Oak Valley Bancorp Reports 4th Quarter Results

OAKDALE, CA--(Marketwire - February 11, 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 fiscal year ended December 31, 2009. Net income for 2009 totaled $2.0 million compared to $2.2 million for 2008. After adjustment for preferred stock dividends and accretion this comprised net income available to common shareholders of $1.2 million, or $0.15 per diluted share, compared to net income of $2.1 million, or $0.27 per diluted common share, in 2008.

For the three months ended December 31, 2009, the Bank reported net income of $735,000. After adjustment for preferred stock dividends and accretion this represents net income available to common shareholders of $525,000, or $0.07 per diluted share, compared to net income of $219,000, or $0.03 per diluted common share, for the three months ended December 31, 2008.

Total assets grew to $524.7 million for the year ended December 31, 2009, a 3.3% increase over the prior year. Gross loans at year end totaled $425.6 million, a decrease of $2.6 million, or 0.6%, during 2009. The Bank's total deposits increased to $429.2 million, which was an increase of $51.0 million, or 13.5% over December 31, 2008.

"Despite lower earnings per share, revenues for the bank continue to be strong which has enabled us to improve our already solid capital and liquidity positions. Strong revenue has also allowed us to record increased loan loss provisions and continue to address the lending needs of the communities we serve. While our loan totals were relatively flat, in 2009 the Bank made over $100 million in commercial, small business, and consumer loans," stated Ron Martin, CEO. "At the same time, our branches have shown the ability to increase deposits and decrease our cost of funds throughout the year. It's impossible to have positive results in these areas, especially in the current environment, unless you are taking great care of existing customers, attracting new ones, and providing both groups with a level of service in which they see superior value," Martin concluded.

The Bank's loan loss provision totaled $5.9 million in 2009, compared to $2.2 million in loan loss provision for the year ended December 31, 2008. The increases in loan loss provisions reflect 2009 charge-offs and increased allocation for economic uncertainty. Net charge-offs totaling $4.4 million for 2009 primarily relate to construction loans secured by real property, where the value of the collateral has declined. The allowance for loan losses as a percentage of loans totaled 1.65% at December 31, 2009, compared to 1.30% at December 31, 2008.

Non-performing assets totaled $16.6 million, or 3.16% of total assets at December 31, 2009, compared to $7.5 million, or 1.47% of total assets, at December 31, 2008. Of the $16.6 million, non-performing loans account for $14.4 million, all secured by real estate, while the remaining $2.2 million is comprised of foreclosed properties. Write-downs on OREO properties totaled $2.4 million during 2009.

"As crucial a part it played in our success in 2009, management and monitoring of underperforming assets will remain a primary focus in 2010. We have made sizeable provisions for loan losses in each quarter of this year and management continues to ensure that all OREO property is written down appropriately in light of current market values. Our diligence in these areas and our resolve to adhere to conservative credit practices will only strengthen in the coming year," stated Chris Courtney, President.

Net interest income of $23.6 million for the year ended December 31, 2009, increased by $3.1 million, or 15.2%, over the prior year. The Bank's net interest margin was 4.99% for the year ended December 31, 2009, compared to 4.72% for the year ended December 31, 2008. The increase is a result of the Bank's ability to reduce its cost of funds, while increasing deposits, at a more rapid rate than the yield on earning assets is declining.

Non-interest expense of $18.2 million for the year ended December 31, 2009, increased $353,000, or 2.0%, over the prior year. The primary increases in non-interest expense were write-downs and expenses associated with foreclosed properties, which increased by $1.1 million over the prior year; and, increased regulatory assessments of $652 thousand over the prior year. These increases were partially offset by decreases in overhead, the largest being a decrease in salaries and benefits of $912 thousand, compared to prior year.

"Increased net interest income, corresponding to margin expansion, solidified our profitability in 2009. An increase in our core deposits, associated with our growing customer base, was a strong contributor to a reduction in cost of funds. Diligent expense control has also been exercised to partially offset increased regulatory and OREO related expenses," stated Rick McCarty, CFO.

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

      Net interest
       income        $   6,079  $   6,020  $   5,887  $   5,656  $   5,333
      Provision for
       loan losses         900        925      2,137      1,900      1,001
      Non-interest
       income              618        778        647        598        602
      Non-interest
       expense           4,749      4,745      4,787      3,938      4,712
      Income before
       income taxes      1,048      1,128       (389)       416        222
      Provision for
       income taxes        313        249       (344)       (14)       (61)
                     ---------  ---------  ---------  ---------  ---------
      Net income           735        879        (45)       430        283
      Preferred
       stock
       dividends and
       accretion          (210)      (210)      (210)      (210)       (64)
                     ---------  ---------  ---------  ---------  ---------
      Net income
       available to
       common
       shareholders        525        669       (255)       220        219
                     =========  =========  =========  =========  =========

      Earnings per
       common share
       - basic            0.07       0.09      (0.03)      0.03       0.03
      Earnings per
       common share
       - diluted          0.07       0.09      (0.03)      0.03       0.03
      Dividends
       declared per
       common share
       (1)                   -          -          -      0.025      0.025
      Return on
       average
       common equity      4.41%      5.73%     -2.23%      1.97%      1.95%
      Return on
       average
       assets             0.56%      0.67%     -0.03%      0.34%      0.23%
      Net interest
       margin (2)         5.10%      5.06%      4.96%      4.86%      4.72%
      Efficiency
       Ratio (2)         69.52%     68.77%     71.59%     61.97%     78.30%

Capital - Period End
      Book value per
       share         $    6.14  $    6.06  $    5.89  $    5.91  $    5.81

Credit Quality -
 Period End
      Nonperforming
       assets/total
       assets             3.16%      2.09%      1.94%      2.66%      1.47%
      Loan loss
       reserve/gross
       loans (3)          1.65%      1.50%      1.34%      1.53%      1.30%


Period End Balance
 Sheet
($ in thousands)
Total assets         $ 524,722  $ 521,179  $ 525,606  $ 523,747  $ 508,203
      Gross Loans      425,627    425,374    424,390    430,416    428,177
      Nonperforming
       assets           16,568     10,904     10,177     13,906      7,467
      Allowance for
       credit losses
       (3)               7,020      6,396      5,701      6,603      5,569
      Deposits         429,210    431,533    419,941    410,089    378,248
      Common Equity     47,192     46,563     45,130     45,286     44,486
      Total Capital
       (4)              60,692     60,063     58,630     58,786     57,986
Non-Financial Data
      Full-time
       equivalent
       staff               117        120        111        117        117
      Number of
       banking
       offices,
       domestic
       and foreign          12         12         12         12         12
Common Shares
 outstanding
      Period end     7,681,877  7,681,877  7,661,627  7,661,627  7,661,627
      Period average
       - basic       7,681,877  7,668,891  7,661,627  7,661,627  7,660,526
      Period average
       - diluted     7,709,076  7,694,058  7,686,800  7,703,892  7,723,711
Market Ratios
      Stock Price    $    4.41  $    4.30  $    4.25  $    3.75  $    6.00
      Price/Earnings     16.27      12.43        N/A      32.22      52.82
      Price/Book          0.72       0.71       0.72       0.63       1.03




                                                    TWELVE MONTHS ENDED
                                                --------------------------

                                                DECEMBER 31,  DECEMBER 31,
($ in thousands, except per share)                  2009          2008
                                                ------------  ------------

      Net interest income                       $     23,642  $     20,515
      Provision for loan losses                        5,862         2,188
      Non-interest income                              2,641         2,522
      Non-interest expense                            18,218        17,865
      Income before income taxes                       2,203         2,984
      Provision for income taxes                         203           822
                                                ------------  ------------
      Net income                                       2,000         2,162

      Preferred stock dividends and accretion           (842)          (64)
                                                ------------  ------------
      Net income available to common
       shareholders                                    1,158         2,098
                                                ============  ============

      Earnings per common share - basic                 0.15          0.27
      Earnings per common share - diluted               0.15          0.27
      Dividends declared per common share (1)          0.025         0.075
      Return on average common equity                   2.51%         4.77%
      Return on average assets                          0.38%         0.46%
      Net interest margin (2)                           4.99%         4.72%
      Efficiency Ratio (2)                             68.04%        76.55%

Capital - Period End
      Book value per share                      $       6.14  $       5.81

Credit Quality - Period End
      Nonperforming assets/total assets                 3.16%         1.47%
      Loan loss reserve/gross loans (3)                 1.65%         1.30%


Period End Balance Sheet
($ in thousands)
Total assets                                    $    524,722  $    508,203
      Gross Loans                                    425,627       428,177
      Nonperforming assets                            16,568         7,467
      Allowance for credit losses (3)                  7,020         5,569
      Deposits                                       429,210       378,248
      Common Equity                                   47,192        44,486
      Total Capital (4)                               60,692        57,986
Non-Financial Data
      Full-time equivalent staff                         117           117
      Number of banking offices, domestic
       and foreign                                        12            12
Common Shares outstanding
      Period end                                   7,681,877     7,661,627
      Period average - basic                       7,668,562     7,642,775
      Period average - diluted                     7,696,822     7,738,604
Market Ratios
      Stock Price                               $       4.41  $       6.00
      Price/Earnings                                   29.20         21.86
      Price/Book                                        0.72          1.03


(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