Oak Valley Bancorp (NASDAQ: OVLY) (the “Company”), the bank holding company for Oak Valley Community Bank and its 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 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.
“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.
Total assets were $1.94 billion at March 31, 2023, a decrease of $27.7 million and $5.3 million from Dec. 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 Dec. 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 Dec. 31, 2022 and March 31, 2022, respectively.
The Company has 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. Company officials noted that their 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.”
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 18 branches: Oakdale, Turlock, Stockton, Patterson, Ripon, Escalon, Manteca, Tracy, Sacramento, Roseville, two branches in Sonora, three branches in Modesto, and three branches in the 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.
