OVLY 8-K
Oak Valley Bancorp (OVLY)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
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The
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Dated: April 21, 2023
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OAK VALLEY BANCORP
By: /s/ Jeffrey A. Gall
Jeffrey A. Gall
Senior Vice President and Chief Financial Officer (Principal Financial Officer and duly
authorized signatory)
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Exhibit Index
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Exhibit No.
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Description
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99.1
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Press Release of Oak Valley Bancorp dated April 20, 2023
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document)
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Exhibit 99.1
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PRESS RELEASE |
For Immediate Release
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Date: |
April 20, 2023 |
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Contact: |
Chris Courtney/Rick McCarty |
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Phone: |
(209) 848-2265 www.ovcb.com |
OAK VALLEY BANCORP REPORTS 1st QUARTER RESULTS
OAKDALE, CA – 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 first quarter of 2023. For the three months ended March 31, 2023, consolidated net income was $9,225,000, or $1.12 per diluted share (EPS). This compared to consolidated net income of $9,475,000, or $1.15 EPS, for the prior quarter and $2,369,000, or $0.29 EPS, for the same period a year ago.
The net income decrease compared to the prior quarter was primarily the result of a decline in the reversal of loan loss provisions to $460,000 in the first quarter, compared to a reversal of $1,550,000 during the fourth quarter of 2022. This difference was offset by quarter over quarter increases in net interest income and non-interest income of $430,000 and $234,000, respectively. The substantial increase in net income compared to the same period a year ago was attributable to rising net interest income resulting from increased yields on earning assets, triggered by FOMC rate hikes, and growth of our investment and loan portfolios.
Net interest income for the three months ended March 31, 2023 was $19,543,000, compared to $19,113,000 in the prior quarter, and $10,958,000 in the same period a year ago. The increase over the prior periods is primarily attributable to increased yields as described above. The year over year increase was also driven in part by loan growth of $68.1 million and investment portfolio growth of $207.8 million.
Net interest margin for the three months ended March 31, 2023 was 4.39%, compared to 4.09% for the prior quarter and 2.51% 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.
“As our balance sheet grew over the past few years, we were patient with lower yields on higher levels of cash reserves, in anticipation of rising interest rates. That strategy has served us very well over the course of the Fed’s most recent rate cycle,” stated Rick McCarty, President and Chief Operating Officer.
Non-interest income was $1,655,000 for the quarter ended March 31, 2023, compared to $1,421,000 for the prior quarter and $1,168,000 for the same period last year. The increase compared to prior periods was partially due to a rise in fee income from CDARS, a program that offers full FDIC insurance to certain deposit customers, and a gain on sale of investment securities recorded during the first quarter of 2023.
Non-interest expense totaled $9,757,000 for the quarter ended March 31, 2023, compared to $9,611,000 in the previous quarter and $9,122,000 in the same quarter a year ago. The increase in non-interest expense compared to prior periods corresponds primarily to staffing expense and general operating costs related to servicing the growing loan and deposit portfolios, including staff and overhead expense connected to the new Roseville Branch, which opened in December 2022.
Total assets were $1.94 billion at March 31, 2023, a decrease of $27.7 million and $5.3 million from December 31, 2022 and March 31, 2022, respectively. Gross loans were $926.8 million at March 31, 2023, an increase of $11.1 million and $68.1 million over December 31, 2022 and March 31, 2022, respectively. The Company’s total deposits were $1.77 billion at March 31, 2023, a decrease of $45.1 million and $30.1 million from December 31, 2022 and March 31, 2022, respectively. We have experienced nominal negative impacts on liquidity resulting from the recent events in the banking industry. The deposit decrease during the first quarter was related to normal seasonal activity and some movement to higher deposit rates offered by other financial institutions. Our liquidity position is very strong as evidenced by $389 million in cash equivalent balances at March 31, 2023.
“Our relationship management teams remain committed to understanding each client’s needs and tailoring solutions to best meet their objectives,” stated Chris Courtney, CEO. “Our ability to deepen relationships proves our service model has enduring value. As we expand our footprint, we intentionally pursue experienced banking professionals who share in our appreciation of this style of relationship building.”
Non-performing assets (“NPA”) remained at zero as of March 31, 2023, as they were as of December 31, 2022 and March 31, 2022. The allowance for loan losses (“ALLL”) as a percentage of gross loans was 1.01% at March 31, 2023, compared to 1.03% at December 31, 2022 and 1.25% at March 31, 2022. The Company recorded a $460,000 reversal of loan loss provisions during the first quarter, due to improvements in credit quality metrics as calculated by our internal loan risk model. Adoption of CECL resulted in an additional $345,000 to the ALLL, recorded on the implementation date of January 1, 2023. The year-over-year ALLL decrease includes the reversal of a COVID-19 risk-based discretionary reserve of approximately $1.1 million during the fourth quarter of 2022, as it was no longer required due to improved economic conditions. Loan loss reserves relative to gross loans remain at acceptable levels consistent with our internal loan risk model and credit quality remains stable.
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.
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Oak Valley Bancorp |
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Financial Highlights (unaudited) |
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($ in thousands, except per share) |
1st Quarter |
4th Quarter |
3rd Quarter |
2nd Quarter |
1st Quarter |
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Selected Quarterly Operating Data: |
2023 |
2022 |
2022 |
2022 |
2022 |
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Net interest income |
$ | 19,543 | $ | 19,113 | $ | 16,772 | $ | 13,233 | $ | 10,958 | ||||||||||
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(Reversal of) provision for loan losses |
(460 | ) | (1,550 | ) | 200 | - | - | |||||||||||||
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Non-interest income |
1,655 | 1,421 | 1,611 | 1,371 | 1,168 | |||||||||||||||
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Non-interest expense |
9,757 | 9,611 | 9,370 | 9,205 | 9,122 | |||||||||||||||
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Net income before income taxes |
11,901 | 12,473 | 8,813 | 5,399 | 3,004 | |||||||||||||||
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Provision for income taxes |
2,676 | 2,998 | 2,013 | 1,141 | 635 | |||||||||||||||
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Net income |
$ | 9,225 | $ | 9,475 | $ | 6,800 | $ | 4,258 | $ | 2,369 | ||||||||||
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Earnings per common share - basic |
$ | 1.13 | $ | 1.16 | $ | 0.83 | $ | 0.52 | $ | 0.29 | ||||||||||
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Earnings per common share - diluted |
$ | 1.12 | $ | 1.15 | $ | 0.83 | $ | 0.52 | $ | 0.29 | ||||||||||
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Dividends paid per common share |
$ | 0.16 | $ | - | $ | 0.15 | $ | - | $ | 0.15 | ||||||||||
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Return on average common equity |
28.36 | % | 33.37 | % | 21.96 | % | 13.40 | % | 6.84 | % | ||||||||||
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Return on average assets |
1.93 | % | 1.90 | % | 1.35 | % | 0.88 | % | 0.50 | % | ||||||||||
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Net interest margin (1) |
4.39 | % | 4.09 | % | 3.61 | % | 2.98 | % | 2.51 | % | ||||||||||
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Efficiency ratio (2) |
46.31 | % | 45.49 | % | 48.14 | % | 59.68 | % | 71.70 | % | ||||||||||
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Capital - Period End |
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Book value per common share |
$ | 17.08 | $ | 15.33 | $ | 12.86 | $ | 14.38 | $ | 15.95 | ||||||||||
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Credit Quality - Period End |
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Nonperforming assets/ total assets |
0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||||
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Loan loss reserve/ gross loans |
1.01 | % | 1.03 | % | 1.21 | % | 1.19 | % | 1.25 | % | ||||||||||
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Period End Balance Sheet |
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($ in thousands) |
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Total assets |
$ | 1,940,674 | $ | 1,968,346 | $ | 1,962,470 | $ | 1,991,235 | $ | 1,946,019 | ||||||||||
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Gross loans |
926,820 | 915,758 | 912,235 | 907,627 | 858,763 | |||||||||||||||
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Nonperforming assets |
- | - | - | - | - | |||||||||||||||
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Allowance for loan losses |
9,383 | 9,468 | 10,997 | 10,785 | 10,762 | |||||||||||||||
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Deposits |
1,769,176 | 1,814,297 | 1,830,882 | 1,852,502 | 1,799,305 | |||||||||||||||
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Common equity |
141,470 | 126,627 | 106,188 | 118,698 | 131,649 | |||||||||||||||
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Non-Financial Data |
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Full-time equivalent staff |
206 | 198 | 209 | 209 | 206 | |||||||||||||||
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Number of banking offices |
18 | 18 | 17 | 17 | 17 | |||||||||||||||
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Common Shares outstanding |
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Period end |
8,281,661 | 8,257,894 | 8,258,794 | 8,254,574 | 8,255,601 | |||||||||||||||
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Period average - basic |
8,182,737 | 8,175,871 | 8,172,836 | 8,170,291 | 8,157,987 | |||||||||||||||
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Period average - diluted |
8,226,991 | 8,213,891 | 8,206,342 | 8,201,367 | 8,197,275 | |||||||||||||||
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Market Ratios |
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Stock Price |
$ | 23.66 | $ | 22.65 | $ | 17.87 | $ | 17.20 | $ | 18.45 | ||||||||||
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Price/Earnings |
5.17 | 4.93 | 5.41 | 8.23 | 15.67 | |||||||||||||||
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Price/Book |
1.39 | 1.48 | 1.39 | 1.20 | 1.16 | |||||||||||||||
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(1) Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 21%. |
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(2) Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 21%. |
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A marginal federal/state combined tax rate of 29.56%, was used for applicable revenue. |