OHIO VALLEY BANC CORP

CASH AND CASH EQUIVALENTS

The Company’s cash and cash equivalents consist of cash, as well as interest- and noninterest- bearing balances due from other banks. The amounts of cash and cash equivalents fluctuate on a daily basis due to customer activity and liquidity needs. At December 31, 2024, cash and cash equivalents decreased $45,019 to $83,107, compared to $128,126 at December 31, 2023. The decrease in cash and cash equivalents came mostly from lower interest-bearing deposits on hand with correspondent banks. At December 31, 2024, the Company’s interest-bearing FRB clearing account represented over 80% of cash and cash equivalents. The Company utilizes its interest-bearing FRB clearing account to manage excess funds, as well as to assist in funding earning asset growth. During 2024, the growth in loans and securities exceeded the growth in deposits. As a result, the balance in the FRB clearing account decreased to cover the funding requirement. The interest rate paid on both the required and excess reserve balances of the FRB account is based on the targeted federal funds rate established by the Federal Open Market Committee (“FOMC”). During 2024, the rate associated with the Company’s FRB clearing account decreased 100 basis points due to actions taken by the FOMC to reduce the target federal funds rate to a range of 4.25% to 4.50%. The interest-bearing deposit balances in the FRB are 100% secured by the U.S. Government.

As liquidity levels continuously vary based on consumer activities, amounts of cash and cash equivalents can vary widely at any given point in time. The Company’s focus during periods of heightened liquidity will be to invest excess funds into longer-term, higher-yielding assets, primarily loans, when the opportunities arise. Further information regarding the Company’s liquidity can be found below under the caption “Liquidity” in this Management’s Discussion and Analysis.