Oak Valley Bancorp (NASDAQ: OVLY) (the “Company”), the bank holding company for Oak Valley Community Bank and its Eastern Sierra Community Bank division (the “Bank”), recently reported unaudited consolidated financial results. For the three months ended Dec. 31, 2020, consolidated net income was $4,649,000 or $0.57 per diluted share (EPS), as compared to $3,748,000, or $0.46 EPS, for the prior quarter and $3,191,000, or $0.39 EPS for the same period a year ago. Consolidated net income for the year ended Dec. 31, 2020, totaled $13,687,000, or $1.68 EPS, representing an increase of 9.6 percent compared to $12,489,000 or $1.54 EPS for 2019.
The Board of Directors of Oak Valley Bancorp at their Jan. 19, 2021, meeting declared the payment of a cash dividend of $0.145 per share of common stock to its shareholders of record at the close of business on Feb. 1, 2021. The payment date will be Feb. 12, 2021 and will amount to approximately $1,192,000. This is the first dividend payment made by the Company in 2021.
The fourth quarter net income increase in 2020 was primarily due to the $244 million in Paycheck Protection Program (PPP) loans funded during the second and third quarters that resulted in loan interest and fee income of $2,150,000 during the fourth quarter, compared to $1,478,000 during the third quarter of 2020. Year-to-date PPP loan interest and fee income totaled $4,720,000. The year-to-date results were also bolstered by deferred loan cost GAAP accounting adjustments of $1,253,000 against salary expense during the second and third quarters, corresponding to the PPP loans funded. Additionally, the Company recorded a loan loss provision reversal of $338,000 during the fourth quarter, as compared to provisions of $193,000 and $210,000 during the third quarter of 2020 and fourth quarter of 2019, respectively. The fourth quarter reversal was attributable to non-accrual loans decreasing to a zero balance for the first time since the recession over a decade ago, as the one remaining non-accrual loan was placed back on accrual status during the quarter.
The Company has benefited from loan growth, excluding PPP loans, of $51.3 million, and investment portfolio growth of $19.6 million, during the year ended Dec. 31, 2020. This growth in earning assets contributed to net interest income expansion and helped to offset the yield reduction resulting from the FOMC rate cuts during March of 2020.
“Unprecedented growth resulting from the bank’s fervent participation in PPP, in support of local businesses, combined with organic growth to help us attain record level earnings. We are extremely proud of the way our team has stepped up to meet the challenges the pandemic has presented,” stated Chris Courtney, President and CEO of the Company and the Bank. “Oak Valley was founded on the notion of serving the needs of the small business community. In 2020, that commitment was called to action and on display. As we emerge from these trying times, we are confident the relationships we have forged will be strengthened like never before.”
Oak Valley Bancorp operates Oak Valley Community Bank and its 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 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.
Net interest income was $12,128,000 and $44,957,000 for the fourth quarter and year ended Dec. 31, 2020, respectively, compared to $11,455,000 during the prior quarter, $10,350,000 for the fourth quarter of 2019 and $41,034,000 for the year ended Dec. 31, 2019. The increase is attributable to interest and fees on PPP loans and organic growth as mentioned above. Net interest margin was 3.49 percent and 3.59 percent for the fourth quarter and year ended Dec. 31, 2020, respectively, as compared to 3.98 percent and 4.13 percent for the same periods of 2019. The interest margin compression was attributable to the FOMC rate cuts in March 2020, which adversely impacted earning asset yields and the infusion of short-term PPP loans which yield 1 percent.
Total assets were $1.51 billion at Dec. 31, 2020, an increase of $61.9 million over Sept. 30, 2020 and $363.2 million over Dec. 31, 2019. Gross loans were $1.01 billion as of Dec. 31, 2020, a decrease of $13.7 million from Sept. 30, 2020, and an increase of $262.1 million over Dec. 31, 2019. The fourth quarter decrease in gross loans was the result of PPP loan forgiveness principal payments from the SBA totaling $33.4 million. The Company’s total deposits were $1.37 billion as of Dec. 31, 2020, an increase of $56.6 million over Sept. 30, 2020, and $347.9 million over Dec. 31, 2019. The Dec. 31, 2020 balance sheet totals were bolstered by the $244 million in PPP loans funded during the second and third quarters, which consequently increased total deposits, as the PPP funded amounts were credited directly to the borrowers’ deposit accounts.