Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-34142 OAK VALLEY BANCORP (Exact name of registrant as specified in its charter) California 26-2326676 (State or other jurisdiction of incorporation or organiza ...

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Oak Valley Bancorp's unaudited condensed consolidated financial statements for Q3 and nine-month periods ended September 30, 2022, covering balance sheets, income, comprehensive income, equity, and cash flows, with detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to **$1.962 billion** as of September 30, 2022, driven by cash redeployment into securities and loans, while liabilities increased to **$1.856 billion** due to deposits, and equity decreased to **$106.2 million** due to unrealized losses on available-for-sale securities Condensed Consolidated Balance Sheets (in thousands) | Account | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$1,962,470** | **$1,964,478** | | Cash and cash equivalents | $445,060 | $778,267 | | Securities - available for sale | $510,045 | $262,889 | | Loans, net | $899,939 | $847,847 | | **Total Liabilities** | **$1,856,282** | **$1,821,866** | | Deposits | $1,830,882 | $1,806,966 | | **Total Shareholders' Equity** | **$106,188** | **$142,612** | | Accumulated other comprehensive (loss) income | ($41,544) | $6,188 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Net income increased to **$6.8 million** in Q3 2022 and **$13.4 million** for the nine months, primarily driven by a significant rise in net interest income to **$16.8 million** and **$41.0 million** respectively, reflecting higher yields Key Income Statement Data (in thousands, except per share amounts) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $16,772 | $13,296 | $40,963 | $37,526 | | Provision for loan losses | $200 | $0 | $200 | $0 | | Non-interest income | $1,611 | $1,303 | $4,150 | $3,883 | | Non-interest expense | $9,370 | $8,407 | $27,696 | $24,342 | | **Net Income** | **$6,800** | **$4,554** | **$13,427** | **$12,870** | | Net income per diluted share | $0.83 | $0.56 | $1.64 | $1.57 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) The company reported a comprehensive loss of **$11.4 million** in Q3 2022 and **$34.3 million** for the nine-month period, primarily due to significant unrealized holding losses on available-for-sale securities totaling **$18.2 million** and **$47.7 million** respectively, driven by rising interest rates Comprehensive (Loss)/Income (in thousands) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $6,800 | $4,554 | $13,427 | $12,870 | | Total other comprehensive loss | ($18,213) | ($305) | ($47,732) | ($718) | | **Comprehensive (loss)/income** | **($11,413)** | **$4,249** | **($34,305)** | **$12,152** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents decreased by **$333.2 million** for the nine months ended September 30, 2022, primarily due to a **$369.8 million** net cash outflow from investing activities, offset by **$15.3 million** from operations and **$21.3 million** from financing Net Cash Flows for Nine Months Ended September 30 (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash from operating activities | $15,318 | $14,316 | | Net cash (used in) from investing activities | ($369,846) | $110,264 | | Net cash from financing activities | $21,321 | $330,877 | | **Net (Decrease) Increase in Cash** | **($333,207)** | **$455,457** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed information on accounting policies, upcoming CECL model adoption, securities and loan portfolios, asset quality, fair value measurements, and earnings per share, confirming lending to middle-market businesses as the primary revenue source - The company is preparing for the adoption of the **Current Expected Credit Loss (CECL) model** on January 1, 2023, anticipating earlier recognition of credit losses[20](index=20&type=chunk) - As of September 30, 2022, the company reported **no non-accrual, past-due, or impaired loans**, indicating strong credit quality[45](index=45&type=chunk) - The company's primary revenue source is providing loans to **middle-market businesses** in several California counties[18](index=18&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 and nine-month 2022 financial performance, highlighting strong net interest income growth, stable credit quality, the impact of rising interest rates on earnings and investment portfolio value, and changes in non-interest income and expenses - Net income for Q3 2022 was **$6.8 million** and **$13.4 million** for the first nine months, driven by strong loan and investment portfolio growth and higher earning asset yields[130](index=130&type=chunk) - Net interest income increased **26.1%** in Q3 2022 and **9.2%** in the first nine months, attributed to earning asset growth and positive FOMC rate increases[132](index=132&type=chunk) - Total assets decreased slightly by **0.1%** from year-end 2021, as cash was deployed into **6.1%** net loan growth and a **92.7%** increase in investment securities[130](index=130&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in the Company's market risk exposures since December 31, 2021, with ongoing monitoring, especially concerning the COVID-19 pandemic - The Company's exposures to market risk have **not changed materially** since December 31, 2021[194](index=194&type=chunk) [Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2022, with no significant changes to internal control over financial reporting during the quarter or impact from COVID-19 - The CEO and CFO concluded that the Company's **disclosure controls and procedures were effective** as of the end of the reporting period[195](index=195&type=chunk) - No **significant changes** were made to the Company's internal control over financial reporting during the quarter ended September 30, 2022[196](index=196&type=chunk) [PART II – OTHER INFORMATION](index=59&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) The company is not a party to any pending or threatened material legal proceedings, nor are there any involving directors, nominees, or executive officers adverse to the company - There are **no pending or threatened material legal proceedings** to which the Company is a party[200](index=200&type=chunk) [Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - There have been **no material changes** from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021[201](index=201&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[201](index=201&type=chunk) [Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including certifications from the Principal Executive Officer and Principal Financial Officer, and financial statements in Inline XBRL format - Exhibits filed with the report include **CEO and CFO certifications** (31.1, 31.2, 32.1) and financial data in **Inline XBRL format** (101, 104)[202](index=202&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-34142 OAK VALLEY BANCORP (Exact name of registrant as specified in its charter) California 26-2326676 State or other jurisdiction of I.R.S. Employer incorporation ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-34142 OAK VALLEY BANCORP (Exact name of registrant as specified in its charter) State or other jurisdiction of I.R.S. Employer incorporation or organization Iden ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-34142 OAK VALLEY BANCORP (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 125 North Third ...

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents Oak Valley Bancorp's unaudited condensed consolidated financial statements, including balance sheets, income, cash flows, and detailed accounting notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Summarizes the company's financial position, detailing assets, liabilities, and shareholders' equity at specific dates Condensed Consolidated Balance Sheets (in thousands) | (in thousands) | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **ASSETS** | | Cash and cash equivalents | $682,113 | $226,656 | | Securities - available for sale | $241,687 | $217,164 | | Loans, net | $858,233 | $997,246 | | Total Assets | $1,856,759 | $1,511,478 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | Deposits | $1,701,180 | $1,367,809 | | Total liabilities | $1,716,971 | $1,381,784 | | Total shareholders' equity | $139,788 | $129,694 | | Total Liabilities and Shareholders' Equity | $1,856,759 | $1,511,478 | - Total assets increased by **$345.3 million** (**22.8%**) from December 31, 2020, to September 30, 2021, primarily driven by a significant increase in cash and cash equivalents and deposits[10](index=10&type=chunk) - Loans, net, decreased by **$139.0 million** (**13.9%**) from December 31, 2020, to September 30, 2021, largely due to Paycheck Protection Program (PPP) loan forgiveness payments[10](index=10&type=chunk)[145](index=145&type=chunk) [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Presents the company's revenues, expenses, and net income over specific reporting periods Condensed Consolidated Statements of Income (in thousands, except per share amounts) | (in thousands, except per share amounts) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total interest income | $13,543 | $11,729 | $38,268 | $33,740 | | Total interest expense | $247 | $274 | $742 | $911 | | Net interest income | $13,296 | $11,455 | $37,526 | $32,829 | | Provision for loan losses | $0 | $193 | $0 | $2,503 | | Total non-interest income | $1,303 | $1,228 | $3,883 | $3,535 | | Total non-interest expense | $8,407 | $7,501 | $24,342 | $21,824 | | Net Income | $4,554 | $3,748 | $12,870 | $9,038 | | Net income per share | $0.56 | $0.46 | $1.58 | $1.11 | - Net income increased by **$806,000** (**21.5%**) for the three months ended September 30, 2021, and by **$3,832,000** (**42.4%**) for the nine months ended September 30, 2021, compared to the same periods in 2020, primarily due to growth in earning assets, PPP loan interest and fees, and a decrease in loan loss provision[13](index=13&type=chunk)[145](index=145&type=chunk) - **No provision for loan losses** was recorded in the three and nine-month periods ended September 30, 2021, compared to **$193,000** and **$2,503,000** in the comparable 2020 periods, as credit quality remained strong and PPP loans are government-guaranteed[13](index=13&type=chunk)[145](index=145&type=chunk)[165](index=165&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Details the company's net income and other comprehensive income components, such as unrealized gains or losses Condensed Consolidated Statements of Comprehensive Income (in thousands) | (dollars in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income | $4,554 | $3,748 | $12,870 | $9,038 | | Total other comprehensive (loss)/Income | $(305) | $1,350 | $(718) | $4,366 | | Comprehensive income | $4,249 | $5,098 | $12,152 | $13,404 | - Total other comprehensive income shifted from a gain of **$1,350,000** in Q3 2020 to a loss of **$305,000** in Q3 2021, and from a gain of **$4,366,000** in the nine months ended Sep 30, 2020, to a loss of **$718,000** in the same period of 2021, primarily due to unrealized losses on securities[15](index=15&type=chunk) [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Outlines changes in the company's equity, including common stock, retained earnings, and other comprehensive income Shareholders' Equity Changes (in thousands) | (dollars in thousands) | Balances, Sep 30, 2021 | Balances, Sep 30, 2020 | | :--- | :--- | :--- | | Common Stock | $25,435 | $25,435 | | Additional Paid-in Capital | $4,544 | $4,084 | | Retained Earnings | $102,833 | $87,700 | | Accumulated Other Comprehensive Income (Loss) | $6,976 | $6,763 | | Total Shareholders' Equity | $139,788 | $123,982 | - Total shareholders' equity increased to **$139,788,000** as of September 30, 2021, from **$123,982,000** as of September 30, 2020, driven by net income and stock-based compensation, partially offset by cash dividends and other comprehensive loss[18](index=18&type=chunk)[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Reports the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | (dollars in thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $14,316 | $16,375 | | Net cash from (used) in investing activities | $110,264 | $(310,020) | | Net cash from financing activities | $330,877 | $288,851 | | NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | $455,457 | $(4,794) | | CASH AND CASH EQUIVALENTS, end of period | $682,113 | $142,800 | - Net cash from investing activities significantly improved to a positive **$110,264,000** for the nine months ended September 30, 2021, compared to a negative **$310,020,000** in the prior year, primarily due to a net decrease in loans (PPP loan paydowns)[23](index=23&type=chunk) - Cash and cash equivalents at the end of the period surged to **$682,113,000** as of September 30, 2021, from **$142,800,000** in the prior year, reflecting a net increase of **$455,457,000**[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures for the condensed consolidated financial statements [NOTE 1 – BASIS OF PRESENTATION](index=12&type=section&id=NOTE%201%20%E2%80%93%20BASIS%20OF%20PRESENTATION) Describes the company's business operations and the basis for preparing the interim financial statements - Oak Valley Bancorp is the parent holding company for Oak Valley Community Bank, a California state-chartered bank operating branches in various California locations, including a separate division, Eastern Sierra Community Bank[26](index=26&type=chunk)[27](index=27&type=chunk) - The Company's primary revenue source is providing loans, predominantly to middle-market businesses[27](index=27&type=chunk) - Interim financial statements are unaudited but include all necessary normal recurring adjustments; results for the three and nine-month periods are not indicative of a full year's operations[26](index=26&type=chunk) [NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS](index=12&type=section&id=NOTE%202%20%E2%80%93%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) Details recent accounting standards and their expected or actual impact on the financial statements - The Company, classified as a Small Reporting Company, will adopt ASU No. 2016-13 (CECL model) on January 1, 2023, which is expected to result in earlier recognition of credit losses[28](index=28&type=chunk) - ASU 2019-04, clarifying guidance on credit losses, hedging, and recognition/measurement, was adopted on January 1, 2020, without material impact[29](index=29&type=chunk) - ASU 2020-04, addressing Reference Rate Reform (LIBOR), is being evaluated for its effects on consolidated financial statements[32](index=32&type=chunk) [NOTE 3 – SECURITIES](index=14&type=section&id=NOTE%203%20%E2%80%93%20SECURITIES) Provides information on the company's investment securities, including fair value and impairment assessments Equity Securities Fair Value and Recognized Losses (in thousands) | (in thousands) | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Fair Value of Equity Securities | $3,406 | $3,425 | | Losses recognized (3 months ended Sep 30) | $23 | $7 | | Losses recognized (9 months ended Sep 30) | $68 | $(59) (Gain) | Available-for-Sale Debt Securities Fair Value (in thousands) | (in thousands) | Amortized Cost (Sep 30, 2021) | Fair Value (Sep 30, 2021) | Amortized Cost (Dec 31, 2020) | Fair Value (Dec 31, 2020) | | :--- | :--- | :--- | :--- | :--- | | U.S. agencies | $22,890 | $23,551 | $22,802 | $23,692 | | Municipalities | $140,667 | $149,309 | $115,706 | $125,602 | | Corporate debt | $17,425 | $17,627 | $14,229 | $14,352 | | Asset backed securities | $45,829 | $46,226 | $47,226 | $47,287 | | Total Available-for-Sale Securities | $231,783 | $241,687 | $206,240 | $217,164 | - Management determined **no investment security was other than temporarily impaired**, with unrealized losses primarily due to asset-backed securities repaying slower than expected and interest rate changes[37](index=37&type=chunk)[194](index=194&type=chunk) [NOTE 4 – LOANS](index=16&type=section&id=NOTE%204%20%E2%80%93%20LOANS) Details the composition and quality of the company's loan portfolio, including PPP loans and allowance for losses Loan Portfolio Composition (in thousands) | (in thousands) | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Commercial real estate | $669,371 | $661,331 | | Commercial and industrial | $149,559 | $292,006 | | Consumer residential | $27,539 | $30,887 | | Agriculture | $25,148 | $28,255 | | Total loans | $872,110 | $1,013,115 | | Less: Deferred loan fees and costs, net | $(2,526) | $(4,572) | | Less: Allowance for loan losses | $(11,351) | $(11,297) | | Net loans | $858,233 | $997,246 | - PPP outstanding balances totaled **$66,532,000** at September 30, 2021, down from **$210,822,000** at December 31, 2020, due to **$278 million** in forgiveness payments from the SBA[43](index=43&type=chunk)[145](index=145&type=chunk) - **No loans were on non-accrual status** as of September 30, 2021, and December 31, 2020, indicating strong credit quality[53](index=53&type=chunk)[165](index=165&type=chunk)[181](index=181&type=chunk) Allowance for Loan Losses Activity (in thousands) | (in thousands) | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Beginning balance | $11,327 | $11,297 | $11,443 | $9,146 | | Charge-offs | $(7) | $(15) | $(5) | $(24) | | Recoveries | $31 | $69 | $4 | $10 | | Provision for (reversal of) loan losses | $0 | $0 | $193 | $2,503 | | Ending balance | $11,351 | $11,351 | $11,635 | $11,635 | [NOTE 5 — FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS](index=28&type=section&id=NOTE%205%20%E2%80%94%20FINANCIAL%20INSTRUMENTS%20AND%20FAIR%20VALUE%20MEASUREMENTS) Explains the methodologies and hierarchy used for fair value measurements of financial instruments - The Company uses a fair value hierarchy (Level 1, 2, 3) to measure financial instruments, maximizing observable inputs[86](index=86&type=chunk)[87](index=87&type=chunk) - Loans and deposits are primarily valued using Level 3 inputs, reflecting discounted cash flow analyses and internal modeling with unobservable inputs[90](index=90&type=chunk)[91](index=91&type=chunk) Fair Value of Financial Instruments Not Measured at Fair Value (in thousands) | (in thousands) | Carrying Amount (Sep 30, 2021) | Fair Value (Sep 30, 2021) | Carrying Amount (Dec 31, 2020) | Fair Value (Dec 31, 2020) | | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $682,113 | $682,113 | $226,656 | $226,656 | | Loans, net | $858,233 | $866,845 | $997,246 | $1,006,335 | | Deposits | $(1,701,180) | $(1,701,197) | $(1,367,809) | $(1,367,874) | [NOTE 6 – EARNINGS PER SHARE](index=32&type=section&id=NOTE%206%20%E2%80%93%20EARNINGS%20PER%20SHARE) Presents the basic and diluted earnings per share calculations for the reporting periods Earnings Per Share (EPS) (in thousands, except per share amounts) | (In thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income | $4,554 | $3,748 | $12,870 | $9,038 | | Basic EPS | $0.56 | $0.46 | $1.58 | $1.11 | | Diluted EPS | $0.56 | $0.46 | $1.57 | $1.11 | - Basic and diluted EPS increased for both the three and nine-month periods ended September 30, 2021, reflecting higher net income[102](index=102&type=chunk) [NOTE 7 – RISKS AND UNCERTAINTIES](index=33&type=section&id=NOTE%207%20%E2%80%93%20RISKS%20AND%20UNCERTAINTIES) Highlights key risks and uncertainties, including the impact of the COVID-19 pandemic on operations - The COVID-19 pandemic has significantly impacted loan portfolio quality and net interest income due to declining short-term interest rates[104](index=104&type=chunk) - Management increased qualitative factors for the allowance for loan and lease losses in anticipation of COVID-19 impacts, but there's no certainty it will be sufficient[104](index=104&type=chunk) - The Company maintains **strong on-balance sheet liquidity** and contingent resources to meet client liquidity needs, supported by Federal Reserve provisions[105](index=105&type=chunk)[106](index=106&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on the company's financial condition, operational results, and key performance drivers [Introduction](index=35&type=section&id=Introduction) Introduces the company's business model, services, and operational focus as a community bank - Oak Valley Bancorp operates Oak Valley Community Bank as a community bank, focusing on commercial banking services for individuals and small to medium-sized businesses in California's Central Valley and Eastern Sierras[112](index=112&type=chunk)[113](index=113&type=chunk) - The Bank offers a range of services including business checking/savings, commercial and real estate loans, lines of credit, online banking, remote deposit capture, and merchant services[114](index=114&type=chunk)[115](index=115&type=chunk) [COVID-19 Impact and Outlook](index=37&type=section&id=COVID-19%20Impact%20and%20Outlook) Discusses the impact of the COVID-19 pandemic on the company's loan portfolio, net interest income, and credit quality - The COVID-19 pandemic has significantly impacted the Company's loan portfolio quality and net interest income due to declining short-term interest rates[118](index=118&type=chunk) - **No loan loss provisions** were warranted in the first nine months of 2021 due to **strong credit quality** (**zero non-accrual loans**) and the government guarantee on PPP loans[118](index=118&type=chunk) - Net interest margin compressed due to increased low-yielding cash balances from deposit growth and PPP loan forgiveness, alongside FOMC rate cuts[118](index=118&type=chunk) - One borrowing relationship (**3 loans**, **$8.057 million**) experienced COVID-19 related hardship, leading to principal payment deferrals and conversion to interest-only for the remainder of 2021[119](index=119&type=chunk) [Critical Accounting Estimates](index=37&type=section&id=Critical%20Accounting%20Estimates) Identifies and explains the key accounting estimates requiring significant management judgment - Management identifies five critical accounting estimates: Allowance for Loan Losses, Non-Accrual Loan Policy, Asset Impairment Judgments, Fair Value Measurements, and Income Taxes[122](index=122&type=chunk) - The allowance for loan losses is based on a three-phase methodology: specific review of individual loans, segmenting loan pools with similar characteristics, and management's estimate based on various subjective factors[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[130](index=130&type=chunk) - Loans are generally placed on non-accrual status when over **90 days** delinquent or collection is highly uncertain, with interest income recognized only after principal repayment or assured future payments[129](index=129&type=chunk) - Asset impairment judgments involve periodic analyses for assets like loans and investment securities, with OREO initially recorded at fair value less selling costs[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) [Overview of Results of Operations and Financial Condition](index=43&type=section&id=Overview%20of%20Results%20of%20Operations%20and%20Financial%20Condition) Summarizes the company's overall financial performance and condition, highlighting key trends and changes - The Company's business strategy is to operate as a well-capitalized, profitable, and independent community-oriented bank, with a shareholder value strategy focused on enhancing value, making its retail banking franchise more valuable, and efficiently utilizing capital[144](index=144&type=chunk) [Income Summary](index=43&type=section&id=Income%20Summary) Provides a summary of the company's net income, return metrics, and key income and expense components Income Summary (in thousands) | (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income | $4,554 | $3,748 | $12,870 | $9,038 | | Return on average assets (annualized) | 1.00% | 1.04% | 1.01% | 0.91% | | Return on average common equity (annualized) | 13.01% | 12.19% | 12.74% | 10.21% | | Net interest income | $13,296 | $11,455 | $37,526 | $32,829 | | Provision for loan losses | $0 | $193 | $0 | $2,503 | | Non-interest income | $1,303 | $1,228 | $3,883 | $3,535 | | Non-interest expense | $8,407 | $7,501 | $24,342 | $21,824 | - Net income increased due to growth of earning assets, PPP loan interest and fees, and a decrease in loan loss provision[145](index=145&type=chunk) - Total assets increased by **$345.3 million** (**22.8%**) to **$1,856.8 million**, while net loans decreased by **$139.0 million** (**13.9%**) to **$858.2 million** from December 31, 2020, to September 30, 2021[145](index=145&type=chunk) [Net Interest Income](index=44&type=section&id=Net%20Interest%20Income) Analyzes the company's net interest income and net interest margin, including factors affecting changes Net Interest Income and Margin | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $13,296,000 | $11,455,000 | $37,526,000 | $32,829,000 | | Net interest margin | 3.17% | 3.44% | 3.22% | 3.62% | | Earning asset yield | 3.22% | 3.52% | 3.29% | 3.72% | | Cost of funds on interest-bearing liabilities | 0.10% | 0.15% | 0.11% | 0.18% | - Net interest income increased by **$1,841,000** (**16.1%**) for the three months and **$4,697,000** (**14.3%**) for the nine months ended September 30, 2021, primarily due to increased earning assets, including PPP loans[147](index=147&type=chunk) - Net interest margin decreased due to strong deposit growth leading to high levels of low-yielding cash and the negative impact of FOMC interest rate cuts on earning asset yields[148](index=148&type=chunk) - PPP loans contributed **$2,679,000** and **$7,472,000** in interest and fees during the three and nine months ended September 30, 2021, respectively, but their forgiveness is expected to significantly reduce this contribution in Q4 2021 and FY2022[118](index=118&type=chunk)[147](index=147&type=chunk)[150](index=150&type=chunk) [Provision for Loan Losses](index=48&type=section&id=Provision%20for%20Loan%20Losses) Details the provision for loan losses, explaining the rationale behind recorded amounts Provision for Loan Losses (in thousands) | (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Provision for loan losses | $0 | $193 | $0 | $2,503 | - **No loan loss provisions** were recorded in the three and nine-month periods ended September 30, 2021, due to **strong credit quality** (**zero non-accrual loans**) and the government guarantee on PPP loans[165](index=165&type=chunk) - Provisions in 2020 were primarily due to macro-economic adjustments related to the COVID-19 pandemic's potential negative impact on borrowers[165](index=165&type=chunk) [Non-Interest Income](index=49&type=section&id=Non-Interest%20Income) Examines the components of non-interest income and factors contributing to their changes Non-Interest Income (in thousands) | (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Service charges on deposits | $320 | $303 | $939 | $959 | | Debit card transaction fee income | $442 | $365 | $1,250 | $971 | | Mortgage commissions | $52 | $27 | $136 | $78 | | Total non-interest income | $1,303 | $1,228 | $3,883 | $3,535 | - Total non-interest income increased by **$75,000** (**6.1%**) for the three months and **$348,000** (**9.8%**) for the nine months ended September 30, 2021[166](index=166&type=chunk) - Debit card transaction fee income saw significant increases (**21.1%** for **3 months**, **28.7%** for **9 months**) due to a shift towards electronic payment methods amid the COVID-19 pandemic[167](index=167&type=chunk)[168](index=168&type=chunk) - Mortgage commissions increased substantially (**92.6%** for **3 months**, **74.4%** for **9 months**) due to increased demand for home purchases and refinancing[167](index=167&type=chunk)[170](index=170&type=chunk) [Non-Interest Expense](index=50&type=section&id=Non-Interest%20Expense) Analyzes the company's non-interest expenses, including salaries, occupancy, and regulatory assessments Non-Interest Expense (in thousands) | (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $5,205 | $4,410 | $15,000 | $12,958 | | Occupancy expenses | $989 | $951 | $2,940 | $2,705 | | Regulatory assessments (FDIC & DFPI) | $141 | $111 | $390 | $213 | | Total non-interest expense | $8,407 | $7,501 | $24,342 | $21,824 | - Total non-interest expense increased by **$906,000** (**12.1%**) for the three months and **$2,518,000** (**11.5%**) for the nine months ended September 30, 2021[172](index=172&type=chunk) - Salaries and employee benefits increased due to additional staffing for loan and deposit growth and a decrease in deferred cost adjustments on funded PPP loans[172](index=172&type=chunk) - Regulatory assessments (FDIC & DFPI) increased significantly (**27.0%** for **3 months**, **83.1%** for **9 months**) as assessment credits were fully utilized and deposit growth impacted the assessment base[172](index=172&type=chunk)[175](index=175&type=chunk) [Income Taxes](index=51&type=section&id=Income%20Taxes) Discusses the company's income tax provisions and effective tax rates for the reporting periods Income Tax Provisions and Effective Rates | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Provision for income taxes | $1,638,000 | $1,241,000 | $4,197,000 | $2,999,000 | | Effective income tax rate | 26.5% | 24.9% | 24.6% | 24.9% | - The effective income tax rate for the nine months ended September 30, 2021, was **24.6%**, compared to **24.9%** in 2020, primarily due to tax credits from low-income housing projects and tax-free income on municipal securities and loans[178](index=178&type=chunk) [Asset Quality](index=51&type=section&id=Asset%20Quality) Assesses the quality of the company's assets, focusing on non-performing loans and other real estate owned Non-Performing Assets (in thousands) | (in thousands) | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Loans in non-accrual status | $0 | $0 | | Loans past due 90 days or more and accruing | $0 | $0 | | Total non-performing loans | $0 | $0 | | Other real estate owned | $0 | $0 | | Total non-performing assets | $0 | $0 | | Non-performing assets to total assets | 0.00% | 0.00% | | Non-performing loans to total loans | 0.00% | 0.00% | - The Company reported **zero non-performing assets**, **non-performing loans**, and OREO as of September 30, 2021, and December 31, 2020, indicating excellent asset quality[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) [Allowance for Loan and Lease Losses](index=52&type=section&id=Allowance%20for%20Loan%20and%20Lease%20Losses) Details the allowance for loan losses, its adequacy, and changes over the reporting periods Allowance for Loan Losses (in thousands) | (in thousands) | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Allowance for loan losses | $11,351 | $11,297 | | Allowance for loan losses to total loans | 1.30% | 1.12% | - The allowance for loan losses increased by **$54,000** to **$11,351,000** as of September 30, 2021, due to net loan recoveries[186](index=186&type=chunk) - The allowance for loan losses as a percentage of total loans increased to **1.30%** from **1.12%**, mainly due to paydowns of PPP loans which do not require a loan loss reserve[186](index=186&type=chunk) [Investment Activities](index=52&type=section&id=Investment%20Activities) Describes the company's investment strategy, portfolio composition, and liquidity management - Investment activities are managed by the Company's Investment Committee to provide liquidity, establish an interest rate-sensitive position, and earn adequate income without undue risk[190](index=190&type=chunk)[192](index=192&type=chunk) Cash Equivalents (in thousands) | (in thousands) | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $682,113 | $226,656 | - All investment securities are classified as available-for-sale, except for one mutual fund classified as an equity security[192](index=192&type=chunk) - Management determined **no investment security was other than temporarily impaired**, with unrealized losses primarily due to interest rate changes[194](index=194&type=chunk) [Deposits](index=54&type=section&id=Deposits) Analyzes the company's deposit base, growth trends, and funding sources Deposits Outstanding (in thousands) | (in thousands) | September 30, 2021 | December 31, 2020 | Nine Month Change ($) | Nine Month Change (%) | | :--- | :--- | :--- | :--- | :--- | | Demand | $1,133,865 | $907,913 | $225,952 | 24.9% | | MMDA | $380,348 | $301,506 | $78,842 | 26.1% | | Savings | $148,244 | $120,552 | $27,692 | 23.0% | | Time < $250K | $21,924 | $16,134 | $5,790 | 35.9% | | Time > $250K | $16,799 | $21,704 | $(4,905) | (22.6%) | | Total Deposits | $1,701,180 | $1,367,809 | $333,371 | 24.4% | - Total deposits increased by **$333,371,000** (**24.4%**) to **$1,701,180,000** as of September 30, 2021, driven by core deposit growth and PPP program opportunities[195](index=195&type=chunk)[196](index=196&type=chunk) - The Company had **no brokered deposits** as of September 30, 2021, and December 31, 2020, emphasizing its core deposit growth strategy[197](index=197&type=chunk) [Borrowings](index=54&type=section&id=Borrowings) Details the company's borrowing activities and reliance on external funding sources - The Company had **no outstanding FHLB advances or other borrowings** as of September 30, 2021, and December 31, 2020, relying on deposit growth as its primary funding source[198](index=198&type=chunk) - A **$50 million** FHLB advance taken in April 2020 for PPP loan funding was **fully repaid in July 2020**[198](index=198&type=chunk) [Capital Ratios](index=54&type=section&id=Capital%20Ratios) Presents the company's regulatory capital ratios and compliance with minimum capital requirements Regulatory Capital Ratios (Bank and Company) (in thousands) | Capital Ratios | Sep 30, 2021 (Actual) | Sep 30, 2021 (Minimum) | Dec 31, 2020 (Actual) | Dec 31, 2020 (Minimum) | | :--- | :--- | :--- | :--- | :--- | | **Bank** | | Total capital (to Risk-Weighted Assets) | 13.7% | >10.5% | 13.1% | >10.5% | | Tier I capital (to Risk-Weighted Assets) | 12.6% | >8.5% | 12.0% | >8.5% | | Common Equity Tier 1 Capital (to Risk Weighted Assets) | 12.6% | >7.0% | 12.0% | >7.0% | | Tier I capital (to Average Assets) | 7.2% | >4.0% | 8.0% | >4.0% | | **Company** | | Total capital (to Risk-Weighted Assets) | 13.7% | >10.5% | 13.2% | >10.5% | | Tier I capital (to Risk-Weighted Assets) | 12.6% | >8.5% | 12.0% | >8.5% | | Common Equity Tier 1 Capital (to Risk Weighted Assets) | 12.6% | >7.0% | 12.0% | >7.0% | | Tier I capital (to Average Assets) | 7.2% | >4.0% | 8.0% | >4.0% | - Both the Bank and the Company **exceeded all minimum regulatory capital requirements**, including the conservation buffer, as of September 30, 2021, and December 31, 2020[200](index=200&type=chunk)[202](index=202&type=chunk) [Liquidity Management](index=55&type=section&id=Liquidity%20Management) Discusses the company's liquidity position, sources, and management strategies - The Company's primary liquidity sources are dividends from the Bank, with sufficient earnings anticipated to meet funding requirements for the next twelve months[203](index=203&type=chunk) Liquid Assets and Liquidity Ratio | Metric | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Liquid assets | $768.0 million | $336.6 million | | Liquid assets to total assets | 41.4% | 22.3% | - Liquid assets significantly increased due to deposit growth and PPP loan forgiveness payments, resulting in higher cash levels[204](index=204&type=chunk) - The Company's borrowing capacity from the FHLB was approximately **$349.1 million** with **no outstanding advances** as of September 30, 2021, and it also maintains **$70 million** in federal funds lines of credit[206](index=206&type=chunk) [Off-Balance Sheet Arrangements](index=57&type=section&id=Off-Balance%20Sheet%20Arrangements) Describes the company's off-balance sheet commitments, such as credit extensions and letters of credit Commitments to Extend Credit (in millions) | (in millions) | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Commitments to extend credit | $171.7 | $145.7 | | Obligations under letters of credit | $3.4 | $2.9 | - The Company provides various forms of credit lines, which represent a credit risk but are not reflected on the balance sheets[208](index=208&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Refers to disclosures on market risk, noting any material changes and ongoing monitoring efforts - **No material changes to market risk exposures** were reported as of September 30, 2021, compared to December 31, 2020[210](index=210&type=chunk) - The Company continues to monitor its market risk exposures in light of the COVID-19 pandemic[210](index=210&type=chunk) [Item 4. Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Reports on the effectiveness of disclosure controls and internal control over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures were **effective as of September 30, 2021**[211](index=211&type=chunk) - **No significant changes to internal control** over financial reporting occurred during the quarter ended September 30, 2021[212](index=212&type=chunk) - Remote work arrangements due to COVID-19 did not adversely impact financial reporting systems or internal controls, and processes allow for secure remote execution if needed in the future[212](index=212&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) Discloses any pending or threatened material legal proceedings against the company - There are **no pending or threatened material legal proceedings** against the Company[215](index=215&type=chunk) - No directors, nominees, executive officers, or their associates are party to any material legal proceedings adverse to the Company[215](index=215&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) Refers to previously disclosed risk factors, noting any material changes - **No material changes to the risk factors** disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020, have occurred[216](index=216&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports on any unregistered sales of equity securities or use of proceeds - **No unregistered sales of equity securities** or use of proceeds were reported[217](index=217&type=chunk) [Item 3. Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Discloses any defaults upon senior securities - **No defaults upon senior securities** were reported[217](index=217&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Reports on any mine safety disclosures - **No mine safety disclosures** were reported[217](index=217&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) Provides any other information requiring disclosure in this section - **No other information was reported**[217](index=217&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) Lists the exhibits filed as part of the report, including certifications from the Principal Executive Officer and Principal Financial Officer, and financial statements formatted in Inline XBRL - Exhibits include certifications from the Principal Executive Officer (**31.01**) and Principal Financial Officer (**31.02**) pursuant to the Sarbanes-Oxley Act of 2002[218](index=218&type=chunk) - Financial statements for the quarter ended September 30, 2021, are filed in Inline XBRL format (Exhibit **101**)[218](index=218&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-34142 OAK VALLEY BANCORP (Exact name of registrant as specified in its charter) State or other jurisdiction of I.R.S. Employer incorporation or organization Ident ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-34142 OAK VALLEY BANCORP (Exact name of registrant as specified in its charter) State or other jurisdiction of I.R.S. Employer incorporation or organization Iden ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-34142 OAK VALLEY BANCORP (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 125 North Third ...