As of
September 30, 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.
29
NOTE 9 – DEPOSITS
Deposits are comprised of the following:
|
September 30,
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 $
61,446
and $
48,395
at September 30, 2025
and December 31, 2024, respectively.
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
.
30
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 2024 Annual Report 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 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%. In relation to program changes implemented by the Treasurer post implementation, the rate on the matching funds increased to 1.79% for
the third quarter of 2025. 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 September 30, 2025, the balance of Sweet
Home Ohio accounts totaled $9,049 compared to $6,775 at December 31, 2024. At September 30, 2025, the amount of Treasurer deposits totaled $72,507 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 September 30, 2025, the balance of securities used to collateralize the Treasurer deposits totaled $66,990 compared
to $102,871 at December 31, 2024.
31
FINANCIAL RESULTS OVERVIEW:
Net income totaled $3,030 during the
third quarter of 2025, an increase of $311 from the same period of 2024. Earnings per share for the third quarter of 2025 finished at $.64 per share, compared to $.58 per share during the third quarter of 2024. Net income totaled $11,646 during the
first nine months of 2025, an increase of $3,162 from the same period of 2024. Earnings per share during the first nine months of 2025 finished at $2.47 per share, compared to $1.79 per share during the first nine months of 2024. Higher net earnings
also had a corresponding impact on the Company’s annualized net income to average asset ratio, or return on assets, which increased 22 basis points to 1.03% during the first nine months 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 215 basis points to 9.95% during the first nine months of 2025, compared to the same period in 2024.
Earnings were positively impacted by the growth in average earning assets, which increased 7.3% and 8.8% during both the quarterly and year-to-date periods,
respectively. The increases came primarily from loans and securities, which contributed to a 16.0% and 18.3% increase in net interest income during both the three and nine months ended September 30, 2025, compared to the same periods in 2024,
respectively. The positive effects from higher net interest income were partially offset by increases in provision and noninterest expense combined with lower noninterest income. Provision expense increased in large part due to a higher qualitative
risk factor, as well as growth in loans and off-balance sheet commitments. This contributed to a 20.8% and 44.5% increase in provision expense during both the three and nine months ended September 30, 2025, compared to the same periods in 2024,
respectively. Earnings were also negatively impacted by higher noninterest expenses and lower noninterest income, which collectively reduced income by 16.4% and 6.5% during both the three and nine months ended September 30, 2025, compared to the same
periods in 2024, respectively. This was largely impacted by a $1,219 loss on the sale of securities realized during the third quarter of 2025.
During the three months ended September 30, 2025, net interest income increased $2,016, or 16.0%, over the same period in 2024. During the nine months ended
September 30, 2025, net interest income increased $6,538, or 18.3%, over the same period in 2024. Net interest income growth during both the quarterly and year-to-date periods was primarily the result of an increase in average earning assets, led by
securities and loans. During the three months ended September 30, 2025, average securities increased $25,983 while average loans increased $76,514. During the nine months ended September 30, 2025, average securities increased $74,685 while average
loans increased $65,448. The growth in average securities was in large part due 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 29 basis points during the three months ended September 30, 2025, and 32 basis points during the nine months ended September 30, 2025,
compared to the same periods in 2024, respectively. 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, and the accretion of an $817 market discount on purchased loans that was recognized in the second quarter of 2025. The cost of funding sources increased only slightly as the composition of funding sources shifted
more to lower cost deposit sources, such as Negotiable Order of Withdrawal (“NOW”), savings, money market, and checking accounts.
During the three and nine months ended September 30, 2025, the Company’s provision for credit loss expense increased $192 and $824, when compared to the same
periods in 2024. The increases resulted primarily from an elevated qualitative risk factor, as well as growth in loans and off-balance sheet commitments related to unused commercial lines. Partially offsetting the increases to provision expense were
lower specific reserves on loans individually evaluated for impairment.
During the three and nine months ended September 30, 2025, noninterest income decreased $1,106, or 38.8%, and $1,009, or 10.9%, from the same periods in
2024. The decreases resulted primarily mostly from a $1,219 loss on the sale of securities realized during the third quarter of 2025 that lowered noninterest income. The Company sold $11,027 in securities that were yielding 1.32% and replaced them with
securities yielding 4.37%, which is expected to increase future interest income. Partially offsetting the impact from the sale of securities was higher interchange income earned on debit and credit cards, which increased $91 and $151 during the three
and nine months ended September 30, 2025, when compared to the same periods in 2024. Other noninterest income also increased $22 during the third quarter of 2025 and $43 during the first nine months of 2025, when compared to the same periods in 2024.
Increases to other noninterest income resulted mostly from lower losses related to the pending sale of premises, while fees from commercial loan servicing and mortgage application referrals increased during both the quarterly and year-to-date periods.
32
During the three and nine months ended September 30, 2025, noninterest expense increased $269, or 2.4%, and $532, or 1.6%, over the same periods in 2024.
Noninterest expenses were led by increases in data processing and marketing costs, which collectively increased $166, or 15.8%, and $577, or 18.7%, during the three and nine months ended September 30, 2025, over the same periods in 2024. Data
processing expenses were impacted by costs associated with the Company’s debit and credit card platforms. Marketing cost increases were impacted by higher donation and advertising budgets for 2025. Other noninterest expense also increased $203 during
the third quarter of 2025 and $162 during the first nine months of 2025, when compared to the same periods in 2024. Increases to other noninterest expense came mostly from higher costs associated with ATM’s, employee recruiting, and interest rate swap
arrangements. Partially offsetting increases to noninterest expense were decreases in salaries and employee benefits, which decreased $229 and $376 during the three and nine months ended September 30, 2025, when compared to the same periods in 2024.
Cost savings in salaries and employee benefits during 2025 were the direct result of a voluntary early retirement program implemented in 2024. The changes in the remaining noninterest expense areas were minimal.
The $138 and $1,011 increase in the Company’s provision for income taxes during the three and nine months ended September 30, 2025, compared to the same
periods 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 September 30, 2025, total assets were $1,570,043, an increase of $66,631 from year-end 2024. The increase in assets was primarily the result of a $68,709
increase in loans, which was impacted by strong second and third quarter loan growth of a total of $87,238 that more than offset the $18,529 decrease in loans that occurred during the first quarter. The first quarter loan decrease was related to a
$31,473 decrease in a warehouse line of credit extended to another mortgage lender. The second and third quarter growth in loans occurred primarily in the targeted areas of commercial real estate, commercial and industrial, and residential real estate
loans. This included a $12,777 repurchase of two commercial and industrial loans in June 2025 that had been previously participated out. The increase in loans was primarily funded by a $57,309 increase in deposit balances and net proceeds from a $7,930
decrease in total securities from year-end 2024. Securities decreased in part due to a lower need for securities to be pledged to the Treasurer due to a $24,859 deposit balance decrease from year-end 2024.
At September 30, 2025, total liabilities were $1,405,626, up $52,542 from year-end 2024. Contributing most to this increase were higher interest-bearing
deposit balances, up $56,844 from year-end 2024, consisting of higher balances from time deposits (+17.6%) and savings and money market balances (+5.3%), partially offset by a decrease in NOW accounts (-10.2%). At September 30, 2025, the Company’s
noninterest-bearing demand deposits were relatively stable, increasing $465 from year-end 2024.
At September 30, 2025, total shareholders' equity was $164,417, up $14,089 from December 31, 2024. This increase came primarily from year-to-date net income
and an after-tax increase in net unrealized gains on AFS securities, partially offset by year-to-date cash dividends paid. Regulatory capital ratios of the Company remained higher than the "well capitalized" minimums.
Comparison of Financial Condition
at September 30, 2025 and December 31, 2024
at September 30, 2025 and December 31, 2024
The following discussion focuses in more detail on the consolidated financial condition of the Company at September 30, 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.
33
Cash and Cash Equivalents
At September 30, 2025, cash and cash equivalents were $89,316, an increase of $6,209, or 7.5%, from December 31, 2024. The increase came primarily from
interest-bearing deposits with banks, which were up $4,848, or 7.2%, from year-end 2024. The Company’s interest-bearing FRB clearing account contributed most to the increase in interest-bearing deposits with banks, representing 80% of cash and cash
equivalents at September 30, 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 increase in excess funds during the first nine months of 2025 resulted
primarily from growth in total deposits, which were up 4.5% from year-end 2024. 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 (“FOMC”). During the third quarter of 2025, the rate associated with the Company’s FRB clearing account decreased 25 basis points due to actions taken by the FOMC to reduce the targeted federal funds rate to a range of 4.00% to 4.25% at
September 30, 2025. The FRB clearing account rate was reduced again by 25 basis points in October 2025 due to further actions taken by the FOMC that lowered the targeted federal funds rate to a current range of 3.75% to 4.00%. 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 $7,930, or 2.9% from year-end 2024. As previously mentioned, the decrease in securities was impacted by the lower
need for securities to pledge to the Treasurer for deposits related to the Homebuyers Plus program. The Company’s U.S. Government securities portfolio decreased $63,184 from $168,030 at year-end 2024 to $104,846 at September 30, 2025, impacted by
$65,560 in maturities, net of purchases. The Company utilized its proceeds from net maturities of U.S. Government securities to help fund additional purchases in U.S. Government agency (“Agency”) mortgage-backed securities, which were up $55,677, or
59.1%, from year-end 2024. During the first nine months of 2025, purchases of Agency mortgage-backed securities totaled $78,284, while being partially offset by $17,333 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 September 30, 2025, the Company’s investment securities portfolio was comprised mostly of Agency
mortgage-backed securities at 56.1% of total investments, while U.S. Government securities represented 39.2%.
Furthermore, during the third quarter of 2025, the Company received proceeds of $9,808 from the sale of three Agency mortgage-backed securities totaling
$11,027. These securities carrying a weighted average yield of 1.32% were replaced with similar securities at a higher weighted average yield of 4.37%. While this sale and repurchase of securities resulted in a realized loss of $1,219 with little
change to the balance of earning assets, the Company will benefit from the shift to higher-yielding securities that is expected to increase future income and have a positive impact to the margin.
Included in the factors mentioned above were changes in net unrealized losses associated with AFS securities. During the first nine months of 2025, a
decrease in long-term market rates led to a $7,245 increase in the fair value associated with the Company’s AFS securities at September 30, 2025, of which, $1,219 was related to the realized loss on the sale of securities previously discussed. 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.
34
COMMERCIAL REAL ESTATE BY INDUSTRY
As of September 30, 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
|
$
|
218,867
|
49.46
|
%
|
||||
|
Accommodation and Food Services
|
80,543
|
18.20
|
%
|
|||||
|
Retail Trade
|
30,982
|
7.00
|
%
|
|||||
|
Health Care and Social Assistance
|
24,409
|
5.52
|
%
|
|||||
|
Manufacturing
|
20,081
|
4.54
|
%
|
|||||
|
Construction
|
17,804
|
4.02
|
%
|
|||||
|
All Other
|
49,821
|
11.26
|
%
|
|||||
|
Total
|
$
|
442,507
|
100.00
|
%
|
||||
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.
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 increased to $1,130,534 at September 30, 2025, representing an increase of $68,709, or 6.5%, as compared to $1,061,825 at
December 31, 2024. The increase in loans came primarily from the commercial real estate and commercial and industrial portfolios, partially offset by a decrease in the consumer loan portfolio, while the residential real estate portfolio was
relatively stable from year-end 2024.
The Company’s commercial loan portfolio increased $83,449, or 15.7%, from year-end 2024. The most significant driver of this increase was higher loan
balances within the commercial real estate portfolio, which increased $69,520, or 18.6%, from year-end 2024. At September 30, 2025, commercial real estate loans represented the largest segment of the Company’s total loan portfolio at 39.1%. 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 $13,929, or 8.8%, from year-end 2024.
The growth was impacted by an increase in larger loan originations during the year. This included a $12,777 repurchase of two commercial and industrial loans in June 2025 that had been previously participated out. 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.
35
The Company’s residential real estate loan portfolio was relatively stable at September 30, 2025 compared to year-end 2024, increasing just $172. At
September 30, 2025, residential real estate loans represented the second largest segment of the Company’s total loan portfolio at 33.1%.
The minimal
change from year-end 2024 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. At September 30, 2025, the balance of this line of credit was $0, but draw downs on the line of credit began again post quarter end.The future balance of the line of credit will depend on mortgage volume and the funding needs of the
lead bank, but it is expected to increase. The remaining residential real estate loan balances increased $31,645, or 9.3%, from year-end 2024. Through the first nine months of 2025, as mortgage rates generally remained at elevated levels during most of
the year, the Company experienced fewer opportunities to sell long-term fixed rate loans to the secondary market. As a result of the elevated mortgage rates, mortgage customers selected 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 and contributed to a shift into more short-term variable rate mortgages as of September 30, 2025.
The increases in the Company’s commercial and residential real estate loan portfolios at September 30, 2025 were partially offset by a decrease in the
Company’s consumer loan portfolio, which was down $14,912, or 9.5%, from year-end 2024. This change was impacted by a $10,740, or 21.4%, 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 $9,066, or 14.1%, decrease in other consumer loans from year-end 2024, impacted by principal
repayments and payoffs. Decreases in consumer loans were partially offset by a $4,894, or 11.5%, increase in home equity lines of credit.
Allowance for Credit Losses
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.
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 September 30, 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 and nine months ended September 30, 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 September 30, 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 and nine months ended September 30, 2025.
36
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 September 30, 2025, the ACL for loans totaled $11,420, or 1.01%, of total loans. As of December 31, 2024, the ACL for loans totaled $10,088, or 0.95%,
of total loans. The $1,332, or 13.2%, increase in the ACL came primarily from loans collectively evaluated. The increase in ACL reserves from year-end 2024 was mostly impacted by a $68,709 increase in total loans, primarily within the commercial real
estate segment. Further increases in year-to-date reserves also came from a higher historical loss rate within the commercial and residential real estate portfolios, as well as higher qualitative risk factor adjustments within the commercial real
estate portfolio. The increases in general reserves were partially offset by a lower historical loss rate within the consumer loan portfolio.
The Company experienced a decreasing trend in its nonperforming levels from year-end 2024. Nonperforming loans to total loans decreased to 0.42% at September
30, 2025, compared to 0.46% at December 31, 2024, while nonperforming assets to total assets decreased to 0.30% at September 30, 2025, compared to 0.33% at December 31, 2024. The decrease in nonperforming loans to total loans was the result of a $165
decrease in nonaccrual loans, coming mostly from the commercial real estate and consumer loan portfolios. While nonperforming levels were down from year-end 2024, total loans past due increased $6,835, or 48.8%. The increase in higher delinquencies
from year-end 2024 was not considered to be a trending movement, as the increase was primarily related to two commercial loans that were past due 30-59 days at September 30, 2025.
The Company has experienced an increase in loan balances deemed special mention or substabdard, particularly in the commercial real estate segment. At
September 30, 2025, commercial real estate loans classified as special mention or substandard totaled $33,563, an increase of $10,266 from December 31, 2024. The increase was largely related to two loan relationships. One of these relationships was
downgraded to substandard and collateral dependent based on the customer’s debt service coverage ratio. Based on the value of the collateral, no specific reserve was required. The second loan relationship is a construction loan that was downgraded to
special mention due to the project extending past the expected completion date and exceeding estimated construction costs.
Management believes that the ACL at September 30, 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 September 30, 2025 increased $57,309, or 4.5%, from year-end
2024. The increase in deposits came primarily from interest-bearing deposit balances, which were up by $56,844, or 6.0%, from year-end 2024, while noninterest-bearing deposits increased $465, or 0.1%, from year-end 2024.
37
The increase in noninterest-bearing demand deposits was primarily from the Company’s business and incentive-based checking account
balances.
The increase in interest-bearing deposits came primarily from time deposit balances, which increased $69,423, or 17.6%, from year-end
2024. The increase came from retail time deposits, which increased $55,116 from year-end 2024. The Company targeted growth in retail CDs by promoting a special CD rate offering during the third quarter of 2025 to assist in funding loan growth. The
Company also utilized more wholesale CDs to help fund earning asset demand, which increased $14,307 from year-end 2024.
Further increases in interest-bearing deposits came from savings and money market balances, which increased $15,154, or 5.3%, from
year-end 2024. The increase came primarily from money market accounts, which increased $11,897 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. Savings account balances increased $3,257 impacted mostly by the Company’s statement savings account product.
Partially offsetting the increases in time, savings and money market deposit balances were lower NOW account balances, which decreased
$27,733, or 10.2%, from year-end 2024. The decrease was largely from a $24,859 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 $2,874 decrease in its other municipal NOW product balances, particularly within the Gallia County, Ohio, and Mason County, West Virginia, market areas.
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 $36,024 at September 30, 2025, a decrease of $3,716, or 9.4%, 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 various wholesale funding sources to help manage interest
rate sensitivity and liquidity.
Shareholders’ Equity
Total shareholders' equity at September 30, 2025 increased $14,089, or 9.4%, to finish at $164,417, as compared to $150,328 at December
31, 2024. This was primarily from year-to-date net income and an increase in accumulated other comprehensive income, partially offset by cash dividends paid. The increase in accumulated other comprehensive income was related to the $4,697, net of tax,
market appreciation of AFS securities due to a decrease in market interest rates and the recognition of a $950, net of tax, realized loss on the sale of securities that was previously unrealized.
Comparison of Results of Operations
For the Three and Nine Months Ended
September 30, 2025 and 2024
The following discussion focuses, in more detail, on the consolidated results of operations of the Company for the three and nine months
ended September 30, 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 and nine months ended September 30, 2025, net interest income increased $2,016, or 16.0%, and $6,538, or 18.3%, compared to the same periods in 2024, respectively.
The quarterly and year-to-date 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 minimize the higher average costs paid on deposits and borrowings.
38
Total interest and fee income recognized on the Company’s earning assets increased $2,142, or 11.0%, during the third quarter of 2025, and $6,645, or 11.9%,
during the nine months ended September 30, 2025, compared to the same periods in 2024, respectively. The earnings growth was impacted by interest on loans, which increased $1,898, or 11.8%, and $4,970, or 10.8%, during the three and nine months ended
September 30, 2025, compared to the same periods in 2024, respectively. This improvement was impacted by increases in both average loan balances and loan yields. Overall, average loans increased $76,514 during the third quarter of 2025 and $65,448
during the first nine months of 2025. 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 24 basis points to 6.69% during the third quarter of 2025 and increasing 27 basis points to 6.68% during the first nine months of 2025, compared to the same periods in
2024. A portion of the loan yield improvement came from the recognition of a market discount on two purchased commercial and industrial loans totaling $817 in the second quarter of 2025. Loan yield increases were mostly impacted by the commercial and
residential real estate loan portfolios.
Total interest on securities increased $405, or 22.2%, during the third quarter of 2025, and $3,011, or 80.8%, during the first nine months of 2025, compared
to the same periods in 2024. The earnings growth was primarily related to 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 to 18 months. The security purchases were used to collateralize $100,000 in public fund deposits received by the Treasurer as part of the program. This
contributed to increases in average security balances, which were up $25,983 and $74,685 during the three and nine months ended September 30, 2025, compared to the same periods in 2024. While average 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 in the third quarter of 2024 at a weighted average yield of 4.7% that was higher
than the 2.39% average yield on the total securities portfolio at September 30, 2024. Average security yields were also positively impacted by the elevated market rate environment during 2024 that continued into most of 2025. As a result, average
security yields increased 32 basis points to 3.21% during the third quarter of 2025 and increased 82 basis points to 3.21% during the first nine months of 2025, compared to the same periods in 2024.
Total interest income from interest-bearing deposits with banks decreased $227, or 28.7%, during the third quarter of 2025, and decreased $1,625, or 44.5%,
during the first nine months of 2025, compared to the same periods in 2024. This was largely from average balance decreases with the Company’s interest-bearing FRB clearing account, which decreased $4,445 and $25,933 during the three and nine months
ended September 30, 2025, compared to the same periods in 2024, respectively. FRB clearing balances were used to assist in funding loan growth, which contributed to the average balance decrease of FRB funds during 2025. Further impacting lower interest
income from the FRB clearing account were short-term rate decreases during 2024 and 2025. 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 inflationary
pressures, which lowered the target federal funds rate to a range of 4.25% to 4.50% going into 2025. In 2025, the FRB again reduced the rate associated with the FRB clearing account by 25 basis points in September and another 25 basis points in
October, due to concerns of a weakening labor market. This lowered the target federal funds rate to a range of 3.75% to 4.00% as of October 31, 2025. The decreases in interest rates had a negative impact on the FRB clearing account’s interest earnings.
Total interest expense incurred on the Company’s interest-bearing liabilities was limited to increases of just $126, or 1.8%, during the third quarter of
2025, and $107, or 0.5%, during the first nine months of 2025, compared to the same periods in 2024. The increase in funding expenses were directly related to the increases in average interest-bearing liabilities, primarily from deposits. The expense
impact from higher average deposit balances was almost completely offset by a lower cost of funds as the composition of average funding sources shifted from higher cost deposit sources such as time deposits to lower cost deposit sources such as NOW,
savings, and money market deposits.
Growth in the Company’s average interest-bearing liabilities came mostly from NOW, savings and money market deposit balances, which increased $33,956 and
$84,877 during both the third quarter and first nine months of 2025, compared to the same periods 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. As a result of the additions of the municipal NOW Treasurer account and new Home Sweet Home savings accounts during the second half of 2024, there was an increase in the average balance of interest-bearing deposits of $17,175 and $66,072
during the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024. Average interest-bearing deposit growth also came from the Company’s lower-costing tiered money market product (Money Fund), which increased
$36,503 and $33,217 during the three and nine months ended September 30, 2025, compared to the same periods in 2024, respectively.
39
The Company also experienced a $45,308 and $19,290 increase in its average time deposits during both the third quarter and first nine months of 2025,
compared to the same periods in 2024. The surge in average quarterly time deposit balances was the result of a special CD rate offering that began in July 2025 that was successful in raising additional retail deposits used to assist in funding loan
demand. While the movement of higher time deposit balances had a corresponding impact to higher interest expense, the average cost associated with time deposits decreased 52 basis points to 4.15% during the first nine months of 2025. 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 NOW, savings or money market accounts (average cost of
1.46%). Furthermore, the Company’s average wholesale funding balances decreased $12,723 during the first nine months of 2025, which included the use of brokered CDs (average cost of 4.62%) and FHLB advances (average cost of 4.04%). 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 contributed to lower 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 2.13% at September 30, 2024 to 1.99% at September 30, 2025.
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 third quarter net interest margin increased to 4.05%, compared to 2024’s third quarter net interest margin of 3.76%. The Company’s year-to-date net interest margin increased to 4.03%, compared to 2024’s year-to-date net interest margin of
3.71%. Positive contributions to margin growth came from the Company’s average earning assets, which increased 7.3% and 8.8% during the third quarter and first nine months of 2025, respectively, mostly from higher-yielding loans and securities. Margin
improvement 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, and money market 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
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
September 30, 2025, the Company’s provision for credit losses expense totaled $1,112, an increase of $192 when compared to $920 in provision expense during the three months ended September 30, 2024. For the nine months ended September 30, 2025, the
Company’s provision for credit losses expense totaled $2,676, an increase of $824 when compared to $1,852 in provision expense during the nine months ended September 30, 2024.
The increase in credit loss expense during the quarterly period came primarily from unfunded commitments on off-balance sheet liabilities, which increased
$243 during the three months ended September 30, 2025, and increased $361 during the first nine months of 2025, compared to the same periods in 2024. The impact came mostly from an increase in the originations of several new commercial and industrial
lines during the second and third quarters of 2025.
The increase in credit loss expense during the year-to-date period came primarily from loans, which decreased $15 during the third quarter of 2025, but
increased $463 during the first nine months of 2025, compared to the same periods in 2024. Provision expense on loans during 2025 was impacted primarily by a higher qualitative risk factor that increased reserves. The qualitative risk factor was
impacted by an increase in industry risk associated with hotel and motel loans that elevated reserves during the third quarter of 2025. Partially offsetting the increase in qualitative risk was a lower historical loan loss factor primarily impacted by
GDP and unemployment projections regressing less during 2025 compared to 2024.
40
Provision expense on loans during 2025 was also impacted by loan balances generally allocated for due to strong loan growth during 2025 that generated higher
general reserves and a corresponding increase to provision expense, particularly during the third quarter of 2025.
Partially offsetting increases in provision expense during 2025 was a $427 increase in specific reserves during the third quarter of 2024 compared to no
specific reserves in 2025. This specific allocation from 2024 was associated with a collateral-dependent commercial and industrial loan relationship that required a corresponding provision expense charge of $427 to establish the specific reserve.
Further impacting provision expense were net loan charge-offs, which decreased $127 during the third quarter of 2025, but increased $283 during the first
nine months of 2025, compared to the same periods in 2024. Lower net charge-offs during the third quarter of 2025 came mostly from the consumer loan portfolio while higher net charge-offs during the first nine months of 2025 were the result of large
recoveries collected on one commercial and industrial borrower during the second quarter of 2024.
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 $1,106, or 38.8%, during the three months ended September 30, 2025, and decreased $1,009, or 10.9%, during the nine months ended
September 30, 2025, compared to the same periods in 2024. The decrease came primarily from losses associated with the sales of investment securities. During the third quarter of 2023, the Company received proceeds of $9,808 from the sale of three
securities totaling $11,027 at a weighted average yield of 1.32%. The lower-yielding securities were replaced with similar securities with a higher weighted average yield of 4.37%. As a result, the realized losses on the sale of securities totaled
$1,219, which reduced noninterest income during both the three and nine months ended September 30, 2025. While realized losses were incurred, the transactions are expected to increase future income and have a positive impact to the margin going
forward.
Partially offsetting the impact from the loss on sale of securities was growth in interchange income earned on debit and credit cards, which increased $91
and $151 during the three and nine months ended September 30, 2025, compared to the same periods in 2024, respectively. This was due to an increase in the transaction volume associated with debit and credit cards. The Company’s other noninterest income
also increased $22 and $43 during the three and nine months ended September 30, 2025, compared to the same periods in 2024, respectively. Other noninterest income was primarily impacted by increases in commercial servicing fees, mortgage application
referral fees, and lower losses incurred on the sale of bank premises, which were all partially offset by decreases in swap asset revenue. The remaining noninterest income categories did not change during the third quarter of 2025, while increasing
$16, or 0.3%, during the first nine months of 2025, compared to the same periods in 2024.
Noninterest Expense
Noninterest expense increased $269, or 2.4%, during the three months ended September 30, 2025, and increased $532, or 1.6%, during the nine months ended
September 30, 2025, compared to the same periods in 2024. Contributing most to the increase in noninterest expense were data processing expenses, which increased $114 and $413 during the three and nine months ended September 30, 2025, compared to the
same periods in 2024, respectively. Higher costs in this category were primarily related to debit and credit card processing due to higher transaction volume and conversion costs for the Company’s new reward platform.
Higher noninterest expense also came from marketing expense, which increased $52 during the third quarter of 2025, and $164 during the first nine months of
2025. Higher costs in this category were the direct result of additional expense added to both the donations and advertising budgets for 2025.
41
Total other noninterest expense increased $203 and $162 during the three and nine months ended September 30, 2025, compared to the same periods in 2024,
respectively. This was impacted primarily from higher ATM costs during the third quarter of 2025, as well as increases in employee recruiting costs, all partially offset by decreases in swap asset expense.
Total occupancy and equipment expenses also increased $55 and $91 during the three and nine months ended September 30, 2025, compared to the same periods in
2024, respectively. This was impacted by increases in various repair and maintenance costs and higher utility expenses.
The Company’s largest noninterest expense, salaries and employee benefits, decreased $229, or 3.5%, during the three months ended September 30, 2025, and
decreased $376, or 2.0%, during the nine months ended September 30, 2025, compared to the same periods in 2024. The
decreases were primarily related to the
Company’s full-time equivalent employee base being down nine employees from 264 at September 30, 2024 to 255 at September 30, 2025. Furthermore, insurance premium costs saw a decrease in 2025, 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 year-to-date expense savings from the early retirement program were annual merit increases that were recorded in the second quarter of 2025.
The remaining noninterest expense categories increased $74 during the third quarter of 2025, and increased $78 during the first nine months of 2025, compared
to the same periods in 2024, impacted mostly by higher software and FDIC assessment costs.
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 and nine months ended September 30, 2025 to the same periods in 2024, the Company has benefited from an increase in average earning assets, primarily from higher-yielding loans and securities, and a decrease in average costs on
interest-bearing deposits associated with a deposit composition shift from higher-costing time deposits to lower-costing savings, NOW, money market and checking account deposits. Also positively impacting earnings were 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 2.4% increase during the third quarter of 2025, and a 1.6% increase during the first nine
months of 2025, over the same periods in 2024. These positive effects from lower personnel costs and strong net interest margin growth has more than offset the $1,219 in realized losses from the sale of securities in the third quarter of 2025. As a
result, the Company’s quarterly efficiency number decreased (improved) to 69.70% during the three months ended September 30, 2025, compared to 72.01% during the three months ended September 30, 2024. The Company’s year-to-date efficiency number also
decreased (improved) to 65.52% during the nine months ended September 30, 2025, compared to 72.27% during the nine months ended September 30, 2024.
Provision for income taxes
The Company’s income tax provision increased $138 during the three months ended September 30, 2025, and increased $1,011 during the nine months ended
September 30, 2025, compared to the same periods in 2024. The increase in tax expense was related to increases in operating income and the effective tax rate. During the third quarter of 2025, operating income increased 13.6% and the associated
effective tax rate increased from 17.5% in 2024 to 19.1% in 2025. During the first nine months of 2025, operating income increased 40.5% and the associated effective tax rate increased from 17.7% in 2024 to 19.6% in 2025. The effective rate increases
during both the quarterly and year-to-date periods of 2025 were primarily from lower tax-exempt earnings.
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.
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The Community Bank Leverage Ratio (CBLR) framework provides simplified capital requirements for qualifying community banking organizations
(QCBOs), including banks and holding companies. To be eligible for the CBLR framework, a QCBO must meet the following criteria:
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•
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Have less than $10 billion in total consolidated assets,
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•
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Hold limited amounts of certain trading assets and liabilities,
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•
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Maintain limited off-balance sheet exposure, and
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•
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Achieve a leverage ratio greater than 9.0%.
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Under the CBLR framework, a QCBO must maintain a CBLR of at least 9.0%. If the ratio falls below this threshold, the QCBO has a two-quarter
grace period to restore compliance, provided its leverage ratio remains above 8.0% during this period. If the QCBO does not meet these requirements, it must comply with the existing Basel III capital requirements.
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 September 30, 2025. As of September 30, 2025, the Bank’s CBLR was 10.18%.
Cash dividends paid by the Company were $3,204 during the first nine months of 2025. The year-to-date dividends paid totaled $0.68 per share.
Liquidity
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 $350,907, represented 22.4% of total assets at
September 30, 2025, compared to $352,563 and 23.5% of total assets at December 31, 2024. This decrease in liquid funds was primarily the result of the funding of loans, which increased $68,709 from year-end 2024, mostly from the commercial loan
portfolio. Loan funding sources 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, money market, and noninterest-bearing demand deposits which
increased 8.5% from year-end 2024, partially offset by lower interest-bearing demand deposits, which decreased 10.2%, from year-end 2024.
43
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 September 30, 2025, the Bank could borrow an additional $116,143 from the FHLB and the borrowing line with the FRB had
availability of $44,597. 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 September 30, 2025, the amount of brokered CDs outstanding was 3.96% of total assets, as compared to 3.25% at December 31, 2024. At September 30, 2025,
the Bank had utilized 44.47% of its FHLB capacity, a decrease from 52.21% at December 31, 2024. The collective internal limit on all wholesale funding sources is 40% of total assets. At September 30, 2025, the Bank’s total wholesale funding sources
represented 11.86% of total assets. Based on the collective internal wholesale funding limit, the Bank had the capacity to borrow an additional $438 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 $1,332,487 in total
deposit balances at September 30, 2025, only 37.4%, or $498,790, 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 September 30, 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.
44
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.
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 September 30, 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
September 30, 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 September 30, 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 operations or cash flows.
ITEM 1A. RISK FACTORS
An investment in our common shares involves risks. Before making an investment decision, you should carefully consider all of the information in this
Quarterly Report, including in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Condensed Consolidated Financial Statements and related notes. In addition, you should carefully
consider the risks and uncertainties described in the section entitled “Risk Factors” in our 2024 Annual Report. If any of the identified risks are realized, our business, financial condition, operating results and prospects could be materially and
adversely affected. In that case, the trading price of our common shares may decline. In addition, other risks of which we are currently unaware, or which we do not currently view as material, could have a material adverse effect on our business,
financial condition, operating results and prospects. As of the date of this Quarterly Report, there have been no material changes to the risk factors previously disclosed under the section entitled "Risk Factors" in Part I, Item 1A of our 2024 Annual
Report.
45
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 September 30, 2025.
Ohio Valley did not purchase any of its shares during the three months ended September 30, 2025.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the three months ended September 30, 2025, no director or officer of the Company
adopted
, modified, or
terminated
a “Rule 10b5-1 trading
arrangement” or a “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408(a) of Regulation S-K.
46
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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47
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
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OHIO VALLEY BANC CORP.
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Date:
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November 14, 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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November 14, 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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TABLE OF CONTENTS
Part I - Financial InformationItem 1. Financial StatementsNote 1 Summary Of Significant Accounting PoliciesNote 1 Summary Of Significant Accounting Policies (continued)Note 2 Fair Value Of Financial InstrumentsNote 2 Fair Value Of Financial Instruments (continued)Note 3 SecuritiesNote 3 Securities (continued)Note 4 Loans and Allowance For Credit LossesNote 4 Loans and Allowance For Credit Losses (continued)Note 5 Financial Instruments with Off-balance Sheet RiskNote 6 Other Borrowed FundsNote 7 LeasesNote 8 Risks and UncertaintiesNote 9 DepositsNote 10 Revenue From Contracts with CustomersItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II - Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits