Oak Valley Bancorp Reports 2nd Quarter Results And Announces Cash Dividend

Oakdale, California, UNITED STATES

OAKDALE, Ca., July 21, 2023 (GLOBE NEWSWIRE) -- Oak Valley Bancorp (NASDAQ: OVLY) (the “Company”), the bank holding company for Oak Valley Community Bank and their Eastern Sierra Community Bank division, recently reported unaudited consolidated financial results. For the three months ended June 30, 2023, consolidated net income was $8,404,000, or $1.02 per diluted share (EPS), as compared to $9,225,000, or $1.12 EPS, for the prior quarter and $4,258,000, or $0.52 EPS, for the same period a year ago. Consolidated net income for the six months ended June 30, 2023 was $17,629,000, or $2.14 EPS, compared to $6,627,000 or $0.81 EPS for the same period of 2022.

The decrease in second quarter net income compared to the prior quarter was due primarily to a $460,000 reversal of loan loss provision in the first quarter of 2023 and an increase in non-interest expense during the second quarter. The QTD and YTD increases compared to the same periods of 2022 were related to net interest income increases resulting from increased yields on earning assets, triggered by FOMC rate hikes, combined with growth of our investment and loan portfolios.

Net interest income for the three months ended June 30, 2023 was $19,407,000, compared to $19,543,000 in the prior quarter, and $13,233,000 in the same period a year ago. Interest expense on deposit accounts increased during the quarter, and our average cost of funds rate increased to 0.16% from 0.10% in the prior quarter and 0.05% in the same quarter of the prior year. Overall, the rate increases that began in 2022 have had a positive impact on net interest income and resulted in an increase over the 2022 comparable period. In addition to rising yields, the Company recognized $42.9 million and $18.2 million in loan and investment portfolio growth, respectively, during the prior twelve months.

Net interest margin for the three months ended June 30, 2023 was 4.45%, compared to 4.39% for the prior quarter and 2.98% for the same period last year. The interest margin expansion compared to prior periods was fueled by the impact of FOMC rate increases on earning asset yields and growth of the loan and investment portfolios, as discussed above.

“We have strategically capitalized on the opportunity to increase yield through investments and loans during this most recent rate cycle, which has undeniably fueled margin expansion and profitability,” stated Rick McCarty, President and Chief Operating Officer.

Non-interest income was $1,655,000 for the quarter ended June 30, 2023, compared to $1,655,000 for the prior quarter and $1,371,000 for the same period last year. The increase compared to the same period a year ago was mainly due to service charges and a positive change in the market value of equity securities.

Non-interest expense totaled $10,062,000 for the quarter ended June 30, 2023, compared to $9,757,000 in the prior quarter and $9,205,000 in the same quarter a year ago. The second quarter increase compared to prior periods is mainly due to staffing expense and general operating costs related to servicing the growing loan and deposit portfolios.

Total assets were $1.86 billion at June 30, 2023, a decrease of $79.0 million and $129.5 million over March 31, 2023 and June 30, 2022, respectively, due to the deposit decreases as described below. Gross loans were $950.5 million at June 30, 2023, an increase of $23.7 million over March 31, 2023 and $42.9 million over June 30, 2022. The Company’s total deposits were $1.68 billion as of June 30, 2023, a decrease of $86.8 million and $170.1 million from March 31, 2023 and June 30, 2022, respectively. The deposit decrease during the second quarter was related to movement to higher deposit rates offered by other financial institutions, including Oak Valley Investments. Our liquidity position is very strong as evidenced by $301 million in cash and cash equivalents balances at June 30, 2023.

“We are pleased to report another quarter of solid results. Through our relationship banking business model, we have been able to continue generating core loan growth,” stated Chris Courtney, CEO. “Net interest income for the year has been exceptionally strong and we credit our team members for their ongoing commitment to providing clients with first-class service – day in and day out. A key factor in our ability to consistently be competitive when offering financing solutions in the communities we call home is our commitment to building and broadening our relationships with customers,” Courtney concluded.

Non-performing assets (“NPA”) remained at zero as of June 30, 2023, as they were for all of 2023 and 2022. The allowance for credit losses (“ACL”) as a percentage of gross loans decreased to 0.99% at June 30, 2023, compared to 1.01% at March 31, 2023 and 1.19% at June 30, 2022 due to the increase in outstanding loans. The Company did not record a provision for credit losses during the second quarter of 2023 as loan loss reserves relative to gross loans remain at acceptable levels and credit quality remains stable.

The Board of Directors of Oak Valley Bancorp at their July 18, 2023, meeting declared the payment of a cash dividend of $0.16 per share of common stock to its shareholders of record at the close of business on July 31, 2023. The payment date will be August 11, 2023 and will amount to approximately $1,325,000. This is the second dividend payment made by the Company in 2023.

Oak Valley Bancorp operates Oak Valley Community Bank & their Eastern Sierra Community Bank division, through which it offers a variety of loan and deposit products to individuals and small businesses. They currently operate through 18 conveniently located branches: Oakdale, Turlock, Stockton, Patterson, Ripon, Escalon, Manteca, Tracy, Sacramento, Roseville, two branches in Sonora, three branches in Modesto, and three branches in their Eastern Sierra division, which includes Bridgeport, Mammoth Lakes, and Bishop. The Company’s Roseville location opened in early 2022 as a Loan Production Office and as a full-service branch in December 2022.

For more information, call 1-866-844-7500 or visit www.ovcb.com.

This press release includes forward-looking statements about the corporation for which the corporation claims the protection of safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are based on management's knowledge and belief as of today and include information concerning the corporation's possible or assumed future financial condition, and its results of operations and business. Forward-looking statements are subject to risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include fluctuations in interest rates, government policies and regulations (including monetary and fiscal policies), legislation, economic conditions, including increased energy costs in California, credit quality of borrowers, operational factors and competition in the geographic and business areas in which the company conducts its operations. All forward-looking statements included in this press release are based on information available at the time of the release, and the Company assumes no obligation to update any forward-looking statement.

Contact:Chris Courtney/Rick McCarty
Phone:(209) 848-2265

Oak Valley Bancorp
Financial Highlights (unaudited)
($ in thousands, except per share)2nd Quarter1st Quarter4th Quarter3rd Quarter2nd Quarter
Selected Quarterly Operating Data:20232023202220222022
 Net interest income$19,407 $19,543 $19,113 $16,772 $13,233 
 (Reversal of) provision for credit losses -  (460) (1,550) 200  - 
 Non-interest income 1,655  1,655  1,421  1,611  1,371 
 Non-interest expense 10,062  9,757  9,611  9,370  9,205 
 Net income before income taxes 11,000  11,901  12,473  8,813  5,399 
 Provision for income taxes 2,596  2,676  2,998  2,013  1,141 
 Net income$8,404 $9,225 $9,475 $6,800 $4,258 
 Earnings per common share - basic$1.03 $1.13 $1.16 $0.83 $0.52 
 Earnings per common share - diluted$1.02 $1.12 $1.15 $0.83 $0.52 
 Dividends paid per common share$- $0.16 $- $0.15 $- 
 Return on average common equity 23.48% 28.36% 33.37% 21.96% 13.40%
 Return on average assets 1.79% 1.93% 1.90% 1.35% 0.88%
 Net interest margin (1) 4.45% 4.39% 4.09% 3.61% 2.98%
 Efficiency ratio (2) 46.31% 46.31% 45.49% 48.14% 59.68%
Capital - Period End     
 Book value per common share$17.76 $17.08 $15.33 $12.86 $14.38 
Credit Quality - Period End     
 Nonperforming assets/ total assets 0.00% 0.00% 0.00% 0.00% 0.00%
 Loan loss reserve/ gross loans 0.99% 1.01% 1.03% 1.21% 1.19%
Period End Balance Sheet     
($ in thousands)     
 Total assets$1,861,713 $1,940,674 $1,968,346 $1,962,470 $1,991,235 
 Gross loans 950,488  926,820  915,758  912,235  907,627 
 Nonperforming assets -  -  -  -  - 
 Allowance for credit losses 9,411  9,383  9,468  10,997  10,785 
 Deposits 1,682,378  1,769,176  1,814,297  1,830,882  1,852,502 
 Common equity 147,122  141,470  126,627  106,188  118,698 
Non-Financial Data     
 Full-time equivalent staff 213  206  198  209  209 
 Number of banking offices 18  18  18  17  17 
Common Shares outstanding     
 Period end 8,281,661  8,281,661  8,257,894  8,258,794  8,254,574 
 Period average - basic 8,195,270  8,182,737  8,175,871  8,172,836  8,170,291 
 Period average - diluted 8,227,218  8,226,991  8,213,891  8,206,342  8,201,367 
Market Ratios     
 Stock Price$25.19 $23.66 $22.65 $17.87 $17.20 
 Price/Earnings 6.12  5.17  4.93  5.41  8.23 
 Price/Book 1.42  1.39  1.48  1.39  1.20 
(1)Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 21%.
(2)Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 21%.
 A marginal federal/state combined tax rate of 29.56%, was used for applicable revenue.


($ in thousands, except per share)  
 Net interest income$38,950 $24,191  
 Reversal of provision for credit losses (460) -  
 Non-interest income 3,310  2,539  
 Non-interest expense 19,819  18,327  
 Net income before income taxes 22,901  8,403  
 Provision for income taxes 5,272  1,776  
 Net income$17,629 $6,627  
 Earnings per share - basic$2.15 $0.81  
 Earnings per share - diluted$2.14 $0.81  
 Dividends paid per share$0.16 $0.15  
 Return on average equity 25.80% 9.98% 
 Return on average assets 1.86% 0.69% 
 Net interest margin (1) 4.42% 2.75% 
 Efficiency ratio (2) 46.31% 65.12% 
Capital - Period End  
 Book value per share$17.76 $14.38  
Credit Quality - Period End  
 Nonperforming assets/ total assets 0.00% 0.00% 
 Loan loss reserve/ gross loans 0.99% 1.19% 
Period End Balance Sheet  
($ in thousands)  
 Total assets$1,861,713 $1,991,235  
 Gross loans 950,488  907,627  
 Nonperforming assets -  -  
 Allowance for credit losses 9,411  10,785  
 Deposits 1,682,378  1,852,502  
 Stockholders' equity 147,122  118,698  
Non-Financial Data  
 Full-time equivalent staff 213  209  
 Number of banking offices 18  17  
Common Shares outstanding  
 Period end 8,281,661  8,254,574  
 Period average - basic 8,189,038  8,164,173  
 Period average - diluted 8,227,105  8,199,333  
Market Ratios  
 Stock Price$25.19 $17.20  
 Price/Earnings 5.80  10.51  
 Price/Book 1.42  1.20  
(1)Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 21%.
(2)Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 21%.
 A marginal federal/state combined tax rate of 29.56%, was used for applicable revenue.