Oak Valley Bancorp Reports 2nd Quarter Results

OAKDALE, CA--(Marketwired - Jul 16, 2014) - Oak Valley Bancorp (NASDAQ: OVLY), the bank holding company for Oak Valley Community Bank and Eastern Sierra Community Bank, recently reported consolidated financial results. For the three months ended June 30, 2014, consolidated net income available to common shareholders was $2,537,000, or $0.32 per diluted common share. This compared to consolidated net income available to common shareholders of $1,374,000, or $0.18 per diluted common share for the same period a year ago.

Total assets were $678.3 million at June 30, 2014, an increase of $34.1 million, or 5.3%, from June 30, 2013. The Company's total deposits were $603.0 million as of June 30, 2014, an increase of $25.8 million, or 4.5% over June 30, 2013. Gross loans increased to $435.7 million at June 30, 2014, an increase of $45.0 million, or 11.5% from June 30, 2013.

Net interest income increased $151,000 or 2.5% to $6.2 million for the three months ended June 30, 2014, compared to $6.0 million for the same period last year. The increase is driven primarily by the increase in loan volume, as the interest rate environment continues to compress loan and investment yields. The Company's net interest margin for the three months ended June 30, 2014 was 4.07%, compared to 4.18% for the same period last year.

In addition to income from normal operations, during the quarter, the Company also reached a settlement of $2.92 million on a previously written down asset, which ultimately led to a net recovery of $1.88 million. The entire $1.88 million was recognized in income through a credit to the loan loss provision. 

"We are very pleased to report another solid operational performance for the quarter. Despite continued margin pressure, the efforts of our relationship management teams are producing results that are fueling earnings," stated Chris Courtney, President and CEO of the Company and the Bank. "We acknowledge the tremendous impact of the recovery the Bank recorded during the quarter, yet we are equally energized by the loan growth we've experienced and the underlying momentum we seem to be building within the local business community," Courtney concluded.

Non-interest expense for the three month and six month periods ended June 30, 2014 totaled $5.0 million and $9.9 million, respectively, an increase over the $4.7 million and $9.4 million for the comparable periods in 2013. This increase corresponds to growth in full time equivalent staff from 134 to 144. Deposit servicing costs associated with deposit growth and transaction activity have also increased. 

Non-performing assets as of June 30, 2014 were $5.1 million, or 0.75% of total assets, as compared to $4.2 million, or 0.65% at June 30, 2013. The increase is the net result of the Bank placing one additional loan relationship on non-accrual status during the first quarter of 2014 and receiving the remaining principal payment from the aforementioned loan settlement. 

The recovery resulted in a reversal of provision for loan losses of $1.88 million for the quarter ended June 30, 2014, as compared to a provision of $100,000 for the same period of the previous year. The ratio of loan loss reserves to gross loans decreased to 1.74% as of June 30, 2014, compared to 1.94% at June 30, 2013.

The Company recently announced the payment of a cash dividend of $0.065 per share of common stock to its shareholders of record at the close of business on July 14, 2014. In aggregate, the distribution will amount to approximately $524,000. This is the second dividend payment made by the Company in 2014.

The Company currently operates through 14 branches in Oakdale, Sonora, Turlock, Stockton, Patterson, Ripon, Escalon, Manteca, three branches in Modesto, and three branches in their Eastern Sierra Division, which includes Bridgeport, Mammoth Lakes, and Bishop. The Company also recently announced plans to open a branch in Tracy later this summer.

For more information, please 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.

Oak Valley Bancorp
Financial Highlights (unaudited)
($ in thousands, except per share)
Selected Quarterly Operating Data:			2nd Quarter 2014				1st Quarter 2014				4th Quarter 2013				3rd Quarter 2013				2nd Quarter 2013
	Net interest income		$	6,175			$	6,104			$	6,372			$	6,030			$	6,024
	Provision for loan losses			(1,877	)			-				-				100				100
	Non-interest income			927				810				812				866				818
	Non-interest expense			4,989				4,881				4,668				4,619				4,734
	Net income before income taxes			3,990				2,033				2,516				2,177				2,008
	Provision for income taxes			1,453				625				809				672				634
	Net income available to common shareholders			2,537				1,408				1,707				1,505				1,374
	Earnings per common share - basic		$	0.32			$	0.18			$	0.22			$	0.19			$	0.18
	Earnings per common share - diluted		$	0.32			$	0.18			$	0.22			$	0.19			$	0.18
	Dividends paid per common share		$	-			$	0.10			$	-			$	-			$	-
	Return on average common equity			14.53	%			8.59	%			10.47	%			9.45	%			8.48	%
	Return on average assets			1.50	%			0.84	%			1.01	%			0.92	%			0.86	%
	Net interest margin (1)			4.07	%			4.04	%			4.19	%			4.12	%			4.18	%
	Efficiency ratio (2)			67.55	%			68.29	%			63.05	%			64.65	%			67.17	%
Capital - Period End
	Book value per common share		$	8.84			$	8.40			$	8.14			$	7.99			$	8.01
Credit Quality - Period End
	Nonperforming assets/ total assets			0.75	%			0.90	%			0.48	%			0.68	%			0.65	%
	Loan loss reserve/ gross loans			1.74	%			1.80	%			1.83	%			1.85	%			1.94	%
Period End Balance Sheet
($ in thousands)
	Total assets		$	678,319			$	687,591			$	671,853			$	659,192			$	644,230
	Gross loans			435,671				422,510				419,438				413,856				390,647
	Nonperforming assets			5,065				6,164				3,256				4,495				4,189
	Allowance for loan losses			7,602				7,615				7,659				7,669				7,570
	Deposits			602,978				615,997				602,633				591,642				577,129
	Common equity			71,369				67,824				64,517				63,379				63,457
Non-Financial Data
	Full-time equivalent staff			144				142				136				135				134
	Number of banking offices			14				14				14				14				14
Common Shares outstanding
	Period end			8,075,855				8,071,355				7,929,730				7,929,730				7,924,730
	Period average - basic			7,953,499				7,878,152				7,803,247				7,802,705				7,802,012
	Period average - diluted			8,001,815				7,941,456				7,859,380				7,851,157				7,842,964
Market Ratios
	Stock Price		$	9.93			$	9.41			$	8.37			$	7.96			$	7.67
	Price/Earnings			7.76				12.98				9.64				10.40				10.86
	Price/Book			1.12				1.12				1.03				1.00				0.96

			SIX MONTHS ENDED JUNE 30,
			2014				2013
	Net interest income		$	12,279			$	11,873
	Provision for loan losses			(1,877	)			200
	Non-interest income			1,737				1,603
	Non-interest expense			9,870				9,373
	Net income before income taxes			6,023				3,903
	Provision for income taxes			2,078				1,229
	Net income			3,945				2,674
	Preferred stock dividends			-				(68	)
	Net income available to common shareholders		$	3,945			$	2,606
	Earnings per common share - basic		$	0.50			$	0.33
	Earnings per common share - diluted		$	0.49			$	0.33
	Dividends paid per common share		$	0.10			$	-
	Return on average common equity			11.65	%			8.16	%
	Return on average assets			1.17	%			0.84	%
	Net interest margin (1)			4.06	%			4.11	%
	Efficiency ratio (2)			67.91	%			67.55	%
Capital - Period End
	Book value per common share		$	8.84			$	8.01
Credit Quality - Period End
	Nonperforming assets/ total assets			0.75	%			0.65	%
	Loan loss reserve/ gross loans			1.74	%			1.94	%
Period End Balance Sheet
($ in thousands)
	Total assets		$	678,319			$	644,230
	Gross loans			435,671				390,647
	Nonperforming assets			5,065				4,189
	Allowance for loan losses			7,602				7,570
	Deposits			602,978				577,129
	Common equity			71,369				63,457
Non-Financial Data
	Full-time equivalent staff			144				134
	Number of banking offices			14				14
Common Shares outstanding
	Period end			8,075,855				7,924,730
	Period average - basic			7,916,034				7,790,238
	Period average - diluted			7,971,802				7,836,736
Market Ratios
	Stock Price		$	9.93			$	7.67
	Price/Earnings			9.88				11.37
	Price/Book			1.12				0.96
(1) Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 34%.
(2) Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 34%, and a marginal federal/state combined tax rate of 41.15% for applicable revenue.