Ohio Valley Banc Corp. filed SEC Form 8-K: Results of Operations and Financial Condition

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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GALLIPOLIS, Ohio - Ohio Valley Banc Corp. [Nasdaq: OVBC] (the “Company”) reported consolidated net income for the quarter ended December 31, 2024, of $2,515,000, a decrease of $708,000 from the same period the prior year. Earnings per share for the fourth quarter of 2024 were $.53 compared to $.68 for the prior year fourth quarter. For the year ended December 31, 2024, net income totaled $10,999,000, a decrease of $1,632,000, or 12.9%, from the same period the prior year. Earnings per share were $2.32 for 2024 versus $2.65 for 2023. Return on average assets and return on average equity were .77% and 7.50%, respectively, for the year ended December 31, 2024, compared to .99% and 9.24%, respectively, for the same period in the prior year.

Ohio Valley Banc Corp. President and CEO, Larry Miller stated, “While it is never enjoyable to report lower net income, given all that was accomplished in 2024, I am quite pleased with how the company is positioned for future success. Net income was down primarily due to two one-time expenses that management knowingly accepted to put the company in a more favorable position as we look to the future. The largest of the two expenses was the $3.3 million associated with the voluntary early retirement program. The other one-time expense was the $496,000 in account bonuses paid to new Sweet Home Ohio depositors. Both of these expenses are part of a broader strategy to improve shareholder value and further our Community First Mission.”

For the three months ended December 31, 2024, net interest income increased $1,755,000, and for the year ended December 31, 2024, net interest income increased $2,777,000 from the same respective periods last year. Contributing to the increase in quarterly net interest income was the $187 million increase in average earning assets. For the year ended December 31, 2024, the increase in net interest income was attributable to the $149 million increase in average earning assets, which was partially offset by the 23 basis point decrease in the net interest margin. In general, the growth in earning assets was primarily driven by loan growth followed by an increase in average securities and higher average balances being maintained at the Federal Reserve. For 2024, average loans increased $86 million from the prior year. The loan growth experienced during 2024 exceeded expectations and occurred primarily within the commercial lending and residential real estate lending segments. A portion of the growth in the residential real estate segment was associated with the higher utilization of a warehouse line of credit extended to another mortgage lender. For 2024, average securities increased $36 million and average balances maintained at the Federal Reserve increased $28 million from the prior year. These increases were related to investing deposit growth that exceeded loan growth. The decrease in the net interest margin for the respective periods was related to the cost of funding sources increasing more than the yield on earning assets. This increase in the cost of funding was partially linked to the Company’s decision to increase rates on deposit accounts to attract deposits amidst heightened market competition for such funds. In addition, the composition of funding sources trended toward certificates of deposit and wholesale funding sources, which generally cost more than other funding sources, such as checking, NOW, savings and money market deposit products.

For the three months ended December 31, 2024, the provision for credit losses was $617,000, a decrease of $72,000 from the same period last year. The provision for credit loss expense for the fourth quarter of 2024 was primarily related to additional reserves for certain qualitative risk factors, quarter-to-date net charge-offs of $433,000 and a $13 million quarterly increase in loan balances. These increases were partially offset by the release of a $427,000 specific reserve on a collateral dependent individually evaluated loan due to obtaining additional collateral to cover the deficiency. In addition, the improvement in the unemployment and gross domestic product forecast contributed to lower expected loss rates. For the year ended December 31, 2024, the provision for credit losses was $2,469,000, an increase of $379,000 from the same period last year. The year-to-date provision for credit loss expense was primarily associated with net charge-offs of $1,260,000, loan growth of $90 million and additional reserves associated with certain qualitative risk factors. The allowance for credit losses was .95% of total loans at December 31, 2024, compared to .90% at December 31, 2023. The ratio of nonperforming loans to total loans increased to .46% at December 31, 2024, compared to .26% at December 31, 2023.

For the three months ended December 31, 2024, noninterest income totaled $3,920,000, an increase of $339,000 from the same period last year. For the year ended December 31, 2024, noninterest income totaled $13,171,000, an increase of $542,000 from the same period last year. The increases were largely due to service charges on deposit accounts and interchange income earned on debit and credit card transactions. For 2024, service charges on deposit accounts increased $339,000 from the prior year. The increase was primarily related to an increase in the volume of overdraft transactions during 2024. Debit and credit card interchange income for 2024 increased $108,000 from the prior year due to an increase in the number of transactions.

For the three months ended December 31, 2024, noninterest expense totaled $13,306,000, an increase of $3,004,000 from the same period last year. For the year ended December 31, 2024, noninterest expense totaled $46,130,000, an increase of $4,762,000 from the same period last year. The Company’s largest noninterest expense, salaries and employee benefits, increased $3,076,000 as compared to the fourth quarter of 2023, and $4,391,000 as compared to the year ended December 31, 2023. The increase was primarily related to annual merit increases, higher health insurance premiums, and the severance expense associated with a voluntary early retirement program. During the third quarter of 2024, the Company established a voluntary early retirement program for select employees meeting certain criteria. Based on the number of employees that accepted the severance package, the Company incurred an expense of $3,338,000. The early retirement program is expected to reduce salary and employee benefit expense on a go-forward basis. The growth in salaries and employee benefit expense was partially offset by the elimination of staffing for Race Day Mortgage by April 2023, which resulted in a savings of $200,000 for 2024, when compared to the same period last year.

Further contributing to higher noninterest expense were customer rewards for new accounts, data processing and professional fees. During the third quarter, the Company began participating in a program offered by the Ohio Treasurer called Ohio Homebuyer Plus. The program is designed to encourage Ohio residents to save for the purchase of a home. As a participant in the program, the Company developed the Sweet Home Ohio deposit account to offer participants an above-market interest rate along with a deposit bonus to assist customers in achieving their home savings goal. During the fourth quarter of 2024, the Company paid account bonuses totaling $496,000 to new Sweet Home Ohio deposit customers. For the three months and year ended December 31, 2024, data processing increased $53,000 and $285,000, respectively, from the same periods last year. The increase was primarily related to debit card processing due to higher transaction volume and to higher costs associated with enhancements to the Company’s digital banking platform. Professional fees increased $10,000 for the fourth quarter of 2024 and increased $217,000 for year ended 2024, as compared to the same periods in 2023. The increase was related to higher director fees and a general increase in legal and accounting fees. These increases were partially offset by a decrease in software expense and marketing expense. For 2024, software expense decreased $389,000 from the prior year due to the closure of Race Day Mortgage, which eliminated certain processing platforms. Marketing expense for 2024 decreased $190,000 from the prior year due to a reduction in select marketing campaigns.

The Company’s total assets at December 31, 2024 were $1.503 billion, an increase of $151 million from December 31, 2023. As previously discussed, the Company began participating in the Ohio Treasurer’s Ohio Homebuyer Plus program. For each Sweet Home Ohio account that was opened, the Company received a deposit from the Treasurer at a subsidized interest rate. At December 31, 2024, the balance of Sweet Home Ohio accounts totaled $6.8 million and the amount deposited by the Treasurer totaled $97 million. These deposit balances were the key contributor to the $148 million increase in total deposits. Since the Treasurer deposits are classified as public funds, which are required to be collateralized, the Company invested the funds in securities to be pledged as collateral to the Treasurer. The investment of these funds contributed to the $105 million increase in securities from December 31, 2023. As of December 31, 2024, total loans have increased $90 million. The increase was largely in the commercial and residential real estate segments. The growth in these segments was partially offset by a decrease in consumer loans, as this segment was deemphasized by the Company in 2024 as other loan portfolio segments are more profitable. In line with its decision to deemphasize consumer loans, the Company exited the indirect lending business for autos and recreational vehicles effective October 11, 2024. To assist with funding the growth in loans, the balance of funds maintained at the Federal Reserve decreased $47 million from year end 2023, which provided a higher rate of return. At December 31, 2024, shareholders’ equity increased $6.3 million from year end 2023. This was primarily from year-to-date net income of $11 million and an increase in accumulated other comprehensive income of $.9 million, partially offset by cash dividends paid of $4.2 million and the purchase of 82,673 treasury shares for $1.9 million under the Company’s treasury repurchase program.

Ohio Valley Banc Corp. common stock is traded on the NASDAQ Global Market under the symbol OVBC. The holding company owns The Ohio Valley Bank Company with 17 offices in Ohio and West Virginia, and Loan Central, Inc. with six consumer finance offices in Ohio. Learn more about Ohio Valley Banc Corp. at www.ovbc.com.

Caution Regarding Forward-Looking Information

Certain statements contained in this earnings release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believes,” “anticipates,” “expects,” “appears,” “intends,” “targeted” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying those statements. Forward-looking statements involve risks and uncertainties. Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events, including: (i) changes in political, economic or other factors, such as inflation rates, recessionary or expansive trends, taxes, the effects of implementation of federal legislation with respect to taxes and government spending and the continuing economic uncertainty in various parts of the world; (ii) competitive pressures;  (iii) fluctuations in interest rates; (iv) the level of defaults and prepayment on loans made by the Company; (v) unanticipated litigation, claims, or assessments; (vi) fluctuations in the cost of obtaining funds to make loans; (vii) regulatory changes; and (viii) other factors that may be described in the Company’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission from time to time. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made to reflect unanticipated events.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.