OHIO VALLEY BANC CORP

NONINTEREST EXPENSE

Management continues to work diligently to minimize noninterest expense. For 2024, total noninterest expense increased $4,762, or 11.5%, as compared to 2023. The Company’s largest noninterest expense item, salaries and employee benefits, increased $4,391, or 18.8%, during 2024. The increase was largely the result of a voluntary severance package offered to employees meeting certain criteria during the fourth quarter of 2024. Based on the number of employees that accepted the severance package, the Company incurred an expense of $3,338. The early retirement program is expected to reduce salary and employee benefit expense on a go-forward basis. Higher salaries and employee benefit costs also came from annual performance-based merit increases and higher health insurance premiums from 2023 to 2024. Partially offsetting these increases were lower salary and employee benefit expenses related to the elimination of staffing for Race Day by April 2023. Race Day was officially closed in December 2023, which resulted in a $200 savings in salary and employee benefit expense.

The Company’s other noninterest expense activity increased $379, or 6.3%, during 2024. This was primarily due to increases in customer rewards for new accounts from the Company’s facilitation of the Sweet Home Ohio program. During the fourth quarter of 2024, the Company paid account bonuses totaling $496 to the new Sweet Home Ohio deposit customers. This increase was partially offset by decreases in various overhead expenses associated with Race Day resulting from the unwinding of business operations mentioned above.

Further impacting higher noninterest expense was data processing expense, which increased $285, or 10.2%, during 2024. Data processing costs were impacted by a higher transaction volume of debit cards which increased the associated processing costs of that platform. Higher costs also were associated with various enhancements to the Company’s digital banking platform.

Professional fees also increased $217, or 13.1%, during 2024, primarily from increases in director fees and general increases in legal and accounting fees.

Partially offsetting these increases was less software and marketing expenses during 2024. Software expense decreased $389, or 14.7%, from the year ended 2023. The decrease was largely from the closure of Race Day which had eliminated various processing platforms in 2023 that resulted in $404 of expense savings. Marketing expense decreased $190, or 18.8%, primarily due to a reduction in select marketing campaigns.

The remaining noninterest expense categories increased $69, or 1.8%, during the year-ended 2024, as compared to 2023. The increase came primarily from higher FDIC premium costs, which increased $79, or 13.9%, during the year ended 2024. The expense was mostly related to an increase in the Company’s assessment base during 2024 which was impacted by the growth in average assets.