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 2025, the Company recorded $3,054 in provision expense, an increase of $585, or 23.7%, from the provision expense in 2024. Total provision expense during 2025 consisted of $2,765 in provision expense from loans and $289 in provision expense from unfunded commitments, as no provision expense was required for HTM securities.

Provision expense on loans during 2025 was impacted by increases in loan balances generally allocated for during 2025. The risk associated with a $134,193 increase in loans generated higher general reserves and a corresponding increase to provision expense. In addition, provision expense on loans was further impacted by an increase in modeled loss rates due to the regression in GDP and unemployment projections. Collectively, this contributed to additional provision expense during 2025, primarily within the commercial real estate loan segment.

Provision expense on loans during 2025 was also impacted by net loan charge-offs, which totaled $1,334 for the year. Net loan charge-offs came mostly from the consumer loan portfolio, which totaled $1,258, and required a corresponding increase to provision expense during 2025.