Oak Valley Bancorp Reports 3rd Quarter Results

Rhea-AI Summary

Oak Valley Bancorp (NASDAQ: OVLY) reported a strong financial performance for Q3 2022, with consolidated net income reaching $6.8 million or $0.83 per diluted share, up from $4.3 million or $0.52 in the previous quarter. Year-to-date earnings reached $13.4 million, a 4.3% increase from $12.9 million in the prior year. Net interest income rose to $16.8 million, driven by higher yields from FOMC rate hikes and growth in loans and investments. Total assets stood at $1.96 billion, while non-performing assets remained at zero.

Positive

• Net income increased by $2.5 million quarter-over-quarter.
• Year-to-date earnings rose to $13.4 million, up 4.3% year-over-year.
• Net interest income surged to $16.8 million due to higher yields.
• Loan portfolio grew by $52 million year-to-date.

Negative

• Total deposits decreased by $21.6 million from the previous quarter.
• Non-interest expense increased to $9.37 million, up from $9.20 million in the prior quarter.

OAKDALE, Calif., Oct. 20, 2022 (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 September 30, 2022 consolidated net income was $6,800,000, or $0.83 per diluted share (EPS), compared to $4,258,000, or $0.52 EPS for the prior quarter and $4,554,000, or $0.56 EPS for the same period of 2021. Consolidated net income for the nine months ended September 30, 2022 totaled $13,427,000, or $1.64 EPS, representing an increase of $557,000 or 4.3%, compared to $12,870,000, or $1.57 EPS for the nine months ended September 30, 2021. The year-to-date increase in earnings includes a reduction in Paycheck Protection Program (“PPP”) loan interest and fee income from $7,472,000 in 2021 to $881,000 in 2022.

Net interest income was $16,772,000 for the three months ended September 30, 2022, compared to $13,233,000 for the prior quarter and $13,296,000 for the same period of 2021. The increase over the prior quarters is attributable primarily to increased yields on all earning assets resulting from recent FOMC rate hikes. In addition, the loan and investment security portfolios grew by $4.6 million and $34.3 million, respectively, during the third quarter. These increases were offset in part by the decrease in PPP loan interest and fees, as outstanding balances have been paid down to $5.0 million as of September 30, 2022, a year-over-year reduction of $61.5 million due to SBA forgiveness payments.

The net interest margin for the three months ended September 30, 2022 was 3.61%, compared to 2.98% for the prior quarter, and 3.17% for the same period of 2021. The interest margin expansion compared to the prior periods was the result of deploying cash balances into higher yielding investments and loans, and the positive impact of FOMC rate hikes on the yields of our earning assets.

“As rates have increased across the yield curve, we have moved excess cash into higher yielding investments and loans which has significantly impacted our net interest margin. Year to date, the book value of our investment portfolio has grown by $315 million, and our loan portfolio is up approximately $52 million, resulting in a tremendous boost to earnings this year,” stated Rick McCarty, President and Chief Operating Officer.

Non-interest income for the three months ended September 30, 2022 totaled $1,611,000, compared to $1,371,000 during the prior quarter, and $1,303,000 for the same period of 2021. The increases over the prior periods were mainly due to a gain of $274,000 from market value changes on a limited partnership equity investment.

Non-interest expense for the three months ended September 30, 2022 totaled $9,370,000, compared to $9,205,000 during the prior quarter, and $8,407,000 for the same period of 2021. The third 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 $1.96 billion as of September 30, 2022, a decrease of $28.8 million over June 30, 2022 and an increase of $105.7 million over September 30, 2021. Gross loans were $912.2 million as of September 30, 2022, an increase of $4.6 million over June 30, 2022, and $40.1 million over September 30, 2021. Gross loans were impacted by PPP loan balance decreases of $4.5 million and $61.5 million, during the third quarter and trailing twelve months, respectively, due to SBA forgiveness payments. Total deposits were $1.83 billion as of September 30, 2022, a decrease of $21.6 million over June 30, 2022, and an increase of $129.7 million over September 30, 2021.

“We remain steadfast in our efforts to broaden relationships by assessing the long-term needs and preferences of our clients. We strive to support them in a consultative manner which provides value and allows us to champion the pursuit of their financial goals,” stated Chris Courtney, CEO. “As we expand our footprint, we intentionally pursue experienced banking professionals who share in our appreciation of this style of relationship building,” Courtney concluded.

Non-performing assets as of September 30, 2022 remained at zero, as they were the prior period and for the same period a year ago.

The allowance for loan losses to gross loans was 1.21% at September 30, 2022, compared to 1.19% at June 30, 2022 and 1.30% at September 30, 2021. The increase during the quarter was due to the $200,000 loan loss provision resulting from loan growth and other factors dictated by our internal model.

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 17 conveniently located branches: Oakdale, Turlock, Stockton, Patterson, Ripon, Escalon, Manteca, Tracy, Sacramento, 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 received regulatory approval to open a new office in Roseville, which is currently operating as a Loan Production Office and will open as a full-service branch later this year.

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)		3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter
Selected Quarterly Operating Data:			2022			2022			2022			2021			2021
	Net interest income	$	16,772		$	13,233		$	10,958		$	11,309		$	13,296
	(Reversal of) provision for loan losses		200			-			-			(635	)		-
	Non-interest income		1,611			1,371			1,168			1,542			1,303
	Non-interest expense		9,370			9,205			9,122			8,877			8,407
	Net income before income taxes		8,813			5,399			3,004			4,609			6,192
	Provision for income taxes		2,013			1,141			635			1,143			1,638
	Net income	$	6,800		$	4,258		$	2,369		$	3,466		$	4,554
	Earnings per common share - basic	$	0.83		$	0.52		$	0.29		$	0.43		$	0.56
	Earnings per common share - diluted	$	0.83		$	0.52		$	0.29		$	0.42		$	0.56
	Dividends paid per common share	$	0.150		$	-		$	0.150		$	-		$	0.145
	Return on average common equity		21.96	%		13.40	%		6.84	%		9.75	%		13.01	%
	Return on average assets		1.35	%		0.88	%		0.50	%		0.72	%		1.00	%
	Net interest margin (1)		3.61	%		2.98	%		2.51	%		2.55	%		3.17	%
	Efficiency ratio (2)		48.14	%		59.68	%		71.70	%		67.45	%		55.94	%
Capital - Period End
	Book value per common share	$	12.86		$	14.38		$	15.95		$	17.31		$	16.97
Credit Quality - Period End
	Nonperforming assets/ total assets		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
	Loan loss reserve/ gross loans		1.21	%		1.19	%		1.25	%		1.25	%		1.30	%
Period End Balance Sheet
($ in thousands)
	Total assets	$	1,962,470		$	1,991,235		$	1,946,019		$	1,964,478		$	1,856,759
	Gross loans		912,235			907,627			858,763			860,037			872,110
	Nonperforming assets		-			-			-			-			-
	Allowance for loan losses		10,997			10,785			10,762			10,738			11,351
	Deposits		1,830,882			1,852,502			1,799,305			1,806,966			1,701,180
	Common equity		106,188			118,698			131,649			142,612			139,788
Non-Financial Data
	Full-time equivalent staff		209			209			206			205			196
	Number of banking offices		17			17			17			17			17
Common Shares outstanding
	Period end		8,258,794			8,254,574			8,255,601			8,239,099			8,239,099
	Period average - basic		8,172,836			8,170,291			8,157,987			8,151,250			8,148,277
	Period average - diluted		8,206,342			8,201,367			8,197,275			8,188,003			8,182,780
Market Ratios
	Stock Price	$	17.87		$	17.20		$	18.45		$	17.40		$	17.54
	Price/Earnings		5.41			8.23			15.67			10.31			7.91
	Price/Book		1.39			1.20			1.16			1.01			1.03
(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.
		NINE MONTHS ENDED SEPTEMBER 30,
Profitability			2022			2021
($ in thousands, except per share)
	Net interest income	$	40,963		$	37,526
	Provision for loan losses		200			-
	Non-interest income		4,150			3,883
	Non-interest expense		27,697			24,342
	Net income before income taxes		17,216			17,067
	Provision for income taxes		3,789			4,197
	Net income	$	13,427		$	12,870
	Earnings per share - basic	$	1.64		$	1.58
	Earnings per share - diluted	$	1.64		$	1.57
	Dividends paid per share	$	0.300		$	0.290
	Return on average equity		13.79	%		12.74	%
	Return on average assets		0.92	%		1.01	%
	Net interest margin (1)		3.05	%		3.22	%
	Efficiency ratio (2)		58.20	%		56.96	%
Capital - Period End
	Book value per share	$	12.86		$	16.97
Credit Quality - Period End
	Nonperforming assets/ total assets		0.00	%		0.00	%
	Loan loss reserve/ gross loans		1.21	%		1.30	%
Period End Balance Sheet
($ in thousands)
	Total assets	$	1,962,470		$	1,856,759
	Gross loans		912,235			872,110
	Nonperforming assets		-			-
	Allowance for loan losses		10,997			11,351
	Deposits		1,830,882			1,701,180
	Stockholders' equity		106,188			139,788
Non-Financial Data
	Full-time equivalent staff		209			196
	Number of banking offices		17			17
Common Shares outstanding
	Period end		8,258,794			8,239,099
	Period average - basic		8,167,093			8,142,931
	Period average - diluted		8,201,695			8,175,618
Market Ratios
	Stock Price	$	17.87		$	17.54
	Price/Earnings		8.13			8.30
	Price/Book		1.39			1.03
	(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 earnings for Q3 2022?

Oak Valley Bancorp reported a net income of $6.8 million or $0.83 EPS for Q3 2022.

How much did net interest income increase for Oak Valley Bancorp?

Net interest income increased to $16.8 million for Q3 2022.

What is the current status of Oak Valley Bancorp's non-performing assets?

Non-performing assets remained at zero as of September 30, 2022.

What was the total asset value for Oak Valley Bancorp as of Q3 2022?

Total assets stood at $1.96 billion as of September 30, 2022.