8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.

Date of Report: April 21, 2022 (Date of earliest event reported)
Oak Valley Bancorp (Exact name of registrant as specified in its charter)
CA (State or other jurisdiction of incorporation)	001-34142 (Commission File Number)	26-2326676 (IRS Employer Identification Number)
125 N. Third Ave. Oakdale, CA (Address of principal executive offices)	95361 (Zip Code)
(209) 848-2265 (Registrant's telephone number, including area code)
Not Applicable (Former Name or Former Address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	OVLY	The Nasdaq Stock Market, LLC

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition

On April 21, 2022 Oak Valley Bancorp issued a press release, a copy of which is attached as Exhibit 99.1 and incorporated herein by reference. The press release announced the Company’s operating results for the quarter ended March 31, 2022.

The information in this Item 2.02 in this Form 8-K and the Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.

Item 7.01. Regulation FD Disclosure.

See “Item 2.02. Results of Operations and Financial Condition” which is incorporated by reference in this Item 7.01.

Item 9.01. Financial Statements and Exhibits

(a) Financial statements:
            None
(b) Pro forma financial information:
            None
(c) Shell company transactions:
            None
(d) Exhibits
            99.1       Press Release of Oak Valley Bancorp dated April 21, 2022

           104        Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: April 25, 2022 OAK VALLEY BANCORP    By:  /s/ Jeffrey A. Gall                             
     Jeffrey A. Gall
     Senior Vice President and Chief Financial Officer (Principal Financial Officer and duly authorized signatory)

Exhibit Index
Exhibit No.	Description
99.1	Press Release of Oak Valley Bancorp dated April 21, 2022
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

EX-99.1

Exhibit 99.1

PRESS RELEASE

For Immediate Release

Date: April 21, 2022

Contact: Chris Courtney/Rick McCarty

Phone: (209) 848-2265

www.ovcb.com

OAK VALLEY BANCORP REPORTS 1^st QUARTER RESULTS

OAKDALE, CA – 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 first quarter of 2022. For the three months ended March 31, 2022, consolidated net income was $2,369,000, or $0.29 per diluted share (EPS). This compared to consolidated net income of $3,466,000, or $0.42 EPS, for the prior quarter and $4,357,000, or $0.53 EPS, for the same period a year ago.

The first quarter net income decrease was primarily due to a decrease in Paycheck Protection Program (PPP) loan interest and fee income to $487,000 during the first quarter, compared to $1,254,000 during the fourth quarter of 2021 and $2,590,000 during the first quarter of 2021. Additionally, a loan loss provision reversal of $635,000 was recorded in the fourth quarter of 2021 related to general improvements in credit risk metrics within our loan portfolio, as compared to no provision or reversal recorded during the first quarter of 2022.

The Company has benefited from loan growth, excluding PPP loans, of $47.2 million, and investment portfolio growth of $133.5 million, during the prior twelve months. This growth in earning assets helped to offset the yield reduction resulting from the current low interest rate environment. $345 million has been funded in new PPP loans since the commencement of the PPP loan program, of which $327 million has been paid down through SBA forgiveness payments, leaving an outstanding balance of $17.7 million as of March 31, 2022.

Net interest income for the three months ended March 31, 2022 was $10,958,000, compared to $11,309,000 in the prior quarter, and $12,242,000 in the same period a year ago. The decrease from the prior periods is attributable to a reduction in interest and fees on PPP loans as described above, which was offset in part by the growth in earning assets.

Net interest margin for the three months ended March 31, 2022 was 2.51%, compared to 2.55% for the prior quarter and 3.43% for the same period last year. The interest margin compression compared to the first quarter of 2021 was mainly due to an increase in low-yielding cash balances driven by deposit growth and PPP loan forgiveness payments, lower PPP interest and fees and lower overall market rates triggered by the FOMC rate cuts in March 2020, which continue to adversely impact earning asset yields as they reprice and mature.

“As PPP loans continue to pay down, PPP related revenue also subsides. The resulting impact has been higher cash balances and a reduction in net interest margin. The high cash balances leave us well positioned to take advantage of rising rates as we deploy funds into loans and investment securities.” stated Rick McCarty, President and Chief Operating Officer.

Non-interest income was $1,168,000 for the quarter ended March 31, 2022, compared to $1,542,000 for the prior quarter and $1,176,000 for the same period last year. The decrease compared to the fourth quarter was due to decreases in gains on called investment securities and fair value changes on one equity security.

Non-interest expense totaled $9,122,000 for the quarter ended March 31, 2022, compared to $8,877,000 in the previous quarter and $7,720,000 in the same quarter a year ago. The increase in non-interest expense compared to prior periods corresponds primarily to staffing expense and general operating costs related to servicing the growing loan and deposit portfolios, and a decrease in deferred costs associated with funded loans, which is recorded against salary expense. The decrease in deferred costs is from the recognition of $520,000 related to funded PPP loans during the first quarter of 2021.

Total assets were $1.95 billion at March 31, 2022, a decrease of $18.5 million from December 31, 2021 and an increase of $280.6 million over March 31, 2021. Gross loans were $858.8 million at March 31, 2022, a decrease of $1.3 million and $170.0 million over December 31, 2021 and March 31, 2021, respectively. The first quarter and year-over-year decreases in gross loans were due to decreases in PPP loan balances of $12.8 million and $217.2 million, respectively, as a result of PPP forgiveness payments received from the SBA. The Company’s total deposits were $1.80 billion as of March 31, 2022, a decrease of $7.7 million from December 31, 2021 and an increase of $281.5 million over March 31, 2021.

“Our balance sheet remains incredibly strong. As we transition from PPP-related initiatives and refocus on relationship expansion and development, we will remain diligent in our effort to understand each client’s needs and tailor solutions to best meet their objectives,” stated Chris Courtney, CEO. “Our ability to deepen the relationships kindled in the last two years, and maintain those forged over the past 30, proves our service model has enduring value.”

Non-performing assets (“NPA”) remained at zero as of March 31, 2022 and December 31, 2021, as compared to $362,000 or 0.02% of total assets at March 31, 2021. The decrease compared to the same period a year ago was due to the full payment on one non-accrual loan.

The allowance for loan losses as a percentage of gross loans was 1.25% at March 31, 2022 and December 31, 2021, compared to 1.10% at March 31, 2021. The increase compared March 31, 2021 is due to the decrease in outstanding PPP loans that do not require a loan loss reserve as they are guaranteed by the federal government through the SBA program. The Company did not record a provision for loan losses during the first quarter of 2022, as loan loss reserves relative to gross loans remain at acceptable levels and credit quality remains stable.

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 conveniently located 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 Company received regulatory approval to open a new office in Roseville, which is currently operating as a Loan Production Office and is expected to open as a full-service branch in the second half of the year.

For more information, 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)	1st Quarter			4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
Selected Quarterly Operating Data:	2022			2021			2021			2021			2021
Net interest income	$	10,958		$	11,309		$	13,296		$	11,988		$	12,242
(Reversal of) provision for loan losses		-			(635	)		-			-			-
Non-interest income		1,168			1,542			1,303			1,405			1,176
Non-interest expense		9,122			8,877			8,407			8,215			7,720
Net income before income taxes		3,004			4,609			6,192			5,178			5,698
Provision for income taxes		635			1,143			1,638			1,218			1,341
Net income	$	2,369		$	3,466		$	4,554		$	3,960		$	4,357
Earnings per common share - basic	$	0.29		$	0.43		$	0.56		$	0.49		$	0.54
Earnings per common share - diluted	$	0.29		$	0.42		$	0.56		$	0.48		$	0.53
Dividends paid per common share	$	0.150		$	-		$	0.145		$	-		$	0.145
Return on average common equity		6.84	%		9.75	%		13.01	%		11.77	%		13.44	%
Return on average assets		0.50	%		0.72	%		1.00	%		0.93	%		1.12	%
Net interest margin (1)		2.51	%		2.55	%		3.17	%		3.09	%		3.43	%
Efficiency ratio (2)		71.70	%		67.45	%		55.94	%		59.55	%		55.47	%
Capital - Period End
Book value per common share	$	15.95		$	17.31		$	16.97		$	16.60		$	16.02
Credit Quality - Period End
Nonperforming assets/ total assets		0.00	%		0.00	%		0.00	%		0.02	%		0.02	%
Loan loss reserve/ gross loans		1.25	%		1.25	%		1.30	%		1.20	%		1.10	%
Period End Balance Sheet
($ in thousands)
Total assets	$	1,946,019		$	1,964,478		$	1,856,759		$	1,764,464		$	1,665,394
Gross loans		858,763			860,037			872,110			943,894			1,028,776
Nonperforming assets		-			-			-			362			362
Allowance for loan losses		10,762			10,738			11,351			11,327			11,312
Deposits		1,799,305			1,806,966			1,701,180			1,614,480			1,517,785
Common equity		131,649			142,612			139,788			136,620			131,942
Non-Financial Data
Full-time equivalent staff		206			205			196			188			183
Number of banking offices		17			17			17			17			17
Common Shares outstanding
Period end		8,255,601			8,239,099			8,239,099			8,231,983			8,235,939
Period average - basic		8,157,987			8,151,250			8,148,277			8,145,538			8,134,831
Period average - diluted		8,197,275			8,188,003			8,182,780			8,177,714			8,166,178
Market Ratios
Stock Price	$	18.45		$	17.40		$	17.54		$	18.17		$	17.15
Price/Earnings		15.67			10.31			7.91			9.32			7.90
Price/Book		1.16			1.01			1.03			1.09			1.07

(1)  Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 21%.

(2)  Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 21%.

   A marginal federal/state combined tax rate of 29.56%, was used for applicable revenue.

XML

Document And Entity Information	Apr. 21, 2022
Document Information [Line Items]
Entity, Registrant Name	Oak Valley Bancorp
Document, Type	8-K
Document, Period End Date	Apr. 21, 2022
Entity, Incorporation, State or Country Code	CA
Entity, File Number	001-34142
Entity, Tax Identification Number	26-2326676
Entity, Address, Address Line One	125 N. Third Ave.
Entity, Address, City or Town	Oakdale
Entity, Address, State or Province	CA
Entity, Address, Postal Zip Code	95361
City Area Code	209
Local Phone Number	848-2265
Title of 12(b) Security	Common Stock
Trading Symbol	OVLY
Security Exchange Name	NASDAQ
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0001431567