8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.

Date of Report: January 19, 2017 (Date of earliest event reported)
Oak Valley Bancorp (Exact name of registrant as specified in its charter)
CA (State or other jurisdiction of incorporation)	001-34142 (Commission File Number)	26-2326676 (IRS Employer Identification Number)
125 N. Third Ave. Oakdale, CA (Address of principal executive offices)	95361 (Zip Code)
(209) 848-2265 (Registrant's telephone number, including area code)
Not Applicable (Former Name or Former Address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On January 19, 2017 Oak Valley Bancorp issued a press release, a copy of which is attached as Exhibit 99.1 and incorporated herein by reference. The press release announced the Company’s operating results for the year and quarter ended December 31, 2016.

The information in this Item 2.02 in this Form 8-K and the Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.

Item 7.01. Regulation FD Disclosure.

See “Item 2.02. Results of Operations and Financial Condition” which is incorporated by reference in this Item 7.01.

Item 9.01. Financial Statements and Exhibits

(a) Financial statements:
            None
(b) Pro forma financial information:
            None
(c) Shell company transactions:
            None
(d) Exhibits
            99.1       Press Release of Oak Valley Bancorp dated January 19, 2017

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: January 20, 2017 OAK VALLEY BANCORP  By:  /s/ Jeffrey A. Gall                    
     Jeffrey A. Gall
     Senior Vice President and Chief Financial Officer (Principal Financial Officer and duly authorized signatory)

Exhibit Index
Exhibit No.	Description
99.1	Press Release of Oak Valley Bancorp dated January 19, 2017

EX-99.1

Exhibit 99.1

PRESS RELEASE

For Immediate Release

Date: January 19, 2017

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

OAK VALLEY BANCORP REPORTS 4^th QUARTER RESULTS

OAKDALE, CA − Oak Valley Bancorp (NASDAQ: OVLY) (the “Company”), the bank holding company for Oak Valley Community Bank and Eastern Sierra Community Bank (the “Bank”), reported today unaudited consolidated financial results for the fourth quarter and year ended December 31, 2016. For the three months ended December 31, 2016, consolidated net income was $2,322,000, or $0.29 per diluted share, as compared to $1,930,000, or $0.24 per diluted share, for the prior quarter and $490,000, or $0.06 per diluted share for the same period a year ago.

Consolidated net income for the year ended December 31, 2016 totaled $7,665,000, or $0.95 per diluted share, representing an increase of 56.2% compared to $4,908,000, or $0.61 per diluted share for 2015. The increase to net income compared to the prior year is mainly due to merger related expenses of $1.97 million recorded during 2015 and the additional earnings recorded in 2016 from the acquisition of Mother Lode Bank, combined with increased net interest income from organic loan growth of $69.5 million during 2016.

Net interest income was $8,049,000 and $31,526,000 for the three and twelve months ended December 31, 2016, respectively, compared to $7,829,000 during the prior quarter, $6,647,000 for the fourth quarter of 2015 and $25,402,000 for the year ended December 31, 2015. The increase from prior periods is the result of strong loan production which is driving net interest income in spite of margin pressures. The Company’s net interest margin for the three months ended December 31, 2016 was 3.68%, compared to 3.73% for the prior quarter and 3.62% for the same period last year. Net interest margin for the year ended 2016 was 3.81% compared to 3.66% in 2015.

Non-interest expense for the three and twelve months ended December 31, 2016 totaled $6,017,000 and $24,315,000, respectively, compared to $5,924,000 during the prior quarter, $7,085,000 for the fourth quarter of 2015 and $22,676,000 for the year ended December 31, 2015. The increase compared to prior periods is primarily due to overhead from our new Sonora branch opened in December 2015 and overall higher servicing costs on our growing deposit and loan portfolios. Compared to the fourth quarter of 2015, these overhead increases were offset by the previously mentioned merger related expenses recorded in 2015.

Non-interest income for the three and twelve months ended December 31, 2016 totaled $1,242,000 and $4,412,000, respectively, compared to $1,077,000 during the prior quarter, $962,000 for the fourth quarter of 2015 and $4,110,000 for the year ended December 31, 2015. The increase compared to prior periods is the result of increased transaction related fees and service charges associated with the increased number of deposit accounts.

Total assets were $1.0 billion at December 31, 2016, an increase of $54.4 million over September 30, 2016 and $104.4 million over December 31, 2015. Gross loans were $610.9 million as of December 31, 2016, an increase of $8.4 million over September 30, 2016, and an increase of $69.9 million over December 31, 2015. The Company’s total deposits were $914.1 million as of December 31, 2016, an increase of $54.3 million over September 30, 2016, and an increase of $99.4 million over December 31, 2015.

“Oak Valley’s 25 year anniversary ended with the Company reaching $1 billion in assets. My appreciation goes out to our loyal customers, shareholders and employees for their support in hitting this impressive milestone,” stated Chris Courtney, President and CEO of the Company and the Bank. “Organic growth and benefits related to the Mother Lode acquisition continue to perform above expectations as evidenced by the strong earnings reported for 2016. After absorbing initial merger expenses in 2015, we have benefited from our expanded customer base and we look forward to continued accretion in the years to come.”

Non-performing assets as of December 31, 2016 were $4,247,000, or 0.42% of total assets, compared to $4,099,000, or 0.43% as of September 30, 2016, and $7,882,000, or 0.88% at December 31, 2015.  The increase in non-performing assets during the fourth quarter is due to a protective advance of $419,000 on an impaired loan to preserve the value of the collateral, which was partially offset by a residential land property sale that had a book value of $275,000. The loan growth slightly outpaced the provision for loan loss of $69,000 during the fourth quarter, thus decreasing the allowance for loan losses to 1.28% of gross loans at December 31, 2016 compared to 1.29% at September 30, 2016 and 1.36% at December 31, 2015.

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)	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
Selected Quarterly Operating Data:	2016			2016			2016			2016			2015
Net interest income	$	8,049		$	7,829		$	8,106		$	7,542		$	6,647
Provision for loan losses		69			90			125			200			-
Non-interest income		1,242			1,077			1,056			1,037			962
Non-interest expense		6,017			5,924			6,187			6,187			7,085
Net income before income taxes		3,205			2,892			2,850			2,192			524
Provision for income taxes		883			962			946			683			34
Net income	$	2,322		$	1,930		$	1,904		$	1,509		$	490
Earnings per common share - basic	$	0.29		$	0.24		$	0.24		$	0.19		$	0.06
Earnings per common share - diluted	$	0.29		$	0.24		$	0.24		$	0.19		$	0.06
Dividends paid per common share	$	-		$	0.12		$	-		$	0.120		$	-
Return on average common equity		11.07	%		9.28	%		9.48	%		7.68	%		2.49	%
Return on average assets		0.95	%		0.82	%		0.85	%		0.67	%		0.24	%
Net interest margin (1)		3.68	%		3.73	%		4.03	%		3.76	%		3.62	%
Efficiency ratio (2)		56.44	%		62.08	%		62.48	%		67.46	%		66.65	%
Capital - Period End
Book value per common share	$	10.19		$	10.24		$	10.14		$	9.76		$	9.69
Credit Quality - Period End
Nonperforming assets/ total assets		0.42	%		0.43	%		0.42	%		0.97	%		0.88	%
Loan loss reserve/ gross loans		1.28	%		1.29	%		1.32	%		1.33	%		1.36	%
Period End Balance Sheet
($ in thousands)
Total assets	$	1,001,423		$	947,017		$	925,635		$	905,750		$	897,038
Gross loans		610,949			602,569			579,774			568,227			541,032
Nonperforming assets		4,247			4,099			3,884			8,763			7,882
Allowance for loan losses		7,832			7,767			7,680			7,557			7,356
Deposits		914,093			859,756			838,458			822,440			814,691
Common equity		82,450			82,858			81,993			78,960			78,263
Non-Financial Data
Full-time equivalent staff		163			158			158			164			158
Number of banking offices		16			16			16			16			16
Common Shares outstanding
Period end		8,088,455			8,093,555			8,088,155			8,088,155			8,078,155
Period average - basic		8,032,380			8,030,782			8,028,332			8,008,602			7,996,644
Period average - diluted		8,066,575			8,063,381			8,060,464			8,051,776			8,045,090
Market Ratios
Stock Price	$	12.55		$	10.20		$	9.75		$	9.27		$	10.40
Price/Earnings		10.94			10.70			10.25			12.27			42.78
Price/Book		1.23			1.00			0.96			0.95			1.07

	Year Ended December 31,
($ in thousands, except per share)	2016			2015
Net interest income	$	31,526		$	25,402
Provision for (reversal of) loan losses		484			(125	)
Non-interest income		4,412			4,110
Non-interest expense		24,315			22,676
Net income before income taxes		11,139			6,961
Provision for income taxes		3,474			2,053
Net income	$	7,665		$	4,908
Earnings per common share - basic	$	0.95		$	0.61
Earnings per common share - diluted	$	0.95		$	0.61
Dividends paid per common share	$	0.24		$	0.21
Return on average common equity		9.43	%		6.41	%
Return on average assets		0.83	%		0.63	%
Net interest margin (1)		3.81	%		3.66	%
Efficiency ratio (2)		62.01	%		68.07	%
Capital - Period End
Book value per common share	$	10.19		$	9.69
Credit Quality - Period End
Nonperforming assets/ total assets		0.42	%		0.88	%
Loan loss reserve/ gross loans		1.28	%		1.36	%
Period End Balance Sheet
($ in thousands)
Total assets	$	1,001,423		$	897,038
Gross loans		610,949			541,032
Nonperforming assets		4,247			7,882
Allowance for loan losses		7,832			7,356
Deposits		914,093			814,691
Common equity		82,450			78,263
Non-Financial Data
Full-time equivalent staff		163			158
Number of banking offices		16			16
Common Shares outstanding
Period end		8,088,455			8,078,155
Period average - basic		8,047,046			7,989,088
Period average - diluted		8,082,657			8,036,845
Market Ratios
Stock Price	$	12.55		$	10.40
Price/Earnings		13.18			16.93
Price/Book		1.23			1.07

(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.