8-K
Oak Valley Bancorp (OVLY)
| UNITED STATES<br> SECURITIES AND EXCHANGE COMMISSION<br> Washington, D.C. 20549<br><br> <br>* * *<br> <br><br><br> <br>FORM 8-K<br><br> <br><br><br> <br>CURRENT REPORT<br><br> <br><br><br> <br>Pursuant to Section 13 or 15(d) of the<br> Securities Exchange Act of 1934. | ||
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| Date of Report: October 20, 2022<br> (Date of earliest event reported) | ||
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| Oak Valley Bancorp<br> (Exact name of registrant as specified in its charter) | ||
| CA<br> (State or other jurisdiction<br> of incorporation) | 001-34142<br> (Commission File Number) | 26-2326676<br> (IRS Employer<br> Identification Number) |
| 125 N. Third Ave. Oakdale, CA<br> (Address of principal executive offices) | 95361<br> (Zip Code) | |
| (209) 848-2265<br> (Registrant's telephone number, including area code) | ||
| Not Applicable<br> (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) |
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| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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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 20, 2022 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, 2022.
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 20, 2022 |
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| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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, 2022
| OAK VALLEY BANCORP | |
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| By: | /s/ Jeffrey A. Gall |
| Jeffrey A. Gall | |
| Senior Vice President and Chief Financial Officer (Principal | |
| Financial Officer and duly authorized signatory) |
| Exhibit Index | |
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| Exhibit No. | Description |
| 99.1 | Press Release of Oak Valley Bancorp dated October 20, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
ex_434918.htm
Exhibit 99.1
| PRESS RELEASE |
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For Immediate Release
| Date: | October 20, 2022 |
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| Contact: | Chris Courtney/Rick McCarty |
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| Phone: | (209) 848-2265 |
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| www.ovcb.com |
OAK VALLEY BANCORP REPORTS 3rd QUARTER RESULTS
OAKDALE, CAOak 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, 2022 consolidated net income was $6,800,000, or $0.83 per diluted share (EPS), compared to $4,258,000, or $0.52 EPS for the prior quarter and $4,554,000, or $0.56 EPS for the same period of 2021. Consolidated net income for the nine months ended September 30, 2022 totaled $13,427,000, or $1.64 EPS, representing an increase of $557,000 or 4.3%, compared to $12,870,000, or $1.57 EPS for the nine months ended September 30, 2021. The year-to-date increase in earnings includes a reduction in Paycheck Protection Program (“PPP”) loan interest and fee income from $7,472,000 in 2021 to $881,000 in 2022.
Net interest income was $16,772,000 for the three months ended September 30, 2022, compared to $13,233,000 for the prior quarter and $13,296,000 for the same period of 2021. The increase over the prior quarters is attributable primarily to increased yields on all earning assets resulting from recent FOMC rate hikes. In addition, the loan and investment security portfolios grew by $4.6 million and $34.3 million, respectively, during the third quarter. These increases were offset in part by the decrease in PPP loan interest and fees, as outstanding balances have been paid down to $5.0 million as of September 30, 2022, a year-over-year reduction of $61.5 million due to SBA forgiveness payments.
The net interest margin for the three months ended September 30, 2022 was 3.61%, compared to 2.98% for the prior quarter, and 3.17% for the same period of 2021. The interest margin expansion
compared to the prior periods was the result of deploying cash balances into higher yielding investments and loans, and the positive impact of FOMC rate hikes on the yields of our earning assets.
“As rates have increased across the yield curve, we have moved excess cash into higher yielding investments and loans which has significantly impacted our net interest margin. Year to date, the book value of our investment portfolio has grown by $315 million, and our loan portfolio is up approximately $52 million, resulting in a tremendous boost to earnings this year,” stated Rick McCarty, President and Chief Operating Officer.
Non-interest income for the three months ended September 30, 2022 totaled $1,611,000, compared to $1,371,000 during the prior quarter, and $1,303,000 for the same period of 2021. The increases over the prior periods were mainly due to a gain of $274,000 from market value changes on a limited partnership equity investment.
Non-interest expense for the three months ended September 30, 2022 totaled $9,370,000, compared to $9,205,000 during the prior quarter, and $8,407,000 for the same period of 2021. The third quarter increase compared to prior periods is mainly due to staffing expense and general operating costs related to servicing the growing loan and deposit portfolios.
Total assets were $1.96 billion as of September 30, 2022, a decrease of $28.8 million over June 30, 2022 and an increase of $105.7 million over September 30, 2021. Gross loans were $912.2 million as of September 30, 2022, an increase of $4.6 million over June 30, 2022, and $40.1 million over September 30, 2021. Gross loans were impacted by PPP loan balance decreases of $4.5 million and $61.5 million, during the third quarter and trailing twelve months, respectively, due to SBA forgiveness payments. Total deposits were $1.83 billion as of September 30, 2022, a decrease of $21.6 million over June 30, 2022, and an increase of $129.7 million over September 30, 2021.
“We remain steadfast in our efforts to broaden relationships by assessing the long-term needs and preferences of our clients. We strive to support them in a consultative manner which provides value and allows us to champion the pursuit of their financial goals,” stated Chris Courtney, CEO. “As we expand our footprint, we intentionally pursue experienced banking professionals who share in our appreciation of this style of relationship building,” Courtney concluded.
Non-performing assets as of September 30, 2022 remained at zero, as they were the prior period and for the same period a year ago.
The allowance for loan losses to gross loans was 1.21% at September 30, 2022, compared to 1.19% at June 30, 2022 and 1.30% at September 30, 2021. The increase during the quarter was due to the $200,000 loan loss provision resulting from loan growth and other factors dictated by our internal model.
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 Company received regulatory approval to open a new office in Roseville, which is currently operating as a Loan Production Office and will open as a full-service branch later this year.
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 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Selected Quarterly Operating Data: | 2022 | 2022 | 2021 | 2021 | ||||||||||
| Net interest income | 16,772 | $ | 13,233 | $ | 10,958 | $ | 11,309 | $ | 13,296 | |||||
| (Reversal of) provision for loan losses | 200 | - | - | (635 | ) | - | ||||||||
| Non-interest income | 1,611 | 1,371 | 1,168 | 1,542 | 1,303 | |||||||||
| Non-interest expense | 9,370 | 9,205 | 9,122 | 8,877 | 8,407 | |||||||||
| Net income before income taxes | 8,813 | 5,399 | 3,004 | 4,609 | 6,192 | |||||||||
| Provision for income taxes | 2,013 | 1,141 | 635 | 1,143 | 1,638 | |||||||||
| Net income | 6,800 | $ | 4,258 | $ | 2,369 | $ | 3,466 | $ | 4,554 | |||||
| Earnings per common share - basic | 0.83 | $ | 0.52 | $ | 0.29 | $ | 0.43 | $ | 0.56 | |||||
| Earnings per common share - diluted | 0.83 | $ | 0.52 | $ | 0.29 | $ | 0.42 | $ | 0.56 | |||||
| Dividends paid per common share | 0.150 | $ | - | $ | 0.150 | $ | - | $ | 0.145 | |||||
| Return on average common equity | 21.96 | % | 13.40 | % | 6.84 | % | 9.75 | % | 13.01 | % | ||||
| Return on average assets | 1.35 | % | 0.88 | % | 0.50 | % | 0.72 | % | 1.00 | % | ||||
| Net interest margin (1) | 3.61 | % | 2.98 | % | 2.51 | % | 2.55 | % | 3.17 | % | ||||
| Efficiency ratio (2) | 48.14 | % | 59.68 | % | 71.70 | % | 67.45 | % | 55.94 | % | ||||
| Capital - Period End | ||||||||||||||
| Book value per common share | 12.86 | $ | 14.38 | $ | 15.95 | $ | 17.31 | $ | 16.97 | |||||
| Credit Quality - Period End | ||||||||||||||
| Nonperforming assets/ total assets | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||
| Loan loss reserve/ gross loans | 1.21 | % | 1.19 | % | 1.25 | % | 1.25 | % | 1.30 | % | ||||
| Period End Balance Sheet | ||||||||||||||
| ( in thousands) | ||||||||||||||
| Total assets | 1,962,470 | $ | 1,991,235 | $ | 1,946,019 | $ | 1,964,478 | $ | 1,856,759 | |||||
| Gross loans | 912,235 | 907,627 | 858,763 | 860,037 | 872,110 | |||||||||
| Nonperforming assets | - | - | - | - | - | |||||||||
| Allowance for loan losses | 10,997 | 10,785 | 10,762 | 10,738 | 11,351 | |||||||||
| Deposits | 1,830,882 | 1,852,502 | 1,799,305 | 1,806,966 | 1,701,180 | |||||||||
| Common equity | 106,188 | 118,698 | 131,649 | 142,612 | 139,788 | |||||||||
| Non-Financial Data | ||||||||||||||
| Full-time equivalent staff | 209 | 209 | 206 | 205 | 196 | |||||||||
| Number of banking offices | 17 | 17 | 17 | 17 | 17 | |||||||||
| Common Shares outstanding | ||||||||||||||
| Period end | 8,258,794 | 8,254,574 | 8,255,601 | 8,239,099 | 8,239,099 | |||||||||
| Period average - basic | 8,172,836 | 8,170,291 | 8,157,987 | 8,151,250 | 8,148,277 | |||||||||
| Period average - diluted | 8,206,342 | 8,201,367 | 8,197,275 | 8,188,003 | 8,182,780 | |||||||||
| Market Ratios | ||||||||||||||
| Stock Price | 17.87 | $ | 17.20 | $ | 18.45 | $ | 17.40 | $ | 17.54 | |||||
| Price/Earnings | 5.41 | 8.23 | 15.67 | 10.31 | 7.91 | |||||||||
| Price/Book | 1.39 | 1.20 | 1.16 | 1.01 | 1.03 |
All values are in US Dollars.
| (1) | Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 21%. |
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| (2) | Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 21%. |
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A marginal federal/state combined tax rate of 29.56%, was used for applicable revenue.
| Profitability | 2021 | ||||
| ( in thousands, except per share) | |||||
| Net interest income | 40,963 | $ | 37,526 | ||
| Provision for loan losses | 200 | - | |||
| Non-interest income | 4,150 | 3,883 | |||
| Non-interest expense | 27,697 | 24,342 | |||
| Net income before income taxes | 17,216 | 17,067 | |||
| Provision for income taxes | 3,789 | 4,197 | |||
| Net income | 13,427 | $ | 12,870 | ||
| Earnings per share - basic | 1.64 | $ | 1.58 | ||
| Earnings per share - diluted | 1.64 | $ | 1.57 | ||
| Dividends paid per share | 0.300 | $ | 0.290 | ||
| Return on average equity | 13.79 | % | 12.74 | % | |
| Return on average assets | 0.92 | % | 1.01 | % | |
| Net interest margin (1) | 3.05 | % | 3.22 | % | |
| Efficiency ratio (2) | 58.20 | % | 56.96 | % | |
| Capital - Period End | |||||
| Book value per share | 12.86 | $ | 16.97 | ||
| Credit Quality - Period End | |||||
| Nonperforming assets/ total assets | 0.00 | % | 0.00 | % | |
| Loan loss reserve/ gross loans | 1.21 | % | 1.30 | % | |
| Period End Balance Sheet | |||||
| ( in thousands) | |||||
| Total assets | 1,962,470 | $ | 1,856,759 | ||
| Gross loans | 912,235 | 872,110 | |||
| Nonperforming assets | - | - | |||
| Allowance for loan losses | 10,997 | 11,351 | |||
| Deposits | 1,830,882 | 1,701,180 | |||
| Stockholders' equity | 106,188 | 139,788 | |||
| Non-Financial Data | |||||
| Full-time equivalent staff | 209 | 196 | |||
| Number of banking offices | 17 | 17 | |||
| Common Shares outstanding | |||||
| Period end | 8,258,794 | 8,239,099 | |||
| Period average - basic | 8,167,093 | 8,142,931 | |||
| Period average - diluted | 8,201,695 | 8,175,618 | |||
| Market Ratios | |||||
| Stock Price | 17.87 | $ | 17.54 | ||
| Price/Earnings | 8.13 | 8.30 | |||
| Price/Book | 1.39 | 1.03 |
All values are in US Dollars.
| (1) | Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 21%. |
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| (2) | Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 21%. |
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A marginal federal/state combined tax rate of 29.56%, was used for applicable revenue.