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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934

For the Quarterly Period Ended June 30, 2015

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

For the transition period from to .

Commission File No. 1-13652

First West Virginia Bancorp, Inc.

(Exact name of registrant as specified in its charter)

West Virginia

55-6051901

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1701 Warwood Avenue

Wheeling, West Virginia 26003

(Address of principal executive offices)

Registrant’s telephone number, including area code: (304) 277-1100

N/A

(Former name, former address and former fiscal year,

if changed since last report)

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 report(s), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer or a smaller reporting company. See the definitions of “ large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company as defined by Rule 12b-2 of the Exchange Act. ¨ Yes x No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ¨ Yes ¨ No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the issuer’s common stock as of June 30, 2015: Common Stock, $5.00 Par Value, shares outstanding: 1,728,730 shares

FORM 10-Q INDEX


		Page No.
PART I - Financial Information

Item 1.	Financial Statements		4-29

	Consolidated Balance Sheets at June 30, 2015 (unaudited) and December 31, 2014		4

	Consolidated Statements of Income for the three and six months ended June 30, 2015 and June 30, 2014 (unaudited)		5

	Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2015 and June 30, 2014 (unaudited)		6

	Consolidated Statements of Changes in Stockholders’ Equity for the six months ended June 30, 2015 and 2014 (unaudited)		7

	Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 (unaudited)		8

	Condensed Notes to the Consolidated Financial Statements (unaudited)		9-29

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		30-43

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		44

Item 4.	Controls and Procedures		44

PART II - Other Information

Item 1.	Legal Proceedings		45

Item 1A.	Risk Factors		45

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		45

Item 3.	Defaults upon Senior Securities		45

Item 4.	Mine Safety Disclosures		45

Item 5.	Other Information		45

Item 6.	Exhibits		45

SIGNATURES			46

FIRST WEST VIRGINIA BANCORP, INC.

PART I

FINANCIAL INFORMATION

Item 1 - Financial Statements

First West Virginia Bancorp, Inc. and Subsidiary

CONSOLIDATED BALANCE SHEETS


	June 30, 2015			December 31, 2014
(in thousands, except shares)	(Unaudited)
ASSETS
Cash and due from banks	$	5,290		$	5,348
Due from banks - interest bearing		12,407			15,048

Total cash and cash equivalents		17,697			20,396
Investment securities:
Available-for-sale (at fair value)		191,337			197,079
Loans		104,820			99,217
Less allowance for loan losses		(1,758	)		(1,813	)

Net loans		103,062			97,404
Premises and equipment, net		8,197			8,413
Accrued income receivable		1,014			1,015
Goodwill		1,644			1,644
Bank owned life insurance		3,894			3,840
Other assets		2,844			2,599

Total assets	$	329,689		$	332,390

LIABILITIES
Noninterest bearing deposits:
Demand	$	37,826		$	41,556
Interest bearing deposits:
Demand		53,873			55,459
Savings		116,145			112,756
Time		59,536			62,372

Total deposits		267,380			272,143
Securities sold under agreements to repurchase		23,321			21,051
Federal Home Loan Bank borrowings		3,371			3,420
Accrued interest payable		110			120
Other liabilities		642			784

Total liabilities		294,824			297,518

COMMITMENTS AND CONTINGENT LIABILITIES
Commitments and contingent liabilities		—			—
STOCKHOLDERS’ EQUITY
Common stock - 2,000,000 shares authorized at $5 par value:
1,728,730 shares issued at June 30, 2015 and December 31, 2014		8,644			8,644
Treasury stock - 10,000 shares at cost		(228	)		(228	)
Surplus		6,966			6,966
Retained earnings		19,338			18,655
Accumulated other comprehensive income		145			835

Total stockholders’ equity		34,865			34,872

Total liabilities and stockholders’ equity	$	329,689		$	332,390

The accompanying condensed notes are an integral part of the unaudited consolidated financial statements.

First West Virginia Bancorp, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended, June 30,						Six Months Ended, June 30,
	2015			2014			2015		2014
(in thousands, except shares and per share amounts)	(Unaudited)						(Unaudited)
INTEREST AND DIVIDEND INCOME
Loans, including fees:
Taxable	$	1,127		$	1,030		$	2,417	$	2,075
Tax-exempt		127			132			255		257
Debt securities:
Taxable		733			710			1,468		1,384
Tax-exempt		294			481			626		1,023
Other interest and dividend income		24			28			70		52

Total interest and dividend income		2,305			2,381			4,836		4,791

INTEREST EXPENSE
Deposits		253			276			514		561
Federal funds purchased and repurchase agreements		55			39			104		78
Federal Home Loan Bank borrowings		40			41			81		83

Total interest expense		348			356			699		722

Net interest income		1,957			2,025			4,137		4,069
PROVISION FOR LOAN LOSSES		—			—			—		—

Net interest income after provision for loan losses		1,957			2,025			4,137		4,069

NONINTEREST INCOME
Service charges and other fees		74			93			149		179
Net gains on available for sale securities		200			261			1,156		261
Other-than-temporary losses on securities
Total other-than-temporary losses		—			—			—		(49	)
Portion of loss recognized in other comprehensive income (before taxes)		—			—			—		—

Net impairment losses recognized in earnings		—			—			—		(49	)
Other operating income		152			153			319		322

Total noninterest income		426			507			1,624		713

NONINTEREST EXPENSE
Salary and employee benefits		1,012			937			2,004		1,847
Net occupancy expense of premises		426			421			864		850
Other operating expenses		659			667			1,242		1,238

Total noninterest expense		2,097			2,025			4,110		3,935

Income before income taxes		286			507			1,651		847
INCOME TAX EXPENSE (BENEFIT)		(46	)		(31	)		281		(137	)

Net income	$	332		$	538		$	1,370	$	984

WEIGHTED AVERAGE SHARES OUTSTANDING		1,718,730			1,718,730			1,718,730		1,718,730

EARNINGS PER COMMON SHARE	$	0.20		$	0.31		$	0.80	$	0.57

DIVIDENDS PER COMMON SHARE	$	0.20		$	0.20		$	0.40	$	0.40

The accompanying condensed notes are an integral part of the unaudited consolidated financial statements.

First West Virginia Bancorp, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


	Three Months Ended, June 30,						Six Months Ended, June 30,
	2015			2014			2015			2014
(in thousands)	(Unaudited)						(Unaudited)
Net Income	$	332		$	538		$	1,370		$	984

Other comprehensive income (loss):
Investment securities available for sale
Unrealized holding gains (losses) arising during the period		(1,971	)		2,489			50			5,022
Income tax effect		742			(937	)		(19	)		(1,890	)
Reclassification of gains recognized in earnings		(200	)		(261	)		(1,156	)		(212	)
Income tax effect		75			99			435			80

Total other comprehensive income (loss)		(1,354	)		1,390			(690	)		3,000

Comprehensive income (loss)	$	(1,022	)	$	1,928		$	680		$	3,984

The accompanying condensed notes are an integral part of the unaudited consolidated financial statements.

First West Virginia Bancorp, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands, except shares and per share amounts)


													Accumulated
													Other
	Common Stock				Treasury					Retained			Comprehensive
	Shares		Amount		Stock			Surplus		Earnings			Income (Loss)			Total
BALANCE, DECEMBER 31, 2014		1,728,730	$	8,644	$	(228	)	$	6,966	$	18,655		$	835		$	34,872
Net Income		—		—		—			—		1,370			—			1,370
Other comprehensive loss		—		—		—			—		—			(690	)		(690	)
Cash dividend ($.40 per share)		—		—		—			—		(687	)		—			(687	)

BALANCE, JUNE 30, 2015		1,728,730	$	8,644	$	(228	)	$	6,966	$	19,338		$	145		$	34,865


													Accumulated
													Other
	Common Stock				Treasury					Retained			Comprehensive
	Shares		Amount		Stock			Surplus		Earnings			Income (Loss)			Total
BALANCE, DECEMBER 31, 2013		1,728,730	$	8,644	$	(228	)	$	6,966	$	18,126		$	(2,718	)	$	30,790
Net Income		—		—		—			—		984			—			984
Other comprehensive income		—		—		—			—		—			3,000			3,000
Cash dividend ($.40 per share)		—		—		—			—		(687	)		—			(687	)

BALANCE, JUNE 30, 2014		1,728,730	$	8,644	$	(228	)	$	6,966	$	18,423		$	282		$	34,087

The accompanying condensed notes are an integral part of the unaudited consolidated financial statements.

First West Virginia Bancorp, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the Six Months Ended June 30,
(in thousands)	2015			2014
OPERATING ACTIVITIES
Net income	$	1,370		$	984
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		318			304
Amortization of investment securities, net		403			215
Investment security gains		(1,156	)		(261	)
Other-than-temporary losses on securities		—			49
Net gains on sales of mortgage loans		—			(2	)
Loss on disposal of premises and equipment		9			2
Increase in cash surrender value of bank-owned life insurance		(54	)		(53	)
Originations of mortgage loans held for sale		—			(85	)
Proceeds from sales of mortgage loans		—			87
Decrease in interest receivable		1			33
Decrease in interest payable		(10	)		(12	)
Decrease (increase) in deferred taxes		62			(5	)
Other, net		(32	)		(1,345	)

Net cash provided by (used in) operating activities		911			(89	)

INVESTING ACTIVITIES
Net increase in loans, net of charge-offs		(5,667	)		(1,047	)
Recoveries on loans previously charged-off		8			3
Proceeds from sales of securities available-for-sale		52,074			12,210
Proceeds from maturities, prepayments, and calls of securities available-for-sale		14,139			10,043
Purchases of securities available-for-sale		(60,824	)		(18,346	)
Purchases of premises and equipment		(111	)		(1,081	)

Net cash provided by (used in) investing activities		(381	)		1,782

FINANCING ACTIVITIES
Net decrease in deposits		(4,763	)		(10,147	)
Dividends paid		(687	)		(687	)
Increase (decrease) in short-term borrowings		2,270			(438	)
Repayment of Federal Home Loan Bank borrowings		(49	)		(47	)

Net cash used in financing activities		(3,229	)		(11,319	)

DECREASE IN CASH AND CASH EQUIVALENTS		(2,699	)		(9,626	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		20,396			31,875

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	17,697		$	22,249

Supplemental Disclosures:
Cash Paid for Interest	$	709		$	733
Cash Paid for Income Taxes	$	26		$	8

The accompanying condensed notes are an integral part of the unaudited consolidated financial statements.

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting and reporting policies applied in the presentation of the accompanying consolidated financial statements follows.

Nature of Operations and Basis of Presentation: First West Virginia Bancorp, Inc. (the “Company”) is a West Virginia Company. The Company provides a variety of banking services to individuals and businesses through the branch network of its affiliate bank (the “Bank”). The Bank operates nine full service branches located in Wheeling (3), Wellsburg, Moundsville, New Martinsville, Buckhannon, and Weston, West Virginia and Bellaire, Ohio. Primary deposit products consist of checking accounts, savings accounts, and certificates of deposit. Primary lending products consist of commercial and residential real estate loans, consumer loans, and business loans.

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. Accordingly, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto of the Company included in the Annual Report on Form 10-K for the year ended December 31, 2014. However, in the opinion of management, all adjustments (consisting of only normal recurring adjustments) which are necessary for a fair presentation of the financial statements have been included. The results of operations for the six month period ended June 30, 2015, are not necessarily indicative of the results which may be expected for the entire year or any other period. The consolidated balance sheet of the Company as of December 31, 2014 has been derived from the audited consolidated balance sheet of the Company as of that date.

Principles of Consolidation: The consolidated financial statements of the Company include the financial statements of the parent and its wholly-owned subsidiary, Progressive Bank, N.A. All significant intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to material change in the near term relate to the determination of the allowance for loan losses, valuation of deferred tax assets, other-than-temporary impairments (OTTI), and fair values of financial instruments.

Cash and Cash Equivalents: Cash and cash equivalents consist of cash on hand and amounts due from banks and federal funds sold with maturities of less than 90 days. At June 30, 2015, the Company’s cash accounts exceeded federally insured limits by approximately $537,000. Additionally, the Company had approximately $11,721,000 on deposit with the Federal Reserve Bank and the Federal Home Loan Bank of Pittsburgh as of June 30, 2015.

Investment Securities: Investment securities are classified at the time of purchase, based on management’s intention and ability, as securities available for sale or held to maturity. Debt securities classified as held to maturity are stated at cost adjusted for amortization of premium and accretion of discount which are computed using the interest method and recognized as adjustments of interest income. Certain other debt and equity securities have been classified as available for sale to serve principally as a source of liquidity. Unrealized holding gains and losses for available-for-sale securities are reported as a separate component of stockholders’ equity, net of tax, until realized. Realized securities gains and losses are computed using the specific identification method. Interest and dividends on investment securities are recognized as income when earned.

Securities are periodically reviewed for other-than-temporary impairment based upon a number of factors, including, but not limited to, the length of time and extent to which the market value has been less than cost, the financial condition of the underlying issuer, the ability of the issuer to meet contractual obligations, the likelihood of the security’s ability to recover any decline in its market value, and management’s intent and ability to hold the security for a period of time sufficient to allow for a recovery in market value. Among the factors that are considered in determining management’s intent and ability is a review of the Company’s capital adequacy, interest rate risk position and liquidity. The assessment of a security’s ability to recover any decline in market value, the ability of the issuer to meet contractual obligations and management’s intent and ability requires considerable judgment. Once a decline in value is determined to be other-than-temporary, if the Company does not intend to sell the security, and it is more-likely-than-not that it will not be required to sell the security before recovery of the security’s amortized cost basis, the charge to earnings is limited to the amount of credit loss. Any remaining difference between fair value and amortized cost (the difference defined as the non-credit portion) is recognized in other comprehensive income, net of applicable taxes. Otherwise, the entire difference between fair value and amortized cost is charged to earnings. There were no investment securities identified by management to be other-than-temporarily impaired at June 30, 2015 and December 31, 2014. If investments decline in fair value due to adverse changes in the financial markets, charges to income could occur in future periods.

Federal Reserve and Federal Home Loan Bank stock are required investments for institutions that are members of the Federal Reserve and Federal Home Loan Bank systems. The required investment in the common stock is based on a predetermined formula, carried at cost and evaluated for impairment.

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Loans and Loans Held for Sale: Loans are generally reported at the principal balance outstanding, net of unearned income. Interest income on loans is accrued based on the principal outstanding. It is the Company’s policy to discontinue the accrual of interest when either the principal or interest is past due 90 days or more, unless the loan is both well secured and in the process of collection. It is the Company’s policy not to recognize interest income on specific impaired loans unless the likelihood of future loss is remote. Interest payments received on such loans are applied as a reduction of the loan principal balance. A nonaccrual loan may be returned to accrual status when none of its principal and interest payments are due and there has been a sustained period of repayment performance. Loans are considered past due when contractually required principal and interest payments have not been made on the due dates. Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount amortized over the contractual life of the related loans or commitments as an adjustment of the related loan’s yield. Loans held for sale are carried at the lower of cost or estimated market value in the aggregate. There were no loans held for sale as of June 30, 2015 and December 31, 2014.

Consumer loans are fully charged off or charged down to net realizable value when deemed uncollectible due to bankruptcy or other factors or no later than a defined number of days past due. Consumer loans not secured by real estate are charged off or charged down to net realizable value at 120 days past due for closed-end loans and 180 days past due for open-end loans. Residential real estate loans are charged down to net realizable value at 120 days past due for closed-end loans and 180 days past due for open-end loans. Commercial loans are fully charged off or charged down to net realizable value when management judges the loan to be uncollectible.

The Company has entered into an agreement with the Federal Home Loan Bank of Pittsburgh (“FHLB”) under which the bank may sell conforming one-to-four family residential mortgage loans to the FHLB. The current agreement dated December 28, 2013 provides for a maximum commitment of $5,000,000. This commitment expires on December 28, 2015. Loans sold to the FHLB are sold with limited recourse or credit risk based upon utilization of the original commitment. The bank also maintains the servicing of these loans, for which it is paid a servicing fee. The total amount of loans sold and outstanding to the FHLB were $7,944,000 and $8,501,000 as of June 30, 2015 and December 31, 2014, respectively. These loans were also subject to recourse obligation or credit risk in the amount of $316,000 and $323,000 at June 30, 2015 and December 31, 2014, respectively. No liability has been recorded for the recourse obligation as the likelihood of incurring the liability is considered remote. The amount of income recognized as a result of this agreement was $6,000 and $5,000 for the three months ended June 30, 2015 and 2014, respectively, and $12,000 and $13,000 for the six months ended June 30, 2015 and 2014, respectively.

Allowance for Loan Losses: The allowance for loan losses represents the amount which management estimates is adequate to provide for probable losses inherent in its loan portfolio. The allowance method is used in providing for loan losses. Accordingly, all loan losses are charged to the allowance, and all recoveries are credited to it. The allowance for loan losses is established through a provision for loan losses that is charged to operations. The provision is based on management’s evaluation of the adequacy of the allowance for loan losses which encompasses the overall risk characteristics of the various portfolio segments, past experience with losses, the impact of economic conditions on borrowers, and other relevant factors. The estimates used in determining the adequacy of the allowance for loan losses, including the amounts and timing of future cash flows expected on impaired loans, are particularly susceptible to significant changes in the near term.

Management tracks and assigns a historical loss percentage for each loan rating category within each loan type. A rolling three-year historical loss ratio is used, calculated on a quarterly basis.

Management currently utilizes nine qualitative factors that are adjusted based on changes in the lending environment and economic conditions. The qualitative factors include the following: levels of and trends in delinquencies, non-accruals, and charge-offs; trends within the loan portfolio; changes in lending policies and procedures; experience of lending personnel and management oversight; national and local economic trends; concentrations of credit; external factors such as legal and regulatory requirements; changes in the quality of loan review and Board oversight; and changes in the value of underlying collateral. The number of qualitative factors can change. Factors can be added for new risks or taken away if the risk no longer applies. Each loan type will have its own risk profile and management will evaluate and adjust each qualitative factor for each loan type quarterly, if necessary. For example, if one area of the loan portfolio is experiencing sharp increases in growth, it is likely the qualitative factor for trends in the loan portfolio would be increased for that loan type. As levels of delinquencies and non-accrual loans decline for commercial real estate and commercial loans it is likely that factor would be reduced.

In terms of the Company’s loan portfolio, the commercial and industrial loans and commercial real estate loans are deemed to have more risk than the consumer real estate loans and other consumer loans in the portfolio. The commercial loans not secured by real estate are highly dependent on financial condition and are more dependent on economic conditions. The commercial loans secured by real estate are also dependent on economic conditions but generally have stronger forms of collateral. More recently, commercial real estate has been negatively impacted by devaluation so these commercial loans carry a higher qualitative factor for changes in the value of collateral. The commercial loans and commercial real estate loans have historically been responsible for the majority of the Company’s delinquencies, non-accrual loans, and charge-offs so both of these categories carry higher qualitative factors than consumer real estate loans and other consumer loans. The Company has historically experienced very low levels of consumer real estate and consumer loan charge-offs so these qualitative factors are set lower than the commercial real estate and commercial and industrial loans.

Mortgage loans secured by one-to-four family properties and all consumer loans are large groups of smaller-balance homogeneous loans and are measured for impairment collectively. Loans that experience insignificant payment delays, which are defined as 90 days or less, generally are not classified as impaired. Management determines the significance of payment delays on a case-by-case basis taking into consideration all circumstances concerning the loan, the credit worthiness and payment history of the borrower, the length of the payment delay, and the amount of shortfall in relation to the principal and interest owed.

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Allowance for Loan Losses: (Continued)

Impaired loans are loans for which it is probable the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. The Company individually evaluates such loans for impairment and does not aggregate loans by major risk classifications. The definition of “impaired loans” is not the same as the definition of “nonaccrual loans,” although the two categories overlap.

The Company may choose to place a loan on nonaccrual status due to payment delinquency or uncertain collectibility while not classifying the loan as impaired, provided the loan is not a commercial or commercial real estate classification. Payments received on nonaccrual loans are applied as a reduction of the loan principal balance. Factors considered by management in determining impairment include payment status and collateral value. The amount of impairment for these types of loans is determined by the difference between the present value of the expected cash flows related to the loan, using the original interest rate, and its recorded value, or in the case of collateral dependent loans, the difference between the fair value of the collateral and the recorded amount of the loans. When foreclosure is probable, impairment is measured based on the fair value of the collateral less estimated liquidation expenses.

Individual loan reviews are based upon specific quantitative and qualitative criteria, including the size of the loan, loan quality ratings, value of collateral, repayment ability of borrowers, and historical experience factors. The historical experience factors utilized for individual loan reviews are based upon past loss experience, known trends in losses and delinquencies, the growth of loans in particular markets and industries, and known changes in economic conditions in the particular lending markets. Allowances for homogeneous loans (such as residential mortgage loans, personal loans, etc.) are evaluated based upon historical loss experience, trends in losses and delinquencies, growth of loans in particular markets, and known changes in economic conditions in each lending market. There can be no assurance the allowance for loan losses will be adequate to cover all losses, but management believes the allowance for loan losses in the amount of $1,758,000 at June 30, 2015, was adequate to provide for probable losses from existing loans based on information currently available. While management uses available information to provide for loan losses, the ultimate collectibility of a substantial portion of the loan portfolio, and the need for future additions to the allowance, will be based on changes in economic conditions and other relevant factors. As such, an adverse change in economic activity could reduce cash flows for both commercial and individual borrowers, which would likely cause the Company to experience increases in problem assets, delinquencies and losses on loans.

Goodwill: Goodwill resulted from the Company’s purchase of a less-than-whole financial institution (the “branch”). The goodwill value of $1,644,000 is supported ultimately by revenue that is driven by the volume of business transacted. A decline in earnings as a result of a lack of growth or the inability to deliver cost effective services over sustained periods can lead to impairment of goodwill that could adversely impact earnings in future periods.

Goodwill is periodically reviewed for impairment. No impairment losses were recognized as of June 30, 2015 and 2014. Additionally, future events could cause management to conclude that impairment indicators exist and that the goodwill is impaired, which would result in the Company recording an impairment loss. Any resulting impairment loss could have a material, adverse impact on the Company’s financial condition and results of operations.

Mortgage Servicing Rights (“MSRs”): The Company has agreements for the express purpose of selling loans in the secondary market. The Company maintains all servicing rights for these loans. Originated MSRs are recorded by allocating total costs incurred between the loan and servicing rights based on their relative fair values. MSRs are amortized in proportion to the estimated servicing income over the estimated life of the servicing portfolio. Impairment is evaluated based on the fair value of the right, based on portfolio interest rates and prepayment characteristics.

Bank-owned Life Insurance: Bank-owned life insurance consists of investments in life insurance policies on executive officers and other members of the bank’s management. The policies are carried at their net cash surrender value. Changes in the policy value are recorded as an adjustment to the carrying value with the corresponding amount recognized as non-interest income or expense. Earnings on these policies are based on the net earnings on the cash surrender value of the policies. The net cash surrender value of bank-owned life insurance was $3,894,000 and $3,840,000 at June 30, 2015 and December 31, 2014, respectively. The death benefit value of the bank-owned life insurance at June 30, 2015 and December 31, 2014 was $8.7 million and $8.8 million, respectively. An agreement has been executed with all officers whereby a $40,000 death benefit is payable upon the participant’s death while employed by the Company to their designated beneficiary.

Advertising Costs: Advertising costs are expensed as the costs are incurred. Advertising expenses amounted to $70,000 and $50,000 for the three months ended June 30, 2015 and June 30, 2014, respectively. For the six month periods ended June 30, 2015 and 2014 advertising expenses amounted to $100,000 and $89,000, respectively.

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost, less accumulated depreciation and amortization. Provisions for depreciation and amortization are computed generally using the straight-line method over the estimated useful lives of the assets. When units of property are disposed of, the premises and equipment accounts are relieved of the cost and the accumulated depreciation related to such units. Any resulting gains or losses are credited to or charged against income. Cost of repairs and maintenance is charged to expense as incurred. Additions and improvements are capitalized at cost.

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Transfers of Financial Assets: Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Other Real Estate Owned: Assets acquired through, or in lieu of, loan foreclosures are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. The assets are subsequently accounted for at the lower of cost or fair value, less estimated costs to sell. Any subsequent declines in fair value and gains or losses on the disposition of these assets are credited to or charged against income. Other real estate owned is included in other assets. The recorded investment in consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled approximately $71,000 at June 30, 2015.

Income Taxes: The Company and its subsidiary file a consolidated federal income tax return. There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Statement of Income. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred income tax expenses or benefits are based on the changes in the deferred tax asset or liability from period to period. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

Earnings Per Common Share: Earnings per common share are calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the year. The Company has no securities which would be considered potential common stock.

Legal Proceedings: The nature of the business of the Holding Company’s subsidiary generates a certain amount of litigation involving matters arising in the ordinary course of business. The Company is unaware of any litigation other than ordinary routine litigation incidental to the business of the Company, to which it or its subsidiary is a party or of which any of their property is subject.

Recent Accounting Pronouncements: In February 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The ASU focuses on the consolidation evaluation for reporting organizations (public and private companies and not-for-profit organizations) that are required to evaluate whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification and improves current GAAP by:

•

Placing more emphasis on risk of loss when determining a controlling financial interest. A reporting organization may no longer have to consolidate a legal entity in certain circumstances based solely on its fee arrangement, when certain criteria are met.

•

Reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (VIE).

•

Changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or VIEs.

The ASU will be effective for periods beginning after December 15, 2015, for public companies. Early adoption is permitted, including adoption in an interim period. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. Existing GAAP does not include explicit guidance about a customer’s accounting for fees paid in a cloud computing arrangement. Examples of cloud computing arrangements include: (a) software as a service; (b) platform as a service; (c) infrastructure as a service; and (d) other similar hosting arrangements. The amendments add guidance to Subtopic 350-40, Intangibles - Goodwill and Other - Internal-Use Software, which will help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The guidance already exists in the FASB Accounting Standards Codification in paragraphs 985-605-55-121 through 55-123, but it is included in a Subtopic applied by cloud service providers to determine whether an arrangement includes the sale or license of software. For public business entities, the amendments will be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements.

In May 2015, the FASB issued ASU 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). This Update addresses the diversity in practice related to how certain investments measured at net asset value with future redemption dates are categorized; the amendments in this Update remove the requirement to categorize investments for which fair values are measured using the net asset value per share practical expedient. It also limits disclosures to investments for which the entity has elected to measure the fair value using the practical expedient. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements.

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 2 - INVESTMENT SECURITIES

The amortized cost and estimated fair values of investment securities are as follows at June 30, 2015 and December 31, 2014:


	(Expressed in thousands)
	June 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available-for-sale:
Obligations of U.S. Government corporations and agencies	$	44,751	$	—	$	(459	)	$	44,292
Obligations of states and political subdivisions		32,301		1,617		(127	)		33,791
Mortgage-backed securities		113,878		362		(1,194	)		113,046
Equity securities		175		35		(2	)		208

Total available-for-sale	$	191,105	$	2,014	$	(1,782	)	$	191,337


	(Expressed in thousands)
	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available-for-sale:
Obligations of U.S. Government corporations and agencies	$	44,595	$	13	$	(602	)	$	44,006
Obligations of states and political subdivisions		40,349		2,144		(71	)		42,422
Mortgage-backed securities		110,626		818		(1,001	)		110,443
Equity securities		171		38		(1	)		208

Total available-for-sale	$	195,741	$	3,013	$	(1,675	)	$	197,079

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at June 30, 2015 and December 31, 2014, was approximately $138,183,000 and $92,305,000, which is approximately 72.2% and 46.8%, respectively, of the Company’s available-for-sale investment portfolio.

The Company’s investment securities portfolio contains unrealized losses of direct obligations of the U.S. Government agency securities, including mortgage-related instruments issued or backed by the full faith and credit of the United States government or are generally viewed as having the implied guarantee of the U.S. government, and debt obligations of a U.S. state or political subdivision.

The unrealized losses on the Company’s investments in direct obligations of U.S. government corporations and agencies were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2015.

The unrealized losses on the Company’s investments in residential mortgage-backed securities were caused by interest rate increases. The Company expects to recover the amortized cost basis over the term of the securities. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2015.

The unrealized losses on the Company’s investments in securities of state and political subdivisions were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2015.

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 2 - INVESTMENT SECURITIES (CONTINUED)

On a quarterly basis, the Company evaluates the severity and duration of impairment for its investment securities portfolio and the Company’s ability to hold the securities until they recover. Generally, impairment is considered other-than-temporary when an investment security has sustained a decline in market value for a period of twelve months. The Company has concluded that any impairment of its investment securities portfolio is not other-than-temporary but is the result of interest rate changes that are not expected to result in the noncollection of principal and interest during the period. There are 70 positions that are temporarily impaired at June 30, 2015.

The following tables show the Company’s gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at June 30, 2015 and December 31, 2014:


	(Expressed in thousands)
	June 30, 2015
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. Government corporations and agencies	$	28,513	$	(236	)	$	15,777	$	(223	)	$	44,290	$	(459	)
Obligations of states and political subdivisions		6,099		(127	)		—		—			6,099		(127	)
Mortgage-backed securities		55,913		(439	)		31,827		(755	)		87,740		(1,194	)

Total debt securities		90,525		(802	)		47,604		(978	)		138,129		(1,780	)
Equity securities		32		(1	)		22		(1	)		54		(2	)

Total	$	90,557	$	(803	)	$	47,626	$	(979	)	$	138,183	$	(1,782	)


	(Expressed in thousands) December 31, 2014
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. Government corporations and agencies	$	5,486	$	(9	)	$	36,006	$	(593	)	$	41,492	$	(602	)
Obligations of states and political subdivisions		766		(7	)		5,000		(64	)		5,766		(71	)
Mortgage-backed securities		7,193		(12	)		37,835		(989	)		45,028		(1,001	)

Total debt securities		13,445		(28	)		78,841		(1,646	)		92,286		(1,674	)
Equity securities		19		(1	)		—		—			19		(1	)

Total	$	13,464	$	(29	)	$	78,841	$	(1,646	)	$	92,305	$	(1,675	)

The following is a tabular rollforward of the amount of credit related OTTI recognized in earnings (in thousands):


	For the three months ended					For the six months ended
	June 30, 2015		June 30, 2014			June 30, 2015		June 30, 2014
Balance at beginning of period	$	—	$	49		$	—	$	—
Additions for credit-related OTTI not previously recognized		—		—			—		49
Reductions for securities sold during the period (realized)		—		(49	)		—		(49	)

Balance at end of period	$	—	$	—		$	—	$	—

No other-than-temporary impairment losses were recognized in accumulated other comprehensive income as of June 30, 2015 and 2014.

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 2 - INVESTMENT SECURITIES (CONTINUED)

The amortized cost and fair value of investment securities at June 30, 2015, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	(Expressed in thousands) June 30, 2015
	Amortized Cost		Fair Value
Due in one year or less	$	584	$	605
Due after one year through five years		27,146		27,069
Due after five years through ten years		33,926		34,084
Due after ten years		15,396		16,325

		77,052		78,083
Mortgage-backed securities		113,878		113,046
Equity securities		175		208

Total	$	191,105	$	191,337

Proceeds from sales of securities available-for-sale during the six month periods ended June 30, 2015 and 2014, were $52,074,000 and $12,210,000, respectively. Gross gains of $1,156,000 were realized during the six months ended June 30, 2015. Gross losses realized during the six months ended June 30, 2015 were less than $500 and not considered material for financial reporting and disclosure purposes. Gross gains of $297,000 and gross losses of $36,000 were realized during the six months ended June 30, 2014. Proceeds from sales of securities available-for-sale during the three month periods ended June 30, 2015 and 2014, were $12,527,000 and $12,210,000, respectively. Gross gains of $200,000 were realized during the three months ended June 30, 2015. Gross losses realized during the three months ended June 30, 2015 were less than $500 and not considered material for financial reporting and disclosure purposes. Gross gains of $297,000 and gross losses of $36,000 were realized during the three months ended June 30, 2014. Assets carried at $71,661,000 and $63,856,000 at June 30, 2015 and December 31, 2014, respectively, were pledged to secure United States Government and other public funds and for other purposes as required or permitted by law.

NOTE 3 - LOANS AND LEASES

Loans outstanding at June 30, 2015 and December 31, 2014, are as follows:


	(Expressed in Thousands)
	June 30, 2015		December 31, 2014
Consumer Real Estate:
Construction	$	3,563	$	3,519
Farmland		82		93
Residential 1-4 family		22,757		23,737
Home equity loans		980		1,207
Home equity lines of credit		4,305		3,966

Total Consumer Real Estate		31,687		32,522
Commercial Real Estate:
Non-farm, non-residential		39,742		37,411
Multifamily (5 or more) residential properties		9,210		9,538

Total Commercial Real Estate		48,952		46,949
Commercial and Other Loans:
Commercial		10,751		5,720
Non-rated industrial development obligations		10,792		11,384
Other loans		27		19

Total Commercial and Other Loans		21,570		17,123
Consumer Loans:
Installment and other loans to individuals		2,299		2,261
Credit Cards		462		503

Total Consumer Loans		2,761		2,764

Total Loans		104,970		99,358
Less unearned interest and deferred fees		150		141

Gross Loans		104,820		99,217
Less allowance for loan losses		1,758		1,813

Net Loans	$	103,062	$	97,404

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 3 - LOANS AND LEASES (CONTINUED)

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. These policies and procedures are reviewed by management and approved by the Board of Directors on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentration of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

The Company originates direct and indirect consumer loans including principally residential real estate, home equity lines and loans, credit cards, and indirect vehicle loans using a credit analysis as part of the underwriting process. Each loan type has a separate underwriting criteria, which consists of several factors including debt to income, type of collateral, credit history and customer relationship with the Company. Credit risk is driven by factors such as the creditworthiness of a borrower and general economic conditions in the Company’s market area that might impact the borrower’s personal income, employment, or collateral value. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably. Underwriting standards are designed to promote relationship banking rather than transactional banking. The Company’s management examines current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial and industrial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of the borrower, however, may not be as expected and the collateral securing the loan may fluctuate in value. Credit risk in these loans is driven by the creditworthiness of the borrower and the economic conditions that impact the cash flow stability from business operations. Minimum standards and underwriting guidelines have been established for commercial loan types.

Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be adversely affected by the general economy or conditions specific to the real estate market such as geography and/or property type.

Construction and land development real estate loans are usually based upon estimates of costs and estimated value of the completed project and include independent appraisal reviews and a financial analysis of the developers and property owners. Sources of repayment of these loans may include permanent loans, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are considered to be higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic conditions and the availability of long-term financing. Credit risk in these loans may be impacted by the creditworthiness of a borrower, property values and the economic conditions in the Company’s market areas.

Non-accrual loans amounted to $869,000 and $1,032,000 at June 30, 2015 and December 31, 2014, respectively. The amount of interest income that would have been recognized had the loans performed in accordance with their original terms was $12,000 and $19,000 for the three months ended June 30, 2015 and June 30, 2014, respectively. For the six months ended June 30, 2015 and 2014 and for the year ended December 31, 2014, the amount of interest income that would have been recognized had the loans performed in accordance with their original terms was $21,000, $37,000 and $63,000, respectively.

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 3 - LOANS AND LEASES (CONTINUED)

The following tables present the aging of the recorded investment in past due loans by class of loans (in thousands):


	June 30, 2015
	Current			30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Total Loans			90 Days or More Past Due and Accruing
Commercial and other loans	$	21,519		$	31	$	—	$	20	$	51	$	21,570		$	—
Commercial real estate		48,272			354		—		326		680		48,952			—
Consumer real estate		31,493			116		—		78		194		31,687			—
Consumer		2,741			12		8		—		20		2,761			—
Unearned interest and deferred fees		(150	)		—		—		—		—		(150	)		—

Total loans	$	103,875		$	513	$	8	$	424	$	945	$	104,820		$	—

Non-accrual loans included above are as follows:
Commercial and other loans	$	—		$	—	$	—	$	20	$	20	$	20		$	—
Commercial real estate		243			—		—		326		326		569			—
Consumer real estate		171			31		—		78		109		280			—
Consumer		—			—		—		—		—		—			—

Total non-accrual loans	$	414		$	31	$	—	$	424	$	455	$	869		$	—


	December 31, 2014
	Current			30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Total Loans			90 Days or More Past Due and Accruing
Commercial and other loans	$	17,078		$	6	$	—	$	39	$	45	$	17,123		$	—
Commercial real estate		46,246			—		13		690		703		46,949			—
Consumer real estate		32,384			71		—		67		138		32,522			—
Consumer		2,742			5		3		14		22		2,764			14
Unearned interest and deferred fees		(141	)		—		—		—		—		(141	)		—

Total loans	$	98,309		$	82	$	16	$	810	$	908	$	99,217		$	14

Non-accrual loans included above are as follows:
Commercial and other loans	$	—		$	—	$	—	$	39	$	39	$	39		$	—
Commercial real estate		—			—		13		690		703		703			—
Consumer real estate		223			—		—		67		67		290			—
Consumer		—			—		—		—		—		—			—

Total non-accrual loans	$	223		$	—	$	13	$	796	$	809	$	1,032		$	—

The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Risk ratings are assigned to individual credit exposures as an aspect of the credit approval and are adjusted thereafter to reflect changes in risk exposure as the borrower’s condition changes. The most significant factor used to determine the risk rating is the borrower’s primary source of repayment which includes a cash flow analysis. Other items considered in the loan review include secondary sources of repayment, financial trends, collateral value and characteristics, the size of the loan, and external factors impacting the borrower’s repayment ability.

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 3 - LOANS AND LEASES (CONTINUED)

Loans rated as “Pass” include those that have minimal, modest, acceptable, and higher risk. Minimal risk loans are fully secured by marketable securities or cash collateral, or loans supported by the United States Treasury. Modest risk loans have borrowers with stable cash flows over an extended period of time and extensive access to credit from several sources. Acceptable risk loans include individual borrowers with substantial liquid assets and commercial borrowers with strong cash flow. Higher risk loans have adequate sources of repayment and no current identifiable risk for repayment and loans that are slightly below average due to any number of factors such as income, collateral, or the lack of sufficient financial information.

Problem and potential problem loans are classified as “Special Mention,” “Substandard,” and “Doubtful.” Substandard loans are inadequately protected by the current worth and paying capacity of the borrower or the collateral pledged, if any. These loans have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that deserve management’s close attention are deemed to be Special Mention.

The following tables present the risk category of loans by class of loans based on the most recent analysis performed as of June 30, 2015 and December 31, 2014 (in thousands):


June 30, 2015	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and other	$	21,550	$	—	$	20	$	—	$	21,570
Commercial real estate		45,226		—		3,726		—		48,952

Total	$	66,776	$	—	$	3,746	$	—	$	70,522


December 31, 2014	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and other	$	17,084	$	—	$	39	$	—	$	17,123
Commercial real estate		41,679		1,170		4,100		—		46,949

Total	$	58,763	$	1,170	$	4,139	$	—	$	64,072

For consumer and consumer real estate loan classes, the Company also 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 in those loan classes based on payment activity as of June 30, 2015 and December 31, 2014 (in thousands):


June 30, 2015	Performing		Non-performing		Total
Consumer	$	2,761	$	—	$	2,761
Consumer real estate		31,056		631		31,687

Total	$	33,817	$	631	$	34,448


December 31, 2014	Performing		Non-performing		Total
Consumer	$	2,750	$	14	$	2,764
Consumer real estate		32,232		290		32,522

Total	$	34,982	$	304	$	35,286

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 3 - LOANS AND LEASES (CONTINUED)

The Company also evaluates problem loans for impairment. A loan is considered to be impaired if it is probable that the Company will not be able to collect the payments for principal and interest when due according to the contractual terms of the loan agreement. Impaired loans generally include all non-accrual loans and troubled debt restructurings (TDRs).

Impaired loans at June 30, 2015 and December 31, 2014 are set forth in the following tables (in thousands):


	June 30, 2015
	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial and other loans	$	20	$	—	$	20	$	20	$	20
Commercial real estate		569		341		228		569		77
Consumer real estate		425		75		350		425		9

Total	$	1,014	$	416	$	598	$	1,014	$	106


	December 31, 2014
	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial and other loans	$	39	$	—	$	39	$	39	$	39
Commercial real estate		744		474		270		744		78
Consumer real estate		493		143		350		493		9
Consumer		18		—		11		11		1

Total	$	1,294	$	617	$	670	$	1,287	$	127


	Average Recorded Investment				Interest Income Recognized				Interest Income Recognized Cash Basis
	For the three months ended				For the three months ended				For the three months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Commercial and other loans	$	20	$	22	$	—	$	—	$	—	$	—
Commercial real estate		587		850		—		1		39		—
Consumer real estate		431		185		5		2		1		—

Total	$	1,038	$	1,057	$	5	$	3	$	40	$	—


	Average Recorded Investment				Interest Income Recognized				Interest Income Recognized Cash Basis
	For the six months ended				For the six months ended				For the six months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Commercial and other loans	$	29	$	24	$	—	$	—	$	—	$	—
Commercial real estate		646		881		—		1		253		—
Consumer real estate		459		179		10		2		2		—

Total	$	1,134	$	1,084	$	10	$	3	$	255	$	—

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 3 - LOANS AND LEASES (CONTINUED)

Loan Modifications

The Company’s loan portfolio also includes certain loans that have been modified in a troubled debt restructuring (TDR), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonaccrual at the time of restructure and may only be returned to accrual status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. TDRs on accrual status may remain in accrual status after they have been restructured as long as they continue to perform in accordance with their modified terms. There was one TDR in accrual status at June 30, 2015 and two TDRs in accrual status at December 31, 2014.

When the Company modifies a loan, management evaluates any possible impairment based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized by segment or class of loan, as applicable, through an allowance estimate or a charge-off to the allowance. Segment and class status is determined by the loan’s classification at origination.

The following tables include the recorded investment and number of modifications for new TDRs, as of the respective dates. The Company reports the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured (in thousands).


	June 30, 2015						December 31, 2014
Troubled Debt Restructurings	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post Modification Outstanding Recorded Investment
Commercial and other loans		—	$	—	$	—		—	$	—	$	—
Commercial real estate		—		—		—		—		—		—
Consumer real estate		2		422		422		1		350		350

Total		2	$	422	$	422		1	$	350	$	350

Troubled Debt Restructurings That Subsequently Defaulted Within 12 Months After Restructuring
Commercial and other loans		—	$	—	$	—		—	$	—	$	—
Commercial real estate		—		—		—		—		—		—
Consumer real estate		—		—		—		1		350		350

Total		—	$	—	$	—		1	$	350	$	350

The following tables include new TDRs by type of modification (in thousands):


	June 30, 2015
Troubled Debt Restructurings	Interest Only		Term		Combination		Total Modification
Commercial and other loans	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—
Consumer real estate		—		422		—		422

Total	$	—	$	422	$	—	$	422

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 3 - LOANS AND LEASES (CONTINUED)


	December 31, 2014
Troubled Debt Restructurings	Interest Only		Term		Combination		Total Modification
Commercial and other loans	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—
Consumer real estate		—		350		—		350

Total	$	—	$	350	$	—	$	350

At June 30, 2015 and December 31, 2014, there were funds of $24,000 and $33,000 committed to be advanced to customers whose loans were classified as TDRs.

NOTE 4 - ALLOWANCE FOR LOAN LOSSES

The following table summarizes the primary segments of the ALL, segregated into the amount for loans individually evaluated for impairment by class of loans for the six months ended as of June 30, 2015 and June 30, 2014 (in thousands):


June 30, 2015	Commercial and Other			Commercial Real Estate			Consumer Real Estate			Consumer			Total
Allowance for Loan Losses:
Beginning Balance, January 1, 2015	$	281		$	1,254		$	263		$	15		$	1,813
Charge-offs		(57	)		—			—			(6	)		(63	)
Recoveries		—			2			—			6			8
Provision		120			(113	)		(7	)		—			—

Ending Balance, June 30, 2015	$	344		$	1,143		$	256		$	15		$	1,758

Loans individually evaluated for impairment	$	20		$	77		$	9		$	—		$	106
Loans collectively evaluated for impairment		324			1,066			247			15			1,652

Ending Balance	$	344		$	1,143		$	256		$	15		$	1,758


June 30, 2014	Commercial and Other			Commercial Real Estate			Consumer Real Estate			Consumer			Total
Allowance for Loan Losses:
Beginning Balance, January 1, 2014	$	260		$	1,315		$	263		$	27		$	1,865
Charge-offs		—			—			—			(4	)		(4	)
Recoveries		—			—			—			3			3
Provision		(20	)		(45	)		67			(2	)		—

Ending Balance, June 30, 2014	$	240		$	1,270		$	330		$	24		$	1,864

Loans individually evaluated for impairment	$	19		$	45		$	—		$	—		$	64
Loans collectively evaluated for impairment		221			1,225			330			24			1,800

Ending Balance	$	240		$	1,270		$	330		$	24		$	1,864

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 4 - ALLOWANCE FOR LOAN LOSSES (CONTINUED)

The following table summarizes the primary segments of the ALL for the three months ended as of June 30, 2015 and June 30, 2014 (in thousands):


June 30, 2015	Commercial and Other			Commercial Real Estate			Consumer Real Estate			Consumer			Total
Allowance for Loan Losses:
Beginning Balance, April 1, 2015	$	304		$	1,232		$	261		$	14		$	1,811
Charge-offs		(57	)		—			—			—			(57	)
Recoveries		—			—			—			4			4
Provision		97			(89	)		(5	)		(3	)		—

Ending Balance, June 30, 2015	$	344		$	1,143		$	256		$	15		$	1,758


June 30, 2014	Commercial and Other			Commercial Real Estate			Consumer Real Estate			Consumer			Total
Allowance for Loan Losses:
Beginning Balance, April 1, 2014	$	255		$	1,315		$	269		$	27		$	1,866
Charge-offs		—			—			—			(4	)		(4	)
Recoveries		—			—			—			2			2
Provision		(15	)		(45	)		61			(1	)		—

Ending Balance, June 30, 2014	$	240		$	1,270		$	330		$	24		$	1,864

The following table presents loans individually and collectively evaluated for impairment by class of loans as of June 30, 2015 and December 31, 2014 (in thousands):


June 30, 2015	Commercial and Other		Commercial Real Estate		Consumer Real Estate		Consumer		Unearned Discounts			Total
Loans individually evaluated	$	20	$	569	$	425	$	—	$	—		$	1,014
Loans collectively evaluated		21,550		48,383		31,262		2,761		(150	)		103,806

Ending Balance	$	21,570	$	48,952	$	31,687	$	2,761	$	(150	)	$	104,820


December 31, 2014
Loans individually evaluated	$	39	$	744	$	493	$	11	$	—		$	1,287
Loans collectively evaluated		17,084		46,205		32,029		2,753		(141	)		97,930

Ending Balance	$	17,123	$	46,949	$	32,522	$	2,764	$	(141	)	$	99,217

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment are stated at cost, less accumulated depreciation, as follows (in thousands):


	June 30, 2015		December 31, 2014		Estimated Useful Life Years
Land	$	1,984	$	1,984
Land improvements		418		419		5 - 20
Leasehold improvements		1,089		1,087		5 - 20
Buildings		6,998		6,998		5 - 50
Furniture, fixtures & equipment		4,264		4,228		3 - 30

Total		14,753		14,716
Less accumulated depreciation		6,556		6,303

Premises and equipment, net	$	8,197	$	8,413

Charges to operations for depreciation approximated $158,000 and $152,000 for the three months ended June 30, 2015 and 2014, respectively. Depreciation expenses were $318,000 and $304,000 for the six months ended June 30, 2015 and 2014, respectively.

NOTE 6 - DEPOSITS

The composition of the Bank’s deposits at June 30, 2015 and December 31, 2014 follows (in thousands):


	June 30, 2015
	Demand
	Noninterest Bearing		Interest Bearing		Savings		Time
Individuals, partnerships and corporations (includes certified and official checks)	$	37,337	$	47,974	$	111,281	$	56,774
States and political subdivisions		487		5,899		4,864		2,280
Commercial banks and other depository institutions		2		—		—		482

Total	$	37,826	$	53,873	$	116,145	$	59,536


	December 31, 2014
	Demand
	Noninterest Bearing		Interest Bearing		Savings		Time
Individuals, partnerships and corporations (includes certified and official checks)	$	41,102	$	48,583	$	108,108	$	59,400
States and political subdivisions		384		6,876		4,617		2,490
Commercial banks and other depository institutions		70		—		31		482

Total	$	41,556	$	55,459	$	112,756	$	62,372

A maturity distribution of time certificates of deposit at June 30, 2015 and December 31, 2014, follows:


(dollars in thousands)	Maturities of Time Deposits
	June 30, 2015		December 31, 2014
Due in 2015	$	17,943	$	35,151
Due in 2016		22,948		13,213
Due in 2017		7,269		6,215
Due in 2018		4,123		4,252
Due in 2019		3,487		3,522
Due in 2020 and thereafter		3,766		19

Total	$	59,536	$	62,372

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 6 - DEPOSITS (CONTINUED)

Time deposits include certificates of deposit issued in denominations of $100,000 or more which amounted to $19,579,000 and $21,348,000 at June 30, 2015 and December 31, 2014, respectively. Interest expense on certificates of deposit of $100,000 or more was $53,000 and $62,000 for the three months ended June 30, 2015 and 2014, respectively. Interest expense on certificates of deposit of $100,000 or more was $117,000 and $133,000 for the six months ended June 30, 2015 and 2014, respectively. The following table sets forth the remaining maturity of time certificates of deposit of $100,000 or more:


	Maturities of Time Deposits in Excess of $100,000
(dollars in thousands)	June 30, 2015		December 31, 2014
Three Months or Less	$	2,705	$	4,870
Over Three and Less than Six Months		2,502		3,123
Over Six and Less than Twelve Months		6,422		4,515
Over Twelve Months		7,950		8,840

Total	$	19,579	$	21,348

NOTE 7 - FEDERAL HOME LOAN BANK BORROWINGS

The subsidiary Bank is a member of the Federal Home Loan Bank of Pittsburgh (“FHLB”). The FHLB borrowings are secured by a blanket lien by the FHLB on certain residential real estate loans or securities with a market value at least equal to the outstanding balances. The remaining maximum borrowing capacity with the FHLB at June 30, 2015 was approximately $39.9 million subject to the purchase of additional FHLB stock. The subsidiary bank had FHLB borrowings of $3,371,000 and $3,420,000 at June 30, 2015 and December 31, 2014, respectively. At June 30, 2015 the subsidiary bank had three fixed rate amortizing advances which totaled $3,371,000 with interest rates ranging from 4.65% to 4.89% of which $1,891,000 will mature through 2018 and $1,480,000 will mature through 2023. The collateral securing these borrowings totaled $3,523,000 at June 30, 2015.

The bank also has a line of credit agreement with the Federal Home Loan Bank which matures on May 2, 2016. The maximum credit available is $21.4 million under the agreement. There were no borrowings outstanding under this agreement at June 30, 2015 and December 31, 2014, respectively.

Contractual maturities of FHLB borrowings as of June 30, 2015 were as follows (in thousands):


Due in 2015	$	50
Due in 2016		105
Due in 2017		110
Due in 2018		1,760
Due in 2019		43
Due in 2020 and thereafter		1,303

Total	$	3,371

NOTE 8 - REPURCHASE AGREEMENTS

The Bank transfers various securities to customers in exchange for cash at the end of each business day and agrees to reacquire the securities at the end of the next business day for the cash exchanged plus interest. The process is repeated at the end of each business day until the agreement is terminated. The securities underlying the agreements remained under the Bank’s control. The risk involved in this type of transaction is that the fair value of the securities transferred may decline below the amount of the Bank’s obligation which would require the Bank to pledge additional amounts. The Bank attempts to manage this risk by monitoring the fair value of securities pledged compared to the repurchase agreement amounts. The following table shows repurchase agreements accounted for as secured borrowings (in thousands):


	June 30, 2015
	Remaining Contractual Maturity
Repurchase Agreements Accounted for as Secured Borrowings	Overnight and Continuous
U.S. Government corporations and agencies	$	7,034
Obligations of states and political subdivisions		6,324
Mortgage-backed securities		21,160

Total securities pledged for repurchase agreements		34,518

Gross amount of recognized liabilities for repurchase agreements	$	23,321

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 9 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The activity in accumulated other comprehensive income (loss) for the three and six months ended June 30, 2015 and 2014 is as follows:


(dollars in thousands)	Accumulated Other Comprehensive Income (Loss)⁽¹⁾ Unrealized Gains (Losses) on Securities Available for Sale
	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
Beginning Balance	$	1,499		$	(1,108	)	$	835		$	(2,718	)
Other comprehensive income (loss) before reclassifications		(1,229	)		1,552			31			3,132
Amounts reclassified from accumulated other comprehensive income		(125	)		(162	)		(721	)		(132	)

Period Change		(1,354	)		1,390			(690	)		3,000

Ending Balance	$	145		$	282		$	145		$	282

⁽¹⁾	All amounts are net of tax. Related income tax expense or benefit is calculated using a combined Federal and State income tax rate approximating 39.5%.


	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other Comprehensive Income (Loss) Components	For the three months ended June 30,						Affected Line Item in the Statement of Income
(dollars in thousands)	2015			2014
Securities available for sale ⁽¹⁾:
Net securities gains reclassified into earnings	$	(200	)	$	(261	)	Net gains on available for sale securities
Related income tax expense		75			99		Income tax expense (benefit)

Net effect on accumulated other comprehensive income (loss) for the period	$	(125	)	$	(162	)	Net of tax

Total reclassifications for the period	$	(125	)	$	(162	)	Net of tax


	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other Comprehensive Income (Loss) Components	For the six months ended June 30,						Affected Line Item in the Statement of Income
(dollars in thousands)	2015			2014
Securities available for sale ⁽¹⁾:
Net securities gains reclassified into earnings	$	(1,156	)	$	(261	)	Net gains on available for sale securities
Other-than-temporary losses reclassified into earnings		—			49		Other-than-temporary losses on investments
Related income tax expense		435			80		Income tax expense (benefit)

Net effect on accumulated other comprehensive income (loss) for the period	$	(721	)	$	(132	)	Net of tax

Total reclassifications for the period	$	(721	)	$	(132	)	Net of tax

⁽¹⁾	For additional detail related to unrealized gains (losses) on securities and related amounts reclassified from accumulated other comprehensive income (loss) see Note 2 “Investment Securities.”

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 10 - REGULATORY MATTERS

The Company’s subsidiary bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the bank must meet specific capital guidelines that involve quantitative measures of the bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weighting, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to adjusted total assets (as defined). For June 30, 2015, Interim Final Basel III rules require the bank to maintain minimum amounts and ratios of common equity Tier I capital (as defined in the regulations) to risk-weighted assets (as defined). Additionally under Basel III rules, the decision was made to opt-out of including accumulated other comprehensive income in regulatory capital. For December 31, 2014, regulatory capital ratios were calculated under Basel I rules.

As of June 30, 2015, the most recent notifications from the Office of the Comptroller of the Currency categorized the bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes has changed the capital category. The capital ratios of the Company’s subsidiary bank, along with the regulatory framework for adequately capitalized and well capitalized institutions are depicted as set forth in the following table:


(Amounts Expressed in Thousands)	Actual					For Capital Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Progressive Bank, N.A.
As of June 30, 2015
Total Capital (to Risk Weighted Assets)	$	33,654		22.26	%	$	12,097		8.0	%	$	15,121		10.0	%
Tier I Capital (to Risk Weighted Assets)		31,896		21.09	%		9,072		6.0	%		12,097		8.0	%
Common Equity Tier I Capital (to Risk Weighted Assets)		31,896		21.09	%		6,804		4.5	%		9,829		6.5	%
Tier I Capital (to Adjusted Total Assets)		31,896		9.61	%		13,278		4.0	%		16,598		5.0	%
As of December 31, 2014
Total Capital (to Risk Weighted Assets)	$	32,700		21.29	%	$	12,290		8.0	%	$	15,362		10.0	%
Tier I Capital (to Risk Weighted Assets)		30,887		20.11	%		6,145		4.0	%		9,217		6.0	%
Tier I Capital (to Adjusted Total Assets)		30,887		9.30	%		13,280		4.0	%		16,600		5.0	%

NOTE 11 - FAIR VALUE MEASUREMENTS

The following disclosures show the hierarchal disclosure framework associated with the level of pricing observations utilized in measuring assets and liabilities at fair value. The three broad levels defined by U.S. generally accepted accounting principles are as follows:


•	Level I:	Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

•	Level II:	Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.

•	Level III:	Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. This hierarchy requires the use of observable market data when available.

Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral that secure the impaired loans include observable inputs employed by certified appraisers or an internal evaluator for similar assets classified as Level III inputs adjusted for qualitative factors and estimated liquidation expenses.

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 11 - FAIR VALUE MEASUREMENTS (CONTINUED)

The following table presents the assets reported on the balance sheet at their fair value as of June 30, 2015 and December 31, 2014, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.


(dollars in thousands)	June 30, 2015
	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Securities available for sale:
U.S. Government corporations and agencies	$	—	$	44,292	$	—	$	44,292
Obligations of states and political subdivisions		—		33,791		—		33,791
Mortgage-backed securities		—		113,046		—		113,046
Equity securities		208		—		—		208

Total securities available for sale:	$	208	$	191,129	$	—	$	191,337

Assets measured on a nonrecurring basis:
Impaired loans	$	—	$	—	$	493	$	493


(dollars in thousands)	December 31, 2014
	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Securities available for sale:
U.S. Government corporations and agencies	$	—	$	44,006	$	—	$	44,006
Obligations of states and political subdivisions		—		42,422		—		42,422
Mortgage-backed securities		—		110,443		—		110,443
Equity securities		208		—		—		208

Total securities available for sale:	$	208	$	196,871	$	—	$	197,079

Assets measured on a nonrecurring basis:
Impaired loans	$	—	$	—	$	503	$	503

NOTE 12 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Level III inputs were used in determining fair value.


(dollars in thousands)	Quantitative Information about Level III Fair Value Measurements
June 30, 2015	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired Loans	$	493	Appraisal of collateral (1)	Appraisal adjustments (2)	-100.0% to 0.0% (-14.4%)
				Liquidation expenses (2)	0.0% to 9.0% (9.0%)

(dollars in thousands)	Quantitative Information about Level III Fair Value Measurements
December 31, 2014	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired Loans	$	503	Appraisal of collateral (1)	Appraisal adjustments (2)	-30.0% to 0.0% (-11.5%)
				Liquidation expenses (2)	0.0% to 9.0% (8.8%)

(1)	The fair value is determined through independent appraisals by certified appraisers or internal evaluators of the underlying collateral.

(2)

Appraisals and evaluations may be adjusted by management for qualitative factors and estimated liquidation expenses. The range and weighted average of liquidation expenses are expressed as a percent of discounted collateral value and other appraisal adjustments are presented as a percentage of the appraised amounts.

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 12 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

Collateral-dependent Impaired Loans

The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level III of the fair value hierarchy.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral.

Financial Instruments

The reported fair values of financial instruments are based on a variety of factors. Where possible, fair values represent quoted market prices for identical or comparable instruments. In other cases, fair values have been estimated based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of risk. Intangible values assigned to customer relationships are not reflected in the reported fair values. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of period end or that will be realized in the future.

The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial instruments:

Cash and Cash Equivalents: The carrying amount for cash and cash equivalents is a reasonable estimate of fair value.

Investment Securities Available-for-sale: Where quoted market prices are available in an active market, securities are classified within Level I of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters. Such securities are classified in Level II of the valuation hierarchy.

Loans: The fair value for net loans is estimated by discounting future cash flows using current market inputs at which loans with similar terms and qualities would be made to borrowers of similar credit quality.

Accrued Interest Receivable: The carrying amount of accrued interest receivable approximates its fair value.

Deposits: Noninterest bearing and interest bearing demand deposits and savings deposits are valued based on the discounted value of cash flows after estimating the weighted average remaining term and adding estimated wholesale borrowing costs to the rate. The fair values for time deposits are based on the discounted value of cash flows.

Repurchase Agreements: The carrying amount for repurchase agreements is considered to be a reasonable estimate of fair value.

Federal Home Loan Bank Borrowings: The discounted cash flow method is used to estimate the fair value of Federal Home Loan Bank borrowings.

Accrued Interest Payable: The carrying amount of accrued interest payable approximates its fair value.

Off-Balance-Sheet Instruments: The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The amount of fees currently charged on commitments is determined to be insignificant and, therefore, the carrying value and fair value of off-balance-sheet instruments are not shown.

First West Virginia Bancorp, Inc. and Subsidiary

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

(Unaudited)

NOTE 12 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The estimates of fair values of financial instruments are summarized as follows at June 30, 2015 and December 31, 2014:


	June 30, 2015
	Carrying		Estimated Fair Value
(Amounts Expressed in Thousands)	Amount		Level I		Level II		Level III		Total
Financial assets:
Cash and cash equivalents	$	17,697	$	17,697	$	—	$	—	$	17,697
Investment securities		191,337		208		191,129		—		191,337
Loans, net		103,062		—		—		103,840		103,840
Accrued interest receivable		1,014		1,014		—		—		1,014
Financial liabilities:
Deposits		267,380		197,386		59,359		—		256,745
Repurchase agreements		23,321		23,321		—		—		23,321
Federal Home Loan Bank borrowings		3,371		—		3,642		—		3,642
Accrued interest payable		110		110		—		—		110


	December 31, 2014
	Carrying		Estimated Fair Value
(Amounts Expressed in Thousands)	Amount		Level I		Level II		Level III		Total
Financial assets:
Cash and cash equivalents	$	20,396	$	20,396	$	—	$	—	$	20,396
Investment securities		197,079		208		196,871		—		197,079
Loans, net		97,404		—		—		98,445		98,445
Accrued interest receivable		1,015		1,015		—		—		1,015
Financial liabilities:
Deposits		272,143		199,444		62,289		—		261,733
Repurchase agreements		21,051		21,051		—		—		21,051
Federal Home Loan Bank borrowings		3,420		—		3,714		—		3,714
Accrued interest payable		120		120		—		—		120

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

Table One

SELECTED FINANCIAL DATA (Dollars in thousands, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,						Years Ended December 31,
	2015			2014			2015			2014			2014			2013			2012
SUMMARY OF OPERATIONS
Total interest income	$	2,305		$	2,381		$	4,836		$	4,791		$	9,601		$	9,414		$	9,838
Total interest expense		348			356			699			722			1,449			1,524			1,789
Net interest income		1,957			2,025			4,137			4,069			8,152			7,890			8,049
Provision (credit) for loan losses		—			—			—			—			—			(400	)		(248	)
Total other income		426			507			1,624			713			1,877			1,440			2,352
Total other expenses		2,097			2,025			4,110			3,935			8,060			7,672			7,604
Income before income taxes		286			507			1,651			847			1,969			2,058			3,045
Net income		332			538			1,370			984			1,904			2,241			2,538
PER SHARE DATA (1)
Net income	$	0.20		$	0.31		$	0.80		$	0.57		$	1.11		$	1.30		$	1.48
Cash dividends declared		0.20			0.20			0.40			0.40			0.80			0.76			0.73
Book value per share		20.29			19.83			20.29			19.83			20.29			17.91			20.77
AVERAGE BALANCE SHEET SUMMARY
Total loans, net	$	101,789		$	91,022		$	101,486		$	91,387		$	94,103		$	97,374		$	104,566
Investment securities		192,642			200,150			192,171			201,658			199,571			177,809			154,755
Deposits - interest bearing		231,882			229,439			232,482			228,935			230,440			218,229			208,308
Stockholders’ equity		34,594			33,563			34,420			33,485			33,767			32,597			31,608
Total assets		334,942			333,421			334,730			335,642			335,515			316,172			293,601
SELECTED RATIOS
Return on average assets		0.40	%		0.65	%		0.83	%		0.59	%		0.57	%		0.71	%		0.86	%
Return on average equity		3.85	%		6.43	%		8.03	%		5.93	%		5.64	%		6.87	%		8.03	%
Average equity to average assets		10.33	%		10.07	%		10.28	%		9.98	%		10.06	%		10.31	%		10.77	%
Dividend payout ratio (1)		100.00	%		64.52	%		50.00	%		70.18	%		72.07	%		58.46	%		49.32	%
Loan to deposit ratio		39.20	%		34.25	%		39.20	%		34.25	%		36.46	%		32.67	%		40.33	%

	June 30,						December 31,
	2015			2014			2014			2013			2012
BALANCE SHEET
Investments	$	191,337		$	202,383		$	197,079		$	199,955		$	178,208
Loans		104,820			94,445			99,217			93,402			99,387
Allowance for loan losses		(1,758	)		(1,864	)		(1,813	)		(1,865	)		(2,181	)
Other assets		35,290			40,385			37,907			50,653			31,133

Total Assets	$	329,689		$	335,349		$	332,390		$	342,145		$	306,547

Deposits	$	267,380		$	275,730		$	272,143		$	285,877		$	246,462
Federal funds purchased and repurchase agreements		23,321			19,777			21,051			20,215			18,767
FHLB borrowings		3,371			3,469			3,420			3,516			3,606
Other liabilities		752			2,286			904			1,747			2,009
Stockholders’ equity		34,865			34,087			34,872			30,790			35,703

Total Liabilities and Stockholders’ Equity	$	329,689		$	335,349		$	332,390		$	342,145		$	306,547

(1)	Adjusted for the 4 percent common stock dividend to stockholders of record as of December 19, 2012.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides further detail on the financial condition and results of operations of the Company. The section should be read in conjunction with the notes and financial statements presented elsewhere in this report.

The Company’s critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of June 30, 2015 have remained unchanged from the disclosures presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 under the section “Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations.”

Forward-Looking Information: Certain information contained in this report, which are not historical facts, may be forward-looking statements that involve risks and uncertainties. These statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including without limitation, the effect of changing economic conditions, changes in interest rates, changes in lending activities, changes in state and federal regulations, and other external factors which may materially impact the Company’s operational and financial performance. Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by such statements, including without limitation, the effect of changing regional and national economic conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to the parent company and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and other regulatory bodies; potential legislative and federal and state regulatory actions and reform; competitive conditions in the financial services industry; rapidly changing technology affecting financial services, and/or other external developments materially impacting the Company’s operational and financial performance. The Company does not assume any duty to update forward-looking statements.

Critical Accounting Policies: The Company’s accounting policies are integral to understanding the results reported. The accounting policies are described in detail in Note 1 of the Consolidated Financial Statements. Our most complex accounting policies require management’s judgment to ascertain the valuation of assets, liabilities, commitments and contingencies. Detailed policies and control procedures have been established and are intended to ensure valuation methods are well controlled and applied consistently from period to period. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The following is a brief description of our current accounting policies involving significant management valuation judgments.

Other-Than-Temporary Impairment of Investment Securities: Investment securities are evaluated periodically to determine whether a decline in their value is other-than-temporary. Management utilizes criteria such as the magnitude and duration of the decline, in addition to the reasons underlying the decline, to determine whether the loss in value is other-than-temporary. The term “other-than-temporary” is not intended to indicate that the decline is permanent. It indicates that the prospects for a near term recovery of value are not necessarily favorable, or that there is a lack of evidence to support fair values equal to, or greater than, the carrying value of the investment. Once a decline in value is determined to be other-than-temporary, the value of the security is reduced and a corresponding charge to earnings is recognized.

Allowance for Loan Losses: Arriving at an appropriate level of allowance for loan losses involves a high degree of judgment. The Company’s allowance for loan losses provides for probable losses based upon evaluations of known and inherent risks in the loan portfolio. Management uses historical information to assess the adequacy of the allowance for loan losses as well as the prevailing business environment as it is affected by changing economic conditions and various external factors, which may impact the portfolio in ways currently unforeseen. The allowance is increased by provisions for loan losses and by recoveries of loans previously charged-off and reduced by loans charged-off. For a full discussion of the Company’s methodology of assessing the adequacy of the reserve for loan losses, refer to Note 1 of the Consolidated Financial Statements.

Goodwill: As discussed in Note 1 of the notes to the Consolidated Financial Statements, the Company must assess goodwill each year for impairment. This assessment involves estimating cash flows for future periods. If the future cash flows were less than the recorded goodwill balance, we would be required to take a charge against earnings to write down the assets to the lower value.

Deferred Tax Assets: The Company uses an estimate of future earnings to support its position that the benefit of the deferred tax assets will be realized. If future income should prove non-existent or less than the amount of the deferred tax assets within the tax years to which they may be applied, the asset may not be realized and our net income will be reduced. The deferred tax assets are described further in Note 1 of the Consolidated Financial Statements.

OVERVIEW

The Company reported net income of $1,370,000 or $.80 per share for the six months ended June 30, 2015 compared to $984,000 or $.57 per share for the same period during 2014. The increase in net income for the six months ended June 30, 2015 as compared to the same period in 2014 of $386,000 or 39.2% was primarily the result of the increase in noninterest income and net interest income, offset in part by the increase in income tax expense and noninterest expense. Noninterest income increased $911,000 or 127.8% primarily due to the increase in the net gains on sales of investment securities offset in part by a decline in service charges and fees earned on deposit accounts. Net interest income increased $68,000 or 1.7%, primarily due to the increase in the interest and fees earned on loans and the small decrease in the interest expense paid on interest bearing liabilities, offset in part by the decrease in the interest earned on investment securities. Income tax expense increased $418,000 primarily due to the increase in net gains on sales of securities during the first six months of 2015 over the same period in 2014. Noninterest expenses increased $175,000 or 4.4% during the six month period ended June 30, 2015 as compared to the same period in 2014 primarily due to increases in salary and employee benefits expenses as well as slight increases in occupancy expenses and other operating expenses. The return on average assets was .83% for the six months ended June 30, 2015 as compared to .59% for the same period of the prior year. For the six months ended June 30, 2015 compared to June 30, 2014, the return on average equity was 8.03% and 5.93%, respectively.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

For the second quarter of 2015, net income was $332,000 or $.20 per share as compared to $538,000 or $.31 per share for the same period in 2014. The decrease in net income for the three months ended June 30, 2015 as compared to the same period of the prior year of $206,000 or 38.3% was primarily the result of the decrease in net interest income and noninterest income and the increase in noninterest expense, offset in part by the small increase in the income tax benefit. Net interest income decreased $68,000 or 3.4% primarily due to the decrease in the interest earned on investment securities, offset in part by the increase in the interest and fees earned on loans and the slight decrease in the interest expense paid on interest bearing liabilities. Noninterest income decreased $81,000 or 16.0% for the three months ended June 30, 2015 as compared to the same period of the prior year primarily due to the decrease in the net gains on sales of investment securities as well as the decline in service charges and fees earned on deposit accounts. Noninterest expense increased $72,000 or 3.6% during the three month period ended June 30, 2015 as compared to the same period in 2014 primarily due to the increases in salary and employee benefits expenses and occupancy expenses, offset in part by a slight decrease in other operating expenses.

The sections that follow discuss in more detail the information contained in the summary of Selected Financial Data of the Company.

EARNINGS ANALYSIS - For the six months ended June 30, 2015

Net Interest Income

Net interest income, which is the primary source of earnings for the Company, is the difference between interest earned on loans and investments and interest paid on deposits and borrowings. Changes in the volume and mix of interest earning assets and interest bearing liabilities combined with changes in market rates of interest greatly effect net interest income. Table Two presents the average balance sheets and an interest rate analysis for the six months ended June 30, 2015 and 2014.

For the six months ended June 30, 2015, net interest income was $4,137,000, an increase of $68,000 or 1.7%, from the same period in 2014. This increase was primarily the result of the increase in the interest and fees earned on loans and the small decrease in the interest expense paid on interest bearing liabilities, offset in part by the decrease in the interest earned on investment securities. The changes in the volume and mix of earning assets and interest bearing liabilities combined with changes in market rates of interest resulted in a taxable equivalent net yield on average earning assets of 3.03% for the six months ended June 30, 2015 as compared to 3.14% for the same period in 2014. There was a slight decrease in the average volume of earning assets of $1,130,000 or .4%.

Interest and fees on loans increased $341,000 or 14.6%, from the same period in 2014 primarily due to the increase in the average loan volume combined with the increase in the average yield on loans. The average loan volume increased approximately $7.4 million or 7.8% since December 31, 2014. The taxable equivalent yield on loans increased 19 basis points in 2015 from 5.46% at December 31, 2014 to 5.65% at June 30, 2015 and increased 13 basis points as compared to the six months ended June 30, 2014.

Interest income on investment securities during the first six months of 2015 decreased $313,000 or 13.0% as compared to the same period of the prior year. The decrease in interest income on investment securities was primarily due to the decline in the average volume combined with a decrease in the yields earned. The average volume of investment securities decreased approximately $7.4 million or 3.7% since December 31, 2014. The taxable equivalent yield on investment securities decreased 32 basis points in 2015, from 2.96% at December 31, 2014 to 2.64% at June 30, 2015 and decreased 45 basis points as compared to the six months ended June 30, 2014.

During the six months ended June 30, 2015, interest expense declined $22,000 or 3.1% as compared to the same period in 2014. The decrease in the average yield paid on interest bearing liabilities, partially offset by an increase in the average volume of interest bearing liabilities primarily contributed to the decrease in interest expense during the six month period ended June 30, 2015. The average yield paid on interest bearing liabilities fell 3 basis points from .57% at December 31, 2014 to .54% at June 30, 2015 and decreased 4 basis points as compared to the six months ended June 30, 2014. The average volume of interest bearing liabilities increased approximately $5.0 million or 2.0% since December 31, 2014.

Noninterest Income

Noninterest income increased $911,000 or 127.8% for the six months ended June 30, 2015 as compared to same period of the prior year. The increase in noninterest income was primarily due to the increase in the net gains on sales of investment securities offset in part by the decrease in service charges and fees earned on deposit accounts and the small decrease in other operating income.

The net gains on investment securities increased $895,000 for the six month period ended June 30, 2015 as compared to the same period in 2014. These sales occurred as part of the Company’s deferred tax asset strategy and to take advantage of favorable market conditions. The Company accounted for securities gains of $1,156,000 during the six month period ended June 30, 2015 and securities gains of $297,000 and securities losses of $36,000 during the six month period ended June 30, 2014. Gross losses realized during the six months ended June 30, 2015 were less than $500 and not considered material for financial reporting and disclosure purposes.

Service charges and other fees represent charges that are earned from assessments made on checking and savings accounts. Service charges and other fee income fell $30,000 or 16.8%, in the first six months of 2015 as compared to the same period in 2014 primarily due to a decline in overdraft charges which fluctuate based on customer activity.

Other operating income represents fees from safe deposit box rentals, sales of checkbooks, sales of cashiers’ checks and money orders, utility collections, ATM charges and card fees, credit life commissions, credit card fees and commissions and various other charges and fees related to normal customer banking relationships. For the six month period ended June 30, 2015, other operating income decreased $3,000 or .9% compared to the same period in 2014. The decrease in other operating income was primarily due to decreases in checkbook income, ATM fees, and credit card fees, offset in part by an increase in various miscellaneous income sources.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Table Two - Average Balance Sheets and Interest Rate Analysis (dollars in thousands)

The following table presents an average balance sheet, interest earned on interest bearing assets, interest paid on interest bearing liabilities, average interest rates and interest differentials for the six months ended June 30, 2015 and 2014. Average balance sheet information for the periods ended June 30, 2015 and 2014 was compiled using the daily average balance sheet. Total loans are gross of the allowance for loan losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average balance computations; however, no interest was included in income subsequent to the non-accrual status classification. Loan fees and unearned discounts were included in income for average rate calculation purposes. Average yields on investment securities available for sale have been calculated based on amortized cost.


	(Unaudited) For the six months ended June 30, 2015								(Unaudited) For the six months ended June 30, 2014
	Average Volume			Interest		Average Rate			Average Volume			Interest		Average Rate
ASSETS:
Investment securities:
U.S. Treasury and U. S. Government agencies	$	45,610		$	405		1.79	%	$	49,900		$	452		1.83	%
Mortgage backed securities		111,909			1,016		1.83	%		95,621			921		1.94	%
States and political subdivisions
Taxable		2,212			44		4.01	%		335			8		4.82	%
Non-taxable		32,268			626		3.91	%		55,636			1,023		3.71	%
Other securities		172			3		3.52	%		166			3		3.64	%

Total Investment securities:		192,171			2,094		2.20	%		201,658			2,407		2.41	%
Interest bearing deposits		20,082			25		0.25	%		21,363			27		0.25	%
Loans, net of unearned income		101,486			2,672		5.31	%		91,387			2,332		5.15	%
Other earning assets		853			45		10.64	%		1,314			25		3.84	%

Total earning assets		314,592			4,836		3.10	%		315,722			4,791		3.06	%
Other assets		21,945								21,785
Allowance for loan losses		(1,807	)							(1,865	)

Total Assets	$	334,730							$	335,642

LIABILITIES
Time deposits	$	61,187		$	293		0.97	%	$	65,973		$	350		1.07	%
Savings deposits		114,567			187		0.33	%		110,278			180		0.33	%
Interes

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

FIRST WEST VIRGINIA BANCORP INC 10-Q