Oak Valley Bancorp Reports 2nd Quarter Results

OAKDALE, CA--(Marketwire - July 29, 2008) - Oak Valley Bancorp, (OTCBB: OVYB), the bank holding company for Oak Valley Community Bank, recently reported mid-year results. Effective as of July 3, 2008, Oak Valley Community Bank adopted a bank holding company structure as a result of which it became a wholly owned subsidiary of Oak Valley Bancorp. Oak Valley Bancorp is a newly established corporation that is 100% owned by the former shareholders of the Bank, after conversion, one-for-one, of their Bank stock into shares of Oak Valley Bancorp. The Bank and Oak Valley Bancorp have received all necessary regulatory approvals for this transaction.

Net income for the second quarter ending June 30, 2008 was $553,000 or $0.07 per diluted share; a 44.9% decrease in net income from the $1,003,000, for the same period last year. For the six month period ending June 30, 2008 net income was $1,329,000 compared to last year's $2,005,000; a decrease of 33.7%. Total assets grew to $476.1 million at June 30, 2008, an increase of $34.9 million, or 7.9%, over June 30, 2007. Gross loans increased by $23.9 million, to $400.5 million as of June 30, 2008, an increase of 6.3% over June 30, 2007. The Bank's total deposits were $358.2 million on June 30, 2008, which is a decrease of $6.0 million, or 1.6% below June 30, 2007.

Core performance of the Bank continues to be solid with the bank producing some of the best operating numbers in its history. Asset and loan growth continue at a steady pace. Seasonally slow first quarter loan activity reversed itself with $12.9 million in new loans added in the second quarter. Deposits decreased slightly from the same period last year, primarily due to our willingness to allow some low margin Certificates of Deposit to exit the bank. This decision comes as a result of adherence to our full-relationship strategy and has favored our net interest margin. Limiting single service high cost deposits has allowed the bank to maintain a healthy NIM of 4.77%, despite the 225 basis point drop by the Federal Reserve Bank in the first half of 2008.

"These are very challenging times in the banking business and even the best banks have experienced some loan problems and losses as we all work our way through the downturn. Oak Valley has built a solid foundation based on sound underwriting standards and long term business relationships that even in these difficult times will keep the bank profitable and secure. We are pleased with our growth in loans and our strong net interest margin and while we have not been immune to the economic environment, early identification and recognition of problem loans will minimize losses in the long run," stated Ronald Martin, CEO.

The credit quality of the bank's loan portfolio continues to be solid and stable. Nonperforming assets at June 30, 2008, were $6.4 million, or 1.35% of total assets, a decrease of $2.7 million from $9.1 million, at December 31, 2007. The decrease is the result of a $1.7 million loan payoff and $1.0 million in write-downs. Nonperforming assets at June 30, 2008, consist of $3.5 million in other real estate owned and $2.9 million of loans on non-accrual status. For the second quarter 2008, the bank accrued $440 thousand to the allowance for loan losses compared to $120 thousand for the second quarter 2007. Year to date provisions to the allowance for loan losses totaled $585 thousand and $290 thousand for the years 2008 and 2007, respectively. The increase in provision was the result of year to date charge-offs, associated with the loans on non-accrual, and loan growth.

"While operating in what is arguably one of the hardest hit housing markets in the nation, Oak Valley's non-performing assets remain at a manageable level. Through early recognition, collection efforts and continued write-downs to market, management is reducing non-performing loans and as of June 30, 2008, nonperforming assets represent only 1.35% of total assets. While we do not see additional problem loans on the horizon, we remain vigilant in monitoring our portfolio as the economy progresses through this cycle," summarized Courtney.

Established in 1991, Oak Valley Community Bank offers a variety of loan and deposit products dedicated to serving the needs of individuals and small businesses. The Bank currently operates through 12 conveniently located branches: Oakdale, Escalon, Sonora, Turlock, Stockton, Patterson, Ripon, two branches in Modesto, and three branches in their Eastern Sierra Division, which include Bridgeport, Mammoth Lakes and Bishop.

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)


                        2nd        1st        4th        3rd        2nd
Profitability         Quarter    Quarter    Quarter    Quarter    Quarter
($ in thousands,
 except per share)     2008       2008       2007       2007       2007
Selected Quarterly
 Operating Data:
    Net interest
     income          $   5,081  $   4,809  $   4,792  $   4,859  $   4,653
    Provision for
     loan losses           440        145        120        145        120
    Non-interest
     income                683        623        562        506        552
    Non-interest
     expense             4,573      4,065      3,897      3,582      3,452
    Income before
     income taxes          751      1,222      1,337      1,638      1,633
    Provision for
     income taxes          198        446        387        668        630
    Net income             553        776        950        969      1,003
    Earnings per
     common share -
     basic                0.07       0.10       0.12       0.13       0.14
    Earnings per
     common share -
     diluted              0.07       0.10       0.12       0.13       0.14
    Dividends
     declared per
     common share (1)        -          -          -       0.19          -
    Return on
     average common
     equity (2)           5.01%      7.16%      8.93%      9.34%     11.04%
    Return on
     average assets       0.47%      0.68%      0.83%      0.87%      0.90%
    Net interest
     margin (3)           4.77%      4.60%      4.50%      4.67%      4.47%
    Efficiency Ratio (3) 78.04%     73.70%     72.00%     66.02%     65.49%

Capital - Period End
    Book value per
     share (2)       $    5.71  $    5.70  $    5.57  $    5.41  $    5.29

Credit Quality -
 Period End
    Nonperforming
     assets/assets        1.35%      1.60%      2.00%      0.27%      0.00%
    Loan loss
     reserve/loans (4)    1.08%      1.09%      1.16%      1.23%      1.22%

Period End Balance
 Sheet
($ in thousands)
Total assets         $ 476,094  $ 462,995  $ 454,257  $ 453,738  $ 441,191
    Gross Loans        400,537    387,647    387,809    385,901    376,671
    Nonperforming
     assets              6,435      7,395      9,087      1,216          -
    Allowance for
     credit losses (4)   4,321      4,225      4,507      4,757      4,600
    Deposits           358,159    362,760    377,348    386,158    364,164
    Common Equity (2)   43,735     43,373     42,361     41,184     39,052
Non-Financial Data
    Full-time
     equivalent
     staff                 128        130        125        119        120
    Number of
     banking
     offices,
     domestic
     and foreign            12         12         12         12         12
Common Shares
 outstanding
    Period end (2)   7,658,252  7,611,377  7,607,780  7,606,068  7,379,613
    Period average -
     basic (2)       7,641,534  7,610,039  7,606,506  7,567,719  7,167,879
    Period average -
     diluted (2)     7,697,681  7,696,308  7,727,570  7,717,768  7,341,990
Market Ratios
    Stock Price      $    7.00  $    8.49  $    8.25  $    9.94  $   10.95
    Price/Earnings       24.12      20.70      16.64      19.56      19.50
    Price/Book (2)        1.23       1.49       1.48       1.84       2.07



Profitability
($ in thousands,
  except per share)     YEAR TO DATE
                    ----------------------
                     6/30/2008  6/30/2007
Selected Quarterly
 Operating Data:
    Net interest
     income          $   9,890  $   9,254
    Provision for
     loan losses           585        290
    Non-interest
     income              1,306      1,092
    Non-interest
     expense             8,639      6,772
    Income before
     income taxes        1,972      3,285
    Provision for
     income taxes          643      1,280
    Net income           1,329      2,005
    Earnings per
     common share -
     basic                0.17       0.28
    Earnings per
     common share -
     diluted              0.17       0.27
    Dividends
     declared per
     common share (1)        -          -
    Return on
     average common
     equity (2)           6.09%     11.27%
    Return on
     average assets       0.58%      0.91%
    Net interest
     margin (3)           4.68%      4.48%
    Efficiency Ratio (3) 75.95%     64.62%

Capital - Period End
    Book value per
     share (2)       $    5.71  $    5.32

Credit Quality -
 Period End
    Nonperforming
     assets/assets        1.35%      0.00%
    Loan loss
     reserve/loans (4)    1.08%      1.22%

Period End Balance
 Sheet
($ in thousands)
Total assets         $ 476,094  $ 441,191
    Gross Loans        400,537    376,671
    Nonperforming
     assets              6,435          -
    Allowance for
     credit losses
     (4)                 4,321      4,600
    Deposits           358,159    364,164
    Common Equity
     (2)                43,735     39,052
Non-Financial Data
    Full-time
     equivalent
     staff                 128        120
    Number of
     banking
     offices,
     domestic
     and foreign            12         12
Common Shares
 outstanding
    Period end (2)   7,658,252  7,379,613
    Period average -
     basic (2)       7,625,787  7,138,564
    Period average -
     diluted (2)     7,695,980  7,317,633
Market Ratios
    Stock Price      $    7.00  $   10.95
    Price/Earnings       20.03      19.33
    Price/Book (2)        1.23       2.06


(1) Cash dividend of $1,444,697 paid in August 2007.
(2) Includes 256,142 shares issued on June 15, 2007 for the Rights
    Subscription stock offering and 200,289 shares issued on July 16, 2007
    for the Remaining shares stock offering, totaling $5,020,739 in
    additional capital.
(3) Ratio computed on a fully tax equivalent basis using a marginal
    federal tax rate of 34%.
(4) Adjusted for Allowance for Off-Balance Sheet Credit Exposure.

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