Core Viewpoint - Oak Valley Bancorp reported a decrease in net income for Q1 2025 primarily due to increased operating expenses, despite a stable net interest margin and growth in total assets and deposits [1][2][6]. Financial Performance - Consolidated net income for Q1 2025 was $5,297,000, or $0.64 per diluted share, down from $6,008,000, or $0.73 EPS in the previous quarter and $5,727,000, or $0.69 EPS a year ago [1]. - Net interest income for Q1 2025 was $17,807,000, slightly down from $17,846,000 in the prior quarter but up from $17,241,000 a year ago [3]. - Non-interest income increased to $1,613,000 in Q1 2025 from $1,430,000 in the previous quarter and $1,519,000 a year ago, driven by positive changes in the fair value of equity securities [4]. - Non-interest expenses rose to $12,624,000 in Q1 2025 from $11,548,000 in the previous quarter and $11,529,000 a year ago, mainly due to staffing and operational costs [5]. Balance Sheet Highlights - Total assets reached $1.92 billion as of March 31, 2025, an increase of $23.8 million from December 31, 2024, and $118.6 million from March 31, 2024 [6]. - Gross loans were $1.09 billion, a decrease of $15.6 million from December 31, 2024, but an increase of $51.4 million from March 31, 2024 [6]. - Total deposits increased to $1.71 billion, up by $17.9 million from December 31, 2024, and $101.2 million from March 31, 2024 [6]. - The liquidity position remained strong with cash and cash equivalents of $209.3 million, an increase of $40.5 million from December 31, 2024 [6]. Credit Quality - Non-performing assets remained at zero as of March 31, 2025, consistent with previous periods [7]. - The allowance for credit losses as a percentage of gross loans was 1.05%, stable compared to 1.04% at the end of the previous quarter and 1.05% a year ago [7]. Operational Overview - Oak Valley Bancorp operates through 18 branches and plans to open a 19th branch in Lodi later this year [8].

Core Insights - Oak Valley Community Bank has announced the promotions of Greg Mulder to Vice President, Commercial Banking Officer, and John Westberg to Assistant Vice President, Commercial Banking Officer [1][4] Group 1: Promotions and Roles - Greg Mulder has been with the bank for nearly 11 years, progressing from Credit Analyst to AVP Commercial Credit Officer, and will now oversee a significant C&I loan portfolio [2] - John Westberg joined the bank seven years ago and will focus on portfolio management, client growth, and strategic projects in his new role [3] Group 2: Background and Contributions - Mulder is recognized for managing complex C&I relationships and reflects the bank's core values through customer service [2] - Westberg has played key roles in initiatives like the Paycheck Protection Program and contributes across departments [3] Group 3: Company Overview - Oak Valley Bancorp operates Oak Valley Community Bank and Eastern Sierra Community Bank, offering various loan and deposit products through 18 branches [4] - The company plans to open its 19th branch location in Lodi later this year [4]

Financial Position and Capital - As of December 31, 2024, the Bank's primary capital plus allowance for credit losses totaled $214.9 million[30]. - The Bank's authorized legal lending limits were $32.2 million for unsecured loans and an additional $21.5 million for specific secured loans[30]. - The company owned $5,531,000 in Federal Home Loan Bank stock as of December 31, 2024[54]. - The borrowing limit with the Federal Home Loan Bank was approximately $364 million as of December 31, 2024[55]. - The company has a net deferred tax asset of $15.5 million as of December 31, 2024, which may or may not be fully realized[207]. - The Company is subject to a common equity Tier 1 minimum capital requirement of 4.5% of risk-weighted assets and a minimum Tier 1 risk-based capital requirement of 6.0% of risk-weighted assets under the Basel III framework[202]. - The Company may face limitations on capital distributions if it does not maintain a capital conservation buffer exceeding 2.5% of common equity tier 1 capital[202]. - Increases in deposit insurance premiums and special FDIC assessments will negatively impact the Company's earnings[206]. - The Company could incur a goodwill impairment charge if estimates of the fair value of reporting units change[208]. Loan Portfolio and Real Estate Exposure - Approximately 99% of the Bank's loans and 90% of its deposits are generated from the Central Valley, which has a total population of over 5 million[24]. - As of December 31, 2024, consumer and commercial real estate loans constituted 90% of the Bank's loan portfolio, with 97% being commercial real estate loans[32]. - The aggregate loan-to-value of the entire commercial real estate portfolio was 45.3% as of December 31, 2024[41]. - Non-owner occupied commercial real estate comprised 66.5% of the Bank's total commercial real estate commitments as of December 31, 2024[41]. - The highest concentration by product type in the commercial real estate segment was retail, comprising 27.1% of total CRE loan commitments as of December 31, 2024[41]. - Approximately 90% of the company's loan portfolio held for investment consisted of real estate-related loans as of December 31, 2024[69]. - The company’s commercial real estate loans involve higher principal amounts and repayment is dependent on factors outside its control[160]. - The company is exposed to risks associated with environmental liabilities for properties acquired through foreclosure, which could adversely affect financial condition and results of operations[164]. Regulatory Environment and Compliance - The Dodd-Frank Act, enacted in 2010, has significantly impacted the financial services industry by mandating higher capital and liquidity requirements, including a minimum common equity Tier 1 ratio of 4.5% of risk-weighted assets[85]. - Federal regulators have adopted regulations to increase capital requirements on banks and bank holding companies pursuant to Basel III, which includes a minimum Tier 1 risk-based capital requirement of 6.0% of risk-weighted assets[86]. - The Volcker Rule restricts certain activities by banking entities, including prohibiting short-term proprietary trading and imposing limits on investments in hedge funds or private equity funds[91]. - Capital adequacy guidelines require banks to maintain a minimum leverage ratio of at least 4% to 5%, depending on their rating and growth expectations[97]. - The Community Reinvestment Act requires banks to meet the credit needs of their communities, with penalties for non-compliance potentially including denials of applications for branches or mergers[83]. - Federal banking regulators may impose higher capital requirements for institutions experiencing significant growth, necessitating capital positions above minimum supervisory levels[98]. - The assessment base for federal deposit insurance was changed to consolidated assets less tangible capital, generally increasing insurance fees for larger banks[88]. - The regulatory capital rules implementing Basel III include an additional capital conservation buffer of 2.5% of risk-weighted assets to avoid limitations on dividend payments and share repurchases[96]. - Enforcement actions may include cease and desist orders and directives to increase capital for banks found to be operating in an unsafe or unsound manner[101]. - The Company is subject to extensive anti-money laundering regulations, including the Bank Secrecy Act and the USA Patriot Act, to prevent illicit financial activities[111]. - The beneficial ownership information reporting requirement under the Corporate Transparency Act is set to take effect on January 1, 2025, but is currently under litigation[112]. - The Company is subject to the disclosure and regulatory requirements of the 1933 Act and the 1934 Act, administered by the SEC, and must comply with Nasdaq listing standards[131]. - Non-compliance with fair lending laws could result in material penalties and negatively impact the Company's reputation and financial condition[204]. Business Strategy and Growth - The Bank intends to continue its growth strategy by opening additional branches and loan production offices as demand dictates[22]. - The company intends to pursue an organic growth strategy and may engage in selected acquisitions of financial institutions and branch acquisitions[140]. - The company’s growth initiatives may require recruiting experienced personnel, and failure to do so could limit the execution of its growth strategy[142]. - The company does not currently have plans to develop new lines of business requiring significant capital investment[61]. Economic and Market Conditions - The company’s financial condition and results of operations are dependent on the economy, particularly in the Central Valley and Eastern Sierras, where adverse economic conditions could reduce growth rates[144]. - Recent bank failures have caused significant market volatility and decreased confidence in the U.S. banking system, potentially leading to deposit outflows[151]. - Economic downturns could lead to increased loan delinquencies and a decline in net interest income, adversely impacting financial results[145]. - Rising interest rates may reduce net interest income and the value of assets if interest on liabilities increases more quickly than interest on assets[165]. - The company may experience increased regulatory scrutiny and changes in capital requirements as a response to recent bank failures and market conditions[153]. - Competition in the banking and financial services industry is intense, which may limit growth and profitability[170]. Operational Risks and Challenges - The company faces significant operational risks, including fraud, incorrect transactions, and technology errors[172]. - The company relies heavily on third-party vendors for essential services, and any failure in these relationships could negatively impact operations[180]. - The company is exposed to cybersecurity risks, and breaches could lead to significant reputational damage and financial losses[185]. - The company must comply with various federal and state privacy laws, which may increase operational costs and complexity[190]. - The enterprise risk management framework may not effectively mitigate risks, potentially leading to unexpected losses[173]. - The company maintains an allowance for credit losses, which is periodically reviewed and may prove insufficient to absorb actual incurred losses in the loan portfolio[155]. - The company’s underwriting practices may not fully protect against losses in the loan portfolio, leading to potential higher-than-expected losses[158]. - New lines of business and strategic initiatives may subject the company to additional risks and uncertainties[167]. Environmental and Climate Risks - Climate change poses physical and transition risks that could disrupt operations and increase expenses, impacting the company's financial condition[184]. - The company may face significant environmental liabilities related to properties it forecloses on, which could materially affect its financial condition[134]. - The SEC adopted new rules requiring public companies to disclose substantial information about the material impacts of climate-related risks on their business, which are currently being challenged in court[135]. Ratings and Market Perception - The company’s ratings are subject to adjustments based on financial strength and industry conditions, with recent downgrades affecting several large U.S. banks[152]. - The Company received an "Outstanding" CRA Assessment Rating from the FRB in January 2023, reflecting strong performance in meeting community credit needs[109]. - The Company anticipates sufficient earnings to provide dividends to the Company to meet cash requirements for 2025[104].

Core Insights - Oak Valley Community Bank has appointed Jean Turpen as Vice President, Commercial Credit Officer, enhancing its leadership in commercial lending [1][2] - Turpen brings 21 years of banking experience, specializing in commercial credit and lending, which will support the bank's growth objectives [2][3] - The bank operates 18 branches and plans to open a 19th location in Lodi later this year, indicating ongoing expansion efforts [5] Company Overview - Oak Valley Bancorp is the parent company of Oak Valley Community Bank, which offers a variety of loan and deposit products to individuals and small businesses [5] - The bank's current branch locations include cities such as Oakdale, Turlock, Stockton, and Sacramento, among others [5] Leadership and Expertise - Jean Turpen's responsibilities will include client relationship management, portfolio management, and credit analysis, focusing on sustainable growth [2] - Her educational background includes a bachelor's degree in mathematics from the University of Alaska Anchorage, and she is a member of the Construction Financial Management Association [4]

Core Points - Oak Valley Community Bank has received regulatory approval to establish its 19th full-service branch in downtown Lodi, scheduled to open in mid-2025 [1] - The Lodi Branch will be the bank's sixth location in San Joaquin County, offering a full range of personal and commercial banking services, including a traditional walk-up ATM and night deposit service [2] - The expansion into Lodi aims to enhance accessibility for clients and introduce the bank's services to a new audience, particularly in the northern part of San Joaquin County [3] Company Overview - Oak Valley Bancorp operates Oak Valley Community Bank and its Eastern Sierra Community Bank division, providing various loan and deposit products to individuals and small businesses [4] - The bank currently operates 18 branches across multiple locations, including Oakdale, Turlock, Stockton, and several others in the Eastern Sierra division [4]

Financial Performance - Consolidated net income for Q4 2024 was $6,008,000, or $0.73 per diluted share, down 18.0% from $7,324,000, or $0.89 EPS in Q3 2024[2] - Year-to-date consolidated net income for 2024 totaled $24,948,000, representing a decrease of 19.1% compared to $30,848,000 in 2023[2] - Net income for 2024 was $24,948,000, a decrease of 19.4% from $30,848,000 in 2023[17] - Earnings per share (basic) decreased to $3.04 in 2024 from $3.76 in 2023, representing a decline of 19.1%[17] Income and Expenses - Net interest income for Q4 2024 was $17,846,000, an increase from $17,655,000 in Q3 2024, but a decrease from $17,914,000 in Q4 2023[4] - Net interest income fell to $70,034,000 in 2024, down 7.4% from $75,802,000 in 2023[17] - Non-interest income for Q4 2024 was $1,430,000, down from $1,846,000 in Q3 2024 and $1,755,000 in Q4 2023[6] - Non-interest expense increased to $46,017,000, up 11.5% from $41,157,000 in the previous year[17] Assets and Liabilities - Total assets were $1.90 billion as of December 31, 2024, an increase of $58.2 million from December 31, 2023[8] - Total assets grew to $1,900,604,000, an increase of 3.1% from $1,842,422,000 in 2023[17] - Gross loans increased to $1.11 billion as of December 31, 2024, up $90.0 million from the previous year[8] - Total deposits reached $1.70 billion as of December 31, 2024, an increase of $45.2 million from December 31, 2023[8] - Deposits increased to $1,695,690,000, up 2.7% from $1,650,534,000 in the prior year[17] Ratios and Returns - Average cost of funds increased to 0.78% in 2024, compared to 0.28% in 2023, impacting net interest margin which was 4.00% for Q4 2024[4][5] - Return on average equity decreased to 14.39% in 2024 from 21.87% in 2023[17] - The efficiency ratio worsened to 60.08% in 2024 compared to 49.93% in 2023[17] Stock and Dividends - The Board declared a cash dividend of $0.30 per share, amounting to approximately $2,507,000, to be paid on February 14, 2025[10] - The stock price at the end of the period was $29.25, down from $29.95 in the previous year[17] Asset Quality - Non-performing assets remained at zero for all of 2024, with the allowance for credit losses at 1.04% of gross loans as of December 31, 2024[9] - Book value per share rose to $21.95, an increase of 9.6% from $20.03 in 2023[17]

Core Insights - Oak Valley Bancorp reported a consolidated net income of $6,008,000 for Q4 2024, a decrease from $7,324,000 in Q3 2024 and an increase from $5,865,000 in Q4 2023, with a full-year net income of $24,948,000, down 19.1% from $30,848,000 in 2023 [1][17] - The decrease in earnings was attributed to increased deposit interest expenses and general operating expenses, despite a positive variance from the reversal of credit loss provisions [1][3] Financial Performance - Net interest income for Q4 2024 was $17,846,000, slightly up from $17,655,000 in Q3 2024 but down from $17,914,000 in Q4 2023, with a full-year net interest income of $70,034,000, down from $75,802,000 in 2023 [3][17] - The average cost of funds increased to 0.78% in 2024 from 0.28% in 2023, impacting net interest margin, which was 4.00% for Q4 2024 compared to 4.15% in Q4 2023 [3][4] - Non-interest income for Q4 2024 was $1,430,000, down from $1,846,000 in Q3 2024 and $1,755,000 in Q4 2023, with full-year non-interest income totaling $6,555,000, slightly down from $6,631,000 in 2023 [5][17] Expense and Asset Management - Non-interest expenses for Q4 2024 totaled $11,548,000, up from $11,324,000 in Q3 2024 and $10,760,000 in Q4 2023, driven by increases in audit, data processing, and consulting expenses [6][17] - Total assets were $1.90 billion as of December 31, 2024, flat compared to September 30, 2024, but up $58.2 million from December 31, 2023, with gross loans increasing to $1.11 billion [7][17] Credit Quality - Non-performing assets remained at zero for 2024, with the allowance for credit losses as a percentage of gross loans decreasing to 1.04% as of December 31, 2024, from 1.07% a year prior [8][18] - The company has maintained stable credit quality despite industry concerns regarding commercial real estate [8] Shareholder Returns - The Board of Directors declared a cash dividend of $0.30 per share, amounting to approximately $2,507,000, marking the first dividend payment in 2025 [9]

Group 1 - Oak Valley Community Bank was recognized as the "2024 SBA 504 Most Active Bank" by Success Capital, highlighting its significant lending activity in several counties [1] - Rob Gildea, Vice President and Commercial Banking Officer, received the title of "2024 SBA 504 Most Active Loan Officer," reflecting his expertise and commitment to supporting small businesses [1] - The 504 Program, which Oak Valley participates in, provides loans for small business development, offering low down payment, fixed-rate financing for purchasing or building business facilities [1][4] Group 2 - The award presentation by Success Capital took place in November, with representation from various Commercial Banking Officers and executives from Oak Valley Community Bank [2] - Oak Valley Community Bank operates 18 branches across California, providing a range of loan and deposit products to individuals and small businesses [3] - Success Capital has been assisting small businesses in California since 1986, facilitating access to favorable fixed-rate financing through various loan programs, including the SBA 504 [4]

Core Insights - Oak Valley Community Bank has appointed David Skitarelic as Vice President, Commercial Banking Officer, enhancing its leadership team in the Greater Sacramento region [1][2] Group 1: Company Overview - Oak Valley Bancorp operates Oak Valley Community Bank and Eastern Sierra Community Bank, providing a range of loan and deposit products to individuals and small businesses [3] - The bank has 18 branches located in various cities including Oakdale, Turlock, Stockton, and Sacramento, among others [3] Group 2: Leadership Appointment - David Skitarelic brings 30 years of commercial banking experience in the Sacramento area to his new role, focusing on commercial lending and business development [2] - His local connections and community involvement are expected to facilitate a smooth transition and effective performance in his new position [2]

Group 1 - Oak Valley Community Bank has received approval for two AHEAD grants totaling $125,000 to support Turlock Gospel Mission and Habitat for Humanity of Tuolumne County [1][2] - The $100,000 grant will aid Turlock Gospel Mission in job creation and equipment purchase for their workforce development program, while the $25,000 grant will enhance Habitat for Humanity's communication infrastructure [2][3] - The AHEAD grants are part of a $7.3 million disbursement awarded to 84 economic development projects across Arizona, California, and Nevada, aimed at addressing community needs and providing opportunities for underserved populations [3] Group 2 - Turlock Gospel Mission, founded in 2007, provides essential services including meals, emergency shelter, and job training programs [4] - Habitat for Humanity of Tuolumne County, established in 1999, focuses on eliminating substandard housing and supporting families in becoming self-reliant homeowners [5] - Oak Valley Community Bank operates 18 branches and offers a variety of financial products to individuals and small businesses [6]