Asset Growth Drives Oak Valley Bancorp's Solid Q4 Earnings

Shares of Oak Valley Bancorp OVLY have declined 2.7% since the company reported its earnings for the quarter ended Dec. 31, 2025. This compares to the S&P 500 index’s 0.9% growth over the same time frame. Over the past month, the stock has gained 5.5% compared with the S&P 500’s 1.4% increase.

For the fourth quarter of 2025, Oak Valley Bancorp reported net income of 76 cents per share, which marks an increase from 73 cents per share in the same quarter last year, a 4.1% year-over-year improvement.  

Total net interest income for the quarter reached $19.5 million, up 9% year over year. 

Consolidated net income of $6.3 million reflected an increase from $6 million in the same quarter last year.

Full-year 2025 net income was $23.9 million, or $2.88 per share, reflecting a decline from $25 million, or $3.02 per share, in 2024. 

Annual net interest income rose 6.5% to $74.6 million, supported by growth in average earning assets and stable interest expense.

Oak Valley Bancorp Price, Consensus and EPS Surprise

Oak Valley Bancorp price-consensus-eps-surprise-chart | Oak Valley Bancorp Quote

Other Key Business Metrics

Oak Valley’s net interest margin (NIM) for the fourth quarter was 4.14%, up from 4.00% in the year-ago quarter. Both quarterly and annual NIM figures represent an improvement over 2024 due to higher loan yields and a reduction in funding costs.

Non-interest income rose to $1.8 million in the quarter, a 27.6% increase from $1.4 million a year earlier. The quarterly year-over-year growth was fueled by higher investment advisory fees, service charges, and unrealized gains on equity securities. The annual figure also benefited from life insurance policy redemptions earlier in 2025.

On the expense side, non-interest expense grew 6.2% year over year to $12.3 million. Annual non-interest expense climbed 9.3% to $50.3 million, driven by higher staffing costs, board fees, and general operational expenses tied to servicing expanding loan and deposit portfolios.

Management Commentary

CEO Chris Courtney characterized the quarter as one of continued operational strength. He highlighted the company’s milestone of surpassing $2 billion in total assets, attributing the achievement to consistent growth, sound financial performance and strong client relationships.

The bank’s efficiency ratio improved to 55.9% in the fourth quarter from 58.1% a year ago, reflecting better operational leverage. For the full year, the efficiency ratio ticked up slightly to 59.7% from 58.2%, a change linked to increased operating costs.

Return on average assets for the fourth quarter was 1.3%, matching the figure from the same period in 2024. Full-year return on assets slipped to 1.2% from 1.4%, and return on average equity declined to 12.6% from 14.4% in the prior year.

Factors Influencing Headline Numbers

The fourth-quarter dip in earnings relative to the prior quarter was primarily due to a provision for credit losses totaling $0.9 million. This was linked to a collateral-dependent commercial real estate loan that was placed on non-accrual status in December. The move also led to a rise in non-performing assets (NPA) to $4.6 million, or 0.2% of total assets compared to zero NPA in the previous quarter and year-ago period.

Despite the one-off charge, overall credit quality remains stable. The allowance for credit losses (ACL) as a percentage of gross loans rose to 1.1%, from 1% in the fourth quarter of 2024. Management emphasized that the ACL remains at acceptable levels after a thorough review of the commercial real estate portfolio.

Other Developments

The company’s board of directors declared a cash dividend of 37.5 cents per share, payable on Feb. 13, 2026, to shareholders of record as of Feb. 2, 2026. This marks the first dividend payment of 2026 and totals approximately $3.2 million. The annual dividend for 2025 amounted to 60 cents per share, up from 45 cents per share in 2024, signaling management’s ongoing commitment to returning value to shareholders.

Oak Valley continues to operate its 19 banking offices across Central California and the Eastern Sierra region, having expanded its branch network by one location over the past year.

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