Shares of Oak Valley Bancorp (OVLY Quick QuoteOVLY - Free Report) have gained 5.7% since the company reported its earnings for the quarter ended Sept. 30, 2025. This compares to the S&P 500 index’s 1% growth over the same time frame. Over the past month, the stock has declined 2.8% compared with the S&P 500’s 2.2% growth.

For the third quarter of 2025, Oak Valley reported net income of 81 cents per share, down from 89 cents per share in the same period of 2024. The bottom line dropped approximately 9% year over year, primarily due to higher operating expenses and the absence of a $1.6 million credit loss reversal that boosted third-quarter 2024 earnings.

Net interest income rose to $19.2 million from $17.7 million a year earlier. The 8.7% year-over-year increase in net interest income was driven by asset growth and improved loan yields. 

Net income of $6.7 million reflected a year-over-year decline from $7.3 million in the same period of 2024.

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 non-interest income climbed to $2 million in the third quarter compared to $1.9 million in the prior-year period. This uptick was attributed to a one-time life insurance policy redemption gain, alongside higher investment advisory fees and increased service charges on deposit accounts.

Non-interest expenses of $12.7 million rose 12.2% from $11.3 million in the year-ago quarter. The increase was linked to higher staffing and operating costs incurred to support growth in the loan and deposit books. Return on average assets for the quarter was 1.4%, down from 1.6% a year earlier, while return on average common equity fell to 14.3% from 16.5%.

The bank’s net interest margin (NIM) improved slightly to 4.16% in the quarter, up from 4.04% a year ago. The efficiency ratio improved to 58.3% from 56.4% posted in the prior-year quarter.

Management Commentary

CEO Chris Courtney emphasized the bank’s commitment to growth and operational execution. He highlighted the recent opening of a full-service branch in Lodi, the company’s 19th location, as a reflection of its strategic expansion efforts. He also noted that the bank continues to maintain excellent asset quality and strong customer relationships.

Courtney's commentary underscored Oak Valley’s focus on measured expansion and customer-centric operations, even amid rising operational expenses. The hiring of six new full-time employees in the third quarter reflects this growth strategy, aimed at sustaining momentum in both loan and deposit portfolio growth.

Factors Influencing the Headline Numbers

The year-over-year decline in net income was primarily influenced by a one-off credit event in 2024. In the third quarter of that year, the bank recorded a $1.6 million reversal in provision for credit losses due to loan recoveries.

The absence of a similar boost in 2025 led to a natural decline in comparative earnings. In the most recent quarter, the company recorded only a $0.06 million reversal related to reduced unfunded loan commitments.

Additionally, rising non-interest expenses due to workforce expansion and infrastructure investments contributed to margin pressures. However, these were partially offset by higher net interest income and improved NIM, reflecting management’s efforts to optimize asset yields amid fluctuating interest rate conditions.

Other Developments

A key development in the quarter was the launch of Oak Valley's new branch in Lodi on Oct. 2, 2025. This expansion was supported by a modest increase in headcount during the third quarter, positioning the company to enhance its service capabilities and footprint across California’s Central Valley.