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Section 1: 8-K (FORM 8-K)

ovly20191021_8k.htm

 

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:  October 18, 2019
(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 October 18, 2019 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 and nine months ended September 30, 2019.

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 October 18, 2019

 

 

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: October 21, 2019

 

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 October 18, 2019

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

ex_160699.htm

Exhibit 99.1

 

PRESS RELEASE

 

For Immediate Release

 

Date:

October 18, 2019

Contact:

Chris Courtney/Rick McCarty

Phone: (209) 848-2265
  www.ovcb.com

 

 

OAK VALLEY BANCORP REPORTS RECORD 3rd 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 three months ended September 30, 2019, consolidated net income was $3,231,000, or $0.40 per diluted share (EPS), compared to $2,963,000, or $0.37 EPS for the prior quarter and $3,165,000, or $0.39 EPS for the same period of 2018. Consolidated net income for the nine months ended September 30, 2019 totaled $9,298,000, or $1.15 EPS, representing an increase of $740,000 or 8.6%, compared to $8,558,000, or $1.06 EPS for the nine months ended September 30, 2018.

 

The earnings increase compared to prior periods was primarily driven by net interest income expansion corresponding to loan growth. Net interest income increased to $10,445,000 for the three months ended September 30, 2019, compared to $10,128,000 for the prior quarter and $9,944,000 for the same period of 2018. The net interest margin for the three months ended September 30, 2019 was 4.18%, compared to 4.23% for the prior quarter, and 3.97% for the same period of 2018. Despite the increase to net interest income and average loans, the net interest margin retracted in the third quarter compared to the prior quarter due to an increase in cash balances compounded by a decrease in yields due to the two FOMC rate cuts thus far during 2019.

 

Non-interest income for the three months ended September 30, 2019 totaled $1,275,000, compared to $1,242,000 during the prior quarter, and $1,137,000 for the same period of 2018. The increase compared to these prior periods is primarily due to service charges and transaction-based fee income from our expanding core deposit base.

 

Non-interest expense for the three months ended September 30, 2019 totaled $7,157,000, compared to $7,310,000 during the prior quarter, and $6,820,000 for the same period of 2018. The decrease compared to the prior period is due to various operating expense reductions and a reduction in the provision for losses of undisbursed loan commitments. The increase compared to the same period of last year corresponds to staffing increases and general operating costs related to servicing the growing loan and deposit portfolios.

 

 

 

 

Total assets were $1.10 billion as of September 30, 2019, an increase of $32.8 million from June 30, 2019 and $25.3 million over September 30, 2018. Gross loans were $732.3 million as of September 30, 2019, an increase of $14.2 million over June 30, 2019, and $69.1 million over September 30, 2018. The Company’s total deposits were $978.0 million as of September 30, 2019, an increase of $28.9 million over June 30, 2019, and $3.6 million over September 30, 2018.

 

“Loan production and core deposit growth continue to deliver solid results. Despite recent quarter over quarter pressure on net interest margin, we have driven profitability through increased loan volume and by fostering strong relationships with many of the finest businesses and business owners in the communities we serve,” stated Chris Courtney, President and CEO.  “Our team remains focused on creating a second-to-none service experience.” Courtney concluded. 

 

“While we’ve begun to experience industry-wide pressure on loan and investment yield, we have been able to overcome the impact by growing the loan portfolio and keeping a watchful eye on the bank’s cost of funds. Heading into the fourth quarter, we have a positive outlook on our loan pipeline and anticipate that loan production will partially moderate yield compression.” stated Rick McCarty, Senior EVP, Chief Operating Officer.

 

Non-performing assets as of September 30, 2019 were $1,200,000, or 0.11% of total assets, compared to $906,000, or 0.08% of total assets, as of June 30, 2019, and $663,000, or 0.09%, at September 30, 2018. The increase during the third quarter was a result of two consumer residential loans that were placed on non-accrual status. The allowance for loan losses to gross loans was 1.23% at September 30, 2019, compared to 1.22% at June 30, 2019 and 1.23% at September 30, 2018. The Company recorded provision for loan losses of $240,000 during the third quarter of 2019 which was commensurate with growth of the loan portfolio, as loan loss reserves relative to gross loans remain at acceptable levels and credit quality remains strong.

 

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.

 

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)

 

3rd Quarter

   

2nd Quarter

   

1st Quarter

   

4th Quarter

   

3rd Quarter

 

Selected Quarterly Operating Data:

 

2019

   

2019

   

2019

   

2018

   

2018

 
                                         

Net interest income

  $ 10,445     $ 10,128     $ 10,111     $ 10,179     $ 9,944  

Provision for loan losses

    240       95       -       555       -  

Non-interest income

    1,275       1,242       1,275       1,232       1,137  

Non-interest expense

    7,157       7,310       7,233       6,921       6,820  

Net income before income taxes

    4,323       3,965       4,153       3,935       4,261  

Provision for income taxes

    1,092       1,002       1,049       956       1,096  

Net income

  $ 3,231     $ 2,963     $ 3,104     $ 2,979     $ 3,165  
                                         

Earnings per common share - basic

  $ 0.40     $ 0.37     $ 0.38     $ 0.37     $ 0.39  

Earnings per common share - diluted

  $ 0.40     $ 0.37     $ 0.38     $ 0.37     $ 0.39  

Dividends paid per common share

  $ 0.135     $ -     $ 0.135     $ -     $ 0.130  

Return on average common equity

    11.86 %     11.39 %     12.54 %     12.16 %     13.21 %

Return on average assets

    1.18 %     1.13 %     1.17 %     1.08 %     1.17 %

Net interest margin (1)

    4.18 %     4.23 %     4.16 %     3.96 %     3.97 %

Efficiency ratio (2)

    59.67 %     62.27 %     62.20 %     58.78 %     59.50 %
                                         

Capital - Period End

                                       

Book value per common share

  $ 13.31     $ 12.98     $ 12.45     $ 12.09     $ 11.67  
                                         

Credit Quality - Period End

                                       

Nonperforming assets/ total assets

    0.11 %     0.08 %     0.09 %     0.08 %     0.09 %

Loan loss reserve/ gross loans

    1.23 %     1.22 %     1.23 %     1.22 %     1.23 %
                                         

Period End Balance Sheet

                                       

($ in thousands)

                                       

Total assets

  $ 1,101,132     $ 1,068,310     $ 1,059,130     $ 1,094,887     $ 1,075,805  

Gross loans

    732,334       718,158       707,408       711,902       663,195  

Nonperforming assets

    1,200       906       967       920       920  

Allowance for loan losses

    9,005       8,770       8,677       8,685       8,135  

Deposits

    977,993       949,090       938,743       986,495       974,424  

Common equity

    109,320       106,583       102,218       99,038       95,666  
                                         

Non-Financial Data

                                       

Full-time equivalent staff

    182       184       180       178       176  

Number of banking offices

    17       17       17       17       17  
                                         

Common Shares outstanding

                                       

Period end

    8,210,637       8,208,853       8,209,750       8,194,805       8,194,255  

Period average - basic

    8,105,294       8,102,807       8,093,106       8,086,748       8,083,927  

Period average - diluted

    8,120,096       8,117,192       8,102,411       8,097,161       8,104,252  
                                         

Market Ratios

                                       

Stock Price

  $ 16.77     $ 19.55     $ 17.64     $ 18.30     $ 19.65  

Price/Earnings

    10.60       13.33       11.34       12.52       12.65  

Price/Book

    1.26       1.51       1.42       1.51       1.68  

 

 

 

 

   

NINE MONTHS ENDED

SEPTEMBER 30,

 

($ in thousands, except per share)

 

2019

   

2018

 
                 

Net interest income

  $ 30,684     $ 28,388  

Provision for loan losses

    335       -  

Non-interest income

    3,792       3,480  

Non-interest expense

    21,700       20,457  

Net income before income taxes

    12,441       11,411  

Provision for income taxes

    3,143       2,853  

Net income

  $ 9,298     $ 8,558  
                 

Earnings per common share - basic

  $ 1.15     $ 1.06  

Earnings per common share - diluted

  $ 1.15     $ 1.06  

Dividends paid per common share

  $ 0.270     $ 0.26  

Return on average common equity

    11.92 %     12.29 %

Return on average assets

    1.16 %     1.08 %

Net interest margin (1)

    4.19 %     3.87 %

Efficiency ratio (2)

    61.36 %     62.30 %
                 

Capital - Period End

               

Book value per common share

  $ 13.31     $ 11.67  
                 

Credit Quality - Period End

               

Nonperforming assets/ total assets

    0.11 %     0.09 %

Loan loss reserve/ gross loans

    1.23 %     1.23 %
                 

Period End Balance Sheet

               

($ in thousands)

               

Total assets

  $ 1,101,132     $ 1,075,805  

Gross loans

    732,334       663,195  

Nonperforming assets

    1,200       920  

Allowance for loan losses

    9,005       8,135  

Deposits

    977,993       974,424  

Common equity

    109,320       95,666  
                 

Non-Financial Data

               

Full-time equivalent staff

    182       176  

Number of banking offices

    17       17  
                 

Common Shares outstanding

               

Period end

    8,210,637       8,194,255  

Period average - basic

    8,100,447       8,079,707  

Period average - diluted

    8,113,298       8,101,087  
                 

Market Ratios

               

Stock Price

  $ 16.77     $ 19.65  

Price/Earnings

    10.93       13.88  

Price/Book

    1.26       1.68  

 

(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.

 

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