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Oak Valley Bancorp Reports 4th Quarter Results

OAKDALE, CA -- (Marketwired) -- 01/22/14 -- Oak Valley Bancorp (NASDAQ: OVLY), the bank holding company for Oak Valley Community Bank and Eastern Sierra Community Bank, recently reported consolidated financial results. For the three months ended December 31, 2013, consolidated net income available to common shareholders was a record $1.7 million, or $0.22 per diluted share. This compared to consolidated net income available to common shareholders of $1.4 million, or $0.18 per diluted share for the three months ended December 31, 2012 and represented a 21.5% increase over the prior year.

Net income for 2013 totaled $5.9 million compared to $5.8 million for 2012. After adjustment for preferred stock dividends and accretion, consolidated net income available to common shareholders was $5.8 million, or $0.74 per diluted share, compared to consolidated net income of $5.3 million, or $0.69 per diluted common share, in 2012. This represents a 9.2% increase in consolidated net income available to common shareholders and marks a new annual earnings record for Oak Valley Bancorp.

Total assets grew to $672.1 million as of December 31, 2013, which was an increase of $11.5 million, or 1.7% over the prior year. Deposits increased to $602.6 million, which was an increase of $15.6 million, or 2.7% over the prior year. Gross loans at year end totaled $419.4 million, reflecting an increase of $28.5 million, or 7.3%, over December 31, 2012.

"We are pleased to report another year of solid earnings. Our commitment to customer care and relationship building is unwavering and the cornerstone of our success," stated Chris Courtney, President and CEO of the Company and the Bank. "Our results are a reflection of emerging consumer confidence and economic expansion in the communities we serve."

Non-performing assets were $3.3 million, or 0.48% of total assets at December 31, 2013. This is down from $6.9 million, or 1.05% at December 31, 2012. There are currently six properties remaining with the non-performing classification; five of which remain as loans, along with one property taken into OREO.

The allowance for loan losses totaled 1.83% of gross loans at December 31, 2013 compared to 2.04% at December 31, 2012. The annual provision for loan losses of $300,000 in 2013 was down from $1.2 million in 2012. Given the high quality of the loan portfolio, limited provisioning was required to support the growth of the portfolio.

Net interest income of $24.3 million for the year ended December 31, 2013, decreased by $570,000, or 2.3%, from the prior year. The year began with margin compression, corresponding to low loan pricing and high cash balances. The margin stabilized in the second half of the year, as cash was deployed into new loans. The Company's net interest margin was 4.13% for the year ended December 31, 2013, compared to 4.53% for the year ended December 31, 2012. Net interest margin for the three months ended December 31, 2013 was 4.19%, compared to 4.15% for the three months ended December 31, 2012.

Non-interest income was $3.3 million for the year ended December 31, 2013, compared to $3.1 million the prior year. The increase is partially attributable to additional fee income related to deposit growth and commissions corresponding to growth in Oak Valley Investments.

Non-interest expense was $18.7 million for the year ended December 31, 2013, compared to $18.2 million for the prior year, an increase of $411,000, or 2.3%. This increase consists primarily of costs associated with servicing deposit growth across all branches.

The Company currently operates through 14 branches in Oakdale, Sonora, Turlock, Stockton, Patterson, Ripon, Escalon, Manteca, three branches in Modesto, and three branches in their Eastern Sierra Division, which includes Bridgeport, Mammoth Lakes, and Bishop.

For more information, please 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 Bancorp
                      Financial Highlights (unaudited)

($ in thousands,         4th        3rd        2nd        1st        4th
 except per share)     Quarter    Quarter    Quarter    Quarter    Quarter
Selected Quarterly
 Operating Data:        2013       2013       2013       2013       2012
                     ---------- ---------- ---------- ---------- ----------

  Net interest
   income            $    6,372 $    6,030 $    6,024 $    5,849 $    6,115
  Provision for loan
   losses                     -        100        100        100        250
  Non-interest
   income                   812        866        818        785        855
  Non-interest
   expense                4,668      4,619      4,734      4,639      4,513
  Income before
   income taxes           2,516      2,177      2,008      1,895      2,207
  Provision for
   income taxes             809        672        634        595        718
                     ---------- ---------- ---------- ---------- ----------
  Net income              1,707      1,505      1,374      1,300      1,489
  Preferred stock
   dividends and
   accretion                  -          -          -        (68)       (84)
                     ---------- ---------- ---------- ---------- ----------
  Net income
   available to
   common
   shareholders      $    1,707 $    1,505 $    1,374 $    1,232 $    1,405
                     ========== ========== ========== ========== ==========

  Earnings per
   common share -
   basic             $     0.22 $     0.19 $     0.18 $     0.16 $     0.18
  Earnings per
   common share -
   diluted           $     0.22 $     0.19 $     0.18 $     0.16 $     0.18
  Return on average
   common equity          10.47%      9.45%      8.48%      7.82%      8.87%
  Return on average
   assets                  1.01%      0.92%      0.86%      0.81%      0.91%
  Net interest
   margin (1)              4.19%      4.12%      4.18%      4.05%      4.15%
  Efficiency ratio
   (1)                    63.05%     64.65%     67.17%     67.95%     63.23%

Capital - Period End
  Book value per
   share             $     8.24 $     7.99 $     8.01 $     8.10 $     7.99

Credit Quality -
 Period End
  Nonperforming
   assets/ total
   assets                  0.48%      0.68%      0.65%      0.99%      1.05%
  Loan loss reserve/
   gross loans             1.83%      1.85%      1.94%      1.99%      2.04%

Period End Balance
 Sheet
($ in thousands)
  Total assets       $  672,060 $  659,192 $  644,230 $  648,418 $  660,581
  Gross loans           419,438    413,856    390,647    389,992    390,986
  Nonperforming
   assets                 3,256      4,495      4,189      6,439      6,923
  Allowance for loan
   losses                 7,659      7,669      7,570      7,743      7,975
  Deposits              602,633    591,642    577,129    580,215    586,993
  Common equity          65,310     63,379     63,457     64,098     63,219
  Total capital (2)      65,310     63,379     63,457     64,098     69,969

Non-Financial Data
  Full-time
   equivalent staff         136        135        134        134        130
  Number of banking
   offices                   14         14         14         14         14

Common Shares
 outstanding
  Period end          7,929,730  7,929,730  7,924,730  7,914,730  7,907,780
  Period average -
   basic              7,803,247  7,802,705  7,802,012  7,778,333  7,762,261
  Period average -
   diluted            7,859,380  7,851,157  7,842,964  7,830,439  7,793,523

Market Ratios
  Stock Price        $     8.37 $     7.96 $     7.67 $     8.14 $     7.45
  Price/Earnings           9.64      10.40      10.86      12.67      10.38
  Price/Book               1.02       1.00       0.96       1.01       0.93



                          YEAR ENDED
                          DECEMBER 31,
                        2013       2012
                     ---------- ----------

($ in thousands,
 except per share)
Selected Quarterly
 Operating Data:

  Net interest
   income            $   24,275 $   24,845
  Provision for loan
   losses                   300      1,150
  Non-interest
   income                 3,281      3,148
  Non-interest
   expense               18,660     18,249
  Income before
   income taxes           8,596      8,594
  Provision for
   income taxes           2,710      2,813
                     ---------- ----------
  Net income              5,886      5,781
  Preferred stock
   dividends and
   accretion                (68)      (452)
                     ---------- ----------
  Net income
   available to
   common
   shareholders      $    5,818 $    5,329
                     ========== ==========

  Earnings per
   common share -
   basic             $     0.75 $     0.69
  Earnings per
   common share -
   diluted           $     0.74 $     0.69
  Return on average
   common equity           9.07%      8.80%
  Return on average
   assets                  0.90%      0.95%
  Net interest
   margin (1)              4.13%      4.53%
  Efficiency ratio
   (1)                    65.65%     63.83%

Capital - Period End
  Book value per
   share             $     8.24 $     7.99

Credit Quality -
 Period End
  Nonperforming
   assets/ total
   assets                  0.48%      1.05%
  Loan loss reserve/
   gross loans             1.83%      2.04%

Period End Balance
 Sheet
($ in thousands)
  Total assets       $  672,060 $  660,581
  Gross loans           419,438    390,986
  Nonperforming
   assets                 3,256      6,923
  Allowance for loan
   losses                 7,659      7,975
  Deposits              602,633    586,993
  Common equity          65,310     63,219
  Total capital (2)      65,310     69,969

Non-Financial Data
  Full-time
   equivalent staff         136        130
  Number of banking
   offices                   14         14

Common Shares
 outstanding
  Period end          7,929,730  7,907,780
  Period average -
   basic              7,796,659  7,740,990
  Period average -
   diluted            7,846,078  7,766,745

Market Ratios
  Stock Price        $     8.37 $     7.45
  Price/Earnings          11.22      10.85
  Price/Book               1.02       0.93


  (1) Ratio computed on a fully tax equivalent basis using a marginal
   federal tax rate of 34%.
  (2) Includes preferred stock issued to the U.S. Treasury under the SBLF
   Program of $6.75 million for the quarter ended December 31, 2012. There
   was no preferred stock outstanding as of March 31, June 30, September
   30, and December 31, 2013.


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

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