OHIO VALLEY BANC CORP

2024 v. 2023

Ohio Valley generated net income of $10,999 for 2024, a decrease of $1,632, or 12.9%, from 2023. Earnings per share were $2.32 for 2024, a decrease of 12.5% from 2023. The decrease in net income and earnings per share for 2024 was largely impacted by increases in provision for credit losses and noninterest expense, completely offsetting increases in both net interest and noninterest income.

The Company’s net interest income in 2024 was $48,804, representing an increase of $2,777, or 6.0%, from 2023. Net interest income during 2024 was positively impacted by a $148,686 increase in average earning assets, with higher relative balances being maintained in loans, as opposed to interest-bearing deposits with banks or securities, which generally yield less than loans. This led to an $86,448 increase in average loans, while average securities and interest-bearing deposits with banks increased $35,591 and $26,647, respectively, from year-end 2023. The benefits of higher earning assets were partially offset by a year-to-date decrease in the Company’s fully tax-equivalent net interest income as a percentage of average earning assets (“net interest margin”), which decreased 23 basis points to 3.71% at December 31, 2024. The decrease in the net interest margin was related to the cost of interest-bearing liabilities increasing more than the yield on earning assets.

Net interest income increased $2,777, or 6.0%, during 2024, compared to 2023. Growth in net interest earnings was mostly impacted by growth in average earning assets, which increased 12.6% during 2024. This was partially offset by a lower net interest margin, decreasing 23 basis points during 2024. The growth in average earning assets came primarily from loans, securities, and interest-bearing deposits with banks. Loan increases were led by the commercial and residential real estate loan segments, while interest-bearing deposits with banks consisted mostly of average balances maintained at the Company’s interest-bearing Federal Reserve Bank (“FRB”) clearing account. Average securities grew in large part to the increased pledging requirements on public fund deposits as part of the Ohio Homebuyer Plus program. Decreases to the net interest margin were largely related to the cost of funding sources increasing more than the yield on earning assets. This increase in the cost of funding was partially linked to the Company’s decision to increase rates on deposit accounts to attract deposits amidst heightened market competition for such funds during 2023. In addition, the composition of funding sources have trended toward certificates of deposit (“CDs”), and wholesale funding sources, which generally cost more than other funding sources, such as checking, negotiable order of withdrawal (“NOW”), savings and money market deposit products.

Provision for credit losses during 2024 increased $379, or 18.1%, from 2023. The increase was primarily due to additional reserves associated with certain qualitative risk factors, a $565 increase in net charge-offs, and an $89,925 increase in loan balances.

The Company’s noninterest income increased $542, or 4.3%, from 2023. The year-to-date increase in noninterest income came largely from service charges on deposit accounts and interchange income earned on debit and credit card transactions, which collectively increased $447 from 2023. During 2024, the increase in service charges on deposit accounts was related to an increase in the volume of overdraft transactions, while debit and credit card interchange income benefited from an increase in the number of transactions. Other increases in noninterest income came from trust fee income and income from bank owned life insurance (“BOLI”), which collectively increased $147 from 2023.