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Oak Valley Bancorp Reports Record 3rd Quarter Results

OAKDALE, Calif., Oct. 18, 2019 (GLOBE NEWSWIRE) -- Oak Valley Bancorp (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, 2019, consolidated net income was $3,231,000, or $0.40 per diluted share (EPS), compared to $2,963,000, or $0.37 EPS for the prior quarter and $3,165,000, or $0.39 EPS for the same period of 2018. Consolidated net income for the nine months ended September 30, 2019 totaled $9,298,000, or $1.15 EPS, representing an increase of $740,000 or 8.6%, compared to $8,558,000, or $1.06 EPS for the nine months ended September 30, 2018.

The earnings increase compared to prior periods was primarily driven by net interest income expansion corresponding to loan growth. Net interest income increased to $10,445,000 for the three months ended September 30, 2019, compared to $10,128,000 for the prior quarter and $9,944,000 for the same period of 2018. The net interest margin for the three months ended September 30, 2019 was 4.18%, compared to 4.23% for the prior quarter, and 3.97% for the same period of 2018. Despite the increase to net interest income and average loans, the net interest margin retracted in the third quarter compared to the prior quarter due to an increase in cash balances compounded by a decrease in yields due to the two FOMC rate cuts thus far during 2019. 

Non-interest income for the three months ended September 30, 2019 totaled $1,275,000, compared to $1,242,000 during the prior quarter, and $1,137,000 for the same period of 2018. The increase compared to these prior periods is primarily due to service charges and transaction-based fee income from our expanding core deposit base. 

Non-interest expense for the three months ended September 30, 2019 totaled $7,157,000, compared to $7,310,000 during the prior quarter, and $6,820,000 for the same period of 2018. The decrease compared to the prior period is due to various operating expense reductions and a reduction in the provision for losses of undisbursed loan commitments. The increase compared to the same period of last year corresponds to staffing increases and general operating costs related to servicing the growing loan and deposit portfolios. 

Total assets were $1.10 billion as of September 30, 2019, an increase of $32.8 million from June 30, 2019 and $25.3 million over September 30, 2018. Gross loans were $732.3 million as of September 30, 2019, an increase of $14.2 million over June 30, 2019, and $69.1 million over September 30, 2018. The Company’s total deposits were $978.0 million as of September 30, 2019, an increase of $28.9 million over June 30, 2019, and $3.6 million over September 30, 2018.

“Loan production and core deposit growth continue to deliver solid results. Despite recent quarter over quarter pressure on net interest margin, we have driven profitability through increased loan volume and by fostering strong relationships with the many of the finest businesses and business owners in the communities we serve,” stated Chris Courtney, President and CEO. “Our team remains focused on creating a second-to-none service experience,” Courtney concluded. 

“While we’ve begun to experience industry-wide pressure on loan and investment yield, we have been able to overcome the impact by growing the loan portfolio and keeping a watchful eye on the bank’s cost of funds. Heading into the fourth quarter, we have a positive outlook on our loan pipeline and anticipate that loan production will partially moderate yield compression,” stated Rick McCarty, Senior EVP, Chief Operating Officer.

Non-performing assets as of September 30, 2019 were $1,200,000, or 0.11% of total assets, compared to $906,000, or 0.08% of total assets, as of June 30, 2019, and $663,000, or 0.09%, at September 30, 2018. The increase during the third quarter was a result of two consumer residential loans that were placed on non-accrual status. The allowance for loan losses to gross loans was 1.23% at September 30, 2019, compared to 1.22% at June 30, 2019 and 1.23% at September 30, 2018. The Company recorded provision for loan losses of $240,000 during the third quarter of 2019 which was commensurate with growth of the loan portfolio, as loan loss reserves relative to gross loans remain at acceptable levels and credit quality remains strong.

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.

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.


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:   2019     2019     2019     2018     2018  
             
  Net interest income $ 10,445   $ 10,128   $ 10,111   $ 10,179   $ 9,944  
  Provision for loan losses   240     95     -     555     -  
  Non-interest income   1,275     1,242     1,275     1,232     1,137  
  Non-interest expense   7,157     7,310     7,233     6,921     6,820  
  Net income before income taxes   4,323     3,965     4,153     3,935     4,261  
  Provision for income taxes   1,092     1,002     1,049     956     1,096  
  Net income $ 3,231   $ 2,963   $ 3,104   $ 2,979   $ 3,165  
             
  Earnings per common share - basic $ 0.40   $ 0.37   $ 0.38   $ 0.37   $ 0.39  
  Earnings per common share - diluted $ 0.40   $ 0.37   $ 0.38   $ 0.37   $ 0.39  
  Dividends paid per common share $ 0.135   $ -   $ 0.135   $ -   $ 0.130  
  Return on average common equity   11.86 %   11.39 %   12.54 %   12.16 %   13.21 %
  Return on average assets   1.18 %   1.13 %   1.17 %   1.08 %   1.17 %
  Net interest margin (1)   4.18 %   4.23 %   4.16 %   3.96 %   3.97 %
  Efficiency ratio (2)   59.67 %   62.27 %   62.20 %   58.78 %   59.50 %
             
Capital - Period End          
  Book value per common share $ 13.31   $ 12.98   $ 12.45   $ 12.09   $ 11.67  
             
Credit Quality - Period End          
  Nonperforming assets/ total assets   0.11 %   0.08 %   0.09 %   0.08 %   0.09 %
  Loan loss reserve/ gross loans   1.23 %   1.22 %   1.23 %   1.22 %   1.23 %
             
Period End Balance Sheet          
($ in thousands)          
  Total assets $ 1,101,132   $ 1,068,310   $ 1,059,130   $ 1,094,887   $ 1,075,805  
  Gross loans   732,334     718,158     707,408     711,902     663,195  
  Nonperforming assets   1,200     906     967     920     920  
  Allowance for loan losses   9,005     8,770     8,677     8,685     8,135  
  Deposits   977,993     949,090     938,743     986,495     974,424  
  Common equity   109,320     106,583     102,218     99,038     95,666  
             
Non-Financial Data          
  Full-time equivalent staff   182     184     180     178     176  
  Number of banking offices   17     17     17     17     17  
             
Common Shares outstanding          
  Period end   8,210,637     8,208,853     8,209,750     8,194,805     8,194,255  
  Period average - basic   8,105,294     8,102,807     8,093,106     8,086,748     8,083,927  
  Period average - diluted   8,120,096     8,117,192     8,102,411     8,097,161     8,104,252  
             
Market Ratios          
  Stock Price $ 16.77   $ 19.55   $ 17.64   $ 18.30   $ 19.65  
  Price/Earnings   10.60     13.33     11.34     12.52     12.65  
  Price/Book   1.26     1.51     1.42     1.51     1.68  
             
             
             
    NINE MONTHS ENDED SEPTEMBER 30,      
($ in thousands, except per share)   2019     2018        
             
  Net interest income $ 30,684   $ 28,388        
  Provision for loan losses   335     -        
  Non-interest income   3,792     3,480        
  Non-interest expense   21,700     20,457        
  Net income before income taxes   12,441     11,411        
  Provision for income taxes   3,143     2,853        
  Net income $ 9,298   $ 8,558        
             
  Earnings per common share - basic $ 1.15   $ 1.06        
  Earnings per common share - diluted $ 1.15   $ 1.06        
  Dividends paid per common share $ 0.270   $ 0.26        
  Return on average common equity   11.92 %   12.29 %      
  Return on average assets   1.16 %   1.08 %      
  Net interest margin (1)   4.19 %   3.87 %      
  Efficiency ratio (2)   61.36 %   62.30 %      
             
Capital - Period End          
  Book value per common share $ 13.31   $ 11.67        
             
Credit Quality - Period End          
  Nonperforming assets/ total assets   0.11 %   0.09 %      
  Loan loss reserve/ gross loans   1.23 %   1.23 %      
             
Period End Balance Sheet          
($ in thousands)          
  Total assets $ 1,101,132   $ 1,075,805        
  Gross loans   732,334     663,195        
  Nonperforming assets   1,200     920        
  Allowance for loan losses   9,005     8,135        
  Deposits   977,993     974,424        
  Common equity   109,320     95,666        
             
Non-Financial Data          
  Full-time equivalent staff   182     176        
  Number of banking offices   17     17        
             
Common Shares outstanding          
  Period end   8,210,637     8,194,255        
  Period average - basic   8,100,447     8,079,707        
  Period average - diluted   8,113,298     8,101,087        
             
Market Ratios          
  Stock Price $ 16.77   $ 19.65        
  Price/Earnings   10.93     13.88        
  Price/Book   1.26     1.68        
             
             
(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.      


Contact: Chris Courtney/Rick McCarty
Phone: (209) 848-2265
  www.ovcb.com