SOURCE: Oak Valley Comnmunity Bank

April 25, 2008 17:10 ET

Oak Valley Community Bank Reports 1st Quarter Results

OAKDALE, CA--(Marketwire - April 25, 2008) - Oak Valley Community Bank, traded as (OTCBB: OVYB), announced its financial results for the three months ended March 31, 2008. The Bank's total assets increased by $11 million, or 2.3%, over March 31, 2007, to $463 million at the end of the first quarter. The Bank's total deposits were $363 million on March 31, 2008, which is an increase of $11 million, or 3.0% over March 31, 2007. Gross loans were essentially flat, at $388 million on March 31, 2008, increasing by 67 thousand over March 31, 2007. The Bank posted first quarter earnings of $776 thousand, or $0.10 per diluted share, down $226 thousand, or 22.5%, compared to $1.0 million, or $0.14 per diluted share, for the same period in 2007.

"Although we have seen an unprecedented 200 basis point rate drop by the Federal Reserve Bank in the first quarter, we have been able to maintain a consistent margin. While other banks have seen a drop off in loan volume due to depressed property values, decreased activity, and pay downs, our portfolio has remained stable," stated CFO, Rick McCarty. "Our focus on full banking relationships, and limited tolerance for high cost deposits held by single service households, has resulted in a stable net interest margin," he concluded.

Net interest income increased by $207 thousand, or 4.5% over the same period last year, as a result of an increase in the Bank's net interest margin of 4.60% for the three months ended March 31, 2008, up from 4.49% for the same period in 2007. During the first quarter, non-interest income increased by $83 thousand, or 15.4%, over the same period last year. The increases in net interest margin and non-interest income correspond to an increase in the Bank's core deposit base, resulting from the growth in the Bank's branch network and product base. Offsetting these increases is the impact of the young network of branches, including the December 2007 opening of the Bank's newest Stockton location and the addition of three experienced Commercial Loan Officers, which led to increases in non-interest expense of $744 thousand, or 22.4%, for the period ending March 31, 2008, compared to the same period in 2007.

"Not only did we fully staff the Stockton branch, we had the good fortune to hire three experienced Lending Officers in the Stockton, Modesto and Sonora markets. Technological advancements include upgrades to our Small Business program and a new 24-hour 'In Touch' telephone banking system. We also hired a cash management expert to work directly with customers in the Bank's four Central Valley counties. Over time, these initiatives will enhance profitability and yield long-term benefits," commented President, Chris Courtney.

The bank has not been immune from the credit cycle currently being experienced in parts of the nation including the Central Valley of California. Oak Valley has always taken pride in its history of low credit losses and adherence to prudent loan underwriting standards supported by a philosophy of early recognition and remediation of problem loans. December 31, 2007 Non-Performing Assets were at 2.0% of total assets, or $9.1 million. This number has decreased in the first quarter to 1.6%, or $7.4 million, $2.8 million of which have been taken into OREO (other real estate owned) and written down to an appropriate level given current market conditions. The decrease of $1.7 million is the result of the sale of property and write downs of $413 thousand. The much publicized default of an $875 thousand loan to Diablo Grande is included in this non-performing category and is secured by real estate with sufficient equity for no loss potential in the opinion of management. Management also believes that the current level of classified loans is moderate and manageable in relation to the size of the Bank's loan portfolio and they have identified problem loans to date and reserved appropriately for potential losses. All NPAs are secured by real estate and the Bank will continue its vigilance and reserve accordingly given current and forecasted economic conditions.

"While we have seen modest, year over year growth in deposits, loan growth was limited due to the general slowdown in the Central Valley economy. Increased non-interest expenses corresponding to the Bank's strategic objectives have caused some erosion of first quarter earnings. Despite intense pressure on interest rates, we have diligently managed our net interest margin as a result of our ongoing focus on core deposit expansion. Going forward, our ability to expand our margin and increase profitability requires a continued broadening of our customer base and our successfully establishing full-banking relationships with our clients," summarized Ron Martin, CEO.

Established in 1991, Oak Valley Community Bank offers a variety of loan and deposit products dedicated to serving the needs of individuals and small businesses. The Bank currently operates through 12 conveniently located branches: Oakdale, Escalon, Sonora, Turlock, Stockton, Patterson, Ripon, two branches in Modesto, and three branches in their Eastern Sierra Division, which include Bridgeport, Mammoth Lakes and Bishop.

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 Community Bank
                    Statement of Condition (unaudited)



Profitability             1st        4th        3rd        2nd        1st
($ in thousands,        Quarter    Quarter    Quarter    Quarter    Quarter
 except per share)        2008       2007       2007       2007       2007
Selected Quarterly
 Operating Data:
  Net interest
   income            $   4,809  $   4,792  $   4,859  $   4,653  $   4,602
  Provision for loan
   losses                  145        120        145        120        170
  Non-interest income      623        562        506        552        540
  Non-interest expense   4,065      3,897      3,540      3,452      3,320
  Income before income
   taxes                 1,222      1,337      1,680      1,633      1,652
  Provision for income
   taxes                   446        387        667        630        650
  Net income               776        950      1,013      1,003      1,002
  Earnings per common
   share - basic          0.10       0.12       0.13       0.14       0.14
  Earnings per common
   share - diluted        0.10       0.12       0.13       0.14       0.14
  Dividends declared
   per common share (1)      -          -       0.19          -          -
  Return on average
   common equity (5)      7.16%      8.93%      9.75%     11.04%     11.50%
  Return on average
   assets                 0.68%      0.83%      0.91%      0.90%      0.92%
  Net interest margin (2) 4.60%      4.50%      4.67%      4.47%      4.49%
  Efficiency Ratio (2)   73.70%     72.00%     65.24%     65.49%     63.75%

Capital - Period End
  Tier 1 risk-based
   capital ratio (4)     10.02%     10.02%      9.86%      9.57%      8.47%
  Book value per
   share (5)         $    5.74  $    5.60  $    5.45  $    5.32  $    5.01

Credit Quality
- Period End
  Nonperforming
   assets/assets          1.60%      2.00%      0.27%      0.00%      0.00%
  Loan loss
   reserve/loans (3)      1.09%      1.16%      1.23%      1.22%      1.16%

Period End Balance Sheet
 ($ in thousands)
Total assets         $ 463,140  $ 454,401  $ 453,882  $ 441,334  $ 452,520
  Gross Loans          387,647    387,809    385,901    376,671    387,580
  Nonperforming assets   7,395      9,087      1,216          -          -
  Allowance for credit
   losses (3)            4,225      4,507      4,757      4,600      4,480
  Deposits             362,760    377,348    386,158    364,164    352,086
  Common Equity (5)     43,652     42,640     41,462     39,287     35,665
Non-Financial Data
  Full-time equivalent
   staff                   130        125        119        120        115
  Number of banking
   offices, domestic
   and foreign              12         12         12         12         12
Common Shares
 outstanding
  Period end (5)     7,611,377  7,607,780  7,606,068  7,379,613  7,122,171
  Period average -
   basic (5)         7,610,039  7,606,506  7,567,719  7,167,879  7,108,923
  Period average -
   diluted (5)       7,748,962  7,727,570  7,717,768  7,341,990  7,293,827
Market Ratios
  Stock Price        $    8.49  $    8.25  $    9.94  $   10.95  $   11.10
  Price/Earnings         20.71      16.64      18.72      19.50      19.43
  Price/Book (5)          1.48       1.47       1.82       2.06       2.22



Profitability            YEAR TO DATE
($ in thousands,     --------------------
 except per share)   3/31/2008  3/31/2007
Selected Quarterly
 Operating Data:
  Net interest
   income            $   4,809  $   4,602
  Provision for loan
   losses                  145        170
  Non-interest income      623        540
  Non-interest expense   4,065      3,320
  Income before income
   taxes                 1,222      1,652
  Provision for income
   taxes                   446        650
  Net income               776      1,002
  Earnings per common
   share - basic          0.10       0.14
  Earnings per common
   share - diluted        0.10       0.14
  Dividends declared
   per common share (1)      -          -
  Return on average
   common equity (5)      7.16%     11.50%
  Return on average
   assets                 0.68%      0.92%
  Net interest
   margin (2)             4.60%      4.49%
  Efficiency Ratio (2)   73.70%     63.75%
Capital - Period End
  Tier 1 risk-based
   capital ratio (4)     10.02%      8.47%
  Book value per
   share (5)         $    5.74  $    5.01

Credit Quality
 - Period End
  Nonperforming
   assets/assets          1.60%      0.00%
  Loan loss
   reserve/loans (3)      1.09%      1.16%

Period End Balance Sheet
($ in thousands)
Total assets         $ 463,140  $ 452,520
  Gross Loans          387,647    387,580
  Nonperforming assets   7,395          -
  Allowance for credit
   losses (3)            4,225      4,480
  Deposits             362,760    352,086
  Common Equity (5)     43,652     35,665
Non-Financial Data
  Full-time equivalent
   staff                   130        115
  Number of banking
   offices, domestic
   and foreign              12         12
Common Shares
 outstanding
  Period end (5)     7,611,377  7,122,171
  Period average -
   basic (5)         7,610,039  7,108,923
  Period average -
   diluted (5)       7,748,962  7,293,827
Market Ratios
  Stock Price        $    8.49  $   11.10
  Price/Earnings         20.71      19.43
  Price/Book (5)          1.48       2.22

(1) Cash dividend of $1,444,697 paid in August.
(2) Ratio computed on a fully tax equivalent basis using a marginal.
    federal tax rate of 34%.
(3) Adjusted for Allowance for Off-Balance Sheet Credit Exposure.
(4) 1st Quarter 2008 is estimated.
(5) Includes 256,142 shares issued on June 15, 2007 for the Rights
    Subscription stock offering and 200,289 shares issued on July 16, 2007
    for the Remaining shares stock offering, totaling $5,020,739 in
    additional capital.

Contact Information

  • Contact:
    Ron Martin/Chris Courtney/Rick McCarty
    Phone: (209) 848-2265
    www.ovcb.com