Shares of Oak Valley Bancorp (OVLY Quick QuoteOVLY - Free Report) have declined 2.5% since the company reported its earnings for the quarter ended March 31, 2026, underperforming the S&P 500 index’s 1.5% growth over the same period. Over the past month, the stock has gained 5.2%, also lagging the broader market’s 13.5% increase.

Oak Valley Bancorp reported first-quarter 2026 net income of 64 cents per share, which remained flat year over year.

Net interest income rose to $18.8 million from $17.8 million a year earlier, reflecting a 5.7% increase driven by growth in earning assets. Non-interest income also improved to $2 million from $1.6 million last year, aided by a special dividend. Offsetting these gains, non-interest expenses climbed to $13.5 million from $12.6 million, an increase of about 7%, pressuring overall profitability.

Oak Valley Bancorp reported net income of $5.31 million, essentially flat compared with $5.30 million.

Oak Valley Bancorp Price, Consensus and EPS Surprise

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

Balance Sheet and Operating Metrics

The company continued to expand its balance sheet on a year-over-year basis, though some metrics softened sequentially. Total assets stood at $2 billion at March 31, 2026, up $85.9 million from a year earlier. Gross loans increased to $1.2 billion, reflecting a $56.5 million rise from March 31, 2025, while deposits grew by $67.4 million to $1.8 billion over the same period.

Profitability ratios showed modest compression. Return on average assets was 1.07%, down from 1.13% a year ago, while return on average common equity declined to 10.23% from 11.58%. Net interest margin improved slightly year over year to 4.12% from 4.09%. The efficiency ratio rose to 62.99% from 63.00% a year earlier. 

Credit Quality and Provisioning

Credit quality metrics weakened compared to a year ago but remained stable sequentially. Non-performing assets totaled $4.6 million, or 0.23% of total assets, compared to zero a year earlier, primarily due to a single collateral-dependent loan placed on non-accrual status in late 2025. The allowance for credit losses increased to 1.13% of gross loans from 1.05% a year earlier, reflecting a more conservative stance amid evolving macroeconomic conditions.

The company recorded a provision for credit losses of $0.5 million in the quarter compared to no provision in the year-ago period, driven by adjustments in its CECL model and credit risk factors. Management indicated that reserves remain at acceptable levels and that overall credit quality is stable despite the uptick in non-performing assets.

Management Commentary and Key Drivers

Management attributed the quarter-over-quarter decline in net income primarily to higher operating expenses and lower net interest income. Increased staffing costs and expenses tied to servicing a growing loan and deposit base contributed to the rise in non-interest expenses.

On the revenue side, the year-over-year improvement in net interest income was driven by growth in earning assets and loan yields, though partially offset by lower yields on cash balances and slightly higher deposit costs.

CEO Chris Courtney emphasized the company’s “strong” balance sheet and “stable performance across core business lines,” highlighting a continued focus on disciplined growth and conservative risk management. Liquidity remained solid, supported by $201.6 million in cash and cash equivalents at quarter-end.