Oak Valley Bancorp(OVLY) - 2025 Q2 - Quarterly Results

Executive Summary & Key Announcements This section outlines Oak Valley Bancorp's second quarter 2025 financial performance, including net income, diluted EPS, and a cash dividend declaration Contact Information This section provides the contact details for media inquiries regarding the press release - Contact: Chris Courtney/Rick McCarty, Phone: (209) 848-2265, Website: www.ovcb.com[2](index=2&type=chunk) Second Quarter 2025 Financial Highlights Oak Valley Bancorp reported consolidated net income of $5.588 million, or $0.67 per diluted share (EPS), for the second quarter of 2025, showing an increase from the prior quarter but a decrease year-over-year, with year-to-date net income also slightly down Consolidated Net Income and Diluted EPS | Period | Net Income | Diluted EPS | | :----- | :--------- | :---------- | | Q2 2025 | $5.588 million | $0.67 | | Q1 2025 | $5.297 million | $0.64 | | Q2 2024 | $5.889 million | $0.71 | | YTD 2025 | $10.885 million | $1.31 | | YTD 2024 | $11.616 million | $1.41 | Cash Dividend Announcement The Board of Directors declared a cash dividend of $0.30 per share of common stock, payable on August 8, 2025, marking the second dividend payment in 2025 Q2 2025 Cash Dividend Details | Detail | Value | | :----- | :---- | | Dividend per share | $0.30 | | Record Date | July 28, 2025 | | Payment Date | August 8, 2025 | | Total Amount | Approximately $2.515 million | | Payment Count in 2025 | Second dividend payment | Detailed Financial Performance This section details the drivers behind changes in net income, net interest income, and non-interest income and expense, along with management's perspectives on performance Drivers of Net Income Change The sequential increase in Q2 2025 net income was driven by loan growth and rising loan portfolio yields, while year-over-year decreases were due to higher deposit interest and general operating expenses - QoQ Increase (Q2 2025 vs Q1 2025): Result of loan growth, a rise in the yield of the loan portfolio, and corresponding increase in interest income - YoY Decrease (Q2 2025 vs Q2 2024 & YTD 2025 vs YTD 2024): Related to an increase in deposit interest expense and general operating expenses[4] Net Interest Income and Margin Net interest income for Q2 2025 reached $18.154 million, increasing over prior periods due to higher average earning asset balances and rising loan yields, with the cost of funds declining slightly to 0.77% and net interest margin stable at 4.11% Net Interest Income and Related Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----- | :------ | :------ | :------ | | Net Interest Income | $18.154 million | $17.807 million | $17.292 million | | Gross Loans Growth (QoQ) | $18.903 million | N/A | N/A | | Gross Loans Growth (YoY) | $39.820 million | N/A | N/A | | Cost of Funds | 0.77% | 0.79% | 0.73% | | Net Interest Margin | 4.11% | 4.09% | 4.11% | - Increase in net interest income over prior periods attributed to an increase in average earning asset balances and loan yields - Loan yields continue to trend upward - Cost of funds increased throughout 2024 but began to decline during the first six months of 2025[5] Non-Interest Income and Expense Non-interest income for Q2 2025 was $1.703 million, increasing sequentially due to fair value adjustments and investment advisory services, but decreasing year-over-year, while non-interest expenses totaled $12.688 million, rising due to general operating costs for growing portfolios Non-Interest Income and Expense | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----- | :------ | :------ | :------ | | Non-interest income | $1.703 million | $1.613 million | $1.760 million | | Non-interest expense | $12.688 million | $12.624 million | $11.616 million | - Non-interest income: Increased QoQ due to fair value adjustments on a limited partner equity investment and increased production from investment advisory service. Decreased YoY due to the same investment advisory service fee income[7][8] - Non-interest expense: Increased QoQ and YoY due to general operating costs related to servicing the growing loan and deposit portfolios[7][8] Management Perspectives on Performance Rick McCarty, President and COO, highlighted solid earnings from a cautious business approach, emphasizing increased net interest income from loan growth and stable interest margins as proof of the company's ability to manage profitability through relationship-based deposit growth - Rick McCarty, President and COO, stated: - Solid earnings reflect a steady and cautious approach to business management - Increase in net interest income due to loan growth and stable interest margins demonstrates ability to navigate changing market conditions - Commitment to relationship-based deposit growth remains strong, enabling competitive lending strategy and profitability management[6] Balance Sheet and Credit Quality This section provides an overview of the balance sheet, including total assets, gross loans, and deposits, along with an assessment of asset quality and credit loss allowance Balance Sheet Overview As of June 30, 2025, total assets were $1.92 billion, with gross loans growing to $1.11 billion and total deposits at $1.71 billion, demonstrating strong liquidity with $198.9 million in cash and cash equivalents Key Balance Sheet Figures | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :----- | :------------ | :------------- | :------------ | | Total Assets | $1.92 billion | $1.924 billion | $1.84 billion | | Gross Loans | $1.11 billion | $1.091 billion | $1.07 billion | | Total Deposits | $1.71 billion | $1.714 billion | $1.645 billion | | Cash & Cash Equivalents | $198.9 million | N/A | N/A | - Total assets decreased by $3.5 million QoQ but increased by $80.4 million YoY - Gross loans increased by $18.9 million QoQ and $39.8 million YoY - Total deposits decreased by $2.4 million QoQ but increased by $66.5 million YoY - Liquidity position remains strong[9] Asset Quality and Credit Loss Allowance Non-performing assets remained at zero as of June 30, 2025, with the allowance for credit losses (ACL) as a percentage of gross loans slightly decreasing to 1.03% due to loan portfolio growth, and no provision for credit losses recorded Asset Quality Metrics | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :----- | :------------ | :------------- | :------------ | | Non-performing assets (NPA) | $0 | $0 | $0 | | ACL as % of Gross Loans | 1.03% | 1.05% | 1.04% | - Non-performing assets remained at zero for all of 2025 and 2024 - The decrease in ACL as a percentage of gross loans from prior periods is mainly due to the growth in the loan portfolio - Management concluded that credit loss reserves relative to gross loans remain at acceptable levels, and credit quality remains stable - No provision for credit losses was recorded during the second quarter[10] Management Perspectives on Balance Sheet Chris Courtney, CEO, expressed satisfaction with the continued expansion of the loan portfolio and the overall strength of the balance sheet, attributing the company's growth to team dedication and client service despite a marginal quarterly decline in deposits - Chris Courtney, CEO, stated: - Pleased with the continued expansion of the loan portfolio and overall strength of the balance sheet - While deposits declined marginally from the previous quarter, the year-over-year deposit trajectory remains on an upward trend - Growth is a testament to the unwavering dedication and collaboration of team members and their commitment to outstanding client service[10] Company Information This section provides an overview of Oak Valley Bancorp's business operations, branch network, and a disclaimer regarding forward-looking statements Business Operations and Branch Network Oak Valley Bancorp operates Oak Valley Community Bank and its Eastern Sierra Community Bank division, offering diverse loan and deposit products through 18 branches across California, with plans to open its 19th branch in Lodi - Operates Oak Valley Community Bank & Eastern Sierra Community Bank division - Offers a variety of loan and deposit products to individuals and small businesses - Currently operates through 18 branches in various California locations (Oakdale, Turlock, Stockton, Patterson, Ripon, Escalon, Manteca, Tracy, Sacramento, Roseville, Sonora (2), Modesto (3), Eastern Sierra division (Bridgeport, Mammoth Lakes, Bishop)) - Will open its 19th branch location later this year in Lodi[12] Forward-Looking Statements Disclaimer This press release contains forward-looking statements protected by the Private Securities Litigation Reform Act of 1995, subject to risks like interest rate fluctuations, government policies, economic conditions, credit quality, operational factors, and competition, with no obligation for the Company to update them - Includes forward-looking statements claiming protection of safe harbor provisions in the Private Securities Litigation Reform Act of 1995 - Statements are based on management's knowledge and belief and concern possible future financial condition, results of operations, and business - Subject to risks and uncertainties, including fluctuations in interest rates, government policies, economic conditions (e.g., increased energy costs in California), credit quality, operational factors, and competition - Company assumes no obligation to update any forward-looking statement[14][15] Unaudited Financial Highlights Tables This section presents comprehensive unaudited financial data, including selected quarterly operating data and six-month financial data, offering a detailed view of the company's performance and financial health Selected Quarterly Operating Data This section provides a comprehensive table of selected unaudited quarterly operating data for Oak Valley Bancorp, covering Q2 2025, Q1 2025, Q4 2024, Q3 2024, and Q2 2024, including key financial metrics, ratios, capital, credit quality, and balance sheet figures Selected Quarterly Operating Data (Unaudited) | Selected Quarterly Operating Data: | 2nd Quarter | | | 1st Quarter | | 4th Quarter | | 3rd Quarter | | 2nd Quarter | | :------------------------------- | :---------- | :- | :- | :---------- | :- | :---------- | :- | :---------- | :- | :---------- | | ($ in thousands, except per share) | 2025 | | | 2025 | | 2024 | | 2024 | | 2024 | | Net interest income | $ 18,154 | | | $ 17,807 | | $ 17,846 | | $ 17,655 | | $ 17,292 | | (Reversal of) provision for credit losses | - | | | - | | - | | (1,620) | | - | | Non-interest income | 1,703 | | | 1,613 | | 1,430 | | 1,846 | | 1,760 | | Non-interest expense | 12,688 | | | 12,624 | | 11,548 | | 11,324 | | 11,616 | | Net income before income taxes | 7,169 | | | 6,796 | | 7,728 | | 9,797 | | 7,436 | | Provision for income taxes | 1,581 | | | 1,499 | | 1,720 | | 2,473 | | 1,547 | | Net income | $ 5,588 | | | $ 5,297 | | $ 6,008 | | $ 7,324 | | $ 5,889 | | Earnings per common share - basic | $ 0.68 | | | $ 0.64 | | $ 0.73 | | $ 0.89 | | $ 0.72 | | Earnings per common share - diluted | $ 0.67 | | | $ 0.64 | | $ 0.73 | | $ 0.89 | | $ 0.71 | | Dividends paid per common share | $ - | | | $ 0.300 | | $ - | | $ 0.225 | | $ - | | Return on average common equity | 12.21% | | | 11.58% | | 12.86% | | 16.54% | | 14.19% | | Return on average assets | 1.18% | | | 1.13% | | 1.25% | | 1.56% | | 1.30% | | Net interest margin (1) | 4.11% | | | 4.09% | | 4.00% | | 4.04% | | 4.11% | | Efficiency ratio (2) | 63.90% | | | 65.01% | | 59.91% | | 58.07% | | 60.97% | | Capital - Period End | | | | | | | | | | | | Book value per common share | $ 22.17 | | | $ 21.89 | | $ 21.95 | | $ 22.18 | | $ 20.55 | | Credit Quality - Period End | | | | | | | | | | | | Nonperforming assets / total assets | 0.00% | | | 0.00% | | 0.00% | | 0.00% | | 0.00% | | Credit loss reserve / gross loans | 1.03% | | | 1.05% | | 1.04% | | 1.07% | | 1.04% | | Balance Sheet - Period End (in thousands) | | | | | | | | | | | | Total assets | $ 1,920,909 | | | $ 1,924,365 | | $ 1,900,604 | | $ 1,900,455 | | $ 1,840,521 | | Gross loans | 1,109,856 | | | 1,090,953 | | 1,106,535 | | 1,075,138 | | 1,070,036 | | Nonperforming assets | - | | | - | | - | | - | | - | | Allowance for credit losses | 11,430 | | | 11,448 | | 11,460 | | 11,479 | | 11,121 | | Deposits | 1,711,241 | | | 1,713,592 | | 1,695,690 | | 1,690,301 | | 1,644,748 | | Common equity | 185,805 | | | 183,520 | | 183,436 | | 185,393 | | 171,799 | | Balance Sheet - Average (in thousands) | | | | | | | | | | | | Average assets | $ 1,903,741 | | | $ 1,903,585 | | $ 1,909,691 | | $ 1,863,983 | | $ 1,814,643 | | Average earning assets | 1,818,430 | | | 1,814,338 | | 1,819,649 | | 1,780,056 | | 1,737,270 | | Average equity | 183,612 | | | 185,592 | | 185,345 | | 175,693 | | 166,429 | | Non-Financial Data | | | | | | | | | | | | Full-time equivalent staff | 231 | | | 225 | | 223 | | 222 | | 223 | | Number of banking offices | 18 | | | 18 | | 18 | | 18 | | 18 | | Common Shares outstanding | | | | | | | | | | | | Period end | 8,382,062 | | | 8,382,062 | | 8,357,211 | | 8,358,711 | | 8,359,556 | | Period average - basic | 8,245,147 | | | 8,231,844 | | 8,224,504 | | 8,221,475 | | 8,219,699 | | Period average - diluted | 8,285,299 | | | 8,278,301 | | 8,278,427 | | 8,263,790 | | 8,248,295 | | Market Ratios | | | | | | | | | | | | Stock Price | $ 27.24 | | | $ 24.96 | | $ 29.25 | | $ 26.57 | | $ 24.97 | | Price/Earnings | 10.02 | | | 9.56 | | 10.09 | | 7.52 | | 8.69 | | Price/Book | 1.23 | | | 1.14 | | 1.33 | | 1.20 | | 1.22 | Six Months Ended Financial Data This section presents detailed unaudited financial data for the six months ended June 30, 2025, compared to June 30, 2024, including profitability metrics, capital figures, credit quality indicators, period-end and average balance sheet data, non-financial data, and market ratios Six Months Ended Financial Data (Unaudited) | Profitability | | | SIX MONTHS ENDED | | | :------------------------------- | :- | :---------- | :--------------- | :- | | ($ in thousands, except per share) | | 2025 | | 2024 | | Net interest income | $ | 35,961 | $ | 34,533 | | (Reversal of) provision for credit losses | | - | | - | | Non-interest income | | 3,316 | | 3,279 | | Non-interest expense | | 25,312 | | 23,145 | | Net income before income taxes | | 13,965 | | 14,667 | | Provision for income taxes | | 3,080 | | 3,051 | | Net income | $ | 10,885 | $ | 11,616 | | Earnings per share - basic | $ | 1.32 | $ | 1.41 | | Earnings per share - diluted | $ | 1.31 | $ | 1.41 | | Dividends paid per share | $ | 0.30 | $ | 0.225 | | Return on average equity | | 11.89% | | 14.03% | | Return on average assets | | 1.15% | | 1.28% | | Net interest margin (1) | | 4.10% | | 4.10% | | Efficiency ratio (2) | | 64.44% | | 59.36% | | Capital - Period End | | | | | | Book value per share | $ | 22.17 | $ | 20.55 | | Credit Quality - Period End | | | | | | Nonperforming assets/ total assets | | 0.00% | | 0.00% | | Credit loss reserve/ gross loans | | 1.03% | | 1.04% | | Balance Sheet - Period End (in thousands) | | | | | | Total assets | $ | 1,920,909 | $ | 1,840,521 | | Gross loans | | 1,109,856 | | 1,070,036 | | Nonperforming assets | | - | | - | | Allowance for credit losses | | 11,430 | | 11,121 | | Deposits | | 1,711,241 | | 1,644,748 | | Stockholders' equity | | 185,805 | | 171,799 | | Balance Sheet - Average (in thousands) | | | | | | Average assets | $ | 1,903,663 | $ | 1,819,426 | | Average earning assets | | 1,816,395 | | 1,740,898 | | Average equity | | 184,596 | | 166,071 | | Non-Financial Data | | | | | | Full-time equivalent staff | | 231 | | 223 | | Number of banking offices | | 18 | | 18 | | Common Shares outstanding | | | | | | Period end | | 8,382,062 | | 8,359,556 | | Period average - basic | | 8,238,532 | | 8,214,658 | | Period average - diluted | | 8,281,819 | | 8,246,472 | | Market Ratios | | | | | | Stock Price | $ | 27.24 | $ | 24.97 | | Price/Earnings | | 10.22 | | 8.81 | | Price/Book | | 1.23 | | 1.22 |