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

ovly20180720_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:  July 19, 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 July 19, 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 six months ended June 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 8.01   Other Events

 

On July 17, 2018, the Board of Directors of Oak Valley Bancorp declared a $0.13 per share cash dividend for shareholders of record as of July 30, 2018, payable on August 10, 2018. A press release was issued on July 19, 2018 and is attached to this Current Report and is incorporated into this report by reference.

 

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 July 19, 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: July 20, 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 July 19, 2018

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

ex_118127.htm

Exhibit 99.1

 

PRESS RELEASE

 

 

For Immediate Release

 

Date:

July 19, 2018

Contact:

Chris Courtney/Rick McCarty

Phone:

(209) 848-2265

 

www.ovcb.com

 

 

OAK VALLEY BANCORP REPORTS 2nd QUARTER RESULTS AND ANNOUNCES CASH DIVIDEND

 

 

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 June 30, 2018, consolidated net income was $2,591,000, or $0.32 per diluted share (EPS), compared to $2,802,000, or $0.35 EPS, for the prior quarter and $2,830,000, or $0.35 EPS, for the same period a year ago. The decrease of $211,000 compared to the prior quarter is mainly due to non-recurring gains on the sale of an OREO property and investment securities recorded during the first quarter of 2018. Compared to the second quarter of 2017, the net income decrease of $239,000 is attributable to the $938,000 one-time merger-related settlement payments that were recorded in the second quarter of 2017, which were offset in part by strong core earnings and the lower federal income tax rate in 2018 corresponding to the Tax Cuts and Jobs Act of 2017.

 

Consolidated net income for the six months ended June 30, 2018 totaled $5,393,000, or $0.67 EPS, representing an increase of 7.1% compared to $5,037,000, or $0.62 EPS for the six months ended June 30, 2017. In spite of the non-recurring revenue items recorded in the prior year, the Company has benefited from year-over-year earning asset growth, a higher interest rate environment and a lower federal income tax rate, as the main contributors to the year-to-date net income increase of $356,000.

 

Net interest income was $9,327,000 for the three months ended June 30, 2018, compared to $9,117,000 for the prior quarter and $8,455,000 for the same period last year. The increase is attributable to the growth of our investment portfolio, combined with the positive impact of recent FOMC rate hikes on earning assets. As a result, the Company’s net interest margin for the three months ended June 30, 2018 increased to 3.83%, compared to 3.80% for the prior quarter, and 3.74% for the same period last year.

 

Non-interest income for the three months ended June 30, 2018 totaled $1,011,000, compared to $1,332,000 during the prior quarter, and $2,036,000 for the same period last year. Compared to the prior quarter, the decrease is related to gains from the sale of an OREO property and investment securities recorded during the first quarter of 2018. The decrease from the same period last year is primarily due to the aforementioned merger-related settlement payment recorded in 2017.

 

 

 

 

Non-interest expense for the three months ended June 30, 2018 totaled $6,905,000, compared to $6,732,000 during the prior quarter, and $6,076,000 for the same period last year. These increases compared to prior periods correspond to staffing increases partially related to the Company’s upcoming Sacramento expansion, as well as, deposit and loan servicing costs associated with the growing customer base. Additionally, the Company recognized the expense from the remaining contractual lease obligation on a branch premises that was vacated and relocated during the second quarter.

 

Total assets were $1.07 billion as of June 30, 2018, an increase of $16.8 million over March 31, 2018 and $49.1 million over June 30, 2017. Gross loans were $654.6 million as of June 30, 2018, an increase of $6.2 million over March 31, 2018, and an increase of $30.8 million over June 30, 2017. The Company’s total deposits were $970.6 million as of March 31, 2018, an increase of $15.3 million and $44.8 million over March 31, 2018 and June 30, 2017, respectively.

 

“We are pleased to report another quarter of strong core operating results. Net interest income continues to increase and drive profitability,” stated Chris Courtney, President and CEO. Moving to the second half of the year, we are excited about our expansion into Sacramento and the upcoming opening of our new Capitol Mall Branch. We are proud of the relationship team we have assembled for the market, and the response from the business community has been extremely positive,” he concluded.

 

Non-performing assets as of June 30, 2018 were $1,310,000, or 0.12% of total assets, which was flat compared to March 31, 2018, and represented a decrease from $3,242,000, or 0.32%, at June 30, 2017. The allowance for loan losses to gross loans decreased to 1.25% at June 30, 2018, compared to 1.26% at March 31, 2018 and June 30, 2017. The Company did not record a provision for loan losses during the second quarter of 2018 as loan loss reserves relative to gross loans remain at acceptable levels and credit quality remains strong.

 

The Board of Directors of Oak Valley Bancorp at their July 17, 2018 meeting, declared the payment of a cash dividend of $0.13 per share of common stock to its shareholders of record at the close of business on July 30, 2018. The payment date will be August 10, 2018 and will amount to approximately $1,064,000. This is the second dividend payment made by the Company in 2018.

 

During the quarter, Oak Valley Bancorp was notified it would be added to the Russell 2000®Index and Russell 3000® Index as part of the annual reconstitution of the indexes. The Russell 3000® Index captures the 3000 largest U.S. stocks, ranking them by total market capitalization. The largest 1,000 companies comprise the Russell 1000® Index and the next 2,000 companies make-up the Russell 2000® Index.

 

 

 

 

Russell US Indexes are widely used by investment managers and institutional investors as the basis for index funds and as benchmarks for active investment strategies.

 

“Inclusion in the Russell Index is an affirmation of our commitment to steady growth and the creation of long-term shareholder value. It’s an honor to be recognized as one of the 3,000 largest publicly-traded companies in the U.S. and any enhanced liquidity gleaned from inclusion is a benefit to our investors, ” commented Rick McCarty, Senior EVP and COO.

 

Oak Valley Bancorp operates Oak Valley Community Bank & Eastern Sierra Community Bank, through which it offers a variety of loan and deposit products to individuals and small businesses. They currently operate through 16 conveniently located branches: Oakdale, Turlock, Stockton, Patterson, Ripon, Escalon, Manteca, Tracy, two branches in Sonora, three branches in Modesto, a loan production office (LPO) in Downtown Sacramento, and three branches in their Eastern Sierra division, which includes Bridgeport, Mammoth Lakes and Bishop. The Company has announced plans to elevate their LPO in Sacramento to a full-service branch in August 2018.

 

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)

 

2nd Quarter

   

1st Quarter

   

4th Quarter

   

3rd Quarter

   

2nd Quarter

 

Selected Quarterly Operating Data:

 

2018

   

2018

   

2017

   

2017

   

2017

 
                                         

Net interest income

  $ 9,327     $ 9,117     $ 9,023     $ 8,620     $ 8,455  

Provision for loan losses

    -       -       245       70       35  

Non-interest income

    1,011       1,332       1,193       1,276       2,036  

Non-interest expense

    6,905       6,732       6,222       6,060       6,076  

Net income before income taxes

    3,433       3,717       3,749       3,766       4,380  

Provision for income taxes

    842       915       2,160       1,298       1,550  

Net income

  $ 2,591     $ 2,802     $ 1,589     $ 2,468     $ 2,830  
                                         

Earnings per common share - basic

  $ 0.32     $ 0.35     $ 0.20     $ 0.31     $ 0.35  

Earnings per common share - diluted

  $ 0.32     $ 0.35     $ 0.20     $ 0.31     $ 0.35  

Dividends paid per common share

  $ -     $ 0.130     $ -     $ 0.125     $ -  

Return on average common equity

    11.18 %     12.47 %     6.93 %     11.04 %     13.14 %

Return on average assets

    0.99 %     1.08 %     0.62 %     0.98 %     1.14 %

Net interest margin (1)

    3.83 %     3.80 %     3.86 %     3.78 %     3.74 %

Efficiency ratio (2)

    64.20 %     63.40 %     58.35 %     59.55 %     61.14 %
                                         

Capital - Period End

                                       

Book value per common share

  $ 11.50     $ 11.19     $ 11.21     $ 11.07     $ 10.89  
                                         

Credit Quality - Period End

                                       

Nonperforming assets/ total assets

    0.12 %     0.12 %     0.15 %     0.16 %     0.32 %

Loan loss reserve/ gross loans

    1.25 %     1.26 %     1.23 %     1.24 %     1.26 %
                                         

Period End Balance Sheet

                                       

($ in thousands)

                                       

Total assets

  $ 1,069,600     $ 1,052,813     $ 1,034,852     $ 996,721     $ 1,020,495  

Gross loans

    654,594       648,367       662,544       636,609       623,809  

Nonperforming assets

    1,310       1,310       1,564       1,564       3,242  

Allowance for loan losses

    8,162       8,165       8,166       7,917       7,854  

Deposits

    970,615       955,341       938,882       901,716       925,786  

Common equity

    94,145       91,595       90,767       89,676       88,100  
                                         

Non-Financial Data

                                       

Full-time equivalent staff

    175       168       167       164       164  

Number of banking offices

    16       16       16       16       16  
                                         

Common Shares outstanding

                                       

Period end

    8,183,005       8,183,005       8,098,605       8,098,605       8,089,705  

Period average - basic

    8,080,134       8,074,961       8,073,805       8,064,690       8,062,026  

Period average - diluted

    8,098,269       8,100,703       8,090,826       8,083,137       8,080,030  
                                         

Market Ratios

                                       

Stock Price

  $ 22.87     $ 22.30     $ 19.54     $ 16.79     $ 13.90  

Price/Earnings

    17.78       15.85       25.02       13.83       9.87  

Price/Book

    1.99       1.99       1.74       1.52       1.28  

 

 

 

 

   

SIX MONTHS ENDED JUNE 30,

 

($ in thousands, except per share)

 

2018

   

2017

 
                 

Net interest income

  $ 18,444     $ 16,537  

Provision for loan losses

    -       35  

Non-interest income

    2,343       3,507  

Non-interest expense

    13,637       12,283  

Net income before income taxes

    7,150       7,726  

Provision for income taxes

    1,757       2,689  

Net income

  $ 5,393     $ 5,037  
                 

Earnings per common share - basic

  $ 0.67     $ 0.63  

Earnings per common share - diluted

  $ 0.67     $ 0.62  

Dividends paid per common share

  $ 0.13     $ 0.13  

Return on average common equity

    11.82 %     11.96 %

Return on average assets

    1.03 %     1.02 %

Net interest margin (1)

    3.82 %     3.72 %

Efficiency ratio (2)

    63.80 %     62.42 %
                 

Capital - Period End

               

Book value per common share

  $ 11.50     $ 10.89  
                 

Credit Quality - Period End

               

Nonperforming assets/ total assets

    0.12 %     0.32 %

Loan loss reserve/ gross loans

    1.25 %     1.26 %
                 

Period End Balance Sheet

               

($ in thousands)

               

Total assets

  $ 1,069,600     $ 1,020,495  

Gross loans

    654,594       623,809  

Nonperforming assets

    1,310       3,242  

Allowance for loan losses

    8,162       7,854  

Deposits

    970,615       925,786  

Common equity

    94,145       88,100  
                 

Non-Financial Data

               

Full-time equivalent staff

    175       164  

Number of banking offices

    16       16  
                 

Common Shares outstanding

               

Period end

    8,183,005       8,089,705  

Period average - basic

    8,077,562       8,051,983  

Period average - diluted

    8,099,479       8,075,922  
                 

Market Ratios

               

Stock Price

  $ 22.87     $ 13.90  

Price/Earnings

    16.99       11.02  

Price/Book

    1.99       1.28  

 

(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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