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, 2022,
consolidated net income was $4,258,000, or $0.52 per diluted share
(EPS), as compared to $2,369,000, or $0.29 EPS, for the prior
quarter and $3,960,000, or $0.48 EPS, for the same period a year
ago. Consolidated net income for the six months ended June 30, 2022
was $6,627,000, or $0.81 EPS, compared to $8,316,000 or $1.02 EPS
for the same period of 2021. The increase in second quarter net
income compared to the prior quarters was due to an increase in net
interest income driven by strong growth in our loan and investment
portfolios, combined with higher yields on earning assets. The
decrease in year-to-date results is attributable to a reduction in
Paycheck Protection Program (“PPP”) loan interest and fee income
from $4,793,000 in 2021 to $749,000 in 2022.
Net interest income for the three months ended
June 30, 2022 was $13,233,000, compared to $10,958,000 in the prior
quarter, and $11,988,000 in the same period a year ago. The
increase over the prior quarters is attributable to $48.9 million
and $152.3 million in loan and investment portfolio growth,
respectively, during the second quarter. Additionally, the recent
FOMC rate hikes have increased yields on all earning assets, while
cost of funds have remained at historic lows. These increases were
offset in part by the decrease in PPP loan interest and fees, as
outstanding balances have been paid down to $9.5 million as of June
30, 2022, a year-over-year reduction of $141.9 million due to SBA
forgiveness payments.
Net interest margin for the three months ended
June 30, 2022 was 2.98%, compared to 2.51% for the prior quarter
and 3.09% for the same period last year. The interest margin
expansion compared to the prior period was a result of deploying
cash balances into higher yielding investments and loans, and the
yield increase on all earning-assets as discussed above. Margin
compression from the same period a year ago was attributable to the
increase in low-yielding cash balances driven by deposit growth and
PPP loan forgiveness payments, and lower PPP interest and fees.
“We were able to execute on our strategy of
deploying excess cash into investments and loans at a time when the
yield curve had steepened, providing a substantial boost to our net
interest margin, the positive impact of which will not be fully
recognized until the third quarter. Cash balances still remain
relatively high as we continue to seek similar investment
opportunities,” stated Rick McCarty, President and Chief Operating
Officer.
Non-interest income was $1,371,000 for the
quarter ended June 30, 2022, compared to $1,168,000 for the prior
quarter and $1,405,000 for the same period last year. The increase
in the second quarter compared to the prior period was mainly due
to increases in investment advisory fees and service charges on
deposit accounts. The slight decrease from the same period a year
ago was due to fair value changes on one equity security.
Non-interest expense totaled $9,205,000 for the
quarter ended June 30, 2022, compared to $9,122,000 in the prior
quarter and $8,215,000 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. The increase compared to
the same period a year ago also includes a decrease in deferred
costs associated with funded PPP loans, which are recorded against
salary expense.
Total assets were $1.99 billion at June 30,
2022, an increase of $45.2 million and $226.7 million over March
31, 2022 and June 30, 2021, respectively. Gross loans were $907.6
million at June 30, 2022, an increase of $48.9 million over March
31, 2022 and a decrease of $36.3 million from June 30, 2021. Gross
loans were impacted by PPP loan balance decreases of $8.2 million
and $141.9 million, during the second quarter and trailing twelve
months, respectively, due to SBA forgiveness payments. The
Company’s total deposits were $1.85 billion as of June 30, 2022, an
increase of $53.2 million and $238.0 million from March 31, 2022
and June 30, 2021, respectively.
“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. As we stand on the verge of surpassing the
$2.0 billion asset mark, we are reminded that our clients’ strength
and sustainability are the ultimate keys to our success,” Courtney
concluded.
Non-performing assets (“NPA”) remained at zero
as of June 30, 2022 and throughout 2022, as compared to $362,000 or
0.02% of total assets at June 30, 2021. The decrease compared to
the same period a year ago was due to the full payment of one
non-accrual loan.
The allowance for loan losses to gross loans
decreased to 1.19% at June 30, 2022, compared to 1.25% at March 31,
2022 and 1.20% at June 30, 2021 due to the increase in outstanding
loans, excluding PPP, which do not require a loan loss reserve as
they are guaranteed by the federal government through the SBA
program. The Company did not record a provision for loan losses
during the second or first quarter of 2022 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 19, 2022, meeting declared the payment of a cash
dividend of $0.15 per share of common stock to its shareholders of
record at the close of business on August 1, 2022. The payment date
will be August 12, 2022 and will amount to approximately
$1,238,000. This is the second dividend payment made by the Company
in 2022.
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 is expected to open as a full-service branch
in the second half of the 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) |
2nd Quarter |
1st Quarter |
4th Quarter |
3rd Quarter |
2nd Quarter |
Selected Quarterly Operating Data: |
2022 |
2022 |
2021 |
2021 |
2021 |
|
|
|
|
|
|
|
|
Net interest income |
$ |
13,233 |
|
$ |
10,958 |
|
$ |
11,309 |
|
$ |
13,296 |
|
$ |
11,988 |
|
|
(Reversal of) provision for loan losses |
|
- |
|
|
- |
|
|
(635 |
) |
|
- |
|
|
- |
|
|
Non-interest income |
|
1,371 |
|
|
1,168 |
|
|
1,542 |
|
|
1,303 |
|
|
1,405 |
|
|
Non-interest expense |
|
9,205 |
|
|
9,122 |
|
|
8,877 |
|
|
8,407 |
|
|
8,215 |
|
|
Net income before income taxes |
|
5,399 |
|
|
3,004 |
|
|
4,609 |
|
|
6,192 |
|
|
5,178 |
|
|
Provision for income taxes |
|
1,141 |
|
|
635 |
|
|
1,143 |
|
|
1,638 |
|
|
1,218 |
|
|
Net income |
$ |
4,258 |
|
$ |
2,369 |
|
$ |
3,466 |
|
$ |
4,554 |
|
$ |
3,960 |
|
|
|
|
|
|
|
|
|
Earnings per common share - basic |
$ |
0.52 |
|
$ |
0.29 |
|
$ |
0.43 |
|
$ |
0.56 |
|
$ |
0.49 |
|
|
Earnings per common share - diluted |
$ |
0.52 |
|
$ |
0.29 |
|
$ |
0.42 |
|
$ |
0.56 |
|
$ |
0.48 |
|
|
Dividends paid per common share |
$ |
- |
|
$ |
0.150 |
|
$ |
- |
|
$ |
0.145 |
|
$ |
- |
|
|
Return on average common equity |
|
13.40 |
% |
|
6.84 |
% |
|
9.75 |
% |
|
13.01 |
% |
|
11.77 |
% |
|
Return on average assets |
|
0.88 |
% |
|
0.50 |
% |
|
0.72 |
% |
|
1.00 |
% |
|
0.93 |
% |
|
Net interest margin (1) |
|
2.98 |
% |
|
2.51 |
% |
|
2.55 |
% |
|
3.17 |
% |
|
3.09 |
% |
|
Efficiency ratio (2) |
|
59.68 |
% |
|
71.70 |
% |
|
67.45 |
% |
|
55.94 |
% |
|
59.55 |
% |
|
|
|
|
|
|
|
Capital - Period End |
|
|
|
|
|
|
Book value per common share |
$ |
14.38 |
|
$ |
15.95 |
|
$ |
17.31 |
|
$ |
16.97 |
|
$ |
16.60 |
|
|
|
|
|
|
|
|
Credit Quality - Period End |
|
|
|
|
|
|
Nonperforming assets/ total assets |
|
0.00 |
% |
|
0.00 |
% |
|
0.00 |
% |
|
0.00 |
% |
|
0.02 |
% |
|
Loan loss reserve/ gross loans |
|
1.19 |
% |
|
1.25 |
% |
|
1.25 |
% |
|
1.30 |
% |
|
1.20 |
% |
|
|
|
|
|
|
|
Period End Balance Sheet |
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
Total assets |
$ |
1,991,235 |
|
$ |
1,946,019 |
|
$ |
1,964,478 |
|
$ |
1,856,759 |
|
$ |
1,764,464 |
|
|
Gross loans |
|
907,627 |
|
|
858,763 |
|
|
860,037 |
|
|
872,110 |
|
|
943,894 |
|
|
Nonperforming assets |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
362 |
|
|
Allowance for loan losses |
|
10,785 |
|
|
10,762 |
|
|
10,738 |
|
|
11,351 |
|
|
11,327 |
|
|
Deposits |
|
1,852,502 |
|
|
1,799,305 |
|
|
1,806,966 |
|
|
1,701,180 |
|
|
1,614,480 |
|
|
Common equity |
|
118,698 |
|
|
131,649 |
|
|
142,612 |
|
|
139,788 |
|
|
136,620 |
|
|
|
|
|
|
|
|
Non-Financial Data |
|
|
|
|
|
|
Full-time equivalent staff |
|
209 |
|
|
206 |
|
|
205 |
|
|
196 |
|
|
188 |
|
|
Number of banking offices |
|
17 |
|
|
17 |
|
|
17 |
|
|
17 |
|
|
17 |
|
|
|
|
|
|
|
|
Common Shares outstanding |
|
|
|
|
|
|
Period end |
|
8,254,574 |
|
|
8,255,601 |
|
|
8,239,099 |
|
|
8,239,099 |
|
|
8,231,983 |
|
|
Period average - basic |
|
8,170,291 |
|
|
8,157,987 |
|
|
8,151,250 |
|
|
8,148,277 |
|
|
8,145,538 |
|
|
Period average - diluted |
|
8,201,367 |
|
|
8,197,275 |
|
|
8,188,003 |
|
|
8,182,780 |
|
|
8,177,714 |
|
|
|
|
|
|
|
|
Market Ratios |
|
|
|
|
|
|
Stock Price |
$ |
17.20 |
|
$ |
18.45 |
|
$ |
17.40 |
|
$ |
17.54 |
|
$ |
18.17 |
|
|
Price/Earnings |
|
8.23 |
|
|
15.67 |
|
|
10.31 |
|
|
7.91 |
|
|
9.32 |
|
|
Price/Book |
|
1.20 |
|
|
1.16 |
|
|
1.01 |
|
|
1.03 |
|
|
1.09 |
|
|
|
|
|
|
|
|
(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 |
2022 |
2021 |
|
|
|
($ in thousands, except per share) |
|
|
|
|
|
|
Net interest income |
$ |
24,191 |
|
$ |
24,230 |
|
|
|
|
|
Provision for loan losses |
|
- |
|
|
- |
|
|
|
|
|
Non-interest income |
|
2,539 |
|
|
2,580 |
|
|
|
|
|
Non-interest expense |
|
18,327 |
|
|
15,935 |
|
|
|
|
|
Net income before income taxes |
|
8,403 |
|
|
10,875 |
|
|
|
|
|
Provision for income taxes |
|
1,776 |
|
|
2,559 |
|
|
|
|
|
Net income |
$ |
6,627 |
|
$ |
8,316 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic |
$ |
0.81 |
|
$ |
1.02 |
|
|
|
|
|
Earnings per share - diluted |
$ |
0.81 |
|
$ |
1.02 |
|
|
|
|
|
Dividends paid per share |
$ |
0.150 |
|
$ |
0.145 |
|
|
|
|
|
Return on average equity |
|
9.98 |
% |
|
12.59 |
% |
|
|
|
|
Return on average assets |
|
0.69 |
% |
|
1.02 |
% |
|
|
|
|
Net interest margin (1) |
|
2.75 |
% |
|
3.26 |
% |
|
|
|
|
Efficiency ratio (2) |
|
65.12 |
% |
|
57.51 |
% |
|
|
|
|
|
|
|
|
|
|
Capital - Period End |
|
|
|
|
|
|
Book value per share |
$ |
14.38 |
|
$ |
16.60 |
|
|
|
|
|
|
|
|
|
|
|
Credit Quality - Period End |
|
|
|
|
|
|
Nonperforming assets/ total assets |
|
0.00 |
% |
|
0.02 |
% |
|
|
|
|
Loan loss reserve/ gross loans |
|
1.19 |
% |
|
1.20 |
% |
|
|
|
|
|
|
|
|
|
|
Period End Balance Sheet |
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
Total assets |
$ |
1,991,235 |
|
$ |
1,764,464 |
|
|
|
|
|
Gross loans |
|
907,627 |
|
|
943,894 |
|
|
|
|
|
Nonperforming assets |
|
- |
|
|
362 |
|
|
|
|
|
Allowance for loan losses |
|
10,785 |
|
|
11,327 |
|
|
|
|
|
Deposits |
|
1,852,502 |
|
|
1,614,480 |
|
|
|
|
|
Stockholders' equity |
|
118,698 |
|
|
136,620 |
|
|
|
|
|
|
|
|
|
|
|
Non-Financial Data |
|
|
|
|
|
|
Full-time equivalent staff |
|
209 |
|
|
188 |
|
|
|
|
|
Number of banking offices |
|
17 |
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
Common Shares outstanding |
|
|
|
|
|
|
Period end |
|
8,254,574 |
|
|
8,231,983 |
|
|
|
|
|
Period average - basic |
|
8,164,173 |
|
|
8,140,214 |
|
|
|
|
|
Period average - diluted |
|
8,199,333 |
|
|
8,172,153 |
|
|
|
|
|
|
|
|
|
|
|
Market Ratios |
|
|
|
|
|
|
Stock Price |
$ |
17.20 |
|
$ |
18.17 |
|
|
|
|
|
Price/Earnings |
|
10.51 |
|
|
8.82 |
|
|
|
|
|
Price/Book |
|
1.20 |
|
|
1.09 |
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
|
|
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