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 Dec. 31, 2018, consolidated net income was $2,979,000 or $0.37 per diluted share (EPS), as compared to $3,165,000, or $0.39 EPS, for the prior quarter and $1,589,000, or $0.20 EPS for the same period a year ago. Consolidated net income for the year ended Dec. 31, 2018 totaled $11,537,000, or $1.42 EPS, representing an increase of 26.9 percent compared to $9,094,000 or $1.13 EPS for 2017. The decrease from the prior quarter is the result of loan loss provisions recorded during the quarter corresponding to loan growth.
The 2018 net income increases over the comparable periods of 2017 were mainly driven by strong earning asset growth and corresponding increases to net interest income. Additionally, the Company realized a reduction in income tax provision in 2018 due to the lower federal income tax rate of 21 percent, following the passing of the U.S. Tax Cuts and Jobs Act of 2017, which also resulted in a $983,000 charge to federal income tax provision in the fourth quarter of 2017, due to the revaluation of net deferred tax assets.
Net interest income was $10,179,000 and $38,567,000 for the quarter and year ended Dec. 31, 2018, respectively, compared to $9,944,000 during the prior quarter, $9,023,000 for the fourth quarter of 2017 and $34,180,000 for the year ended Dec. 31, 2017. Net interest margin increased to 3.96 percent and 3.89 percent for the quarter and year ended Dec. 31, 2018, respectively, as compared to 3.86 percent and 3.77 percent for the same periods of 2017. The net interest income and net interest margin increases in 2018 over the comparable prior periods were the result of strong growth of loan and investment portfolios and the positive impact that rising interest rates have had on variable rate earning assets.
“Steady core deposit growth combined with third and fourth quarter loan growth have again helped push Company earnings to record level. We are very pleased with our year-end results for 2018,” stated Chris Courtney, President and CEO of the Company and the Bank. “We are enthusiastic about our recent expansion into Sacramento and look forward to growth opportunities in the greater Sacramento region. As we expand our Northern California presence to better serve our clients, we naturally garner increased awareness of the Oak Valley brand, which enables us to introduce more Central Valley families and businesses to our premier style of community banking.”
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 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.
Non-interest income for the fourth quarter and year ended Dec. 31, 2018 totaled $1,232,000 and $4,712,000, respectively, compared to $1,137,000 during the prior quarter, $1,193,000 for the fourth quarter of 2017, and $5,976,000 for the year ended Dec. 31, 2017. The moderate increase in the fourth quarter was mainly due to FHLB dividend income and steady increases in service charges and fee income from a growing customer base. The year-over-year decrease is mainly due to the $938,000 merger-related settlement payments recorded in the second quarter of 2017.
Total assets were $1.09 billion at Dec. 31, 2018, an increase of $19.1 million over Sept. 30, 2018 and $60.1 million over Dec. 31, 2017. Gross loans were $711.9 million as of Dec. 31, 2018, an increase of $48.7 million over Sept. 30, 2018, and an increase of $49.4 million over Dec. 31, 2017. The Company’s total deposits were $986.5 million as of Dec. 31, 2018, an increase of $12.1 million over Sept. 30, 2018, and an increase of $47.6 million over Dec. 31, 2017.