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 first quarter of 2024. For the three months ended March 31, 2024, consolidated net income was $5,727,000, or $0.69 per diluted share (EPS). This compared to consolidated net income of $5,865,000, or $0.71 EPS, for the prior quarter and $9,225,000, or $1.12 EPS, for the same period a year ago.
The net income decrease compared to prior periods was primarily the result of an increase in deposit interest expense. Average cost of funds increased to 68 bps as of March 31, 2024, compared to 55 bps for the prior quarter and 10 bps for the first quarter of 2023. This was partially offset by loan growth of $22.9 million over the prior quarter.
Net interest income for the three months ended March 31, 2024 was $17,241,000, compared to $17,914,000 in the prior quarter, and $19,543,000 in the same period a year ago. The decrease from the prior periods is attributable to the increased cost of funds, offset by loan growth. The decrease in net interest income was also influenced by lower deposits as the bank’s liquidity position allowed it to strategically tolerate some rate-sensitive deposit migration, which substantially mitigated its cost of funds increases relative to peer.
Net interest margin for the three months ended March 31, 2024 was 4.09 percent, compared to 4.15 percent for the prior quarter and 4.39 percent for the same period last year. The interest margin contraction compared to prior periods was due to previously noted deposit rate pressure on cost of funds.
“We are pleased with our overall financial position. While our deposit costs have increased, our average cost of funds remains manageable, as our service-focused banking model continues to strengthen our core-deposit base,” stated Rick McCarty, President and Chief Operating Officer.
Non-interest income was $1,519,000 for the quarter ended March 31, 2024, compared to $1,755,000 for the prior quarter and $1,655,000 for the same period last year. The decreases compared to prior periods was primarily due to changes in the market value of an equity security, and a reduction in overdraft and non-sufficient fund fees charged to customers resulting from regulatory changes in the industry.
Non-interest expense totaled $11,529,000 for the quarter ended March 31, 2024, compared to $10,760,000 in the previous quarter and $9,757,000 in the same quarter a year ago. The increase in non-interest expense compared to prior periods corresponds primarily to staffing expense and general operating costs related to servicing the growing business portfolios.
Total assets were $1.81 billion at March 31, 2024, a decrease of $36.7 million and $134.9 million from Dec. 31, 2023 and March 31, 2023, respectively. Gross loans were $1.04 billion at March 31, 2024, an increase of $22.9 million and $112.7 million over Dec. 31, 2023 and March 31, 2023, respectively. The Company’s total deposits were $1.61 billion at March 31, 2024, a decrease of $38.1 million and $156.8 million from Dec. 31, 2023 and March 31, 2023, respectively. The deposit decrease during the first quarter was mainly related to normal seasonal activity.
“We have started 2024 with a solid performance. Our team’s steadfast focus on targeted prospecting, regardless of economic conditions, has led to a strong first quarter in loan production and a robust loan pipeline,” stated Chris Courtney, CEO.
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 18 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.
