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: February 5, 1999
VALLEY FINANCIAL CORPORATION
VIRGINIA 33-77568 54-1702380
(State of Incorporation) Commission File Number (I.R.S. Employer
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 (the "Bank"), announced on January 28, 1999 its
financial results for the period ended December 31, 1998. The financial results
are detailed in the Company's Press Release dated January 28, 1999 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: February 5, 1999 /s/ A. Wayne Lewis
----------------------------------------
A. Wayne Lewis, Executive Vice President
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FOR RELEASE 5:00 p.m. January 28, 1999 EXHIBIT A
- --------------------------------------
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
ANNOUNCES RECORD EARNINGS
ROANOKE, VIRGINIA. January 28, 1999 -- Roanoke-based Valley Financial
Corporation announced today its consolidated financial results for the quarter
and the fiscal year ended December 31, 1998, which included two major
milestones. The Company's assets exceeded the $100,000,000 mark for the first
time, and pre-tax earnings surpassed $1,000,000 for the year.
Valley Financial reported 1998 pre-tax earnings of $1,021,000 compared to
$486,000 for 1997, a 110% increase. Net income for 1998 was $758,000 or $0.79
per share, compared to $883,000 or $0.92 per share in 1997. Excluding a
$397,000 tax benefit recognized in the fourth quarter of 1997, net income for
1997 would have been $486,000 or $0.50 per share. Return on average total
assets for 1998 was 0.83% and return on average shareholders' equity was 8.87%.
Exclusive of the income tax benefit, 1997's return on average total assets was
0.77% and return on average shareholders' equity was 6.48%.
At December 31, the Company's total assets were $105,186,000, total
deposits were $90,026,000, total loans stood at $71,622,000 and total
shareholders' equity was $9,157,000. Compared with December 31, 1997 the
Company experienced increases of $30,509,000 or 41% in total assets, $24,438,000
or 37% in total deposits and $24,975,000 or 54% in total loans over the twelve-
month period. With capital at December 31, 1998 representing over 12% of risk-
adjusted total assets, the Company easily exceeds the regulatory minimum to be
considered "well capitalized."
For the three months ended December 31, 1998 Valley Financial reported pre-
tax income of $346,000 compared with $192,000 for the fourth quarter of 1997, an
increase of 80%. Net income after provision for income taxes was $278,000 or
$0.29 per share for the three months ended December 31, 1998, compared with
$589,000 or $0.61 per share in the fourth quarter of 1997 when the Company
enjoyed a $397,000 income tax benefit associated with recognition of deferred
tax assets, including available net operating loss carryforwards. Excluding
this tax benefit, net income for 1997's fourth quarter would have been $192,000
or $.20 per share. The Company's return on average total assets was 1.07% for
1998's fourth quarter, and its return on average shareholders' equity was
12.43%.
Ellis L. Gutshall, President and Chief Executive Officer, stated "The
significant growth in earnings - - 110% pre-tax for the year - - 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 21%
increase."
A. Wayne Lewis, Executive Vice President and Chief Operating Officer, said
of the Bank's rapid asset growth "We are proud to have exceeded the substantial
milestone of $100 million in assets in just over 3 1/2 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 "By design, the rapid growth in assets and earnings has
been accomplished without sacrificing asset quality. The Company's total loan
charge-offs since inception have been less than five hundred dollars, and there
were no loans charged off in 1998."
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. A
fourth full-service office under construction at 8 East Main Street in the City
of Salem is expected to open in April.
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.
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VALLEY FINANCIAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
December 31 December 31
1998 1997
----------- -----------
(in thousands, except share data)
<S> <C> <C>
Assets
Cash and due from banks $ 3,462 $ 3,324
Money market investments 1,743 1,473
Securities available-for-sale 26,118 21,144
Loans 71,622 46,647
Less allowance for loan losses and
unearned fees (747) (497)
-------- ------
Total net loans 70,875 46,150
Premises and equipment 1,830 1,315
Organizational costs 77 134
Other assets 1,081 1,137
-------- -------
Total assets $105,186 $74,677
======== =======
Liabilities and Shareholders' Equity
Non-interest bearing demand deposits $ 10,437 $ 7,956
Interest bearing demand, savings &
money market deposits 33,619 19,048
Time deposits greater than $100,000 8,048 6,481
Other deposits 37,922 32,103
-------- -------
Total deposits 90,026 65,588
Short term borrowings 0 0
Federal Home Loan Bank advances 5,000 0
Other liabilities 1,003 810
-------- -------
Total liabilities 96,029 66,398
-------- -------
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 964,590 at December 31, 1998
and 964,040 at December 31, 1997 9,095 9,089
Accumulated deficit (108) (866)
Accumulated other comprehensive income 170 56
-------- -------
Total shareholders' equity 9,157 8,279
-------- -------
Total liabilities and shareholders'
equity $105,186 $74,677
======== =======
Balance Sheet Ratios:
Nonperforming loans/total loans 0.00% 0.00%
Loans past due > 90 days/total loans 0.28% 0.00%
Allowance for loan losses/loans, net 1.00% 0.99%
Book value per share $9.49 $8.59
</TABLE>
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VALLEY FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended
-----------------------------------------
1998 1997 1998 1997
-------- -------- -------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest Income $1,872 $1,359 6,770 4,806
Interest Expense 953 700 3,512 2,511
------ ------ ------ ------
Net interest income 919 659 3,258 2,295
Provision for loan losses 55 12 249 131
------ ------ ------ ------
Net interest income after
provision for loan losses 864 647 3,009 2,164
Noninterest income 78 50 264 178
Noninterest expense 596 505 2,252 1,856
------ ------ ------ ------
Net income before taxes $ 346 $ 192 $1,021 $ 486
------ ------ ------ ------
Provision for income taxes $ 68 ($ 397) $ 263 ($ 397)
------ ------ ------ ------
Net income $ 278 $ 589 $ 758 $ 883
====== ====== ====== ======
Net income per share $ 0.29 $ 0.61 $ 0.79 $ 0.92
====== ====== ====== ======
Performance Ratios:
Return on average total assets 1.07% 1.08%* 0.83% 0.77%
Return on average total
shareholders' equity 12.43% 9.85%* 8.87% 6.48%
Yield on average earning
assets (TEY) 7.82% 8.02% 7.90% 7.96%
Cost of funds 4.10% 4.48% 4.28% 4.55%
Net interest margin 3.91% 3.89% 3.86% 3.80%
Overhead efficiency ratio 59.78% 68.68% 63.94% 74.97%
</TABLE>
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