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Oak Valley Bancorp Reports 4th Quarter Results and Announces Cash Dividend

1. Q4 2024 net income decreased to $6 million, down from $7.3 million. 2. 2024 total deposits increased by $45.2 million year-over-year. 3. Net interest margin fell to 4.00% from 4.15% in Q4 2023. 4. Credit loss reserves relatively stable, with zero non-performing assets. 5. Dividend payment of $0.30 per share declared for holders by February 2025.

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Why Neutral?

Despite declining earnings, stable credit quality may mitigate negative sentiment.

How important is it?

Earnings report shows mixed results; solid liquidity supports investor confidence but growth issues persist.

Why Short Term?

Reaction to earnings may influence OVLY price shortly; however, dividends support stability.

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NASDAQ: OVLY
OAKDALE, Calif., Jan. 24, 2025 (GLOBE NEWSWIRE) -- 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 December 31, 2024, consolidated net income was $6,008,000 or $0.73 per diluted share (EPS), as compared to $7,324,000, or $0.89 EPS, for the prior quarter and $5,865,000, or $0.71 EPS for the same period a year ago. Consolidated net income for the year ended December 31, 2024, totaled $24,948,000, or $3.02 EPS, representing a decrease of 19.1% compared to $30,848,000, or $3.75 EPS for 2023. The decrease in QTD earnings compared to the prior quarter is related to loan recoveries which resulted in the reversal of credit loss provision of $1,620,000 recorded during the third quarter of 2024. The increase over the same period a year ago is related to a credit loss provision of $1,130,000 recorded during the fourth quarter of 2023, corresponding to macro-economic conditions and loan growth of $100.8 million during the fourth quarter of 2023. Despite the positive variance related to the reversal of credit loss provisions, 2024 YTD earnings decreased compared to 2023 due to an increase in deposit interest expense and general operating expenses.        “We are pleased to report another solid year of earnings and commend our team on their commitment to a culture of relationship banking built on a foundation of sound credit quality standards,” stated Chris Courtney, Chief Executive Officer. Net interest income was $17,846,000 and $70,034,000 for the fourth quarter and year ended December 31, 2024, respectively, compared to $17,655,000 during the prior quarter, $17,914,000 for the fourth quarter of 2023, and $75,802,000 for the year ended December 31, 2023. The QTD increase compared to prior quarter is due to an increase of $39.6 million in average earning assets. The QTD and YTD decreases compared to 2023 is due to an increase in deposit interest expense. The average cost of funds increased to 0.78% in 2024, compared to 0.28% in 2023. The higher interest expense was partially offset by loan growth of $90.0 million, or 8.8%, year-over-year. Net interest margin was 4.00% and 4.07% (non-GAAP measure, see financial table footnote 1 below) for the fourth quarter and year ended December 31, 2024, respectively, as compared to 4.04% for the prior quarter, 4.15% for the fourth quarter of 2023, and 4.33% for the year ended December 31, 2023. The interest margin decrease compared to prior periods is the result of increased deposit interest expense as described above. Non-interest income for the fourth quarter and year ended December 31, 2024, totaled $1,430,000 and $6,555,000, respectively, compared to $1,846,000 during the prior quarter, $1,755,000 for the fourth quarter of 2023, and $6,631,000 for the year ended December 31, 2023. The QTD and YTD decreases from prior periods was primarily due to unrealized market value changes on equity securities. Non-interest expense for the fourth quarter and year ended December 31, 2024, totaled $11,548,000 and $46,017,000, respectively, compared to $11,324,000 during the prior quarter, $10,760,000 for the fourth quarter of 2023 and $41,157,000 for the year ended December 31, 2023. The fourth quarter increases are related to audit, data processing, and consulting among other general operating expense increases. The year-to-date increase compared to 2023 corresponds to staffing expense and general operating costs, including advertising, audit and software licensing, related to servicing the loan and deposit portfolios. Total assets were $1.90 billion at December 31, 2024, essentially flat compared to September 30, 2024, and an increase of $58.2 million over December 31, 2023. Gross loans were $1.11 billion as of December 31, 2024, an increase of $31.4 million from September 30, 2024, and $90.0 million from December 31, 2023. The Company’s total deposits were $1.70 billion as of December 31, 2024, an increase of $5.4 million from September 30, 2024, and $45.2 million from December 31, 2023. Our liquidity position remains strong as evidenced by $168.8 million in cash and cash equivalents balances at December 31, 2024. Non-performing assets (“NPA”) remained at zero as of December 31, 2024, as they were for all of 2024 and 2023. The allowance for credit losses (“ACL”) as a percentage of gross loans decreased to 1.04% at December 31, 2024, compared to 1.07% at September 30, 2024 and 1.07% at December 31, 2023. The decrease was related to macro-economic conditions and other credit-related factors that resulted in a favorable output from our CECL credit risk model, combined with loan growth of $31.4 million during the quarter. Given industry concerns of credit risk specific to commercial real estate, management has performed a thorough analysis of this segment within the ACL computation, concluding that the credit loss reserves relative to gross loans remains at acceptable levels, and credit quality remains stable. The Board of Directors of Oak Valley Bancorp at their January 21, 2025 meeting, declared the payment of a cash dividend of $0.30 per share of common stock to its shareholders of record at the close of business on February 3, 2025. The payment date will be February 14, 2025 and will amount to approximately $2,507,000. This is the first dividend payment made by the Company in 2025. Oak Valley Bancorp operates Oak Valley Community Bank & their Eastern Sierra Community Bank division, through which it offers a variety of loan and deposit products to individuals and small businesses. They currently operate through 18 conveniently located branches: Oakdale, Turlock, Stockton, Patterson, Ripon, Escalon, Manteca, Tracy, Sacramento, Roseville, two branches in Sonora, three branches in Modesto, and three branches in their Eastern Sierra division, which includes Bridgeport, Mammoth Lakes, and Bishop. For more information, call 1-866-844-7500 or visit www.ovcb.com. This press release includes forward-looking statements about the corporation for which the corporation claims the protection of safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's knowledge and belief as of today and include information concerning the corporation's possible or assumed future financial condition, and its results of operations and business. Forward-looking statements are subject to risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include fluctuations in interest rates, government policies and regulations (including monetary and fiscal policies), legislation, economic conditions, including increased energy costs in California, credit quality of borrowers, operational factors, and competition in the geographic and business areas in which the company conducts its operations. All forward-looking statements included in this press release are based on information available at the time of the release, and the Company assumes no obligation to update any forward-looking statement. Contact: Chris Courtney/Rick McCartyPhone: (209) 848-2265  www.ovcb.com  Oak Valley BancorpFinancial Highlights (unaudited)       ($ in thousands, except per share)4th Quarter3rd Quarter2nd Quarter1st Quarter4th QuarterSelected Quarterly Operating Data: 2024  2024  2024  2024  2023         Net interest income$17,846 $17,655 $17,292 $17,241 $17,914  (Reversal of) provision for credit losses -  (1,620) -  -  1,130  Non-interest income 1,430  1,846  1,760  1,519  1,755  Non-interest expense 11,548  11,324  11,616  11,529  10,760  Net income before income taxes 7,728  9,797  7,436  7,231  7,779  Provision for income taxes 1,720  2,473  1,547  1,504  1,914  Net income$6,008 $7,324 $5,889 $5,727 $5,865         Earnings per common share - basic$0.73 $0.89 $0.72 $0.70 $0.72  Earnings per common share - diluted$0.73 $0.89 $0.71 $0.69 $0.71  Dividends paid per common share$- $0.225 $- $0.225 $-  Return on average common equity 12.86% 16.54% 14.19% 13.86% 16.44% Return on average assets 1.25% 1.56% 1.30% 1.26% 1.27% Net interest margin (1) 4.00% 4.04% 4.11% 4.09% 4.15% Efficiency ratio (2) 59.91% 58.07% 60.97% 61.46% 54.71%       Capital - Period End      Book value per common share$21.95 $22.18 $20.55 $19.97 $20.03        Credit Quality - Period End      Nonperforming assets / total assets 0.00% 0.00% 0.00% 0.00% 0.00% Credit loss reserve / gross loans 1.04% 1.07% 1.04% 1.05% 1.07%       Period End Balance Sheet     ($ in thousands)      Total assets$1,900,604 $1,900,455 $1,840,521 $1,805,739 $1,842,422  Gross loans 1,106,535  1,075,138  1,070,036  1,039,509  1,016,579  Nonperforming assets -  -  -  -  -  Allowance for credit losses 11,460  11,479  11,121  10,922  10,896  Deposits 1,695,690  1,690,301  1,644,748  1,612,400  1,650,534  Common equity 183,436  185,393  171,799  166,916  166,092        Non-Financial Data      Full-time equivalent staff 223  222  223  219  222  Number of banking offices 18  18  18  18  18        Common Shares outstanding      Period end 8,357,211  8,358,711  8,359,556  8,359,556  8,293,168  Period average - basic 8,224,504  8,221,475  8,219,699  8,209,617  8,200,177  Period average - diluted 8,278,427  8,263,790  8,248,295  8,244,648  8,236,897        Market Ratios      Stock Price$29.25 $26.57 $24.97 $24.78 $29.95  Price/Earnings 10.09  7.52  8.69  8.86  10.55  Price/Book 1.33  1.20  1.22  1.24  1.50        (1) This is a non-GAAP measure because its computed on a fully tax equivalent basis using a marginal federal tax rate of 21%. (2) This ratio was changed to GAAP basis as of the quarter ended December 31, 2024, and all prior periods have been restated accordingly.                       YEAR ENDED DECEMBER 31,   Profitability 2024  2023    ($ in thousands, except per share)      Net interest income$70,034 $75,802     (Reversal of) provision for credit losses (1,620) 970     Non-interest income 6,555  6,631     Non-interest expense 46,017  41,157     Net income before income taxes 32,192  40,306     Provision for income taxes 7,244  9,458     Net income$24,948 $30,848            Earnings per share - basic$3.04 $3.76     Earnings per share - diluted$3.02 $3.75     Dividends paid per share$0.45 $0.32     Return on average equity 14.39% 21.87%    Return on average assets 1.35% 1.64%    Net interest margin (1) 4.07% 4.33%    Efficiency ratio (2) 60.08% 49.93%          Capital - Period End      Book value per share$21.95 $20.03           Credit Quality - Period End      Nonperforming assets/ total assets 0.00% 0.00%    Credit loss reserve/ gross loans 1.04% 1.07%          Period End Balance Sheet     ($ in thousands)      Total assets$1,900,604 $1,842,422     Gross loans 1,106,535  1,016,579     Nonperforming assets -  -     Allowance for credit losses 11,460  10,896     Deposits 1,695,690  1,650,534     Stockholders' equity 183,436  166,092           Non-Financial Data      Full-time equivalent staff 223  222     Number of banking offices 18  18           Common Shares outstanding      Period end 8,357,211  8,293,168     Period average - basic 8,218,846  8,193,874     Period average - diluted 8,258,857  8,230,892           Market Ratios      Stock Price$29.25 $29.95     Price/Earnings 9.64  7.96     Price/Book 1.33  1.50            (1) This is a non-GAAP measure because its computed on a fully tax equivalent basis using a marginal federal tax rate of 21%. (2) This ratio was changed to GAAP basis as of the year ended December 31, 2024, and the prior period has been restated accordingly.

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