Oak Valley Bancorp Reports 4th Quarter Results

OAKDALE, CA--(Marketwire - Jan 22, 2013) -  Oak Valley Bancorp (NASDAQ: OVLY), the bank holding company for Oak Valley Community Bank and Eastern Sierra Community Bank, recently reported financial results for the fiscal year ended December 31, 2012. Net income for 2012 totaled $5.8 million compared to $5.9 million for 2011. After adjustment for preferred stock dividends and accretion, net income available to common shareholders was $5.3 million, or $0.69 per diluted share, compared to net income of $4.7 million, or $0.61 per diluted common share, in 2011. This represents a 13.4% increase in net income available to common shareholders and marks record earnings for Oak Valley Bancorp. 

For the three months ended December 31, 2012, Oak Valley Bancorp reported net income of $1.49 million. After adjustment for preferred stock dividends and accretion, net income available to common shareholders was $1.41 million, or $0.18 per diluted share, representing a 5.7% increase in net income available to common shareholders when compared to the three months ended December 31, 2011.

Total assets grew to $660.5 million as of December 31, 2012, which was an increase of $48.3 million, or 7.9% over the prior year. Deposits increased to $587.0 million, which was an increase of $50.8 million, or 9.5% over the prior year. Gross loans at year end totaled $391.0 million, reflecting a decrease of $5.2 million, or 1.3%, from December 31, 2011. 

Non-performing assets totaled $6.9 million, or 1.05% of total assets at December 31, 2012, compared to $7.5 million, or 1.22% of total assets, at December 31, 2011. Charge-offs corresponding to updated valuations account for the decline in non-performing assets. 

The allowance for loan losses totaled 2.04% of gross loans at December 31, 2012 compared to 2.17% at December 31, 2011. The decrease in reserve ratio corresponds with the charge-offs on non-performing assets. The annual provision for loan losses of $1.2 million in 2012 was down from $1.5 million in 2011.

"The fundamentals of the Company remain strong, including the credit quality of the portfolio and continued deposit growth," commented Chris Courtney, President. "We are cautiously optimistic about loan growth opportunities in the coming year, as we begin to see signs of increased interest in commercial borrowing."

Net interest income of $24.8 million for the year ended December 31, 2012, decreased by $335,000, or 1.3%, from the prior year. This decrease comes from new loans boarding and maturing loans repricing in a low interest rate environment, causing downward pressure on yields. The Company's net interest margin was 4.52% for the year ended December 31, 2012, compared to 4.83% for the year ended December 31, 2011. Interest margin has also been affected by excess deposits being deployed into lower yielding securities and cash based investments. 

Non-interest income was $3.1 million for the year ended December 31, 2012, compared to $2.8 million the prior year. The increase primarily relates to growth in deposit related service charges and fee income generated from increased residential mortgage lending. 

Non-interest expense was $18.2 million for the year ended December 31, 2012, compared to $17.4 million for the prior year, an increase of $855,000, or 4.9%. This increase consists of costs associated with operating two additional branches for a full year, as well as costs related to servicing deposit growth across all branches. 

"We are pleased to report another record year for earnings," stated Ron Martin, CEO. "Our ability to perform with the best of our peers is a tribute to the relationship banking model and the character and capacity of our customers."

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.

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)		4th Quarter				3rd Quarter				2nd Quarter				1st Quarter				4th Quarter
Selected Quarterly Operating Data:		2012				2012				2012				2012				2011
	Net interest income	$	6,115			$	6,254			$	6,212			$	6,264			$	6,335
	Provision for loan losses		250				300				300				300				300
	Non-interest income		855				790				672				831				636
	Non-interest expense		4,513				4,527				4,612				4,597				4,259
	Income before income taxes		2,207				2,217				1,972				2,198				2,412
	Provision for income taxes		718				738				620				737				915
	Net income		1,489				1,479				1,352				1,461				1,497
	Preferred stock dividends and accretion		(84	)			(84	)			(114	)			(169	)			(168	)
	Net income available to common shareholders	$	1,405			$	1,395			$	1,238			$	1,292			$	1,329
	Earnings per common share - basic		0.18				0.18				0.16				0.17				0.17
	Earnings per common share - diluted		0.18				0.18				0.16				0.17				0.17
	Dividends declared per common share		-				-				-				-				-
	Return on average common equity		8.87	%			9.02	%			8.36	%			8.93	%			9.34	%
	Return on average assets		0.91	%			0.97	%			0.92	%			0.98	%			1.00	%
	Net interest margin (1)		4.15	%			4.57	%			4.73	%			4.67	%			4.70	%
	Efficiency ratio (1)		63.23	%			63.11	%			65.28	%			63.74	%			60.06	%
Capital - Period End
	Book value per share	$	7.99			$	7.85			$	7.63			$	7.37			$	7.37
Credit Quality - Period End
	Nonperforming assets/ total assets		1.05	%			1.05	%			1.20	%			1.12	%			1.22	%
	Loan loss reserve/ gross loans		2.04	%			2.05	%			2.05	%			1.98	%			2.17	%
Period End Balance Sheet
($ in thousands)
	Total assets	$	660,480			$	627,817			$	596,417			$	593,513			$	612,172
	Gross loans		390,986				388,714				390,515				392,584				396,202
	Nonperforming assets		6,923				6,611				7,185				6,656				7,477
	Allowance for loan losses		7,975				7,953				8,008				7,792				8,609
	Deposits		586,993				553,333				526,407				518,727				536,204
	Common equity		63,219				62,075				60,185				58,092				56,902
	Total capital (2)		69,969				68,825				66,935				71,592				70,402
Non-Financial Data
	Full-time equivalent staff		130				123				125				126				128
	Number of banking offices		14				14				14				14				14
Common Shares outstanding
	Period end		7,907,780				7,909,280				7,890,905				7,883,780				7,718,469
	Period average - basic		7,762,261				7,750,727				7,728,024				7,722,609				7,705,164
	Period average - diluted		7,793,523				7,778,146				7,750,952				7,743,941				7,737,248
Market Ratios
	Stock Price	$	7.45			$	7.49			$	6.96			$	7.39			$	6.75
	Price/Earnings		10.38				10.49				10.84				11.01				9.87
	Price/Book		0.93				0.95				0.91				1.00				0.92
(1) Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 34%.
(2) Includes $6.75 million in preferred stock issued to the U.S. Treasury under the SBLF Program.
Prior to 6/30/2012, the amount of preferred stock issued was $13.5 million.

			Year Ended December 31,
			2012				2011
	Net interest income		$	24,845			$	25,180
	Provision for loan losses			1,150				1,500
	Non-interest income			3,148				2,751
	Non-interest expense			18,249				17,394
	Income before income taxes			8,594				9,037
	Provision for income taxes			2,813				3,176
	Net income			5,781				5,861
	Preferred stock dividends and accretion			(452	)			(1,161	)
	Net income available to common shareholders		$	5,329			$	4,700
	Earnings per common share - basic			0.69				0.61
	Earnings per common share - diluted			0.69				0.61
	Dividends declared per common share			-				-
	Return on average common equity			8.80	%			8.67	%
	Return on average assets			0.95	%			1.02	%
	Net interest margin (1)			4.52	%			4.83	%
	Efficiency ratio (1)			63.83	%			61.28	%
Capital - Period End
	Book value per share		$	7.99			$	7.37
Credit Quality - Period End
	Nonperforming assets/ total assets			1.05	%			1.22	%
	Loan loss reserve/ gross loans			2.04	%			2.17	%
Period End Balance Sheet
($ in thousands)
	Total assets		$	660,480			$	612,172
	Gross loans			390,986				396,202
	Nonperforming assets			6,923				7,477
	Allowance for loan losses			7,975				8,609
	Deposits			586,993				536,204
	Common equity			63,219				56,902
	Total capital (2)			69,969				70,402
Non-Financial Data
	Full-time equivalent staff			130				128
	Number of banking offices			14				14
Common Shares outstanding
	Period end			7,907,780				7,718,469
	Period average - basic			7,740,990				7,708,853
	Period average - diluted			7,766,745				7,738,999
Market Ratios
	Stock Price		$	7.45			$	6.75
	Price/Earnings			10.85				11.07
	Price/Book			0.93				0.92
(1) Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 34%.
(2) Includes $6.75 million in preferred stock issued to the U.S. Treasury under the SBLF Program.
Prior to 6/30/2012, the amount of preferred stock issued was $13.5 million.