UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q
                  Quarterly Report Pursuant Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For Quarterly Period Ended June 30, 2007          Commission file number 0-10661
-----------------------------------------         ------------------------------

                                TRICO BANCSHARES
             (Exact name of registrant as specified in its charter)

           California                                          94-2792841
------------------------------                            -------------------
 (State or other jurisdiction                              (I.R.S. Employer
 incorporation or organization)                           Identification No.)

                 63 Constitution Drive, Chico, California 95973
               (Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code:  (530) 898-0300


--------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                             Yes  X        No
                                -----        -----

     Indicate by check mark whether the Registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer" and "large accelerated filer" in Rule 12b-2 of the Act (check one).

Large accelerated filer      Accelerated filer  X   Non-accelerated filer
                       -----                  -----                      -----

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Exchange Act).

                             Yes           No  X
                                -----        -----

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date:

Title of Class:  Common stock, no par value

Outstanding shares as of August 7, 2007:  15,835,291


<PAGE>
                                TABLE OF CONTENTS

                                                                          Page

Forward-Looking Statements                                                  1

PART I - FINANCIAL INFORMATION                                              2

      Item 1 - Financial Statements                                         2

      Notes to Unaudited Condensed Consolidated Financial Statements        6

      Financial Summary                                                    16

      Item 2 - Management's Discussion and Analysis of Financial           17
      Condition and Results of Operations

      Item 3 - Quantitative and Qualitative Disclosures about Market Risk  28

      Item 4 - Controls and Procedures                                     29

PART II - OTHER INFORMATION                                                30

      Item 1 - Legal Proceedings                                           30

      Item 1A - Risk Factors                                               30

      Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds 30

      Irem 4 - Submission of Matters to a Vote of Security Holders         30

      Item 6 - Exhibits                                                    31

      Signatures                                                           33

      Exhibits                                                             34



<PAGE>


                           FORWARD-LOOKING STATEMENTS

This  report  on Form  10-Q  contains  forward-looking  statements  about  TriCo
Bancshares (the "Company") for which it claims the protection of the safe harbor
provisions  contained in the Private  Securities  Litigation Reform Act of 1995.
These forward-looking statements are based on Management's current knowledge and
belief and include  information  concerning  the  Company's  possible or assumed
future  financial  condition and results of operations.  When you see any of the
words "believes", "expects", "anticipates", "estimates", or similar expressions,
it may mean making  forward-looking  statements.  A number of  factors,  some of
which are beyond the Company's ability to predict or control, could cause future
results to differ materially from those contemplated.  The reader is directed to
the Company's  annual report on Form 10-K for the year ended  December 31, 2006,
and Part II,  Item 1A of this  report for further  discussion  of factors  which
could  affect  the  Company's  business  and  cause  actual  results  to  differ
materially  from those expressed in any  forward-looking  statement made in this
report.

                                       1
<PAGE>
<TABLE>
<CAPTION>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
                                TRICO BANCSHARES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                  (In thousands, except share data; unaudited)

                                                                 At June 30,            At December 31,
                                                            2007              2006            2006
                                                      -------------------------------   -----------------
<S>                                                         <C>               <C>              <C>
Assets:
     Cash and due from banks                              $93,636           $84,663         $102,220
     Federal funds sold                                     1,715               526              794
                                                      -------------------------------   -----------------
         Cash and cash equivalents                         95,351            85,189          103,014
     Securities available-for-sale                        175,891           221,828          198,361
     Federal Home Loan Bank stock, at cost                  8,543             8,103            8,320
     Loans, net of allowance for loan losses
         of $16,999, $16,893 and $16,914                1,490,629         1,439,115        1,492,965
     Foreclosed assets, net of allowance for
         losses of $180                                       187                 -                -
     Premises and equipment, net                           20,891            21,597           21,830
     Cash value of life insurance                          44,346            42,571           43,536
     Accrued interest receivable                            8,284             7,841            8,727
     Goodwill                                              15,519            15,519           15,519
     Other intangible assets, net                           1,421             3,711            1,666
     Other assets                                          25,965            25,682           26,028
                                                      -------------------------------   -----------------
         Total Assets                                  $1,887,027        $1,871,156       $1,919,966
                                                      ===============================   =================
Liabilities:
     Deposits:
         Noninterest-bearing demand                      $366,321          $354,576         $420,025
         Interest-bearing                               1,144,558         1,159,864        1,179,124
                                                      -------------------------------   -----------------
         Total deposits                                 1,510,879         1,514,440        1,599,149
     Federal funds purchased                               80,500            96,700           38,000
     Accrued interest payable                               6,614             5,739            7,548
     Reserve for unfunded commitments                       2,040             1,849            1,849
     Other liabilities                                     22,264            19,225           22,835
     Other borrowings                                      44,892            33,971           39,911
     Junior subordinated debt                              41,238            41,238           41,238
                                                      -------------------------------   ----------------
         Total Liabilities                              1,708,427         1,713,162        1,750,530
                                                      -------------------------------   ----------------
Commitments and contingencies
Shareholders' Equity:
Common stock, no par value: 50,000,000 shares
         authorized; issued and outstanding:
         15,917,291 at June 30, 2007                       76,394
         15,855,107 at June 30, 2006                                         73,337
         15,857,207 at December 31, 2006                                                      73,739
Retained earnings                                         106,985            90,286          100,218
Accumulated other comprehensive loss, net                  (4,779)           (5,629)          (4,521)
                                                      -------------------------------   ----------------
         Total Shareholders' Equity                       178,600           157,994          169,436
                                                      -------------------------------   ----------------
         Total Liabilities and Shareholders' Equity    $1,887,027        $1,871,156       $1,919,966
                                                      ===============================   ================
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.

                                       2
<PAGE>

<TABLE>
<CAPTION>

                                TRICO BANCSHARES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                (In thousands, except per share data; unaudited)

                                          Three months ended June 30,   Six months ended June 30,
                                              2007            2006         2007           2006
                                         -------------------------------------------------------
<S>                                           <C>             <C>          <C>            <C>
Interest and dividend income:
Loans, including fees                       $29,882         $26,555      $58,305        $51,624
Debt securities:
   Taxable                                    1,623           2,254        3,342          4,610
   Tax exempt                                   375             445          769            907
Dividends                                       101              94          223            178
Federal funds sold                                5              31            8             38
                                         -------------------------------------------------------
Total interest income                        31,986          29,379       62,647         57,357
                                         =======================================================
Interest expense:
Deposits                                      7,550           5,921       14,938         10,863
Federal funds purchased                       1,014           1,169        1,536          1,919
Other borrowings                                506             396          996            744
Junior subordinated debt                        825             789        1,641          1,522
                                         -------------------------------------------------------
Total interest expense                        9,895           8,275       19,111         15,048
                                         -------------------------------------------------------
Net interest income                          22,091          21,104       43,536         42,309
                                         -------------------------------------------------------
Provision for loan losses                       500             554          982          1,054
                                         -------------------------------------------------------
Net interest income after provision for      21,591          20,550       42,554         41,255
   loan losses                           -------------------------------------------------------

Noninterest income:
Service charges and fees                      5,375           4,956     10,436          9,813
Gain on sale of loans                           279             313        545            611
Commissions on sale of non-deposit              550             524      1,050          1,082
   investment products
Increase in cash value of life insurance        405             403        810            803
Other                                           420             335        788            670
                                          ------------------------------------------------------
Total noninterest income                      7,029           6,531     13,629         12,979
                                          ------------------------------------------------------
Noninterest expense:
Salaries and related benefits                 9,619           8,618     19,361         17,774
Other                                         7,824           7,658     15,042         14,924
                                          ------------------------------------------------------
Total noninterest expense                    17,443          16,276     34,403         32,698
                                          ------------------------------------------------------
Income before income taxes                   11,177          10,805     21,780         21,536
Provision for income taxes                    4,422           4,248      8,581          8,444
                                          ------------------------------------------------------
Net income                                   $6,755          $6,557    $13,199        $13,092
                                          ======================================================

Average shares outstanding               15,916,313      15,798,565 15,897,621     15,767,555
Diluted average shares outstanding       16,463,369      16,388,855 16,439,607     16,384,225
Per share data:
Basic earnings                                $0.42           $0.42      $0.83          $0.83
Diluted earnings                              $0.41           $0.40      $0.80          $0.80
Dividends paid                                $0.13           $0.12      $0.26          $0.24


</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>

                                TRICO BANCSHARES
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  (In thousands, except share data; unaudited)

                                                                     Accumulated
                                    Shares of                            Other
                                    Common     Common    Retained   Comprehensive
                                     Stock      Stock    Earnings       Loss           Total
                                 -------------------------------------------------------------
<S>                                   <C>         <C>        <C>          <C>           <C>

Balance at December 31, 2005      15,707,835     $71,412     $81,906     ($3,825)   $149,493
                                                                                    --------
Comprehensive income:
Net income                                                    13,092                  13,092
Change in net unrealized gain on
    Securities available for sale, net                                    (1,804)     (1,804)
                                                                                     -------
Total comprehensive income                                                            11,288
Stock option vesting                                 289                                 289
Stock options exercised              188,187       1,630                               1,630
Tax benefit of stock options exercised               192                                 192
Repurchase of common stock           (40,915)       (186)       (923)                 (1,109)
Dividends paid ($0.24 per share)                              (3,789)                 (3,789)
                                 -------------------------------------------------------------
Balance at June 30, 2006          15,855,107     $73,337     $90,286     ($5,629)   $157,994
                                 =============================================================

Balance at December 31, 2006      15,857,207     $73,739    $100,218     ($4,521)   $169,436
                                                                                    --------
Comprehensive income:
Net income                                                    13,199                  13,199
Change in net unrealized gain on
    Securities available for sale, net                                      (258)       (258)
                                                                                     ---------
Total comprehensive income                                                            12,941
Stock option vesting                                 376                                 376
Stock options exercised              177,600       1,964                               1,964
Tax benefit of stock options exercised               861                                 861
Repurchase of common stock          (117,516)       (546)     (2,295)                 (2,841)
Dividends paid ($0.26 per share)                              (4,137)                 (4,137)
                                 -------------------------------------------------------------
Balance at June 30, 2007          15,917,291     $76,394    $106,985       ($4,779)   $178,600
                                 =============================================================


</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>
                                TRICO BANCSHARES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands; unaudited)
                                                              For the three months ended June 30,
                                                                     2007               2006
                                                               ------------------------------------
<S>                                                                   <C>                <C>
Operating activities:
   Net income                                                      $13,199             $13,092
   Adjustments to reconcile net income to net cash provided
     by operating activities:
       Depreciation of property and equipment, and amortization      1,902               1,894
       Amortization of intangible assets                               245                 696
       Provision for loan losses                                       982               1,054
       Amortization of investment securities premium, net              380                 468
       Originations of loans for resale                            (35,677)             (37,364)
       Proceeds from sale of loans originated for resale            35,853              37,616
       Gain on sale of loans                                          (545)               (611)
       Change in value of mortgage servicing rights                     85                 138
       Gain on sale of investments                                       -                 (12)
       Loss on sale of fixed assets                                      5                  23
       Increase in cash value of life insurance                       (810)               (803)
       Stock option expense                                            376                 289
       Stock option tax benefits                                      (861)               (192)
       Change in:
         Interest receivable                                           443                (200)
         Interest payable                                             (934)              1,233
         Other assets and liabilities, net                           1,070              (3,190)
                                                               ------------------------------------
            Net cash provided by operating activities               15,713              14,131
                                                               ------------------------------------
   Investing activities:
   Proceeds from maturities of securities available-for-sale        21,644              25,997
   Proceeds from sale of securities available-for-sale                   -               9,780
   Purchases of securities available-for-sale                            -                (896)
   Purchases of Federal Home Loan Bank stock                          (223)               (501)
   Loan originations and principal collections, net                  1,167             (71,360)
   Proceeds from sale of premises and equipment                         11                   2
   Purchases of premises and equipment                              (1,704)             (1,951)
                                                               ------------------------------------
   Net cash used by investing activities                            20,895             (38,929)
                                                               ------------------------------------
   Financing activities:
   Net (decrease) increase in deposits                             (88,270)             17,643
   Net increase (decrease) in Federal funds purchased               42,500                (100)
   Payments of principal on long-term other borrowings                 (34)                (29)
   Net change in short-term other borrowings                         5,015               2,610
   Stock option tax benefits                                           861                 192
   Repurchase of common stock                                         (470)                  -
   Dividends paid                                                   (4,137)             (3,789)
   Exercise of stock options                                           264                 521
                                                               ------------------------------------
         Net cash (used) provided by financing activities          (44,271)             17,048
                                                               ------------------------------------
   Net change in cash and cash equivalents                          (7,663)             (7,750)
                                                               ------------------------------------
   Cash and cash equivalents and beginning of period               103,014              92,939
                                                               ------------------------------------
   Cash and cash equivalents at end of period                      $95,351             $85,189
                                                               ====================================
   Supplemental disclosure of noncash activities:
   Loans transferred to other real estate owned                       $187                   -
   Unrealized loss on securities available for sale                  ($446)            ($3,113)
   Value of shares tendered in lieu of cash paid to
     exercise stock options and to pay related tax withholding      $2,371              $1,109
   Supplemental disclosure of cash flow activity:
   Cash paid for interest expense                                  $20,045             $13,815
   Cash paid for income taxes                                       $8,300             $10,700

</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

                                       5
<PAGE>


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: General Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and  pursuant  to  the  rules  and  regulations  of  the
Securities and Exchange  Commission.  The results of operations  reflect interim
adjustments,  all of which are of a normal  recurring  nature and which,  in the
opinion of management,  are necessary for a fair presentation of the results for
the  interim  periods  presented.   The  interim  results  are  not  necessarily
indicative of the results expected for the full year. These unaudited  condensed
consolidated financial statements should be read in conjunction with the audited
consolidated  financial  statements  and  accompanying  notes  as well as  other
information  included in the  Company's  Annual Report on Form 10-K for the year
ended December 31, 2006.

Principles of Consolidation
The consolidated  financial  statements include the accounts of the Company, and
its  wholly-owned  subsidiary,  Tri Counties Bank (the "Bank").  All significant
intercompany accounts and transactions have been eliminated in consolidation.

Nature of Operations
The Company  operates 32 branch  offices and 23 in-store  branch  offices in the
California  counties of Butte,  Contra Costa, Del Norte,  Fresno,  Glenn,  Kern,
Lake, Lassen, Madera,  Mendocino,  Merced, Nevada, Placer,  Sacramento,  Shasta,
Siskiyou,  Stanislaus,  Sutter,  Tehama,  Tulare,  Yolo and Yuba.  The Company's
operating policy since its inception has emphasized retail banking.  Most of the
Company's customers are retail customers and small to medium-sized businesses.

Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  Management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting  period.  On an on-going basis,  the Company  evaluates its
estimates,  including  those  related to the adequacy of the  allowance for loan
losses,  investments,  intangible assets,  income taxes and  contingencies.  The
Company  bases its  estimates  on  historical  experience  and on various  other
assumptions  that are believed to be  reasonable  under the  circumstances,  the
results of which form the basis for making  judgments  about the carrying values
of assets and  liabilities  that are not readily  apparent  from other  sources.
Actual results may differ from these estimates  under  different  assumptions or
conditions.  The  allowance  for loan  losses,  goodwill  and  other  intangible
assessments,  income taxes, and the valuation of mortgage  servicing rights, are
the only accounting estimates that materially affect the Company's  consolidated
financial statements.

Significant Group Concentration of Credit Risk
The Company grants agribusiness,  commercial, consumer, and residential loans to
customers  located  throughout the northern San Joaquin  Valley,  the Sacramento
Valley  and  northern  mountain  regions  of  California.   The  Company  has  a
diversified  loan  portfolio  within  the  business  segments  located  in  this
geographical area.

Cash and Cash Equivalents
For  purposes  of the  consolidated  statements  of cash  flows,  cash  and cash
equivalents include cash on hand, amounts due from banks and federal funds sold.

Investment Securities
The Company  classifies its debt and marketable  equity  securities  into one of
three  categories:  trading,  available-for-sale  or  held-to-maturity.  Trading
securities  are bought and held  principally  for the  purpose of selling in the
near term.  Held-to-maturity  securities are those  securities which the Company
has the  ability and intent to hold until  maturity.  All other  securities  not
included in trading or  held-to-maturity  are classified as  available-for-sale.
During the six months ended June 30, 2007, and throughout  2006, the Company did
not have any securities classified as either held-to-maturity or trading.

                                       6
<PAGE>

Available-for-sale  securities are recorded at fair value.  Unrealized gains and
losses,  net of the related tax effect,  on  available-for-sale  securities  are
reported as a separate  component  of other  accumulated  comprehensive  loss in
shareholders' equity until realized.

Premiums and  discounts  are  amortized or accreted over the life of the related
investment  security  as an  adjustment  to yield using the  effective  interest
method.  Dividend and interest income are recognized when earned. Realized gains
and losses for  securities  are included in earnings  and are derived  using the
specific  identification  method for  determining  the cost of securities  sold.
Unrealized  losses  due to  fluctuations  in fair  value of  securities  held to
maturity  or  available  for sale are  recognized  through  earnings  when it is
determined that an other than temporary decline in value has occurred.

Federal Home Loan Bank Stock
The Bank is a member of the Federal Home Loan Bank of San Francisco ("FHLB"),
and as a condition of membership, it is required to purchase stock. The amount
of FHLB stock required to be purchased is based on the borrowing capacity
desired by the Bank. While technically these are considered equity securities,
there is no market for the FHLB stock. Therefore, the shares are considered as
restricted investment securities. Such investment is carried at cost.

Loans Held for Sale
Loans originated and intended for sale in the secondary market are carried at
the lower of aggregate cost or fair value, as determined by aggregate
outstanding commitments from investors of current investor yield requirements.
Net unrealized losses are recognized through a valuation allowance by charges to
income. At June 30, 2007 and 2006, and December 31, 2006, the Company's balance
of loans held for sale was immaterial.

Mortgage  loans held for sale are  generally  sold with the  mortgage  servicing
rights  retained by the Company.  The carrying  value of mortgage  loans sold is
reduced by the cost allocated to the associated mortgage servicing rights. Gains
or losses on sales of  mortgage  loans are  recognized  based on the  difference
between the selling price and the carrying  value of the related  mortgage loans
sold.

Loans
Loans are reported at the principal amount  outstanding,  net of unearned income
and the allowance for loan losses.  Loan  origination  and  commitment  fees and
certain  direct  loan  origination  costs are  deferred,  and the net  amount is
amortized as an adjustment of the related  loan's yield over the estimated  life
of the loan.  Loans on which the accrual of interest has been  discontinued  are
designated  as  nonaccrual  loans.  Accrual of  interest  on loans is  generally
discontinued  either  when  reasonable  doubt  exists  as to  the  full,  timely
collection  of interest or principal or when a loan becomes  contractually  past
due by 90 days or more with respect to interest or principal.  When loans are 90
days past due, but in Management's  judgment are well secured and in the process
of  collection,  they may be  classified  as  accrual.  When a loan is placed on
nonaccrual  status,  all  interest  previously  accrued  but  not  collected  is
reversed.  Income on such loans is then  recognized only to the extent that cash
is received and where the future  collection of principal is probable.  Interest
accruals are resumed on such loans only when they are brought fully current with
respect to interest and principal and when, in the judgment of  Management,  the
loans are estimated to be fully  collectible  as to both principal and interest.
All impaired loans are classified as nonaccrual loans.

Reserve for Unfunded Commitments
The reserve for unfunded  commitments  is  established  through a provision  for
losses - unfunded  commitments charged to noninterest  expense.  The reserve for
unfunded  commitments is an amount that Management  believes will be adequate to
absorb  probable  losses  inherent in  existing  commitments,  including  unused
portions of  revolving  lines of credits  and other  loans,  standby  letters of
credits,  and unused  deposit  account  overdraft  privilege.  The  reserve  for
unfunded  commitments is based on evaluations of the  collectibility,  and prior
loss experience of unfunded commitments. The evaluations take into consideration
such  factors as changes in the nature and size of the loan  portfolio,  overall
loan portfolio quality, loan concentrations,  specific problem loans and related
unfunded  commitments,  and  current  economic  conditions  that may  affect the
borrower's or depositor's ability to pay.

                                       7
<PAGE>

Allowance for Loan Losses
The allowance for loan losses is established through a provision for loan losses
charged to expense. Loans and deposit-related overdrafts are charged against the
allowance for loan losses when Management  believes that the  collectibility  of
the  principal  is unlikely  or, with  respect to  consumer  installment  loans,
according to an  established  delinquency  schedule.  The allowance is an amount
that Management  believes will be adequate to absorb probable losses inherent in
existing  loans  and  leases,   based  on  evaluations  of  the  collectibility,
impairment and prior loss experience of loans and leases.  The evaluations  take
into  consideration  such  factors  as  changes  in the  nature  and size of the
portfolio,  overall portfolio  quality,  loan  concentrations,  specific problem
loans, and current economic conditions that may affect the borrower's ability to
pay. The Company defines a loan as impaired when it is probable the Company will
be unable to collect all amounts due according to the  contractual  terms of the
loan  agreement.  Impaired  loans are  measured  based on the  present  value of
expected future cash flows discounted at the loan's original  effective interest
rate. As a practical  expedient,  impairment may be measured based on the loan's
observable  market  price or the fair  value  of the  collateral  if the loan is
collateral  dependent.  When the measure of the  impaired  loan is less than the
recorded  investment in the loan, the impairment is recorded through a valuation
allowance.

Credit  risk is inherent in the  business of lending.  As a result,  the Company
maintains  an  allowance  for loan  losses  to  absorb  losses  inherent  in the
Company's  loan  portfolio.  This is  maintained  through  periodic  charges  to
earnings.  These  charges are shown in the  Consolidated  Income  Statements  as
provision for loan losses. All specifically identifiable and quantifiable losses
are  immediately  charged off against the allowance.  However,  for a variety of
reasons,  not all losses are immediately known to the Company and, of those that
are known,  the full extent of the loss may not be quantifiable at that point in
time.  The balance of the Company's  allowance for loan losses is meant to be an
estimate of these unknown but probable  losses  inherent in the  portfolio.  For
purposes of this discussion, "loans" shall include all loans and lease contracts
that are part of the Company's portfolio.

The Company  formally  assesses  the  adequacy of the  allowance  on a quarterly
basis.  Determination  of the  adequacy is based on ongoing  assessments  of the
probable  risk in the  outstanding  loan  portfolio,  and to a lesser extent the
Company's loan commitments. These assessments include the periodic re-grading of
credits based on changes in their individual  credit  characteristics  including
delinquency,  seasoning,  recent financial performance of the borrower, economic
factors, changes in the interest rate environment,  growth of the portfolio as a
whole or by segment, and other factors as warranted.  Loans are initially graded
when  originated.  They are  re-graded as they are renewed,  when there is a new
loan to the same borrower,  when identified facts demonstrate heightened risk of
nonpayment,  or if they become  delinquent.  Re-grading of larger  problem loans
occur at least quarterly.  Confirmation of the quality of the grading process is
obtained by  independent  credit reviews  conducted by consultants  specifically
hired for this purpose and by various bank regulatory agencies.

The Company's method for assessing the appropriateness of the allowance for loan
losses and the reserve for unfunded commitments includes specific allowances for
identified problem loans and leases as determined by SFAS 114, formula allowance
factors for pools of credits, and allowances for changing  environmental factors
(e.g., interest rates, growth, economic conditions, etc.). Allowance factors for
loan  pools are based on the  previous 5 years  historical  loss  experience  by
product type.  Allowances  for specific  loans are based on SFAS 114 analysis of
individual   credits.   Allowances  for  changing   environmental   factors  are
Management's  best estimate of the probable impact these changes have had on the
loan  portfolio as a whole.  This process is explained in detail in the notes to
the Company's audited consolidated  financial statements in its Annual Report on
Form 10-K for the year ended December 31, 2006.

Based on the current conditions of the loan portfolio,  Management believes that
the  allowance for loan losses and the reserve for unfunded  commitments,  which
collectively  stand at  $19,039,000  at June 30,  2007,  are  adequate to absorb
probable losses  inherent in the Company's loan  portfolio.  No assurance can be
given, however, that adverse economic conditions or other circumstances will not
result in increased losses in the portfolio.

                                       8
<PAGE>

The  following  tables  summarize the activity in the allowance for loan losses,
reserve for unfunded  commitments,  and allowance for losses (which is comprised
of the allowance for loan losses and the reserve for unfunded  commitments)  for
the periods indicated (dollars in thousands):

<TABLE>
<CAPTION>

                                             Three months ended             Six months ended
                                                  June 30,                      June 30,
                                           ------------------------------------------------------
                                              2007          2006           2007           2006
                                           ------------------------------------------------------
<S>                                            <C>           <C>            <C>           <C>
     Allowance for loan losses:
     Balance at beginning of period         $16,895       $16,644         $16,914       $16,226
     Provision for loan losses                  500           554             982         1,054
     Loans charged off                         (751)         (564)         (1,490)         (921)
     Recoveries of previously
       charged-off loans                        355           259             593           534
                                           ------------------------------------------------------
       Net charge-offs                         (396)         (305)           (897)         (387)
                                           ------------------------------------------------------
     Balance at end of period               $16,999       $16,893         $16,999       $16,893
                                           ======================================================

     Reserve for unfunded commitments:
     Balance at beginning of period          $1,966        $1,813          $1,849        $1,813
     Provision for losses -
       Unfunded commitments                      74            36             191            36
                                           ------------------------------------------------------
     Balance at end of period                $2,040        $1,849          $2,040        $1,849
                                           ======================================================

     Balance at end of period:
     Allowance for loan losses                                            $16,999       $16,893
     Reserve for unfunded commitments                                       2,040         1,849
                                                                          -----------------------
     Allowance for losses                                                 $19,039       $18,742
                                                                          =======================

     As a percentage of total loans:
     Allowance for loan losses                                              1.13%          1.16%
     Reserve for unfunded commitments                                       0.13%          0.13%
                                                                          -----------------------
     Allowance for losses                                                   1.26%          1.29%
                                                                          =======================
</TABLE>

Mortgage Servicing Rights
Mortgage  servicing  rights (MSRs)  represent  the  Company's  right to a future
stream of cash flows based upon the  contractual  servicing fee associated  with
servicing mortgage loans. Our MSRs arise from residential mortgage loans that we
originate  and sell,  but retain the right to  service  the loans.  For sales of
residential  mortgage  loans, a portion of the cost of  originating  the loan is
allocated to the  servicing  right based on relative fair values of the loan and
the servicing  right.  The net gain from the retention of the servicing right is
included in gain on sale of loans in  noninterest  income when the loan is sold.
Fair  value  is  based  on  market  prices  for  comparable  mortgage  servicing
contracts, when available, or alternatively,  is based on a valuation model that
calculates  the present  value of estimated  future net  servicing  income.  The
valuation model incorporates  assumptions that market  participants would use in
estimating  future  net  servicing  income,  such as the  cost to  service,  the
discount rate, the custodial earnings rate, an inflation rate, ancillary income,
prepayment  speeds and  default  rates and  losses.  MSRs are  included in other
assets. Servicing fees are recorded in noninterest income when earned.

Effective with the Company's early adoption of SFAS 156, beginning as of January
1, 2006 MSRs are carried at fair value,  with changes in fair value  reported in
noninterest  income  in the  period  in which the  change  occurs.  On or before
December  31, 2005,  MSRs were carried at the lower of amortized  cost or market
value.  The  cumulative  effect  related  to the  adoption  of  this  change  in
accounting from lower of amortized cost or market value to fair value on January
1, 2006 was immaterial.

                                       9
<PAGE>

The determination of fair value of our MSRs requires management judgment because
they are not actively traded.  The determination of fair value for MSRs requires
valuation  processes  which combine the use of  discounted  cash flow models and
extensive  analysis  of current  market  data to arrive at an  estimate  of fair
value. The cash flow and prepayment assumptions used in our discounted cash flow
model are based on empirical data drawn from the  historical  performance of our
MSRs,   which  we  believe  are  consistent  with  assumptions  used  by  market
participants  valuing similar MSRs, and from data obtained on the performance of
similar MSRs. The key assumptions used in the valuation of MSRs include mortgage
prepayment  speeds and the discount  rate.  These  variables  can, and generally
will, change from quarter to quarter as market conditions and projected interest
rates change.  The key risks inherent with MSRs are prepayment speed and changes
in interest rates.

The following tables summarize the activity in, and the main assumptions we used
to  determine  the fair  value of  mortgage  servicing  rights  for the  periods
indicated (dollars in thousands):

                                           Six months ended June 30,
                                           -------------------------
                                               2007         2006
                                           -------------------------
Mortgage servicing rights:
Balance at beginning of period               $3,912        $3,638
Additions                                       369           359
Change in fair value                            (85)         (138)
                                           -------------------------
Balance at end of period                     $4,196        $3,859
                                           =========================
Servicing fees received                        $491          $474
Balance of loans serviced at:
     Beginning of period                   $389,636      $373,163
     End of period                         $400,600      $382,625
Weighted-average prepayment speed (CPR)        11.5%         11.5%
Discount rate                                  10.0%         10.0%


Off-Balance Sheet Credit Related Financial Instruments
In the ordinary course of business,  the Company has entered into commitments to
extend credit, including commitments under credit card arrangements,  commercial
letters of credit, and standby letters of credit. Such financial instruments are
recorded when they are funded.

Premises and Equipment
Land is carried at cost. Buildings and equipment, including those acquired under
capital  lease,   are  stated  at  cost  less   accumulated   depreciation   and
amortization.  Depreciation  and  amortization  expenses are computed  using the
straight-line  method over the estimated  useful lives of the related  assets or
lease terms.  Asset lives range from 3-10 years for  furniture and equipment and
15-40 years for land improvements and buildings.

Foreclosed Assets
Assets acquired  through,  or in lieu of, loan foreclosure are held for sale and
are initially recorded at fair value at the date of foreclosure,  establishing a
new cost basis.  Subsequent to  foreclosure,  management  periodically  performs
valuations  and the assets are carried at the lower of  carrying  amount or fair
value less cost to sell. Revenue and expenses from operations and changes in the
valuation allowance are included in other noninterest expense.

Goodwill and Other Intangible Assets
Goodwill  represents the excess of costs over fair value of assets of businesses
acquired.  Goodwill and other intangible  assets acquired in a purchase business
combination and determined to have an indefinite  useful life are not amortized,
but instead  tested for  impairment at least  annually.  Intangible  assets with
estimable  useful lives are amortized  over their  respective  estimated  useful
lives to their estimated residual values, and reviewed for impairment.

                                       10
<PAGE>

The  Company has  identifiable  intangible  assets  consisting  of core  deposit
premiums and minimum  pension  liability.  Core deposit  premiums are  amortized
using an  accelerated  method  over a period  of ten  years.  Intangible  assets
related to minimum pension  liability are adjusted annually based upon actuarial
estimates.

The following table summarizes the Company's goodwill  intangible as of June 30,
2007 and December 31, 2006.

                            December 31,                                June 30,
   (Dollars in Thousands)      2006       Additions     Reductions       2007
                            ----------------------------------------------------
   Goodwill                   $15,519         -              -          $15,519
                            ====================================================

The following table summarizes the Company's core deposit intangibles as of June
30, 2007 and December 31, 2006.

                            December 31,                                June 30,
   (Dollars in Thousands)      2006      Additions     Reductions         2007
                            ----------------------------------------------------
   Core deposit intangibles   $13,643          -          ($10,278)      $3,365
   Accumulated amortization   (11,977)     $10,278            (245)       1,944)
                            ----------------------------------------------------
   Core deposit intangibles,   $1,666      $10,278        ($10,523)      $1,421
     net                    ====================================================

Core deposit  intangibles are amortized over their expected  useful lives.  Such
lives are  periodically  reassessed  to  determine  if any  amortization  period
adjustments are indicated.

The following table summarizes the Company's  estimated core deposit  intangible
amortization for each of the five succeeding years:

                                       Estimated Core Deposit
                                       Intangible Amortization
                Years Ended            (Dollars in thousands)
                -----------           -----------------------
                   2007                         $490
                   2008                         $523
                   2009                         $328
                   2010                         $260
                   2011                          $65
                Thereafter                         -

Impairment of Long-Lived Assets and Goodwill
Long-lived  assets,  such as premises and equipment,  and purchased  intangibles
subject to amortization,  are reviewed for impairment whenever events or changes
in  circumstances  indicate  that the  carrying  amount  of an asset  may not be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison of the carrying amount of an asset to estimated  undiscounted  future
cash flows expected to be generated by the asset.  If the carrying  amount of an
asset  exceeds  its  estimated  future  cash  flows,  an  impairment  charge  is
recognized  by the amount by which the carrying  amount of the asset exceeds the
fair value of the asset. Assets to be disposed of would be separately  presented
in the balance  sheet and reported at the lower of the  carrying  amount or fair
value  less  costs  to sell,  and are no  longer  depreciated.  The  assets  and
liabilities of a disposed  group  classified as held for sale would be presented
separately in the appropriate asset and liability sections of the balance sheet.

On December 31 of each year,  goodwill is tested for  impairment,  and is tested
for impairment  more  frequently if events and  circumstances  indicate that the
asset might be impaired. An impairment loss is recognized to the extent that the
carrying amount exceeds the asset's fair value.  This  determination  is made at
the  reporting  unit  level  and  consists  of two  steps.  First,  the  Company
determines  the fair value of a reporting  unit and  compares it to its carrying
amount.  Second,  if the  carrying  amount of a reporting  unit exceeds its fair
value, an impairment loss is recognized for any excess of the carrying amount of
the reporting unit's goodwill over the implied fair value of that goodwill.  The
implied fair value of goodwill is determined by allocating the fair value of the
reporting unit in a manner similar to a purchase price allocation.  The residual
fair value after this allocation is the implied fair value of the reporting unit
goodwill.

                                       11
<PAGE>

Income Taxes
The  Company's  accounting  for income taxes is based on an asset and  liability
approach.  The Company  recognizes the amount of taxes payable or refundable for
the current  year,  and deferred tax assets and  liabilities  for the future tax
consequences  that have  been  recognized  in its  financial  statements  or tax
returns.  The  measurement  of  tax  assets  and  liabilities  is  based  on the
provisions of enacted tax laws.

Stock-Based Compensation
On  January  1, 2006 the  Company  adopted  Statement  of  Financial  Accounting
Standards No. 123 (revised  2004),  Share-Based  Payment (SFAS 123R),  using the
modified-prospective   transition   method.   Under  this   transition   method,
compensation  cost recognized during the six months ended June 30, 2007 and June
30, 2006 include: (a) compensation cost for all share-based awards granted prior
to, but not yet vested as of, January 1, 2007 and January 1, 2006, respectively,
based on the  grant-date  fair value and related  service  period  estimates  in
accordance with the original  provisions of SFAS 123 and (b)  compensation  cost
for all share-based  awards granted subsequent to January 1, 2007 and January 1,
2006,  respectively,  based on the  grant-date  fair value and  related  service
periods estimated in accordance with the provisions of SFAS 123R.  Historically,
stock options are the only type of share-based award granted by the Company.

Prior to the adoption of SFAS 123R, the Company used the intrinsic  value method
to account for its stock  option plans (in  accordance  with the  provisions  of
Accounting  Principles Board Opinion No. 25).  Intrinsic value is the difference
between share fair market value and option  exercise  price.  Under this method,
compensation  expense was recognized for awards of options to purchase shares of
common stock to employees under compensatory plans only if the fair market value
of the stock at the option grant date (or other  measurement date, if later) was
greater  than the amount the  employee was required to pay to acquire the stock.
Statement of Financial  Accounting Standards No. 123, Accounting for Stock-Based
Compensation  (SFAS 123),  permitted  companies to continue  using the intrinsic
value  method or to adopt a fair value based  method to account for stock option
plans.  The fair value based method would have resulted in the  recognition,  as
expense over the vesting period, of the fair value of all stock-based  awards on
the date of grant.

SFAS 123R  clarifies  and  expands the  guidance  in SFAS 123 in several  areas,
including  measuring fair value and attributing  compensation  cost to reporting
periods.  SFAS 123R  includes a  requirement  to: (a)  estimate  forfeitures  of
share-based awards at the date of grant, (b) expense  share-based awards granted
to  retirement  eligible  employees  and those  employees  with  non-substantive
non-compete  agreements   immediately,   (c)  attribute  compensation  costs  of
share-based award grants to the stated future vesting period,  and (d) recognize
compensation cost of all share-based awards based upon the grant-date fair value
(including pre-2006 options).

The following table shows the number, weighted-average exercise price, intrinsic
value, and weighted average remaining  contractual life, of options exercisable,
options not yet exercisable, and total options outstanding as of June 30, 2007:

<TABLE>
<CAPTION>

                                                      Currently    Currently Not      Total
(dollars in thousands except exercise price)         Exercisable     Exercisable   Outstanding
<S>                                                      <C>             <C>           <C>
Number of options                                    1,165,577         385,354      1,550,931
Weighted average exercise price                         $12.01          $20.35         $14.08
Intrinsic value                                    $12,785,274      $1,015,201    $13,800,475
Weighted average remaining contractual term (yrs.)        5.22            8.69           5.91

</TABLE>

The options for 371,494 shares that are not currently exercisable as of June 30,
2007 are  expected  to vest,  on a  weighted-average  basis,  over the next 2.96
years, and the Company is expected to recognize $2,175,000 of compensation costs
related to these options as they vest.

                                       12
<PAGE>


Earnings Per Share
Basic  earnings per share  represents  income  available to common  shareholders
divided by the  weighted-average  number of common shares outstanding during the
period.  Diluted earnings per share reflects additional common shares that would
have been outstanding if dilutive  potential  common shares had been issued,  as
well as any  adjustments  to income  that would  result from  assumed  issuance.
Potential  common  shares that may be issued by the Company  relate  solely from
outstanding  stock options,  and are determined using the treasury stock method.
In applying  the treasury  method,  the Company uses the entire tax benefit that
would result from the assumed issuance.

Earnings per share have been computed based on the following:

<TABLE>
<CAPTION>

                                                        Three Months         Six Months
                                                       Ended June 30,      Ended June 30,
(in thousands)                                         2007      2006      2007    2006
                                                    ------------------    ------------------
<S>                                                   <C>         <C>        <C>       <C>
Net Income                                          $6,754     $6,557     $13,199   $13,092
Average number of common shares outstanding         15,916     15,799      15,898    15,768
Effect of dilutive stock options                       547        590         542       616
                                                    ------------------    ------------------
Average number of common shares outstanding
   used to calculate diluted earnings per share     16,463     16,389      16,440    16,384
                                                    ==================    ==================
</TABLE>

There  were  87,000  and 0 options  excluded  from the  computation  of  diluted
earnings  per share for the three  month  periods  ended June 30, 2006 and 2005,
respectively, because the effect of these options was antidilutive.

Comprehensive Income
Accounting principles generally require that recognized revenue, expenses, gains
and losses be  included in net income.  Although  certain  changes in assets and
liabilities,   such  as  unrealized  gains  and  losses  on   available-for-sale
securities,  are reported as a separate  component of the equity  section of the
balance  sheet,   such  items,   along  with  net  income,   are  components  of
comprehensive income.

The components of other comprehensive  income (loss) and related tax effects are
as follows:

<TABLE>
<CAPTION>
                                             Three months ended June 30,     Six Months Ended June 30,
                                             ---------------------------     -------------------------
                                                 2007          2006             2007           2006
                                             ---------------------------     -------------------------
<S>                                              <C>           <C>              <C>             <C>
(in thousands)
Unrealized holding gains (losses) on
   available-for-sale securities              ($1,366)        ($516)           ($446)       ($3,113)
Tax effect                                        575           217              188          1,309
                                             ---------------------------      ------------------------
Unrealized holding gains (losses) on
   available-for-sale securities, net of tax    ($791)        ($299)           ($258)       ($1,804)
                                             ===========================      ========================
</TABLE>

The   components  of  accumulated   other   comprehensive   loss,   included  in
shareholders' equity, are as follows:

<TABLE>
<CAPTION>
                                                          June 30,      December 31,
                                                            2007            2006
                                                         --------------------------
<S>                                                          <C>             <C>
                                                                (in thousands)
Net unrealized losses on available-for-sale securities   ($4,301)         ($3,855)
Tax effect                                                 1,809            1,621
                                                         --------         ---------
    Unrealized holding losses on
    available-for-sale securities, net of tax             (2,492)          (2,234)
                                                         --------         ---------
Minimum pension liability                                 (3,946)          (3,946)
Tax effect                                                 1,659            1,659
                                                         --------         ---------
   Minimum pension liability, net of tax                  (2,287)          (2,287)
                                                         --------         ---------
Accumulated other comprehensive loss                     ($4,779)         ($4,521)
                                                         ========         =========
</TABLE>

                                       13
<PAGE>

Retirement Plans
The  Company  has  supplemental  retirement  plans  covering  directors  and key
executives.  These  plans  are  non-qualified  defined  benefit  plans  and  are
unsecured and unfunded.  The Company has purchased insurance on the lives of the
participants  and  intends to use the cash  values of these  policies to pay the
retirement obligations.

The following table sets forth the net periodic  benefit cost recognized for the
plans:

<TABLE>
<CAPTION>


                                                                Three Months         Six Months
                                                               Ended June 30,      Ended June 30,
(in thousands)                                                2007       2006       2007     2006
                                                              ----       ----       ----     ----
<S>                                                            <C>        <C>        <C>      <C>
Net pension cost included the following components:
Service cost-benefits earned during the period                $150       $139       $300     $278
Interest cost on projected benefit obligation                  146        132        292      164
Amortization of net obligation at transition                     -          1          -        1
Amortization of prior service cost                              45         50         90      100
Recognized net actuarial loss                                   28         34         56       68
                                                             ------------------------------------
Net periodic pension cost                                     $369       $356       $738     $711
                                                              ===================================
</TABLE>

During the six months ended June 30, 2007 and 2006, the Company  contributed and
paid out as benefits $284,000 and $286,000,  respectively, to participants under
the plans. For the year ending December 31, 2007, the Company  currently expects
to contribute and pay out as benefits $528,000 to participants under the plans.

Recent Accounting Pronouncements
In February  2006,  the FASB  issued  FASB  Statement  of  Financial  Accounting
Standards  No. 155,  Accounting  for Certain  Hybrid  Financial  Instruments  an
amendment of FASB  Statements  No. 133 and 140 (SFAS 155).  SFAS 155 amends SFAS
133, Accounting for Derivative  Instruments and Hedging Activities and SFAS 140,
Accounting for Transfers and Servicing of Financial  Assets and  Extinguishments
of  Liabilities.  SFAS 155 (i) permits fair value  remeasurement  for any hybrid
financial  instrument that contains an embedded  derivative that otherwise would
require   bifurcation,   (ii)   clarifies   which   interest-only   strips   and
principal-only  strips are not subject to the  requirements  of SFAS 133,  (iii)
establishes a requirement to evaluate interests in securitized  financial assets
to  identify  interests  that are  freestanding  derivatives  or that are hybrid
financial instruments that contain an embedded derivative requiring bifurcation,
(iv) clarifies that  concentrations  of credit risk in the form of subordination
are  not  embedded  derivatives,  and  (v)  amends  SFAS  140 to  eliminate  the
prohibition  on a qualifying  special  purpose  entity from holding a derivative
financial  instrument that pertains to a beneficial  interest other than another
derivative financial instrument. The adoption of SFAS 155 on January 1, 2007 had
no impact the Company's consolidated financial statements.

In  September  2006,  the FASB issued FASB  Statement  of  Financial  Accounting
Standards No. 157,  Fair Value  Measurements  (SFAS 157).  SFAS 157 defines fair
value,  establishes a framework for measuring  fair value in generally  accepted
accounting  principles,  and expands  disclosures about fair value measurements.
SFAS 157 is effective  for the Company on January 1, 2008 and is not expected to
have a significant impact on the Company's consolidated financial statements.

In  September  2006,  the FASB issued FASB  Statement  of  Financial  Accounting
Standards No. 158,  Employers'  Accounting for Defined Benefit Pension and Other
Postretirement Plans, an amendment of FASB Statements No. 87, 88 106, and 132(R)
(SFAS  158).  SFAS 158  requires  an employer to  recognize  the  overfunded  or
underfunded  status of  defined  benefit  postretirement  plans as an asset or a
liability in its statement of financial position.  The funded status is measured
as the difference  between plan assets at fair value and the benefit  obligation
(the projected benefit  obligation for pension plans or the accumulated  benefit
obligation for other postretirement benefit plans). An employer is also required
to measure the funded status of a plan as of the date of its year-end  statement
of financial  position  with  changes in the funded  status  recognized  through
comprehensive  income. SFAS 158 also requires certain disclosures  regarding the
effects on net  periodic  benefit  cost for the next fiscal year that arise from
delayed recognition of gains or losses,  prior service costs or credits, and the
transition asset or obligation. The Company was required to recognize the funded
status of its defined benefit  post-retirement benefit plans in its consolidated
financial  statements  for the year ended  December  31,  2006.  The Company had
previously recognized the funded status of its supplemental retirement plans for
directors and key executives in prior  consolidated  financial  statements.  The
Company  has  no  other  defined  benefit  post-retirement  benefit  plans.  The
requirement to measure plan assets and benefit obligations as of the date of the
year-end  statement  of  financial  position  is  effective  for  the  Company's
consolidated  financial  statements  beginning  with the fiscal year ended after
December 15, 2008.  The Company  currently  uses December 31 as the  measurement
date for its defined benefit post-retirement benefit plans.

                                       14
<PAGE>

In February  2007,  the FASB  issued  FASB  Statement  of  Financial  Accounting
Standards  No. 159, The Fair Value  Option for  Financial  Assets and  Financial
Liabilities - Including an amendment to FASB Statement No. 115 (SFAS 159).  SFAS
159 permits entities to choose to measure many financial instruments and certain
other items at fair value.  The objective is to improve  financial  reporting by
providing  entities  with the  opportunity  to mitigate  volatility  in reported
earnings caused by measuring related assets and liabilities  differently without
having to apply complex hedge accounting  provisions.  SFAS 159 is effective for
the Company on January 1, 2008 and is not expected to have a significant  impact
on the Company's consolidated financial statements.

In June  2006,  the FASB  issued  FASB  Interpretation  No. 48,  Accounting  for
Uncertainty in Income Taxes, an  interpretation  of FASB Statement 109 (FIN 48).
FIN 48  prescribes a recognition  threshold and a measurement  attribute for the
financial  statement  recognition  and  measurement  of a tax position  taken or
expected  to be taken in a tax return.  Benefits  from tax  positions  should be
recognized in the financial statements only when it is more likely than not that
the tax position will be sustained upon  examination by the  appropriate  taxing
authority  that would have full  knowledge  of all relevant  information.  A tax
position that meets the  more-likely-than-not  recognition threshold is measured
at the largest  amount of benefit that is greater than fifty  percent  likely of
being realized upon ultimate settlement. Tax positions that previously failed to
meet the more-likely-than-not  recognition threshold should be recognized in the
first  subsequent  financial  reporting  period in which that  threshold is met.
Previously recognized tax positions that no longer meet the more-likely-than-not
recognition  threshold should be derecognized in the first subsequent  financial
reporting  period in which that threshold is no longer met. FIN 48 also provides
guidance on the  accounting  for and  disclosure of  unrecognized  tax benefits,
interest and penalties.  FIN 48 was effective for the Company on January 1, 2007
and did not have a significant  impact on the Company's  consolidated  financial
statements.

In September  2006,  the Emerging  Issues Task Force (EITF) of the FASB ratified
EITF Issue No. 06-4,  Accounting for Deferred  Compensation  and  Postretirement
Benefit Aspects of Endorsement Split-Dollar Life Insurance Agreements,  and EITF
Issue No. 06-5,  Accounting  for Purchases of Life  Insurance - Determining  the
Amount That Could Be Realized in  Accordance  with FASB  Technical  Bulletin No.
85-4,  Accounting  for Purchases of Life  Insurance.  EITF 06-4 provides that an
employer  should  recognize  a  liability  for  future  benefits  based  on  the
substantive  agreement with the employee.  The Issue should be applied to fiscal
years  beginning after December 15, 2007,  with earlier  application  permitted.
EITF 06-5  provides that in  determining  the amount  recognized as an asset,  a
policyholder  should consider the cash surrender value as well as any additional
amounts  included in the contractual  terms of the policy that will be paid upon
surrender.  The  amount  that  could be  realized  should be  calculated  at the
individual  policy  level and consider  any  probable  contractual  limitations,
including the exclusion of any  additional  amounts paid for the surrender of an
entire group of  policies.  The Issue is  effective  for fiscal years  beginning
after  December  15,  2007.  The Company has life  insurance  arrangements.  The
Company is  currently  evaluating  the impact of  adoption of these rules on the
Company's consolidated financial statements.

Reclassifications
Certain amounts previously  reported in the 2006 financial  statements have been
reclassified to conform to the 2007 presentation.  These  reclassifications  did
not affect previously reported net income or total shareholders' equity.

                                       15
<PAGE>
<TABLE>
<CAPTION>

                                TRICO BANCSHARES
                                Financial Summary
           (dollars in thousands, except per share amounts; unaudited)

                                                       Three months ended            Six months ended
                                                            June 30,                     June 30,
                                                ----------------------------------------------------------
                                                      2007            2006          2007             2006
                                                ----------------------------------------------------------
<S>                                                   <C>              <C>           <C>             <C>
Net Interest Income (FTE)                           $22,308         $21,358       $43,974        $42,826
Provision for loan losses                              (500)           (554)        (982)        (1,054)
Noninterest income                                    7,029           6,531        13,629         12,979
Noninterest expense                                 (17,443)        (16,276)      (34,403)       (32,698)
Provision for income taxes (FTE)                     (4,639)         (4,502)       (9,019)        (8,961)
                                                 ---------------------------------------------------------
Net income                                           $6,755          $6,557       $13,199       $13,092
                                                 =========================================================
Earnings per share:
    Basic                                             $0.42           $0.42         $0.83         $0.83
    Diluted                                           $0.41           $0.40         $0.80         $0.80
Per share:
    Dividends paid                                    $0.13           $0.12         $0.26         $0.24
    Book value at period end                         $11.22           $9.96
    Tangible book value at period end                $10.16           $8.75

Average common shares outstanding                    15,916           15,799      15,898          15,768
Average diluted shares outstanding                   16,463           16,389      16,440          16,384
Shares outstanding at period end                     15,917           15,855
At period end:
    Loans, net                                   $1,490,629       $1,439,115
    Total assets                                  1,887,027        1,871,156
    Total deposits                                1,510,879        1,514,440
    Other borrowings                                 44,892           33,971
    Junior subordinated debt                         41,238           41,238
    Shareholders' equity                           $178,600         $157,994
Financial Ratios:
During the period (annualized):
    Return on assets                                   1.44%            1.42%        1.41%         1.43%
    Return on equity                                  15.11%           16.68%       14.95%        16.80%
    Net interest margin(1)                             5.25%            5.10%        5.19%         5.15%
    Net loan charge-offs to average loans              0.10%            0.09%        0.12%         0.06%
    Efficiency ratio(1)                               59.46%           58.36%       59.72%        58.59%
At Period End:
    Equity to assets                                   9.46%            8.44%
    Total capital to risk-adjusted assets             11.76%           11.11%
    Allowance for losses to loans(2)                   1.26%            1.29%

</TABLE>

(1) Fully taxable equivalent (FTE).
(2) Allowance  for losses  includes  allowance  for loan losses and reserve for
    unfunded commitments.

                                       16
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations

As TriCo  Bancshares (the  "Company") has not commenced any business  operations
independent of Tri Counties Bank (the "Bank"), the following discussion pertains
primarily  to the  Bank.  Average  balances,  including  such  balances  used in
calculating  certain financial ratios, are generally  comprised of average daily
balances  for the  Company.  Within  Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations,  interest income and net interest
income are  generally  presented  on a fully  tax-equivalent  (FTE)  basis.  The
presentation  of  interest  income and net  interest  income on a FTE basis is a
common  practice within the banking  industry.  Interest income and net interest
income  are  shown on a  non-FTE  basis in the  Part I -  Financial  Information
section  of  this  Form  10-Q,  and a  reconciliation  of the  FTE  and  non-FTE
presentations is provided below in the discussion of net interest income.

Critical Accounting Policies and Estimates
The Company's  discussion and analysis of its financial condition and results of
operations  are  based  upon  the  Company's  unaudited  condensed  consolidated
financial  statements,  which have been prepared in accordance  with  accounting
principles  generally accepted in the United States of America.  The preparation
of these  financial  statements  requires  the  Company  to make  estimates  and
judgments that affect the reported amounts of assets, liabilities,  revenues and
expenses,  and related  disclosure of contingent  assets and liabilities.  On an
on-going basis, the Company evaluates its estimates,  including those related to
the  adequacy  of  the  allowance  for  loan  losses,   intangible  assets,  and
contingencies.  The Company bases its estimates on historical  experience and on
various  other  assumptions  that  are  believed  to  be  reasonable  under  the
circumstances,  the results of which form the basis for making  judgments  about
the carrying values of assets and liabilities that are not readily apparent from
other sources.  Actual results may differ from these  estimates  under different
assumptions or conditions.  (See caption  "Allowance for Loan Losses" for a more
detailed discussion).

Results of Operations
The  following   discussion  and  analysis  is  designed  to  provide  a  better
understanding  of the significant  changes and trends related to the Company and
the  Bank's  financial  condition,   operating  results,   asset  and  liability
management,  liquidity and capital  resources and should be read in  conjunction
with the Unaudited Condensed  Consolidated  Financial  Statements of the Company
and the Notes thereto.

Following is a summary of the components of fully taxable equivalent ("FTE") net
income for the periods indicated (dollars in thousands):

                                       Three months ended      Six months ended
                                            June 30,               June 30,
                                   ---------------------------------------------
                                       2007        2006       2007       2006
                                   ---------------------------------------------
Net Interest Income (FTE)           $22,308     $21,358     $43,974     $42,826
Provision for loan losses              (500)       (554)       (982)     (1,054)
Noninterest income                    7,029       6,531      13,629      12,979
Noninterest expense                 (17,443)    (16,276)    (34,403)    (32,698)
Provision for income taxes (FTE)     (4,639)     (4,502)     (9,019)     (8,961)
                                   ---------------------------------------------
Net income                           $6,755      $6,557     $13,199     $13,092
                                   =============================================

The Company had quarterly  earnings of  $6,755,000,  or $0.41 per diluted share,
for the three  months  ended  June 30,  2007.  These  results  represent  a 2.5%
increase from the $0.40 earnings per diluted share reported for the three months
ended June 30, 2006 on earnings of $6,557,000.  The  improvement in results from
the  year-ago   quarter  was  due  to  a  $950,000   (4.4%)  increase  in  fully
tax-equivalent net interest income to $22,308,000,  a $54,000 (9.7%) decrease in
the provision  for loan losses to $500,000,  and a $498,000  (7.6%)  increase in
noninterest  income to  $7,029,000.  These  contributing  factors were partially
offset by a $1,167,000 (7.2%) increase in noninterest expense to $17,443,000 for
the quarter ended June 30, 2007.

The Company  reported  earnings of $13,199,000,  or $0.80 per diluted share, for
the six months ended June 30, 2007.  These results  represent no change from the
$0.80 earnings per diluted share reported for the six months ended June 30, 2006
on earnings of  $13,092,000.  The flat  results  when  compared to the  year-ago
period was primarily due to a $1,148,000 (2.7%) increase in fully tax-equivalent
net interest income to  $43,974,000,  a $72,000 (6.8%) decrease in provision for
loan losses to $982,000, and a $650,000 (5.0%) increase in noninterest income to
$13,629,000.  These  contributing  factors were partially offset by a $1,705,000
(5.2%)  increase in noninterest  expense to $34,403,000 for the six months ended
June 30, 2006.

                                       17

<PAGE>

Net Interest  Income
Following is a summary of the components of net interest  income for the periods
indicated (dollars in thousands):

                                   Three months ended         Six months ended
                                        June 30,                  June 30,
                               -------------------------------------------------
                                    2007        2006           2007        2006
                               -------------------------------------------------
   Interest income                $31,986     $29,379       $62,647     $57,357
   Interest expense                (9,895)     (8,275)      (19,111)    (15,048)
   FTE adjustment                     217         254           438         517
                               -------------------------------------------------
      Net interest income (FTE)   $22,308     $21,358       $43,974     $42,826
                               =================================================
   Average interest-earning    $1,698,620  $1,676,705    $1,695,597  $1,661,741
      assets
   Net interest margin (FTE)        5.25%        5.10%         5.19%       5.15%

The  Company's  primary  source  of  revenue  is  net  interest  income,  or the
difference  between  interest  income on  interest-earning  assets and  interest
expense in interest-bearing liabilities.

Net interest  income (FTE) during the second quarter of 2007 increased  $950,000
(4.4%) from the same period in 2006 to $22,308,000. The increase in net interest
income (FTE) was due to a  $21,915,000  (1.3%)  increase in average  balances of
interest-earning  assets to $1,698,620,000  and a 0.15% increase in net interest
margin (FTE) to 5.25%.

Net  interest  income  (FTE)  during  the  first six  months  of 2007  increased
$1,148,000  (2.7%) from the same period in 2006 to $43,974,000.  The increase in
net interest  income (FTE) was due to a $33,856,000  (2.0%)  increase in average
balances of  interest-earning  assets to $1,695,597,000  and a 0.04% increase in
net interest margin (FTE) to 5.19%.


Interest and Fee Income
Interest  and  fee  income  (FTE)  for the  second  quarter  of  2007  increased
$2,570,000  (8.7%) from the second  quarter of 2006.  The  increase was due to a
$21,915,000 (1.3%) increase in average interest-earning assets to $1,698,620,000
and a 0.51%  increase in the yield on those average  interest-earning  assets to
7.58%.  The growth in  interest-earning  assets was due to a $79,178,000  (5.5%)
increase in average loan balances to $1,506,913,000 that was partially offset by
a decrease  of  $55,202,000  (22.4%)  in  average  balances  of  investments  to
$191,311,000.  The increase in the yield on average  interest-earning assets was
mainly  due to a 0.49%  increase  in yield on loans to 7.93% and a change in the
mix of earning  assets from  lower-earning  investments  towards  higher-earning
loans. The increase in loan yields from the year-ago period is mainly due to the
effect of a 2.50%  increase in the prime rate of lending  from March 31, 2005 to
June 30, 2006, and some modest increase in market yields for  longer-term  fixed
rate loans since June 30, 2006.

Interest and fee income  (FTE) for the six months ended June 30, 2007  increased
$5,211,000  (9.0%) from the same period of 2006. The increase was the net effect
of  a  $33,856,000  (2.0%)  increase  in  average   interest-earning  assets  to
$1,695,597,000   and  a  0.47%   increase   in  the   yield  on  those   average
interest-earning  assets to 7.44%. The growth in interest-earning assets was due
to a $92,346,000 (6.6%) increase in average loan balances to $1,498,484,000 that
was partially offset by a decrease of $57,266,000 (22.5%) in average balances of
investments   to   $196,774,000.   The   increase   in  the  yield  on   average
interest-earning  assets was mainly due to a 0.48% increase in yield on loans to
7.78% and a change in the mix of earning assets from  lower-earning  investments
towards  higher-earning  loans.  The  increase in loan yields from the  year-ago
period is mainly  due to the  effect of a 2.50%  increase  in the prime  rate of
lending from March 31, 2005 to June 30, 2006, and some modest increase in market
yields for longer term fixed rate loans since June 30, 2006.

                                       18
<PAGE>

Interest Expense
Interest  expense  increased  $1,620,000  (19.6%)  to  $9,895,000  in the second
quarter  of 2007  compared  to the  year-ago  quarter.  The  average  balance of
interest-bearing  liabilities  decreased $12,516,000 (0.9%) to $1,311,144,000 in
the second quarter compared to the year-ago quarter. The decrease in the average
balance of  interest-bearing  liabilities  was due  primarily  to  decreases  in
interest-bearing  demand deposits (down  $16,278,000 or 6.7%),  savings deposits
(down  $20,353,000  or 5.0%) and Federal funds  purchased  (down  $17,278,000 or
18.5%),  that  were  partially  offset  by an  increase  in  time  deposits  (up
$31,531,000 or 6.2%). The average rate paid on  interest-bearing  liabilities in
the  quarter  ended  June 30,  2007  increased  0.52% to 3.02%  compared  to the
year-ago  quarter as a result of increases in market  interest rates and changes
in the mix of interest-bearing liabilities towards higher paying time deposits.

Interest expense increased  $4,063,000 (27.0%) to $19,111,000 for the six months
ended June 30, 2007 compared to $15,048,000 in the year-ago period.  The average
balance  of  interest-bearing   liabilities   decreased   $1,014,000  (0.1%)  to
$1,303,179,000  for the six months ended June 30, 2007  compared to the year-ago
period. The decrease in the average balance of interest-bearing  liabilities was
due primarily to decreases in interest-bearing demand deposits (down $16,836,000
or  6.9%),  savings  deposits  (down  $35,338,000  or 8.5%)  and  Federal  funds
purchased (down $22,840,000 or 28.3%), that were partially offset by an increase
in  time  deposits  (up  $64,280,000  or  13.2%).   The  average  rate  paid  on
interest-bearing  liabilities  in the six  month  period  ended  June  30,  2007
increased  0.62%  to 2.93%  compared  to the  year-ago  quarter  as a result  of
increases in market  interest  rates and changes in the mix of  interest-bearing
liabilities towards higher paying time deposits.


Net Interest Margin (FTE)
The  following  table  summarizes  the  components of the Company's net interest
margin for the periods indicated:


                                 Three months ended             Six months ended
                                      June 30,                      June 30,
                                 -----------------------------------------------
                                    2007      2006             2007         2006
                                 -----------------------------------------------
Yield on interest-earning assets    7.58%     7.07%           7.44%        6.97%
Rate paid on interest-bearing
     Liabilities                    3.02%     2.50%           2.93%        2.31%
                                 -----------------------------------------------
     Net interest spread            4.56%     4.57%           4.51%        4.66%
Impact of all other net
     noninterest-bearing funds      0.69%     0.53%           0.68%        0.49%
                                 -----------------------------------------------
        Net interest margin         5.25%     5.10%           5.19%        5.15%
                                 ===============================================

Net interest  margin for the three months  ended June 30, 2007  increased  0.15%
compared to the three months ended June 30, 2006.  This increase in net interest
margin   was   mainly   due  to  an  0.16%   increase   in  the  impact  of  net
noninterest-bearing funds to 0.69% from 0.53% in the year-ago three month period
that was  partially  offset by a 0.01%  decrease in net  interest  spread as the
average yield on interest-earning  assets increased 0.51% while the average rate
paid on  interest-bearing  liabilities  increased  0.52% from the year-ago three
month period.

Net  interest  margin for the six months  ended June 30,  2007  increased  0.04%
compared to the six months  ended June 30, 2006.  This  increase in net interest
margin   was   mainly   due  to  a  0.19%   increase   in  the   impact  of  net
noninterest-bearing  funds to 0.68% from 0.49% in the year-ago six month period.
The increase in the impact of net noninterest-bearing funds was partially offset
by  a  0.15%   decrease  in  net  interest   spread  as  the  average  yield  on
interest-earning   assets  increased  0.47%  while  the  average  rate  paid  on
interest-bearing liabilities increased 0.62% from the year-ago six month period.

                                       19
<PAGE>

Summary of Average Balances, Yields/Rates and Interest Differential
The following tables present, for the periods indicated,  information  regarding
the Company's consolidated average assets, liabilities and shareholders' equity,
the  amounts  of  interest  income  from  average  interest-earning  assets  and
resulting  yields,  and the amount of interest expense paid on  interest-bearing
liabilities.  Average loan balances include nonperforming loans. Interest income
includes  proceeds  from  loans on  nonaccrual  loans  only to the  extent  cash
payments have been received and applied to interest income. Yields on securities
and  certain  loans have been  adjusted  upward to reflect  the effect of income
thereon  exempt from federal income  taxation at the current  statutory tax rate
(dollars in thousands).

<TABLE>
<CAPTION>

                                                          For the three months ended
                                       ----------------------------------------------------------------
                                               June 30, 2007                     June 30, 2006
                                       -----------------------------    -------------------------------
                                                   Interest    Rates               Interest    Rates
                                         Average   Income/    Earned     Average   Income/    Earned
                                         Balance   Expense     Paid      Balance   Expense     Paid
                                       -----------------------------    ------------------------------
<S>                                       <C>        <C>       <C>          <C>      <C>        <C>
Assets:
Loans                                  $1,506,913  $29,882    7.93%     $1,427,735 $26,555     7.44%
Investment securities - taxable           160,444    1,724    4.30%        212,158   2,348     4.43%
Investment securities - nontaxable         30,867      592    7.68%         34,355     699     8.13%
Federal funds sold                            396        5    5.05%          2,457      31     5.05%
                                       ----------------------------     ------------------------------
Total interest-earning assets           1,698,620   32,203    7.58%      1,676,705  29,633     7.07%
                                                    ------                          ------
Other assets                              172,640                          173,782
                                       ----------                       ----------
Total assets                           $1,871,260                       $1,850,487
                                       ==========                       ==========

Liabilities and shareholders' equity:
Interest-bearing demand deposits         $225,632     $114    0.20%       $241,910    $122     0.20%
Savings deposits                          382,835    1,480    1.55%        403,188     843     0.84%
Time deposits                             543,249    5,956    4.39%        511,718   4,956     3.87%
Federal funds purchased                    76,078    1,014    5.33%         93,356   1,169     5.01%
Other borrowings                           42,112      506    4.81%         32,250     396     4.91%
Junior subordinated debt                   41,238      825    8.00%         41,238     789     7.65%
                                      ----------------------------      ------------------------------
Total interest-bearing liabilities      1,311,144    9,895    3.02%      1,323,660   8,275     2.50%
                                                     -----                           -----
Noninterest-bearing deposits              349,017                          340,755

Other liabilities                          32,263                           28,840

Shareholders' equity                      178,836                          157,232
                                      -----------                       ----------
Total liabilities and shareholders'
    equity                             $1,871,260                       $1,850,487
                                      ===========                       ==========
Net interest spread(1)                                        4.56%                            4.57%
Net interest income and interest margin(2)         $22,308    5.25%                $21,358     5.10%
                                                   ================                ==================
</TABLE>

(1)  Net interest spread represents the average yield earned on interest-earning
     assets minus the average rate paid on interest-bearing liabilities.
(2)  Net  interest  margin is computed by  calculating  the  difference  between
     interest   income  and   expense,   divided  by  the  average   balance  of
     interest-earning assets.

                                       20
<PAGE>

<TABLE>
<CAPTION>

                                                           For the six months ended
                                       ---------------------------------------------------------------
                                               June 30, 2007                     June 30, 2006
                                       -----------------------------    ------------------------------
                                                   Interest    Rates               Interest    Rates
                                         Average   Income/    Earned     Average   Income/    Earned
                                         Balance   Expense     Paid      Balance   Expense     Paid
                                       -----------------------------    ------------------------------
<S>                                       <C>        <C>       <C>          <C>      <C>        <C>
Assets:
Loans                                  $1,498,484  $58,305    7.78%     $1,406,138 $51,624     7.34%
Investment securities - taxable           165,258    3,565    4.31%        219,161   4,788     4.37%
Investment securities - nontaxable         31,516    1,207    7.66%         34,879   1,424     8.17%
Federal funds sold                            339        8    4.72%          1,563      38     4.86%
                                       ----------------------------     -----------------------------
Total interest-earning assets           1,695,597   63,085    7.44%      1,661,741  57,874     6.97%
                                                    ------                          ------
Other assets                              172,757                          174,723
                                       ----------                       ----------
Total assets                           $1,868,354                       $1,836,464
                                       ==========                       ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits         $227,852     $229    0.20%       $244,688    $244     0.20%
Savings deposits                          382,359    2,657    1.39%        417,697   1,640     0.79%
Time deposits                             552,081   12,052    4.37%        487,801   8,979     3.68%
Federal funds purchased                    57,801    1,536    5.31%         80,641   1,919     4.76%
Other borrowings                           41,848      996    4.76%         32,128     744     4.63%
Junior subordinated debt                   41,238    1,641    7.96%         41,238   1,522     7.38%
                                        ---------------------------     -----------------------------
Total interest-bearing liabilities      1,303,179   19,111    2.93%      1,304,193  15,048     2.31%
                                                    ------                          ------
Noninterest-bearing deposits              355,311                          348,012
Other liabilities                          33,315                           28,438
Shareholders' equity                      176,549                          155,821
                                        ---------                        ---------
Total liabilities and shareholders'
    equity                             $1,868,354                       $1,836,464
                                       ==========                      ===========
Net interest spread(1)                                        4.51%                            4.66%
Net interest income and interest margin(2)         $43,974    5.19%                $42,826     5.15%
                                                   ================                =================
</TABLE>

(1)  Net interest spread represents the average yield earned on interest-earning
     assets minus the average rate paid on interest-bearing liabilities.
(2)  Net  interest  margin is computed by  calculating  the  difference  between
     interest   income  and   expense,   divided  by  the  average   balance  of
     interest-earning assets.

                                       21

<PAGE>

Summary of  Changes in  Interest  Income and  Expense  due to Changes in Average
Asset & Liability Balances and Yields Earned & Rates Paid

The following tables set forth a summary of the changes in interest income (FTE)
and  interest  expense  from  changes in average  asset and  liability  balances
(volume)  and  changes  in average  interest  rates for the  periods  indicated.
Changes  not  solely  attributable  to volume or rates  have been  allocated  in
proportion to the respective volume and rate components (dollars in thousands).

                                                Three months ended June 30, 2007
                                                   compared with three months
                                                       ended June 30, 2006
                                                --------------------------------
                                                 Volume        Rate       Total
                                                --------------------------------
Increase (decrease) in interest income:
Loans                                            $1,473      $1,854      $3,327
Investment securities                              (682)        (49)       (731)
Federal funds sold                                 (26)          -         (26)
                                                --------------------------------
   Total interest-earning assets                   765        1,805       2,570
                                                --------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits                    (8)           -          (8)
Savings deposits                                   (43)         680         637
Time deposits                                      305          695       1,000
Federal funds purchased                           (216)          61        (155)
Other borrowings                                   121          (11)        110
Junior subordinated debt                             -           36          36
                                                --------------------------------
   Total interest-bearing liabilities              159        1,461       1,620
                                                --------------------------------
Increase in Net Interest Income                   $606         $344        $950
                                                ================================


                                                Six months ended June 30, 2007
                                                    compared with six months
                                                       ended June 30, 2006
                                                --------------------------------
                                                Volume         Rate       Total
                                                --------------------------------
Increase (decrease) in interest income:
Loans                                            $3,389       $3,292     $6,681
Investment securities                            (1,400)         (40)    (1,440)
Federal funds sold                                  (30)           -        (30)
                                                --------------------------------
   Total interest-earning assets                  1,959        3,252      5,211
                                                --------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits                    (17)           2        (15)
Savings deposits                                   (140)       1,157      1,017
Time deposits                                     1,183        1,890      3,073
Federal funds purchased                            (544)         161       (383)
Other borrowings                                    225           27        252
Junior subordinated debt                              -          119        119
                                                --------------------------------
   Total interest-bearing liabilities               707        3,356      4,063
                                                --------------------------------
Increase in Net Interest Income                   $1,252       $(104)    $1,148
                                                ================================

                                       22
<PAGE>

Provision for Loan Losses
The Company  provided  $500,000  for loan  losses in the second  quarter of 2007
versus  $554,000  in the second  quarter of 2006.  During the second  quarter of
2007, the Company  recorded  $396,000 of net loan charge offs versus $305,000 of
net loan charge-offs in the year earlier quarter.

The Company  provided  $982,000 for loan losses during the six months ended June
30, 2007 versus $1,054,000 during the six months ended June 30, 2006. During the
six months  ended June 30,  2007,  the  Company  recorded  $897,000  of net loan
charge-offs  versus  $387,000  of  net  loan  charge-offs  in the  year  earlier
six-month period.

Noninterest Income
The following  table  summarizes the  components of  noninterest  income for the
periods indicated (dollars in thousands).

<TABLE>
<CAPTION>

                                                     Three months ended             Six months ended
                                                          June 30,                      June 30,
                                                   ---------------------------------------------------
                                                     2007          2006            2007          2006
                                                   ---------------------------------------------------
     <S>                                              <C>           <C>             <C>           <C>
     Service charges on deposit accounts           $3,858        $3,706          $7,417        $7,180
     ATM fees and interchange                       1,046           896           1,995         1,714
     Other service fees                               544           542           1,109         1,057
     Change in value of mortgage servicing rights     (73)        (188)            (85)         (138)
     Gain on sale of loans                            279           313             545           611
     Commissions on sale of
       nondeposit investment products                 550           524           1,050         1,082
     Increase in cash value of life insurance         405           403             810           803
     Gain on sale of investments                        -            12               -            12
     Other noninterest income                         420           323             788           658
                                                  ---------------------------------------------------
     Total noninterest income                      $7,029        $6,531         $13,629       $12,979
                                                  ===================================================
</TABLE>

Noninterest income for the second quarter of 2007 increased $498,000 (7.6%) from
the  year-ago  quarter.  The  increase in  noninterest  income from the year-ago
quarter  was mainly  due to a $152,000  (4.1%)  increase  in service  charges on
deposit  accounts to  $3,858,000,  a $150,000  (16.7%)  increase in ATM fees and
interchange  to  $1,046,000,  and a $115,000  improvement  in change in value of
mortgage servicing rights to $73,000. The increase in service charges on deposit
accounts was primarily due to growth in customer count. The increase in ATM fees
and  interchange  was due to growth in customer  count and  expansion of the ATM
network as part of new branch  openings.  The  improvement in change in value of
mortgage  servicing rights is primarily due to a slowdown in refinance  activity
which extends the estimated life of existing mortgages and enhances the value of
the related mortgage servicing rights.

Noninterest  income for the six months  ended June 30, 2007  increased  $650,000
(5.0%) to $13,629,000  from the same period in 2006. The increase in noninterest
income  from the  year-ago  six months  ended June 30,  2006 was mainly due to a
$237,000 (3.3%)  increase in service charges on deposit  accounts to $7,417,000,
and a $281,000 (16.4%)  increase in ATM fees and interchange to $1,995,000.  The
increase in service  charges on deposit  accounts was primarily due to growth in
customer  count.  The increase in ATM fees and  interchange was due to growth in
customer count and expansion of ATM network as part of new branch openings.

                                       23
<PAGE>

Noninterest Expense
The following  table  summarizes the  components of noninterest  expense for the
periods indicated (dollars in thousands).

<TABLE>
<CAPTION>

                                                 Three months ended             Six months ended
                                                      June 30,                      June 30,
                                               ----------------------------------------------------
                                                 2007          2006            2007          2006
                                               ----------------------------------------------------
     <S>                                        <C>           <C>             <C>           <C>
     Salaries & benefits                      $9,619        $8,618         $19,361       $17,774
     Occupancy                                 1,178         1,106           2,348         2,128
     Equipment                                 1,072         1,024           2,170         2,169
     Advertising and marketing                   600           533           1,004           973
     Professional fees                           462           510             809           890
     ATM network charges                         498           466             926           900
     Telecommunications                          419           415             828           785
     Data processing and software                499           394             918           806
     Intangible amortization                     122           350             245           696
     Courier service                             156           316             454           613
     Postage                                     203           249             424           493
     Operational losses                          125            85             185           129
     Assessments                                  84            80             165           160
     Other                                     2,406         2,130           4,566         4,182
                                            ----------------------------------------------------
     Total                                   $17,443       $16,276         $34,403       $32,698
                                            ======================================================

     Average full time equivalent staff          630           621             631           614
     Noninterest expense to revenue (FTE)      59.46%        58.36%         59.72%         58.59%

</TABLE>

Noninterest  expense for the second quarter of 2007 increased  $1,167,000 (7.2%)
compared to the second quarter of 2006.  Salaries and benefits expense increased
$1,001,000 (11.6%) to $9,619,000.  The increase in salaries and benefits expense
was mainly due to annual salary  increases,  and a 1.5% increase in average full
time  equivalent  staff made up  primarily  of new  employees  at the  Company's
recently  opened  branches.  Other  categories  of  noninterest  expense such as
equipment,  occupancy and ATM network  charges also  increased,  in part, due to
these newly opened branches. Intangible amortization decreased $228,000 (65%) to
$122,000  during  the  second  quarter  of 2007 as the core  deposit  intangible
related to the purchase of several  branches in 1997 became  fully  amortized in
the fourth quarter of 2006.

Noninterest expense for the six months ended June 30, 2007 increased  $1,705,000
(5.2%)  compared to the six months  ended June 30,  2006.  Salaries and benefits
expense increased $1,587,000 (8.9%) to $19,361,000. The increase in salaries and
benefits expense was mainly due to annual salary increases,  and a 2.8% increase
in average full time equivalent  staff made up primarily of new employees at the
Company's recently opened branches. Other categories of noninterest expense such
as equipment,  occupancy and ATM network charges also increased, in part, due to
these newly opened branches. Intangible amortization decreased $451,000 (65%) to
$245,000  during  the  six  months  ended  June  30,  2007 as the  core  deposit
intangible  related to the  purchase of several  branches  in 1997 became  fully
amortized in the fourth quarter of 2006.

Provision for Income Tax
The  effective  tax rate for the three  months ended June 30, 2007 was 39.6% and
reflects an increase  from 39.3% for the three months  ended June 30, 2006.  The
effective tax rate for the six months ended June 30, 2007 was 39.4% and reflects
an increase from 39.2% for the six months ended June 30, 2006. The provision for
income  taxes  for  all  periods  presented  is  primarily  attributable  to the
respective  level  of  earnings  and  the  incidence  of  allowable  deductions,
particularly from increase in cash value of life insurance, tax-exempt loans and
state and municipal securities.

                                       24
<PAGE>

Classified Assets
The  Company  closely  monitors  the  markets in which it  conducts  its lending
operations  and  continues  its strategy to control  exposure to loans with high
credit risk.  Asset reviews are performed  using grading  standards and criteria
similar to those employed by bank regulatory  agencies.  Assets receiving lesser
grades  fall  under  the  "classified  assets"  category,   which  includes  all
nonperforming  assets and potential problem loans, and receive an elevated level
of attention to ensure collection.

The following is a summary of classified assets on the dates indicated  (dollars
in thousands):

                                 At June 30, 2007          At December 31, 2006
                             -----------------------     -----------------------
                               Gross Guaranteed  Net      Gross Guaranteed   Net
                             ---------------------------------------------------
Classified loans             $22,314  $6,273  $16,041    $13,116  $6,514  $6,602
Other classified assets          187       -      187          -       -       -
                             ---------------------------------------------------
Total classified assets      $22,501  $6,273  $16,228    $13,116  $6,514  $6,602
                             ===================================================
Allowance for loan losses/classified loans      104.8%                    256.2%


Classified  assets,  net of  guarantees  of the U.S.  Government,  including its
agencies  and its  government-sponsored  agencies  at June 30,  2007,  increased
$9,626,000 (245.8%) to $16,228,000 from $6,602,000 at December 31, 2006.

Nonperforming Loans
Loans are reviewed on an  individual  basis for  reclassification  to nonaccrual
status when any one of the following  occurs:  the loan becomes 90 days past due
as to  interest  or  principal,  the full and timely  collection  of  additional
interest or principal becomes  uncertain,  the loan is classified as doubtful by
internal credit review or bank regulatory  agencies,  a portion of the principal
balance has been charged off, or the Company takes possession of the collateral.
Loans that are placed on nonaccrual even though the borrowers  continue to repay
the  loans as  scheduled  are  classified  as  "performing  nonaccrual"  and are
included  in  total  nonperforming  loans.  The  reclassification  of  loans  as
nonaccrual does not necessarily reflect Management's judgment as to whether they
are collectible.

Interest income is not accrued on loans where Management has determined that the
borrowers  will  be  unable  to  meet  contractual   principal  and/or  interest
obligations,  unless the loan is well secured and in the process of  collection.
When a loan is placed on nonaccrual,  any previously accrued but unpaid interest
is  reversed.  Income on such loans is then  recognized  only to the extent that
cash is received  and where the future  collection  of  principal  is  probable.
Interest  accruals  are resumed on such loans only when they are  brought  fully
current  with  respect to interest and  principal  and when,  in the judgment of
Management, the loans are estimated to be fully collectible as to both principal
and interest.

Interest income on nonaccrual loans, which would have been recognized during the
six  months,  ended  June 30,  2007,  if all such  loans  had  been  current  in
accordance  with their  original  terms,  totaled  $1,142,000.  Interest  income
actually recognized on these loans during the six months ended June 30, 2007 was
$794,000.

The  Company's  policy is to place loans 90 days or more past due on  nonaccrual
status.  In some instances  when a loan is 90 days past due Management  does not
place  it on  nonaccrual  status  because  the loan is well  secured  and in the
process of  collection.  A loan is considered to be in the process of collection
if, based on a probable  specific  event,  it is expected  that the loan will be
repaid or brought current. Generally, this collection period would not exceed 30
days. Loans where the collateral has been repossessed are classified as OREO or,
if the collateral is personal  property,  the loan is classified as other assets
on the Company's consolidated financial statements.

Management considers both the adequacy of the collateral and the other resources
of the  borrower  in  determining  the steps to be taken to  collect  nonaccrual
loans.   Alternatives  that  are  considered  are  foreclosure,   collecting  on
guarantees, restructuring the loan or collection lawsuits.

                                       25
<PAGE>

As shown in the following table, total nonperforming assets net of guarantees of
the  U.S.  Government,  including  its  agencies  and  its  government-sponsored
agencies, increased $8,848,000 (296%) to $13,360,000 during the first six months
of 2007. Nonperforming assets net of guarantees represent 0.71% of total assets.
All nonaccrual loans are considered to be impaired when determining the need for
a specific valuation allowance. The Company continues to make a concerted effort
to work problem and potential  problem loans to reduce risk of loss.

<TABLE>
<CAPTION>

 (dollars in thousands):
                                                   At June 30, 2007           At December 31, 2006
                                              -------------------------    -------------------------
                                                Gross Guaranteed  Net       Gross Guaranteed   Net
                                              ------------------------------------------------------
<S>                                             <C>       <C>      <C>       <C>      <C>      <C>

Performing nonaccrual loans                   $18,708   $6,135  $12,573    $10,255  $6,372   $3,883
Nonperforming, nonaccrual loans                   600        -      600        561       -      561
                                              ------------------------------------------------------
     Total nonaccrual loans                    19,308    6,135   13,173     10,816   6,372    4,444
Loans 90 days past due and still accruing           -        -        -         68       -       68
                                              ------------------------------------------------------
Total nonperforming loans                      19,308    6,135   13,173     10,884   6,372    4,512
Other real estate owned                           187        -      187          -       -        -
                                              ------------------------------------------------------
Total nonperforming assets                    $19,495   $6,135  $13,360    $10,884  $6,372   $4,512
                                              ======================================================
Nonperforming loans to total loans                               0.87%                        0.30%
Nonperforming assets to total assets                             0.71%                        0.24%
Allowance for loan losses to nonperforming loans                  129%                         375%

</TABLE>

Capital Resources
The  current  and  projected  capital  position of the Company and the impact of
capital plans and long-term strategies are reviewed regularly by Management.

On March 11, 2004,  the Board of  Directors  approved an increase in the maximum
number of shares to be repurchased  under the Company's  stock  repurchase  plan
originally announced on July 31, 2003 from 250,000 to 500,000 effective on April
9, 2004,  solely to conform with the two-for-one  stock split effective on April
9, 2004. The 250,000 shares originally authorized for repurchase under this plan
represented  approximately 3.2% of the Company's  approximately 7,852,000 common
shares  outstanding as of July 31, 2003. This plan has no stated expiration date
for the  repurchases,  which  may occur  from time to time as market  conditions
allow.  As of June 30, 2007,  the Company had  repurchased  394,371 shares under
this plan as adjusted for the 2-for-1 stock split paid on April 30, 2004,  which
left 105,629 shares available for repurchase under the plan.

The  Company's  primary  capital  resource is  shareholders'  equity,  which was
$178,600,000 at June 30, 2007. This amount  represents an increase of $9,164,000
from December 31, 2006, the net result of comprehensive income for the period of
$12,941,000, the issuance of common shares via the exercise of stock options for
proceeds of $1,964,000, the tax effects of stock option exercises of $8,612,000,
and the effect of stock  option  vesting of  $376,000,  partially  offset by the
retirement  of common stock with an aggregate  value of  $2,841,000  tendered by
employees,  in lieu of cash, to exercise  stock  options,  and dividends paid of
$4,137,000.  The Company's ratio of equity to total assets was 9.46%, 8.44%, and
8.82% as of June 30, 2007, June 30, 2006, and December 31, 2006, respectively.

The following  summarizes the ratios of capital to risk-adjusted  assets for the
periods indicated:

                                   At June 30,         At            Minimum
                               ---------------     December 31,    Regulatory
                               2007       2006        2006         Requirement
                               -----------------------------------------------
     Tier I Capital            10.76%     10.08%     10.44%         4.00%
     Total Capital             11.76%     11.11%     11.44%         8.00%
     Leverage ratio            11.11%      9.99%     10.49%         4.00%

The  information  presented  under  "Liquidity"  at  Item 3 of  this  Report  is
incorporated herein by reference.

                                       26
<PAGE>

Off-Balance Sheet Items
The Bank has certain  ongoing  commitments  under  operating and capital leases.
These commitments do not significantly  impact operating results. As of June 30,
2007 commitments to extend credit and commitments  related to the Bank's deposit
overdraft  privilege  product were the Bank's only  financial  instruments  with
off-balance  sheet  risk.  The  Bank has not  entered  into  any  contracts  for
financial  derivative   instruments  such  as  futures,   swaps,  options,  etc.
Commitments to extend credit were $685,589,000 and $623,133,000 at June 30, 2006
and December  31, 2006,  respectively,  and  represent  45.5% of the total loans
outstanding  at June 30, 2007 versus  41.3% at December  31,  2006.  Commitments
related to the Bank's deposit overdraft  privilege  product totaled  $36,528,000
and $33,290,000 at June 30, 2007 and December 31, 2006, respectively.

                                       27
<PAGE>

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Asset and Liability Management
The goal for managing the assets and  liabilities  of the Company is to maximize
shareholder  value and earnings while  maintaining a high quality  balance sheet
without exposing the Company to undue interest rate risk. The Board of Directors
has overall  responsibility  for the  Company's  interest  rate risk  management
policies.  The Company has an Asset and Liability  Management  Committee  (ALCO)
which establishes and monitors guidelines to control the sensitivity of earnings
to changes in interest rates.

Activities involved in asset/liability management include but are not limited to
lending,  accepting and placing  deposits,  investing in securities  and issuing
debt.   Interest  rate  risk  is  the  primary  market  risk   associated   with
asset/liability  management.  Sensitivity  of earnings to interest  rate changes
arises when yields on assets change in a different time period or in a different
amount from that of interest  costs on  liabilities.  To mitigate  interest rate
risk, the structure of the balance sheet is managed with the goal that movements
of interest  rates on assets and  liabilities  are  correlated and contribute to
earnings  even in  periods  of  volatile  interest  rates.  The  asset/liability
management  policy  sets  limits on the  acceptable  amount of  variance  in net
interest margin,  net income and market value of equity under changing  interest
environments.  Market value of equity is the net present value of estimated cash
flows from the Company's  assets,  liabilities and off-balance  sheet items. The
Company uses simulation  models to forecast net interest margin,  net income and
market value of equity.

Simulation of net interest  margin,  net income and market value of equity under
various  interest  rate  scenarios is the primary tool used to measure  interest
rate risk. Using computer-modeling  techniques,  the Company is able to estimate
the potential  impact of changing  interest  rates on net interest  margin,  net
income and market value of equity.  A balance sheet  forecast is prepared  using
inputs  of  actual  loan,   securities  and  interest-bearing   liability  (i.e.
deposits/borrowings) positions as the beginning base.

In the simulation of net interest  margin and net income under various  interest
rate scenarios,  the forecast balance sheet is processed  against seven interest
rate  scenarios.  These  seven  interest  rate  scenarios  include  a flat  rate
scenario,  which assumes  interest  rates are  unchanged in the future,  and six
additional rate ramp scenarios ranging from +300 to -300 basis points around the
flat scenario in 100 basis point  increments.  These ramp scenarios  assume that
interest  rates  increase  or  decrease  evenly  (in a  "ramp"  fashion)  over a
twelve-month period and remain at the new levels beyond twelve months.

In the  simulation  of  market  value of  equity  under  various  interest  rate
scenarios,  the forecast balance sheet is processed  against seven interest rate
scenarios.  These seven interest rate  scenarios  include the flat rate scenario
described  above,  and six additional rate shock scenarios  ranging from +300 to
-300 basis points around the flat scenario in 100 basis point increments.  These
rate shock scenarios assume that interest rates increase or decrease immediately
(in a "shock" fashion) and remain at the new level in the future.

At June 30, 2007, the results of the simulations noted above indicate that given
a "flat"  balance sheet  scenario,  and if deposit rates track general  interest
rate changes by  approximately  50%,  the  Company's  balance  sheet is slightly
liability sensitive.  "Liability  sensitive" implies that earnings decrease when
interest rates rise, and increase when interest rates decrease. The magnitude of
all the simulation  results noted above is within the Bank's policy  guidelines.
The asset liability  management policy limits aggregate market risk, as measured
in this  fashion,  to an  acceptable  level  within the  context of  risk-return
trade-offs.

The simulation  results noted above do not incorporate  any management  actions,
which might  moderate the negative  consequences  of interest  rate  deviations.
Therefore,  they do not reflect likely actual results, but serve as conservative
estimates of interest rate risk.

At June 30, 2007 and 2006,  the Company  had no  material  derivative  financial
instruments.

There have been no material  changes from the information  regarding market risk
disclosed  under  "Market Risk  Management"  at Item 7 of the  Company's  Annual
Report on Form 10-K for the year ended December 31, 2006.

                                       28
<PAGE>

Liquidity
The  Company's  principal  source of asset  liquidity is federal  funds sold and
marketable  investment  securities available for sale. At June 30, 2007, federal
funds sold and investment  securities  available for sale totaled  $177,606,000,
representing  a decrease of  $21,549,000  (10.8%) from December 31, 2006,  and a
decrease of  $44,748,000  (20.1%) from June 30, 2006.  In addition,  the Company
generates  additional  liquidity  from its operating  activities.  The Company's
profitability  during  the first six  months of 2007  generated  cash flows from
operations of $16,574,000 compared to $14,323,000 during the first six months of
2006. Additional cash flows may be provided by financing  activities,  primarily
the  acceptance of deposits and borrowings  from banks.  Maturities and sales of
investment  securities produced cash inflows of $21,664,000 and $0 respectively,
during the six months ended June 30, 2007  compared to  $25,997,000  and $9,780,
respectively,  for the six  months  ended June 30,  2006.  During the six months
ended  June 30,  2007,  the  Company  invested  $0 in  securities  and  received
$1,167,000 from a net decline in loan balances,  compared to investing  $896,000
and  $71,360,000  in securities  and net loan growth,  respectively,  during the
first  six  months  of 2006.  These  changes  in  investment  and loan  balances
contributed to net cash provided by investing  activities of $20,895,000  during
the six months  ended June 30,  2007,  compared  to net cash used for  investing
activities of $38,929,000  during the six months ended June 30, 2006.  Financing
activities  used net cash of  $45,132,000  during the six months  ended June 30,
2007,  compared to net cash  provided by  financing  activities  of  $16,856,000
during  the six months  ended June 30,  2006.  A  decrease  in deposit  balances
accounted for an $88,270,000  use of financing funds during the six months ended
June 30, 2007 compared to a $17,643,000 source of financing funds during the six
months ended June 30, 2006 from an increase in deposit  balances.  Federal funds
borrowed  increased  $42,500,000  in the first six months of 2007  compared to a
$100,000  decrease in the first six months of 2006.  Short-term other borrowings
increased  $5,015,000 and  $2,610,000  during the six months ended June 30, 2007
and 2006,  respectively.  Dividends paid used  $4,137,000 and $3,789,000 of cash
during the six months ended June 30, 2007 and 2006, respectively.  Repurchase of
common  stock used  $470,000 and $0 of cash during the six months ended June 30,
2007 and 2006,  respectively.  Also,  the  Company's  liquidity  is dependent on
dividends received from the Bank. Dividends from the Bank are subject to certain
regulatory restrictions.

Item 4.  Controls and Procedures
The Chief Executive  Officer,  Richard Smith,  and the Chief Financial  Officer,
Thomas Reddish, evaluated the effectiveness of the Company's disclosure controls
and  procedures  as  of  June  30,  2007  ("Evaluation  Date").  Based  on  that
evaluation,  they  concluded  that  as of  the  Evaluation  Date  the  Company's
disclosure  controls and procedures are effective to allow timely  communication
to them of  information  relating  to the  Company  and the Bank  required to be
disclosed in its filings with the  Securities  and Exchange  Commission  ("SEC")
under  the  Securities  Exchange  Act of  1934,  as  amended  ("Exchange  Act").
Disclosure  controls and  procedures are Company  controls and other  procedures
that are  designed to ensure that  information  required to be  disclosed by the
Company  in the  reports  that it files  under  the  Exchange  Act is  recorded,
processed,  summarized  and reported  within the time  periods  specified in the
SEC's rules and forms.

No changes in the Company's  internal control over financial  reporting occurred
during  the first six  months of 2007  that  have  materially  affected,  or are
reasonably  likely to materially  affect,  the Company's  internal  control over
financial reporting.

                                       29
<PAGE>

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

Due to the nature of the banking business, the Bank is at times party to various
legal actions;  all such actions are of a routine nature and arise in the normal
course of business of the Bank.

Item 1A - Risk Factors

There have been no material changes to the risk factors previously  disclosed in
Item 1A to Part I of our Annual Report on Form 10-K for the year ended  December
31, 2006.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows information concerning the common stock repurchased by
the Company  during the second  quarter of 2007 pursuant to the Company's  stock
repurchase plan  originally  announced on July 31, 2003, as amended on March 11,
2004, to conform with the Company's  two-for-one  stock split effective on April
9, 2004,  which is discussed in more detail under  "Capital  Resources"  in this
report:

<TABLE>
<CAPTION>

Period          (a) Total number    (b) Average price   (c) Total number of    (d) Maximum number
                of Shares purchased  paid per share     shares purchased as    of shares that may yet
                                                        part of publicly       be purchased under the
                                                        announced plans or     plans or programs
                                                        programs
-------------------------------------------------------------------------------------------------------
<S>                        <C>            <C>               <C>                      <C>
Apr. 1-30, 2007             -              -                 -                    105,629
May 1-31, 2007              -              -                 -                    105,629
Jun. 1-30, 2007             -              -                 -                    105,629
-------------------------------------------------------------------------------------------------------
Total                       -              -                 -                    105,629

</TABLE>

During the quarter ended June 30, 2007, Employees tendered no shares of the
Company's common stock in lieu of cash to exercise options.

Item 4 - Submission of Matters to a Vote of Security Holders

(a) The Company's Annual Meeting of Shareholders was held on May 22, 2007.

(b) and (c) The following ten directors were elected at the meeting:

                                Votes For   Votes Against/Withheld   Abstentions
     William J. Casey           12,565,089         379,342                -
     Donald J. Amaral           12,450,025         609,470                -
     Craig S. Compton           12,580,188         349,144                -
     John S.A. Hasbrook         12,458,979         591,562                -
     Michael W. Koehnen         12,623,979         261,562                -
     Donald E. Murphy           12,580,391         348,738                -
     Steve G. Nettleton         12,623,829         261,862                -
     Richard P. Smith           12,580,401         348,718                -
     Carroll R. Taresh          12,623,879         261,762                -
     Alex A. Vereschagin, Jr.   12,570,407         368,706                -

     The shareholders  ratified the appointment of Moss Adams LLP as independent
     public  accountants of the Company for 2007.  12,694,412  shares were voted
     for the  ratification,  42,429 shares were voted against and 148,700 shares
     abstained.

                                       30

<PAGE>

Item 6 - Exhibits

3.1*      Restated Articles of Incorporation dated May 9, 2003, filed as Exhibit
          3.1 to TriCo's  Quarterly  Report on Form 10-Q for the  quarter  ended
          March 31, 2003.

3.2*      Bylaws  of TriCo  Bancshares,  as  amended,  filed as  Exhibit  3.2 to
          TriCo's Form S-4  Registration  Statement  dated January 16, 2003 (No.
          333-102546).

4*        Certificate  of  Determination  of  Preferences  of  Series  AA Junior
          Participating   Preferred  Stock  filed  as  Exhibit  3.3  to  TriCo's
          Quarterly  Report on Form 10-Q for the  quarter  ended  September  30,
          2001.

10.1*     Rights  Agreement  dated  June 25,  2001,  between  TriCo  and  Mellon
          Investor  Services  LLC filed as Exhibit 1 to  TriCo's  Form 8-A dated
          July 25, 2001.

10.2*     Form of Change of  Control  Agreement  dated as of  August  23,  2005,
          between  TriCo,  Tri  Counties  Bank and each of Bruce  Belton,  Craig
          Carney,  Gary Coelho, W.R. Hagstrom,  Andrew Mastorakis,  Rick Miller,
          Richard O'Sullivan, Thomas Reddish, and Ray Rios filed as Exhibit 10.2
          to  TriCo's  Quarterly  Report  on Form  10-Q  for the  quarter  ended
          September 30, 2005.

10.3*     TriCo's  1995  Incentive  Stock  Option  Plan filed as Exhibit  4.1 to
          TriCo's  Form S-8  Registration  Statement  dated August 23, 1995 (No.
          33-62063).

10.4*     TriCo's  2001 Stock  Option Plan as amended  filed as Exhibit  10.7 to
          TriCo's  Annual  Report on Form 10-K for the year ended  December  31,
          2004.

10.5*     Amended  Employment  Agreement  between  TriCo and Richard Smith dated
          March 20,  2007  filed as Exhibit  10.1 to TriCo's  Report on Form 8-K
          dated March 20, 2007.

10.6*     Tri Counties Bank Executive Deferred Compensation Plan dated September
          1, 1987, as restated April 1, 1992, and amended and restated effective
          as of  January 1, 2004  filed as  Exhibit  10.9 to  TriCo's  Quarterly
          Report on Form 10-Q for the quarter ended September 30, 2005.

10.7*     Tri Counties Bank Deferred  Compensation Plan for Directors  effective
          January 1, 2005 filed as Exhibit 10.10 to TriCo's  Quarterly Report on
          Form 10-Q for the quarter ended September 30, 2005.

10.8*     2005 Tri Counties Bank Deferred  Compensation  Plan for Executives and
          Directors  effective January 1, 2005 filed as Exhibit 10.11 to TriCo's
          Quarterly  Report on Form 10-Q for the  quarter  ended  September  30,
          2005.

10.9*     Tri Counties Bank  Supplemental  Retirement  Plan for Directors  dated
          September  1, 1987,  as  restated  January 1, 2001,  and  amended  and
          restated  January 1, 2004 filed as Exhibit 10.12 to TriCo's  Quarterly
          Report on Form 10-Q for the quarter ended June 30, 2004.

10.10*    2004  TriCo  Bancshares  Supplemental  Retirement  Plan for  Directors
          effective  January 1, 2004 filed as Exhibit 10.13 to TriCo's Quarterly
          Report on Form 10-Q for the quarter ended June 30, 2004.

                                       31
<PAGE>

10.11*    Tri Counties Bank  Supplemental  Executive  Retirement  Plan effective
          September 1, 1987,  as amended and  restated  January 1, 2004 filed as
          Exhibit 10.14 to TriCo's Quarterly Report on Form 10-Q for the quarter
          ended June 30, 2004.

10.12*    2004 TriCo Bancshares Supplemental Executive Retirement Plan effective
          January 1, 2004 filed as Exhibit 10.15 to TriCo's  Quarterly Report on
          Form 10-Q for the quarter ended June 30, 2004.

10.13*    Form of Joint Beneficiary  Agreement  effective March 31, 2003 between
          Tri Counties Bank and each of Craig Carney,  Richard  Miller,  Richard
          O'Sullivan,  Thomas Reddish, and Richard Smith, filed as Exhibit 10.14
          to  TriCo's  Quarterly  Report  on Form  10-Q  for the  quarter  ended
          September 30, 2003.

10.14*   Form of Joint Beneficiary Agreement effective March 31, 2003 between
         Tri Counties Bank and each of Don Amaral, William Casey, Craig Compton,
         John Hasbrook, Michael Koehnen, Donald Murphy, Carroll Taresh, and Alex
         Vereshagin, filed as Exhibit 10.15 to TriCo's Quarterly Report on Form
         10-Q for the quarter ended September 30, 2003.

10.15*    Form of Tri-Counties Bank Executive Long Term Care Agreement effective
          June 10, 2003  between  Tri  Counties  Bank and each of Craig  Carney,
          Richard  Miller,  Richard  O'Sullivan  and  Thomas  Reddish,  filed as
          Exhibit 10.16 to TriCo's Quarterly Report on Form 10-Q for the quarter
          ended September 30, 2003.

10.16*    Form of Tri-Counties Bank Director Long Term Care Agreement  effective
          June 10,  2003  between  Tri  Counties  Bank  and each of Don  Amaral,
          William Casey, Craig Compton, John Hasbrook,  Michael Koehnen,  Donald
          Murphy,  Carroll Taresh, and Alex Verischagin,  filed as Exhibit 10.17
          to  TriCo's  Quarterly  Report  on Form  10-Q  for the  quarter  ended
          September 30, 2003.

10.17*    Form  of  Indemnification   Agreement  between  TriCo   Bancshares/Tri
          Counties  Bank  and  each of the  directors  of  TriCo  Bancshares/Tri
          Counties  Bank  effective  on the date  that  each  director  is first
          elected,  filed as Exhibit 10.18 to TriCo's Annual Report on Form 10-K
          for the year ended December 31, 2003.

10.18*    Form  of  Indemnification   Agreement  between  TriCo   Bancshares/Tri
          Counties Bank and each of W.R. Hagstrom, Craig Carney, Richard Miller,
          Raymond Rios, Richard  O'Sullivan,  Thomas Reddish,  and Richard Smith
          filed as Exhibit  10.21 to TriCo's  Quarterly  Report on Form 10-Q for
          the quarter ended June 30, 2004.

21.1      Tri Counties  Bank, a California  banking  corporation,  TriCo Capital
          Trust I, a Delaware  business  trust,  and TriCo  Capital  Trust II, a
          Delaware business trust, are the only subsidiaries of Registrant

31.1     Rule 13a-14(a)/15d-14(a) Certification of CEO
31.2     Rule 13a-14(a)/15d-14(a) Certification of CFO
32.1     Section 1350 Certification of CEO
32.2     Section 1350 Certification of CFO

       * Previously filed and incorporated by reference.

                                       32

<PAGE>

SIGNATURES
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.

                                      TRICO BANCSHARES
                                      (Registrant)

Date:  August 7, 2007                 /s/ Thomas J. Reddish
                                     -----------------------------------
                                     Thomas J. Reddish
                                     Executive Vice President and
                                     Chief Financial Officer

                                       33
<PAGE>


EXHIBITS

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification of CEO

I, Richard P. Smith, certify that;

    1.    I  have  reviewed  this  quarterly   report  on  Form  10-Q  of  TriCo
          Bancshares;
    2.    Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;
    3.    Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;
    4.    The registrant's  other  certifying  officer and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange Act Rules  13a-15(e)  and  15d-15(e)  and internal
          control  over  financial  reporting  (as defined in Exchange Act Rules
          13a-15(f) and 15d-15(f)) for the registrant and we have:
          a.   Designed such disclosure controls and procedures,  or caused such
               disclosure  controls  and  procedures  to be  designed  under our
               supervision,  to ensure that material information relating to the
               registrant,  including its consolidated subsidiary, is made known
               to us by others within those  entities,  particularly  during the
               period in which this quarterly report is being prepared;
          b.   Designed  such  internal  control over  financial  reporting,  or
               caused such  internal  control  over  financial  reporting  to be
               designed under our supervision,  to provide reasonable  assurance
               regarding  the   reliability  of  financial   reporting  and  the
               preparation  of financial  statements  for  external  purposes in
               accordance with generally accepted accounting principles;
          c.   Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and procedures  and presented in this  quarterly  report
               our  conclusions   about  the  effectiveness  of  the  disclosure
               controls and  procedures,  as of the end of the period covered by
               this quarterly report based on such evaluation; and
          d.   Disclosed in this report any change in the registrant's  internal
               control  over  financial   reporting  that  occurred  during  the
               registrant's  most  recent  fiscal  quarter  that has  materially
               affected,  or is  reasonably  likely to  materially  affect,  the
               registrant's internal control over financial reporting;
    5.    The registrant's other certifying officer and I have disclosed,  based
          on our most recent  evaluation  of  internal  control  over  financial
          reporting, to the registrant's auditors and the audit committee of the
          registrant's board of directors;
          a.   All  significant  deficiencies  and  material  weaknesses  in the
               design or operation of internal control over financial  reporting
               which are reasonably  likely to adversely affect the registrant's
               ability to record, process,  summarize and report financial data;
               and
          b.   Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal control over financial reporting.


Date: August 7, 2007                    /s/ Richard P. Smith
                                        ----------------------------------------
                                        Richard P. Smith
                                        President and Chief Executive Officer

                                       34

<PAGE>

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification of CFO

I, Thomas J. Reddish, certify that;

    1.    I  have  reviewed  this  quarterly   report  on  Form  10-Q  of  TriCo
          Bancshares;
    2.    Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;
    3.    Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;
    4.    The registrant's  other  certifying  officer and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange Act Rules  13a-15(e)  and  15d-15(e)) and internal
          control  over  financial  reporting  (as defined in Exchange Act Rules
          13a-15(f) and 15d-15(f)) for the registrant and we have:
          a.   Designed such disclosure controls and procedures,  or caused such
               disclosure  controls  and  procedures  to be  designed  under our
               supervision,  to ensure that material information relating to the
               registrant,  including its consolidated subsidiary, is made known
               to us by others within those  entities,  particularly  during the
               period in which this quarterly report is being prepared;
          b.   Designed  such  internal  control over  financial  reporting,  or
               caused such  internal  control  over  financial  reporting  to be
               designed under our supervision,  to provide reasonable  assurance
               regarding  the   reliability  of  financial   reporting  and  the
               preparation  of financial  statements  for  external  purposes in
               accordance with generally accepted accounting principles;
          c.   Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and procedures  and presented in this  quarterly  report
               our  conclusions   about  the  effectiveness  of  the  disclosure
               controls and  procedures,  as of the end of the period covered by
               this quarterly report based on such evaluation; and
          d.   Disclosed in this report any change in the registrant's  internal
               control  over  financial   reporting  that  occurred  during  the
               registrant's  most  recent  fiscal  quarter  that has  materially
               affected,  or is  reasonably  likely to  materially  affect,  the
               registrant's internal control over financial reporting;
    5.    The registrant's other certifying officer and I have disclosed,  based
          on our most recent  evaluation  of  internal  control  over  financial
          reporting, to the registrant's auditors and the audit committee of the
          registrant's board of directors;
          a.   All  significant  deficiencies  and  material  weaknesses  in the
               design or operation of internal control over financial  reporting
               which are reasonably  likely to adversely affect the registrant's
               ability to record, process,  summarize and report financial data;
               and
          b.   Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal control over financial reporting.


Date: August7, 2007                    /s/ Thomas J. Reddish
                                        ----------------------------------------
                                        Thomas J. Reddish
                                        Executive Vice President and
                                        Chief Financial Officer

                                       35

<PAGE>

Exhibit 32.1

Section 1350 Certification of CEO

In connection with the Quarterly  Report of TriCo  Bancshares (the "Company") on
Form 10-Q for the period  ended June 30, 2007 as filed with the  Securities  and
Exchange  Commission  on the date hereof (the  "Report"),  I,  Richard P. Smith,
President and Chief Executive  Officer of the Company,  certify,  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that:

     (1)  The Report fully  complies with the  requirements  of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.

          /s/ Richard P. Smith
          -------------------------------------
          Richard P. Smith
          President and Chief Executive Officer

A signed  original of this  written  statement  required by Section 906 has been
provided  to TriCo  Bancshares  and will be  retained  by TriCo  Bancshares  and
furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

Section 1350 Certification of CFO

In connection with the Quarterly  Report of TriCo  Bancshares (the "Company") on
Form 10-Q for the period  ended June 30, 2007 as filed with the  Securities  and
Exchange  Commission  on the date hereof (the  "Report"),  I, Thomas J. Reddish,
Executive Vice President and Chief  Financial  Officer of the Company,  certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully  complies with the  requirements  of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.

          /s/ Thomas J. Reddish
          -------------------------------------
          Thomas J. Reddish
          Executive Vice President and Chief Financial Officer

A signed  original of this  written  statement  required by Section 906 has been
provided  to TriCo  Bancshares  and will be  retained  by TriCo  Bancshares  and
furnished to the Securities and Exchange Commission or its staff upon request.


                                       36
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{"company-data": {"conformed-name": "TRICO BANCSHARES /", "cik": "0000356171", "assigned-sic": "6022", "irs-number": "942792841", "state-of-incorporation": "CA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-10661", "film-number": "071040067"}, "business-address": {"street1": "TRICO BANCSHARES", "street2": "63 CONSTITUTION DRIVE", "city": "CHICO", "state": "CA", "zip": "95973", "phone": "5308980300"}, "mail-address": {"street1": "TRICO BANCSHARES", "street2": "63 CONSTITUTION DRIVE", "city": "CHICO", "state": "CA", "zip": "95973"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q
                  Quarterly Report Pursuant Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For Quarterly Period Ended June 30, 2007          Commission file number 0-10661
-----------------------------------------         ------------------------------

                                TRICO BANCSHARES
             (Exact name of registrant as specified in its charter)

           California                                          94-2792841
------------------------------                            -------------------
 (State or other jurisdiction                              (I.R.S. Employer
 incorporation or organization)                           Identification No.)

                 63 Constitution Drive, Chico, California 95973
               (Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code:  (530) 898-0300

--------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                             Yes  X        No
                                -----        -----

     Indicate by check mark whether the Registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer" and "large accelerated filer" in Rule 12b-2 of the Act (check one).

Large accelerated filer      Accelerated filer  X   Non-accelerated filer
                       -----                  -----                      -----

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Exchange Act).

                             Yes           No  X
                                -----        -----

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date:

Title of Class:  Common stock, no par value

Outstanding shares as of August 7, 2007:  15,835,291
TABLE OF CONTENTS

                                                                          Page

Forward-Looking Statements                                                  1

PART I - FINANCIAL INFORMATION                                              2

      Item 1 - Financial Statements                                         2

      Notes to Unaudited Condensed Consolidated Financial Statements        6

      Financial Summary                                                    16

      Item 2 - Management's Discussion and Analysis of Financial           17
      Condition and Results of Operations

      Item 3 - Quantitative and Qualitative Disclosures about Market Risk  28

      Item 4 - Controls and Procedures                                     29

PART II - OTHER INFORMATION                                                30

      Item 1 - Legal Proceedings                                           30

      Item 1A - Risk Factors                                               30

      Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds 30

      Irem 4 - Submission of Matters to a Vote of Security Holders         30

      Item 6 - Exhibits                                                    31

      Signatures                                                           33

      Exhibits                                                             34
FORWARD-LOOKING STATEMENTS

This  report  on Form  10-Q  contains  forward-looking  statements  about  TriCo
Bancshares (the "Company") for which it claims the protection of the safe harbor
provisions  contained in the Private  Securities  Litigation Reform Act of 1995.
These forward-looking statements are based on Management's current knowledge and
belief and include  information  concerning  the  Company's  possible or assumed
future  financial  condition and results of operations.  When you see any of the
words "believes", "expects", "anticipates", "estimates", or similar expressions,
it may mean making  forward-looking  statements.  A number of  factors,  some of
which are beyond the Company's ability to predict or control, could cause future
results to differ materially from those contemplated.  The reader is directed to
the Company's  annual report on Form 10-K for the year ended  December 31, 2006,
and Part II,  Item 1A of this  report for further  discussion  of factors  which
could  affect  the  Company's  business  and  cause  actual  results  to  differ
materially  from those expressed in any  forward-looking  statement made in this
report.

                                       1
PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
                                TRICO BANCSHARES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                  (In thousands, except share data; unaudited)

                                                                 At June 30,            At December 31,
                                                            2007              2006            2006
                                                      -------------------------------   -----------------
Assets:
     Cash and due from banks                              $93,636           $84,663         $102,220
     Federal funds sold                                     1,715               526              794
                                                      -------------------------------   -----------------
         Cash and cash equivalents                         95,351            85,189          103,014
     Securities available-for-sale                        175,891           221,828          198,361
     Federal Home Loan Bank stock, at cost                  8,543             8,103            8,320
     Loans, net of allowance for loan losses
         of $16,999, $16,893 and $16,914                1,490,629         1,439,115        1,492,965
     Foreclosed assets, net of allowance for
         losses of $180                                       187                 -                -
     Premises and equipment, net                           20,891            21,597           21,830
     Cash value of life insurance                          44,346            42,571           43,536
     Accrued interest receivable                            8,284             7,841            8,727
     Goodwill                                              15,519            15,519           15,519
     Other intangible assets, net                           1,421             3,711            1,666
     Other assets                                          25,965            25,682           26,028
                                                      -------------------------------   -----------------
         Total Assets                                  $1,887,027        $1,871,156       $1,919,966
                                                      ===============================   =================
Liabilities:
     Deposits:
         Noninterest-bearing demand                      $366,321          $354,576         $420,025
         Interest-bearing                               1,144,558         1,159,864        1,179,124
                                                      -------------------------------   -----------------
         Total deposits                                 1,510,879         1,514,440        1,599,149
     Federal funds purchased                               80,500            96,700           38,000
     Accrued interest payable                               6,614             5,739            7,548
     Reserve for unfunded commitments                       2,040             1,849            1,849
     Other liabilities                                     22,264            19,225           22,835
     Other borrowings                                      44,892            33,971           39,911
     Junior subordinated debt                              41,238            41,238           41,238
                                                      -------------------------------   ----------------
         Total Liabilities                              1,708,427         1,713,162        1,750,530
                                                      -------------------------------   ----------------
Commitments and contingencies
Shareholders' Equity:
Common stock, no par value: 50,000,000 shares
         authorized; issued and outstanding:
         15,917,291 at June 30, 2007                       76,394
         15,855,107 at June 30, 2006                                         73,337
         15,857,207 at December 31, 2006                                                      73,739
Retained earnings                                         106,985            90,286          100,218
Accumulated other comprehensive loss, net                  (4,779)           (5,629)          (4,521)
                                                      -------------------------------   ----------------
         Total Shareholders' Equity                       178,600           157,994          169,436
                                                      -------------------------------   ----------------
         Total Liabilities and Shareholders' Equity    $1,887,027        $1,871,156       $1,919,966
                                                      ===============================   ================
See accompanying notes to unaudited condensed consolidated financial statements.

                                       2
TRICO BANCSHARES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                (In thousands, except per share data; unaudited)

                                          Three months ended June 30,   Six months ended June 30,
                                              2007            2006         2007           2006
                                         -------------------------------------------------------
Interest and dividend income:
Loans, including fees                       $29,882         $26,555      $58,305        $51,624
Debt securities:
   Taxable                                    1,623           2,254        3,342          4,610
   Tax exempt                                   375             445          769            907
Dividends                                       101              94          223            178
Federal funds sold                                5              31            8             38
                                         -------------------------------------------------------
Total interest income                        31,986          29,379       62,647         57,357
                                         =======================================================
Interest expense:
Deposits                                      7,550           5,921       14,938         10,863
Federal funds purchased                       1,014           1,169        1,536          1,919
Other borrowings                                506             396          996            744
Junior subordinated debt                        825             789        1,641          1,522
                                         -------------------------------------------------------
Total interest expense                        9,895           8,275       19,111         15,048
                                         -------------------------------------------------------
Net interest income                          22,091          21,104       43,536         42,309
                                         -------------------------------------------------------
Provision for loan losses                       500             554          982          1,054
                                         -------------------------------------------------------
Net interest income after provision for      21,591          20,550       42,554         41,255
   loan losses                           -------------------------------------------------------

Noninterest income:
Service charges and fees                      5,375           4,956     10,436          9,813
Gain on sale of loans                           279             313        545            611
Commissions on sale of non-deposit              550             524      1,050          1,082
   investment products
Increase in cash value of life insurance        405             403        810            803
Other                                           420             335        788            670
                                          ------------------------------------------------------
Total noninterest income                      7,029           6,531     13,629         12,979
                                          ------------------------------------------------------
Noninterest expense:
Salaries and related benefits                 9,619           8,618     19,361         17,774
Other                                         7,824           7,658     15,042         14,924
                                          ------------------------------------------------------
Total noninterest expense                    17,443          16,276     34,403         32,698
                                          ------------------------------------------------------
Income before income taxes                   11,177          10,805     21,780         21,536
Provision for income taxes                    4,422           4,248      8,581          8,444
                                          ------------------------------------------------------
Net income                                   $6,755          $6,557    $13,199        $13,092
                                          ======================================================

Average shares outstanding               15,916,313      15,798,565 15,897,621     15,767,555
Diluted average shares outstanding       16,463,369      16,388,855 16,439,607     16,384,225
Per share data:
Basic earnings                                $0.42           $0.42      $0.83          $0.83
Diluted earnings                              $0.41           $0.40      $0.80          $0.80
Dividends paid                                $0.13           $0.12      $0.26          $0.24
See accompanying notes to unaudited condensed consolidated financial statements.

                                       3
TRICO BANCSHARES
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  (In thousands, except share data; unaudited)

                                                                     Accumulated
                                    Shares of                            Other
                                    Common     Common    Retained   Comprehensive
                                     Stock      Stock    Earnings       Loss           Total
                                 -------------------------------------------------------------
Balance at December 31, 2005      15,707,835     $71,412     $81,906     ($3,825)   $149,493
                                                                                    --------
Comprehensive income:
Net income                                                    13,092                  13,092
Change in net unrealized gain on
    Securities available for sale, net                                    (1,804)     (1,804)
                                                                                     -------
Total comprehensive income                                                            11,288
Stock option vesting                                 289                                 289
Stock options exercised              188,187       1,630                               1,630
Tax benefit of stock options exercised               192                                 192
Repurchase of common stock           (40,915)       (186)       (923)                 (1,109)
Dividends paid ($0.24 per share)                              (3,789)                 (3,789)
                                 -------------------------------------------------------------
Balance at June 30, 2006          15,855,107     $73,337     $90,286     ($5,629)   $157,994
                                 =============================================================

Balance at December 31, 2006      15,857,207     $73,739    $100,218     ($4,521)   $169,436
                                                                                    --------
Comprehensive income:
Net income                                                    13,199                  13,199
Change in net unrealized gain on
    Securities available for sale, net                                      (258)       (258)
                                                                                     ---------
Total comprehensive income                                                            12,941
Stock option vesting                                 376                                 376
Stock options exercised              177,600       1,964                               1,964
Tax benefit of stock options exercised               861                                 861
Repurchase of common stock          (117,516)       (546)     (2,295)                 (2,841)
Dividends paid ($0.26 per share)                              (4,137)                 (4,137)
                                 -------------------------------------------------------------
Balance at June 30, 2007          15,917,291     $76,394    $106,985       ($4,779)   $178,600
                                 =============================================================
See accompanying notes to unaudited condensed consolidated financial statements.

                                       4
TRICO BANCSHARES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands; unaudited)
                                                              For the three months ended June 30,
                                                                     2007               2006
                                                               ------------------------------------
Operating activities:
   Net income                                                      $13,199             $13,092
   Adjustments to reconcile net income to net cash provided
     by operating activities:
       Depreciation of property and equipment, and amortization      1,902               1,894
       Amortization of intangible assets                               245                 696
       Provision for loan losses                                       982               1,054
       Amortization of investment securities premium, net              380                 468
       Originations of loans for resale                            (35,677)             (37,364)
       Proceeds from sale of loans originated for resale            35,853              37,616
       Gain on sale of loans                                          (545)               (611)
       Change in value of mortgage servicing rights                     85                 138
       Gain on sale of investments                                       -                 (12)
       Loss on sale of fixed assets                                      5                  23
       Increase in cash value of life insurance                       (810)               (803)
       Stock option expense                                            376                 289
       Stock option tax benefits                                      (861)               (192)
       Change in:
         Interest receivable                                           443                (200)
         Interest payable                                             (934)              1,233
         Other assets and liabilities, net                           1,070              (3,190)
                                                               ------------------------------------
            Net cash provided by operating activities               15,713              14,131
                                                               ------------------------------------
   Investing activities:
   Proceeds from maturities of securities available-for-sale        21,644              25,997
   Proceeds from sale of securities available-for-sale                   -               9,780
   Purchases of securities available-for-sale                            -                (896)
   Purchases of Federal Home Loan Bank stock                          (223)               (501)
   Loan originations and principal collections, net                  1,167             (71,360)
   Proceeds from sale of premises and equipment                         11                   2
   Purchases of premises and equipment                              (1,704)             (1,951)
                                                               ------------------------------------
   Net cash used by investing activities                            20,895             (38,929)
                                                               ------------------------------------
   Financing activities:
   Net (decrease) increase in deposits                             (88,270)             17,643
   Net increase (decrease) in Federal funds purchased               42,500                (100)
   Payments of principal on long-term other borrowings                 (34)                (29)
   Net change in short-term other borrowings                         5,015               2,610
   Stock option tax benefits                                           861                 192
   Repurchase of common stock                                         (470)                  -
   Dividends paid                                                   (4,137)             (3,789)
   Exercise of stock options                                           264                 521
                                                               ------------------------------------
         Net cash (used) provided by financing activities          (44,271)             17,048
                                                               ------------------------------------
   Net change in cash and cash equivalents                          (7,663)             (7,750)
                                                               ------------------------------------
   Cash and cash equivalents and beginning of period               103,014              92,939
                                                               ------------------------------------
   Cash and cash equivalents at end of period                      $95,351             $85,189
                                                               ====================================
   Supplemental disclosure of noncash activities:
   Loans transferred to other real estate owned                       $187                   -
   Unrealized loss on securities available for sale                  ($446)            ($3,113)
   Value of shares tendered in lieu of cash paid to
     exercise stock options and to pay related tax withholding      $2,371              $1,109
   Supplemental disclosure of cash flow activity:
   Cash paid for interest expense                                  $20,045             $13,815
   Cash paid for income taxes                                       $8,300             $10,700
See accompanying notes to unaudited condensed consolidated financial statements.

                                       5
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: General Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and  pursuant  to  the  rules  and  regulations  of  the
Securities and Exchange  Commission.  The results of operations  reflect interim
adjustments,  all of which are of a normal  recurring  nature and which,  in the
opinion of management,  are necessary for a fair presentation of the results for
the  interim  periods  presented.   The  interim  results  are  not  necessarily
indicative of the results expected for the full year. These unaudited  condensed
consolidated financial statements should be read in conjunction with the audited
consolidated  financial  statements  and  accompanying  notes  as well as  other
information  included in the  Company's  Annual Report on Form 10-K for the year
ended December 31, 2006.

Principles of Consolidation
The consolidated  financial  statements include the accounts of the Company, and
its  wholly-owned  subsidiary,  Tri Counties Bank (the "Bank").  All significant
intercompany accounts and transactions have been eliminated in consolidation.

Nature of Operations
The Company  operates 32 branch  offices and 23 in-store  branch  offices in the
California  counties of Butte,  Contra Costa, Del Norte,  Fresno,  Glenn,  Kern,
Lake, Lassen, Madera,  Mendocino,  Merced, Nevada, Placer,  Sacramento,  Shasta,
Siskiyou,  Stanislaus,  Sutter,  Tehama,  Tulare,  Yolo and Yuba.  The Company's
operating policy since its inception has emphasized retail banking.  Most of the
Company's customers are retail customers and small to medium-sized businesses.

Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  Management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting  period.  On an on-going basis,  the Company  evaluates its
estimates,  including  those  related to the adequacy of the  allowance for loan
losses,  investments,  intangible assets,  income taxes and  contingencies.  The
Company  bases its  estimates  on  historical  experience  and on various  other
assumptions  that are believed to be  reasonable  under the  circumstances,  the
results of which form the basis for making  judgments  about the carrying values
of assets and  liabilities  that are not readily  apparent  from other  sources.
Actual results may differ from these estimates  under  different  assumptions or
conditions.  The  allowance  for loan  losses,  goodwill  and  other  intangible
assessments,  income taxes, and the valuation of mortgage  servicing rights, are
the only accounting estimates that materially affect the Company's  consolidated
financial statements.

Significant Group Concentration of Credit Risk
The Company grants agribusiness,  commercial, consumer, and residential loans to
customers  located  throughout the northern San Joaquin  Valley,  the Sacramento
Valley  and  northern  mountain  regions  of  California.   The  Company  has  a
diversified  loan  portfolio  within  the  business  segments  located  in  this
geographical area.

Cash and Cash Equivalents
For  purposes  of the  consolidated  statements  of cash  flows,  cash  and cash
equivalents include cash on hand, amounts due from banks and federal funds sold.

Investment Securities
The Company  classifies its debt and marketable  equity  securities  into one of
three  categories:  trading,  available-for-sale  or  held-to-maturity.  Trading
securities  are bought and held  principally  for the  purpose of selling in the
near term.  Held-to-maturity  securities are those  securities which the Company
has the  ability and intent to hold until  maturity.  All other  securities  not
included in trading or  held-to-maturity  are classified as  available-for-sale.
During the six months ended June 30, 2007, and throughout  2006, the Company did
not have any securities classified as either held-to-maturity or trading.

                                       6
Available-for-sale  securities are recorded at fair value.  Unrealized gains and
losses,  net of the related tax effect,  on  available-for-sale  securities  are
reported as a separate  component  of other  accumulated  comprehensive  loss in
shareholders' equity until realized.

Premiums and  discounts  are  amortized or accreted over the life of the related
investment  security  as an  adjustment  to yield using the  effective  interest
method.  Dividend and interest income are recognized when earned. Realized gains
and losses for  securities  are included in earnings  and are derived  using the
specific  identification  method for  determining  the cost of securities  sold.
Unrealized  losses  due to  fluctuations  in fair  value of  securities  held to
maturity  or  available  for sale are  recognized  through  earnings  when it is
determined that an other than temporary decline in value has occurred.

Federal Home Loan Bank Stock
The Bank is a member of the Federal Home Loan Bank of San Francisco ("FHLB"),
and as a condition of membership, it is required to purchase stock. The amount
of FHLB stock required to be purchased is based on the borrowing capacity
desired by the Bank. While technically these are considered equity securities,
there is no market for the FHLB stock. Therefore, the shares are considered as
restricted investment securities. Such investment is carried at cost.

Loans Held for Sale
Loans originated and intended for sale in the secondary market are carried at
the lower of aggregate cost or fair value, as determined by aggregate
outstanding commitments from investors of current investor yield requirements.
Net unrealized losses are recognized through a valuation allowance by charges to
income. At June 30, 2007 and 2006, and December 31, 2006, the Company's balance
of loans held for sale was immaterial.

Mortgage  loans held for sale are  generally  sold with the  mortgage  servicing
rights  retained by the Company.  The carrying  value of mortgage  loans sold is
reduced by the cost allocated to the associated mortgage servicing rights. Gains
or losses on sales of  mortgage  loans are  recognized  based on the  difference
between the selling price and the carrying  value of the related  mortgage loans
sold.

Loans
Loans are reported at the principal amount  outstanding,  net of unearned income
and the allowance for loan losses.  Loan  origination  and  commitment  fees and
certain  direct  loan  origination  costs are  deferred,  and the net  amount is
amortized as an adjustment of the related  loan's yield over the estimated  life
of the loan.  Loans on which the accrual of interest has been  discontinued  are
designated  as  nonaccrual  loans.  Accrual of  interest  on loans is  generally
discontinued  either  when  reasonable  doubt  exists  as to  the  full,  timely
collection  of interest or principal or when a loan becomes  contractually  past
due by 90 days or more with respect to interest or principal.  When loans are 90
days past due, but in Management's  judgment are well secured and in the process
of  collection,  they may be  classified  as  accrual.  When a loan is placed on
nonaccrual  status,  all  interest  previously  accrued  but  not  collected  is
reversed.  Income on such loans is then  recognized only to the extent that cash
is received and where the future  collection of principal is probable.  Interest
accruals are resumed on such loans only when they are brought fully current with
respect to interest and principal and when, in the judgment of  Management,  the
loans are estimated to be fully  collectible  as to both principal and interest.
All impaired loans are classified as nonaccrual loans.

Reserve for Unfunded Commitments
The reserve for unfunded  commitments  is  established  through a provision  for
losses - unfunded  commitments charged to noninterest  expense.  The reserve for
unfunded  commitments is an amount that Management  believes will be adequate to
absorb  probable  losses  inherent in  existing  commitments,  including  unused
portions of  revolving  lines of credits  and other  loans,  standby  letters of
credits,  and unused  deposit  account  overdraft  privilege.  The  reserve  for
unfunded  commitments is based on evaluations of the  collectibility,  and prior
loss experience of unfunded commitments. The evaluations take into consideration
such  factors as changes in the nature and size of the loan  portfolio,  overall
loan portfolio quality, loan concentrations,  specific problem loans and related
unfunded  commitments,  and  current  economic  conditions  that may  affect the
borrower's or depositor's ability to pay.

                                       7
Allowance for Loan Losses
The allowance for loan losses is established through a provision for loan losses
charged to expense. Loans and deposit-related overdrafts are charged against the
allowance for loan losses when Management  believes that the  collectibility  of
the  principal  is unlikely  or, with  respect to  consumer  installment  loans,
according to an  established  delinquency  schedule.  The allowance is an amount
that Management  believes will be adequate to absorb probable losses inherent in
existing  loans  and  leases,   based  on  evaluations  of  the  collectibility,
impairment and prior loss experience of loans and leases.  The evaluations  take
into  consideration  such  factors  as  changes  in the  nature  and size of the
portfolio,  overall portfolio  quality,  loan  concentrations,  specific problem
loans, and current economic conditions that may affect the borrower's ability to
pay. The Company defines a loan as impaired when it is probable the Company will
be unable to collect all amounts due according to the  contractual  terms of the
loan  agreement.  Impaired  loans are  measured  based on the  present  value of
expected future cash flows discounted at the loan's original  effective interest
rate. As a practical  expedient,  impairment may be measured based on the loan's
observable  market  price or the fair  value  of the  collateral  if the loan is
collateral  dependent.  When the measure of the  impaired  loan is less than the
recorded  investment in the loan, the impairment is recorded through a valuation
allowance.

Credit  risk is inherent in the  business of lending.  As a result,  the Company
maintains  an  allowance  for loan  losses  to  absorb  losses  inherent  in the
Company's  loan  portfolio.  This is  maintained  through  periodic  charges  to
earnings.  These  charges are shown in the  Consolidated  Income  Statements  as
provision for loan losses. All specifically identifiable and quantifiable losses
are  immediately  charged off against the allowance.  However,  for a variety of
reasons,  not all losses are immediately known to the Company and, of those that
are known,  the full extent of the loss may not be quantifiable at that point in
time.  The balance of the Company's  allowance for loan losses is meant to be an
estimate of these unknown but probable  losses  inherent in the  portfolio.  For
purposes of this discussion, "loans" shall include all loans and lease contracts
that are part of the Company's portfolio.

The Company  formally  assesses  the  adequacy of the  allowance  on a quarterly
basis.  Determination  of the  adequacy is based on ongoing  assessments  of the
probable  risk in the  outstanding  loan  portfolio,  and to a lesser extent the
Company's loan commitments. These assessments include the periodic re-grading of
credits based on changes in their individual  credit  characteristics  including
delinquency,  seasoning,  recent financial performance of the borrower, economic
factors, changes in the interest rate environment,  growth of the portfolio as a
whole or by segment, and other factors as warranted.  Loans are initially graded
when  originated.  They are  re-graded as they are renewed,  when there is a new
loan to the same borrower,  when identified facts demonstrate heightened risk of
nonpayment,  or if they become  delinquent.  Re-grading of larger  problem loans
occur at least quarterly.  Confirmation of the quality of the grading process is
obtained by  independent  credit reviews  conducted by consultants  specifically
hired for this purpose and by various bank regulatory agencies.

The Company's method for assessing the appropriateness of the allowance for loan
losses and the reserve for unfunded commitments includes specific allowances for
identified problem loans and leases as determined by SFAS 114, formula allowance
factors for pools of credits, and allowances for changing  environmental factors
(e.g., interest rates, growth, economic conditions, etc.). Allowance factors for
loan  pools are based on the  previous 5 years  historical  loss  experience  by
product type.  Allowances  for specific  loans are based on SFAS 114 analysis of
individual   credits.   Allowances  for  changing   environmental   factors  are
Management's  best estimate of the probable impact these changes have had on the
loan  portfolio as a whole.  This process is explained in detail in the notes to
the Company's audited consolidated  financial statements in its Annual Report on
Form 10-K for the year ended December 31, 2006.

Based on the current conditions of the loan portfolio,  Management believes that
the  allowance for loan losses and the reserve for unfunded  commitments,  which
collectively  stand at  $19,039,000  at June 30,  2007,  are  adequate to absorb
probable losses  inherent in the Company's loan  portfolio.  No assurance can be
given, however, that adverse economic conditions or other circumstances will not
result in increased losses in the portfolio.

                                       8
The  following  tables  summarize the activity in the allowance for loan losses,
reserve for unfunded  commitments,  and allowance for losses (which is comprised
of the allowance for loan losses and the reserve for unfunded  commitments)  for
the periods indicated (dollars in thousands):
Three months ended             Six months ended
                                                  June 30,                      June 30,
                                           ------------------------------------------------------
                                              2007          2006           2007           2006
                                           ------------------------------------------------------
Allowance for loan losses:
     Balance at beginning of period         $16,895       $16,644         $16,914       $16,226
     Provision for loan losses                  500           554             982         1,054
     Loans charged off                         (751)         (564)         (1,490)         (921)
     Recoveries of previously
       charged-off loans                        355           259             593           534
                                           ------------------------------------------------------
       Net charge-offs                         (396)         (305)           (897)         (387)
                                           ------------------------------------------------------
     Balance at end of period               $16,999       $16,893         $16,999       $16,893
                                           ======================================================

     Reserve for unfunded commitments:
     Balance at beginning of period          $1,966        $1,813          $1,849        $1,813
     Provision for losses -
       Unfunded commitments                      74            36             191            36
                                           ------------------------------------------------------
     Balance at end of period                $2,040        $1,849          $2,040        $1,849
                                           ======================================================

     Balance at end of period:
     Allowance for loan losses                                            $16,999       $16,893
     Reserve for unfunded commitments                                       2,040         1,849
                                                                          -----------------------
     Allowance for losses                                                 $19,039       $18,742
                                                                          =======================

     As a percentage of total loans:
     Allowance for loan losses                                              1.13%          1.16%
     Reserve for unfunded commitments                                       0.13%          0.13%
                                                                          -----------------------
     Allowance for losses                                                   1.26%          1.29%
                                                                          =======================
Mortgage Servicing Rights
Mortgage  servicing  rights (MSRs)  represent  the  Company's  right to a future
stream of cash flows based upon the  contractual  servicing fee associated  with
servicing mortgage loans. Our MSRs arise from residential mortgage loans that we
originate  and sell,  but retain the right to  service  the loans.  For sales of
residential  mortgage  loans, a portion of the cost of  originating  the loan is
allocated to the  servicing  right based on relative fair values of the loan and
the servicing  right.  The net gain from the retention of the servicing right is
included in gain on sale of loans in  noninterest  income when the loan is sold.
Fair  value  is  based  on  market  prices  for  comparable  mortgage  servicing
contracts, when available, or alternatively,  is based on a valuation model that
calculates  the present  value of estimated  future net  servicing  income.  The
valuation model incorporates  assumptions that market  participants would use in
estimating  future  net  servicing  income,  such as the  cost to  service,  the
discount rate, the custodial earnings rate, an inflation rate, ancillary income,
prepayment  speeds and  default  rates and  losses.  MSRs are  included in other
assets. Servicing fees are recorded in noninterest income when earned.

Effective with the Company's early adoption of SFAS 156, beginning as of January
1, 2006 MSRs are carried at fair value,  with changes in fair value  reported in
noninterest  income  in the  period  in which the  change  occurs.  On or before
December  31, 2005,  MSRs were carried at the lower of amortized  cost or market
value.  The  cumulative  effect  related  to the  adoption  of  this  change  in
accounting from lower of amortized cost or market value to fair value on January
1, 2006 was immaterial.

                                       9
The determination of fair value of our MSRs requires management judgment because
they are not actively traded.  The determination of fair value for MSRs requires
valuation  processes  which combine the use of  discounted  cash flow models and
extensive  analysis  of current  market  data to arrive at an  estimate  of fair
value. The cash flow and prepayment assumptions used in our discounted cash flow
model are based on empirical data drawn from the  historical  performance of our
MSRs,   which  we  believe  are  consistent  with  assumptions  used  by  market
participants  valuing similar MSRs, and from data obtained on the performance of
similar MSRs. The key assumptions used in the valuation of MSRs include mortgage
prepayment  speeds and the discount  rate.  These  variables  can, and generally
will, change from quarter to quarter as market conditions and projected interest
rates change.  The key risks inherent with MSRs are prepayment speed and changes
in interest rates.

The following tables summarize the activity in, and the main assumptions we used
to  determine  the fair  value of  mortgage  servicing  rights  for the  periods
indicated (dollars in thousands):

                                           Six months ended June 30,
                                           -------------------------
                                               2007         2006
                                           -------------------------
Mortgage servicing rights:
Balance at beginning of period               $3,912        $3,638
Additions                                       369           359
Change in fair value                            (85)         (138)
                                           -------------------------
Balance at end of period                     $4,196        $3,859
                                           =========================
Servicing fees received                        $491          $474
Balance of loans serviced at:
     Beginning of period                   $389,636      $373,163
     End of period                         $400,600      $382,625
Weighted-average prepayment speed (CPR)        11.5%         11.5%
Discount rate                                  10.0%         10.0%

Off-Balance Sheet Credit Related Financial Instruments
In the ordinary course of business,  the Company has entered into commitments to
extend credit, including commitments under credit card arrangements,  commercial
letters of credit, and standby letters of credit. Such financial instruments are
recorded when they are funded.

Premises and Equipment
Land is carried at cost. Buildings and equipment, including those acquired under
capital  lease,   are  stated  at  cost  less   accumulated   depreciation   and
amortization.  Depreciation  and  amortization  expenses are computed  using the
straight-line  method over the estimated  useful lives of the related  assets or
lease terms.  Asset lives range from 3-10 years for  furniture and equipment and
15-40 years for land improvements and buildings.

Foreclosed Assets
Assets acquired  through,  or in lieu of, loan foreclosure are held for sale and
are initially recorded at fair value at the date of foreclosure,  establishing a
new cost basis.  Subsequent to  foreclosure,  management  periodically  performs
valuations  and the assets are carried at the lower of  carrying  amount or fair
value less cost to sell. Revenue and expenses from operations and changes in the
valuation allowance are included in other noninterest expense.

Goodwill and Other Intangible Assets
Goodwill  represents the excess of costs over fair value of assets of businesses
acquired.  Goodwill and other intangible  assets acquired in a purchase business
combination and determined to have an indefinite  useful life are not amortized,
but instead  tested for  impairment at least  annually.  Intangible  assets with
estimable  useful lives are amortized  over their  respective  estimated  useful
lives to their estimated residual values, and reviewed for impairment.

                                       10
The  Company has  identifiable  intangible  assets  consisting  of core  deposit
premiums and minimum  pension  liability.  Core deposit  premiums are  amortized
using an  accelerated  method  over a period  of ten  years.  Intangible  assets
related to minimum pension  liability are adjusted annually based upon actuarial
estimates.

The following table summarizes the Company's goodwill  intangible as of June 30,
2007 and December 31, 2006.

                            December 31,                                June 30,
   (Dollars in Thousands)      2006       Additions     Reductions       2007
                            ----------------------------------------------------
   Goodwill                   $15,519         -              -          $15,519
                            ====================================================

The following table summarizes the Company's core deposit intangibles as of June
30, 2007 and December 31, 2006.

                            December 31,                                June 30,
   (Dollars in Thousands)      2006      Additions     Reductions         2007
                            ----------------------------------------------------
   Core deposit intangibles   $13,643          -          ($10,278)      $3,365
   Accumulated amortization   (11,977)     $10,278            (245)       1,944)
                            ----------------------------------------------------
   Core deposit intangibles,   $1,666      $10,278        ($10,523)      $1,421
     net                    ====================================================

Core deposit  intangibles are amortized over their expected  useful lives.  Such
lives are  periodically  reassessed  to  determine  if any  amortization  period
adjustments are indicated.

The following table summarizes the Company's  estimated core deposit  intangible
amortization for each of the five succeeding years:

                                       Estimated Core Deposit
                                       Intangible Amortization
                Years Ended            (Dollars in thousands)
                -----------           -----------------------
                   2007                         $490
                   2008                         $523
                   2009                         $328
                   2010                         $260
                   2011                          $65
                Thereafter                         -

Impairment of Long-Lived Assets and Goodwill
Long-lived  assets,  such as premises and equipment,  and purchased  intangibles
subject to amortization,  are reviewed for impairment whenever events or changes
in  circumstances  indicate  that the  carrying  amount  of an asset  may not be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison of the carrying amount of an asset to estimated  undiscounted  future
cash flows expected to be generated by the asset.  If the carrying  amount of an
asset  exceeds  its  estimated  future  cash  flows,  an  impairment  charge  is
recognized  by the amount by which the carrying  amount of the asset exceeds the
fair value of the asset. Assets to be disposed of would be separately  presented
in the balance  sheet and reported at the lower of the  carrying  amount or fair
value  less  costs  to sell,  and are no  longer  depreciated.  The  assets  and
liabilities of a disposed  group  classified as held for sale would be presented
separately in the appropriate asset and liability sections of the balance sheet.

On December 31 of each year,  goodwill is tested for  impairment,  and is tested
for impairment  more  frequently if events and  circumstances  indicate that the
asset might be impaired. An impairment loss is recognized to the extent that the
carrying amount exceeds the asset's fair value.  This  determination  is made at
the  reporting  unit  level  and  consists  of two  steps.  First,  the  Company
determines  the fair value of a reporting  unit and  compares it to its carrying
amount.  Second,  if the  carrying  amount of a reporting  unit exceeds its fair
value, an impairment loss is recognized for any excess of the carrying amount of
the reporting unit's goodwill over the implied fair value of that goodwill.  The
implied fair value of goodwill is determined by allocating the fair value of the
reporting unit in a manner similar to a purchase price allocation.  The residual
fair value after this allocation is the implied fair value of the reporting unit
goodwill.

                                       11
Income Taxes
The  Company's  accounting  for income taxes is based on an asset and  liability
approach.  The Company  recognizes the amount of taxes payable or refundable for
the current  year,  and deferred tax assets and  liabilities  for the future tax
consequences  that have  been  recognized  in its  financial  statements  or tax
returns.  The  measurement  of  tax  assets  and  liabilities  is  based  on the
provisions of enacted tax laws.

Stock-Based Compensation
On  January  1, 2006 the  Company  adopted  Statement  of  Financial  Accounting
Standards No. 123 (revised  2004),  Share-Based  Payment (SFAS 123R),  using the
modified-prospective   transition   method.   Under  this   transition   method,
compensation  cost recognized during the six months ended June 30, 2007 and June
30, 2006 include: (a) compensation cost for all share-based awards granted prior
to, but not yet vested as of, January 1, 2007 and January 1, 2006, respectively,
based on the  grant-date  fair value and related  service  period  estimates  in
accordance with the original  provisions of SFAS 123 and (b)  compensation  cost
for all share-based  awards granted subsequent to January 1, 2007 and January 1,
2006,  respectively,  based on the  grant-date  fair value and  related  service
periods estimated in accordance with the provisions of SFAS 123R.  Historically,
stock options are the only type of share-based award granted by the Company.

Prior to the adoption of SFAS 123R, the Company used the intrinsic  value method
to account for its stock  option plans (in  accordance  with the  provisions  of
Accounting  Principles Board Opinion No. 25).  Intrinsic value is the difference
between share fair market value and option  exercise  price.  Under this method,
compensation  expense was recognized for awards of options to purchase shares of
common stock to employees under compensatory plans only if the fair market value
of the stock at the option grant date (or other  measurement date, if later) was
greater  than the amount the  employee was required to pay to acquire the stock.
Statement of Financial  Accounting Standards No. 123, Accounting for Stock-Based
Compensation  (SFAS 123),  permitted  companies to continue  using the intrinsic
value  method or to adopt a fair value based  method to account for stock option
plans.  The fair value based method would have resulted in the  recognition,  as
expense over the vesting period, of the fair value of all stock-based  awards on
the date of grant.

SFAS 123R  clarifies  and  expands the  guidance  in SFAS 123 in several  areas,
including  measuring fair value and attributing  compensation  cost to reporting
periods.  SFAS 123R  includes a  requirement  to: (a)  estimate  forfeitures  of
share-based awards at the date of grant, (b) expense  share-based awards granted
to  retirement  eligible  employees  and those  employees  with  non-substantive
non-compete  agreements   immediately,   (c)  attribute  compensation  costs  of
share-based award grants to the stated future vesting period,  and (d) recognize
compensation cost of all share-based awards based upon the grant-date fair value
(including pre-2006 options).

The following table shows the number, weighted-average exercise price, intrinsic
value, and weighted average remaining  contractual life, of options exercisable,
options not yet exercisable, and total options outstanding as of June 30, 2007:
Currently    Currently Not      Total
(dollars in thousands except exercise price)         Exercisable     Exercisable   Outstanding
Number of options                                    1,165,577         385,354      1,550,931
Weighted average exercise price                         $12.01          $20.35         $14.08
Intrinsic value                                    $12,785,274      $1,015,201    $13,800,475
Weighted average remaining contractual term (yrs.)        5.22            8.69           5.91
The options for 371,494 shares that are not currently exercisable as of June 30,
2007 are  expected  to vest,  on a  weighted-average  basis,  over the next 2.96
years, and the Company is expected to recognize $2,175,000 of compensation costs
related to these options as they vest.

                                       12
Earnings Per Share
Basic  earnings per share  represents  income  available to common  shareholders
divided by the  weighted-average  number of common shares outstanding during the
period.  Diluted earnings per share reflects additional common shares that would
have been outstanding if dilutive  potential  common shares had been issued,  as
well as any  adjustments  to income  that would  result from  assumed  issuance.
Potential  common  shares that may be issued by the Company  relate  solely from
outstanding  stock options,  and are determined using the treasury stock method.
In applying  the treasury  method,  the Company uses the entire tax benefit that
would result from the assumed issuance.

Earnings per share have been computed based on the following:
Three Months         Six Months
                                                       Ended June 30,      Ended June 30,
(in thousands)                                         2007      2006      2007    2006
                                                    ------------------    ------------------
Net Income                                          $6,754     $6,557     $13,199   $13,092
Average number of common shares outstanding         15,916     15,799      15,898    15,768
Effect of dilutive stock options                       547        590         542       616
                                                    ------------------    ------------------
Average number of common shares outstanding
   used to calculate diluted earnings per share     16,463     16,389      16,440    16,384
                                                    ==================    ==================
There  were  87,000  and 0 options  excluded  from the  computation  of  diluted
earnings  per share for the three  month  periods  ended June 30, 2006 and 2005,
respectively, because the effect of these options was antidilutive.

Comprehensive Income
Accounting principles generally require that recognized revenue, expenses, gains
and losses be  included in net income.  Although  certain  changes in assets and
liabilities,   such  as  unrealized  gains  and  losses  on   available-for-sale
securities,  are reported as a separate  component of the equity  section of the
balance  sheet,   such  items,   along  with  net  income,   are  components  of
comprehensive income.

The components of other comprehensive  income (loss) and related tax effects are
as follows:
Three months ended June 30,     Six Months Ended June 30,
                                             ---------------------------     -------------------------
                                                 2007          2006             2007           2006
                                             ---------------------------     -------------------------
(in thousands)
Unrealized holding gains (losses) on
   available-for-sale securities              ($1,366)        ($516)           ($446)       ($3,113)
Tax effect                                        575           217              188          1,309
                                             ---------------------------      ------------------------
Unrealized holding gains (losses) on
   available-for-sale securities, net of tax    ($791)        ($299)           ($258)       ($1,804)
                                             ===========================      ========================
The   components  of  accumulated   other   comprehensive   loss,   included  in
shareholders' equity, are as follows:
June 30,      December 31,
                                                            2007            2006
                                                         --------------------------
(in thousands)
Net unrealized losses on available-for-sale securities   ($4,301)         ($3,855)
Tax effect                                                 1,809            1,621
                                                         --------         ---------
    Unrealized holding losses on
    available-for-sale securities, net of tax             (2,492)          (2,234)
                                                         --------         ---------
Minimum pension liability                                 (3,946)          (3,946)
Tax effect                                                 1,659            1,659
                                                         --------         ---------
   Minimum pension liability, net of tax                  (2,287)          (2,287)
                                                         --------         ---------
Accumulated other comprehensive loss                     ($4,779)         ($4,521)
                                                         ========         =========
13
Retirement Plans
The  Company  has  supplemental  retirement  plans  covering  directors  and key
executives.  These  plans  are  non-qualified  defined  benefit  plans  and  are
unsecured and unfunded.  The Company has purchased insurance on the lives of the
participants  and  intends to use the cash  values of these  policies to pay the
retirement obligations.

The following table sets forth the net periodic  benefit cost recognized for the
plans:
Three Months         Six Months
                                                               Ended June 30,      Ended June 30,
(in thousands)                                                2007       2006       2007     2006
                                                              ----       ----       ----     ----
Net pension cost included the following components:
Service cost-benefits earned during the period                $150       $139       $300     $278
Interest cost on projected benefit obligation                  146        132        292      164
Amortization of net obligation at transition                     -          1          -        1
Amortization of prior service cost                              45         50         90      100
Recognized net actuarial loss                                   28         34         56       68
                                                             ------------------------------------
Net periodic pension cost                                     $369       $356       $738     $711
                                                              ===================================
During the six months ended June 30, 2007 and 2006, the Company  contributed and
paid out as benefits $284,000 and $286,000,  respectively, to participants under
the plans. For the year ending December 31, 2007, the Company  currently expects
to contribute and pay out as benefits $528,000 to participants under the plans.

Recent Accounting Pronouncements
In February  2006,  the FASB  issued  FASB  Statement  of  Financial  Accounting
Standards  No. 155,  Accounting  for Certain  Hybrid  Financial  Instruments  an
amendment of FASB  Statements  No. 133 and 140 (SFAS 155).  SFAS 155 amends SFAS
133, Accounting for Derivative  Instruments and Hedging Activities and SFAS 140,
Accounting for Transfers and Servicing of Financial  Assets and  Extinguishments
of  Liabilities.  SFAS 155 (i) permits fair value  remeasurement  for any hybrid
financial  instrument that contains an embedded  derivative that otherwise would
require   bifurcation,   (ii)   clarifies   which   interest-only   strips   and
principal-only  strips are not subject to the  requirements  of SFAS 133,  (iii)
establishes a requirement to evaluate interests in securitized  financial assets
to  identify  interests  that are  freestanding  derivatives  or that are hybrid
financial instruments that contain an embedded derivative requiring bifurcation,
(iv) clarifies that  concentrations  of credit risk in the form of subordination
are  not  embedded  derivatives,  and  (v)  amends  SFAS  140 to  eliminate  the
prohibition  on a qualifying  special  purpose  entity from holding a derivative
financial  instrument that pertains to a beneficial  interest other than another
derivative financial instrument. The adoption of SFAS 155 on January 1, 2007 had
no impact the Company's consolidated financial statements.

In  September  2006,  the FASB issued FASB  Statement  of  Financial  Accounting
Standards No. 157,  Fair Value  Measurements  (SFAS 157).  SFAS 157 defines fair
value,  establishes a framework for measuring  fair value in generally  accepted
accounting  principles,  and expands  disclosures about fair value measurements.
SFAS 157 is effective  for the Company on January 1, 2008 and is not expected to
have a significant impact on the Company's consolidated financial statements.

In  September  2006,  the FASB issued FASB  Statement  of  Financial  Accounting
Standards No. 158,  Employers'  Accounting for Defined Benefit Pension and Other
Postretirement Plans, an amendment of FASB Statements No. 87, 88 106, and 132(R)
(SFAS  158).  SFAS 158  requires  an employer to  recognize  the  overfunded  or
underfunded  status of  defined  benefit  postretirement  plans as an asset or a
liability in its statement of financial position.  The funded status is measured
as the difference  between plan assets at fair value and the benefit  obligation
(the projected benefit  obligation for pension plans or the accumulated  benefit
obligation for other postretirement benefit plans). An employer is also required
to measure the funded status of a plan as of the date of its year-end  statement
of financial  position  with  changes in the funded  status  recognized  through
comprehensive  income. SFAS 158 also requires certain disclosures  regarding the
effects on net  periodic  benefit  cost for the next fiscal year that arise from
delayed recognition of gains or losses,  prior service costs or credits, and the
transition asset or obligation. The Company was required to recognize the funded
status of its defined benefit  post-retirement benefit plans in its consolidated
financial  statements  for the year ended  December  31,  2006.  The Company had
previously recognized the funded status of its supplemental retirement plans for
directors and key executives in prior  consolidated  financial  statements.  The
Company  has  no  other  defined  benefit  post-retirement  benefit  plans.  The
requirement to measure plan assets and benefit obligations as of the date of the
year-end  statement  of  financial  position  is  effective  for  the  Company's
consolidated  financial  statements  beginning  with the fiscal year ended after
December 15, 2008.  The Company  currently  uses December 31 as the  measurement
date for its defined benefit post-retirement benefit plans.

                                       14
In February  2007,  the FASB  issued  FASB  Statement  of  Financial  Accounting
Standards  No. 159, The Fair Value  Option for  Financial  Assets and  Financial
Liabilities - Including an amendment to FASB Statement No. 115 (SFAS 159).  SFAS
159 permits entities to choose to measure many financial instruments and certain
other items at fair value.  The objective is to improve  financial  reporting by
providing  entities  with the  opportunity  to mitigate  volatility  in reported
earnings caused by measuring related assets and liabilities  differently without
having to apply complex hedge accounting  provisions.  SFAS 159 is effective for
the Company on January 1, 2008 and is not expected to have a significant  impact
on the Company's consolidated financial statements.

In June  2006,  the FASB  issued  FASB  Interpretation  No. 48,  Accounting  for
Uncertainty in Income Taxes, an  interpretation  of FASB Statement 109 (FIN 48).
FIN 48  prescribes a recognition  threshold and a measurement  attribute for the
financial  statement  recognition  and  measurement  of a tax position  taken or
expected  to be taken in a tax return.  Benefits  from tax  positions  should be
recognized in the financial statements only when it is more likely than not that
the tax position will be sustained upon  examination by the  appropriate  taxing
authority  that would have full  knowledge  of all relevant  information.  A tax
position that meets the  more-likely-than-not  recognition threshold is measured
at the largest  amount of benefit that is greater than fifty  percent  likely of
being realized upon ultimate settlement. Tax positions that previously failed to
meet the more-likely-than-not  recognition threshold should be recognized in the
first  subsequent  financial  reporting  period in which that  threshold is met.
Previously recognized tax positions that no longer meet the more-likely-than-not
recognition  threshold should be derecognized in the first subsequent  financial
reporting  period in which that threshold is no longer met. FIN 48 also provides
guidance on the  accounting  for and  disclosure of  unrecognized  tax benefits,
interest and penalties.  FIN 48 was effective for the Company on January 1, 2007
and did not have a significant  impact on the Company's  consolidated  financial
statements.

In September  2006,  the Emerging  Issues Task Force (EITF) of the FASB ratified
EITF Issue No. 06-4,  Accounting for Deferred  Compensation  and  Postretirement
Benefit Aspects of Endorsement Split-Dollar Life Insurance Agreements,  and EITF
Issue No. 06-5,  Accounting  for Purchases of Life  Insurance - Determining  the
Amount That Could Be Realized in  Accordance  with FASB  Technical  Bulletin No.
85-4,  Accounting  for Purchases of Life  Insurance.  EITF 06-4 provides that an
employer  should  recognize  a  liability  for  future  benefits  based  on  the
substantive  agreement with the employee.  The Issue should be applied to fiscal
years  beginning after December 15, 2007,  with earlier  application  permitted.
EITF 06-5  provides that in  determining  the amount  recognized as an asset,  a
policyholder  should consider the cash surrender value as well as any additional
amounts  included in the contractual  terms of the policy that will be paid upon
surrender.  The  amount  that  could be  realized  should be  calculated  at the
individual  policy  level and consider  any  probable  contractual  limitations,
including the exclusion of any  additional  amounts paid for the surrender of an
entire group of  policies.  The Issue is  effective  for fiscal years  beginning
after  December  15,  2007.  The Company has life  insurance  arrangements.  The
Company is  currently  evaluating  the impact of  adoption of these rules on the
Company's consolidated financial statements.

Reclassifications
Certain amounts previously  reported in the 2006 financial  statements have been
reclassified to conform to the 2007 presentation.  These  reclassifications  did
not affect previously reported net income or total shareholders' equity.

                                       15
TRICO BANCSHARES
                                Financial Summary
           (dollars in thousands, except per share amounts; unaudited)

                                                       Three months ended            Six months ended
                                                            June 30,                     June 30,
                                                ----------------------------------------------------------
                                                      2007            2006          2007             2006
                                                ----------------------------------------------------------
Net Interest Income (FTE)                           $22,308         $21,358       $43,974        $42,826
Provision for loan losses                              (500)           (554)        (982)        (1,054)
Noninterest income                                    7,029           6,531        13,629         12,979
Noninterest expense                                 (17,443)        (16,276)      (34,403)       (32,698)
Provision for income taxes (FTE)                     (4,639)         (4,502)       (9,019)        (8,961)
                                                 ---------------------------------------------------------
Net income                                           $6,755          $6,557       $13,199       $13,092
                                                 =========================================================
Earnings per share:
    Basic                                             $0.42           $0.42         $0.83         $0.83
    Diluted                                           $0.41           $0.40         $0.80         $0.80
Per share:
    Dividends paid                                    $0.13           $0.12         $0.26         $0.24
    Book value at period end                         $11.22           $9.96
    Tangible book value at period end                $10.16           $8.75

Average common shares outstanding                    15,916           15,799      15,898          15,768
Average diluted shares outstanding                   16,463           16,389      16,440          16,384
Shares outstanding at period end                     15,917           15,855
At period end:
    Loans, net                                   $1,490,629       $1,439,115
    Total assets                                  1,887,027        1,871,156
    Total deposits                                1,510,879        1,514,440
    Other borrowings                                 44,892           33,971
    Junior subordinated debt                         41,238           41,238
    Shareholders' equity                           $178,600         $157,994
Financial Ratios:
During the period (annualized):
    Return on assets                                   1.44%            1.42%        1.41%         1.43%
    Return on equity                                  15.11%           16.68%       14.95%        16.80%
    Net interest margin(1)                             5.25%            5.10%        5.19%         5.15%
    Net loan charge-offs to average loans              0.10%            0.09%        0.12%         0.06%
    Efficiency ratio(1)                               59.46%           58.36%       59.72%        58.59%
At Period End:
    Equity to assets                                   9.46%            8.44%
    Total capital to risk-adjusted assets             11.76%           11.11%
    Allowance for losses to loans(2)                   1.26%            1.29%
(1) Fully taxable equivalent (FTE).
(2) Allowance  for losses  includes  allowance  for loan losses and reserve for
    unfunded commitments.

                                       16
Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations

As TriCo  Bancshares (the  "Company") has not commenced any business  operations
independent of Tri Counties Bank (the "Bank"), the following discussion pertains
primarily  to the  Bank.  Average  balances,  including  such  balances  used in
calculating  certain financial ratios, are generally  comprised of average daily
balances  for the  Company.  Within  Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations,  interest income and net interest
income are  generally  presented  on a fully  tax-equivalent  (FTE)  basis.  The
presentation  of  interest  income and net  interest  income on a FTE basis is a
common  practice within the banking  industry.  Interest income and net interest
income  are  shown on a  non-FTE  basis in the  Part I -  Financial  Information
section  of  this  Form  10-Q,  and a  reconciliation  of the  FTE  and  non-FTE
presentations is provided below in the discussion of net interest income.

Critical Accounting Policies and Estimates
The Company's  discussion and analysis of its financial condition and results of
operations  are  based  upon  the  Company's  unaudited  condensed  consolidated
financial  statements,  which have been prepared in accordance  with  accounting
principles  generally accepted in the United States of America.  The preparation
of these  financial  statements  requires  the  Company  to make  estimates  and
judgments that affect the reported amounts of assets, liabilities,  revenues and
expenses,  and related  disclosure of contingent  assets and liabilities.  On an
on-going basis, the Company evaluates its estimates,  including those related to
the  adequacy  of  the  allowance  for  loan  losses,   intangible  assets,  and
contingencies.  The Company bases its estimates on historical  experience and on
various  other  assumptions  that  are  believed  to  be  reasonable  under  the
circumstances,  the results of which form the basis for making  judgments  about
the carrying values of assets and liabilities that are not readily apparent from
other sources.  Actual results may differ from these  estimates  under different
assumptions or conditions.  (See caption  "Allowance for Loan Losses" for a more
detailed discussion).

Results of Operations
The  following   discussion  and  analysis  is  designed  to  provide  a  better
understanding  of the significant  changes and trends related to the Company and
the  Bank's  financial  condition,   operating  results,   asset  and  liability
management,  liquidity and capital  resources and should be read in  conjunction
with the Unaudited Condensed  Consolidated  Financial  Statements of the Company
and the Notes thereto.

Following is a summary of the components of fully taxable equivalent ("FTE") net
income for the periods indicated (dollars in thousands):

                                       Three months ended      Six months ended
                                            June 30,               June 30,
                                   ---------------------------------------------
                                       2007        2006       2007       2006
                                   ---------------------------------------------
Net Interest Income (FTE)           $22,308     $21,358     $43,974     $42,826
Provision for loan losses              (500)       (554)       (982)     (1,054)
Noninterest income                    7,029       6,531      13,629      12,979
Noninterest expense                 (17,443)    (16,276)    (34,403)    (32,698)
Provision for income taxes (FTE)     (4,639)     (4,502)     (9,019)     (8,961)
                                   ---------------------------------------------
Net income                           $6,755      $6,557     $13,199     $13,092
                                   =============================================

The Company had quarterly  earnings of  $6,755,000,  or $0.41 per diluted share,
for the three  months  ended  June 30,  2007.  These  results  represent  a 2.5%
increase from the $0.40 earnings per diluted share reported for the three months
ended June 30, 2006 on earnings of $6,557,000.  The  improvement in results from
the  year-ago   quarter  was  due  to  a  $950,000   (4.4%)  increase  in  fully
tax-equivalent net interest income to $22,308,000,  a $54,000 (9.7%) decrease in
the provision  for loan losses to $500,000,  and a $498,000  (7.6%)  increase in
noninterest  income to  $7,029,000.  These  contributing  factors were partially
offset by a $1,167,000 (7.2%) increase in noninterest expense to $17,443,000 for
the quarter ended June 30, 2007.

The Company  reported  earnings of $13,199,000,  or $0.80 per diluted share, for
the six months ended June 30, 2007.  These results  represent no change from the
$0.80 earnings per diluted share reported for the six months ended June 30, 2006
on earnings of  $13,092,000.  The flat  results  when  compared to the  year-ago
period was primarily due to a $1,148,000 (2.7%) increase in fully tax-equivalent
net interest income to  $43,974,000,  a $72,000 (6.8%) decrease in provision for
loan losses to $982,000, and a $650,000 (5.0%) increase in noninterest income to
$13,629,000.  These  contributing  factors were partially offset by a $1,705,000
(5.2%)  increase in noninterest  expense to $34,403,000 for the six months ended
June 30, 2006.

                                       17
Net Interest  Income
Following is a summary of the components of net interest  income for the periods
indicated (dollars in thousands):

                                   Three months ended         Six months ended
                                        June 30,                  June 30,
                               -------------------------------------------------
                                    2007        2006           2007        2006
                               -------------------------------------------------
   Interest income                $31,986     $29,379       $62,647     $57,357
   Interest expense                (9,895)     (8,275)      (19,111)    (15,048)
   FTE adjustment                     217         254           438         517
                               -------------------------------------------------
      Net interest income (FTE)   $22,308     $21,358       $43,974     $42,826
                               =================================================
   Average interest-earning    $1,698,620  $1,676,705    $1,695,597  $1,661,741
      assets
   Net interest margin (FTE)        5.25%        5.10%         5.19%       5.15%

The  Company's  primary  source  of  revenue  is  net  interest  income,  or the
difference  between  interest  income on  interest-earning  assets and  interest
expense in interest-bearing liabilities.

Net interest  income (FTE) during the second quarter of 2007 increased  $950,000
(4.4%) from the same period in 2006 to $22,308,000. The increase in net interest
income (FTE) was due to a  $21,915,000  (1.3%)  increase in average  balances of
interest-earning  assets to $1,698,620,000  and a 0.15% increase in net interest
margin (FTE) to 5.25%.

Net  interest  income  (FTE)  during  the  first six  months  of 2007  increased
$1,148,000  (2.7%) from the same period in 2006 to $43,974,000.  The increase in
net interest  income (FTE) was due to a $33,856,000  (2.0%)  increase in average
balances of  interest-earning  assets to $1,695,597,000  and a 0.04% increase in
net interest margin (FTE) to 5.19%.

Interest and Fee Income
Interest  and  fee  income  (FTE)  for the  second  quarter  of  2007  increased
$2,570,000  (8.7%) from the second  quarter of 2006.  The  increase was due to a
$21,915,000 (1.3%) increase in average interest-earning assets to $1,698,620,000
and a 0.51%  increase in the yield on those average  interest-earning  assets to
7.58%.  The growth in  interest-earning  assets was due to a $79,178,000  (5.5%)
increase in average loan balances to $1,506,913,000 that was partially offset by
a decrease  of  $55,202,000  (22.4%)  in  average  balances  of  investments  to
$191,311,000.  The increase in the yield on average  interest-earning assets was
mainly  due to a 0.49%  increase  in yield on loans to 7.93% and a change in the
mix of earning  assets from  lower-earning  investments  towards  higher-earning
loans. The increase in loan yields from the year-ago period is mainly due to the
effect of a 2.50%  increase in the prime rate of lending  from March 31, 2005 to
June 30, 2006, and some modest increase in market yields for  longer-term  fixed
rate loans since June 30, 2006.

Interest and fee income  (FTE) for the six months ended June 30, 2007  increased
$5,211,000  (9.0%) from the same period of 2006. The increase was the net effect
of  a  $33,856,000  (2.0%)  increase  in  average   interest-earning  assets  to
$1,695,597,000   and  a  0.47%   increase   in  the   yield  on  those   average
interest-earning  assets to 7.44%. The growth in interest-earning assets was due
to a $92,346,000 (6.6%) increase in average loan balances to $1,498,484,000 that
was partially offset by a decrease of $57,266,000 (22.5%) in average balances of
investments   to   $196,774,000.   The   increase   in  the  yield  on   average
interest-earning  assets was mainly due to a 0.48% increase in yield on loans to
7.78% and a change in the mix of earning assets from  lower-earning  investments
towards  higher-earning  loans.  The  increase in loan yields from the  year-ago
period is mainly  due to the  effect of a 2.50%  increase  in the prime  rate of
lending from March 31, 2005 to June 30, 2006, and some modest increase in market
yields for longer term fixed rate loans since June 30, 2006.

                                       18
Interest Expense
Interest  expense  increased  $1,620,000  (19.6%)  to  $9,895,000  in the second
quarter  of 2007  compared  to the  year-ago  quarter.  The  average  balance of
interest-bearing  liabilities  decreased $12,516,000 (0.9%) to $1,311,144,000 in
the second quarter compared to the year-ago quarter. The decrease in the average
balance of  interest-bearing  liabilities  was due  primarily  to  decreases  in
interest-bearing  demand deposits (down  $16,278,000 or 6.7%),  savings deposits
(down  $20,353,000  or 5.0%) and Federal funds  purchased  (down  $17,278,000 or
18.5%),  that  were  partially  offset  by an  increase  in  time  deposits  (up
$31,531,000 or 6.2%). The average rate paid on  interest-bearing  liabilities in
the  quarter  ended  June 30,  2007  increased  0.52% to 3.02%  compared  to the
year-ago  quarter as a result of increases in market  interest rates and changes
in the mix of interest-bearing liabilities towards higher paying time deposits.

Interest expense increased  $4,063,000 (27.0%) to $19,111,000 for the six months
ended June 30, 2007 compared to $15,048,000 in the year-ago period.  The average
balance  of  interest-bearing   liabilities   decreased   $1,014,000  (0.1%)  to
$1,303,179,000  for the six months ended June 30, 2007  compared to the year-ago
period. The decrease in the average balance of interest-bearing  liabilities was
due primarily to decreases in interest-bearing demand deposits (down $16,836,000
or  6.9%),  savings  deposits  (down  $35,338,000  or 8.5%)  and  Federal  funds
purchased (down $22,840,000 or 28.3%), that were partially offset by an increase
in  time  deposits  (up  $64,280,000  or  13.2%).   The  average  rate  paid  on
interest-bearing  liabilities  in the six  month  period  ended  June  30,  2007
increased  0.62%  to 2.93%  compared  to the  year-ago  quarter  as a result  of
increases in market  interest  rates and changes in the mix of  interest-bearing
liabilities towards higher paying time deposits.

Net Interest Margin (FTE)
The  following  table  summarizes  the  components of the Company's net interest
margin for the periods indicated:

                                 Three months ended             Six months ended
                                      June 30,                      June 30,
                                 -----------------------------------------------
                                    2007      2006             2007         2006
                                 -----------------------------------------------
Yield on interest-earning assets    7.58%     7.07%           7.44%        6.97%
Rate paid on interest-bearing
     Liabilities                    3.02%     2.50%           2.93%        2.31%
                                 -----------------------------------------------
     Net interest spread            4.56%     4.57%           4.51%        4.66%
Impact of all other net
     noninterest-bearing funds      0.69%     0.53%           0.68%        0.49%
                                 -----------------------------------------------
        Net interest margin         5.25%     5.10%           5.19%        5.15%
                                 ===============================================

Net interest  margin for the three months  ended June 30, 2007  increased  0.15%
compared to the three months ended June 30, 2006.  This increase in net interest
margin   was   mainly   due  to  an  0.16%   increase   in  the  impact  of  net
noninterest-bearing funds to 0.69% from 0.53% in the year-ago three month period
that was  partially  offset by a 0.01%  decrease in net  interest  spread as the
average yield on interest-earning  assets increased 0.51% while the average rate
paid on  interest-bearing  liabilities  increased  0.52% from the year-ago three
month period.

Net  interest  margin for the six months  ended June 30,  2007  increased  0.04%
compared to the six months  ended June 30, 2006.  This  increase in net interest
margin   was   mainly   due  to  a  0.19%   increase   in  the   impact  of  net
noninterest-bearing  funds to 0.68% from 0.49% in the year-ago six month period.
The increase in the impact of net noninterest-bearing funds was partially offset
by  a  0.15%   decrease  in  net  interest   spread  as  the  average  yield  on
interest-earning   assets  increased  0.47%  while  the  average  rate  paid  on
interest-bearing liabilities increased 0.62% from the year-ago six month period.

                                       19
Summary of Average Balances, Yields/Rates and Interest Differential
The following tables present, for the periods indicated,  information  regarding
the Company's consolidated average assets, liabilities and shareholders' equity,
the  amounts  of  interest  income  from  average  interest-earning  assets  and
resulting  yields,  and the amount of interest expense paid on  interest-bearing
liabilities.  Average loan balances include nonperforming loans. Interest income
includes  proceeds  from  loans on  nonaccrual  loans  only to the  extent  cash
payments have been received and applied to interest income. Yields on securities
and  certain  loans have been  adjusted  upward to reflect  the effect of income
thereon  exempt from federal income  taxation at the current  statutory tax rate
(dollars in thousands).
For the three months ended
                                       ----------------------------------------------------------------
                                               June 30, 2007                     June 30, 2006
                                       -----------------------------    -------------------------------
                                                   Interest    Rates               Interest    Rates
                                         Average   Income/    Earned     Average   Income/    Earned
                                         Balance   Expense     Paid      Balance   Expense     Paid
                                       -----------------------------    ------------------------------
Assets:
Loans                                  $1,506,913  $29,882    7.93%     $1,427,735 $26,555     7.44%
Investment securities - taxable           160,444    1,724    4.30%        212,158   2,348     4.43%
Investment securities - nontaxable         30,867      592    7.68%         34,355     699     8.13%
Federal funds sold                            396        5    5.05%          2,457      31     5.05%
                                       ----------------------------     ------------------------------
Total interest-earning assets           1,698,620   32,203    7.58%      1,676,705  29,633     7.07%
                                                    ------                          ------
Other assets                              172,640                          173,782
                                       ----------                       ----------
Total assets                           $1,871,260                       $1,850,487
                                       ==========                       ==========

Liabilities and shareholders' equity:
Interest-bearing demand deposits         $225,632     $114    0.20%       $241,910    $122     0.20%
Savings deposits                          382,835    1,480    1.55%        403,188     843     0.84%
Time deposits                             543,249    5,956    4.39%        511,718   4,956     3.87%
Federal funds purchased                    76,078    1,014    5.33%         93,356   1,169     5.01%
Other borrowings                           42,112      506    4.81%         32,250     396     4.91%
Junior subordinated debt                   41,238      825    8.00%         41,238     789     7.65%
                                      ----------------------------      ------------------------------
Total interest-bearing liabilities      1,311,144    9,895    3.02%      1,323,660   8,275     2.50%
                                                     -----                           -----
Noninterest-bearing deposits              349,017                          340,755

Other liabilities                          32,263                           28,840

Shareholders' equity                      178,836                          157,232
                                      -----------                       ----------
Total liabilities and shareholders'
    equity                             $1,871,260                       $1,850,487
                                      ===========                       ==========
Net interest spread(1)                                        4.56%                            4.57%
Net interest income and interest margin(2)         $22,308    5.25%                $21,358     5.10%
                                                   ================                ==================
(1)  Net interest spread represents the average yield earned on interest-earning
     assets minus the average rate paid on interest-bearing liabilities.
(2)  Net  interest  margin is computed by  calculating  the  difference  between
     interest   income  and   expense,   divided  by  the  average   balance  of
     interest-earning assets.

                                       20
For the six months ended
                                       ---------------------------------------------------------------
                                               June 30, 2007                     June 30, 2006
                                       -----------------------------    ------------------------------
                                                   Interest    Rates               Interest    Rates
                                         Average   Income/    Earned     Average   Income/    Earned
                                         Balance   Expense     Paid      Balance   Expense     Paid
                                       -----------------------------    ------------------------------
Assets:
Loans                                  $1,498,484  $58,305    7.78%     $1,406,138 $51,624     7.34%
Investment securities - taxable           165,258    3,565    4.31%        219,161   4,788     4.37%
Investment securities - nontaxable         31,516    1,207    7.66%         34,879   1,424     8.17%
Federal funds sold                            339        8    4.72%          1,563      38     4.86%
                                       ----------------------------     -----------------------------
Total interest-earning assets           1,695,597   63,085    7.44%      1,661,741  57,874     6.97%
                                                    ------                          ------
Other assets                              172,757                          174,723
                                       ----------                       ----------
Total assets                           $1,868,354                       $1,836,464
                                       ==========                       ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits         $227,852     $229    0.20%       $244,688    $244     0.20%
Savings deposits                          382,359    2,657    1.39%        417,697   1,640     0.79%
Time deposits                             552,081   12,052    4.37%        487,801   8,979     3.68%
Federal funds purchased                    57,801    1,536    5.31%         80,641   1,919     4.76%
Other borrowings                           41,848      996    4.76%         32,128     744     4.63%
Junior subordinated debt                   41,238    1,641    7.96%         41,238   1,522     7.38%
                                        ---------------------------     -----------------------------
Total interest-bearing liabilities      1,303,179   19,111    2.93%      1,304,193  15,048     2.31%
                                                    ------                          ------
Noninterest-bearing deposits              355,311                          348,012
Other liabilities                          33,315                           28,438
Shareholders' equity                      176,549                          155,821
                                        ---------                        ---------
Total liabilities and shareholders'
    equity                             $1,868,354                       $1,836,464
                                       ==========                      ===========
Net interest spread(1)                                        4.51%                            4.66%
Net interest income and interest margin(2)         $43,974    5.19%                $42,826     5.15%
                                                   ================                =================
(1)  Net interest spread represents the average yield earned on interest-earning
     assets minus the average rate paid on interest-bearing liabilities.
(2)  Net  interest  margin is computed by  calculating  the  difference  between
     interest   income  and   expense,   divided  by  the  average   balance  of
     interest-earning assets.

                                       21
Summary of  Changes in  Interest  Income and  Expense  due to Changes in Average
Asset & Liability Balances and Yields Earned & Rates Paid

The following tables set forth a summary of the changes in interest income (FTE)
and  interest  expense  from  changes in average  asset and  liability  balances
(volume)  and  changes  in average  interest  rates for the  periods  indicated.
Changes  not  solely  attributable  to volume or rates  have been  allocated  in
proportion to the respective volume and rate components (dollars in thousands).

                                                Three months ended June 30, 2007
                                                   compared with three months
                                                       ended June 30, 2006
                                                --------------------------------
                                                 Volume        Rate       Total
                                                --------------------------------
Increase (decrease) in interest income:
Loans                                            $1,473      $1,854      $3,327
Investment securities                              (682)        (49)       (731)
Federal funds sold                                 (26)          -         (26)
                                                --------------------------------
   Total interest-earning assets                   765        1,805       2,570
                                                --------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits                    (8)           -          (8)
Savings deposits                                   (43)         680         637
Time deposits                                      305          695       1,000
Federal funds purchased                           (216)          61        (155)
Other borrowings                                   121          (11)        110
Junior subordinated debt                             -           36          36
                                                --------------------------------
   Total interest-bearing liabilities              159        1,461       1,620
                                                --------------------------------
Increase in Net Interest Income                   $606         $344        $950
                                                ================================

                                                Six months ended June 30, 2007
                                                    compared with six months
                                                       ended June 30, 2006
                                                --------------------------------
                                                Volume         Rate       Total
                                                --------------------------------
Increase (decrease) in interest income:
Loans                                            $3,389       $3,292     $6,681
Investment securities                            (1,400)         (40)    (1,440)
Federal funds sold                                  (30)           -        (30)
                                                --------------------------------
   Total interest-earning assets                  1,959        3,252      5,211
                                                --------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits                    (17)           2        (15)
Savings deposits                                   (140)       1,157      1,017
Time deposits                                     1,183        1,890      3,073
Federal funds purchased                            (544)         161       (383)
Other borrowings                                    225           27        252
Junior subordinated debt                              -          119        119
                                                --------------------------------
   Total interest-bearing liabilities               707        3,356      4,063
                                                --------------------------------
Increase in Net Interest Income                   $1,252       $(104)    $1,148
                                                ================================

                                       22
Provision for Loan Losses
The Company  provided  $500,000  for loan  losses in the second  quarter of 2007
versus  $554,000  in the second  quarter of 2006.  During the second  quarter of
2007, the Company  recorded  $396,000 of net loan charge offs versus $305,000 of
net loan charge-offs in the year earlier quarter.

The Company  provided  $982,000 for loan losses during the six months ended June
30, 2007 versus $1,054,000 during the six months ended June 30, 2006. During the
six months  ended June 30,  2007,  the  Company  recorded  $897,000  of net loan
charge-offs  versus  $387,000  of  net  loan  charge-offs  in the  year  earlier
six-month period.

Noninterest Income
The following  table  summarizes the  components of  noninterest  income for the
periods indicated (dollars in thousands).
Three months ended             Six months ended
                                                          June 30,                      June 30,
                                                   ---------------------------------------------------
                                                     2007          2006            2007          2006
                                                   ---------------------------------------------------
Service charges on deposit accounts           $3,858        $3,706          $7,417        $7,180
     ATM fees and interchange                       1,046           896           1,995         1,714
     Other service fees                               544           542           1,109         1,057
     Change in value of mortgage servicing rights     (73)        (188)            (85)         (138)
     Gain on sale of loans                            279           313             545           611
     Commissions on sale of
       nondeposit investment products                 550           524           1,050         1,082
     Increase in cash value of life insurance         405           403             810           803
     Gain on sale of investments                        -            12               -            12
     Other noninterest income                         420           323             788           658
                                                  ---------------------------------------------------
     Total noninterest income                      $7,029        $6,531         $13,629       $12,979
                                                  ===================================================
Noninterest income for the second quarter of 2007 increased $498,000 (7.6%) from
the  year-ago  quarter.  The  increase in  noninterest  income from the year-ago
quarter  was mainly  due to a $152,000  (4.1%)  increase  in service  charges on
deposit  accounts to  $3,858,000,  a $150,000  (16.7%)  increase in ATM fees and
interchange  to  $1,046,000,  and a $115,000  improvement  in change in value of
mortgage servicing rights to $73,000. The increase in service charges on deposit
accounts was primarily due to growth in customer count. The increase in ATM fees
and  interchange  was due to growth in customer  count and  expansion of the ATM
network as part of new branch  openings.  The  improvement in change in value of
mortgage  servicing rights is primarily due to a slowdown in refinance  activity
which extends the estimated life of existing mortgages and enhances the value of
the related mortgage servicing rights.

Noninterest  income for the six months  ended June 30, 2007  increased  $650,000
(5.0%) to $13,629,000  from the same period in 2006. The increase in noninterest
income  from the  year-ago  six months  ended June 30,  2006 was mainly due to a
$237,000 (3.3%)  increase in service charges on deposit  accounts to $7,417,000,
and a $281,000 (16.4%)  increase in ATM fees and interchange to $1,995,000.  The
increase in service  charges on deposit  accounts was primarily due to growth in
customer  count.  The increase in ATM fees and  interchange was due to growth in
customer count and expansion of ATM network as part of new branch openings.

                                       23
Noninterest Expense
The following  table  summarizes the  components of noninterest  expense for the
periods indicated (dollars in thousands).
Three months ended             Six months ended
                                                      June 30,                      June 30,
                                               ----------------------------------------------------
                                                 2007          2006            2007          2006
                                               ----------------------------------------------------
Salaries & benefits                      $9,619        $8,618         $19,361       $17,774
     Occupancy                                 1,178         1,106           2,348         2,128
     Equipment                                 1,072         1,024           2,170         2,169
     Advertising and marketing                   600           533           1,004           973
     Professional fees                           462           510             809           890
     ATM network charges                         498           466             926           900
     Telecommunications                          419           415             828           785
     Data processing and software                499           394             918           806
     Intangible amortization                     122           350             245           696
     Courier service                             156           316             454           613
     Postage                                     203           249             424           493
     Operational losses                          125            85             185           129
     Assessments                                  84            80             165           160
     Other                                     2,406         2,130           4,566         4,182
                                            ----------------------------------------------------
     Total                                   $17,443       $16,276         $34,403       $32,698
                                            ======================================================

     Average full time equivalent staff          630           621             631           614
     Noninterest expense to revenue (FTE)      59.46%        58.36%         59.72%         58.59%
Noninterest  expense for the second quarter of 2007 increased  $1,167,000 (7.2%)
compared to the second quarter of 2006.  Salaries and benefits expense increased
$1,001,000 (11.6%) to $9,619,000.  The increase in salaries and benefits expense
was mainly due to annual salary  increases,  and a 1.5% increase in average full
time  equivalent  staff made up  primarily  of new  employees  at the  Company's
recently  opened  branches.  Other  categories  of  noninterest  expense such as
equipment,  occupancy and ATM network  charges also  increased,  in part, due to
these newly opened branches. Intangible amortization decreased $228,000 (65%) to
$122,000  during  the  second  quarter  of 2007 as the core  deposit  intangible
related to the purchase of several  branches in 1997 became  fully  amortized in
the fourth quarter of 2006.

Noninterest expense for the six months ended June 30, 2007 increased  $1,705,000
(5.2%)  compared to the six months  ended June 30,  2006.  Salaries and benefits
expense increased $1,587,000 (8.9%) to $19,361,000. The increase in salaries and
benefits expense was mainly due to annual salary increases,  and a 2.8% increase
in average full time equivalent  staff made up primarily of new employees at the
Company's recently opened branches. Other categories of noninterest expense such
as equipment,  occupancy and ATM network charges also increased, in part, due to
these newly opened branches. Intangible amortization decreased $451,000 (65%) to
$245,000  during  the  six  months  ended  June  30,  2007 as the  core  deposit
intangible  related to the  purchase of several  branches  in 1997 became  fully
amortized in the fourth quarter of 2006.

Provision for Income Tax
The  effective  tax rate for the three  months ended June 30, 2007 was 39.6% and
reflects an increase  from 39.3% for the three months  ended June 30, 2006.  The
effective tax rate for the six months ended June 30, 2007 was 39.4% and reflects
an increase from 39.2% for the six months ended June 30, 2006. The provision for
income  taxes  for  all  periods  presented  is  primarily  attributable  to the
respective  level  of  earnings  and  the  incidence  of  allowable  deductions,
particularly from increase in cash value of life insurance, tax-exempt loans and
state and municipal securities.

                                       24
Classified Assets
The  Company  closely  monitors  the  markets in which it  conducts  its lending
operations  and  continues  its strategy to control  exposure to loans with high
credit risk.  Asset reviews are performed  using grading  standards and criteria
similar to those employed by bank regulatory  agencies.  Assets receiving lesser
grades  fall  under  the  "classified  assets"  category,   which  includes  all
nonperforming  assets and potential problem loans, and receive an elevated level
of attention to ensure collection.

The following is a summary of classified assets on the dates indicated  (dollars
in thousands):

                                 At June 30, 2007          At December 31, 2006
                             -----------------------     -----------------------
                               Gross Guaranteed  Net      Gross Guaranteed   Net
                             ---------------------------------------------------
Classified loans             $22,314  $6,273  $16,041    $13,116  $6,514  $6,602
Other classified assets          187       -      187          -       -       -
                             ---------------------------------------------------
Total classified assets      $22,501  $6,273  $16,228    $13,116  $6,514  $6,602
                             ===================================================
Allowance for loan losses/classified loans      104.8%                    256.2%

Classified  assets,  net of  guarantees  of the U.S.  Government,  including its
agencies  and its  government-sponsored  agencies  at June 30,  2007,  increased
$9,626,000 (245.8%) to $16,228,000 from $6,602,000 at December 31, 2006.

Nonperforming Loans
Loans are reviewed on an  individual  basis for  reclassification  to nonaccrual
status when any one of the following  occurs:  the loan becomes 90 days past due
as to  interest  or  principal,  the full and timely  collection  of  additional
interest or principal becomes  uncertain,  the loan is classified as doubtful by
internal credit review or bank regulatory  agencies,  a portion of the principal
balance has been charged off, or the Company takes possession of the collateral.
Loans that are placed on nonaccrual even though the borrowers  continue to repay
the  loans as  scheduled  are  classified  as  "performing  nonaccrual"  and are
included  in  total  nonperforming  loans.  The  reclassification  of  loans  as
nonaccrual does not necessarily reflect Management's judgment as to whether they
are collectible.

Interest income is not accrued on loans where Management has determined that the
borrowers  will  be  unable  to  meet  contractual   principal  and/or  interest
obligations,  unless the loan is well secured and in the process of  collection.
When a loan is placed on nonaccrual,  any previously accrued but unpaid interest
is  reversed.  Income on such loans is then  recognized  only to the extent that
cash is received  and where the future  collection  of  principal  is  probable.
Interest  accruals  are resumed on such loans only when they are  brought  fully
current  with  respect to interest and  principal  and when,  in the judgment of
Management, the loans are estimated to be fully collectible as to both principal
and interest.

Interest income on nonaccrual loans, which would have been recognized during the
six  months,  ended  June 30,  2007,  if all such  loans  had  been  current  in
accordance  with their  original  terms,  totaled  $1,142,000.  Interest  income
actually recognized on these loans during the six months ended June 30, 2007 was
$794,000.

The  Company's  policy is to place loans 90 days or more past due on  nonaccrual
status.  In some instances  when a loan is 90 days past due Management  does not
place  it on  nonaccrual  status  because  the loan is well  secured  and in the
process of  collection.  A loan is considered to be in the process of collection
if, based on a probable  specific  event,  it is expected  that the loan will be
repaid or brought current. Generally, this collection period would not exceed 30
days. Loans where the collateral has been repossessed are classified as OREO or,
if the collateral is personal  property,  the loan is classified as other assets
on the Company's consolidated financial statements.

Management considers both the adequacy of the collateral and the other resources
of the  borrower  in  determining  the steps to be taken to  collect  nonaccrual
loans.   Alternatives  that  are  considered  are  foreclosure,   collecting  on
guarantees, restructuring the loan or collection lawsuits.

                                       25
As shown in the following table, total nonperforming assets net of guarantees of
the  U.S.  Government,  including  its  agencies  and  its  government-sponsored
agencies, increased $8,848,000 (296%) to $13,360,000 during the first six months
of 2007. Nonperforming assets net of guarantees represent 0.71% of total assets.
All nonaccrual loans are considered to be impaired when determining the need for
a specific valuation allowance. The Company continues to make a concerted effort
to work problem and potential  problem loans to reduce risk of loss.
(dollars in thousands):
                                                   At June 30, 2007           At December 31, 2006
                                              -------------------------    -------------------------
                                                Gross Guaranteed  Net       Gross Guaranteed   Net
                                              ------------------------------------------------------
Performing nonaccrual loans                   $18,708   $6,135  $12,573    $10,255  $6,372   $3,883
Nonperforming, nonaccrual loans                   600        -      600        561       -      561
                                              ------------------------------------------------------
     Total nonaccrual loans                    19,308    6,135   13,173     10,816   6,372    4,444
Loans 90 days past due and still accruing           -        -        -         68       -       68
                                              ------------------------------------------------------
Total nonperforming loans                      19,308    6,135   13,173     10,884   6,372    4,512
Other real estate owned                           187        -      187          -       -        -
                                              ------------------------------------------------------
Total nonperforming assets                    $19,495   $6,135  $13,360    $10,884  $6,372   $4,512
                                              ======================================================
Nonperforming loans to total loans                               0.87%                        0.30%
Nonperforming assets to total assets                             0.71%                        0.24%
Allowance for loan losses to nonperforming loans                  129%                         375%
Capital Resources
The  current  and  projected  capital  position of the Company and the impact of
capital plans and long-term strategies are reviewed regularly by Management.

On March 11, 2004,  the Board of  Directors  approved an increase in the maximum
number of shares to be repurchased  under the Company's  stock  repurchase  plan
originally announced on July 31, 2003 from 250,000 to 500,000 effective on April
9, 2004,  solely to conform with the two-for-one  stock split effective on April
9, 2004. The 250,000 shares originally authorized for repurchase under this plan
represented  approximately 3.2% of the Company's  approximately 7,852,000 common
shares  outstanding as of July 31, 2003. This plan has no stated expiration date
for the  repurchases,  which  may occur  from time to time as market  conditions
allow.  As of June 30, 2007,  the Company had  repurchased  394,371 shares under
this plan as adjusted for the 2-for-1 stock split paid on April 30, 2004,  which
left 105,629 shares available for repurchase under the plan.

The  Company's  primary  capital  resource is  shareholders'  equity,  which was
$178,600,000 at June 30, 2007. This amount  represents an increase of $9,164,000
from December 31, 2006, the net result of comprehensive income for the period of
$12,941,000, the issuance of common shares via the exercise of stock options for
proceeds of $1,964,000, the tax effects of stock option exercises of $8,612,000,
and the effect of stock  option  vesting of  $376,000,  partially  offset by the
retirement  of common stock with an aggregate  value of  $2,841,000  tendered by
employees,  in lieu of cash, to exercise  stock  options,  and dividends paid of
$4,137,000.  The Company's ratio of equity to total assets was 9.46%, 8.44%, and
8.82% as of June 30, 2007, June 30, 2006, and December 31, 2006, respectively.

The following  summarizes the ratios of capital to risk-adjusted  assets for the
periods indicated:

                                   At June 30,         At            Minimum
                               ---------------     December 31,    Regulatory
                               2007       2006        2006         Requirement
                               -----------------------------------------------
     Tier I Capital            10.76%     10.08%     10.44%         4.00%
     Total Capital             11.76%     11.11%     11.44%         8.00%
     Leverage ratio            11.11%      9.99%     10.49%         4.00%

The  information  presented  under  "Liquidity"  at  Item 3 of  this  Report  is
incorporated herein by reference.

                                       26
Off-Balance Sheet Items
The Bank has certain  ongoing  commitments  under  operating and capital leases.
These commitments do not significantly  impact operating results. As of June 30,
2007 commitments to extend credit and commitments  related to the Bank's deposit
overdraft  privilege  product were the Bank's only  financial  instruments  with
off-balance  sheet  risk.  The  Bank has not  entered  into  any  contracts  for
financial  derivative   instruments  such  as  futures,   swaps,  options,  etc.
Commitments to extend credit were $685,589,000 and $623,133,000 at June 30, 2006
and December  31, 2006,  respectively,  and  represent  45.5% of the total loans
outstanding  at June 30, 2007 versus  41.3% at December  31,  2006.  Commitments
related to the Bank's deposit overdraft  privilege  product totaled  $36,528,000
and $33,290,000 at June 30, 2007 and December 31, 2006, respectively.

                                       27
Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Asset and Liability Management
The goal for managing the assets and  liabilities  of the Company is to maximize
shareholder  value and earnings while  maintaining a high quality  balance sheet
without exposing the Company to undue interest rate risk. The Board of Directors
has overall  responsibility  for the  Company's  interest  rate risk  management
policies.  The Company has an Asset and Liability  Management  Committee  (ALCO)
which establishes and monitors guidelines to control the sensitivity of earnings
to changes in interest rates.

Activities involved in asset/liability management include but are not limited to
lending,  accepting and placing  deposits,  investing in securities  and issuing
debt.   Interest  rate  risk  is  the  primary  market  risk   associated   with
asset/liability  management.  Sensitivity  of earnings to interest  rate changes
arises when yields on assets change in a different time period or in a different
amount from that of interest  costs on  liabilities.  To mitigate  interest rate
risk, the structure of the balance sheet is managed with the goal that movements
of interest  rates on assets and  liabilities  are  correlated and contribute to
earnings  even in  periods  of  volatile  interest  rates.  The  asset/liability
management  policy  sets  limits on the  acceptable  amount of  variance  in net
interest margin,  net income and market value of equity under changing  interest
environments.  Market value of equity is the net present value of estimated cash
flows from the Company's  assets,  liabilities and off-balance  sheet items. The
Company uses simulation  models to forecast net interest margin,  net income and
market value of equity.

Simulation of net interest  margin,  net income and market value of equity under
various  interest  rate  scenarios is the primary tool used to measure  interest
rate risk. Using computer-modeling  techniques,  the Company is able to estimate
the potential  impact of changing  interest  rates on net interest  margin,  net
income and market value of equity.  A balance sheet  forecast is prepared  using
inputs  of  actual  loan,   securities  and  interest-bearing   liability  (i.e.
deposits/borrowings) positions as the beginning base.

In the simulation of net interest  margin and net income under various  interest
rate scenarios,  the forecast balance sheet is processed  against seven interest
rate  scenarios.  These  seven  interest  rate  scenarios  include  a flat  rate
scenario,  which assumes  interest  rates are  unchanged in the future,  and six
additional rate ramp scenarios ranging from +300 to -300 basis points around the
flat scenario in 100 basis point  increments.  These ramp scenarios  assume that
interest  rates  increase  or  decrease  evenly  (in a  "ramp"  fashion)  over a
twelve-month period and remain at the new levels beyond twelve months.

In the  simulation  of  market  value of  equity  under  various  interest  rate
scenarios,  the forecast balance sheet is processed  against seven interest rate
scenarios.  These seven interest rate  scenarios  include the flat rate scenario
described  above,  and six additional rate shock scenarios  ranging from +300 to
-300 basis points around the flat scenario in 100 basis point increments.  These
rate shock scenarios assume that interest rates increase or decrease immediately
(in a "shock" fashion) and remain at the new level in the future.

At June 30, 2007, the results of the simulations noted above indicate that given
a "flat"  balance sheet  scenario,  and if deposit rates track general  interest
rate changes by  approximately  50%,  the  Company's  balance  sheet is slightly
liability sensitive.  "Liability  sensitive" implies that earnings decrease when
interest rates rise, and increase when interest rates decrease. The magnitude of
all the simulation  results noted above is within the Bank's policy  guidelines.
The asset liability  management policy limits aggregate market risk, as measured
in this  fashion,  to an  acceptable  level  within the  context of  risk-return
trade-offs.

The simulation  results noted above do not incorporate  any management  actions,
which might  moderate the negative  consequences  of interest  rate  deviations.
Therefore,  they do not reflect likely actual results, but serve as conservative
estimates of interest rate risk.

At June 30, 2007 and 2006,  the Company  had no  material  derivative  financial
instruments.

There have been no material  changes from the information  regarding market risk
disclosed  under  "Market Risk  Management"  at Item 7 of the  Company's  Annual
Report on Form 10-K for the year ended December 31, 2006.

                                       28
Liquidity
The  Company's  principal  source of asset  liquidity is federal  funds sold and
marketable  investment  securities available for sale. At June 30, 2007, federal
funds sold and investment  securities  available for sale totaled  $177,606,000,
representing  a decrease of  $21,549,000  (10.8%) from December 31, 2006,  and a
decrease of  $44,748,000  (20.1%) from June 30, 2006.  In addition,  the Company
generates  additional  liquidity  from its operating  activities.  The Company's
profitability  during  the first six  months of 2007  generated  cash flows from
operations of $16,574,000 compared to $14,323,000 during the first six months of
2006. Additional cash flows may be provided by financing  activities,  primarily
the  acceptance of deposits and borrowings  from banks.  Maturities and sales of
investment  securities produced cash inflows of $21,664,000 and $0 respectively,
during the six months ended June 30, 2007  compared to  $25,997,000  and $9,780,
respectively,  for the six  months  ended June 30,  2006.  During the six months
ended  June 30,  2007,  the  Company  invested  $0 in  securities  and  received
$1,167,000 from a net decline in loan balances,  compared to investing  $896,000
and  $71,360,000  in securities  and net loan growth,  respectively,  during the
first  six  months  of 2006.  These  changes  in  investment  and loan  balances
contributed to net cash provided by investing  activities of $20,895,000  during
the six months  ended June 30,  2007,  compared  to net cash used for  investing
activities of $38,929,000  during the six months ended June 30, 2006.  Financing
activities  used net cash of  $45,132,000  during the six months  ended June 30,
2007,  compared to net cash  provided by  financing  activities  of  $16,856,000
during  the six months  ended June 30,  2006.  A  decrease  in deposit  balances
accounted for an $88,270,000  use of financing funds during the six months ended
June 30, 2007 compared to a $17,643,000 source of financing funds during the six
months ended June 30, 2006 from an increase in deposit  balances.  Federal funds
borrowed  increased  $42,500,000  in the first six months of 2007  compared to a
$100,000  decrease in the first six months of 2006.  Short-term other borrowings
increased  $5,015,000 and  $2,610,000  during the six months ended June 30, 2007
and 2006,  respectively.  Dividends paid used  $4,137,000 and $3,789,000 of cash
during the six months ended June 30, 2007 and 2006, respectively.  Repurchase of
common  stock used  $470,000 and $0 of cash during the six months ended June 30,
2007 and 2006,  respectively.  Also,  the  Company's  liquidity  is dependent on
dividends received from the Bank. Dividends from the Bank are subject to certain
regulatory restrictions.

Item 4.  Controls and Procedures
The Chief Executive  Officer,  Richard Smith,  and the Chief Financial  Officer,
Thomas Reddish, evaluated the effectiveness of the Company's disclosure controls
and  procedures  as  of  June  30,  2007  ("Evaluation  Date").  Based  on  that
evaluation,  they  concluded  that  as of  the  Evaluation  Date  the  Company's
disclosure  controls and procedures are effective to allow timely  communication
to them of  information  relating  to the  Company  and the Bank  required to be
disclosed in its filings with the  Securities  and Exchange  Commission  ("SEC")
under  the  Securities  Exchange  Act of  1934,  as  amended  ("Exchange  Act").
Disclosure  controls and  procedures are Company  controls and other  procedures
that are  designed to ensure that  information  required to be  disclosed by the
Company  in the  reports  that it files  under  the  Exchange  Act is  recorded,
processed,  summarized  and reported  within the time  periods  specified in the
SEC's rules and forms.

No changes in the Company's  internal control over financial  reporting occurred
during  the first six  months of 2007  that  have  materially  affected,  or are
reasonably  likely to materially  affect,  the Company's  internal  control over
financial reporting.

                                       29
PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

Due to the nature of the banking business, the Bank is at times party to various
legal actions;  all such actions are of a routine nature and arise in the normal
course of business of the Bank.

Item 1A - Risk Factors

There have been no material changes to the risk factors previously  disclosed in
Item 1A to Part I of our Annual Report on Form 10-K for the year ended  December
31, 2006.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows information concerning the common stock repurchased by
the Company  during the second  quarter of 2007 pursuant to the Company's  stock
repurchase plan  originally  announced on July 31, 2003, as amended on March 11,
2004, to conform with the Company's  two-for-one  stock split effective on April
9, 2004,  which is discussed in more detail under  "Capital  Resources"  in this
report:
Period          (a) Total number    (b) Average price   (c) Total number of    (d) Maximum number
                of Shares purchased  paid per share     shares purchased as    of shares that may yet
                                                        part of publicly       be purchased under the
                                                        announced plans or     plans or programs
                                                        programs
-------------------------------------------------------------------------------------------------------
Apr. 1-30, 2007             -              -                 -                    105,629
May 1-31, 2007              -              -                 -                    105,629
Jun. 1-30, 2007             -              -                 -                    105,629
-------------------------------------------------------------------------------------------------------
Total                       -              -                 -                    105,629
During the quarter ended June 30, 2007, Employees tendered no shares of the
Company's common stock in lieu of cash to exercise options.

Item 4 - Submission of Matters to a Vote of Security Holders

(a) The Company's Annual Meeting of Shareholders was held on May 22, 2007.

(b) and (c) The following ten directors were elected at the meeting:

                                Votes For   Votes Against/Withheld   Abstentions
     William J. Casey           12,565,089         379,342                -
     Donald J. Amaral           12,450,025         609,470                -
     Craig S. Compton           12,580,188         349,144                -
     John S.A. Hasbrook         12,458,979         591,562                -
     Michael W. Koehnen         12,623,979         261,562                -
     Donald E. Murphy           12,580,391         348,738                -
     Steve G. Nettleton         12,623,829         261,862                -
     Richard P. Smith           12,580,401         348,718                -
     Carroll R. Taresh          12,623,879         261,762                -
     Alex A. Vereschagin, Jr.   12,570,407         368,706                -

     The shareholders  ratified the appointment of Moss Adams LLP as independent
     public  accountants of the Company for 2007.  12,694,412  shares were voted
     for the  ratification,  42,429 shares were voted against and 148,700 shares
     abstained.

                                       30
Item 6 - Exhibits

3.1*      Restated Articles of Incorporation dated May 9, 2003, filed as Exhibit
          3.1 to TriCo's  Quarterly  Report on Form 10-Q for the  quarter  ended
          March 31, 2003.

3.2*      Bylaws  of TriCo  Bancshares,  as  amended,  filed as  Exhibit  3.2 to
          TriCo's Form S-4  Registration  Statement  dated January 16, 2003 (No.
          333-102546).

4*        Certificate  of  Determination  of  Preferences  of  Series  AA Junior
          Participating   Preferred  Stock  filed  as  Exhibit  3.3  to  TriCo's
          Quarterly  Report on Form 10-Q for the  quarter  ended  September  30,
          2001.

10.1*     Rights  Agreement  dated  June 25,  2001,  between  TriCo  and  Mellon
          Investor  Services  LLC filed as Exhibit 1 to  TriCo's  Form 8-A dated
          July 25, 2001.

10.2*     Form of Change of  Control  Agreement  dated as of  August  23,  2005,
          between  TriCo,  Tri  Counties  Bank and each of Bruce  Belton,  Craig
          Carney,  Gary Coelho, W.R. Hagstrom,  Andrew Mastorakis,  Rick Miller,
          Richard O'Sullivan, Thomas Reddish, and Ray Rios filed as Exhibit 10.2
          to  TriCo's  Quarterly  Report  on Form  10-Q  for the  quarter  ended
          September 30, 2005.

10.3*     TriCo's  1995  Incentive  Stock  Option  Plan filed as Exhibit  4.1 to
          TriCo's  Form S-8  Registration  Statement  dated August 23, 1995 (No.
          33-62063).

10.4*     TriCo's  2001 Stock  Option Plan as amended  filed as Exhibit  10.7 to
          TriCo's  Annual  Report on Form 10-K for the year ended  December  31,
          2004.

10.5*     Amended  Employment  Agreement  between  TriCo and Richard Smith dated
          March 20,  2007  filed as Exhibit  10.1 to TriCo's  Report on Form 8-K
          dated March 20, 2007.

10.6*     Tri Counties Bank Executive Deferred Compensation Plan dated September
          1, 1987, as restated April 1, 1992, and amended and restated effective
          as of  January 1, 2004  filed as  Exhibit  10.9 to  TriCo's  Quarterly
          Report on Form 10-Q for the quarter ended September 30, 2005.

10.7*     Tri Counties Bank Deferred  Compensation Plan for Directors  effective
          January 1, 2005 filed as Exhibit 10.10 to TriCo's  Quarterly Report on
          Form 10-Q for the quarter ended September 30, 2005.

10.8*     2005 Tri Counties Bank Deferred  Compensation  Plan for Executives and
          Directors  effective January 1, 2005 filed as Exhibit 10.11 to TriCo's
          Quarterly  Report on Form 10-Q for the  quarter  ended  September  30,
          2005.

10.9*     Tri Counties Bank  Supplemental  Retirement  Plan for Directors  dated
          September  1, 1987,  as  restated  January 1, 2001,  and  amended  and
          restated  January 1, 2004 filed as Exhibit 10.12 to TriCo's  Quarterly
          Report on Form 10-Q for the quarter ended June 30, 2004.

10.10*    2004  TriCo  Bancshares  Supplemental  Retirement  Plan for  Directors
          effective  January 1, 2004 filed as Exhibit 10.13 to TriCo's Quarterly
          Report on Form 10-Q for the quarter ended June 30, 2004.

                                       31
10.11*    Tri Counties Bank  Supplemental  Executive  Retirement  Plan effective
          September 1, 1987,  as amended and  restated  January 1, 2004 filed as
          Exhibit 10.14 to TriCo's Quarterly Report on Form 10-Q for the quarter
          ended June 30, 2004.

10.12*    2004 TriCo Bancshares Supplemental Executive Retirement Plan effective
          January 1, 2004 filed as Exhibit 10.15 to TriCo's  Quarterly Report on
          Form 10-Q for the quarter ended June 30, 2004.

10.13*    Form of Joint Beneficiary  Agreement  effective March 31, 2003 between
          Tri Counties Bank and each of Craig Carney,  Richard  Miller,  Richard
          O'Sullivan,  Thomas Reddish, and Richard Smith, filed as Exhibit 10.14
          to  TriCo's  Quarterly  Report  on Form  10-Q  for the  quarter  ended
          September 30, 2003.

10.14*   Form of Joint Beneficiary Agreement effective March 31, 2003 between
         Tri Counties Bank and each of Don Amaral, William Casey, Craig Compton,
         John Hasbrook, Michael Koehnen, Donald Murphy, Carroll Taresh, and Alex
         Vereshagin, filed as Exhibit 10.15 to TriCo's Quarterly Report on Form
         10-Q for the quarter ended September 30, 2003.

10.15*    Form of Tri-Counties Bank Executive Long Term Care Agreement effective
          June 10, 2003  between  Tri  Counties  Bank and each of Craig  Carney,
          Richard  Miller,  Richard  O'Sullivan  and  Thomas  Reddish,  filed as
          Exhibit 10.16 to TriCo's Quarterly Report on Form 10-Q for the quarter
          ended September 30, 2003.

10.16*    Form of Tri-Counties Bank Director Long Term Care Agreement  effective
          June 10,  2003  between  Tri  Counties  Bank  and each of Don  Amaral,
          William Casey, Craig Compton, John Hasbrook,  Michael Koehnen,  Donald
          Murphy,  Carroll Taresh, and Alex Verischagin,  filed as Exhibit 10.17
          to  TriCo's  Quarterly  Report  on Form  10-Q  for the  quarter  ended
          September 30, 2003.

10.17*    Form  of  Indemnification   Agreement  between  TriCo   Bancshares/Tri
          Counties  Bank  and  each of the  directors  of  TriCo  Bancshares/Tri
          Counties  Bank  effective  on the date  that  each  director  is first
          elected,  filed as Exhibit 10.18 to TriCo's Annual Report on Form 10-K
          for the year ended December 31, 2003.

10.18*    Form  of  Indemnification   Agreement  between  TriCo   Bancshares/Tri
          Counties Bank and each of W.R. Hagstrom, Craig Carney, Richard Miller,
          Raymond Rios, Richard  O'Sullivan,  Thomas Reddish,  and Richard Smith
          filed as Exhibit  10.21 to TriCo's  Quarterly  Report on Form 10-Q for
          the quarter ended June 30, 2004.

21.1      Tri Counties  Bank, a California  banking  corporation,  TriCo Capital
          Trust I, a Delaware  business  trust,  and TriCo  Capital  Trust II, a
          Delaware business trust, are the only subsidiaries of Registrant

31.1     Rule 13a-14(a)/15d-14(a) Certification of CEO
31.2     Rule 13a-14(a)/15d-14(a) Certification of CFO
32.1     Section 1350 Certification of CEO
32.2     Section 1350 Certification of CFO

       * Previously filed and incorporated by reference.

                                       32
SIGNATURES
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.

                                      TRICO BANCSHARES
                                      (Registrant)

Date:  August 7, 2007                 /s/ Thomas J. Reddish
                                     -----------------------------------
                                     Thomas J. Reddish
                                     Executive Vice President and
                                     Chief Financial Officer

                                       33
EXHIBITS

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification of CEO

I, Richard P. Smith, certify that;

    1.    I  have  reviewed  this  quarterly   report  on  Form  10-Q  of  TriCo
          Bancshares;
    2.    Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;
    3.    Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;
    4.    The registrant's  other  certifying  officer and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange Act Rules  13a-15(e)  and  15d-15(e)  and internal
          control  over  financial  reporting  (as defined in Exchange Act Rules
          13a-15(f) and 15d-15(f)) for the registrant and we have:
          a.   Designed such disclosure controls and procedures,  or caused such
               disclosure  controls  and  procedures  to be  designed  under our
               supervision,  to ensure that material information relating to the
               registrant,  including its consolidated subsidiary, is made known
               to us by others within those  entities,  particularly  during the
               period in which this quarterly report is being prepared;
          b.   Designed  such  internal  control over  financial  reporting,  or
               caused such  internal  control  over  financial  reporting  to be
               designed under our supervision,  to provide reasonable  assurance
               regarding  the   reliability  of  financial   reporting  and  the
               preparation  of financial  statements  for  external  purposes in
               accordance with generally accepted accounting principles;
          c.   Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and procedures  and presented in this  quarterly  report
               our  conclusions   about  the  effectiveness  of  the  disclosure
               controls and  procedures,  as of the end of the period covered by
               this quarterly report based on such evaluation; and
          d.   Disclosed in this report any change in the registrant's  internal
               control  over  financial   reporting  that  occurred  during  the
               registrant's  most  recent  fiscal  quarter  that has  materially
               affected,  or is  reasonably  likely to  materially  affect,  the
               registrant's internal control over financial reporting;
    5.    The registrant's other certifying officer and I have disclosed,  based
          on our most recent  evaluation  of  internal  control  over  financial
          reporting, to the registrant's auditors and the audit committee of the
          registrant's board of directors;
          a.   All  significant  deficiencies  and  material  weaknesses  in the
               design or operation of internal control over financial  reporting
               which are reasonably  likely to adversely affect the registrant's
               ability to record, process,  summarize and report financial data;
               and
          b.   Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal control over financial reporting.

Date: August 7, 2007                    /s/ Richard P. Smith
                                        ----------------------------------------
                                        Richard P. Smith
                                        President and Chief Executive Officer

                                       34
Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification of CFO

I, Thomas J. Reddish, certify that;

    1.    I  have  reviewed  this  quarterly   report  on  Form  10-Q  of  TriCo
          Bancshares;
    2.    Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;
    3.    Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;
    4.    The registrant's  other  certifying  officer and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange Act Rules  13a-15(e)  and  15d-15(e)) and internal
          control  over  financial  reporting  (as defined in Exchange Act Rules
          13a-15(f) and 15d-15(f)) for the registrant and we have:
          a.   Designed such disclosure controls and procedures,  or caused such
               disclosure  controls  and  procedures  to be  designed  under our
               supervision,  to ensure that material information relating to the
               registrant,  including its consolidated subsidiary, is made known
               to us by others within those  entities,  particularly  during the
               period in which this quarterly report is being prepared;
          b.   Designed  such  internal  control over  financial  reporting,  or
               caused such  internal  control  over  financial  reporting  to be
               designed under our supervision,  to provide reasonable  assurance
               regarding  the   reliability  of  financial   reporting  and  the
               preparation  of financial  statements  for  external  purposes in
               accordance with generally accepted accounting principles;
          c.   Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and procedures  and presented in this  quarterly  report
               our  conclusions   about  the  effectiveness  of  the  disclosure
               controls and  procedures,  as of the end of the period covered by
               this quarterly report based on such evaluation; and
          d.   Disclosed in this report any change in the registrant's  internal
               control  over  financial   reporting  that  occurred  during  the
               registrant's  most  recent  fiscal  quarter  that has  materially
               affected,  or is  reasonably  likely to  materially  affect,  the
               registrant's internal control over financial reporting;
    5.    The registrant's other certifying officer and I have disclosed,  based
          on our most recent  evaluation  of  internal  control  over  financial
          reporting, to the registrant's auditors and the audit committee of the
          registrant's board of directors;
          a.   All  significant  deficiencies  and  material  weaknesses  in the
               design or operation of internal control over financial  reporting
               which are reasonably  likely to adversely affect the registrant's
               ability to record, process,  summarize and report financial data;
               and
          b.   Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal control over financial reporting.

Date: August7, 2007                    /s/ Thomas J. Reddish
                                        ----------------------------------------
                                        Thomas J. Reddish
                                        Executive Vice President and
                                        Chief Financial Officer

                                       35
Exhibit 32.1

Section 1350 Certification of CEO

In connection with the Quarterly  Report of TriCo  Bancshares (the "Company") on
Form 10-Q for the period  ended June 30, 2007 as filed with the  Securities  and
Exchange  Commission  on the date hereof (the  "Report"),  I,  Richard P. Smith,
President and Chief Executive  Officer of the Company,  certify,  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that:

     (1)  The Report fully  complies with the  requirements  of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.

          /s/ Richard P. Smith
          -------------------------------------
          Richard P. Smith
          President and Chief Executive Officer

A signed  original of this  written  statement  required by Section 906 has been
provided  to TriCo  Bancshares  and will be  retained  by TriCo  Bancshares  and
furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

Section 1350 Certification of CFO

In connection with the Quarterly  Report of TriCo  Bancshares (the "Company") on
Form 10-Q for the period  ended June 30, 2007 as filed with the  Securities  and
Exchange  Commission  on the date hereof (the  "Report"),  I, Thomas J. Reddish,
Executive Vice President and Chief  Financial  Officer of the Company,  certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully  complies with the  requirements  of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.

          /s/ Thomas J. Reddish
          -------------------------------------
          Thomas J. Reddish
          Executive Vice President and Chief Financial Officer

A signed  original of this  written  statement  required by Section 906 has been
provided  to TriCo  Bancshares  and will be  retained  by TriCo  Bancshares  and
furnished to the Securities and Exchange Commission or its staff upon request.

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