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

PART I – FINANCIAL INFORMATION Item 1. Financial Statements Presents Oak Valley Bancorp's unaudited condensed consolidated financial statements, covering key financial positions and performance for specified periods Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (dollars in thousands) | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | ASSETS | | | | Cash and cash equivalents | $198,860 | $168,751 | | Securities - available for sale | $503,347 | $526,496 | | Loans, net | $1,096,549 | $1,093,514 | | Total Assets | $1,920,909 | $1,900,604 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Deposits | $1,711,241 | $1,695,690 | | Total liabilities | $1,735,104 | $1,717,168 | | Total shareholders' equity | $185,805 | $183,436 | | Total Liabilities and Shareholders' Equity | $1,920,909 | $1,900,604 | Condensed Consolidated Statements of Income Condensed Consolidated Statements of Income (dollars in thousands, except per share amounts) | (dollars in thousands, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $21,421 | $20,245 | $42,537 | $40,237 | | Total interest expense | $3,267 | $2,953 | $6,576 | $5,704 | | Net interest income | $18,154 | $17,292 | $35,961 | $34,533 | | Total non-interest income | $1,703 | $1,760 | $3,316 | $3,279 | | Total non-interest expense | $12,688 | $11,616 | $25,312 | $23,145 | | Net Income | $5,588 | $5,889 | $10,885 | $11,616 | | Net income per share | $0.68 | $0.72 | $1.32 | $1.41 | | Net income per diluted share | $0.67 | $0.71 | $1.31 | $1.41 | Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Comprehensive Income (dollars in thousands) | (dollars in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $5,588 | $5,889 | $10,885 | $11,616 | | Total other comprehensive loss | $(3,537) | $(1,210) | $(6,204) | $(4,382) | | Comprehensive income | $2,051 | $4,679 | $4,681 | $7,234 | Condensed Consolidated Statements of Changes in Shareholders' Equity Condensed Consolidated Statements of Changes in Shareholders' Equity (dollars in thousands) | (dollars in thousands) | Balances, June 30, 2025 | Balances, June 30, 2024 | Balances, January 1, 2025 | Balances, January 1, 2024 | | :--------------------- | :---------------------- | :---------------------- | :------------------------ | :------------------------ | | Common Stock (Amount) | $25,435 | $25,435 | $25,435 | $25,435 | | Additional Paid-in Capital | $6,394 | $5,851 | $6,199 | $5,512 | | Retained Earnings | $183,880 | $164,051 | $175,502 | $154,301 | | Accumulated Other Comprehensive Income (Loss) | $(29,904) | $(23,538) | $(23,700) | $(19,156) | | Total Shareholders' Equity | $185,805 | $171,799 | $183,436 | $166,092 | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (dollars in thousands) | (dollars in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $13,552 | $12,451 | | Net cash provided by (used in) investing activities | $3,753 | $(40,960) | | Net cash provided by (used in) in financing activities | $12,804 | $(7,759) | | NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | $30,109 | $(36,268) | | CASH AND CASH EQUIVALENTS, end of period | $198,860 | $180,300 | Notes to Condensed Consolidated Financial Statements Detailed disclosures and explanations for the condensed consolidated financial statements, covering basis of presentation, accounting, securities, loans, financial instruments, and earnings per share Note 1 – Basis of Presentation This note clarifies Oak Valley Bancorp's structure, its primary revenue source, and significant accounting estimates - Oak Valley Bancorp is the parent holding company for Oak Valley Community Bank, operating branches across California, including the Eastern Sierra Community Bank division[17][18] - The company's primary source of revenue is providing loans to predominantly middle-market businesses[18] - Significant accounting estimates include the allowance for credit losses and fair value measurements, which are subject to change based on new events and operating environment shifts[19] Note 2 – Recent Accounting Pronouncements This note discusses the adoption and anticipated impact of recent FASB Accounting Standards Updates (ASUs) - ASU 2023-02 (Investments in Tax Credit Structures) became effective January 1, 2024, allowing proportional amortization for various tax equity investments; it did not have a material impact[20] - ASU 2023-07 (Segment Reporting) became effective January 1, 2024, for annual periods and January 1, 2025, for interim periods; it did not have a material impact as the Company operates as a single segment[21] - ASU 2023-09 (Income Tax Disclosures) is effective January 1, 2025, and is not anticipated to have a material impact[22] - ASU 2024-03 (Expense Disaggregation Disclosures) is effective after December 15, 2026, for annual periods and December 15, 2027, for interim periods, and is not anticipated to have a material impact[23] Note 3 – Securities This note details the company's equity and debt securities portfolio, highlighting unrealized losses on available-for-sale debt securities Equity Securities (dollars in thousands) | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Equity securities (fair value) | $3,292 | $3,169 | | Gains on equity securities (six months ended June 30) | $64 | $(81) | Available-for-sale securities (dollars in thousands) | (dollars in thousands) | Amortized Cost (June 30, 2025) | Fair Value (June 30, 2025) | Gross Unrealized Losses (June 30, 2025) | | :--------------------- | :----------------------------- | :------------------------- | :-------------------------------------- | | Available-for-sale securities (Total) | $545,803 | $503,347 | $(43,010) | - Unrealized losses on available-for-sale debt securities are primarily due to rising market yields, not credit deterioration, and no allowance for credit loss has been established. The Company does