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

ovly20190419_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:  April 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 April 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 ended March 31, 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 April 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: April 22, 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 April 18, 2019

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

ex_141186.htm

Exhibit 99.1

 

PRESS RELEASE

 

 

 

For Immediate Release

 

Date:

April 18, 2019

Contact:

Chris Courtney/Rick McCarty

Phone:

(209) 848-2265

 

www.ovcb.com

 

OAK VALLEY BANCORP REPORTS 1st 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 2019. For the three months ended March 31, 2019, consolidated net income was $3,104,000, or $0.38 per diluted share (EPS). This compared to consolidated net income of $2,979,000, or $0.37 EPS, for the prior quarter and $2,802,000, or $0.35 EPS, for the same period a year ago. The increase in net income compared to the first quarter of 2018 was driven by net interest margin expansion corresponding to strong earning asset growth. Net interest income decreased compared to the fourth quarter of 2018, but net income still increased due to the reduction in provision for loan losses.

 

Net interest income for the three months ended March 31, 2019 was $10,111,000, compared to $10,179,000 in the prior quarter and $9,117,000 for the same period a year ago. The net interest income decrease from the prior period is mainly due to two fewer days of interest accrual. Additionally, deposits and corresponding interest-earning cash balances decreased during the first quarter, as a result of the bank electing not to match competitive offerings on certain high interest rate deposit accounts. Despite these factors, average loans which are the key to sustained net interest income growth, increased during the first quarter by $25.2 million over the prior quarter.

 

Net interest margin for the three months ended March 31, 2019 was 4.16%, compared to 3.96% for the prior quarter and 3.80% for the same period last year. The increase comes as a result of higher yields on new loans, the positive impact that rising interest rates have had on our variable rate earning assets and the previously mentioned reduction in high-cost deposit accounts that were compressing the net interest margin.

 

Non-interest income was $1,275,000 for the quarter ended March 31, 2019, compared to $1,232,000 for the prior quarter and $1,332,000 for the same period last year. The increase compared to the prior quarter is mainly due to increased gains on called investment securities. The decrease compared to the first quarter of 2018, was primarily due to last year’s gain of $193,000 recorded from the sale of an OREO property, which was offset by increases in service charge and transaction fee income during the first quarter of 2019, as a result of our growing core deposit base.

 

 

 

 

Non-interest expense totaled $7,233,000 for the quarter ended March 31, 2019, compared to $6,921,000 in the previous quarter and $6,732,000 in the same quarter a year ago. The increase compared to prior periods corresponds to the expansion into Sacramento and other lending and credit administration staff additions, as well as increased general operating costs related to servicing the growing loan and deposit portfolios.

 

Total assets were $1.06 billion at March 31, 2019, a decrease of $35.8 million from December 31, 2018 and an increase of $6.3 million over March 31, 2018. Gross loans were $707.4 million at March 31, 2019, a decrease of $4.5 million over December 31, 2018, and an increase of $59.0 million over March 31, 2018. The Company’s total deposits were $938.7 million as of March 31, 2019, a decrease of $47.8 million and $16.6 million from December 31, 2018 and March 31, 2018, respectively.

 

“We are pleased to report our strongest first quarter earnings on record. While we acknowledge a calculated reduction in deposits, the impact to earnings will be minimal due to the high cost of funds of those accounts. As our growing relationship management teams continue their consistent efforts, we are confident in our ability to attract more and more members of the business community to our unique style of community banking,” stated Chris Courtney, President and CEO.

 

As of March 31, 2019, non-performing assets were $967,000 or 0.09% of total assets, compared to $920,000 or 0.08% of total assets as of December 31, 2018 and $1.3 million or 0.12% of total assets as of March 31, 2018. The decrease from the same period a year ago is the result of periodic collateral sales and subsequent payments received on non-performing loans.

 

The Company did not record a provision for loan losses during the first quarter of 2019 due to the decline in gross loans and sustained solid credit quality. The ratio of allowance for loan losses to gross loans increased slightly to 1.23% at March 31, 2019, compared to 1.22% at December 31, 2018 and decreased from 1.26% at March 31, 2018.

 

Oak Valley Bancorp operates Oak Valley Community Bank and 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)

 

1st Quarter

   

4th Quarter

   

3rd Quarter

   

2nd Quarter

   

1st Quarter

 

Selected Quarterly Operating Data:

 

2019

   

2018

   

2018

   

2018

   

2018

 
                                         

Net interest income

  $ 10,111     $ 10,179     $ 9,944     $ 9,327     $ 9,117  

Provision for loan losses

    -       555       -       -       -  

Non-interest income

    1,275       1,232       1,137       1,011       1,332  

Non-interest expense

    7,233       6,921       6,820       6,905       6,732  

Net income before income taxes

    4,153       3,935       4,261       3,433       3,717  

Provision for income taxes

    1,049       956       1,096       842       915  

Net income

  $ 3,104     $ 2,979     $ 3,165     $ 2,591     $ 2,802  
                                         

Earnings per common share - basic

  $ 0.38     $ 0.37     $ 0.39     $ 0.32     $ 0.35  

Earnings per common share - diluted

  $ 0.38     $ 0.37     $ 0.39     $ 0.32     $ 0.35  

Dividends paid per common share

  $ 0.135     $ -     $ 0.130     $ -     $ 0.130  

Return on average common equity

    12.54 %     12.16 %     13.21 %     11.18 %     12.47 %

Return on average assets

    1.17 %     1.08 %     1.17 %     0.99 %     1.08 %

Net interest margin (1)

    4.16 %     3.96 %     3.97 %     3.83 %     3.80 %

Efficiency ratio (2)

    62.20 %     58.78 %     59.50 %     64.20 %     63.40 %
                                         

Capital - Period End

                                       

Book value per common share

  $ 12.45     $ 12.09     $ 11.67     $ 11.50     $ 11.19  
                                         

Credit Quality - Period End

                                       

Nonperforming assets/ total assets

    0.09 %     0.08 %     0.09 %     0.12 %     0.12 %

Loan loss reserve/ gross loans

    1.23 %     1.22 %     1.23 %     1.25 %     1.26 %
                                         

Period End Balance Sheet

                                       

($ in thousands)

                                       

Total assets

  $ 1,059,130     $ 1,094,887     $ 1,075,805     $ 1,069,600     $ 1,052,813  

Gross loans

    707,408       711,902       663,195       654,594       648,367  

Nonperforming assets

    967       920       920       1,310       1,310  

Allowance for loan losses

    8,677       8,685       8,135       8,162       8,165  

Deposits

    938,743       986,495       974,424       970,615       955,341  

Common equity

    102,218       99,038       95,666       94,145       91,595  
                                         

Non-Financial Data

                                       

Full-time equivalent staff

    180       178       176       175       168  

Number of banking offices

    17       17       17       16       16  
                                         

Common Shares outstanding

                                       

Period end

    8,209,750       8,194,805       8,194,255       8,183,005       8,183,005  

Period average - basic

    8,093,106       8,086,748       8,083,927       8,080,134       8,074,961  

Period average - diluted

    8,102,411       8,097,161       8,104,252       8,098,269       8,100,703  
                                         

Market Ratios

                                       

Stock Price

  $ 17.64     $ 18.30     $ 19.65     $ 22.87     $ 22.30  

Price/Earnings

    11.34       12.52       12.65       17.78       15.85  

Price/Book

    1.42       1.51       1.68       1.99       1.99  

 

 

(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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