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

ovly20190122_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:  January 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)


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 January 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 year ended December 31, 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 January 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: January 23, 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 January 18, 2019

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

ex_133264.htm

Exhibit 99.1

 

PRESS RELEASE

 

For Immediate Release

 

Date:

January 18, 2019

Contact:

Chris Courtney/Rick McCarty

Phone: (209) 848-2265
  www.ovcb.com

 

OAK VALLEY BANCORP REPORTS 4th 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 December 31, 2018, consolidated net income was $2,979,000 or $0.37 per diluted share (EPS), as compared to $3,165,000, or $0.39 EPS, for the prior quarter and $1,589,000, or $0.20 EPS for the same period a year ago. Consolidated net income for the year ended December 31, 2018 totaled $11,537,000, or $1.42 EPS, representing an increase of 26.9% compared to $9,094,000 or $1.13 EPS for 2017. The decrease from the prior quarter is the result of loan loss provisions recorded during the quarter corresponding to loan growth. The 2018 net income increases over the comparable periods of 2017 were mainly driven by strong earning asset growth and corresponding increases to net interest income. Additionally, the Company realized a reduction in income tax provision in 2018 due to the lower federal income tax rate of 21%, following the passing of the U.S. Tax Cuts and Jobs Act of 2017, which also resulted in a $983,000 charge to federal income tax provision in the fourth quarter of 2017, due to the revaluation of net deferred tax assets.

 

Net interest income was $10,179,000 and $38,567,000 for the quarter and year ended December 31, 2018, respectively, compared to $9,944,000 during the prior quarter, $9,023,000 for the fourth quarter of 2017 and $34,180,000 for the year ended December 31, 2017. Net interest margin increased to 3.96% and 3.89% for the quarter and year ended December 31, 2018, respectively, as compared to 3.86% and 3.77% for the same periods of 2017. The net interest income and net interest margin increases in 2018 over the comparable prior periods were the result of strong growth of our loan and investment portfolios and the positive impact that rising interest rates have had on our variable rate earning assets.

 

Non-interest income for the fourth quarter and year ended December 31, 2018 totaled $1,232,000 and $4,712,000, respectively, compared to $1,137,000 during the prior quarter, $1,193,000 for the fourth quarter of 2017, and $5,976,000 for the year ended December 31, 2017. The moderate increase in the fourth quarter was mainly due to FHLB dividend income and steady increases in service charges and fee income from our growing customer base. The year-over-year decrease is mainly due to the $938,000 merger-related settlement payments recorded in the second quarter of 2017.

 

 

 

 

Non-interest expense for the fourth quarter and year ended December 31, 2018 totaled $6,921,000 and $27,378,000, respectively, compared to $6,820,000 during the prior quarter, $6,222,000 for the fourth quarter of 2017 and $24,565,000 for the year ended December 31, 2017. The increase compared to prior periods corresponds to staffing increases, partially related to the expansion into the new Sacramento Branch during the third quarter, and general operating costs related to servicing the growing loan and deposit portfolios.

 

Total assets were $1.09 billion at December 31, 2018, an increase of $19.1 million over September 30, 2018 and $60.1 million over December 31, 2017. Gross loans were $711.9 million as of December 31, 2018, an increase of $48.7 million over September 30, 2018, and an increase of $49.4 million over December 31, 2017. The Company’s total deposits were $986.5 million as of December 31, 2018, an increase of $12.1 million over September 30, 2018, and an increase of $47.6 million over December 31, 2017.

 

“Steady core deposit growth combined with third and fourth quarter loan growth have again helped push Company earnings to record level. We are very pleased with our year-end results for 2018,” stated Chris Courtney, President and CEO of the Company and the Bank. “We are enthusiastic about our recent expansion into Sacramento and look forward to growth opportunities in the greater Sacramento region. As we expand our Northern California presence to better serve our clients, we naturally garner increased awareness of the Oak Valley brand, which enables us to introduce more Central Valley families and businesses to our premier style of community banking,” Courtney concluded.

 

Non-performing assets as of December 31, 2018 were $920,000, or 0.08% of total assets, compared to $920,000, or 0.09% of total assets, as of September 30, 2018, and $1,564,000, or 0.15% at December 31, 2017.  The decrease in non-performing assets during 2018 is the result of payments on non-performing loans and an OREO property sale during the first quarter of 2018.

 

The Company recorded provision for loan losses of $555,000 during the fourth quarter corresponding to strong fourth quarter loan growth. At the same time, credit quality improved slightly, which allowed for a decrease in the allowance for loan losses as a percentage of gross loans to 1.22% at December 31, 2018, compared to 1.23% at September 30, 2018 and December 31, 2017.

 

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 in 2018, 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)

 

4th Quarter

   

3rd Quarter

   

2nd Quarter

   

1st Quarter

   

4th Quarter

 

Selected Quarterly Operating Data:

 

2018

   

2018

   

2018

   

2018

   

2017

 
                                         

Net interest income

  $ 10,179     $ 9,944     $ 9,327     $ 9,117     $ 9,023  

Provision for loan losses

    555       -       -       -       245  

Non-interest income

    1,232       1,137       1,011       1,332       1,193  

Non-interest expense

    6,921       6,820       6,905       6,732       6,222  

Net income before income taxes

    3,935       4,261       3,433       3,717       3,749  

Provision for income taxes

    956       1,096       842       915       2,160  

Net income

  $ 2,979     $ 3,165     $ 2,591     $ 2,802     $ 1,589  
                                         

Earnings per common share - basic

  $ 0.37     $ 0.39     $ 0.32     $ 0.35     $ 0.20  

Earnings per common share - diluted

  $ 0.37     $ 0.39     $ 0.32     $ 0.35     $ 0.20  

Dividends paid per common share

  $ -     $ 0.130     $ -     $ 0.130     $ -  

Return on average common equity

    12.16 %     13.21 %     11.18 %     12.47 %     6.93 %

Return on average assets

    1.08 %     1.17 %     0.99 %     1.08 %     0.62 %

Net interest margin (1)

    3.96 %     3.97 %     3.83 %     3.80 %     3.86 %

Efficiency ratio (2)

    58.78 %     59.50 %     64.20 %     63.40 %     58.35 %
                                         

Capital - Period End

                                       

Book value per common share

  $ 12.09     $ 11.67     $ 11.50     $ 11.19     $ 11.21  
                                         

Credit Quality - Period End

                                       

Nonperforming assets/ total assets

    0.08 %     0.09 %     0.12 %     0.12 %     0.15 %

Loan loss reserve/ gross loans

    1.22 %     1.23 %     1.25 %     1.26 %     1.23 %
                                         

Period End Balance Sheet

                                       

($ in thousands)

                                       

Total assets

  $ 1,094,929     $ 1,075,805     $ 1,069,600     $ 1,052,813     $ 1,034,852  

Gross loans

    711,902       663,195       654,594       648,367       662,544  

Nonperforming assets

    920       920       1,310       1,310       1,564  

Allowance for loan losses

    8,685       8,135       8,162       8,165       8,166  

Deposits

    986,495       974,424       970,615       955,341       938,882  

Common equity

    99,038       95,666       94,145       91,595       90,767  
                                         

Non-Financial Data

                                       

Full-time equivalent staff

    178       176       175       168       167  

Number of banking offices

    17       17       16       16       16  
                                         

Common Shares outstanding

                                       

Period end

    8,194,805       8,194,255       8,183,005       8,183,005       8,098,605  

Period average - basic

    8,086,748       8,083,927       8,080,134       8,074,961       8,073,805  

Period average - diluted

    8,097,161       8,104,252       8,098,269       8,100,703       8,090,826  
                                         

Market Ratios

                                       

Stock Price

  $ 18.30     $ 19.65     $ 22.87     $ 22.30     $ 19.54  

Price/Earnings

    12.52       12.65       17.78       15.85       25.02  

Price/Book

    1.51       1.68       1.99       1.99       1.74  

 

 

 

 

   

YEAR ENDED DECEMBER 31,

 

($ in thousands, except per share)

 

2018

   

2017

 
                 

Net interest income

  $ 38,567     $ 34,180  

Provision for loan losses

    555       350  

Non-interest income

    4,712       5,976  

Non-interest expense

    27,378       24,565  

Net income before income taxes

    15,346       15,241  

Provision for income taxes

    3,809       6,147  

Net income

  $ 11,537     $ 9,094  
                 

Earnings per common share - basic

  $ 1.43     $ 1.13  

Earnings per common share - diluted

  $ 1.42     $ 1.13  

Dividends paid per common share

  $ 0.26     $ 0.25  

Return on average common equity

    12.26 %     10.41 %

Return on average assets

    1.08 %     0.91 %

Net interest margin (1)

    3.89 %     3.77 %

Efficiency ratio (2)

    61.37 %     60.66 %
                 

Capital - Period End

               

Book value per common share

  $ 12.09     $ 11.21  
                 

Credit Quality - Period End

               

Nonperforming assets/ total assets

    0.08 %     0.15 %

Loan loss reserve/ gross loans

    1.22 %     1.23 %
                 

Period End Balance Sheet

               

($ in thousands)

               

Total assets

  $ 1,094,929     $ 1,034,852  

Gross loans

    711,902       662,544  

Nonperforming assets

    920       1,564  

Allowance for loan losses

    8,685       8,166  

Deposits

    986,495       938,882  

Common equity

    99,038       90,767  
                 

Non-Financial Data

               

Full-time equivalent staff

    178       167  

Number of banking offices

    17       16  
                 

Common Shares outstanding

               

Period end

    8,194,805       8,098,605  

Period average - basic

    8,081,482       8,060,686  

Period average - diluted

    8,100,098       8,081,497  
                 

Market Ratios

               

Stock Price

  $ 18.30     $ 19.54  

Price/Earnings

    12.82       17.32  

Price/Book

    1.51       1.74  

 

(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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