Oak Valley Bancorp Reports 3rd Quarter Results

OAKDALE, CA--(Marketwire - October 21, 2009) - 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, 2009, the Bank reported net income of $879,000. After adjustment for preferred stock dividends and accretion this represents net income available to common shareholders of $669,000, or $0.09 per diluted share, compared to net income of $549,000, or $0.07 per diluted common share, for the three months ended September 30, 2008. Year-to-date results for the nine months ended September 30, 2009, include net income of $1,264,000 and net income available to common shareholders of $633,000.

Total assets grew to $521.2 million at September 30, 2009, an increase of $31.1 million, or 6.3%, over September 30, 2008. Gross loans increased by $8.7million, to $425.4 million as of September 30, 2009, an increase of 2.1% over September 30, 2008. The Bank's total deposits increased to $431.5 million on September 30, 2009, which was an increase of $66.3 million, or 18.2% over September 30, 2008.

"Increased net interest income from growth and margin expansion continue to bolster the Bank's financial position. Our branches have been able to grow deposits during this declining rate environment, driving down our cost of funds," stated Rick McCarty, CFO.

Net interest income for the three months ended September 30, 2009 increased by $728,000 to $6.0 million. For the nine months ending September 30, 2009 net interest income was $17.6 million, a $2.4 million increase over the $15.2 million for the same period last year. Growth of earning assets accounted for $1,531,000 million of the increased net interest income, while net interest margin expansion accounted for $852,000. Net interest margin for the three months ended September 30, 2009 was 5.04%, compared to 4.76% during the same period last year. Year-to-date net interest margin was 4.95%, compared to 4.71% in the first nine months of 2008.

Non interest expense remained relatively flat despite significant increases in OREO expenses and FDIC assessments of $1,038,000 and $408,000 respectively, for the nine month period of 2009 as compared to 2008.

"We are delighted with our operational performance and the consistent expansion of our net interest margin. This is the third consecutive quarter in which we have seen net interest margin improvement," commented Ron Martin, CEO. "Despite the strong overall performance, provision for loan losses of $925,000 and total OREO expenses of $916,000 for the three-months ended September 30, 2009, partially offset margin expansion. Proactive management of our credit quality and OREO valuation will serve us well in the long term as we emerge from these precarious times," Martin concluded.

Non-performing assets were up slightly, increasing by $727,000 to $10.9 million, or 2.09% of total assets at September 30, 2009, from $10.2 million, or 1.94% of total assets at June 30, 2009. Consequently, the Bank recorded $925,000 in loan loss provisions in the third quarter, increasing our allowance for loan loss reserve from 1.34% at June 30, 2009, to 1.50% at September 30, 2009 even though there was not an acutely significant migration of loans to a default status.

"A primary focus this year has been maintaining a healthy core operating structure. We've kept a keen eye on expense management and remain staunchly committed to relationship building and attracting customers to the bank. These fundamentals and our ongoing adherence to strong credit practices are of particular importance, especially at a time when the economy is only beginning to show signs of improvement," stated Chris Courtney, President.

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 us online at 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,        3rd        2nd        1st        4th        3rd
 except per share)    Quarter    Quarter    Quarter    Quarter    Quarter
Selected Quarterly      2009       2009       2009       2008       2008
 Operating Data:

  Net interest
   income            $   6,020  $   5,887  $   5,656  $   5,333  $   5,292
  Provision for loan
   losses                  925      2,137      1,900      1,001        602
  Non-interest
   income                  778        647        598        602        634
  Non-interest
   expense               4,745      4,787      3,938      4,712      4,535
  Income before
   income taxes          1,128       (389)       416        222        789
  Provision for
   income taxes            249       (344)       (14)       (61)       240
                     ---------  ---------  ---------  ---------  ---------
  Net income               879        (45)       430        283        549

  Preferred stock
   dividends and
   accretion              (210)      (210)      (210)       (64)         -
                     ---------  ---------  ---------  ---------  ---------
  Net income
   available to
   common
   shareholders            669       (255)       220        219        549
                     =========  =========  =========  =========  =========

  Earnings per
   common share -
   basic                  0.09      (0.03)      0.03       0.03       0.07
  Earnings per
   common share -
   diluted                0.09      (0.03)      0.03       0.03       0.07
  Dividends declared
   per common share
   (1)                       -          -      0.025      0.025      0.050
  Return on average
   common equity          5.73%     -2.23%      1.97%      1.95%      4.91%
  Return on average
   assets                 0.67%     -0.03%      0.34%      0.23%      0.45%
  Net interest
   margin (2)             5.04%      4.95%      4.85%      4.72%      4.76%
  Efficiency Ratio
   (2)                   68.77%     71.59%     61.97%     78.30%     76.03%

Capital - Period End
  Book value per
   share             $    6.06  $    5.89  $    5.91  $    5.81  $    5.77

Credit Quality -
 Period End
  Nonperforming
   assets/assets          2.09%      1.94%      2.66%      1.47%      1.33%
  Loan loss
   reserve/loans (3)      1.50%      1.34%      1.53%      1.30%      1.12%

Period End Balance
 Sheet
($ in thousands)
Total assets         $ 521,179  $ 525,606  $ 523,747  $ 508,203  $ 490,111
  Gross Loans          425,374    424,390    430,416    428,177    416,664
  Nonperforming
   assets               10,904     10,177     13,906      7,467      6,538
  Allowance for
   credit losses (3)     6,396      5,701      6,603      5,569      4,650
  Deposits             431,533    419,941    410,089    378,248    365,230
  Common Equity         46,563     45,130     45,286     44,486     44,151
  Total Capital (4)     60,063     58,630     58,786     57,986     44,151
Non-Financial Data
  Full-time
   equivalent staff        120        111        117        117        119
  Number of banking
   offices, domestic
   and foreign              12         12         12         12         12
Common Shares
 outstanding
  Period end         7,681,877  7,661,627  7,661,627  7,661,627  7,658,252
  Period average -
   basic             7,668,891  7,661,627  7,661,627  7,660,526  7,658,252
  Period average -
   diluted           7,694,058  7,686,800  7,703,892  7,723,711  7,743,091
Market Ratios
  Stock Price        $    4.30  $    4.25  $    3.75  $    6.00  $    6.30
  Price/Earnings         12.43        N/A      32.22      52.82      22.14
  Price/Book              0.71       0.72       0.63       1.03       1.09



                       NINE MONTHS ENDED
                     ---------------------
                   SEPTEMBER 30, SEPTEMBER 30,
                     ---------  ----------
($ in thousands,        2009       2008
 except per share)   ---------  ----------

  Net interest
   income            $  17,563  $  15,181
  Provision for loan
   losses                4,962      1,187
  Non-interest
   income                2,023      1,920
  Non-interest
   expense              13,469     13,153
  Income before
   income taxes          1,155      2,761
  Provision for
   income taxes           (109)       883
                     ---------  ---------
  Net income             1,264      1,878

  Preferred stock
   dividends and
   accretion              (631)         -
                     ---------  ---------
  Net income
   available to
   common
   shareholders            633      1,878
                     =========  =========

  Earnings per
   common share -
   basic                  0.08       0.25
  Earnings per
   common share -
   diluted                0.08       0.24
  Dividends declared
   per common share
   (1)                   0.025      0.050
  Return on average
   common equity          1.85%      5.71%
  Return on average
   assets                 0.32%      0.53%
  Net interest
   margin (2)             4.95%      4.71%
  Efficiency Ratio
   (2)                   67.54%     75.95%

Capital - Period End
  Book value per
   share             $    6.06  $    5.77

Credit Quality -
 Period End
  Nonperforming
   assets/assets          2.09%      1.33%
  Loan loss
   reserve/loans (3)      1.50%      1.12%

Period End Balance
 Sheet
($ in thousands)
Total assets         $ 521,179  $ 490,111
  Gross Loans          425,374    416,664
  Nonperforming
   assets               10,904      6,538
  Allowance for
   credit losses (3)     6,396      4,650
  Deposits             431,533    365,230
  Common Equity         46,563     44,151
  Total Capital (4)     60,063     44,151
Non-Financial Data
  Full-time
   equivalent staff        120        119
  Number of banking
   offices, domestic
   and foreign              12         12
Common Shares
 outstanding
  Period end         7,681,877  7,658,252
  Period average -
   basic             7,664,075  7,636,687
  Period average -
   diluted           7,692,110  7,737,050
Market Ratios
  Stock Price        $    4.30  $    6.30
  Price/Earnings         38.93      19.23
  Price/Book              0.71       1.09


(1) Cash dividends of $191,542, $382,943 and $191,542 paid in the Q1 2009,
    Q4 2008 and Q3 2008, respectively.
(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