Oak Valley Bancorp Reports 4th Quarter Results


OAKDALE, CA--(Marketwire - January 28, 2011) - 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 fiscal year ended December 31, 2010. Net income for 2010 totaled $4.6 million compared to $2.0 million for 2009. After adjustment for preferred stock dividends and accretion, net income available to common shareholders was $3.8 million, or $0.49 per diluted share, compared to net income of $1.2 million, or $0.15 per diluted common share, in 2009.

For the three months ended December 31, 2010, the Bank reported net income of $1.5 million. After adjustment for preferred stock dividends and accretion, net income available to common shareholders was $1.3 million, or $0.17 per diluted share, compared to net income of $525 thousand, or $0.07 per diluted common share, for the three months ended December 31, 2009.

Total assets grew to $552.9 million for the year ended December 31, 2010, a 5.4% increase over the prior year. Deposits increased to $476.7 million, which was an increase of $47.5 million, or 11.1% over December 31, 2009. Gross loans at year end totaled $404.2 million, reflecting a decrease of $21.4 million, or 5.0%, during 2010.

"We are extremely pleased with the overall performance in 2010. Robust core deposit growth and solid net interest margin led to strong results. We have built a solid foundation and remain poised to support the communities we serve, as the economy improves," commented Ron Martin, CEO.


The Bank's loan loss provision totaled $4.0 million in 2010, compared to $5.9 million in loan loss provision for the year ended December 31, 2009. The decrease in loan loss provisions reflect a reduction in charge-offs. Net charge-offs totaled $2.6 million in 2010 versus $4.6 million in 2009. The allowance for loan losses as a percentage of loans totaled 2.04% at December 31, 2010 compared to 1.65% at December 31, 2009.

Non-performing assets totaled $12.3 million, or 2.22% of total assets at December 31, 2010, compared to $16.6 million, or 3.16% of total assets, at December 31, 2009. Of the $12.3 million, non-performing loans account for $11.5 million, all secured by real estate, while the remaining $778,000 is comprised of foreclosed properties. Write-downs on OREO properties totaled $424,000 during 2010.

"We've been successful in mitigating and reducing non-performing assets in 2010. Our adherence to conservative credit practices has undoubtedly served us well through these precarious times. While we claim no immunity to the economic woes that challenge all of us today, we are optimistic that the principles which have guided us through our 20 year history will continue to serve us well in the years to come," said Chris Courtney, President.

Net interest income of $25.0 million for the year ended December 31, 2010, increased by $1.4 million, or 5.8%, from the prior year. The Bank's net interest margin was 5.20% for the year ended December 31, 2010, compared to 4.99% for the year ended December 31, 2009. The increase is a result of the Bank's ability to reduce its cost of funds at a more rapid rate than the yield on earning assets is declining.

Non-interest expense of $16.8 million for the year ended December 31, 2010, decreased $1.4 million, or 7.9%, from the prior year. This was the result of a $2.0 million, year over year, reduction in write-downs and expenses associated with foreclosed properties, which was partially offset by increases in employee salaries and benefits, from the prior year.

"Net interest income continues to be a key driver of profitability. The Bank's ongoing goal to expand our customer base and serve the banking needs of the community enabled us to increase core deposits and further expand our margin in this low rate environment," stated Rick McCarty, CFO.

Earlier this year, the Bank announced plans to open new branches in Modesto and Manteca in 2011. The new locations will bring the Bank's branch total to 14. Currently, Oak Valley Community Bank operates through 12 branches in 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 on Oak Valley Community Bank, 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,        4th        3rd        2nd        1st        4th
 except per share)    Quarter    Quarter    Quarter    Quarter    Quarter
Selected Quarterly
 Operating Data:       2010       2010       2010       2010       2009

  Net interest
   income            $   6,343  $   6,359  $   6,244  $   6,060  $   6,079
  Provision for loan
   losses                1,005      1,005      1,005      1,005        900
  Non-interest
   income                  715        676        732        647        618
  Non-interest
   expense               3,826      4,188      4,316      4,445      4,749
  Income before
   income taxes          2,227      1,842      1,655      1,257      1,048
  Provision for
   income taxes            727        701        616        309        313
                     ---------  ---------  ---------  ---------  ---------
  Net income             1,500      1,141      1,039        948        735
  Preferred stock
   dividends and
   accretion              (210)      (210)      (211)      (211)      (210)
                     ---------  ---------  ---------  ---------  ---------
  Net income
   available to
   common
   shareholders          1,290        931        828        737        525
                     =========  =========  =========  =========  =========

  Earnings per
   common share -
   basic                  0.17       0.12       0.11       0.10       0.07
  Earnings per
   common share -
   diluted                0.17       0.12       0.11       0.10       0.07
  Dividends declared
   per common share
   (1)                       -          -          -          -          -
  Return on average
   common equity          9.99%      7.38%      6.84%      6.22%      4.41%
  Return on average
   assets                 1.09%      0.86%      0.81%      0.75%      0.56%
  Net interest
   margin (2)             5.01%      5.23%      5.36%      5.22%      5.10%
  Efficiency Ratio
   (2)                   53.03%     58.99%     61.21%     65.59%     69.52%

Capital - Period End
  Book value per
   share             $    6.64  $    6.57  $    6.38  $    6.24  $    6.14

Credit Quality -
 Period End
  Nonperforming
   assets/ total
   assets                 2.22%      2.00%      2.29%      2.85%      3.16%
  Loan loss reserve/
   gross loans            2.04%      1.88%      1.85%      1.65%      1.65%

Period End Balance
 Sheet
($ in thousands)
  Total assets       $ 552,894  $ 534,879  $ 519,203  $ 520,275  $ 524,722
  Gross Loans          404,194    408,971    411,067    411,013    425,627
  Nonperforming
   assets               12,253     10,690     11,882     14,854     16,568
  Allowance for
   credit losses         8,255      7,700      7,614      6,762      7,020
  Deposits             476,739    448,904    435,756    431,624    429,210
  Common Equity         51,158     50,605     48,984     47,904     47,192
  Total Capital (3)     64,658     64,105     62,484     61,404     60,692

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

Common Shares
 outstanding
  Period end         7,702,127  7,702,127  7,681,877  7,681,877  7,681,877
  Period average -
   basic             7,702,127  7,692,900  7,681,877  7,681,877  7,681,877
  Period average -
   diluted           7,719,157  7,729,175  7,720,440  7,705,488  7,709,076

Market Ratios
  Stock Price        $    5.90  $    5.40  $    5.25  $    4.10  $    4.41
  Price/Earnings          8.88      11.25      12.14      10.54      16.27
  Price/Book              0.89       0.82       0.82       0.66       0.72




                      TWELVE MONTHS ENDED
                     ---------  ---------
($ in thousands,   DECEMBER 31, DECEMBER 31,
 except per share)     2010       2009
                     ---------  ---------
  Net interest
   income            $  25,006  $  23,642
  Provision for loan
   losses                4,020      5,862
  Non-interest
   income                2,770      2,641
  Non-interest
   expense              16,775     18,218
  Income before
   income taxes          6,981      2,203
  Provision for
   income taxes          2,353        203
                     ---------  ---------
  Net income             4,628      2,000
  Preferred stock
   dividends and
   accretion              (842)      (842)
                     ---------  ---------
  Net income
   available to
   common
   shareholders          3,786      1,158
                     =========  =========

  Earnings per
   common share -
   basic                  0.49       0.15
  Earnings per
   common share -
   diluted                0.49       0.15
  Dividends declared
   per common share
   (1)                       -      0.025
  Return on average
   common equity          7.65%      2.51%
  Return on average
   assets                 0.88%      0.38%
  Net interest
   margin (2)             5.20%      4.99%
  Efficiency Ratio
   (2)                   59.62%     68.04%

Capital - Period End
  Book value per
   share             $    6.64  $    6.14

Credit Quality -
 Period End
  Nonperforming
   assets/ total
   assets                 2.22%      3.16%
  Loan loss reserve/
   gross loans            2.04%      1.65%

Period End Balance
 Sheet
($ in thousands)
  Total assets       $ 552,894  $ 524,722
  Gross Loans          404,194    425,627
  Nonperforming
   assets               12,253     16,568
  Allowance for
   credit losses         8,255      7,020
  Deposits             476,739    429,210
  Common Equity         51,158     47,192
  Total Capital (3)     64,658     60,692

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

Common Shares
 outstanding
  Period end         7,702,127  7,681,877
  Period average -
   basic             7,689,760  7,668,562
  Period average -
   diluted           7,720,624  7,696,822

Market Ratios
  Stock Price        $    5.90  $    4.41
  Price/Earnings         11.98      29.20
  Price/Book              0.89       0.72


(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) 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