Oak Valley Bancorp Annual Report: A Simple Guide

I’ve put together this guide to help you understand how Oak Valley Bancorp performed this year. My goal is to cut through the corporate jargon so you can decide if this company fits your investment goals.

1. What does this company do?

Oak Valley Bancorp is a community bank based in Oakdale, California. It operates 19 branches across the Central Valley and the Eastern Sierras. The bank makes money primarily by earning more interest on loans than it pays to its depositors. Its loan portfolio focuses on commercial real estate, farming, and small businesses, serving as a financial engine for local economies.

2. How did they perform this year?

2025 was a year of steady growth, though rising costs and higher interest rates pressured profits.

• Growth: Total assets grew 6.4% to $2.02 billion. Customer deposits rose 5.7% to $1.78 billion, providing a stable foundation for lending.
• Profit: Interest income rose 6.5% to $74.6 million. However, profit fell to $23.9 million from $24.9 million in 2024. Earnings per share dropped to $2.88 from $3.02.
• Why the dip? Operating expenses rose 9.3% to $50.3 million. The bank invested $2.5 million more in staff to remain competitive and $1.8 million more in technology to modernize digital banking and security systems.

3. Loan Quality: How safe is their money?

The bank holds $1.48 billion in loans, with 91% backed by real estate. This includes $820 million in commercial real estate and $350 million in construction loans. The bank uses conservative lending standards, maintaining an average loan-to-value ratio of 44.9%. This provides a significant buffer against potential drops in property values.

While loan quality remains strong, non-performing assets—loans that are 90 days or more past due—rose to $5.9 million (0.40% of total loans), up from 0.12% in 2024. To manage this, the bank holds $16.2 million in reserves to cover potential future losses.

4. Risks: What should you watch out for?

• Cybersecurity: The bank relies on third-party providers for its digital banking infrastructure. A security breach at one of these partners could disrupt operations or impact customer data.
• Dividends: The bank paid a dividend of $0.88 per share in 2025. These payments are subject to Board approval, which depends on the bank maintaining sufficient capital. Currently, the bank’s capital ratio is a healthy 12.5%.
• Economic Sensitivity: Because the bank is tied to the Central Valley’s economy, a downturn in local property values or environmental factors like droughts affecting farms could lead to missed loan payments and reduced demand for new lending.

5. Future outlook

Oak Valley focuses on "slow and steady" growth. The bank is prioritizing market share expansion and the improvement of digital tools to attract a younger demographic. For investors, the bank offers a stable, dividend-paying profile focused on capital preservation. As you evaluate this opportunity, keep an eye on the "efficiency ratio"—the cost to generate a dollar of revenue—which has risen to 65% due to recent investments in staff and technology.

Investor Takeaway: Oak Valley Bancorp is a conservative, locally-focused institution. It is best suited for investors looking for stability and consistent dividends rather than rapid growth. When deciding whether to invest, consider if you are comfortable with their current strategy of spending more on technology and staff to secure long-term efficiency, and whether you believe the local Central Valley economy will remain resilient.