Oak Valley Bancorp Reports 2nd Quarter Results

Oak Valley Bancorp Reports 2nd Quarter Results 
OAKDALE, CA -- (MARKET WIRE) -- 08/04/09 --  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, 2009, the Bank reported
a net loss of $45,000. After adjustment for preferred stock dividends
and accretion this represents a net loss of $257,000 available to
common shareholders, compared to income of $553,000, or $0.07 per
diluted common share, for the three months ended June 30, 2008. 
Year-to-date results for the six months ended June 30, 2009, include
net income of $385,000 and net income available to common
shareholders representing a loss of $37,000. 
Provisioning for loan losses of $2.1 million and OREO write downs of
$846,000 for the three-months ended June 30, 2009 led to the decrease
in net income.  Another expense contributing to the erosion of net
income in the second quarter was the FDIC imposed, one-time, special
insurance assessment for all financial institutions and represented
$234,000 for the Bank. 
"While we are of course disappointed to post a net loss for the
quarter, core earnings are stronger than ever and the bank is well
positioned for economic recovery," stated Ron Martin, CEO. 
"Aggressive credit management and early problem loan recognition
continues to be a priority for the Bank's management team.  All OREO
property is written down appropriately and all non-accrual loans are
adequately reserved in light of current market values.  The Bank's
non-performing assets to total assets remain below local and national
peer groups," added Chris Courtney, President. 
Total charge-offs and write-downs to OREO for the quarter were just
over $3.9 million.   The result is a decrease in non-performing assets
of $3.73 million to $10.2 million, or 1.94% of total assets at June
30, 2009, from $13.9 million, or 2.66% of total assets at March 31,
2009. 
Increased net interest income corresponding to growth and an
expanding net interest margin continues to support the Bank's
financial position.   Net interest income as of June 30, 2009 was
$11.5 million, a $1.6 million increase over the $9.9 million in the
same period the previous year; net interest margin during the same
periods were 4.92% and 4.68%, respectively. Growth accounted for $1.1
million of the realized interest income gains, while margin expansion
accounted for $500,000. The Bank has also focused on non-interest
expense, driving costs associated with employment and benefits down
by $968,000 for the six months ended June 30, 2009, compared to the
same period in 2008. 
Total assets grew to $525.6 million at June 30, 2009, an increase of
$49.5 million, or 10.4%, over June 30, 2008.  Gross loans increa
sed by
$23.9 million, to $424.4 million as of June 30, 2009, an increase of
6.0% over June 30, 2008.  The Bank's total deposits also increased to
$419.9 million on June 30, 2009, which was $61.8 million, or 17.2%
over June 30, 2008. The bank's risk based capital position remains
strong at 13.2%, compared to regulatory guidelines of 10% for well
capitalized banks. 
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,        2nd        1st        4th        3rd        2nd
 except per share)    Quarter    Quarter    Quarter    Quarter    Quarter
Selected Quarterly
 Operating Data:       2009       2009       2008       2008       2008

                     ---------  ---------  ---------  ---------  ---------
   Net interest
    income           $   5,887  $   5,656  $   5,333  $   5,292  $   5,081
   Provision for
    loan losses          2,137      1,900      1,001        602        440
   Non-interest
    income                 647        598        602        634        672
   Non-interest
    expense              4,787      3,938      4,712      4,535      4,562
   Income before
    income taxes          (389)       416        222        789        751
   Provision for
    income taxes          (344)       (14)       (61)       240        198
                     ---------  ---------  ---------  ---------  ---------
   Net income              (45)       430        283        549        553
   Preferred stock
    dividends and
    accretion             (212)      (210)       (64)         -          -
                     ---------  ---------  ---------  ---------  ---------
   Net income
    available to
    common
    shareholders          (257)       220        219        549        553
                     =========  =========  =========  =========  =========

   Earnings per
    common share -
    basic                (0.03)      0.03       0.03       0.07       0.07
   Earnings per
    common share -
    diluted              (0.03)      0.03       0.03       0.07       0.07
   Dividends
    declared per
    common share (1)         -      0.025      0.025      0.050          -
   Return on average
    common equity        -2.24%      1.97%      1.95%      4.91%      5.01%
   Return on average
    assets               -0.03%      0.34%      0.23%      0.45%      0.47%
   Net interest
    margin (2)            4.97%      4.87%      4.72%      4.76%      4.77%
   Efficiency Ratio
    (2)                  71.46%     61.80%     78.30%     76.03%     78.04%

Capital - Period End
   Book value per
    share            $    5.89  $    5.91  $    5.81  $    5.77  $    5.71

Credit Quality -
 Period End
   Nonperforming
    assets/assets         1.94%      2.66%      1.47%      1.33%      1.35%
   Loan loss
    reserve/loans
    (3)                   1.34%      1.53%      1.30%      1.12%      1.08%

Period End Balance
 Sheet
($ in thousands)
Total assets         $ 525,606  $ 523,747  $ 508,203  $ 490,111  $ 476,094
   Gross Loans         424,390    430,416    428,177    416,664    400,537
   Nonperforming
    assets              10,177     13,906      7,467      6,538      6,435
   Allowance for
    credit losses
    (3)                  5,701      6,603      5,569      4,650      4,321
   Deposits            419,941    410,089    378,248    365,230    358,159
   Common Equity        45,130     45,286     44,486     44,151     43,735
Non-Financial Data
   Full-time
    equivalent staff       111        117        117        119        128
   Number of banking
    offices,
    domestic
    and foreign             12         12         12         12         12
Common Shares
 outstanding
   Period end        7,661,627  7,661,627  7,661,627  7,658,252  7,658,252
   Period average -
    basic            7,661,627  7,661,627  7,660,526  7,658,252  7,641,534
   Period average -
    diluted          7,686,800  7,703,892  7,723,711  7,743,091  7,697,681
Market Ratios
   Stock Price       $    4.25  $    3.75  $    6.00  $    6.30  $    7.00
   Price/Earnings          N/A    
  32.22      52.82      22.14      24.12
   Price/Book             0.72       0.63       1.03       1.09       1.23

                                                       SIX MONTHS ENDED
                                                    ----------------------
                                                     JUNE 30,    JUNE 30,
($ in thousands, except per share)                     2009        2008
                                                    ----------  ----------

      Net interest income                           $   11,543  $    9,890
      Provision for loan losses                          4,037         585
      Non-interest income                                1,246       1,306
      Non-interest expense                               8,725       8,639
      Income before income taxes                            27       1,972
      Provision for income taxes                          (358)        643
                                                    ----------  ----------
      Net income                                           385       1,329
      Preferred stock dividends and accretion             (423)          -
                                                    ----------  ----------
      Net income available to common shareholders          (37)      1,329
                                                    ==========  ==========

      Earnings per common share - basic                  (0.00)       0.17
      Earnings per common share - diluted                (0.00)       0.17
      Dividends declared per common share (1)            0.025           -
      Return on average common equity                    -0.17%       6.09%
      Return on average assets                            0.15%       0.58%
      Net interest margin (2)                             4.92%       4.68%
      Efficiency Ratio (2)                               66.74%      75.95%

Capital - Period End
      Book value per share                          $     5.89  $     5.71

Credit Quality - Period End
      Nonperforming assets/assets                         1.94%       1.35%
      Loan loss reserve/loans (3)                         1.34%       1.08%

Period End Balance Sheet
($ in thousands)
Total assets                                        $  525,606  $  476,094
      Gross Loans                                      424,390     400,537
      Nonperforming assets                              10,177       6,435
      Allowance for credit losses (3)                    5,701       4,321
      Deposits                                         419,941     358,159
      Common Equity                                     45,130      43,735
Non-Financial Data
      Full-time equivalent staff                           111         128
      Number of banking offices, domestic
       and foreign                                          12          12
Common Shares outstanding
      Period end                                     7,661,627   7,658,252
      Period average - basic                         7,661,627   7,625,787
      Period average - diluted                       7,691,821   7,695,980
Market Ratios
      Stock Price                                   $     4.25  $     7.00
      Price/Earnings                                       N/A       20.03
      Price/Book                                          0.72        1.23

(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.

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