Asset Growth Drives Oak Valley Bancorp's Solid Q4 Earnings

Core Viewpoint - Oak Valley Bancorp reported a mixed performance for the fourth quarter of 2025, with a slight increase in net income year-over-year but a decline in full-year earnings compared to 2024, alongside improvements in net interest income and non-interest income [1][2][4]. Financial Performance - For Q4 2025, Oak Valley Bancorp's net income was $6.3 million, or 76 cents per share, up from $6 million, or 73 cents per share, in Q4 2024, reflecting a 4.1% year-over-year increase [1][2]. - Full-year 2025 net income totaled $23.9 million, or $2.88 per share, down from $25 million, or $3.02 per share, in 2024 [2]. - Total net interest income for Q4 reached $19.5 million, a 9% increase year-over-year, while annual net interest income rose 6.5% to $74.6 million [2]. Key Business Metrics - The net interest margin (NIM) for Q4 was 4.14%, up from 4.00% in the same quarter last year, attributed to higher loan yields and reduced funding costs [3]. - Non-interest income increased to $1.8 million in Q4, a 27.6% rise from $1.4 million a year earlier, driven by higher investment advisory fees and service charges [4]. Expense Management - Non-interest expenses grew 6.2% year-over-year to $12.3 million in Q4, with annual non-interest expenses climbing 9.3% to $50.3 million due to higher staffing costs and operational expenses [5]. Operational Efficiency - The efficiency ratio improved to 55.9% in Q4 from 58.1% a year ago, indicating better operational leverage, while the full-year efficiency ratio slightly increased to 59.7% from 58.2% [7]. - Return on average assets for Q4 was 1.3%, consistent with the previous year, while full-year return on assets decreased to 1.2% from 1.4% [7]. Credit Quality - A provision for credit losses of $0.9 million in Q4 was linked to a commercial real estate loan placed on non-accrual status, resulting in non-performing assets rising to $4.6 million, or 0.2% of total assets [8]. - The allowance for credit losses as a percentage of gross loans increased to 1.1% from 1% in Q4 2024, indicating stable overall credit quality [9]. Shareholder Returns - The board declared a cash dividend of 37.5 cents per share, payable on February 13, 2026, marking the first dividend payment of 2026, with an annual dividend for 2025 of 60 cents per share, up from 45 cents in 2024 [10]. Company Growth - Oak Valley Bancorp surpassed $2 billion in total assets, attributed to consistent growth and strong client relationships, while maintaining 19 banking offices across Central California and the Eastern Sierra region [6][11].