OHIO VALLEY BANC CORP

SECURITIES

Management’s goal in structuring its investment securities portfolio is to maintain a prudent level of liquidity and to provide an acceptable rate of return without sacrificing asset quality. During 2025, the balance of total securities decreased $15,811, or 5.7%, compared to year-end 2024. The decrease in total securities was related to a decrease in the pledging requirement for balances maintained by the Ohio Treasurer, as part of Ohio Homebuyer Plus program. At December 31, 2025, the amount deposited by the Treasurer totaled $69,899, a decrease from $97,366 million at December 31, 2024. This decrease in balance contributed partially to the $81,251 decrease in U.S. Government securities from year-end 2024. The Company utilized the supplemental maturities of U.S. Government securities to help fund additional purchases in U.S. Government agency (“Agency”) mortgage-backed securities, which were up $67,801, or 72.0%, from year-end 2024. Agency mortgage-backed securities represent 62.5% of total securities at December 31, 2025, an increase from 34.2% the prior year. The shift to a higher concentration in Agency mortgage-backed securities was based on the strategy to improve the yield on the portfolio as these type of securities generally yield more than U.S. Government securities. Furthermore, during 2025, the Company sold $36,950 in Agency mortgage-backed securities. These securities carrying a weighted average yield of 1.35% were replaced with similar securities at a higher weighted average yield of 4.52%. While this sale and repurchase of securities resulted in a realized loss of $3,747 with little change to the balance of earning assets, the Company will benefit from the shift to higher-yielding securities that is expected to increase future interest income and have a positive impact to the net interest margin.