OHIO VALLEY BANC CORP

PROVISION EXPENSE

The Company sets aside an ACL through charges to income, which are reflected in the consolidated statement of income as the provision for credit losses. Provision for credit loss is recorded to achieve an ACL that is adequate to absorb estimated losses inherent in the Company’s loan portfolio, unfunded loans, and held to maturity debt securities. Management performs, on a quarterly basis, a detailed analysis of the ACL that encompasses asset portfolio composition, asset quality, loss experience and other relevant economic factors.

During 2024, the Company recorded $2,469 in provision expense, an increase of $379, or 18.1%, from the provision expense in 2023. Total provision expense during 2024 consisted of $2,580 in provision expense from loans, partially offset by recoveries of provision expense from both unfunded commitments and HTM securities that totaled $110 and $1, respectively.

Provision expense on loans during 2024 was impacted primarily by net loan charge-offs, which totaled $1,259 for the year. Net loan charge-offs came mostly from the consumer loan portfolio, which totaled $1,587, and required a corresponding increase to provision expense during 2024.