OAKDALE, CA -- (Marketwire) -- 10/22/08 -- Oak Valley Bancorp, the bank holding company for Oak Valley Community Bank, traded as OVLY on the bulletin board, (OTCBB: OVLY), recently reported third quarter results. For the three months ending September 30, 2008, net income was $597,000, or $0.08 per diluted share; a 38.50% decrease from the $969,000 for the same period last year. For the nine month period ending September 30, 2008 net income was $1,926,000, compared to last year's $2,974,000; a decrease of 35.2%. Net interest income growth continues to be strong with the nine months ending September 30, 2008 increasing $1,068,000, or 7.57%, when compared to the same period in 2007. Increased loan loss provisions of $752,000 and OREO writedowns of $765,000 during the first nine months of 2008, compared to the same period in 2007, offset increases in net interest income.

Total assets grew to $490.1 million at September 30, 2008, an increase of $36.4 million, or 8.0%, over September 30, 2007. Gross loans increased by $30.8 million, to $416.7 million as of September 30, 2008, an increase of 8.0% over September 30, 2007. The Bank's total deposits were $365.2 million on September 30, 2008, which is a decrease of $20.9 million, or 5.4% less than September 30, 2007. Certificate of deposit balances decreased by $30.3 million during the twelve month period ending September 30, 2008, while core deposits increased by $13.7 million during the same period.

"Given the recent turmoil that has plagued the financial sector, we continue to monitor the performance of our loan portfolio and to augment our reserves. We are not overjoyed with the decrease in net income compared to last year, however, we believe that we have identified the problem loans in our portfolio and have reserved adequately for potential losses," stated Ron Martin, CEO. "Loan growth for the year has been strong and this will fuel the profits needed to ensure stability during this economic downturn. Loan production for the nine months ending September 30, 2008 was $116 million of new and renewed loans which is a 24% increase over loan production for the same period in 2007. Quality loans still exist in the marketplace today and there are still banks that adhere to strict credit quality who are still willing to lend to solid borrowers," Martin concluded.

President, Chris Courtney continued, "We have seen strong year-over-year growth in net interest income, which can be attributed to solid loan growth and deliberate efforts to increase low-cost core deposits through calling efforts focused on full relationships and a willingness to allow single service accounts to run-off. Due to deposit mix improvements, our year-to-date net interest margin has increased to 4.71%, a 17 basis point increase over the 4.54% for the same period last year, despite a 325 basis point decrease in interest rates by the Fed."

The third quarter is marked by continued improvement in credit trends. Non-performing loans to total assets are 1.33%, or $6.54 million, down from 2.16%, or $9.81 million, at December 31, 2007. OREO at September 30, 2008 was $4.36 million, or 0.89% of total assets, consisting of three loans. Non-accrual loans are $2.18 million, or 0.44% of total assets. All OREO property has been written down to current appraised values and non-accrual loans have been reviewed by management for reserve adequacy in light of current market values. The bank's common equity has grown to $44.1 million and the bank remains well capitalized by regulatory standards.

The bank continues to bolster loan loss reserves, in recognition of the weak economic climate. The September 30th provision stands at 1.12% up from 1.08% last quarter. Management remains confident in its underwriting practices and in the adequacy of its loss methodology, but given the current economic outlook, is poised to further provision if positive trends in non-performing loans reverse.

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)

                    3rd         2nd         1st         4th         3rd
Profitability     Quarter     Quarter     Quarter     Quarter     Quarter
($ in               2008        2008        2008        2007        2007
 thousands,
 except per
 share)
Selected
 Quarterly
 Operating
 Data:
  Net interest
   income       $    5,291  $    5,081  $    4,809  $    4,792  $    4,859
  Provision for
   loan losses         602         440         145         120         145
  Non-interest
   income              645         672         614         562         506
  Non-interest
   expense           4,476       4,562       4,057       3,897       3,582
  Income before
   income taxes        858         751       1,221       1,337       1,638
  Provision for
   income taxes        261         198         445         387         668
  Net income           597         553         776         950         969
  Earnings per
   common share
   - basic            0.08        0.07        0.10        0.12        0.13
  Earnings per
   common share
   - diluted          0.08        0.07        0.10        0.12        0.13
  Dividends
   declared per
   common share (1)   0.05           -           -           -        0.19
  Return on
   average
   common
   equity (2)         5.34%       5.01%       7.16%       8.93%       9.34%
  Return on
   average
   assets             0.49%       0.47%       0.68%       0.83%       0.87%
  Net interest
   margin (3)         4.76%       4.77%       4.60%       4.50%       4.67%
  Efficiency
   Ratio (3)         74.93%      78.04%      73.70%      72.00%      66.02%
Capital -
 Period End
  Book value
   per share(2) $     5.76  $     5.71  $     5.70  $     5.57  $     5.41
Credit Quality
 - Period End
  Nonperforming
   assets/assets      1.17%       1.35%       1.60%       2.16%       0.27%
  Loan loss
   reserve/loans(4)   1.12%       1.08%       1.09%       1.16%       1.23%
Period End
 Balance Sheet
($ in thousands)
Total assets    $  490,088  $  476,094  $  463,044  $  454,259  $  453,738
  Gross Loans      416,664     400,537     387,647     387,809     385,901
  Nonperforming
   assets            5,720       6,435       7,395       9,808       1,216
  Allowance for
   credit
   losses (4)        4,650       4,321       4,225       4,507       4,757
  Deposits         365,230     358,159     362,760     377,348     386,158
  Common Equity(2)  44,129      43,735      43,302      42,361      41,184
Non-Financial Data
  Full-time
   equivalent
   staff               119         128         130         125         119
  Number of
   banking
   offices,
   domestic
   and foreign          12          12          12          12          12
Common Shares
 outstanding
  Period end(2)  7,658,252   7,658,252   7,611,377   7,607,780   7,606,068
  Period
   average -
   basic (2)     7,658,252   7,641,534   7,610,039   7,606,506   7,567,719
  Period
   average -
   diluted (2)   7,743,091   7,697,681   7,696,308   7,727,570   7,717,768
Market Ratios
  Stock Price   $     6.30  $     7.00  $     8.49  $     8.25  $     9.94
  Price/
   Earnings          20.38       24.12       20.69       16.64       19.56
  Price/Book (2)      1.09        1.23        1.49        1.48        1.84



Profitability        YEAR TO DATE
 ($ in           ---------------------
  thousands,     9/30/2008   9/30/2007
  except per
  share)
Selected
 Quarterly
 Operating
 Data:
  Net interest
   income       $   15,181  $   14,114
  Provision for
   loan losses       1,187         435
  Non-interest
   income            1,951       1,598
  Non-interest
   expense          13,113      10,354
  Income before
   income taxes      2,832       4,923
  Provision for
   income taxes        906       1,948
  Net income         1,926       2,974
  Earnings per
   common share
   - basic            0.25        0.41
  Earnings per
   common share
   - diluted          0.25        0.40
  Dividends
   declared per
   common share
   (1)                0.05        0.19
  Return on
   average
   common
   equity (2)         5.86%      10.56%
  Return on
   average
   assets             0.55%       0.90%
  Net interest
   margin (3)         4.71%       4.54%
  Efficiency
   Ratio (3)         75.58%      65.10%
Capital -
 Period End
  Book value
   per share
   (2)          $     5.76  $     5.41
Credit Quality
 - Period End
  Nonperforming
   assets/assets      1.33%       0.27%
  Loan loss
   reserve/
   loans (4)          1.12%       1.23%
Period End
 Balance Sheet
($ in thousands)
Total assets    $  490,088  $  453,738
  Gross Loans      416,664     385,901
  Nonperforming
   assets            6,538       1,216
  Allowance for
   credit
   losses (4)        4,650       4,757
  Deposits         365,230     386,158
  Common Equity(2)  44,129      41,184
Non-Financial Data
  Full-time
   equivalent
   staff               119         119
  Number of
   banking
   offices,
   domestic
   and foreign          12          12
Common Shares
 outstanding
  Period end(2)  7,658,252   7,606,068
  Period
   average -
   basic (2)     7,636,687   7,283,187
  Period
   average -
   diluted (2)   7,737,050   7,443,004
Market Ratios
  Stock Price   $     6.30  $     9.94
  Price/
   Earnings          18.75       18.20
  Price/Book (2)      1.09        1.84

  (1) Cash dividend of $382,943 and $1,444,697 paid in August 2008 and
      2007, respectively.
  (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.