Oak Valley Bancorp Reports 3rd Quarter Results OAKDALE,

OAKDALE, CA--(Marketwired - Oct 21, 2016) - 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 September 30, 2016, consolidated net income was $1,930,000, or $0.24 per diluted common share, compared to $1,904,000, or $0.24 per diluted common share, for the prior quarter and $1,382,000, or $0.17 per diluted common share for the same period a year ago. The earnings growth compared to prior periods is mainly due to strong loan production which is driving net interest income, and improvements in operating efficiency that resulted in a decrease in non-interest expense.

Net interest income was $7,829,000 for the three months ended September 30, 2016, compared to $8,106,000 for the prior quarter and $6,354,000 for the same period last year. The decrease compared to the prior quarter is mainly due to one-time loan discount accretion on certain purchase credit impaired ("PCI") loans acquired from Mother Lode Bank, recognized during the second quarter of 2016. The increase compared to the third quarter of 2015 is the result of strong organic loan growth over the past twelve months combined with the acquisition of Mother Lode Bank. The Company's net interest margin for the three months ended September 30, 2016 was 3.73%, compared to 4.03% for the prior quarter, and 3.61% for the same period last year. The net interest margin compressed slightly compared to the prior quarter as a result of the PCI loan accretion during the second quarter but excluding these non-recurring entries, the strong loan growth has allowed us to deploy low-yielding cash balances into higher yielding commercial loans and investment securities, resulting in the year over year expansion of our net interest margin.

Non-interest income for the three months ended September 30, 2016 totaled $1,077,000, compared to $1,056,000 during the prior quarter, and $965,000 for the same period last year. The increase compared to the prior quarters is primarily the result of increased transaction related fees and service charges associated with the increased number of deposit accounts.

Non-interest expense for the three months ended September 30, 2016 totaled $5,924,000, compared to $6,187,000 during the prior quarter, and $5,299,000 for the same period last year. The decrease compared to the prior quarter is mainly the due to an increase in deferred loan costs from strong loan production and a decrease of OREO related expenses. The increase compared to last year corresponds to salaries and benefits associated with our new Sonora branch and general operating costs related to servicing the growing loan and deposit portfolios.

Total assets were $947 million as of September 30, 2016, an increase of $21.4 million over June 30, 2016 and $153.3 million over September 30, 2015. Gross loans were $602.6 million as of September 30, 2016, an increase of $22.8 million over June 30, 2016, and an increase of $125.2 million over September 30, 2015. The Company's total deposits were $859.8 million as of September 30, 2016, an increase of $21.3 million over June 30, 2016, and an increase of $147.2 million over September 30, 2015.

The balance sheet growth compared to September 30, 2015 includes acquired balances of $78.7 million in assets, including $45.8 million in gross loans, and $71.1 million in total deposits from Mother Lode Bank.

"Delivering on our core strength of relationship banking has allowed us to capitalize on the loan demand within our community and expand our market presence," stated Chris Courtney, President and CEO. "The business portfolio acquired from Mother Lode Bank continues to perform in line with expectations as we've implemented strategic operating efficiencies which have propelled accretion to earnings," concluded Courtney.

Non-performing assets as of September 30, 2016 were $4,099,000, or 0.43% of total assets, compared to $3,884,000, or 0.42% of total assets, as of June 30, 2016, and $5,123,000, or 0.65%, at September 30, 2015. The slight increase during the quarter is due to one property valued at $254,000 that was acquired through a loan foreclosure during the quarter. The loan growth slightly outpaced the provision for loan loss of $90,000 during the third quarter of 2016, thus decreasing the allowance for loan losses to 1.29% of gross loans at September 30, 2016 compared to 1.32% at June 30, 2016 and 1.55% at September 30, 2015. The decrease in the loan loss reserve percentage compared to September 30, 2015 is primarily due to the loans acquired from Mother Lode Bank that were recorded at fair value and thus did not require a loan loss reserve.

Oak Valley Bancorp operates Oak Valley Community Bank & Eastern Sierra Community Bank, through which it offers a variety of loan and deposit products to individuals and small businesses. They currently operate through 16 conveniently located branches: Oakdale, Turlock, Stockton, Patterson, Ripon, Escalon, Manteca, Tracy, two branches in Sonora, three 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 Bancorp
Financial Highlights (unaudited)
($ in thousands, except per share)		3rd Quarter				2nd Quarter				1st Quarter				4th Quarter				3rd Quarter
Selected Quarterly Operating Data:		2016				2016				2016				2015				2015
	Net interest income	$	7,829			$	8,106			$	7,542			$	6,647			$	6,354
	Provision for (reversal of) loan losses		90				125				200				-				-
	Non-interest income		1,077				1,056				1,037				962				965
	Non-interest expense		5,924				6,187				6,187				7,085				5,299
	Net income before income taxes		2,892				2,850				2,192				524				2,020
	Provision for income taxes		962				946				683				34				638
	Net income	$	1,930			$	1,904			$	1,509			$	490			$	1,382
	Earnings per common share - basic	$	0.24			$	0.24			$	0.19			$	0.06			$	0.17
	Earnings per common share - diluted	$	0.24			$	0.24			$	0.19			$	0.06			$	0.17
	Dividends paid per common share	$	0.12			$	-			$	0.12			$	-			$	0.11
	Return on average common equity		9.28	%			9.48	%			7.68	%			2.49	%			7.17	%
	Return on average assets		0.82	%			0.85	%			0.67	%			0.24	%			0.70	%
	Net interest margin (1)		3.73	%			4.03	%			3.76	%			3.62	%			3.61	%
	Efficiency ratio (2)		62.08	%			62.48	%			67.46	%			66.65	%			66.95	%
Capital - Period End
	Book value per common share	$	10.24			$	10.14			$	9.76			$	9.69			$	9.55
Credit Quality - Period End
	Nonperforming assets/ total assets		0.43	%			0.42	%			0.97	%			0.88	%			0.65	%
	Loan loss reserve/ gross loans		1.29	%			1.32	%			1.33	%			1.36	%			1.55	%
Period End Balance Sheet
($ in thousands)
	Total assets	$	947,017			$	925,635			$	905,750			$	897,038			$	793,723
	Gross loans		602,569				579,774				568,227				541,032				477,327
	Nonperforming assets		4,099				3,884				8,763				7,882				5,123
	Allowance for loan losses		7,767				7,680				7,557				7,356				7,389
	Deposits		859,756				838,458				822,440				814,691				712,577
	Common equity		82,858				81,993				78,960				78,263				77,147
Non-Financial Data
	Full-time equivalent staff		158				158				164				158				150
	Number of banking offices		16				16				16				16				15
Common Shares outstanding
	Period end		8,093,555				8,088,155				8,088,155				8,078,155				8,078,155
	Period average - basic		8,030,782				8,028,332				8,008,602				7,996,644				7,994,857
	Period average - diluted		8,063,381				8,060,464				8,051,776				8,045,090				8,040,577
Market Ratios
	Stock Price	$	10.20			$	9.75			$	9.27			$	10.40			$	9.46
	Price/Earnings		10.70				10.25				12.27				42.78				13.79
	Price/Book		1.00				0.96				0.95				1.07				0.99

			Nine Months Ended September 30,
($ in thousands, except per share)			2016				2015
	Net interest income		$	23,477			$	18,755
	Provision for (reversal of) loan losses			415				(125	)
	Non-interest income			3,170				3,148
	Non-interest expense			18,298				15,591
	Net income before income taxes			7,934				6,437
	Provision for income taxes			2,591				2,019
	Net income		$	5,343			$	4,418
	Earnings per common share - basic		$	0.67			$	0.55
	Earnings per common share - diluted		$	0.66			$	0.55
	Dividends paid per common share		$	0.24			$	0.21
	Return on average common equity			8.83	%			7.77	%
	Return on average assets			0.78	%			0.77	%
	Net interest margin (1)			3.84	%			3.68	%
	Efficiency ratio (2)			63.95	%			68.56	%
Capital - Period End
	Book value per common share		$	10.24			$	9.55
Credit Quality - Period End
	Nonperforming assets/ total assets			0.43	%			0.65	%
	Loan loss reserve/ gross loans			1.29	%			1.55	%
Period End Balance Sheet
($ in thousands)
	Total assets		$	947,017			$	793,723
	Gross loans			602,569				477,327
	Nonperforming assets			4,099				5,123
	Allowance for loan losses			7,767				7,389
	Deposits			859,756				712,577
	Common equity			82,858				77,147
Non-Financial Data
	Full-time equivalent staff			158				150
	Number of banking offices			16				15
Common Shares outstanding
	Period end			8,093,555				8,078,155
	Period average - basic			8,022,602				7,986,542
	Period average - diluted			8,058,558				8,034,066
Market Ratios
	Stock Price		$	10.20			$	9.46
	Price/Earnings			11.50				12.79
	Price/Book			1.00				0.99

(1)		Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 34%.
(2)		Ratio computed on a fully tax equivalent basis using a marginal federal tax rate of 34%, and a marginal federal/state combined tax rate of 41.15% for applicable revenue.