Non-interest expense of $2.82 million for the three months ended September 30, 2008 represented an increase of $82,000 when compared with the three months ended September 30, 2007. Non-interest expense for the nine months ended September 30, 2008 of $8.76 million increased by $291,000 when compared to the $8.47 million incurred during the 2007 period. Salaries & benefits decreased by $517,000 during the nine months ended September 30, 2008 as compared to the same period in 2007 as a result of a decrease in the number of full-time equivalent employees partially due to attrition and partially due to decreased levels of construction lending. Legal and professional fees, as well as other costs associated with holding other real estate owned increased by $410,000 during the nine months ended September 30, 2008 as compared to the same period in 2007. Other expenses increased $398,000 during the same period. "We are committed to maximizing shareholder value by continuing to implement our cost saving strategic initiatives while navigating these complex economic times," stated Hess.
Founded in February 1995, Citizens Bank, headquartered in Nevada City, became a wholly owned subsidiary of the Company in 2003. In addition to the new Auburn branch in Placer County, the Bank has six other branches in communities throughout Nevada County, including Nevada City, Grass Valley, Penn Valley, Lake of the Pines, and Truckee. The opening of the Auburn branch represents the Bank's first physical entry into neighboring Placer County. The Bank offers community banking services, including a wide variety of deposit products, commercial, residential and consumer loans, and other traditional banking products and services, designed to meet the needs of small and middle market businesses and individuals.

This release may contain certain forward-looking statements that are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact the Company's earnings in future periods. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe", "expect", "intend", "estimate" or words of similar meaning, or future or conditional verbs such as "will", "would", "should", "could" or "may". Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, real estate values, and competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory and technological factors affecting the Bank's operations, pricing, products and services. These and other important factors are detailed in various Federal Deposit Insurance Corporation filings made periodically by the Bank, copies of which are available from the Bank without charge. The Company or the Bank undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.