Oak Valley Bancorp (NASDAQ: OVLY), 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, 2019, consolidated net income was $2,963,000, or $0.37 per diluted share (EPS), compared to $3,104,000, or $0.38 EPS, for the prior quarter and $2,591,000, or $0.32 EPS, for the same period a year ago. The decrease of $141,000 compared to the prior quarter is mainly due to loan loss provisions of $95,000 resulting from loan growth of $10.8 million during the second quarter, along with slightly higher operating costs. Compared to the second quarter of 2018, the net income increase of $372,000 was driven by net interest margin expansion corresponding to loan growth.
Consolidated net income for the six months ended June 30, 2019 totaled $6,067,000, or $0.75 EPS, representing an increase of 12.5 percent compared to $5,393,000, or $0.67 EPS for the six months ended June 30, 2018. The Company has benefited from year-over-year loan growth and increased service fee income resulting from the expansion of our deposit and loan customer base, as the main contributors to the year-to-date net income increase of $674,000.
Net interest income was $10,128,000 for the three months ended June 30, 2019, compared to $10,111,000 for the prior quarter and $9,327,000 for the same period last year. The increase is attributable to the growth of average gross loans, combined with the positive impact that the 2018 FOMC rate hikes have had on the yield of earning assets. As a result, the Company’s net interest margin for the three months ended June 30, 2019 increased to 4.23 percent, compared to 4.16 percent for the prior quarter, and 3.83 percent for the same period last year.
Non-interest income for the three months ended June 30, 2019 totaled $1,242,000, compared to $1,275,000 during the prior quarter, and $1,011,000 for the same period last year. The decrease compared to the prior quarter is due to a decline in gains recorded from called available-for-sale investment securities. The increase from the same period last year is primarily due to unrealized gains recorded on the fair value of equity investment securities. Additionally, the Company continues to recognize steady growth in service charge and transaction fee income, as a result of its growing core deposit base.
Non-interest expense for the three months ended June 30, 2019 totaled $7,310,000, compared to $7,233,000 during the prior quarter, and $6,905,000 for the same period last year. The increase compared to prior periods corresponds to the expansion into Sacramento during the third quarter of 2018, and other lending and credit administration staff additions, combined with increased general operating costs related to servicing the growing loan and deposit portfolios.
Total assets were $1.07 billion as of June 30, 2019, an increase of $9.2 million over March 31, 2019 and a decrease of $1.3 million over June 30, 2018. Gross loans were $718.2 million as of June 30, 2019, an increase of $10.8 million over March 31, 2019, and an increase of $63.6 million over June 30, 2018. The Company’s total deposits were $949.1 million as of June 30, 2019, an increase of $10.3 million over March 31, 2019 and a decrease of $21.5 million over June 30, 2018, as a result of the bank electing not to match competitive offerings on certain high interest rate deposit accounts during the first quarter of 2019.
“The Bank is truly hitting on all cylinders, as evidenced by positive year-over-year trends in each of its key performance ratios. This is a tribute to the hard work and dedication our team puts forward in delivering a unique customer experience and their commitment to lending prudently to quality clients,” stated Chris Courtney, President and CEO.
Non-performing assets as of June 30, 2019 were $906,000, or 0.08 percent of total assets, compared to $967,000 or 0.09 percent of total assets as of March 31, 2019, and $1,310,000, or 0.12 percent, at June 30, 2018. The decrease from the same period a year ago is the result of collateral sales and subsequent payments received on non-performing loans. The allowance for loan losses to gross loans decreased to 1.22 percent at June 30, 2019, compared to 1.23 percent at March 31, 2019 and 1.25 percent at June 30, 2018. The Company recorded provision for loan losses of $95,000 during the second quarter of 2019 due to the $10.8 million loan growth, as loan loss reserves relative to gross loans remain at acceptable levels and credit quality remains strong.
The Board of Directors of Oak Valley Bancorp at their July 16, 2019 meeting, declared the payment of a cash dividend of $0.135 per share of common stock to its shareholders of record at the close of business on July 29, 2019. The payment date will be Aug. 9, 2019 and will amount to approximately $1,108,000. This is the second dividend payment made by the Company in 2019.
Oak Valley Bancorp operates Oak Valley Community Bank and 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 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. The Sacramento – Capitol Mall Branch, which opened in 2018, is the latest addition to Oak Valley’s network.
For more information, call 1-866-844-7500 or visit www.ovcb.com.
