Oak Valley Bancorp Reports 3rd Quarter Results

OAKDALE, CA--(Marketwired - Oct 22, 2014) - Oak Valley Bancorp (NASDAQ: OVLY), the bank holding company for Oak Valley Community Bank and Eastern Sierra Community Bank, recently reported consolidated financial results. For the three months ended September 30, 2014, consolidated net income available to common shareholders was $1,535,000, or $0.19 per diluted common share. This compared to consolidated net income available to common shareholders of $1,505,000, or $0.19 per diluted common share for the same period a year ago.

Year-to-date results for the nine months ended September 30, 2014, include consolidated net income available to common shareholders of $5,480,000, representing a 33.3% increase over the $4,111,000 recorded during the same period last year. In addition to income from normal operations, year-to-date income was bolstered by a $1.88 million credit to the loan loss provision related to the recovery of a previously charged off loan that was received in the second quarter of 2014.

Total assets were $706.8 million at September 30, 2014, an increase of $47.6 million, or 7.2%, from September 30, 2013. The Company's total deposits were $630.2 million as of September 30, 2014, an increase of $38.5 million, or 6.5% over September 30, 2013. Gross loans increased to $435.8 million at September 30, 2014, an increase of $21.9 million, or 5.3% from September 30, 2013.

Net interest income increased $359,000 or 6.0% to $6.4 million for the three months ended September 30, 2014, compared to $6.0 million for the same period last year. The increase is driven primarily by the increase in loan volume. The Company's net interest margin for the three months ended September 30, 2014 was 4.13%, compared to 4.12% for the same period last year.

"We are pleased to report another quarter of solid earnings. Our emphasis on growth through core deposits has served us well and will continue to provide us with a hedge against an eventual rise in interest rates," stated Chris Courtney, President and CEO of the Company and the Bank. "Despite uncertainty in the global economy, loan demand continues to be strong locally and we are well positioned to meet that demand and help Central Valley businesses grow," Courtney concluded.

Non-interest expense for the three month and nine month periods ended September 30, 2014 totaled $5.1 million and $15.0 million, respectively, an increase over the $4.6 million and $14.0 million for the comparable periods in 2013. This increase corresponds to growth in full time equivalent staff from 135 to 145 some of which is related to the intentional practice of hiring key personnel prior to branch openings in expansion markets and some of which is natural volume related growth within the commercial lending and credit areas. Deposit growth and activity continue to add related servicing costs as well.

There was no provision for loan loss during the three months ended September 30, 2014, compared to $100,000 for the same period the previous year. The ratio of loan loss reserves to gross loans decreased to 1.73% at September 30, 2014, compared to 1.85% at September 30, 2013. Non-performing assets as of September 30, 2014 were $4.3 million, or 0.61% of total assets, as compared to $4.5 million, or 0.68% at September 30, 2013.

The Company currently operates through 14 branches in Oakdale, Sonora, Turlock, Stockton, Patterson, Ripon, Escalon, Manteca, three branches in Modesto, and three branches in their Eastern Sierra Division, which includes Bridgeport, Mammoth Lakes, and Bishop. Earlier this year the Company announced plans to open a branch in Tracy, which is scheduled to open in November.

For more information, please 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.

Oak Valley Bancorp
Financial Highlights (unaudited)
($ in thousands, except per share)
Selected Quarterly Operating Data:			3rd Quarter 2014				2nd Quarter 2014				1st Quarter 2014				4th Quarter 2013				3rd Quarter 2013
	Net interest income		$	6,389			$	6,175			$	6,104			$	6,372			$	6,030
	(Recovery of) provision for loan losses			-				(1,877	)			-				-				100
	Non-interest income			940				927				810				812				866
	Non-interest expense			5,112				4,989				4,881				4,668				4,619
	Net income before income taxes			2,217				3,990				2,033				2,516				2,177
	Provision for income taxes			682				1,453				625				809				672
	Net income available to common shareholders			1,535				2,537				1,408				1,707				1,505
	Earnings per common share - basic		$	0.19			$	0.32			$	0.18			$	0.22			$	0.19
	Earnings per common share - diluted		$	0.19			$	0.32			$	0.18			$	0.22			$	0.19
	Dividends paid per common share		$	0.065			$	-			$	0.10			$	-			$	-
	Return on average common equity			8.44	%			14.53	%			8.59	%			10.47	%			9.45	%
	Return on average assets			0.88	%			1.50	%			0.84	%			1.01	%			0.92	%
	Net interest margin (1)			4.13	%			4.07	%			4.04	%			4.19	%			4.12	%
	Efficiency ratio (2)			66.76	%			67.55	%			68.29	%			63.05	%			64.65	%
Capital - Period End
	Book value per common share		$	9.01			$	8.84			$	8.40			$	8.14			$	7.99
Credit Quality - Period End
	Nonperforming assets/ total assets			0.61	%			0.75	%			0.90	%			0.48	%			0.68	%
	Loan loss reserve/ gross loans			1.73	%			1.74	%			1.80	%			1.83	%			1.85	%
Period End Balance Sheet
($ in thousands)
	Total assets		$	706,821			$	678,319			$	687,591			$	671,853			$	659,192
	Gross loans			435,776				435,671				422,510				419,438				413,856
	Nonperforming assets			4,333				5,065				6,164				3,256				4,495
	Allowance for loan losses			7,541				7,602				7,615				7,659				7,669
	Deposits			630,178				602,978				615,997				602,633				591,642
	Common equity			72,793				71,369				67,824				64,517				63,379
Non-Financial Data
	Full-time equivalent staff			145				144				142				136				135
	Number of banking offices			14				14				14				14				14
Common Shares outstanding
	Period end			8,074,855				8,075,855				8,071,355				7,929,730				7,929,730
	Period average - basic			7,959,316				7,953,499				7,878,152				7,803,247				7,802,705
	Period average - diluted			8,011,125				8,001,815				7,941,456				7,859,380				7,851,157
Market Ratios
	Stock Price		$	10.03			$	9.93			$	9.41			$	8.37			$	7.96
	Price/Earnings			13.11				7.76				12.98				9.64				10.40
	Price/Book			1.11				1.12				1.12				1.03				1.00

(1)	Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 34%.
(2)	Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 34%, and a marginal federal/state combined tax rate of 41.15% for applicable revenue.

			NINE MONTHS ENDED
			SEPTEMBER 30,
			2014				2013
	Net interest income		$	18,668			$	17,903
	(Recovery of) provision for loan losses			(1,877	)			300
	Non-interest income			2,677				2,469
	Non-interest expense			14,982				13,992
	Net income before income taxes			8,240				6,080
	Provision for income taxes			2,760				1,901
	Net income			5,480				4,179
	Preferred stock dividends			-				(68	)
	Net income available to common shareholders		$	5,480			$	4,111
	Earnings per common share - basic		$	0.69			$	0.53
	Earnings per common share - diluted		$	0.69			$	0.52
	Dividends paid per common share		$	0.165			$	-
	Return on average common equity			10.53	%			8.59	%
	Return on average assets			1.07	%			0.87	%
	Net interest margin (1)			4.08	%			4.11	%
	Efficiency ratio (2)			67.52	%			66.57	%
Capital - Period End
	Book value per common share		$	9.01			$	7.99
Credit Quality - Period End
	Nonperforming assets/ total assets			0.61	%			0.68	%
	Loan loss reserve/ gross loans			1.73	%			1.85	%
Period End Balance Sheet
($ in thousands)
	Total assets		$	706,821			$	659,192
	Gross loans			435,776				413,856
	Nonperforming assets			4,333				4,495
	Allowance for loan losses			7,541				7,669
	Deposits			630,178				591,642
	Common equity			72,793				63,379
Non-Financial Data
	Full-time equivalent staff			145				135
	Number of banking offices			14				14
Common Shares outstanding
	Period end			8,074,855				7,929,730
	Period average - basic			7,930,620				7,794,439
	Period average - diluted			7,985,054				7,841,596
Market Ratios
	Stock Price		$	10.03			$	7.96
	Price/Earnings			10.86				11.29
	Price/Book			1.11				1.00

(1)	Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 34%.
(2)	Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 34%, and a marginal federal/state combined tax rate of 41.15% for applicable revenue.

Contact:
Chris Courtney/Rick McCarty
Phone:[phone]
www.ovcb.com