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

ovly20181022_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, 2018
(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)



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, 2018 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, 2018.

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, 2018

 


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 22, 2018

 

 

  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, 2018

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

ex_125942.htm

Exhibit 99.1

 

PRESS RELEASE

 

For Immediate Release

 

Date:

October 18, 2018

Contact:

Chris Courtney/Rick McCarty

Phone:

(209) 848-2265 

www.ovcb.com

         

 

OAK VALLEY BANCORP REPORTS 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, 2018, consolidated net income was $3,165,000, or $0.39 per diluted share (EPS), compared to $2,591,000, or $0.32 EPS for the prior quarter and $2,468,000, or $0.31 EPS for the same period of 2017. Consolidated net income for the nine months ended September 30, 2018 totaled $8,558,000, or $1.06 EPS, representing an increase of $1,053,000 or 14.0%, compared to $7,505,000, or $0.93 EPS for the nine months ended September 30, 2017. The earnings increase compared to prior periods is primarily due to loan growth, the positive impact of rising interest rates on earning assets resulting in increased net interest income, and a lower effective tax rate in 2018 compared to 2017 due to the Tax Cuts and Jobs Act of 2017.

 

Net interest income increased to $9,944,000 for the three months ended September 30, 2018, compared to $9,327,000 for the prior quarter and $8,620,000 for the same period of 2017, mainly due to growth of our loan and investment portfolios. Additionally, the balance sheet has been asset sensitive to interest rate changes because of the high cash balances and substantial portion of the loan and investment portfolios that have variable rates, which has had a positive impact on net interest income and the net interest margin during the current rising rate environment. For the three months ended September 30, 2018, net interest margin was 3.97%, compared to 3.83% for the prior quarter, and 3.78% for the same period of 2017.

 

Non-interest income for the three months ended September 30, 2018 totaled $1,137,000, compared to $1,011,000 during the prior quarter, and $1,276,000 for the same period of 2017. The increase compared to the prior quarter is primarily due to a decrease in the unrealized loss in equity securities. The decrease compared to the same period last year is largely due to a $211,000 gain on the sale of an OREO property recorded during the third quarter in 2017. Outside of these non-recurring items and adjustments, service charges and fee income from our core deposit base continues to rise at a steady pace.

 

 

 

 

Non-interest expense for the three months ended September 30, 2018 totaled $6,820,000, compared to $6,905,000 during the prior quarter, and $6,060,000 for the same period of 2017. The decrease compared to the prior period is mainly due to the recognition of remaining contractual lease obligation on a branch premises which was vacated, relocated, and recorded during the second quarter. 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. More specifically, we expanded into the Sacramento market with a de novo branch in Downtown Sacramento which opened last month.

 

Total assets were $1.08 billion as of September 30, 2018, an increase of $6.2 million from June 30, 2018 and $79.1 million over September 30, 2017. Gross loans were $663.2 million as of September 30, 2018, an increase of $8.6 million over June 30, 2018, and $26.6 million over September 30, 2017. The Company’s total deposits were $974.4 million as of September 30, 2018, an increase of $3.8 million over June 30, 2018, and $72.7 million over September 30, 2017.

 

“We are very happy to report another strong quarter and solid year-to-date results. As we have from the beginning, we remain focused on developing relationships with our clients which are based on trust and the understanding that we succeed by helping our clients flourish,” stated Chris Courtney, President and CEO. “Through the years our team has grown, most recently with the opening of our Sacramento Branch, but our commitment to the values on which the bank was built is unwavering. While we are excited about the expansion into Sacramento, our clients can count on our unique brand of service remaining the same as we grow, Courtney concluded.

 

Non-performing assets as of September 30, 2018 were $920,000, or 0.09% of total assets, compared to $1,310,000, or 0.12% of total assets, as of June 30, 2018, and $1,564,000, or 0.16%, at September 30, 2017. The decrease during the quarter is due to a pay-down on one impaired loan relationship. The allowance for loan losses to gross loans decreased to 1.23% at September 30, 2018, compared to 1.25% at June 30, 2018 and 1.24% at September 30, 2017. The Company did not record a provision for loan losses during the third quarter of 2018 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. The Sacramento – Capitol Mall Branch, which opened during the quarter, is the latest addition to Oak Valley’s network.

 

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:

 

2018

   

2018

   

2018

   

2017

   

2017

 
                                         

Net interest income

  $ 9,944     $ 9,327     $ 9,117     $ 9,023     $ 8,620  

Provision for loan losses

    -       -       -       245       70  

Non-interest income

    1,137       1,011       1,332       1,193       1,276  

Non-interest expense

    6,820       6,905       6,732       6,222       6,060  

Net income before income taxes

    4,261       3,433       3,717       3,749       3,766  

Provision for income taxes

    1,096       842       915       2,160       1,298  

Net income

  $ 3,165     $ 2,591     $ 2,802     $ 1,589     $ 2,468  
                                         

Earnings per common share - basic

  $ 0.39     $ 0.32     $ 0.35     $ 0.20     $ 0.31  

Earnings per common share - diluted

  $ 0.39     $ 0.32     $ 0.35     $ 0.20     $ 0.31  

Dividends paid per common share

  $ 0.130     $ -     $ 0.130     $ -     $ 0.125  

Return on average common equity

    13.21 %     11.18 %     12.47 %     6.93 %     11.04 %

Return on average assets

    1.17 %     0.99 %     1.08 %     0.62 %     0.98 %

Net interest margin (1)

    3.97 %     3.83 %     3.80 %     3.86 %     3.78 %

Efficiency ratio (2)

    59.50 %     64.20 %     63.40 %     58.35 %     59.55 %
                                         

Capital - Period End

                                       

Book value per common share

  $ 11.67     $ 11.50     $ 11.19     $ 11.21     $ 11.07  
                                         

Credit Quality - Period End

                                       

Nonperforming assets/ total assets

    0.09 %     0.12 %     0.12 %     0.15 %     0.16 %

Loan loss reserve/ gross loans

    1.23 %     1.25 %     1.26 %     1.23 %     1.24 %
                                         

Period End Balance Sheet

                                       

($ in thousands)

                                       

Total assets

  $ 1,075,805     $ 1,069,600     $ 1,052,813     $ 1,034,852     $ 996,721  

Gross loans

    663,195       654,594       648,367       662,544       636,609  

Nonperforming assets

    920       1,310       1,310       1,564       1,564  

Allowance for loan losses

    8,135       8,162       8,165       8,166       7,917  

Deposits

    974,424       970,615       955,341       938,882       901,716  

Common equity

    95,666       94,145       91,595       90,767       89,676  
                                         

Non-Financial Data

                                       

Full-time equivalent staff

    176       175       168       167       164  

Number of banking offices

    17       16       16       16       16  
                                         

Common Shares outstanding

                                       

Period end

    8,194,255       8,183,005       8,183,005       8,098,605       8,098,605  

Period average - basic

    8,083,927       8,080,134       8,074,961       8,073,805       8,064,690  

Period average - diluted

    8,104,252       8,098,269       8,100,703       8,090,826       8,083,137  
                                         

Market Ratios

                                       

Stock Price

  $ 19.65     $ 22.87     $ 22.30     $ 19.54     $ 16.79  

Price/Earnings

    12.65       17.78       15.85       25.02       13.83  

Price/Book

    1.68       1.99       1.99       1.74       1.52  

 

 

 

 

   

NINE MONTHS ENDED SEPTEMBER 30,

 

($ in thousands, except per share)

 

2018

   

2017

 
                 

Net interest income

  $ 28,388     $ 25,157  

Provision for loan losses

    -       105  

Non-interest income

    3,480       4,783  

Non-interest expense

    20,457       18,343  

Net income before income taxes

    11,411       11,492  

Provision for income taxes

    2,853       3,987  

Net income

  $ 8,558     $ 7,505  
                 

Earnings per common share - basic

  $ 1.06     $ 0.93  

Earnings per common share - diluted

  $ 1.06     $ 0.93  

Dividends paid per common share

  $ 0.26     $ 0.25  

Return on average common equity

    12.29 %     11.64 %

Return on average assets

    1.08 %     1.01 %

Net interest margin (1)

    3.87 %     3.73 %

Efficiency ratio (2)

    62.30 %     61.48 %
                 

Capital - Period End

               

Book value per common share

  $ 11.67     $ 11.07  
                 

Credit Quality - Period End

               

Nonperforming assets/ total assets

    0.09 %     0.16 %

Loan loss reserve/ gross loans

    1.23 %     1.24 %
                 

Period End Balance Sheet

               

($ in thousands)

               

Total assets

  $ 1,075,805     $ 996,721  

Gross loans

    663,195       636,609  

Nonperforming assets

    920       1,564  

Allowance for loan losses

    8,135       7,917  

Deposits

    974,424       901,716  

Common equity

    95,666       89,676  
                 

Non-Financial Data

               

Full-time equivalent staff

    176       164  

Number of banking offices

    17       16  
                 

Common Shares outstanding

               

Period end

    8,194,255       8,098,605  

Period average - basic

    8,079,707       8,056,265  

Period average - diluted

    8,101,087       8,078,353  
                 

Market Ratios

               

Stock Price

  $ 19.65     $ 16.79  

Price/Earnings

    13.88       13.48  

Price/Book

    1.68       1.52  

 

 

(1)  Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 34% in 2017, and 21% in 2018.

(2)  Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 34% 2017, and 21% in 2018.

       A marginal federal/state combined tax rate of 41.15% in 2017 and 29.56% in 2018, was used for applicable revenue.

 

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