Oak Valley Bancorp(US:OVLY)2023-11-14 16:39Financial Performance - The Company reported net income of $7,354,000 and $24,983,000 for the three and nine-month periods ended September 30, 2023, representing increases of 8.1% and 86.1% compared to the same periods in 2022[113]. - Return on average assets (annualized) was 1.57% and 1.76% for the three and nine-month periods ended September 30, 2023, compared to 1.35% and 0.92% for the same periods in 2022[114]. - Annualized return on average common equity was 19.85% and 23.71% for the three and nine-month periods ended September 30, 2023, compared to 21.96% and 13.79% for the same periods in 2022[114]. Net Interest Income - Net interest income increased by $2,166,000 or 12.9% and $16,925,000 or 41.3% for the three and nine-month periods ended September 30, 2023, respectively, driven by loan growth and higher yields on earning assets[113]. - Net interest income for the three months ended September 30, 2023, was $18,938,000, an increase of 12.9% compared to the same period in 2022[116]. - For the nine months ended September 30, 2023, net interest income reached $57,888,000, reflecting a 41.3% increase from the comparable period in 2022[116]. - The net interest margin improved to 4.34% and 4.39% for the three and nine-month periods ended September 30, 2023, respectively, compared to 3.61% and 3.05% in 2022[117]. - The net interest spread for the nine months ended September 30, 2023, was 4.25%, up from 3.01% in the same period of 2022[121]. Non-Interest Income and Expenses - Non-interest income decreased by $45,000 or 2.8% for the three-month period but increased by $726,000 or 17.5% for the nine-month period ended September 30, 2023, compared to the same periods in 2022[113]. - Non-interest expense increased by $1,208,000 or 12.9% and $2,701,000 or 9.8% for the three and nine-month periods ended September 30, 2023, primarily due to staffing increases and overhead related to servicing the growing loan and deposit portfolios[113]. - Non-interest income for the nine months ended September 30, 2023, was $4,876,000, representing an increase of $726,000 (17.5%) compared to the same period in 2022, driven by service charges on deposits and other income[134]. - Total non-interest expense rose by $1,208,000 (12.9%) for Q3 2023 and $2,701,000 (9.8%) for the nine-month period, reflecting increased operational costs associated with business expansion[141]. Credit Quality - The Company recognized a credit loss provision of $300,000 during the third quarter and a reversal of credit loss provisions of $160,000 during the nine-month period ended September 30, 2023[113]. - Provisions for credit losses were $300,000 for Q3 2023, with a reversal of $160,000 for the nine-month period, compared to $200,000 in provisions for the same periods in 2022, indicating strong credit quality with non-accrual loans at a zero balance[133]. - As of September 30, 2023, non-performing assets totaled $0, maintaining a 0.00% ratio to total assets, indicating strong credit quality within the loan portfolio[153]. - The allowance for credit losses increased to $9,738,000 as of September 30, 2023, from $9,468,000 as of December 31, 2022, reflecting a reversal of $160,000 in provisions and net loan recoveries of $84,000[155]. Liquidity and Capital - Cash and cash equivalent balances decreased by $151,872,000 or 35.3% from December 31, 2022, to September 30, 2023[113]. - The Company had no outstanding Federal Home Loan Bank advances or borrowings as of September 30, 2023, relying primarily on deposit growth for funding[169]. - The Company maintains a line of credit with two correspondent banks for up to $70 million in federal funds, with no advances as of September 30, 2023[178]. - As of September 30, 2023, the Company's total capital to risk-weighted assets ratio was 14.5%, exceeding the minimum requirement of 10.5%[173]. - The Tier I capital to risk-weighted assets ratio was 13.7% as of September 30, 2023, above the minimum requirement of 8.5%[173]. Deposits - Total deposits decreased by $147,749,000 or 8.1% to $1,666,548,000 as of September 30, 2023, compared to $1,814,297,000 as of December 31, 2022[165]. - Average deposits for the nine-month period ended September 30, 2023, decreased by $83,117,000 to $1,725,040,000 compared to the same period in 2022[165]. - The Company experienced nominal negative impacts on liquidity due to recent events in the banking industry, with deposit decreases attributed to higher rates offered by competitors[167]. - The Company had no brokered deposits as of September 30, 2023, emphasizing a strategy focused on core deposit growth[168].