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 Sept. 30, 2022 consolidated net income was $6,800,000, or $0.83 per diluted share (EPS), compared to $4,258,000, or $0.52 EPS for the prior quarter and $4,554,000, or $0.56 EPS for the same period of 2021. Consolidated net income for the nine months ended Sept. 30, 2022 totaled $13,427,000, or $1.64 EPS, representing an increase of $557,000 or 4.3 percent, compared to $12,870,000, or $1.57 EPS for the nine months ended Sept. 30, 2021. The year-to-date increase in earnings includes a reduction in Paycheck Protection Program (“PPP”) loan interest and fee income from $7,472,000 in 2021 to $881,000 in 2022.
Net interest income was $16,772,000 for the three months ended Sept. 30, 2022, compared to $13,233,000 for the prior quarter and $13,296,000 for the same period of 2021. The increase over the prior quarters is attributable primarily to increased yields on all earning assets resulting from recent FOMC rate hikes. In addition, the loan and investment security portfolios grew by $4.6 million and $34.3 million, respectively, during the third quarter. These increases were offset in part by the decrease in PPP loan interest and fees, as outstanding balances have been paid down to $5.0 million as of Sept. 30, 2022, a year-over-year reduction of $61.5 million due to SBA forgiveness payments.
The net interest margin for the three months ended Sept. 30, 2022 was 3.61 percent, compared to 2.98 percent for the prior quarter, and 3.17 percent for the same period of 2021. The interest margin expansion compared to the prior periods was the result of deploying cash balances into higher yielding investments and loans, and the positive impact of FOMC rate hikes on the yields of earning assets.
“As rates have increased across the yield curve, we have moved excess cash into higher yielding investments and loans which has significantly impacted our net interest margin. Year to date, the book value of our investment portfolio has grown by $315 million, and our loan portfolio is up approximately $52 million, resulting in a tremendous boost to earnings this year,” stated Rick McCarty, President and Chief Operating Officer.
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 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 Company received regulatory approval to open a new office in Roseville, which is currently operating as a Loan Production Office and will open as a full-service branch later this year.
For more information, call 1-866-844-7500 or visit www.ovcb.com.
Total assets were $1.96 billion as of Sept. 30, 2022, a decrease of $28.8 million over June 30, 2022 and an increase of $105.7 million over Sept. 30, 2021. Gross loans were $912.2 million as of Sept. 30, 2022, an increase of $4.6 million over June 30, 2022, and $40.1 million over Sept. 30, 2021. Gross loans were impacted by PPP loan balance decreases of $4.5 million and $61.5 million, during the third quarter and trailing 12 months, respectively, due to SBA forgiveness payments. Total deposits were $1.83 billion as of Sept. 30, 2022, a decrease of $21.6 million over June 30, 2022, and an increase of $129.7 million over Sept. 30, 2021.
“We remain steadfast in our efforts to broaden relationships by assessing the long-term needs and preferences of our clients. We strive to support them in a consultative manner which provides value and allows us to champion the pursuit of their financial goals,” stated Chris Courtney, CEO. “As we expand our footprint, we intentionally pursue experienced banking professionals who share in our appreciation of this style of relationship building.”