Oak Valley Bancorp Amends 4th Quarter Results

OAKDALE, CA--(Marketwired - Mar 18, 2014) - Oak Valley Bancorp (NASDAQ: OVLY), the bank holding company for Oak Valley Community Bank and Eastern Sierra Community Bank, recently published a revision to their fourth quarter results, which were first published January 22, 2014. Changes to the financial results reduced reported common equity and total capital by $793,000 as a result of the common stock dividend that was declared in December 2013, but inadvertently was not transferred out of equity and into a liability account at that time. The effect of the error was that the book value per share should have been $8.14 instead of $8.24 and the price to book ratio should have been 1.03 instead of 1.02. Also, due to a reclassification of deferred tax assets, reported total assets decreased by $207,000, which was reported as $672.1 million and should have been $671.9 million. The original release is amended and restated as follows and the financial tables below have been adjusted accordingly to reflect these changes.

For the three months ended December 31, 2013, consolidated net income available to common shareholders was a record $1.7 million, or $0.22 per diluted share. This compared to consolidated net income available to common shareholders of $1.4 million, or $0.18 per diluted share for the three months ended December 31, 2012 and represented a 21.5% increase over the prior year.

Net income for 2013 totaled $5.9 million compared to $5.8 million for 2012. After adjustment for preferred stock dividends and accretion, consolidated net income available to common shareholders was $5.8 million, or $0.74 per diluted share, compared to consolidated net income of $5.3 million, or $0.69 per diluted common share, in 2012. This represents a 9.2% increase in consolidated net income available to common shareholders and marks a new annual earnings record for Oak Valley Bancorp.

Total assets grew to $671.9 million as of December 31, 2013, which was an increase of $11.3 million, or 1.7% over the prior year. Deposits increased to $602.6 million, which was an increase of $15.6 million, or 2.7% over the prior year. Gross loans at year end totaled $419.4 million, reflecting an increase of $28.5 million, or 7.3%, over December 31, 2012.

"We are pleased to report another year of solid earnings. Our commitment to customer care and relationship building is unwavering and the cornerstone of our success," stated Chris Courtney, President and CEO of the Company and the Bank. "Our results are a reflection of emerging consumer confidence and economic expansion in the communities we serve."

Non-performing assets were $3.3 million, or 0.48% of total assets at December 31, 2013. This is down from $6.9 million, or 1.05% at December 31, 2012. There are currently six properties remaining with the non-performing classification; five of which remain as loans, along with one property taken into OREO.

The allowance for loan losses totaled 1.83% of gross loans at December 31, 2013 compared to 2.04% at December 31, 2012. The annual provision for loan losses of $300,000 in 2013 was down from $1.2 million in 2012. Given the high quality of the loan portfolio, limited provisioning was required to support the growth of the portfolio.

Net interest income of $24.3 million for the year ended December 31, 2013, decreased by $570,000, or 2.3%, from the prior year. The year began with margin compression, corresponding to low loan pricing and high cash balances. The margin stabilized in the second half of the year, as cash was deployed into new loans. The Company's net interest margin was 4.13% for the year ended December 31, 2013, compared to 4.53% for the year ended December 31, 2012. Net interest margin for the three months ended December 31, 2013 was 4.19%, compared to 4.15% for the three months ended December 31, 2012.

Non-interest income was $3.3 million for the year ended December 31, 2013, compared to $3.1 million the prior year. The increase is partially attributable to additional fee income related to deposit growth and commissions corresponding to growth in Oak Valley Investments.

Non-interest expense was $18.7 million for the year ended December 31, 2013, compared to $18.2 million for the prior year, an increase of $411,000, or 2.3%. This increase consists primarily of costs associated with servicing deposit growth across all branches.

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.

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)		4th Quarter				3rd Quarter				2nd Quarter				1st Quarter				4th Quarter
Selected Quarterly Operating Data:		2013				2013				2013				2013				2012
	Net interest income	$	6,372			$	6,030			$	6,024			$	5,849			$	6,115
	Provision for loan losses		-				100				100				100				250
	Non-interest income		812				866				818				785				855
	Non-interest expense		4,668				4,619				4,734				4,639				4,513
	Income before income taxes		2,516				2,177				2,008				1,895				2,207
	Provision for income taxes		809				672				634				595				718
	Net income		1,707				1,505				1,374				1,300				1,489
	Preferred stock dividends and accretion		-				-				-				(68	)			(84	)
	Net income available to common shareholders	$	1,707			$	1,505			$	1,374			$	1,232			$	1,405
	Earnings per common share - basic	$	0.22			$	0.19			$	0.18			$	0.16			$	0.18
	Earnings per common share - diluted	$	0.22			$	0.19			$	0.18			$	0.16			$	0.18
	Return on average common equity		10.47	%			9.45	%			8.48	%			7.82	%			8.87	%
	Return on average assets		1.01	%			0.92	%			0.86	%			0.81	%			0.91	%
	Net interest margin (1)		4.19	%			4.12	%			4.18	%			4.05	%			4.15	%
	Efficiency ratio (1)		63.05	%			64.65	%			67.17	%			67.95	%			63.23	%
Capital - Period End
	Book value per share	$	8.14			$	7.99			$	8.01			$	8.10			$	7.99
Credit Quality - Period End
	Nonperforming assets/ total assets		0.48	%			0.68	%			0.65	%			0.99	%			1.05	%
	Loan loss reserve/ gross loans		1.83	%			1.85	%			1.94	%			1.99	%			2.04	%
Period End Balance Sheet
($ in thousands)
	Total assets	$	671,853			$	659,192			$	644,230			$	648,418			$	660,581
	Gross loans		419,438				413,856				390,647				389,992				390,986
	Nonperforming assets		3,256				4,495				4,189				6,439				6,923
	Allowance for loan losses		7,659				7,669				7,570				7,743				7,975
	Deposits		602,633				591,642				577,129				580,215				586,993
	Common equity		64,517				63,379				63,457				64,098				63,219
	Total capital (2)		64,517				63,379				63,457				64,098				69,969
Non-Financial Data
	Full-time equivalent staff		136				135				134				134				130
	Number of banking offices		14				14				14				14				14
Common Shares outstanding
	Period end		7,929,730				7,929,730				7,924,730				7,914,730				7,907,780
	Period average - basic		7,803,247				7,802,705				7,802,012				7,778,333				7,762,261
	Period average - diluted		7,859,380				7,851,157				7,842,964				7,830,439				7,793,523
Market Ratios
	Stock Price	$	8.37			$	7.96			$	7.67			$	8.14			$	7.45
	Price/Earnings		9.64				10.40				10.86				12.67				10.38
	Price/Book		1.03				1.00				0.96				1.01				0.93
		YEAR ENDED DECEMBER 31,
		2013				2012
($ in thousands, except per share)
Selected Quarterly Operating Data:
	Net interest income	$	24,275			$	24,845
	Provision for loan losses		300				1,150
	Non-interest income		3,281				3,148
	Non-interest expense		18,660				18,249
	Income before income taxes		8,596				8,594
	Provision for income taxes		2,710				2,813
	Net income		5,886				5,781
	Preferred stock dividends and accretion		(68	)			(452	)
	Net income available to common shareholders	$	5,818			$	5,329
	Earnings per common share - basic	$	0.75			$	0.69
	Earnings per common share - diluted	$	0.74			$	0.69
	Return on average common equity		9.07	%			8.80	%
	Return on average assets		0.90	%			0.95	%
	Net interest margin (1)		4.13	%			4.53	%
	Efficiency ratio (1)		65.65	%			63.83	%
Capital - Period End
	Book value per share	$	8.14			$	7.99
Credit Quality - Period End
	Nonperforming assets/ total assets		0.48	%			1.05	%
	Loan loss reserve/ gross loans		1.83	%			2.04	%
Period End Balance Sheet
($ in thousands)
	Total assets	$	671,853			$	660,581
	Gross loans		419,438				390,986
	Nonperforming assets		3,256				6,923
	Allowance for loan losses		7,659				7,975
	Deposits		602,633				586,993
	Common equity		64,517				63,219
	Common equity		64,517				69,969
Non-Financial Data
	Full-time equivalent staff		136				130
	Number of banking offices		14				14
Common Shares outstanding
	Period end		7,929,730				7,907,780
	Period average - basic		7,796,659				7,740,990
	Period average - diluted		7,846,078				7,766,745
Market Ratios
	Stock Price	$	8.37			$	7.45
	Price/Earnings		11.22				10.85
	Price/Book		1.03				0.93

	(1) Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 34%.
	(2) Includes preferred stock issued to the U.S. Treasury under the SBLF Program of $6.75 million for the quarter ended December 31, 2012. There was no preferred stock outstanding as of March 31, June 30, September 30, and December 31, 2013.