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

Rhea-AI Summary

Oak Valley Bancorp (NASDAQ: OVLY) reported unaudited consolidated financial results for the three and six months ended June 30, 2023. The company's net income was $8,404,000 for Q2, with an EPS of $1.02, compared to $9,225,000 and $1.12 EPS for the prior quarter. For the six months ended June 30, 2023, net income was $17,629,000, or $2.14 EPS, compared to $6,627,000 or $0.81 EPS for the same period of 2022. The increase in net income was attributed to net interest income increases, triggered by FOMC rate hikes, and growth of the investment and loan portfolios. Non-interest income and expenses also showed positive trends. Total assets decreased, while gross loans and total deposits increased. The Company also declared a cash dividend of $0.16 per share of common stock.

Positive

• Positive trends in net interest income, non-interest income, and expenses
• Net interest margin expansion due to FOMC rate increases
• Increase in gross loans and total deposits
• Declaration of cash dividend of $0.16 per share of common stock

Negative

• None.

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
	www.ovcb.com

Oak Valley Bancorp
Financial Highlights (unaudited)
($ in thousands, except per share)		2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
Selected Quarterly Operating Data:		2023			2023			2022			2022			2022
	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.

 

		SIX MONTHS ENDED JUNE 30,
Profitability		2023			2022
($ 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.

FAQ

What were Oak Valley Bancorp's net income and EPS for the second quarter of 2023?

The net income for the second quarter of 2023 was $8,404,000, with an EPS of $1.02.

What led to the increase in net income for Oak Valley Bancorp?

The increase in net income was attributed to net interest income increases, triggered by FOMC rate hikes, and growth of the investment and loan portfolios.

What was the total assets, gross loans, and total deposits for Oak Valley Bancorp as of June 30, 2023?

Total assets were $1.86 billion, gross loans were $950.5 million, and total deposits were $1.68 billion as of June 30, 2023.

What dividend did Oak Valley Bancorp declare for its shareholders?

Oak Valley Bancorp declared a cash dividend of $0.16 per share of common stock.