Oak Valley Bancorp Reports 3rd Quarter Results

| Source: Oak Valley Bancorp Oak Valley Bancorp

OAKDALE, CA--(Marketwire - October 20, 2010) - Oak Valley Bancorp (NASDAQ: OVLY), the bank holding company for Oak Valley Community Bank and Eastern Sierra Community Bank, recently reported financial results. For the three months ended September 30, 2010, the Bank reported net income of $1,141,000, compared to net income of $879,000 for the three months ended September 30, 2009. After adjustment for preferred stock dividends and accretion this represents net income available to common shareholders of $931,000, or $0.12 per diluted common share, compared to $669,000, or $0.09 per diluted common share, for the three months ended September 30, 2009.

Year-to-date results for the nine months ended September 30, 2010, include net income of $3,128,000 and net income available to common shareholders of $2,496,000, compared to net income of $1,264,000 and net income available to common shareholders of $633,000 during the same period last year.

Net interest income for the three months ended September 30, 2010 increased by $339,000 over the same period the previous year to $6.4 million. For the nine months ending September 30, 2010 net interest income was $18.7 million, a $1.1 million increase over the $17.6 million for the same period last year. Net interest margin for the three months ended September 30, 2010 was 5.23%, compared to 5.06% during the same period last year. Year-to-date net interest margin was 5.27%, compared to 4.96% in the first nine months of 2009.

"The third quarter proved to be another positive quarter for the bank in terms of net interest income. Our net interest margin remained strong as our cost of funds continued to decrease, offsetting the repricing of credits in this historically low rate environment," stated Ron Martin, CEO.

Noninterest expense for the three-months ended September 30, 2010 was of $4.2 million, compared to $4.7 million for the same period in 2009. For the nine-months ended September 30, 2010, noninterest expense totaled $13.0 million, compared to $13.5 million for the same period the previous year. Write downs and expenses associated with impaired loans and Other Real Estate Owned (OREO) continue to impact noninterest expense totals, but were down to $700,000 year-to-date versus $2.0 million during the same period in last year.

Nonperforming assets as of September 30, 2010 totaled $10.7 million or 2.00% of total assets, a decrease from the $11.9 million, or 2.29%, at June 30, 2010, yet relatively flat compared to the $10.9 million, or 2.09% in nonperforming assets for the same period the previous year. The reduction marked the third consecutive quarter in which the Bank recorded a decrease in non-performing assets. The provision for loan losses for the nine months ended September 30, 2010 were down $1.9 million from the same period the previous year to $3.0 million, corresponding to the stabilization of the loan portfolio.

Total assets grew to $534.9 million at September 30, 2010, an increase of $13.7 million, or 2.6%, over September 30, 2009. Gross loans decreased to $409.0 million as of September 30, 2010, a decrease of $16.4 million, or 3.9% from September 30, 2009. The Bank's total deposits increased to $448.9 million on September 30, 2010, which was an increase of $17.4 million, or 4.0% over September 30, 2009.

"As we continue to navigate the waters of economic uncertainty, we are pleased with our deposit growth and ability to improve our deposit mix as awareness of the Oak Valley brand increases and customers naturally gravitate toward reliable banks with proven stability," remarked Chris Courtney, President. "The additional liquidity positions us well to serve the borrowing needs of the business community as consumer confidence improves and loan demand returns to more normal levels," concluded Courtney.

Oak Valley Bancorp operates Oak Valley and Eastern Sierra Community Bank, through which it offers a variety of loan and deposit products to individuals and small businesses. The Company currently operates through 12 conveniently located branches: Oakdale, Sonora, Turlock, Stockton, Patterson, Ripon, Escalon, two branches in Modesto, and three branches in their Eastern Sierra Division, which includes Bridgeport, Mammoth Lakes and Bishop.

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 Community Bank
                    Statement of Condition (unaudited)


($ in thousands,
 except per share)      3rd        2nd        1st        4th        3rd
Selected Quarterly    Quarter    Quarter    Quarter    Quarter    Quarter
 Operating Data:       2010       2010       2010       2009       2009

  Net interest
   income            $   6,359  $   6,244  $   6,060  $   6,079  $   6,020
  Provision for
   loan losses           1,005      1,005      1,005        900        925
  Non-interest
   income                  676        732        647        618        778
  Non-interest
   expense               4,188      4,316      4,445      4,749      4,745
  Income before
   income taxes          1,842      1,655      1,257      1,048      1,128
  Provision for
   income taxes            701        616        309        313        249
                     ---------  ---------  ---------  ---------  ---------
  Net income             1,141      1,039        948        735        879

  Preferred stock
   dividends and
   accretion              (210)      (211)      (211)      (210)      (210)
                     ---------  ---------  ---------  ---------  ---------
  Net income
   available to
   common
   shareholders            931        828        737        525        669
                     =========  =========  =========  =========  =========

  Earnings per
   common share
   - basic                0.12       0.11       0.10       0.07       0.09
  Earnings per
   common share
   - diluted              0.12       0.11       0.10       0.07       0.09
  Dividends
   declared per
   common share (1)          -          -          -          -          -
  Return on average
   common equity          7.38%      6.84%      6.22%      4.41%      5.73%
  Return on average
   assets                 0.86%      0.81%      0.75%      0.56%      0.67%
  Net interest
   margin (2)             5.23%      5.36%      5.22%      5.10%      5.06%
  Efficiency
   Ratio (2)             58.99%     61.21%     65.59%     69.52%     68.77%

Capital - Period End
  Book value per
   share             $    6.57  $    6.38  $    6.24  $    6.14  $    6.06

Credit Quality -
 Period End
  Nonperforming
   assets/ total
   assets                 2.00%      2.29%      2.85%      3.16%      2.09%
  Loan loss
   reserve/ gross
   loans (3)              1.88%      1.85%      1.65%      1.65%      1.50%

Period End Balance
 Sheet
($ in thousands)
  Total assets       $ 534,879  $ 519,203  $ 520,275  $ 524,722  $ 521,179
  Gross Loans          408,971    411,067    411,013    425,627    425,374
  Nonperforming
   assets               10,690     11,882     14,854     16,568     10,904
  Allowance for
   credit losses
   (3)                   7,700      7,614      6,762      7,020      6,396
  Deposits             448,904    435,756    431,624    429,210    431,533
  Common Equity         50,605     48,984     47,904     47,192     46,563
  Total Capital
   (4)                  64,105     62,484     61,404     60,692     60,063

Non-Financial Data
  Full-time
   equivalent staff        115        117        118        117        120
  Number of banking
   offices                  12         12         12         12         12

Common Shares
 outstanding
  Period end         7,702,127  7,681,877  7,681,877  7,681,877  7,681,877
  Period average
   - basic           7,692,900  7,681,877  7,681,877  7,681,877  7,668,891
  Period average
   - diluted         7,729,175  7,720,440  7,705,488  7,709,076  7,694,058
Market Ratios
  Stock Price        $    5.40  $    5.25  $    4.10  $    4.41  $    4.30
  Price/Earnings         11.25      12.14      10.54      16.27      12.43
  Price/Book              0.82       0.82       0.66       0.72       0.71




                                                   NINE MONTHS ENDED
                                             -----------------------------
                                             SEPTEMBER 30,   SEPTEMBER 30,
($ in thousands, except per share)               2010            2009
                                             -------------   -------------

  Net interest income                        $      18,663   $      17,563
  Provision for loan losses                          3,015           4,962
  Non-interest income                                2,055           2,023
  Non-interest expense                              12,949          13,469
  Income before income taxes                         4,754           1,155
  Provision for income taxes                         1,626            (109)
                                             -------------   -------------
  Net income                                         3,128           1,264
  Preferred stock dividends and
   accretion                                          (632)           (631)
                                             -------------   -------------
  Net income available to common
   shareholders                                      2,496             633
                                             =============   =============

  Earnings per common share - basic                   0.32            0.08
  Earnings per common share - diluted                 0.32            0.08
  Dividends declared per common share (1)                -           0.025
  Return on average common equity                     6.83%           1.85%
  Return on average assets                            0.81%           0.32%
  Net interest margin (2)                             5.27%           4.96%
  Efficiency Ratio (2)                               61.88%          67.54%

Capital - Period End
  Book value per share                       $        6.57   $        6.06

Credit Quality - Period End
  Nonperforming assets/ total assets                  2.00%           2.09%
  Loan loss reserve/ gross loans (3)                  1.88%           1.50%

Period End Balance Sheet
($ in thousands)
  Total assets                               $     534,879   $     521,179
  Gross Loans                                      408,971         425,374
  Nonperforming assets                              10,690          10,904
  Allowance for credit losses (3)                    7,700           6,396
  Deposits                                         448,904         431,533
  Common Equity                                     50,605          46,563
  Total Capital (4)                                 64,105          60,063

Non-Financial Data
  Full-time equivalent staff                           115             120
  Number of banking offices                             12              12

Common Shares outstanding
  Period end                                     7,702,127       7,681,877
  Period average - basic                         7,685,592       7,664,075
  Period average - diluted                       7,719,616       7,692,110

Market Ratios
  Stock Price                                $        5.40   $        4.30
  Price/Earnings                                     12.44           38.93
  Price/Book                                          0.82            0.71


(1) Common shareholder cash dividend of $191,542 was paid in the first
    quarter of 2009.
(2) Ratio computed on a fully tax equivalent basis using a marginal federal
    tax rate of 34%.
(3) Adjusted for Allowance for Off-Balance Sheet Credit Exposure.
(4) Includes $13.5 million in preferred stock issued to the U.S. Treasury
    under the TARP Capital Purchase Program.

Contact Information: Contact: Ron Martin Chris Courtney Rick McCarty Phone: (209) 848-2265 www.ovcb.com