Oak Valley Bancorp Reports Decrease in Net Income for Q2 and First Half of 2026

Oak Valley Bancorp reported its financial results for the second quarter and first half of 2026, revealing a net income of $5.1 million for the three months ended June 30, 2026, a decrease from $5.6 million in the same period of 2025. For the six-month period, net income was $10.4 million, down from $10.9 million year-over-year. The decline in profitability was attributed to increased operating expenses, which rose by 13.8% for the quarter and 11.6% for the half-year, primarily due to staffing increases and overhead costs associated with business growth. The company’s net interest income, however, increased by 4.4% to $18.9 million for the quarter and by 5% to $37.8 million for the six months, driven by higher loan yields and an increase in earning asset balances.

Total assets for Oak Valley Bancorp decreased by $21.5 million, or 1.1%, to $2.0 billion as of June 30, 2026, compared to the end of 2025. The company saw a 2% increase in net loans, which rose to $1.15 billion, while total deposits fell by 1.6% to $1.76 billion. The decrease in deposits was primarily due to a decline in demand deposits, which fell by 4.2%. The bank's cash and cash equivalents also decreased significantly by 16.1%, reflecting a strategic shift in asset allocation.

In terms of operational metrics, Oak Valley Bancorp's allowance for credit losses (ACL) decreased to $11.2 million, representing 0.96% of total loans, down from 1.08% at the end of 2025. The company recorded provisions for credit losses of $21,000 and $485,000 for the three and six months ended June 30, 2026, respectively, compared to $245,000 and $519,000 in the same periods of 2025. The bank's non-performing assets totaled $2.6 million, a reduction from $4.6 million at the end of 2025, indicating improved asset quality.

Strategically, Oak Valley Bancorp continues to focus on enhancing shareholder value and expanding its retail banking franchise. The company has maintained a strong capital position, with total shareholders' equity increasing to $217 million as of June 30, 2026. The bank remains well-capitalized under regulatory standards, with capital ratios exceeding the minimum requirements. Looking ahead, management anticipates continued growth in net interest income, although they expect non-interest expenses to rise as the company expands its operations. The bank is also closely monitoring economic conditions that could impact credit quality and overall performance.