(Source: MARKET WIRE)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 March 31, 2009, net income was $430,000. For the same period, net income available to common shareholders was $220,000, or $0.03 per diluted common share compared to $776,000, or $0.10 per diluted common share, for the same period last year.

An increase in net interest income was offset by a larger loan loss provision. Net interest income grew by 17.6% or $847,000, compared to the same period last year, but loan loss provisions for the first quarter 2009 were $1.9 million compared to the $145,000 provided in the same period in 2008. The Bank increased reserves corresponding to an increase of non-performing loans and recognition of a decline in property value of some assets securing non-performing loans. As of March 31, 2009, the allowance for loan loss to gross loans was 1.53%, up from 1.30% last quarter, and 1.09% for the three months ended March 31, 2008.

Total assets grew to $523.7 million at March 31, 2009, an increase of $60.7 million, or 13.1%, over March 31, 2008. Gross loans increased by $42.8 million, to $430.4 million as of March 31, 2009, an increase of 11.0% over March 31, 2008. The Bank's total deposits were $410.1 million on March 31, 2009, which is an increase of $47.3 million, or 13.0% over March 31, 2008.

"We experienced rather strong loan and deposit growth during the quarter and we are pleased with the operating income generated by the company given the state of the economy," stated Ron Martin, CEO. "Though we do not have the loan loss exposure of many of our peers, we are taking the necessary steps to ensure that we are adequately augmenting our reserves," he concluded.

First quarter non-performing assets to total assets are 2.66%, or $13.9 million, up from 1.47%, or $7.5 million, at year end 2008. As of March 31, 2009, seven loan relationships were on non-accrual status totaling $10.6 million, or 2.03% of total assets. Other Real Estate Owned (OREO) held as of March 31, 2009 was $3.3 million, or 0.63% of total assets and consists of three properties. All OREO property has been written down to current appraised values less sales cost and non-accrual loans have been reviewed to ensure adequate reserves have been established in light of current market values.

As of March 31, 2009, the Bank's common equity has grown to $45.3 million and the bank remains well capitalized by regulatory standards. However, taking into consideration the increased reserves and corresponding impact on net income, the Bank's Board of Directors elected to suspend dividends for the first quarter of 2009.

"While loan provisions continue to affect the Bank's earnings, we remain below our peer group in non-performing loan and OREO totals.