OHIO VALLEY BANC CORP

NONINTEREST EXPENSE

Management continues to work diligently to minimize noninterest expense. For 2025, total noninterest expense decreased $1,921, or 4.2%, as compared to 2024. The Company’s largest noninterest expense item, salaries and employee benefits, decreased $2,873, or 10.3%, from 2024. The decrease was largely the result of a voluntary severance package offered to employees meeting certain criteria during 2024. Based on the number of employees that accepted the severance package, the Company incurred an expense of $3,338. The savings from the early retirement program were partially offset by annual performance-based merit increases awarded in 2025.

Further impacting higher noninterest expense was data processing expense, which increased $457, or 14.8%, during 2025. Higher costs in this category were related to debit and credit card processing due to higher transaction volume and conversion costs for the Company’s new rewards platform. In addition, marketing expense also increased $385 during 2025, primarily from advertising costs, a higher contribution to our own foundation fund and costs associated with supporting the communities we serve.

The Company’s other noninterest expense activity decreased $80 during 2025. This was primarily due to a decrease 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 decrease was partially offset by increases in various overhead expenses, such as, debit and credit card rewards, recruiting costs, and costs associated with fraudulent activity, which collectively increased $316 from 2024.

The Company’s efficiency ratio is a non-GAAP measurement and is defined as noninterest expense as a percentage of fully tax-equivalent net interest income plus noninterest income. The effects from provision expense are excluded from the efficiency ratio. Management continues to place emphasis on managing its balance sheet mix and interest rate sensitivity as well as developing more innovative ways to generate noninterest revenue. For 2025, net interest income grew $8,941, or 18.3%, from 2024 driven by the growth in average earning assets and the increase in the net interest margin. The growth in this revenue source was partially offset by a $4,201, or 31.9% decrease in noninterest income. This decrease was largely attributed to the $3,747 loss on sale of securities. In total, the net increase in these two revenue sources was $4,740 from 2024. For 2025, noninterest expense decreased $1,921, or 4.2%, due largely to lower salaries and employee benefits that resulted from management’s implementation of a voluntary retirement program in 2024. Based on the net increase in revenue sources and the decrease in overhead expenses, the Company’s efficiency ratio decreased (improved) from 73.79% at December 31, 2024, to 65.74% at December 31, 2025.