OVLY Oak Valley Bancorp

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, 2024, consolidated net income was $7,324,000, or $0.89 per diluted share (EPS), as compared to $5,889,000, or $0.71 EPS, for the prior quarter and $7,354,000, or $0.89 EPS, for the same period a year ago. Consolidated net income for the nine months ended September 30, 2024 was $18,940,000, or $2.30 EPS, compared to $24,983,000 or $3.04 EPS for the same period of 2023.

The increase in third quarter net income compared to the prior quarter was primarily due to loan recoveries that resulted in a reversal of allowance for credit losses of $1,620,000. The QTD and YTD decreases compared to the same periods of 2023 were related to an increase in deposit interest expense and general operating expenses.

Net interest income for the three months ended September 30, 2024 was $17,655,000, compared to $17,292,000 in the prior quarter, and $18,938,000 in the same period a year ago. The increase in net interest income over the prior quarter is attributed to earning asset growth and an increase of 3 basis points in the average earning asset yield. The decrease from the same period a year ago is due to an increase in deposit interest expense, as the average cost of funds increased to 0.83% bps for the third quarter of 2024, compared to 0.33% for the comparable period of 2023. The higher interest expense was partially offset by loan growth of $103.9 million over the same period. Net interest margin for the three months ended September 30, 2024 was 4.04%, compared to 4.11% for the prior quarter and 4.34% for the same period last year.

“Our strong core deposits have helped manage funding costs and maintain a healthy net interest margin. Loan growth is crucial to minimizing future margin compression amid possible interest rate drops. Oak Valley was founded on service-focused relationship banking, which drives these efforts. Our success in growing relationships relies on standing out from our competitors by meeting and surpassing client expectations,” stated Rick McCarty, President and Chief Operating Officer.

Non-interest income was $1,846,000 for the quarter ended September 30, 2024, compared to $1,760,000 for the prior quarter and $1,566,000 for the same period last year. The increases compared to prior periods was mainly due to unrealized gains on equity securities as a result of lower interest rates.

Non-interest expense totaled $11,324,000 for the quarter ended September 30, 2024, compared to $11,616,000 in the prior quarter and $10,578,000 in the same quarter a year ago. The decrease compared to the prior period is mainly due to charitable contributions and data processing expense. The third quarter increase compared to the same period a year ago is mainly due to staffing expense and general operating costs related to servicing the growing loan and deposit portfolios.

Total assets were $1.90 billion at September 30, 2024, an increase of $59.9 million and $65.1 million over June 30, 2024 and September 30, 2023, respectively. Gross loans were $1.08 billion at September 30, 2024, an increase of $5.1 million over June 30, 2024 and $103.9 million over September 30, 2023. The Company’s total deposits were $1.69 billion as of September 30, 2024, an increase of $45.6 million and $23.8 million from June 30, 2024 and September 30, 2023, respectively. Our liquidity position is very strong as evidenced by $213.9 million in cash and cash equivalents balances at September 30, 2024.

Non-performing assets (“NPA”) remained at zero as of September 30, 2024, as they were for all of 2024 and 2023. The allowance for credit losses (“ACL”) as a percentage of gross loans increased to 1.07% at September 30, 2024, compared to 1.04% at June 30, 2024 and 1.00% at September 30, 2023. The increase over the prior quarter is due to macro-economic forecasts, loan growth and other credit-risk factors included in the ACL calculation which dictated an increase of $358,000 in the ACL. Loan recoveries totaled $2.0 million during the third quarter of 2024, which consisted of two loans that dated back to the recession. The net impact of the $2.0 million loan recoveries and the $358,000 increase in the ACL calculation resulted in a reversal of ACL provisions totaling $1.62 million. Given industry concerns of credit risk specific to commercial real estate, management has performed a thorough analysis of this segment as part of the CECL credit risk model’s ACL computation, concluding that the credit loss reserves relative to gross loans remains at acceptable levels, 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.

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:			2024			2024			2024			2023			2023
	Net interest income	$	17,655		$	17,292		$	17,241		$	17,914		$	18,938
	(Reversal of) provision for credit losses		(1,620	)		-			-			1,130			300
	Non-interest income		1,846			1,760			1,519			1,755			1,566
	Non-interest expense		11,324			11,616			11,529			10,760			10,578
	Net income before income taxes		9,797			7,436			7,231			7,779			9,626
	Provision for income taxes		2,473			1,547			1,504			1,914			2,272
	Net income	$	7,324		$	5,889		$	5,727		$	5,865		$	7,354
	Earnings per common share - basic	$	0.89		$	0.72		$	0.70		$	0.72		$	0.90
	Earnings per common share - diluted	$	0.89		$	0.71		$	0.69		$	0.71		$	0.89
	Dividends paid per common share	$	0.225		$	-		$	0.225		$	-		$	0.160
	Return on average common equity		16.54	%		14.19	%		13.86	%		16.44	%		19.85	%
	Return on average assets		1.56	%		1.30	%		1.26	%		1.27	%		1.57	%
	Net interest margin (1)		4.04	%		4.11	%		4.09	%		4.15	%		4.34	%
	Efficiency ratio (2)		56.96	%		59.12	%		59.61	%		53.08	%		49.89	%
Capital - Period End
	Book value per common share	$	22.18		$	20.55		$	19.97		$	20.03		$	16.29
Credit Quality - Period End
	Nonperforming assets / total assets		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
	Credit loss reserve / gross loans		1.07	%		1.04	%		1.05	%		1.07	%		1.00	%
Period End Balance Sheet
($ in thousands)
	Total assets	$	1,900,455		$	1,840,521		$	1,805,739		$	1,842,422		$	1,835,402
	Gross loans		1,075,138			1,070,036			1,039,509			1,016,579			971,243
	Nonperforming assets		-			-			-			-			-
	Allowance for credit losses		11,479			11,121			10,922			10,896			9,738
	Deposits		1,690,301			1,644,748			1,612,400			1,650,534			1,666,548
	Common equity		185,393			171,799			166,916			166,092			135,095
Non-Financial Data
	Full-time equivalent staff		222			223			219			222			225
	Number of banking offices		18			18			18			18			18
Common Shares outstanding
	Period end		8,358,711			8,359,556			8,359,556			8,293,168			8,293,468
	Period average - basic		8,221,475			8,219,699			8,209,617			8,200,177			8,197,083
	Period average - diluted		8,263,790			8,248,295			8,244,648			8,236,897			8,232,338
Market Ratios
	Stock Price	$	26.57		$	24.97		$	24.78		$	29.95		$	25.08
	Price/Earnings		7.52			8.69			8.86			10.55			7.05
	Price/Book		1.20			1.22			1.24			1.50			1.54
(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			2024			2023
($ in thousands, except per share)
	Net interest income	$	52,188		$	57,888
	Provision for (reversal of) credit losses		(1,620	)		(160	)
	Non-interest income		5,125			4,876
	Non-interest expense		34,469			30,397
	Net income before income taxes		24,464			32,527
	Provision for income taxes		5,524			7,544
	Net income	$	18,940		$	24,983
	Earnings per share - basic	$	2.30		$	3.05
	Earnings per share - diluted	$	2.30		$	3.04
	Dividends paid per share	$	0.450		$	0.320
	Return on average equity		14.90	%		23.71	%
	Return on average assets		1.38	%		1.76	%
	Net interest margin (1)		4.08	%		4.39	%
	Efficiency ratio (2)		58.55	%		47.48	%
Capital - Period End
	Book value per share	$	22.18		$	16.29
Credit Quality - Period End
	Nonperforming assets/ total assets		0.00	%		0.00	%
	Credit loss reserve/ gross loans		1.07	%		1.00	%
Period End Balance Sheet
($ in thousands)
	Total assets	$	1,900,455		$	1,835,402
	Gross loans		1,075,138			971,243
	Nonperforming assets		-			-
	Allowance for credit losses		11,479			9,738
	Deposits		1,690,301			1,666,548
	Stockholders' equity		185,393			135,095
Non-Financial Data
	Full-time equivalent staff		222			225
	Number of banking offices		18			18
Common Shares outstanding
	Period end		8,358,711			8,293,468
	Period average - basic		8,216,947			8,191,749
	Period average - diluted		8,252,286			8,228,869
Market Ratios
	Stock Price	$	26.57		$	25.08
	Price/Earnings		8.65			6.15
	Price/Book		1.20			1.54
	(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.