Pacific Valley Bancorp Reports Second Quarter 2025 Financial Performance Amid Rising Costs

Overview

On July 28, 2025, Pacific Valley Bancorp reported its financial outcomes for the second quarter of 2025, revealing important insights into the bank's performance and strategic initiatives aimed at future growth. The overall net income for the quarter, which concluded on June 30, 2025, was $923 thousand. This figure reflects a decline of 9.0% or $91 thousand compared to the same period in the previous year, primarily influenced by a rise in personnel-related expenses.

Financial Highlights

During the second quarter, there was also a marginal decrease of 2.3% or $22 thousand in net income compared to the quarter that ended on March 31, 2025. The main driver of this reduction came from increased personnel expenses linked to a growth in staffing levels. Despite these challenges, higher loan interest income helped mitigate some losses. Basic earnings per share stood at $0.19, consistent with the previous quarter’s results.

For the first half of 2025 (ending June 30), net income totaled $1.9 million, marking a decrease of 15.7% or $348 thousand compared to the same period in 2024, again predominantly due to the rise in personnel expenses and higher deposit interest costs.

Net Interest Margin and Loans Growth

For the second quarter, the net interest margin was reported at 3.61%, up from 3.43% in the prior quarter. This increase is attributed to boosted loan interest income, despite facing higher expenses related to money market accounts. The gross loans outstanding grew by an impressive 9.5%, amounting to $43.5 million when compared to the previous year, largely driven by increased lending in agricultural real estate and commercial real estate (CRE).

Deposits Trend

Total deposits reached $490.2 million by the end of June 2025, growing by $30.6 million or 6.7% when juxtaposed against the previous year. This growth is somewhat offset by decreases in demand deposits and certificate deposits. Notably, deposits increased by $11 million in the second quarter, reflecting a significant upsurge in core deposits.

Community Growth Strategies

CEO Anker Fanoe provided insight into the bank’s strategies during the earnings call, noting that they are laying the groundwork for future expansion with the establishment of a loan production office in downtown Salinas, and planning the opening of a branch office in Santa Cruz later this year. Fanoe pointed out that opportunities for growth arise from market changes, particularly due to the acquisition of competitor banks, which has increased loan and deposit production.

Strength in Liquidity and Capital

Fanoe emphasized the bank's strong liquidity position, highlighting a primary liquidity ratio of 11.0% as of June 30, 2025, down from 12.9% year-over-year. Total on-balance sheet liquidity amounted to $63 million, while contingent liquidity, which includes various borrowing capacities, totaled $362 million, indicating a robust buffer against potential challenges.

Conclusion

The bank's performance in the second quarter of 2025 illustrates a phase of transition and strategic growth investment despite facing challenges from rising personnel costs. With an optimistic outlook, leadership believes that these strategic investments will yield greater profitability in the longer term as the banking environment evolves. Going forward, Pacific Valley Bancorp is committed to enhancing its operational capabilities and leveraging market opportunities while maintaining a focus on strong financial management.