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: November 9, 1998
VALLEY FINANCIAL CORPORATION
VIRGINIA 33-77568 54-1702380
(State of Incorporation) (Commission (I.R.S. Employer)
File Number) Identification Number)
36 Church Avenue, S.W.
Roanoke, Virginia 24011
(Address of principal executive offices)
(540) 342-2265
(Issuer's telephone number, including area code)
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Item 5. Other Events.
Valley Financial Corporation (the "Company"), the holding company for
Roanoke, VA-based Valley Bank, announced on October 23, 1998 its financial
results for the period ended September 30, 1998. The financial results are
detailed in the Company's Press Release dated October 23, 1998 filed as Exhibit
A to this Form 8-K and incorporated by reference herein.
The Company's common stock is traded over the counter under the symbol VYFC.
SIGNATURES
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.
VALLEY FINANCIAL CORPORATION
Date: November 9, 1998 /s/ A. Wayne
----------------------------------------
A. Wayne Lewis, Executive Vice President
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FOR RELEASE 5:00 p.m. October 23, 1998
VALLEY FINANCIAL CORPORATION
36 Church Avenue, S.W.
Roanoke, Virginia 24011
For Further Information Contact:
Ellis L. Gutshall, President and Chief Executive Officer
A. Wayne Lewis, Executive Vice President and Chief Operating Officer
(540) 342-2265
VALLEY FINANCIAL CORPORATION HAS RECORD OPERATING EARNINGS
ROANOKE, VIRGINIA. October 23, 1998 -- Roanoke-based Valley Financial
Corporation announced today its consolidated financial results. For the nine
months ended September 30, 1998, Valley Financial reported operating earnings of
$675,000 or $.70 per share compared with $294,000 or $.30 per share for the nine
months of 1997, a 130% increase. Net income after provision for income taxes of
$195,000 was $480,000 or $.50 per share for the first nine months of 1998, a 63%
increase over the net income of $294,000 or $.30 per share reported for the same
period in 1997 when the Company was not in a tax-paying position. The Company's
return on average total assets was 0.73% for 1998's first nine months, and its
return on average shareholders' equity was 7.62%. These profitability ratios
represent significant increases from the 0.65% and 5.30%, respectively, reported
for the nine months ended September 30, 1997.
For the three months ended September 30, 1998, Valley Financial reported
operating earnings of $307,000 or $.32 per share compared with $165,000 or $.17
per share for the third quarter of 1997, an 86% increase. Net income after
provision for income taxes of $87,000 was $220,000 or $.23 per share for the
third quarter of 1998, a 33% increase over the net income of $165,000 or $.17
per share reported in the third quarter of 1997 when the Company was not in a
taxable position. The Company's return on average total assets was 0.87% for
1998's third quarter, and its return on average shareholders' equity was 10.19%.
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At September 30, the Company's total assets were $99,840,000, total deposits
were $81,949,000, total loans stood at $66,468,000 and total shareholders'
equity was $9,008,000. Compared with September 30, 1997 the Company experienced
increases of $29,151,000 or 41% in total assets, $19,905,000 or 32% in total
deposits and $21,723,000 or 49% in total loans over the twelve-month period.
With capital at September 30, 1998 representing over 9% of total assets, the
Company easily exceeds the regulatory minimum to be considered "well
capitalized."
Ellis L. Gutshall, President and Chief Executive Officer, stated that "The
significant growth in earnings - - 130% pre-tax for the nine months - - is
fueled by strong balance sheet growth coupled with expense control. Total
assets over the past twelve months were up 41% but noninterest expenses were
held to a 23% increase."
A. Wayne Lewis, Executive Vice President and Chief Operating Officer, said of
the Banks rapid asset growth "We are proud to be right at the $100 million asset
level in less than 32 years after Valley Bank opened its doors. Reaching this
milestone validates our organizers' vision that there was a need in the Valley
for a new locally owned and managed bank offering superior customer service."
Gutshall also noted that "By design, the rapid growth has been accomplished
without sacrificing asset quality. There have been no loans charged off in
1998, and at September 30 no loans were past due 90 days or more. One of the
biggest dangers for startup banks traditionally has been bad loans, and we have
put forth significant efforts to avoid that pitfall."
Valley Financial Corporation is the holding company for Valley Bank, which
opened for business May 15, 1995 and engages in a general commercial and retail
banking business in the Roanoke Valley, emphasizing the needs of small
businesses, professional concerns and individuals. Valley Bank operates from
three full-service offices at 36 Church Avenue, SW and 2203 Crystal Spring
Avenue, SW in Roanoke City, and 4467 Starkey Road, SW in Roanoke County.
Additionally, it recently opened a loan production office at 302 East Main
Street in the City of Salem and has commenced construction on a full service
branch at 8 East Main Street in Salem.
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The Common Stock of Valley Financial Corporation is traded over the counter
under the symbol VYFC, and is quoted on the OTC Bulletin Board, an electronic
quotation and trade reporting service of the National Association of Securities
Dealers.
- - END -
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<TABLE>
<CAPTION>
VALLEY FINANCIAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30 December 31 September 30
1998 1997 1997
------------ ----------- ------------
(in thousands, except share data)
<S> <C> <C> <C>
Assets
Cash and due from banks $ 3,240 $ 3,324 $ 2,168
Money market investments 21 1,473 751
Securities available-for-sale 28,038 21,144 21,357
Loans 66,468 46,647 44,745
Less allowance for loan losses and
unearned fees (694) (497) (484)
------- ------- -------
Total net loans 65,774 46,150 44,261
Premises and equipment 1,635 1,315 1,351
Organizational costs 90 134 150
Other assets 1,042 1,137 651
------- ------- -------
Total assets $99,840 $74,677 $70,689
======= ======= =======
Liabilities and Shareholders' Equity
Non-interest bearing demand deposits $ 9,304 $ 7,956 $ 6,093
Interest bearing demand, savings & money
market deposits 25,997 19,048 15,416
Time deposits greater than $100,000 7,899 6,481 6,607
Other deposits 38,749 32,103 33,928
------- ------- -------
Total deposits 81,949 65,588 62,044
Short term borrowings 2,891 0 121
Federal Home Loan Bank advances 5,000 0 0
Other liabilities 994 810 846
------- ------- -------
Total liabilities 90,834 66,398 63,011
------- ------- -------
Preferred stock, no par value. Authorized
10,000,000 shares; none issued and
outstanding
Common stock, no par value. Authorized
10,000,000 shares; issued and
outstanding 964,165 at September 30, 1998
and 964,040 at December 31, 1997 9,091 9,089 9,089
Accumulated deficit (386) (866) (1,454)
Accumulated other comprehensive income 301 56 43
------- ------- -------
Total shareholders' equity 9,006 8,279 7,678
------- ------- -------
Total liabilities and shareholders'
equity $99,840 $74,677 $70,689
======= ======= =======
Balance Sheet Ratios:
Nonperforming loans/total loans 0.00% 0.00% 0.00%
Loans past due > 90 days/total loans 0.00% 0.00% 0.00%
Allowance for loan losses/loans, net 0.98% 0.99% 1.01%
Book value per share $9.34 $8.59 $7.96
</TABLE>
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<TABLE>
<CAPTION>
VALLEY FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Nine Months
Ended
September 30
-----------------------------------
1998 1997 1998 1997
---- ---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest Income $1,856 $1,282 4,898 3,447
Interest Expense 987 682 2,559 1,811
------ ------ ------ ------
Net interest income 869 600 2,339 1,636
Provision for loan losses 66 37 194 119
------ ------ ------ ------
Net interest income after provisions
for loan losses 803 563 2,145 1,517
Noninterest Income 64 45 186 128
Noninterest Expense 560 443 1,656 1,351
------ ------ ------ ------
Net income before taxes $ 307 $ 165 $ 675 $ 294
------ ------ ------ ------
Provision for income taxes $ 87 $ 0 $ 195 $ 0
------ ------ ------ ------
Net income $ 220 $ 165 $ 480 $ 294
====== ====== ====== ======
Net income per share $ 0.23 $ 0.17 $ 0.50 $ 0.30
====== ====== ====== ======
Performance Ratios:
Return on average total assets 0.85% 0.98% 0.73% 0.65%
Return on average total shareholders'
equity 11.54% 8.71% 7.62% 5.30%
Yield on average earning assets (TEY) 7.80% 7.92% 7.92% 7.95%
Cost of funds 4.29% 4.60% 4.35% 4.58%
Net interest margin 3.73% 3.70% 3.84% 3.77%
Overhead efficiency ratio 57.94% 68.68% 63.92% 76.59%
</TABLE>
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