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. |
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