Oak Valley Bancorp Reports 2nd Quarter Results

OAKDALE, CA--(Marketwire - July 21, 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 June 30, 2010, the Bank reported net income of $1,039,000. After adjustment for preferred stock dividends and accretion this represents net income available to common shareholders of $828,000, or $0.11 per diluted common share. Year-to-date results for the six months ended June 30, 2010, were net income of $1,987,000 and net income available to common shareholders of $1,566,000. This compares to year-to-date results for the six months ended June 30, 2009, which were net income of $385,000 and a net loss of $36,000 to common shareholders.

Net interest income corresponding to net interest margin expansion continues to support the Bank's earnings growth. Year-to-date net interest income grew by $761,000, or 6.6%, to $12.3 million compared to $11.5 million for the same period last year. The net interest margin during the same periods averaged 5.29% and 4.92%, respectively; while the net interest margin for the second quarter was 5.36%.

Noninterest expense for the year remains essentially unchanged. For the six-months ended June 30, 2010, the Bank recorded noninterest expense of $8.76 million, compared to $8.73 million for the same period the previous year. Write downs and expenses associated with Other Real Estate Owned (OREO) continue to impact noninterest expense totals. However, the provision for loan losses for the six months ended June 30, 2010 were $2.0 million, compared to $4.0 million provisioned for during the same period last year.

Nonperforming assets as of June 30, 2010 totaled $11.9 million or 2.29% of total assets, an increase over $10.2 million, or 1.94%, for the same period the previous year, but a decrease from the $14.9 million, or 2.85% in nonperforming assets at March 31, 2010. The result is a reduction in nonperforming assets of $3.0 million since March 31, 2010.

Total assets were $519.2 million at June 30, 2010, a decrease of $6.4 million, or 1.2%, from June 30, 2009. This corresponded to a decline in Gross loans of $13.3 million, to $411.1 million as of June 30, 2010, a decrease of 3.1% from June 30, 2009. The Bank's total deposits were $435.8 million as of June 30, 2010, an increase of $15.8 million, or 3.8% over June 30, 2009.

"We are pleased with the general operational efficiency and continued expansion of our net interest margin. Remaining focused on our goal to attract more business and personal demand deposit accounts has helped fuel that margin expansion while increasing our deposit base," stated Ron Martin, CEO. "While we are currently experiencing a decline in loan totals, we are well positioned to support the borrowing needs of our clients and the local business community, particularly as the economy improves and commercial loan demand is restored to more traditional levels," Martin concluded.

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

   Net interest
    income           $   6,244  $   6,060  $   6,079  $   6,020  $   5,887
   Provision for
    loan losses          1,005      1,005        900        925      2,137
   Non-interest
    income                 732        647        618        778        647
   Non-interest
    expense              4,316      4,445      4,749      4,745      4,787
   Income before
    income taxes         1,655      1,257      1,048      1,128       (389)
   Provision for
    income taxes           616        309        313        249       (344)
                     ---------  ---------  ---------  ---------  ---------
   Net income            1,039        948        735        879        (45)
   Preferred stock
    dividends and
    accretion             (211)      (211)      (210)      (210)      (210)
                     ---------  ---------  ---------  ---------  ---------
   Net income
    available to
    common
    shareholders           828        737        525        669       (255)
                     =========  =========  =========  =========  =========

   Earnings per
    common share -
    basic                 0.11       0.10       0.07       0.09      (0.03)
   Earnings per
    common share -
    diluted               0.11       0.10       0.07       0.09      (0.03)
   Dividends
    declared per
    common share (1)         -          -          -          -          -
   Return on average
    common equity         6.84%      6.22%      4.41%      5.73%     -2.23%
   Return on average
    assets                0.81%      0.75%      0.56%      0.67%     -0.03%
   Net interest
    margin (2)            5.36%      5.22%      5.10%      5.06%      4.96%
   Efficiency Ratio
    (2)                  61.21%     65.59%     69.52%     68.77%     71.59%

Capital - Period End
   Book value per
    share            $    6.38  $    6.24  $    6.14  $    6.06  $    5.89

Credit Quality -
 Period End
   Nonperforming
    assets/ total
    assets                2.29%      2.85%      3.16%      2.09%      1.94%
   Loan loss
    reserve/ gross
    loans (3)             1.85%      1.65%      1.65%      1.50%      1.34%

Period End Balance
 Sheet
($ in thousands)
Total assets         $ 519,203  $ 520,275  $ 524,722  $ 521,179  $ 525,606
   Gross Loans         411,067    411,013    425,627    425,374    424,390
   Nonperforming
    assets              11,882     14,854     16,568     10,904     10,177
   Allowance for
    credit losses
    (3)                  7,614      6,762      7,020      6,396      5,701
   Deposits            435,756    431,624    429,210    431,533    419,941
   Common Equity        48,984     47,904     47,192     46,563     45,130
   Total Capital (4)    62,484     61,404     60,692     60,063     58,630

Non-Financial Data
   Full-time
    equivalent staff       117        118        117        120        111
   Number of banking
    offices, foreign
    and domestic            12         12         12         12         12

Common Shares
 outstanding
   Period end        7,681,877  7,681,877  7,681,877  7,681,877  7,661,627
   Period average -
    basic            7,681,877  7,681,877  7,681,877  7,668,891  7,661,627
   Period average -
    diluted          7,720,440  7,705,488  7,709,076  7,694,058  7,686,800
Market Ratios
   Stock Price       $    5.25  $    4.10  $    4.41  $    4.30  $    4.25
   Price/Earnings        12.14      10.54      16.27      12.43        N/A
   Price/Book             0.82       0.66       0.72       0.71       0.72





                                                        SIX MONTHS ENDED
                                                      --------------------

                                                      JUNE 30,   JUNE 30,
($ in thousands, except per share)                      2010       2009
                                                      ---------  ---------

   Net interest income                                $  12,305  $  11,543
   Provision for loan losses                              2,010      4,037
   Non-interest income                                    1,379      1,246
   Non-interest expense                                   8,761      8,725
   Income before income taxes                             2,912         27
   Provision for income taxes                               926       (358)
                                                      ---------  ---------
   Net income                                             1,987        385
   Preferred stock dividends and accretion                 (421)      (421)
                                                      ---------  ---------
   Net income available to common shareholders            1,566        (36)
                                                      =========  =========

   Earnings per common share - basic                       0.20      (0.00)
   Earnings per common share - diluted                     0.20      (0.00)
   Dividends declared per common share (1)                    -      0.025
   Return on average common equity                         6.54%     -0.17%
   Return on average assets                                0.78%      0.15%
   Net interest margin (2)                                 5.29%      4.92%
   Efficiency Ratio (2)                                   63.36%     66.74%

Capital - Period End
   Book value per share                               $    6.38  $    5.89

Credit Quality - Period End
   Nonperforming assets/ total assets                      2.29%      1.94%
   Loan loss reserve/ gross loans (3)                      1.85%      1.34%

Period End Balance Sheet
($ in thousands)
Total assets                                          $ 519,203  $ 525,606
   Gross Loans                                          411,067    424,390
   Nonperforming assets                                  11,882     10,177
   Allowance for credit losses (3)                        7,614      5,701
   Deposits                                             435,756    419,941
   Common Equity                                         48,984     45,130
   Total Capital (4)                                     62,484     58,630

Non-Financial Data
   Full-time equivalent staff                               117        111
   Number of banking offices, foreign and domestic           12         12

Common Shares outstanding
   Period end                                         7,681,877  7,661,627
   Period average - basic                             7,681,877  7,661,627
   Period average - diluted                           7,713,312  7,691,821
Market Ratios
   Stock Price                                        $    5.25  $    4.25
   Price/Earnings                                         12.77        N/A
   Price/Book                                              0.82       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) 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