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, 2009         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)

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

--------------------------------------------------------------------------------
(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        Small reporting company
                                   ----                          ----
     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 July 31, 2009:  15,787,753



<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                                                21

   Item 2 - Management's Discussion and Analysis of Financial                22
            Condition and Results of Operations

   Item 3 - Quantitative and Qualitative Disclosures about Market Risk       33

   Item 4 - Controls and Procedures                                          34

PART II - OTHER INFORMATION                                                  35

   Item 1 - Legal Proceedings                                                35

   Item 1A - Risk Factors                                                    35

   Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds      35

   Item 4 - Submission of Matters to a Vote of Security Holders              35

   Item 6 - Exhibits                                                         36

   Signatures                                                                39

   Exhibits                                                                  40



<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 the  Company  is  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,  2008,  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  suggested  by any  forward-looking
statement made in this report.  Such Form 10-K and this report should be read to
put any  forward-looking  statements  in  context  and to  gain a more  complete
understanding of the risks and uncertainties involved in the Company's business.
Any forward-looking statement may turn out to be wrong and cannot be guaranteed.
The Company does not intend to update any  forward-looking  statement  after the
date of 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,
                                                         2009              2008                2008
                                                       ----------------------------       ---------------
     <S>                                                    <C>              <C>                <C>
Assets:
     Cash and due from banks                              $55,071           $76,658           $64,375
     Cash at Federal Reserve and other banks              127,852                 -            21,980
                                                       ----------------------------        ----------
         Cash and cash equivalents                        182,923            76,658            86,355
     Securities available-for-sale                        252,104           253,129           266,561
     Federal Home Loan Bank stock, at cost                  9,274             9,010             9,235
     Loans, net of allowance for loan losses
         of $33,624, $24,281 and $27,590                1,518,611         1,519,043         1,563,259
     Foreclosed assets, net of allowance for
         losses of $318, $214 and $230                      2,622             1,178             1,185
     Premises and equipment, net                           18,208            19,580            18,841
     Cash value of life insurance                          47,365            45,701            46,815
     Accrued interest receivable                            7,575             7,802             7,935
     Goodwill                                              15,519            15,519            15,519
     Other intangible assets, net                             454               920               653
     Other assets                                          33,186            31,950            26,832
                                                       ----------------------------        -----------
         Total Assets                                  $2,087,841        $1,980,490        $2,043,190
                                                       ============================        ===========
Liabilities:
     Deposits:
         Noninterest-bearing demand                      $358,618          $347,336          $401,247
         Interest-bearing                               1,378,767         1,163,717         1,268,023
                                                       ----------------------------         ----------
         Total deposits                                 1,737,385         1,511,053         1,669,270
     Federal funds purchased                                    -           123,750                 -
     Accrued interest payable                               5,094             5,119             6,146
     Reserve for unfunded commitments                       3,140             3,465             2,565
     Other liabilities                                     27,107            24,131            24,034
     Other borrowings                                      73,898            85,048           102,005
     Junior subordinated debt                              41,238            41,238            41,238
                                                       ----------------------------         ----------
         Total Liabilities                              1,887,862         1,793,804         1,845,258
                                                       ----------------------------         ----------
Commitments and contingencies
Shareholders' Equity
     Common stock, no par value: 50,000,000 shares
         authorized; issued and outstanding:
         15,782,753 at June 30, 2009                       79,257
         15,744,881 at June 30, 2008                                         78,306
         15,756,101 at December 31, 2008                                                       78,246
     Retained earnings                                    118,400           111,360           117,630
     Accumulated other comprehensive income (loss), net     2,322            (2,980)            2,056
                                                       ----------------------------        -----------
         Total Shareholders' Equity                       199,979           186,686           197,932
                                                       ----------------------------       ------------
     Total Liabilities and Shareholders' Equity        $2,087,841        $1,980,490        $2,043,190
                                                       ============================       ===========

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


                                       2
<PAGE>
<TABLE>
<CAPTION>
                                TRICO BANCSHARES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                  (In thousands, except share data; unaudited)

                                                       Three months ended June 30,   Six months ended June 30,
                                                             2009           2008        2009           2008
                                                    ----------------------------------------------------------
<S>                                                       <C>            <C>            <C>            <C>
Interest and dividend income:
Loans, including fees                                  $25,218         $27,015        50,731        $54,741
   Debt securities:
   Taxable                                               2,896           2,892         5,979          5,851
   Tax exempt                                              263             299           527            623
Dividends                                                    -             125             -            244
Cash at Federal Reserve and other banks                     55               1            77              3
                                                    ---------------------------------------------------------
Total interest income                                   28,432          30,332        57,314         61,462
                                                    ---------------------------------------------------------
Interest expense:
Deposits                                                 4,778           5,650         9,980         12,827
Federal funds purchased                                      -             711             -          1,523
Other borrowings                                           112             524           354          1,587
Junior subordinated debt                                   396             586           836          1,299
                                                    --------------------------------------------------------
Total interest expense                                   5,286           7,471        11,170         17,236
                                                    --------------------------------------------------------
Net interest income                                     23,146          22,861        46,144         44,226
                                                    --------------------------------------------------------
Provision for loan losses                                7,850           8,800        15,650         12,900
                                                    --------------------------------------------------------
Net interest income after provision for loan losses     15,296          14,061        30,494         31,326
                                                    --------------------------------------------------------
Noninterest income:
Service charges and fees                                 6,182           5,826        11,234         10,954
Gain on sale of loans                                      948             316         1,589            574
Commissions on sale of non-deposit investment products     492             525           981            945
Increase in cash value of life insurance                   270             360           550            720
Other                                                      104             253           257            937
                                                    ---------------------------------------------------------
Total noninterest income                                 7,996           7,280        14,611         14,130
                                                    ---------------------------------------------------------
Noninterest expense:
Salaries and related benefits                           10,069           9,645        19,858         19,125
Other                                                    9,275           8,199        16,687         16,292
                                                    --------------------------------------------------------
Total noninterest expense                               19,344          17,844        36,545         35,417
                                                    --------------------------------------------------------
Income before income taxes                               3,948           3,497         8,560         10,039
Provision for income taxes                               1,436           1,223         3,166          3,717
                                                    --------------------------------------------------------
Net income                                              $2,512          $2,274        $5,394         $6,322
                                                    ========================================================

Average shares outstanding                          15,782,753      15,744,881    15,778,689     15,793,483
Diluted average shares outstanding                  15,997,437      15,953,288    16,008,462     16,017,505

Per share data:
Basic earnings                                           $0.16           $0.14         $0.34          $0.40
Diluted earnings                                         $0.16           $0.14         $0.34          $0.39
Dividends paid                                           $0.13           $0.13         $0.26          $0.26

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


                                       3
<PAGE>

<TABLE>
<CAPTION>
                                TRICO BANCSHARES
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
           (In thousands, except share and per 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, 2007            15,911,550     $78,775    $111,655       ($1,552)   $188,878
                                                                                            --------
Comprehensive income:
Net income                                                           6,322                     6,322
Change in net unrealized gain on
          Securities available for sale, net                                      (1,428)     (1,428)
                                                                                            ---------
Total comprehensive income                                                                     4,894
Cumulative effect of change in
   Accounting principle, net of tax                                   (522)                     (522)
Stock option vesting                                       356                                   356
Repurchase of common stock                (166,669)       (825)     (1,996)                   (2,821)
Dividends paid ($0.26 per share)                                    (4,099)                   (4,099)
                                       ---------------------------------------------------------------
Balance at June 30, 2008                15,744,881     $78,306    $111,360       ($2,980)   $186,686
                                       ===============================================================

Balance at December 31, 2008            15,756,101     $78,246    $117,630        $2,056    $197,932
Comprehensive income:
Net income                                                           5,394                     5,394
Change in net unrealized loss on
  Securities available for sale, net                                                 266         266
                                                                                             -------
Total comprehensive income                                                                     5,660
Stock option vesting                                       262                                   262
Stock option exercise                       53,213         828                                   828
Tax benefit of stock options exercised                      53                                    53
Repurchase of common stock                 (26,561)       (132)       (520)                     (652)
Dividends paid ($0.26 per share)                                    (4,104)                   (4,104)
                                       --------------------------------------------------------------
Balance at June 30, 2009                15,782,753     $79,257    $118,400        $2,322    $199,979
                                       ==============================================================
See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>


                                       4
<PAGE>
<TABLE>
<CAPTION>

                                TRICO BANCSHARES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands; unaudited)

                                                                 For the six months ended June 30,
                                                                     2009               2008
                                                               -----------------------------------
<s>                                                                <c>                 <c>
Operating activities:
Net income                                                         $5,394              $6,322
Adjustments to reconcile net income to net cash provided
  by operating activities:
    Depreciation and amortization of property and equipment         1,680               1,745
    Amortization of intangible assets                                 198                 256
    Provision for loan losses                                      15,650              12,900
    Amortization of investment securities premium, net                186                 170
    Originations of loans for resale                              (97,153)            (41,412)
    Proceeds from sale of loans originated for resale              97,917              41,574
    Gain on sale of loans                                          (1,589)               (574)
    Change in value of mortgage servicing rights                      (98)                172
    Provision for losses on other real estate owned                   162                  34
    Loss on sale of other real estate owned                             4                   -
    Loss on sale of fixed assets                                        8                   2
    Increase in cash value of life insurance                         (550)               (720)
    Stock option expense                                              262                 356
    Stock option tax benefits                                         (53)                  -
    Change in:
      Reserve for unfunded commitments                                575               1,375
      Interest receivable                                             360                 752
      Interest payable                                             (1,052)             (2,752)
      Other assets and liabilities, net                            (2,751)             (4,589)
                                                               ------------------------------
      Net cash provided by operating activities                    19,150              15,611
                                                               ------------------------------
Investing activities:
Proceeds from maturities of securities available-for-sale          44,126              26,883
Purchases of securities available-for-sale                        (29,396)            (50,219)
Purchases of Federal Home Loan Bank stock                             (39)               (244)
Loan originations and principal collections, net                   26,722               1,667
Proceeds from sale of premises and equipment                            1                   1
Purchases of premises and equipment                                  (802)             (1,421)
Proceeds from sale of other real estate owned                         673                   -
                                                               ------------------------------
Net cash (used in) provided by investing activities                41,285             (23,333)
                                                               ------------------------------
Financing activities:
Net increase (decrease) in deposits                                68,115             (34,170)
Net increase in Federal funds purchased                                 -              67,750
Payments of principal on long-term other borrowings                   (39)                (39)
Net change in short-term other borrowings                         (28,068)            (31,039)
Stock option tax benefits                                              53                   -
Repurchase of common stock                                              -              (2,821)
Dividends paid                                                     (4,104)             (4,099)
Exercise of stock options                                             176                   -
                                                               ------------------------------
      Net cash provided by (used in) financing activities          36,133              (4,418)
                                                               ------------------------------
  Net change in cash and cash equivalents                          96,568             (12,140)
                                                               ------------------------------
  Cash and cash equivalents and beginning of period                86,355              88,798
                                                               ------------------------------
  Cash and cash equivalents at end of period                     $182,923             $76,658
                                                               ==============================
  Supplemental disclosure of noncash activities:
Loans transferred to other real estate owned                       $2,276              $1,025
Unrealized net gain (loss) on securities available for sale          $459             ($2,464)
Market value of shares tendered by employees in-lieu of
  cash to pay for exercise options and/or related taxes              $652                   -
Supplemental disclosure of cash flow activity:
Cash paid for interest expense                                    $12,222             $19,988
Cash paid for income taxes                                         $8,567              $8,100

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


                                       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, 2008.

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 25 in-store  branch  offices in the
California  counties of Butte,  Contra Costa, Del Norte,  Fresno,  Glenn,  Kern,
Lake, Lassen,  Madera,  Mendocino,  Merced,  Napa, 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. The Company currently  classifies all its operation into one
business segment that it denotes as community banking.

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, 2009, and throughout  2008, the Company did
not have any securities classified as either held-to-maturity or trading.

                                       6
<PAGE>


The amortized  cost and estimated  fair values of investments in debt and equity
securities are summarized in the following tables:
<TABLE>
<CAPTION>


                                                                                       June 30, 2009
                                                             --------------------------------------------------------------
                                                                                  Gross            Gross         Estimated
                                                              Amortized        Unrealized       Unrealized         Fair
                                                                Cost              Gains           Losses           Value
                                                             --------------------------------------------------------------
<S>                                                              <C>               <C>              <C>              <C>
Securities Available-for-Sale                                                         (in thousands)
Obligations of U.S. government corporations and agencies       $222,225           $7,114                 -       $229,339
Obligations of states and political subdivisions                 22,289              231              (286)        22,234
Corporate debt securities                                         1,000                -              (469)           531
                                                             -------------------------------------------------------------
     Total securities available-for-sale                       $245,514           $7,345             ($755)      $252,104
                                                             =============================================================


                                                                                     December 31, 2008
                                                             -------------------------------------------------------------
                                                                                  Gross            Gross         Estimated
                                                              Amortized        Unrealized       Unrealized         Fair
                                                                Cost              Gains           Losses           Value
                                                             -------------------------------------------------------------
Securities Available-for-Sale                                                         (in thousands)
Obligations of U.S. government corporations and agencies       $236,786           $6,193               ($2)      $203,774
Obligations of states and political subdivision                  22,644              293              (272)        27,648
Corporate debt securities                                         1,000                -               (81)         1,005
                                                             -------------------------------------------------------------
    Total securities available-for-sale                        $260,430           $6,486             ($355)      $266,561
                                                             =============================================================
</TABLE>

The amortized cost and estimated fair value of debt  securities at June 30, 2009
by  contractual  maturity are shown  below.  Actual  maturities  may differ from
contractual  maturities  because  borrowers may have the right to call or prepay
obligations  with or without  call or  prepayment  penalties.  At June 30, 2009,
obligations  of U.S.  government  corporations  and  agencies  with a cost basis
totaling  $222,225,000  consist almost  entirely of  mortgage-backed  securities
whose contractual maturity, or principal repayment, will follow the repayment of
the  underlying  mortgages.  For  purposes of the  following  table,  the entire
outstanding  balance  of  these   mortgage-backed   securities  issued  by  U.S.
government  corporations  and agencies is  categorized  based on final  maturity
date.  At June 30, 2009,  the Company  estimates the average  remaining  life of
these  mortgage-backed  securities  issued by U.S.  government  corporations and
agencies to be approximately 3.4 years. Average remaining life is defined as the
time span after which the principal balance has been reduced by half.

                                                                     Estimated
                                                  Amortized Cost     Fair Value
                                                 -------------------------------
Investment  Securities                                    (in thousands)
Due in one year                                       $410              $411
Due after one year  through  five years             55,064            56,043
Due after five years through ten years              28,750            29,441
Due after ten years                                161,289           166,209
                                                 ------------------------------
Totals                                            $245,514          $252,104
                                                 ==============================

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  income
(loss) in shareholders' equity until realized.  During the six months ended June
30,  2009,  and  throughout  2008,  the  Company  did not  sell  any  investment
securities.

Investment  securities  with an aggregate  carrying  value of  $219,789,000  and
$231,056,000 at June 30, 2009 and December 31, 2008, respectively,  were pledged
as  collateral  for  specific  borrowings,  lines of  credit  and  local  agency
deposits.


                                 7
<PAGE>


Gross  unrealized  losses on  investment  securities  and the fair  value of the
related  securities,  aggregated by investment  category and length of time that
individual securities have been in a continuous  unrealized loss position,  were
as follows:

<TABLE>
<CAPTION>
                                                            Less than 12 months   12 months or more          Total
                                                            -------------------   ------------------    ------------------
                                                            Fair    Unrealized    Fair    Unrealized    Fair    Unrealized
June 30, 2009                                               Value      Loss       Value      Loss       Value      Loss
                                                            --------------------------------------------------------------
<S>                                                          <C>       <C>         <C>        <C>        <C>       <C>
Securities Available-for-Sale:                                                        (in thousands)
Obligations of U.S. government
   corporations and agencies                                     -         -           -         -           -         -
 Obligations of states and political subdivisions            3,427      (108)      1,910      (178)      5,337      (286)
Corporate debt securities                                    1,000      (469)          -         -       1,000      (469)
                                                            --------------------------------------------------------------
Total securities available-for-sale                         $4,427     ($577)     $1,910     ($178)     $6,353     ($755)
                                                            ==============================================================

                                                            Less than 12 months   12 months or more          Total
                                                            -------------------   ------------------    ------------------
                                                            Fair    Unrealized    Fair    Unrealized    Fair    Unrealized
December 31, 2008                                           Value      Loss       Value      Loss       Value      Loss
                                                            --------------------------------------------------------------
Securities Available-for-Sale:                                                        (in thousands)
Obligations ofm U.S. government
   corporations and agencies                                  $130       ($1)        $18       ($1)       $148       ($2)
Obligations of states and political subdivisions             6,882      (272)          -         -       6,882      (272)
Corporate debt securities                                    1,000       (81)          -         -       1,000       (81)
                                                            --------------------------------------------------------------
Total securities available-for-sale                         $8,012     ($354)        $18       ($1)     $8,030     ($355)
                                                            ==============================================================
</TABLE>

Obligations of U.S.  government corporations and agencies:  Unrealized losses on
investments  in obligations  of U.S.  government  corporations  and agencies are
caused  by  interest  rate  increases.  The  contractual  cash  flows  of  these
securities are guaranteed by U.S.  Government  Sponsored  Entities  (principally
Fannie Mae and Freddie  Mac). It is expected  that the  securities  would not be
settled at a price less than the amortized cost of the  investment.  Because the
decline in fair value is  attributable  to  changes  in  interest  rates and not
credit quality, and because the Company has the ability and intent to hold these
investments until a market price recovery or maturity, these investments are not
considered other-than-temporarily impaired. At June 30, 2009, no debt securities
representing  obligations  of U.S.  government  corporations  and  agencies  had
unrealized losses.

Obligations  of states and  political  subdivisions:  The  unrealized  losses on
investments in obligations of states and political  subdivisions  were caused by
increases in required  yields by investors in these types of  securities.  It is
expected  that the  securities  would not be  settled  at a price  less than the
amortized  cost  of the  investment.  Because  the  decline  in  fair  value  is
attributable  to changes in interest rates and not credit  quality,  and because
the Company has the ability and intent to hold these  investments until a market
price   recovery   or   maturity,   these   investments   are   not   considered
other-than-temporarily   impaired.   At  June  30,  2009,  11  debt   securities
representing  obligations  of states and political  subdivisions  had unrealized
losses with  aggregate  depreciation  of 5.4% from the Company's  amortized cost
basis.

Obligations of corporation debt securities: The unrealized losses on investments
in corporate  debt  securities  were caused by  increases in required  yields by
investors in these types of securities. It is expected that the securities would
not be  settled  at a price  less  than the  amortized  cost of the  investment.
Because the decline in fair value is  attributable  to changes in interest rates
and not credit  quality,  and  because the Company has the ability and intent to
hold  these  investments  until a  market  price  recovery  or  maturity,  these
investments  are not  considered  other-than-temporarily  impaired.  At June 30,
2009,  1  corporate  debt  security  had  an  unrealized   loss  with  aggregate
depreciation of 46.9% from the Company's amortized cost basis.


                                       8
<PAGE>


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 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, 2009,  June 30, 2008,  and December 31, 2008, 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 the sale of loans that are held for sale are recognized at the time
of the sale and determined by the  difference  between net sale proceeds and the
net book  value of the  loans  less the  estimated  fair  value of any  retained
mortgage servicing rights.

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 actual 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.  At June 30,  2009,
$8,632,000 of loans are  classified as troubled debt  restructured.  The Company
had obligations to lend $1,663,000 of additional funds on the restructured loans
as of June 30, 2009.

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.


                                       9
<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
occurs 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 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, 2008.

Based on the current conditions of the loan portfolio,  Management believes that
the  allowance  for loan  losses  ($33,624,000)  and the  reserve  for  unfunded
commitments  ($3,140,000),  which  collectively stand at $36,764,000 at June 30,
2009,  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.


                                       10
<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 June 30,   Six months ended June 30,
                                         -------------------------------------------------------
   Allowance for loan losses:                2009           2008           2009           2008
                                         -------------------------------------------------------
   <S>                                       <C>           <C>             <C>          <C>
   Balance at beginning of period         $32,774       $19,383          $27,590       $17,331
   Provision for loan losses                7,850         8,800           15,650        12,900
   Loans charged off:
     Real estate mortgage:
       Residential                           (484)         (167)           (574)         (221)
   Commercial                                (103)            -            (145)          (19)
     Consumer:
       Home equity lines                   (2,163)         (789)         (3,468)         (948)
       Home equity loans                      (80)         (161)           (185)         (250)
       Auto indirect                         (628)         (623)         (1,293)       (1,172)
       Other consumer                        (203)         (277)           (518)         (579)
     Commercial                              (579)         (254)         (1,058)         (389)
     Construction:
       Residential                         (3,068)       (1,905)         (3,068)       (2,983)
       Commercial                               -             -               -             -
                                          -----------------------------------------------------
   Total loans charged off                 (7,308)       (4,176)        (10,309)       (6,561)
   Recoveries of previously
     charged-off loans:
     Real estate mortgage:
       Residential                              -             -               -             -
       Commercial                              16            14              31            28
     Consumer:
       Home equity lines                        7             -               9             -
       Home equity loans                        -             -               -             -
       Auto indirect                          124            69             260           191
       Other consumer                         155           181             351           374
     Commercial                                 6            10              38            18
     Construction:
       Residential                              -             -               4             -
       Commercial                               -             -               -             -
                                          ----------------------------------------------------
   Total recoveries of
     previously charged off loans             308           274             693           611
                                          ----------------------------------------------------
       Net charge-offs                     (7,000)       (3,902)         (9,616)       (5,950)
                                          ----------------------------------------------------
   Balance at end of period               $33,624       $24,281         $33,624       $24,281
                                          ====================================================
   Reserve for unfunded commitments:
   Balance at beginning of period          $2,740        $2,915          $2,565        $2,090
   Provision for losses -
     unfunded commitments                     400           550             575         1,375
                                          ----------------------------------------------------
   Balance at end of period                $3,140        $3,465          $3,140        $3,465
                                          ====================================================
   Balance at end of period:
   Allowance for loan losses                                            $33,624      $24,281
   Reserve for unfunded commitments                                       3,140        3,465
                                                                        ---------------------
   Allowance for losses                                                 $36,764      $27,746
                                                                        =====================
   As a percentage of total loans:
   Allowance for loan losses                                              2.17%         1.57%
   Reserve for unfunded commitments                                        .20%         0.23%
                                                                        ---------------------
   Allowance for losses                                                   2.37%         1.80%
                                                                        =====================
</TABLE>


                                       11
<PAGE>


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 the 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.

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 Company uses an independent third party to determine fair
value of MSRs.

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,
                                            -------------------------
                                               2009         2008
                                            -------------------------
   Mortgage servicing rights:
   Balance at beginning of period              $2,972        $4,088
   Additions                                      825           412
   Change in fair value                            98          (172)
                                            -------------------------
   Balance at end of period                    $3,895        $4,328
                                            =========================
   Servicing fees received                       $546          $506
   Balance of loans serviced at:
     Beginning of period                     $431,195      $406,743
     End of period                           $468,360      $417,080
  Weighted-average prepayment speed (CPR)        16.3%         10.7%
  Discount rate                                   9.0%         10.0%




                                       12
<PAGE>


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 net  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.

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,
2009 and December 31, 2008.

                               December 31,                             June 30,
   (Dollars in Thousands)         2008       Additions     Reductions     2009
                              --------------------------------------------------
   Goodwill                      $15,519         -              -       $15,519
                              ==================================================

The following table summarizes the Company's core deposit intangibles as of June
30, 2009 and December 31, 2008.

                                   December 31,                         June 30,
   (Dollars in Thousands)             2008      Additions  Reductions      2009
                                   ---------------------------------------------
   Core deposit intangibles        $3,365             -             -    $3,365
   Accumulated amortization        (2,712)            -          (199)   (2,911)
                                   ---------------------------------------------
   Core deposit intangibles, net     $653             -         ($199)    $ 454
                                   =============================================

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)
               -----------               -----------------------
                  2009                             $328
                  2010                             $260
                  2011                              $65
               Thereafter                             -


                                       13
<PAGE>


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.  Currently,  and  historically,  the Company is  comprised of only one
reporting  unit that operates  within the business  segment it has identified as
"community banking".

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
The following table shows the number, weighted-average exercise price, intrinsic
value,  weighted average remaining  contractual life,  average remaining vesting
period,  and remaining  compensation  cost to be  recognized  over the remaining
vesting period of options  exercisable,  options not yet exercisable,  and total
options outstanding as of June 30, 2009:
<TABLE>
<CAPTION>
                                                      Currently     Currently Not     Total
(dollars in thousands except exercise price)         Exercisable     Exercisable   Outstanding
<S>                                                      <C>             <C>           <C>
Number of options                                     1,176,438       195,150       1,371,588
Weighted average exercise price                          $13.80        $20.16          $14.70
Intrinsic value                                          $4,042           $61          $4,103
Weighted average remaining contractual term (yrs.)         2.15          3.21            3.01
</TABLE>

The options for 195,150 shares that are not currently exercisable as of June 30,
2009 are  expected  to vest,  on a  weighted-average  basis,  over the next 3.21
years, and the Company is expected to recognize $1,400,000 of compensation costs
related to these options as they vest.

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.


                                       14
<PAGE>


Earnings per share have been computed based on the following:
<TABLE>
<CAPTION>

                                                 Three months ended June 30,  Six months ended June 30,

                                                      2009         2008           2009        2008
(in thousands)                                   ------------------------------------------------------
<S>                                                   <C>          <C>            <C>         <C>
Net income                                          $2,512       $2,274         $5,394      $6,322

Average number of common shares outstanding         15,783       15,745         15,779      15,793
Effect of dilutive stock options                       214          208            229         225
                                                 ---------------------------------------------------
Average number of common shares outstanding
   used to calculate diluted earnings per share     15,997       15,953         16,008      16,018
                                                 ===================================================
</TABLE>

There were 553,000 and 658,000 options  excluded from the computation of diluted
earnings  per share for the three  month  periods  ended June 30, 2009 and 2008,
respectively, because the effect of these options was antidilutive.

There were 553,000 and 541,000 options  excluded from the computation of diluted
earnings  per share  for the six month  periods  ended  June 30,  2009 and 2008,
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,
                                             ---------------------------------------------------------
                                                 2009          2008             2009           2008
(in thousands)                               ---------------------------------------------------------
<S>                                               <C>          <C>               <C>            <C>
Unrealized holding losses on
   available-for-sale securities              ($1,988)      ($5,185)             $460        ($2,464)
Tax effect                                        836         2,180               194          1,036
                                             ---------------------------------------------------------
Unrealized holding losses on
   available-for-sale securities, net of tax  ($1,152)      ($3,005)             $266        ($1,428)
                                             =========================================================
</TABLE>


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

                                                          June 30,  December 31,
                                                             2009      2008
                                                          ----------------------
                                                             (in thousands)
Net unrealized gains on available-for-sale securities      $6,590      $6,131
Tax effect                                                 (2,771)     (2,578)
                                                          ----------------------
    Unrealized holding gains on
    available-for-sale securities, net of tax               3,819       3,553
                                                          ----------------------
Minimum pension liability                                  (2,677)     (2,677)
Tax effect                                                  1,126       1,126
                                                          ----------------------
   Minimum pension liability, net of tax                   (1,551)     (1,551)

Joint beneficiary agreement liability                          94          94
Tax effect                                                    (40)        (40)
                                                           ---------------------
   Joint beneficiary agreement liability, net of tax           54          54
                                                           ---------------------
Accumulated other comprehensive income                     $2,322      $2,056
                                                           =====================


                                       15
<PAGE>


Retirement Plans
The Company has  supplemental  retirement plans for current and former 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 (but is not  required) 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)                                           2009       2008       2009     2008
                                                         ----       ----       ----     ----
<S>                                                       <C>        <C>        <C>      <C>

Net pension cost included the following components:
Service cost-benefits earned during the period           $99       $139       $198     $278
Interest cost on projected benefit obligation            174        166        348      332
Amortization of net obligation at transition               -          -          -        -
Amortization of prior service cost                        38         45         76       90
Recognized net actuarial loss                             25         37         50       74
                                                        ------------------------------------
Net periodic pension cost                               $336       $387       $672     $774
                                                        ====================================
</TABLE>


During the six months ended June 30, 2009 and 2008, the Company  contributed and
paid out as benefits $388,000 and $314,000,  respectively, to participants under
the plans. For the year ending December 31, 2009, the Company  currently expects
to contribute and pay out as benefits $730,000 to participants under the plans.

Fair Value Measurement
The Company utilizes fair value measurements to record fair value adjustments to
certain  assets  and  liabilities  and  to  determine  fair  value  disclosures.
Securities available-for-sale and mortgage servicing rights are recorded at fair
value on a recurring basis. Additionally,  from time to time, the Company may be
required to record at fair value other assets on a nonrecurring  basis,  such as
loans held for sale,  loans held for investment and certain other assets.  These
nonrecurring  fair value adjustments  typically involve  application of lower of
cost or market accounting or impairment write-downs of individual assets.

The Company groups assets and  liabilities at fair value in three levels,  based
on the  markets  in  which  the  assets  and  liabilities  are  traded  and  the
reliability of the assumptions used to determine fair value. These levels are:

Level 1 - Valuation is based upon quoted prices for identical instruments traded
          in active markets
Level 2 - Valuation  is based upon  quoted  prices for  similar  instruments  in
          active markets,  quoted prices for identical or similar instruments in
          markets that are not active, and model-based  valuation techniques for
          which all significant assumptions are observable in the market.
Level 3 - Valuation is generated from  model-based  techniques that use at least
          one  significant  assumption  not  observable  in  the  market.  These
          unobservable  assumptions reflect estimates of assumptions that market
          participants  would use in pricing the asset or  liability.  Valuation
          techniques include use of option pricing models,  discounted cash flow
          models and similar techniques.

Securities  available-for-sale  are recorded at fair value on a recurring basis.
Fair value  measurement  is based upon quoted  prices,  if available.  If quoted
prices are not  available,  fair values are measured using  independent  pricing
models or other  model-based  valuation  techniques such as the present value of
future  cash  flows,  adjusted  for the  security's  credit  rating,  prepayment
assumptions  and  other  factors  such  as  credit  loss  assumptions.  Level  1
securities  include  those  traded on an active  exchange,  such as the New York
Stock Exchange,  U.S. Treasury  securities that are traded by dealers or brokers
in active  over-the-counter  markets and money market funds.  Level 2 securities
include  mortgage-backed  securities  issued by government  sponsored  entities,
municipal bonds and corporate debt securities.  Securities classified as Level 3
include asset-backed securities in less liquid markets.


                                       16
<PAGE>


The Company does not record loans at fair value on a recurring  basis.  However,
from time to time,  a loan is  considered  impaired  and an  allowance  for loan
losses is  established.  Loans for which it is probable that payment of interest
and principal will not be made in accordance with the  contractual  terms of the
loan  agreement  are  considered   impaired.   Once  a  loan  is  identified  as
individually  impaired,  management  measures impairment in accordance with SFAS
114, Accounting by Creditors for Impairment of a Loan (SFAS 114). The fair value
of  impaired  loans  is  estimated  using  one  of  several  methods,  including
collateral value,  market value of similar debt,  enterprise value,  liquidation
value and discounted cash flows. Those impaired loans not requiring an allowance
represent  loans  for  which  the  fair  value  of the  expected  repayments  or
collateral  exceed the  recorded  investments  in such loans.  At June 30, 2009,
substantially  all of the total impaired loans were evaluated  based on the fair
value of the collateral.  In accordance  with SFAS 157,  impaired loans where an
allowance  is  established  based  on  the  fair  value  of  collateral  require
classification  in  the  fair  value  hierarchy.  When  the  fair  value  of the
collateral is based on an observable  market price or a current  appraised value
which uses substantially  observable data, the Company records the impaired loan
as nonrecurring  Level 2. When an appraised value is not available or management
determines  the fair  value of the  collateral  is  further  impaired  below the
appraised value, or the appraised value contains a significant  assumption,  and
there is no observable  market price,  the Company  records the impaired loan as
nonrecurring Level 3.

Mortgage servicing rights are carried at fair value. A valuation model, which
utilizes a discounted cash flow analysis using a discount rate and prepayment
speed assumptions is used in the completion of the fair value measurement. While
the prepayment speed assumption is currently quoted for comparable instruments,
the discount rate assumption currently requires a significant degree of
management judgment. As such, the Company classifies mortgage servicing rights
subjected to recurring fair value adjustments as Level 3.

Goodwill and identified  intangible assets are subject to impairment  testing. A
projected  cash flow  valuation  method is used in the  completion of impairment
testing.  This  valuation  method  requires a  significant  degree of management
judgment as there are  unobservable  inputs for these  assets.  In the event the
projected  undiscounted  net  operating  cash  flows are less than the  carrying
value, the asset is recorded at fair value as determined by the valuation model.
As such, the Company  classifies  goodwill and other intangible assets subjected
to nonrecurring fair value adjustments as Level 3.

The table below presents the recorded amount of assets and liabilities  measured
at fair value on a recurring basis (in thousands):

Fair value at June 30, 2009              Total    Level 1     Level 2    Level 3
Securities available-for-sale          $252,104         -    $252,104          -
Mortgage servicing rights                 3,895         -           -     $3,895
                                       -----------------------------------------
Total assets measured at fair value    $255,999         -    $252,104     $3,895
                                       =========================================

The table below presents the recorded amount of assets and liabilities  measured
at fair value on a nonrecurring basis (in thousands):

Fair value at June 30, 2009               Total   Level 1    Level 2     Level 3
Impaired loans                           $40,094        -          -     $40,094
                                        ----------------------------------------
Total assets measured at fair value      $40,094        -          -     $40,094
                                        ========================================

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial  instrument  for which it is practical to estimate  that
value.  Cash and due from banks, fed funds purchased and sold,  accrued interest
receivable  and payable,  and short-term  borrowings  are considered  short-term
instruments. For these short-term instruments their carrying amount approximates
their fair value.

Securities
For all securities, fair values are based on quoted market prices or dealer
quotes.

Loans
The fair  value of  variable  rate  loans is the  current  carrying  value.  The
interest rates on these loans are regularly  adjusted to market rates.  The fair
value of other types of fixed rate loans is estimated by discounting  the future
cash flows using current rates at which similar loans would be made to borrowers
with similar credit ratings for the same remaining maturities. The allowance for
loan losses is a reasonable estimate of the valuation allowance needed to adjust
computed fair values for credit quality of certain loans in the portfolio.

Cash Value of Life Insurance
The  fair  values  of  insurance  policies  owned  are  based  on the  insurance
contract's cash surrender value.

                                       17
<PAGE>


Deposit Liabilities and Long-Term Debt
The fair value of demand deposits,  savings  accounts,  and certain money market
deposits is the amount payable on demand at the reporting date.  These values do
not consider the estimated fair value of the Company's core deposit  intangible,
which is a significant unrecognized asset of the Company. The fair value of time
deposits and debt is based on the discounted value of contractual cash flows.

Securities  Sold under  Agreements to Repurchase and Federal Funds  Purchased or
Sold For short-term  instruments,  including securities sold under agreements to
repurchase  and  federal  funds  purchased  or sold,  the  carrying  amount is a
reasonable estimate of fair value.

Other Borrowings
The fair value of other  borrowings is calculated  based on the discounted value
of the  contractual  cash flows using current rates at which such borrowings can
currently be obtained.

Junior Subordinated Debentures
The fair value of junior subordinated debentures is estimated using a discounted
cash flow model. The future cash flows of these  instruments are extended to the
next available  redemption  date or maturity date as appropriate  based upon the
spreads of recent  issuances or quotes from brokers for comparable  bank holding
companies  compared  to the  contractual  spread  of  each  junior  subordinated
debenture measured at fair value.

Commitments to Extend Credit and Standby Letters of Credit
The fair value of commitments is estimated  using the fees currently  charged to
enter into similar  agreements,  taking into account the remaining  terms of the
agreements and the present credit  worthiness of the counter parties.  For fixed
rate loan commitments,  fair value also considers the difference between current
levels of interest rates and the committed  rates.  The fair value of letters of
credit is based on fees  currently  charged  for  similar  agreements  or on the
estimated  cost to terminate them or otherwise  settle the  obligation  with the
counter parties at the reporting date.

Fair values for financial  instruments are management's  estimates of the values
at which the  instruments  could be exchanged in a transaction  between  willing
parties.  These estimates are subjective and may vary significantly from amounts
that would be realized in actual  transactions.  In addition,  other significant
assets are not  considered  financial  assets  including,  any mortgage  banking
operations,  deferred tax assets, and premises and equipment.  Further,  the tax
ramifications  related to the realization of the unrealized gains and losses can
have a  significant  effect  on the  fair  value  estimates  and  have  not been
considered in any of these estimates. The estimated fair values of the Company's
financial instruments are as follows:
<TABLE>
<CAPTION>

                                                    June 30, 2009                    December 31, 2008
                                            --------------------------         ----------------------------
                                             Carrying           Fair             Carrying           Fair
                                              Amount            Value             Amount            Value
 (in thousands)                             --------------------------         ----------------------------
      <S>                                       <C>              <C>               <C>                 <C>
Financial assets:
  Cash and due from banks                     $55,071          $55,071           $64,375           $64,375
  Cash at Federal Reserve and other banks     127,852          127,852            21,980            21,980
  Securities available-for-sale               252,104          252,104           266,561           266,561
  Federal Home Loan Bank stock, at cost         9,274            9,274             9,235             9,235
  Loans, net                                1,518,611        1,551,729         1,563,259         1,623,697
  Cash value of life insurance                 47,365           47,365            46,815            46,815
  Accrued interest receivable                   7,575            7,575             7,935             7,935
Financial liabilities:
  Deposits                                  1,737,385        1,696,777         1,669,270         1,646,561
  Accrued interest payable                      5,094            5,094             6,146             6,146
  Federal funds purchased                           -                -                 -                 -
  Other borrowings                             73,898           78,685           102,005           101,681
  Junior subordinated debt                     41,238           17,097            41,238            21,856

                                             Contract           Fair            Contract             Fair
Off-balance sheet:                            Amount            Value            Amount              Value
                                             --------------------------         --------            ------
 Commitments                                 $614,022           $6,140          $637,940            $6,379
 Standby letters of credit                      7,424               74             5,425                54
 Overdraft privilege commitments               37,825              378            35,883               359
</TABLE>

                                       18
<PAGE>

Subsequent Events

The Company has evaluated events  subsequent to the balance sheet through August
7, 2009, the date the financial  statements were issued, and has determined that
there were no  recognized  or  non-recognized  subsequent  events  that  require
recognition or disclosure in these financial statements.

Recent Accounting Pronouncements
In February 2008, the FASB issued  Financial  Accounting  Standards  Board Staff
Position FAS SFAS157-2  (FSP 157-2),  Effective  Date of FASB Statement No. 157.
FSP SFAS 157-2 delayed the Company's January 1, 2008,  effective date of FAS 157
for  all  nonfinancial  assets  and  nonfinancial   liabilities,   except  those
recognized or disclosed at fair value in the financial statements on a recurring
basis (at  least  annually),  until  January  1,  2009.  Implementation  of this
standard did not have a material effect on the Company's financial statements.

In March 2008, the FASB issued FASB Statement of Financial  Accounting Standards
No. 161,  Disclosures About Derivative  Instruments and Hedging  Activities,  an
Amendment  of FASB  Statement  No. 133 (SFAS  161).  SFAS 161  amends  SFAS 133,
Accounting  for  Derivative  Instruments  and Hedging  Activities,  to amend and
expand the disclosure  requirements of SFAS 133 to provide greater  transparency
about (i) how and why an entity uses derivative instruments, (ii) how derivative
instruments  and related  hedge items are  accounted  for under SFAS 133 and its
related interpretations, and (iii) how derivative instruments and related hedged
items affect an entity's  financial  position,  results of  operations  and cash
flows. To meet those objectives, SFAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives,  quantitative disclosures about
fair value amounts of gains and losses on derivative instruments and disclosures
about credit-risk-related contingent features in derivative agreements. SFAS 161
is effective  for the Company on January 1, 2009 and did not have a  significant
impact on the Company's financial statements.

In May 2008,  the FASB issued FASB Statement of Financial  Accounting  Standards
No. 162, The Hierarchy of Generally Accepted  Accounting  Principles (SFAS 162).
SFAS 162 identifies  the sources of accounting  principles and the framework for
selecting the principles to be used in the  preparation of financial  statements
of  nongovernmental  entities that are presented in  conformity  with  generally
accepted accounting principles (GAAP) in the United States (the GAAP hierarchy).
The hierarchical guidance provided by SFAS 162 did not have a significant impact
on the Company's financial statements.

In April  2009,  the FASB  issued  Financial  Accounting  Standards  Board Staff
Position FAS SFAS 157-4 (FSP SFAS 157-4), Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability  Have  Significantly  Decreased
and Identifying  Transactions That Are Not Orderly.  FSP SFAS 157-4 affirms that
the  objective  of fair  value when the market for an asset is not active is the
price that would be  received to sell the asset in an orderly  transaction,  and
clarifies and includes additional factors for determining whether there has been
a significant  decrease in market activity for an asset when the market for that
asset is not active.  FSP SFAS 157-4  requires an entity to base its  conclusion
about whether a transaction  was not orderly on the weight of the evidence.  FSP
SFAS 157-4 also amended SFAS 157,  Fair Value  Measurements,  to expand  certain
disclosure  requirements.  The Company  adopted the provisions of FSP SFAS 157-4
during  the  first  quarter  of  2009.  Adoption  of  FSP  SFAS  157-4  did  not
significantly impact the Company's financial statements.

In April  2009,  the FASB  issued  Financial  Accounting  Standards  Board Staff
Position  FAS SFAS  115-2  and SFAS  124-2  (FSP  SFAS  115-2  and SFAS  124-2),
Recognition and Presentation of Other-Than-Temporary Impairments. FSP SFAS 115-2
and SFAS  124-2  (i)  changes  existing  guidance  for  determining  whether  an
impairment  is other than  temporary to debt  securities  and (ii)  replaces the
existing  requirement that the entity's management assert it has both the intent
and ability to hold an impaired  security until recovery with a requirement that
management assert: (a) it does not have the intent to sell the security; and (b)
it is more likely than not it will not have to sell the security before recovery
of its cost  basis.  Under FSP SFAS 115-2 and SFAS  124-2,  declines in the fair
value of  held-to-maturity  and  available-for-sale  securities below their cost
that are deemed to be other than temporary are reflected in earnings as realized
losses to the extent the impairment is related to credit  losses.  The amount of
the  impairment  related to other factors is  recognized in other  comprehensive
income.  The  Company  adopted the  provisions  of FSP SFAS 115-2 and SFAS 124-2
during the first quarter of 2009.  Adoption of FSP SFAS 115-2 and SFAS 124-2 did
not significantly impact the Company's financial statements.

                                       19
<PAGE>


In April  2009,  the FASB  issued  Financial  Accounting  Standards  Board Staff
Position  FAS SFAS  107-1 and APB 28-1 (FSP SFAS  107-1 and APB  28-1),  Interim
Disclosures  about Fair Value of Financial  Instruments.  FSP SFAS 107-1 and APB
28-1 amends SFAS 107, Disclosures about Fair Value of Financial Instruments,  to
require  an  entity  to  provide  disclosures  about  fair  value  of  financial
instruments in interim financial  information and amends  Accounting  Principles
Board (APB)  Opinion  No. 28,  Interim  Financial  Reporting,  to require  those
disclosures in summarized  financial  information at interim reporting  periods.
Under FSP SFAS  107-1 and APB 28-1,  a publicly  traded  company  shall  include
disclosures about the fair value of its financial instruments whenever it issues
summarized  financial  information for interim reporting  periods.  In addition,
entities  must  disclose,  in the  body  or in  the  accompanying  notes  of its
summarized  financial  information  for  interim  reporting  periods  and in its
financial  statements  for  annual  reporting  periods,  the  fair  value of all
financial  instruments  for which it is  practicable  to  estimate  that  value,
whether recognized or not recognized in the statement of financial position,  as
required by SFAS 107. The new interim disclosures required by FSP SFAS 107-1 and
APB 28-1 are included in the Company's  interim financial  statements  beginning
with the second quarter of 2009.

In May 2009,  the FASB issued  Statement of Financial  Accounting  Standards No.
165,  Subsequent Events (SFAS 165). SFAS 165 is effective with interim or annual
financial  periods  ending after June 15, 2009.  The objective of SFAS 165 is to
establish  general  standards for the  accounting  and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued.  In  particular,  SFAS 165 sets forth (i) the period
after the  balance  sheet date during  which  management  of a reporting  entity
should evaluate events or transactions that may occur for potential  recognition
or disclosure in the financial statements, (ii) the circumstances under which an
entity should recognize events or transactions occurring after the balance sheet
date in its financial  statements,  (iii) the disclosures  that an entity should
make about events or transactions that occurred after the balance sheet date.



                                       20

<PAGE>
<TABLE>
<CAPTION>
                                TRICO BANCSHARES
                                Financial Summary
               (In thousands, except per share amounts; unaudited)

                                            Three months ended         Six months ended
                                                June 30,                   June 30,
                                         ------------------------------------------------
                                           2009           2008        2009         2008
                                         ------------------------------------------------
<S>                                          <C>           <C>         <C>         <C>

Net Interest Income (FTE)                  $23,288       $23,029     $46,439      $44,575
Provision for loan losses                   (7,850)       (8,800)    (15,650)     (12,900)
Noninterest income                           7,996         7,280      14,611       14,130
Noninterest expense                        (19,344)      (17,844)    (36,545)     (35,417)
Provision for income taxes (FTE)            (1,578)       (1,391)     (3,461)      (4,066)
                                          ------------------------------------------------
Net income                                  $2,512        $2,274      $5,394       $6,322
                                          ================================================

Earnings per share:
   Basic                                     $0.16         $0.14       $0.34        $0.40
   Diluted                                   $0.16         $0.14       $0.34        $0.39
Per share:
   Dividends paid                            $0.13         $0.13       $0.26        $0.26
   Book value at period end                 $12.67        $11.86
   Tangible book value at period end        $11.66        $10.81

Average common shares outstanding           15,783        15,745      15,779       15,793
Average diluted shares outstanding          15,997        15,953      16,008       16,018
Shares outstanding at period end            15,783        15,745
At period end:
   Loans, net                           $1,518,611    $1,519,043
   Total assets                          2,087,841     1,980,490
   Total deposits                        1,737,385     1,511,053
   Other borrowings                         73,898        85,048
   Junior subordinated debt                 41,238        41,238
Shareholders' equity                      $199,979      $186,686
Financial Ratios:
During the period (annualized):
   Return on assets                           0.48%         0.46%       0.52%        0.64%
   Return on equity                           4.94%         4.74%       5.32%        6.56%
   Net interest margin(1)                     4.82%         5.06%       4.86%        4.90%
   Net loan charge-offs to average loans      1.80%         1.01%       1.23%        0.77%
   Efficiency ratio(1)                       61.83%        58.87%      59.86%       60.33%
At Period End:
   Equity to assets                           9.58%         9.43%
   Total capital to risk-adjusted assets     12.87%        12.26%
   Allowance for losses to loans(2)           2.37%         1.80%

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



                                       21
<PAGE>


Item 2. Management's  Discussion and Analysis of Financial Condition 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 consolidated financial statements, which
have been prepared in accordance with accounting  principles  generally accepted
in the United States. 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  Condensed  Consolidated  Financial  Statements  of the Company and the
Notes thereto located at Item 1 of this report.

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,
                                   ---------------------------------------------
                                       2009       2008         2009       2008
                                   ---------------------------------------------
Net Interest Income (FTE)           $23,288     $23,029      $46,439    $44,575
Provision for loan losses            (7,850)     (8,800)     (15,650)   (12,900)
Noninterest income                    7,996       7,280       14,611     14,130
Noninterest expense                 (19,344)    (17,844)     (36,545)   (35,417)
Provision for income taxes (FTE)     (1,578)     (1,391)      (3,461)    (4,066)
                                   ---------------------------------------------
Net income                           $2,512      $2,274       $5,394     $6,322
                                   =============================================

The Company had quarterly  earnings of  $2,512,000,  or $0.16 per diluted share,
for the three  months  ended June 30,  2009.  This  represents  an  increase  of
$238,000 (10.5%) when compared with earnings of $2,274,000 for the quarter ended
June 30, 2008.  Diluted  earnings per share for the quarter  ended June 30, 2009
increased 14.3% to $0.16 compared to $0.14 for the quarter ended June 30, 2008.

The Company reported earnings of $5,394,000, or $0.34 per diluted share, for the
six months ended June 30, 2009.  These results  represent a decrease of $928,000
(14.7%) when compared with earnings of $6,322,000  for the six months ended June
30,  2008.  Diluted  earnings  per share for the six months  ended June 30, 2009
decreased  12.8% to $0.34  compared  to $0.39 for the six months  ended June 30,
2008.


                                       22
<PAGE>


Net Interest Income
The  Company's  primary  source  of  revenue  is  net  interest  income,  or the
difference  between  interest  income on  interest-earning  assets and  interest
expense  on  interest-bearing  liabilities.   Following  is  a  summary  of  the
components  of net  interest  income  for  the  periods  indicated  (dollars  in
thousands):
<TABLE>
<CAPTION>


                                             Three months ended             Six months ended
                                                 June 30,                      June 30,
                                        -----------------------------------------------------
                                            2009         2008            2009         2008
                                        -----------------------------------------------------
         <S>                                 <C>          <C>             <C>          <C>
   Interest income                        $28,432      $30,332          $57,314      $61,462
   Interest expense                        (5,286)      (7,471)         (11,170)     (17,236)
   FTE adjustment                             142          168              295          349
                                       ------------------------------------------------------
      Net interest income (FTE)           $23,288      $23,029          $46,439      $44,575
                                       ======================================================
   Average interest-earning assets     $1,933,633   $1,819,222       $1,910,377   $1,818,217

   Net interest margin (FTE)                 4.82%        5.06%            4.86%       4.90%
</TABLE>


Net interest  income (FTE) during the second quarter of 2009 increased  $259,000
(1.1%) from the same period in 2008 to $23,288,000. The increase in net interest
income (FTE) was due to an $114,411,000  (6.3%) increase in average  balances of
interest-earning  assets to $1,933,633,000  that was partially offset by a 0.24%
decrease in net interest  margin (FTE) to 4.82% from the quarter  ended June 30,
2008.

Net  interest  income  (FTE)  during  the  first six  months  of 2009  increased
$1,864,000  (4.2%) from the same period in 2008 to $46,439,000.  The increase in
net interest  income (FTE) was due to a $92,160,000  (5.1%)  increase in average
balances of interest-earning  assets to $1,910,377,000 that was partially offset
by a 0.04%  decrease in net  interest  margin (FTE) to 4.86% from 4.90% from the
six month period ended June 30, 2008.

Interest and Fee Income
Interest  and  fee  income  (FTE)  for the  second  quarter  of  2009  decreased
$1,926,000  (6.3%) from the second  quarter of 2008.  The  decrease was due to a
0.80% decrease in the yield on average interest-earning assets to 5.91% that was
partially offset by a $114,411,000  (6.3%) increase in average  interest-earning
assets to  $1,933,633,000.  The  growth in average  interest-earning  assets was
mainly due to a  $109,805,000  increase in average  balance of  interest-earning
cash at the  Federal  Reserve  and other  banks.  The  decrease  in the yield on
average  interest-earning  assets was mainly due to a 0.51% decrease in yield on
loans to 6.48% and the large  increase in  interest-bearing  cash  balances that
earned only 0.20% during the quarter.

Interest and fee income  (FTE) for the six months ended June 30, 2009  decreased
$4,202,000  (6.8%) from the same period of 2008. The decrease was due to a 0.77%
decrease  in the yield on  average  interest-earning  assets  to 6.03%  that was
partially  offset by a $92,160,000  (5.1%) increase in average  interest-earning
assets to $1,910,377,000.  The growth in  interest-earning  assets was primarily
due to a $20,257,000 (1.3%) increase in average loan balances to $1,561,064,000,
and a $77,592,000  increase in average balance of  interest-earning  cash at the
Federal  Reserve  and  other  banks.  The  decrease  in  the  yield  on  average
interest-earning  assets was mainly due to a 0.61% decrease in yield on loans to
6.50% and the large increase in interest-bearing  cash balances that earned only
0.20%  during the six months  ended June 30,  2009.  The decrease in loan yields
from the six months  ended June 30,  2009 was mainly due to a 4.00%  decrease in
the prime  lending  rate from 7.25% at  December  31,  2007 to 3.25% at June 30,
2009.


                                       23
<PAGE>


Interest Expense
Interest  expense  decreased  $2,185,000  (29.2%)  to  $5,286,000  in the second
quarter of 2009 compared to the second quarter of 2008.  The average  balance of
interest-bearing  liabilities  increased $72,837,000 (5.1%) to $1,489,202,000 in
the second  quarter of 2009 compared to the second quarter of 2008. The increase
in the average  balance of  interest-bearing  liabilities  was due  primarily to
increased deposits of $214,226,000  (18.5%) offset by a decrease of $141,389,000
in the  average  balances  of  Federal  funds  purchased  and other  borrowings,
respectively,  from  the  second  quarter  of 2008.  The  average  rate  paid on
interest-bearing  liabilities in the quarter ended June 30, 2009 decreased 0.69%
to 1.42% compared to the quarter ended June 30, 2008 as a result of lower market
rates for almost all types of interest-bearing liabilities.

Interest expense decreased  $6,066,000 (35.2%) to $11,170,000 for the six months
ended June 30, 2009  compared to  $17,236,000  for the six months ended June 30,
2008. The average balance of interest-bearing  liabilities increased $53,730,000
(3.8%) to $1,465,509,000  for the six months ended June 30, 2009 compared to the
six  months  ended  June 30,  2008.  The  increase  in the  average  balance  of
interest-bearing   liabilities  was  due  primarily  to  increased  deposits  of
$189,529,000  (16.4%)  offset  by a  decrease  of  $135,799,000  in the  average
balances of Federal  funds  purchased and other  borrowings  from the six months
ended June 30, 2008.  The average rate paid on  interest-bearing  liabilities in
the six month period ended June 30, 2009  decreased  0.92% to 1.52%  compared to
the six months  ended June 30, 2008 as a result of lower market rates for almost
all types of interest-bearing liabilities.

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,
                                      ------------------------------------------
                                       2009       2008           2009      2008
                                      ------------------------------------------
Yield on interest-earning assets       5.91%      6.71%          6.03%     6.80%
Rate paid on interest-bearing
     Liabilities                       1.42%      2.11%          1.52%     2.44%
                                      ------------------------------------------
     Net interest spread               4.49%      4.60%          4.51%     4.36%
Impact of all other net
     noninterest-bearing funds         0.33%      0.46%          0.35%     0.54%
                                      ------------------------------------------
        Net interest margin            4.82%      5.06%          4.86%     4.90%
                                      ==========================================

Net interest  margin for the three months  ended June 30, 2009  decreased  0.24%
compared to the three months ended June 30, 2008.  This decrease in net interest
margin   was   mainly   due  to  a  0.13%   decrease   in  the   impact  of  net
noninterest-bearing  funds  to 0.33%  and a  decrease  of 0.11% in net  interest
spread  compared to the three months ended June 30, 2008.  The average  yield on
interest-earning   assets  decreased  0.80%  while  the  average  rate  paid  on
interest-bearing  liabilities  decreased  0.69% from the three months ended June
30, 2008.

Net  interest  margin for the six months  ended June 30,  2009  decreased  0.04%
compared to the six months  ended June 30, 2008.  This  decrease in net interest
margin   was   mainly   due  to  a  0.19%   decrease   in  the   impact  of  net
noninterest-bearing  funds  to  0.35%  offset  by an  increase  of  0.15% in net
interest  spread  compared to the six months  ended June 30,  2008.  The average
yield on interest-earning  assets decreased 0.77% while the average rate paid on
interest-bearing  liabilities decreased 0.92% from the six months ended June 30,
2008.



                                       24
<PAGE>


Summary  of  Average  Balances,   Yields/Rates  and  Interest  Differential  The
following table presents,  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, 2009                    June 30, 2008
                                            ------------------------------       -----------------------------
                                                         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                                       $1,555,778   $25,218    6.48%       $1,546,257   $27,015     6.99%
Investment securities - taxable                245,489     2,896    4.72%          247,508     3,017     4.88%
Investment securities - nontaxable              22,407       405    7.23%           25,303       467     7.38%
Cash at Federal Reserve and other banks        109,959        55    0.20%              154         1     1.71%
                                            -----------------------------       ------------------------------
Total interest-earning assets                1,933,633    28,574    5.91%        1,819,222    30,500     6.71%
                                                          ------                              ------
Other assets                                   155,242                             167,452
                                               -------                             -------
Total assets                                $2,088,875                          $1,986,674
                                            ==========                          ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits              $283,777      $444    0.63%         $215,661      $134     0.25%
Savings deposits                               425,759       759    0.71%          392,938     1,172     1.19%
Time deposits                                  664,863     3,575    2.15%          551,574     4,344     3.15%
Federal funds purchased                              -         -    -              130,263       711     2.18%
Other borrowings                                73,565       112    0.61%           84,691       524     2.47%
Junior subordinated debt                        41,238       396    3.84%           41,238       586     5.68%
                                            ----------------------------        ------------------------------
Total interest-bearing liabilities           1,489,202     5,286    1.42%        1,416,365     7,471     2.11%
                                                           -----                               -----
Noninterest-bearing deposits                   361,035                             347,079
Other liabilities                               35,042                              31,225
Shareholders' equity                           203,596                             192,005
                                            ----------                          ----------
Total liabilities and shareholders' equity  $2,088,875                          $1,986,674
                                            ==========                          ==========
Net interest spread(1)                                              4.49%                                4.60%
Net interest income and interest margin(2)               $23,288    4.82%                    $23,029     5.06%
                                                         ================                    =================

(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.
</TABLE>


                                       25
<PAGE>

<TABLE>
<CAPTION>
                                                                  For the six months ended
                                            ------------------------------------------------------------------
                                                     June 30, 2009                    June 30, 2008
                                            ------------------------------       -----------------------------
                                                         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                                       $1,561,064   $50,731    6.50%       $1,540,807   $54,741     7.11%
Investment securities - taxable                248,960     5,979    4.80%          251,143     6,095     4.85%
Investment securities - nontaxable              22,508       822    7.31%           26,014       972     7.47%
Cash at Federal Reserve and other banks         77,845        77    0.20%              253         3     2.37%
                                            -----------------------------       ------------------------------
Total interest-earning assets                1,910,377    57,609    6.03%        1,818,217    61,811     6.80%
                                                          ------                              ------
Other assets                                   158,657                             169,453
                                               -------                             -------
Total assets                                $2,069,034                          $1,987,670
                                            ==========                          ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits              $270,957      $786    0.58%         $217,074      $221     0.20%
Savings deposits                               417,254     1,652    0.79%          390,214     2,674     1.37%
Time deposits                                  660,103     7,542    2.29%          551,497     9,932     3.60%
Federal funds purchased                              -         -    -              116,914     1,523     2.61%
Other borrowings                                75,957       354    0.93%           94,842     1,587     3.35%
Junior subordinated debt                        41,238       836    4.05%           41,238     1,299     6.30%
                                            ----------------------------        ------------------------------
Total interest-bearing liabilities           1,465,509    11,170    1.52%        1,411,779    17,236     2.44%
                                                          ------                              ------
Noninterest-bearing deposits                   363,755                             350,643
Other liabilities                               36,909                              32,521
Shareholders' equity                           202,861                             192,727
                                               -------                             -------
Total liabilities and shareholders' equity  $2,069,034                          $1,987,670
                                            ==========                          ==========
Net interest spread(1)                                              4.51%                                4.36%
Net interest income and interest margin(2)               $46,439    4.86%                    $44,575     4.90%
                                                         ================                    =================
(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.
</TABLE>



                                       26
<PAGE>


Summary of  Changes in  Interest  Income and  Expense  due to Changes in Average
Asset and Liability Balances and Yields Earned and 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, 2009
                                                   compared with three months
                                                      ended June 30, 2008
                                                --------------------------------
                                                 Volume        Rate        Total
                                                --------------------------------
Increase (decrease) in interest income:
Loans                                              $166     $(1,963)    $(1,797)
Investment securities                               (63)       (120)       (183)
Cash at Federal Reserve and other banks             469        (415)         54
                                                --------------------------------
   Total interest-earning assets                    572      (2,498)     (1,926)
                                                --------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits                     43         267         310
Savings deposits                                     98        (511)       (413)
Time deposits                                       892      (1,661)       (769)
Federal funds purchased                            (711)          -        (711)
Other borrowings                                    (69)       (343)       (412)
Junior subordinated debt                              -        (190)       (190)
                                                 -------------------------------
   Total interest-bearing liabilities               254      (2,439)     (2,185)
                                                 -------------------------------
Increase in Net Interest Income                    $318        $(59)       $259
                                                 ===============================

                                                  Six months ended June 30, 2009
                                                     compared with six months
                                                        ended June 30, 2008
                                                 -------------------------------
                                                 Volume         Rate       Total
                                                 -------------------------------
Increase (decrease) in interest income:
Loans                                              $720      $(4,730)   $(4,010)
Investment securities                              (145)        (121)      (266)
Cash at Federal Reserve and other banks             919         (845)        74
                                                 -------------------------------
   Total interest-earning assets                  1,494       (5,696)    (4,202)
                                                 -------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits                     54          511        565
Savings deposits                                    185       (1,207)    (1,022)
Time deposits                                     1,955       (4,345)    (2,390)
Federal funds purchased                          (1,523)           -     (1,523)
Other borrowings                                   (316)        (917)    (1,233)
Junior subordinated debt                              -         (463)      (463)
                                                 -------------------------------
   Total interest-bearing liabilities               352       (6,418)    (6,066)
                                                 -------------------------------
Increase in Net Interest Income                  $1,142         $722     $1,864
                                                 ===============================

Provision for Loan Losses
The Company  provided  $7,850,000  for loan losses in the second quarter of 2009
versus  $8,800,000 in the second quarter of 2008. In the second quarter of 2009,
the Company recorded $7,000,000 of net loan charge-offs versus $3,902,000 of net
loan charge-offs in the second quarter of 2008. In addition,  net charge-offs of
$2,236,000  on home equity lines and loans and $504,000 on auto  indirect  loans
were taken during the second quarter of 2009. During the second quarter of 2009,
the Company also  increased  its  allowance for loan losses by $850,000 from the
first  quarter of 2009 with such  additional  reserves  allocated  primarily  to
consumer loans, residential real estate and construction lending.

The Company  provided  $15,650,000  for loan losses  during the six months ended
June 30, 2009 versus  $12,900,000  during the six months ended June 30, 2008. In
the six months ended June 30, 2009, the Company recorded  $9,616,000 of net loan
charge-offs  versus  $5,950,000 of net loan  charge-offs in the six months ended
June 30,  2008.  A total net of  $3,644,000  in home equity  lines and loans and
$1,033,000 on auto indirect  loans have been  charged-off  during the six months
ended June 30,  2009.  During the six months  ended June 30,  2009,  the Company
increased its  allowance  for loan losses by  $6,034,000  from December 31, 2008
with such additional reserves allocated primarily to consumer loans, residential
real estate and construction lending.


                                       27
<PAGE>


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,
                                                ------------------------------------------------
                                                   2009        2008         2009         2008
                                                ------------------------------------------------
   <S>                                              <C>         <C>         <C>          <C>
   Service charges on deposit accounts           $4,136      $3,963       $7,721       $7,801
   ATM fees and interchange revenue               1,222       1,168        2,320        2,247
   Other service fees                               553         527        1,095        1,078
   Change in value of mortgage servicing rights     271         168           98         (172)
   Gain on sale of loans                            948         316        1,589          574
   Commissions on sale of
     nondeposit investment products                 492         525          981          945
   Increase in cash value of life insurance         270         360          550          720
   Gain from VISA IPO                                 -           -            -          396
   Other noninterest income                         104         253          257          541
                                                -----------------------------------------------
   Total noninterest income                      $7,996      $7,280      $14,611      $14,130
                                                ===============================================
</TABLE>


Noninterest income for the second quarter of 2009 increased $716,000 (9.8%) from
the second quarter of 2008,  mainly due to a $632,000 (200%) increase in gain on
sale of loans to $948,000.  Also  contributing  to the  increase in  noninterest
income was a $173,000 (4.4%) increase in service charges on deposit  accounts to
$4,136,000,  and a $103,000  (61.3%) increase in the change in value of mortgage
servicing rights to $271,000.  These increases were offset a decrease of $90,000
(25.0%) in the cash value of life  insurance to $270,000 and a decrease in other
noninterest  income of $149,000  (58.9%) to $104,000.  The  increases in service
charges on deposit accounts and ATM fees and interchange  revenue were primarily
due to increased numbers of customers.  The increase in gain on sale of loans is
primarily  due  to  increased  refinancing  activity  during  the  quarter.  The
improvement in change in value of mortgage  servicing rights is primarily due to
a decrease in  refinance  activity at the end of the quarter  which  extends the
estimated  life of new mortgages and enhances the value of the related  mortgage
servicing rights.

Noninterest  income for the six months  ended June 30, 2009  increased  $481,000
(3.4%) to $14,611,000  from the same period in 2008. The increase in noninterest
income from the six months  ended June 30,  2009 was mainly due to a  $1,015,000
gain on sale of loans to $1,589,000 (177%),  offset by a decrease of $170,000 in
the cash value of life insurance to $550,000  (23.6%) and a decrease in the gain
on VISA IPO of $396,000  (100%) to $0. The  increase in gain on sale of loans is
primarily  due to  increased  refinancing  activity  in the  low  interest  rate
environment that existed for most of the six month period ended June 30, 2009.



                                       28
<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,
                                                ------------------------------------------------
                                                   2009        2008         2009         2008
                                                ------------------------------------------------
     <S>                                            <C>         <C>          <C>          <C>
   Base salaries, net of
      deferred loan origination costs            $6,568       $6,316       $13,144      $12,649
   Incentive compensation                         1,024          830         1,612        1,390
   Benefits and other compensation costs          2,477        2,499         5,102        5,086
                                                ------------------------------------------------
      Total salaries and related benefits        10,069        9,645        19,858       19,125
                                                ------------------------------------------------
   Occupancy                                      1,269        1,228         2,504        2,416
   Equipment                                        905          998         1,822        1,980
   Telecommunications                               433          630           765        1,227
   Data processing and software                     686          596         1,304        1,211
   Provisions for losses - unfunded commitments     400          550           575        1,375
   ATM network charges                              589          529         1,105        1,023
   Professional fees                                423          509           734        1,002
   Advertising and marketing                        514          434           912          753
   Courier service                                  100          275           273          538
   Postage                                          228          216           507          498
   Intangible amortization                           64          133           198          256
   Operational losses                                90           92           127          205
   Provision for OREO losses                          -            -           162            -
   Assessments                                    1,288           83         1,590          165
   Other                                          2,286        1,926         4,109        3,643
                                                ------------------------------------------------
   Total other noninterest expense                9,275        8,199        16,687       16,292
                                                ------------------------------------------------
   Total noninterest expense                    $19,344      $17,844       $36,545      $35,417
                                                ================================================
   Average full time equivalent staff               639          626           630          626
   Noninterest expense to revenue (FTE)           61.83%       58.87%       59.86%        60.33%
</TABLE>


Noninterest  expense for the second quarter of 2009 increased  $1,500,000 (8.4%)
compared to the second quarter of 2008.  Salaries and benefits expense increased
$424,000 (4.4%) to $10,069,000 mainly due to annual salary increases,  increased
FTE and increased incentive compensation expense related to increased production
of sold loans. Other noninterest expense increased  $1,076,000 (13.1%) primarily
due  to  a  $1,205,000  (1452%)  increase  in  assessments.   The  FDIC  special
assessment, which is due on September 30, 2009 and recorded in the quarter ended
June 30, 2009, totaled $933,000. The remainder of the increase in assessments is
due to increasing deposits and premium rates on FDIC insurance.  The increase in
assessments was partially offset by decreases in  telecommunications of $197,000
(31.3%) to $433,000 and courier service of $175,000 (63.6%) to $100,000.

Noninterest expense for the six months ended June 30, 2009 increased  $1,128,000
(3.2%)  compared to the six months  ended June 30,  2008.  Salaries and benefits
expense  increased  $733,000  (3.8%) to $19,858,000  mainly due to annual salary
increases, increased FTE and increased incentive compensation expense related to
increased production of sold loans. Other noninterest expense increased $395,000
(2.4%) primarily due to assessments  increasing  $1,425,000 (864%) to $1,590,000
offset by a decrease of  $800,000  (58.2%) in  provision  for losses on unfunded
commitments to $575,000 and a decrease in telecommunications by $462,000 (37.7%)
to $765,000.

Provision for Income Tax
The  effective  tax rate for the three  months ended June 30, 2009 was 36.4% and
reflects an increase  from 35.0% for the three months  ended June 30, 2008.  The
effective tax rate for the six months ended June 30, 2009 was 37.0% and reflects
no change from 37.0% for the six months ended June 30, 2008.  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.


                                       29
<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 regarding collection.

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

                              At June 30, 2009            At December 31, 2008
                         --------------------------    -------------------------
                          Gross   Guaranteed   Net     Gross   Guaranteed   Net
                         -------------------------------------------------------
Classified loans         $100,865   $4,884  $95,981     63,850  $5,379  $58,471
Other classified assets     2,622        -    2,622      1,185            1,185
                         -------------------------------------------------------
Total classified assets  $103,487   $4,884  $98,603    $65,035  $5,379  $59,656
                         =======================================================
Allowance for loan losses/classified loans     35.0%                       47.2%

Classified  assets,  net of  guarantees  of the U.S.  Government,  including its
agencies and its government-sponsored  agencies,  increased $38,947,000 (65%) to
$98,603,000 at June 30, 2009 from $59,656,000 at December 31, 2008.

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, 2009 and 2008,  if all such loans had been current in
accordance  with  their  original  terms,   totaled   $2,186,000  and  $952,000,
respectively.  Interest income actually recognized on these loans during the six
months ended June 30, 2009 and 2008 was $605,000 and $415,000, respectively.

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 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.


                                       30
<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 $17,285,000 (60%) to $45,995,000 during the first six months
of 2009. Nonperforming assets net of guarantees represent 2.20% 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>
                                                  At June 30, 2009            At December 31, 2008
                                              -------------------------    -------------------------
                                                Gross  Guaranteed  Net      Gross  Guaranteed   Net
                                              ------------------------------------------------------
<S>                                             <C>       <C>      <C>        <C>     <C>     <C>
(dollars in thousands):
Performing nonaccrual loans                   $24,886   $4,884  $19,982    $22,600  $5,102  $17,498
Nonperforming, nonaccrual loans                21,321        -   21,321      9,994     154    9,840
                                              ------------------------------------------------------
     Total nonaccrual loans                    46,187    4,884   41,303     32,594   5,256   27,338
Loans 90 days past due and still accruing       2,070        -    2,070        187       -      187
                                              ------------------------------------------------------
Total nonperforming loans                      48,257    4,884   43,373     32,781   5,256   27,525
Other real estate owned                         2,622        -    2,622      1,185       -    1,185
                                              ------------------------------------------------------
Total nonperforming assets                    $50,879   $4,884  $45,995    $33,966  $5,256  $28,710
                                              ======================================================
Nonperforming loans to total loans                                 2.79%                       1.73%
Nonperforming assets to total assets                               2.20%                       1.41%
Allowance for loan losses/nonperforming loans                        78%                        100%
</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.

The Company adopted and announced a stock repurchase plan on August 21, 2007 for
the repurchase of up to 500,000  shares of the Company's  common stock from time
to time as market conditions allow. The 500,000 shares authorized for repurchase
under this plan represented  approximately  3.2% of the Company's  approximately
15,815,000 common shares  outstanding as of August 21, 2007. The Company did not
repurchase any shares during the three months ended June 30, 2009. This plan has
no stated expiration date for the repurchases.  As of June 30, 2009, the Company
had  repurchased  166,600  shares  under this plan,  which left  333,400  shares
available for repurchase under the plan.

The  Company's  primary  capital  resource is  shareholders'  equity,  which was
$199,979,000 at June 30, 2009. This amount  represents an increase of $2,047,000
from December 31, 2008, the net result of comprehensive income for the period of
$5,660,000,  the effect of stock  option  vesting of  $262,000,  the exercise of
stock  options  for  $828,000  and the tax  benefit  from the  exercise of stock
options of $53,000 that were partially  offset by the repurchase of common stock
with value of $652,000, and dividends paid of $4,104,000. The Company's ratio of
equity to total assets was 9.58%,  9.43% and 9.69% as of June 30, 2009, June 30,
2008, and December 31, 2008, respectively.

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

                                At June 30,         At              Minimum
                             -----------------      December 31,    Regulatory
                             2009       2008        2008           Requirement
                             -------------------------------------------------
   Tier I Capital            11.61%     11.01%     11.17%           4.00%
   Total Capital             12.87%     12.26%     12.42%           8.00%
   Leverage ratio            10.68%     10.80%     11.09%           4.00%



                                       31
<PAGE>


Liquidity
The discussion of "Liquidity" under Item 3 of this report is incorporated herein
by reference.

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,
2009 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 $621,446,000 and $643,365,000 at June 30, 2009
and December  31, 2008,  respectively,  and  represent  40.0% of the total loans
outstanding at June 30, 2009 and 40.4% at December 31, 2008. Commitments related
to the Bank's  deposit  overdraft  privilege  product  totaled  $37,825,000  and
$35,883,000 at June 30, 2009 and December 31, 2008, respectively.




                                       32
<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, 2009, 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, 2009 and 2008,  the Company  had no  material  derivative  financial
instruments.


                                       33
<PAGE>


Liquidity
The Company's principal source of asset liquidity is cash at Federal Reserve and
other banks and marketable investment securities available for sale. At June 30,
2009,  cash at  Federal  Reserve  and  other  banks  and  investment  securities
available for sale totaled $379,956,000, representing an increase of $91,415,000
(31.7%) from  December 31, 2008,  and an increase of  $126,827,000  (50.1%) from
June 30, 2008. In addition,  the Company generates additional liquidity from its
operating activities. The Company's profitability during the first six months of
2009 generated cash flows from operations of $19,150,000 compared to $15,611,000
during the first six months of 2008.  Additional  cash flows may be  provided by
financing  activities,  primarily the acceptance of deposits and borrowings from
banks.  Sales and maturities of investment  securities  produced cash inflows of
$44,126,000  during the six months ended June 30, 2009  compared to  $26,883,000
for the six months  ended June 30,  2008.  During the six months  ended June 30,
2009, the Company invested $29,435,000 in securities and received $26,722,000 of
net loan principal  reductions,  compared to $50,463,000  invested in securities
and $1,667,000 of net loan principal reductions,  respectively, during the first
six months of 2008. These changes in investment and loan balances contributed to
net cash provided by investing  activities of $41,285,000  during the six months
ended  June 30,  2009,  compared  to net cash used in  investing  activities  of
$23,333,000  during the six months  ended June 30,  2008.  Financing  activities
provided  net cash of  $36,133,000  during the six months  ended June 30,  2009,
compared to net cash used in financing  activities of $4,418,000  during the six
months ended June 30, 2008. Deposit balance increases  accounted for $68,115,000
of  financing  sources  of funds  during the six  months  ended  June 30,  2009,
compared to  $34,170,000  of funds used by decreases in deposits  during the six
months  ended June 30,  2008.  A net  decrease in  short-term  other  borrowings
accounted for $28,068,000 of financing uses of funds during the six months ended
June 30, 2009, compared to $31,039,000 of funds used by a decrease in short-term
other borrowings during the six months ended June 30, 2008.  Dividends paid used
$4,104,000  and $4,099,000 of cash during the six months ended June 30, 2009 and
2008,  respectively.  Federal  funds did not use or provide  cash during the six
months ended June 30, 2009 as compared to an increase of Federal funds purchased
providing  $67,750,000 of cash during the six months ended June 30, 2008.  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 defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act
as of June 30, 2009  ("Evaluation  Date").  Based on that evaluation,  they each
concluded that as of the Evaluation Date the Company's  disclosure  controls and
procedures are effective to ensure that the information required to be disclosed
by the Company in the reports  that it files or submits  under the  Exchange Act
was  recorded,  processed,  summarized  and  reported  within  the time  periods
specified in the SEC's rules and forms and accumulated  and  communicated to the
Company's management,  including the Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.

No changes in the  Company's  internal  control over  financial  reporting  were
identified in connection  with the evaluation  required by paragraph (d) of Rule
13a-15 or 15d-15(e)  under the  Exchange  Act during the second  quarter of 2009
that have materially  affected,  or are reasonably likely to materially  affect,
the Company's internal control over financial reporting.


                                       34
<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, 2008.

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 2009 pursuant to the Company's  stock
repurchase  plan adopted on August 21,  2007,  which is discussed in more detail
under  "Capital  Resources"  in  this  report  and  is  incorporated  herein  by
reference:

<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, 2008             -                  -                       -                 333,400
May 1-31, 2008              -                  -                       -                 333,400
Jun. 1-30, 2008             -                  -                       -                 333,400
-----------------------------------------------------------------------------------------------------------
Total                       -                  -                       -                 333,400
</TABLE>


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

(a) The Company's Annual Meeting of Shareholders was held on May 19, 2009.
(b) and (c) The following twelve directors (the entire board of directors) were
elected at the meeting:

                                 Votes For   Votes Against/Withheld  Abstentions
                                 ----------  ----------------------  -----------
     Donald J. Amaral            13,312,263         198,195            N/A
     William J. Casey            13,252,335         258,268            N/A
     L. Gage Chrysler III        13,297,154         213,645            N/A
     Craig S. Compton            13,259,230         251,228            N/A
     John S.A. Hasbrook          13,263,241         247,217            N/A
     Michael W. Koehnen          13,260,553         249,905            N/A
     Donald E. Murphy            13,302,407         208,110            N/A
     Steve G. Nettleton          13,311,608         198,850            N/A
     Richard P. Smith            13,313,219         197,239            N/A
     Carroll R. Taresh           13,291,347         219,111            N/A
     Alex A. Vereschagin, Jr.    13,257,718         252,740            N/A
     W. Virginia Walker          13,300,482         209,976            N/A


The  shareholders  approved the TriCo  Bancshares  2009 Equity  Incentive  Plan.
10,365,872 shares were voted for approval, 551,116 shares were voted against and
130,636 shares abstained.

The  shareholders  ratified  the  appointment  of Moss Adams LLP as  independent
public accountants of the Company for 2009. 13,352,993 shares were voted for the
ratification, 45,370 shares were voted against and 118,910 shares abstained.



                                       35
<PAGE>


Item 6 - Exhibits

     3.1* Restated  Articles of  Incorporation,  filed as Exhibit 3.1 to TriCo's
          Form 8-K dated March 10, 2009.

     3.2* Bylaws  of TriCo  Bancshares,  as  amended,  filed as  Exhibit  3.2 to
          TriCo's Form 8-K dated March 10, 2009.

     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 Dan Bailey, Bruce Belton,
          Craig Carney,  Gary Coelho, 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.

     10.5*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).

     10.6*TriCo's 2001 Stock Option Plan,  as amended,  filed as Exhibit 10.7 to
          TriCo's  QuarterlyReport  on Form 10-Q for the quarter  ended June 30,
          2005.

     10.7*TriCo's 2009 Equity Incentive plan,  included as Appendix A to TriCo's
          definitive proxy statement filed on April 4, 2009.

     10.8*Amended Employment  Agreement between TriCo and Richard Smith dated as
          of August 23, 2005 filed as Exhibit 10.8 to TriCo's  Quarterly  Report
          on Form 10-Q for the quarter ended September 30, 2005.

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

    10.10*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.

    10.11*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.

    10.13*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.

    10.14*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.

                                       36

<PAGE>


    10.15*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.

    10.16*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.

    10.17*Form of Joint Beneficiary  Agreement  effective March 31, 2003 between
          Tri Counties Bank and each of George Barstow,  Dan Bay, Ron Bee, Craig
          Carney, Robert Elmore, Greg Gill, Richard Miller,  Richard O'Sullivan,
          Thomas Reddish,  Jerald Sax, and Richard Smith, filed as Exhibit 10.14
          to  TriCo's  Quarterly  Report  on Form  10-Q  for the  quarter  ended
          September 30, 2003.

    10.18*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  Vereschagin,  filed  as  Exhibit  10.15 to  TriCo's
          Quarterly  Report on Form 10-Q for the  quarter  ended  September  30,
          2003.

    10.19*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.

    10.20*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 Vereschagin,  filed as Exhibit 10.17
          to  TriCo's  Quarterly  Report  on Form  10-Q  for the  quarter  ended
          September 30, 2003.

    10.21*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.

    10.22*Form  of  Indemnification   Agreement  between  TriCo   Bancshares/Tri
          Counties  Bank and each of Dan Bailey,  Craig Carney,  W.R.  Hagstrom,
          Rick Miller, Richard O'Sullivan, Thomas Reddish, Ray Rios, 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

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


                                       37




<PAGE>


     32.1 Section 1350 Certification of CEO

     32.2 Section 1350 Certification of CFO

        * Previously filed and incorporated by reference.












                                       38
<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, 2009     By/s/Thomas J. Reddish
                            --------------------
                            Thomas J. Reddish
                            Executive Vice President and Chief Financial Officer
                            (Duly authorized officer and Principal financial
                              officer)










                                      39
<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 report on Form 10-Q of TriCo Bancshares;
   2.     Based on my  knowledge,  this  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(s) 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 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  report  our
               conclusions  about the  effectiveness of the disclosure  controls
               and  procedures,  as of the  end of the  period  covered  by this
               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 (the registrant's  fourth
               fiscal  quarter  in  the  case  of an  annual  report)  that  has
               materially  affected,  or  is  reasonably  likely  to  materially
               affect,   the   registrant's   internal  control  over  financial
               reporting; and
     5.   The  registrant's  other  certifying  officer(s) 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 (or persons performing the equivalent
          functions):
          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, 2009            /s/Richard P. Smith
                                -------------------
                                Richard P. Smith
                                President and Chief Executive Officer



                                       40
<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 report on Form 10-Q of TriCo Bancshares;
     2.   Based on my  knowledge,  this  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(s) 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 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  report  our
               conclusions  about the  effectiveness of the disclosure  controls
               and  procedures,  as of the  end of the  period  covered  by this
               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 (the registrant's  fourth
               fiscal  quarter  in  the  case  of an  annual  report)  that  has
               materially  affected,  or  is  reasonably  likely  to  materially
               affect,   the   registrant's   internal  control  over  financial
               reporting; and
     5.   The  registrant's  other  certifying  officer(s) 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 (or persons performing the equivalent
          functions):
          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, 2009        /s/Thomas J. Reddish
                            --------------------
                            Thomas J. Reddish
                            Executive Vice President and Chief Financial Officer



                                       41
<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, 2009 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, 2009 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.




                                       42
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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": "091001352"}, "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, 2009         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)

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

--------------------------------------------------------------------------------
(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        Small reporting company
                                   ----                          ----
     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 July 31, 2009:  15,787,753
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                                                21

   Item 2 - Management's Discussion and Analysis of Financial                22
            Condition and Results of Operations

   Item 3 - Quantitative and Qualitative Disclosures about Market Risk       33

   Item 4 - Controls and Procedures                                          34

PART II - OTHER INFORMATION                                                  35

   Item 1 - Legal Proceedings                                                35

   Item 1A - Risk Factors                                                    35

   Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds      35

   Item 4 - Submission of Matters to a Vote of Security Holders              35

   Item 6 - Exhibits                                                         36

   Signatures                                                                39

   Exhibits                                                                  40
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 the  Company  is  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,  2008,  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  suggested  by any  forward-looking
statement made in this report.  Such Form 10-K and this report should be read to
put any  forward-looking  statements  in  context  and to  gain a more  complete
understanding of the risks and uncertainties involved in the Company's business.
Any forward-looking statement may turn out to be wrong and cannot be guaranteed.
The Company does not intend to update any  forward-looking  statement  after the
date of 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,
                                                         2009              2008                2008
                                                       ----------------------------       ---------------
Assets:
     Cash and due from banks                              $55,071           $76,658           $64,375
     Cash at Federal Reserve and other banks              127,852                 -            21,980
                                                       ----------------------------        ----------
         Cash and cash equivalents                        182,923            76,658            86,355
     Securities available-for-sale                        252,104           253,129           266,561
     Federal Home Loan Bank stock, at cost                  9,274             9,010             9,235
     Loans, net of allowance for loan losses
         of $33,624, $24,281 and $27,590                1,518,611         1,519,043         1,563,259
     Foreclosed assets, net of allowance for
         losses of $318, $214 and $230                      2,622             1,178             1,185
     Premises and equipment, net                           18,208            19,580            18,841
     Cash value of life insurance                          47,365            45,701            46,815
     Accrued interest receivable                            7,575             7,802             7,935
     Goodwill                                              15,519            15,519            15,519
     Other intangible assets, net                             454               920               653
     Other assets                                          33,186            31,950            26,832
                                                       ----------------------------        -----------
         Total Assets                                  $2,087,841        $1,980,490        $2,043,190
                                                       ============================        ===========
Liabilities:
     Deposits:
         Noninterest-bearing demand                      $358,618          $347,336          $401,247
         Interest-bearing                               1,378,767         1,163,717         1,268,023
                                                       ----------------------------         ----------
         Total deposits                                 1,737,385         1,511,053         1,669,270
     Federal funds purchased                                    -           123,750                 -
     Accrued interest payable                               5,094             5,119             6,146
     Reserve for unfunded commitments                       3,140             3,465             2,565
     Other liabilities                                     27,107            24,131            24,034
     Other borrowings                                      73,898            85,048           102,005
     Junior subordinated debt                              41,238            41,238            41,238
                                                       ----------------------------         ----------
         Total Liabilities                              1,887,862         1,793,804         1,845,258
                                                       ----------------------------         ----------
Commitments and contingencies
Shareholders' Equity
     Common stock, no par value: 50,000,000 shares
         authorized; issued and outstanding:
         15,782,753 at June 30, 2009                       79,257
         15,744,881 at June 30, 2008                                         78,306
         15,756,101 at December 31, 2008                                                       78,246
     Retained earnings                                    118,400           111,360           117,630
     Accumulated other comprehensive income (loss), net     2,322            (2,980)            2,056
                                                       ----------------------------        -----------
         Total Shareholders' Equity                       199,979           186,686           197,932
                                                       ----------------------------       ------------
     Total Liabilities and Shareholders' Equity        $2,087,841        $1,980,490        $2,043,190
                                                       ============================       ===========

See accompanying notes to unaudited condensed consolidated financial statements.
2
TRICO BANCSHARES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                  (In thousands, except share data; unaudited)

                                                       Three months ended June 30,   Six months ended June 30,
                                                             2009           2008        2009           2008
                                                    ----------------------------------------------------------
Interest and dividend income:
Loans, including fees                                  $25,218         $27,015        50,731        $54,741
   Debt securities:
   Taxable                                               2,896           2,892         5,979          5,851
   Tax exempt                                              263             299           527            623
Dividends                                                    -             125             -            244
Cash at Federal Reserve and other banks                     55               1            77              3
                                                    ---------------------------------------------------------
Total interest income                                   28,432          30,332        57,314         61,462
                                                    ---------------------------------------------------------
Interest expense:
Deposits                                                 4,778           5,650         9,980         12,827
Federal funds purchased                                      -             711             -          1,523
Other borrowings                                           112             524           354          1,587
Junior subordinated debt                                   396             586           836          1,299
                                                    --------------------------------------------------------
Total interest expense                                   5,286           7,471        11,170         17,236
                                                    --------------------------------------------------------
Net interest income                                     23,146          22,861        46,144         44,226
                                                    --------------------------------------------------------
Provision for loan losses                                7,850           8,800        15,650         12,900
                                                    --------------------------------------------------------
Net interest income after provision for loan losses     15,296          14,061        30,494         31,326
                                                    --------------------------------------------------------
Noninterest income:
Service charges and fees                                 6,182           5,826        11,234         10,954
Gain on sale of loans                                      948             316         1,589            574
Commissions on sale of non-deposit investment products     492             525           981            945
Increase in cash value of life insurance                   270             360           550            720
Other                                                      104             253           257            937
                                                    ---------------------------------------------------------
Total noninterest income                                 7,996           7,280        14,611         14,130
                                                    ---------------------------------------------------------
Noninterest expense:
Salaries and related benefits                           10,069           9,645        19,858         19,125
Other                                                    9,275           8,199        16,687         16,292
                                                    --------------------------------------------------------
Total noninterest expense                               19,344          17,844        36,545         35,417
                                                    --------------------------------------------------------
Income before income taxes                               3,948           3,497         8,560         10,039
Provision for income taxes                               1,436           1,223         3,166          3,717
                                                    --------------------------------------------------------
Net income                                              $2,512          $2,274        $5,394         $6,322
                                                    ========================================================

Average shares outstanding                          15,782,753      15,744,881    15,778,689     15,793,483
Diluted average shares outstanding                  15,997,437      15,953,288    16,008,462     16,017,505

Per share data:
Basic earnings                                           $0.16           $0.14         $0.34          $0.40
Diluted earnings                                         $0.16           $0.14         $0.34          $0.39
Dividends paid                                           $0.13           $0.13         $0.26          $0.26

See accompanying notes to unaudited condensed consolidated financial statements.
3
TRICO BANCSHARES
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
           (In thousands, except share and per share data; unaudited)

                                                                               Accumulated
                                           Shares of                               Other
                                           Common       Common     Retained    Comprehensive
                                           Stock        Stock      Earnings         Loss       Total
                                       ---------------------------------------------------------------
Balance at December 31, 2007            15,911,550     $78,775    $111,655       ($1,552)   $188,878
                                                                                            --------
Comprehensive income:
Net income                                                           6,322                     6,322
Change in net unrealized gain on
          Securities available for sale, net                                      (1,428)     (1,428)
                                                                                            ---------
Total comprehensive income                                                                     4,894
Cumulative effect of change in
   Accounting principle, net of tax                                   (522)                     (522)
Stock option vesting                                       356                                   356
Repurchase of common stock                (166,669)       (825)     (1,996)                   (2,821)
Dividends paid ($0.26 per share)                                    (4,099)                   (4,099)
                                       ---------------------------------------------------------------
Balance at June 30, 2008                15,744,881     $78,306    $111,360       ($2,980)   $186,686
                                       ===============================================================

Balance at December 31, 2008            15,756,101     $78,246    $117,630        $2,056    $197,932
Comprehensive income:
Net income                                                           5,394                     5,394
Change in net unrealized loss on
  Securities available for sale, net                                                 266         266
                                                                                             -------
Total comprehensive income                                                                     5,660
Stock option vesting                                       262                                   262
Stock option exercise                       53,213         828                                   828
Tax benefit of stock options exercised                      53                                    53
Repurchase of common stock                 (26,561)       (132)       (520)                     (652)
Dividends paid ($0.26 per share)                                    (4,104)                   (4,104)
                                       --------------------------------------------------------------
Balance at June 30, 2009                15,782,753     $79,257    $118,400        $2,322    $199,979
                                       ==============================================================
See accompanying notes to unaudited condensed consolidated financial statements.
4
TRICO BANCSHARES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands; unaudited)

                                                                 For the six months ended June 30,
                                                                     2009               2008
                                                               -----------------------------------
Operating activities:
Net income                                                         $5,394              $6,322
Adjustments to reconcile net income to net cash provided
  by operating activities:
    Depreciation and amortization of property and equipment         1,680               1,745
    Amortization of intangible assets                                 198                 256
    Provision for loan losses                                      15,650              12,900
    Amortization of investment securities premium, net                186                 170
    Originations of loans for resale                              (97,153)            (41,412)
    Proceeds from sale of loans originated for resale              97,917              41,574
    Gain on sale of loans                                          (1,589)               (574)
    Change in value of mortgage servicing rights                      (98)                172
    Provision for losses on other real estate owned                   162                  34
    Loss on sale of other real estate owned                             4                   -
    Loss on sale of fixed assets                                        8                   2
    Increase in cash value of life insurance                         (550)               (720)
    Stock option expense                                              262                 356
    Stock option tax benefits                                         (53)                  -
    Change in:
      Reserve for unfunded commitments                                575               1,375
      Interest receivable                                             360                 752
      Interest payable                                             (1,052)             (2,752)
      Other assets and liabilities, net                            (2,751)             (4,589)
                                                               ------------------------------
      Net cash provided by operating activities                    19,150              15,611
                                                               ------------------------------
Investing activities:
Proceeds from maturities of securities available-for-sale          44,126              26,883
Purchases of securities available-for-sale                        (29,396)            (50,219)
Purchases of Federal Home Loan Bank stock                             (39)               (244)
Loan originations and principal collections, net                   26,722               1,667
Proceeds from sale of premises and equipment                            1                   1
Purchases of premises and equipment                                  (802)             (1,421)
Proceeds from sale of other real estate owned                         673                   -
                                                               ------------------------------
Net cash (used in) provided by investing activities                41,285             (23,333)
                                                               ------------------------------
Financing activities:
Net increase (decrease) in deposits                                68,115             (34,170)
Net increase in Federal funds purchased                                 -              67,750
Payments of principal on long-term other borrowings                   (39)                (39)
Net change in short-term other borrowings                         (28,068)            (31,039)
Stock option tax benefits                                              53                   -
Repurchase of common stock                                              -              (2,821)
Dividends paid                                                     (4,104)             (4,099)
Exercise of stock options                                             176                   -
                                                               ------------------------------
      Net cash provided by (used in) financing activities          36,133              (4,418)
                                                               ------------------------------
  Net change in cash and cash equivalents                          96,568             (12,140)
                                                               ------------------------------
  Cash and cash equivalents and beginning of period                86,355              88,798
                                                               ------------------------------
  Cash and cash equivalents at end of period                     $182,923             $76,658
                                                               ==============================
  Supplemental disclosure of noncash activities:
Loans transferred to other real estate owned                       $2,276              $1,025
Unrealized net gain (loss) on securities available for sale          $459             ($2,464)
Market value of shares tendered by employees in-lieu of
  cash to pay for exercise options and/or related taxes              $652                   -
Supplemental disclosure of cash flow activity:
Cash paid for interest expense                                    $12,222             $19,988
Cash paid for income taxes                                         $8,567              $8,100

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, 2008.

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 25 in-store  branch  offices in the
California  counties of Butte,  Contra Costa, Del Norte,  Fresno,  Glenn,  Kern,
Lake, Lassen,  Madera,  Mendocino,  Merced,  Napa, 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. The Company currently  classifies all its operation into one
business segment that it denotes as community banking.

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, 2009, and throughout  2008, the Company did
not have any securities classified as either held-to-maturity or trading.

                                       6
The amortized  cost and estimated  fair values of investments in debt and equity
securities are summarized in the following tables:
June 30, 2009
                                                             --------------------------------------------------------------
                                                                                  Gross            Gross         Estimated
                                                              Amortized        Unrealized       Unrealized         Fair
                                                                Cost              Gains           Losses           Value
                                                             --------------------------------------------------------------
Securities Available-for-Sale                                                         (in thousands)
Obligations of U.S. government corporations and agencies       $222,225           $7,114                 -       $229,339
Obligations of states and political subdivisions                 22,289              231              (286)        22,234
Corporate debt securities                                         1,000                -              (469)           531
                                                             -------------------------------------------------------------
     Total securities available-for-sale                       $245,514           $7,345             ($755)      $252,104
                                                             =============================================================

                                                                                     December 31, 2008
                                                             -------------------------------------------------------------
                                                                                  Gross            Gross         Estimated
                                                              Amortized        Unrealized       Unrealized         Fair
                                                                Cost              Gains           Losses           Value
                                                             -------------------------------------------------------------
Securities Available-for-Sale                                                         (in thousands)
Obligations of U.S. government corporations and agencies       $236,786           $6,193               ($2)      $203,774
Obligations of states and political subdivision                  22,644              293              (272)        27,648
Corporate debt securities                                         1,000                -               (81)         1,005
                                                             -------------------------------------------------------------
    Total securities available-for-sale                        $260,430           $6,486             ($355)      $266,561
                                                             =============================================================
The amortized cost and estimated fair value of debt  securities at June 30, 2009
by  contractual  maturity are shown  below.  Actual  maturities  may differ from
contractual  maturities  because  borrowers may have the right to call or prepay
obligations  with or without  call or  prepayment  penalties.  At June 30, 2009,
obligations  of U.S.  government  corporations  and  agencies  with a cost basis
totaling  $222,225,000  consist almost  entirely of  mortgage-backed  securities
whose contractual maturity, or principal repayment, will follow the repayment of
the  underlying  mortgages.  For  purposes of the  following  table,  the entire
outstanding  balance  of  these   mortgage-backed   securities  issued  by  U.S.
government  corporations  and agencies is  categorized  based on final  maturity
date.  At June 30, 2009,  the Company  estimates the average  remaining  life of
these  mortgage-backed  securities  issued by U.S.  government  corporations and
agencies to be approximately 3.4 years. Average remaining life is defined as the
time span after which the principal balance has been reduced by half.

                                                                     Estimated
                                                  Amortized Cost     Fair Value
                                                 -------------------------------
Investment  Securities                                    (in thousands)
Due in one year                                       $410              $411
Due after one year  through  five years             55,064            56,043
Due after five years through ten years              28,750            29,441
Due after ten years                                161,289           166,209
                                                 ------------------------------
Totals                                            $245,514          $252,104
                                                 ==============================

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  income
(loss) in shareholders' equity until realized.  During the six months ended June
30,  2009,  and  throughout  2008,  the  Company  did not  sell  any  investment
securities.

Investment  securities  with an aggregate  carrying  value of  $219,789,000  and
$231,056,000 at June 30, 2009 and December 31, 2008, respectively,  were pledged
as  collateral  for  specific  borrowings,  lines of  credit  and  local  agency
deposits.

                                 7
Gross  unrealized  losses on  investment  securities  and the fair  value of the
related  securities,  aggregated by investment  category and length of time that
individual securities have been in a continuous  unrealized loss position,  were
as follows:
Less than 12 months   12 months or more          Total
                                                            -------------------   ------------------    ------------------
                                                            Fair    Unrealized    Fair    Unrealized    Fair    Unrealized
June 30, 2009                                               Value      Loss       Value      Loss       Value      Loss
                                                            --------------------------------------------------------------
Securities Available-for-Sale:                                                        (in thousands)
Obligations of U.S. government
   corporations and agencies                                     -         -           -         -           -         -
 Obligations of states and political subdivisions            3,427      (108)      1,910      (178)      5,337      (286)
Corporate debt securities                                    1,000      (469)          -         -       1,000      (469)
                                                            --------------------------------------------------------------
Total securities available-for-sale                         $4,427     ($577)     $1,910     ($178)     $6,353     ($755)
                                                            ==============================================================

                                                            Less than 12 months   12 months or more          Total
                                                            -------------------   ------------------    ------------------
                                                            Fair    Unrealized    Fair    Unrealized    Fair    Unrealized
December 31, 2008                                           Value      Loss       Value      Loss       Value      Loss
                                                            --------------------------------------------------------------
Securities Available-for-Sale:                                                        (in thousands)
Obligations ofm U.S. government
   corporations and agencies                                  $130       ($1)        $18       ($1)       $148       ($2)
Obligations of states and political subdivisions             6,882      (272)          -         -       6,882      (272)
Corporate debt securities                                    1,000       (81)          -         -       1,000       (81)
                                                            --------------------------------------------------------------
Total securities available-for-sale                         $8,012     ($354)        $18       ($1)     $8,030     ($355)
                                                            ==============================================================
Obligations of U.S.  government corporations and agencies:  Unrealized losses on
investments  in obligations  of U.S.  government  corporations  and agencies are
caused  by  interest  rate  increases.  The  contractual  cash  flows  of  these
securities are guaranteed by U.S.  Government  Sponsored  Entities  (principally
Fannie Mae and Freddie  Mac). It is expected  that the  securities  would not be
settled at a price less than the amortized cost of the  investment.  Because the
decline in fair value is  attributable  to  changes  in  interest  rates and not
credit quality, and because the Company has the ability and intent to hold these
investments until a market price recovery or maturity, these investments are not
considered other-than-temporarily impaired. At June 30, 2009, no debt securities
representing  obligations  of U.S.  government  corporations  and  agencies  had
unrealized losses.

Obligations  of states and  political  subdivisions:  The  unrealized  losses on
investments in obligations of states and political  subdivisions  were caused by
increases in required  yields by investors in these types of  securities.  It is
expected  that the  securities  would not be  settled  at a price  less than the
amortized  cost  of the  investment.  Because  the  decline  in  fair  value  is
attributable  to changes in interest rates and not credit  quality,  and because
the Company has the ability and intent to hold these  investments until a market
price   recovery   or   maturity,   these   investments   are   not   considered
other-than-temporarily   impaired.   At  June  30,  2009,  11  debt   securities
representing  obligations  of states and political  subdivisions  had unrealized
losses with  aggregate  depreciation  of 5.4% from the Company's  amortized cost
basis.

Obligations of corporation debt securities: The unrealized losses on investments
in corporate  debt  securities  were caused by  increases in required  yields by
investors in these types of securities. It is expected that the securities would
not be  settled  at a price  less  than the  amortized  cost of the  investment.
Because the decline in fair value is  attributable  to changes in interest rates
and not credit  quality,  and  because the Company has the ability and intent to
hold  these  investments  until a  market  price  recovery  or  maturity,  these
investments  are not  considered  other-than-temporarily  impaired.  At June 30,
2009,  1  corporate  debt  security  had  an  unrealized   loss  with  aggregate
depreciation of 46.9% from the Company's amortized cost basis.

                                       8
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 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, 2009,  June 30, 2008,  and December 31, 2008, 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 the sale of loans that are held for sale are recognized at the time
of the sale and determined by the  difference  between net sale proceeds and the
net book  value of the  loans  less the  estimated  fair  value of any  retained
mortgage servicing rights.

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 actual 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.  At June 30,  2009,
$8,632,000 of loans are  classified as troubled debt  restructured.  The Company
had obligations to lend $1,663,000 of additional funds on the restructured loans
as of June 30, 2009.

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.

                                       9
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
occurs 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 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, 2008.

Based on the current conditions of the loan portfolio,  Management believes that
the  allowance  for loan  losses  ($33,624,000)  and the  reserve  for  unfunded
commitments  ($3,140,000),  which  collectively stand at $36,764,000 at June 30,
2009,  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.

                                       10
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 June 30,   Six months ended June 30,
                                         -------------------------------------------------------
   Allowance for loan losses:                2009           2008           2009           2008
                                         -------------------------------------------------------
Balance at beginning of period         $32,774       $19,383          $27,590       $17,331
   Provision for loan losses                7,850         8,800           15,650        12,900
   Loans charged off:
     Real estate mortgage:
       Residential                           (484)         (167)           (574)         (221)
   Commercial                                (103)            -            (145)          (19)
     Consumer:
       Home equity lines                   (2,163)         (789)         (3,468)         (948)
       Home equity loans                      (80)         (161)           (185)         (250)
       Auto indirect                         (628)         (623)         (1,293)       (1,172)
       Other consumer                        (203)         (277)           (518)         (579)
     Commercial                              (579)         (254)         (1,058)         (389)
     Construction:
       Residential                         (3,068)       (1,905)         (3,068)       (2,983)
       Commercial                               -             -               -             -
                                          -----------------------------------------------------
   Total loans charged off                 (7,308)       (4,176)        (10,309)       (6,561)
   Recoveries of previously
     charged-off loans:
     Real estate mortgage:
       Residential                              -             -               -             -
       Commercial                              16            14              31            28
     Consumer:
       Home equity lines                        7             -               9             -
       Home equity loans                        -             -               -             -
       Auto indirect                          124            69             260           191
       Other consumer                         155           181             351           374
     Commercial                                 6            10              38            18
     Construction:
       Residential                              -             -               4             -
       Commercial                               -             -               -             -
                                          ----------------------------------------------------
   Total recoveries of
     previously charged off loans             308           274             693           611
                                          ----------------------------------------------------
       Net charge-offs                     (7,000)       (3,902)         (9,616)       (5,950)
                                          ----------------------------------------------------
   Balance at end of period               $33,624       $24,281         $33,624       $24,281
                                          ====================================================
   Reserve for unfunded commitments:
   Balance at beginning of period          $2,740        $2,915          $2,565        $2,090
   Provision for losses -
     unfunded commitments                     400           550             575         1,375
                                          ----------------------------------------------------
   Balance at end of period                $3,140        $3,465          $3,140        $3,465
                                          ====================================================
   Balance at end of period:
   Allowance for loan losses                                            $33,624      $24,281
   Reserve for unfunded commitments                                       3,140        3,465
                                                                        ---------------------
   Allowance for losses                                                 $36,764      $27,746
                                                                        =====================
   As a percentage of total loans:
   Allowance for loan losses                                              2.17%         1.57%
   Reserve for unfunded commitments                                        .20%         0.23%
                                                                        ---------------------
   Allowance for losses                                                   2.37%         1.80%
                                                                        =====================
11
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 the 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.

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 Company uses an independent third party to determine fair
value of MSRs.

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,
                                            -------------------------
                                               2009         2008
                                            -------------------------
   Mortgage servicing rights:
   Balance at beginning of period              $2,972        $4,088
   Additions                                      825           412
   Change in fair value                            98          (172)
                                            -------------------------
   Balance at end of period                    $3,895        $4,328
                                            =========================
   Servicing fees received                       $546          $506
   Balance of loans serviced at:
     Beginning of period                     $431,195      $406,743
     End of period                           $468,360      $417,080
  Weighted-average prepayment speed (CPR)        16.3%         10.7%
  Discount rate                                   9.0%         10.0%

                                       12
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 net  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.

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,
2009 and December 31, 2008.

                               December 31,                             June 30,
   (Dollars in Thousands)         2008       Additions     Reductions     2009
                              --------------------------------------------------
   Goodwill                      $15,519         -              -       $15,519
                              ==================================================

The following table summarizes the Company's core deposit intangibles as of June
30, 2009 and December 31, 2008.

                                   December 31,                         June 30,
   (Dollars in Thousands)             2008      Additions  Reductions      2009
                                   ---------------------------------------------
   Core deposit intangibles        $3,365             -             -    $3,365
   Accumulated amortization        (2,712)            -          (199)   (2,911)
                                   ---------------------------------------------
   Core deposit intangibles, net     $653             -         ($199)    $ 454
                                   =============================================

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)
               -----------               -----------------------
                  2009                             $328
                  2010                             $260
                  2011                              $65
               Thereafter                             -

                                       13
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.  Currently,  and  historically,  the Company is  comprised of only one
reporting  unit that operates  within the business  segment it has identified as
"community banking".

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
The following table shows the number, weighted-average exercise price, intrinsic
value,  weighted average remaining  contractual life,  average remaining vesting
period,  and remaining  compensation  cost to be  recognized  over the remaining
vesting period of options  exercisable,  options not yet exercisable,  and total
options outstanding as of June 30, 2009:
Currently     Currently Not     Total
(dollars in thousands except exercise price)         Exercisable     Exercisable   Outstanding
Number of options                                     1,176,438       195,150       1,371,588
Weighted average exercise price                          $13.80        $20.16          $14.70
Intrinsic value                                          $4,042           $61          $4,103
Weighted average remaining contractual term (yrs.)         2.15          3.21            3.01
The options for 195,150 shares that are not currently exercisable as of June 30,
2009 are  expected  to vest,  on a  weighted-average  basis,  over the next 3.21
years, and the Company is expected to recognize $1,400,000 of compensation costs
related to these options as they vest.

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.

                                       14
Earnings per share have been computed based on the following:
Three months ended June 30,  Six months ended June 30,

                                                      2009         2008           2009        2008
(in thousands)                                   ------------------------------------------------------
Net income                                          $2,512       $2,274         $5,394      $6,322

Average number of common shares outstanding         15,783       15,745         15,779      15,793
Effect of dilutive stock options                       214          208            229         225
                                                 ---------------------------------------------------
Average number of common shares outstanding
   used to calculate diluted earnings per share     15,997       15,953         16,008      16,018
                                                 ===================================================
There were 553,000 and 658,000 options  excluded from the computation of diluted
earnings  per share for the three  month  periods  ended June 30, 2009 and 2008,
respectively, because the effect of these options was antidilutive.

There were 553,000 and 541,000 options  excluded from the computation of diluted
earnings  per share  for the six month  periods  ended  June 30,  2009 and 2008,
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,
                                             ---------------------------------------------------------
                                                 2009          2008             2009           2008
(in thousands)                               ---------------------------------------------------------
Unrealized holding losses on
   available-for-sale securities              ($1,988)      ($5,185)             $460        ($2,464)
Tax effect                                        836         2,180               194          1,036
                                             ---------------------------------------------------------
Unrealized holding losses on
   available-for-sale securities, net of tax  ($1,152)      ($3,005)             $266        ($1,428)
                                             =========================================================
The components of accumulated  other  comprehensive  income (loss),  included in
shareholders' equity, are as follows:

                                                          June 30,  December 31,
                                                             2009      2008
                                                          ----------------------
                                                             (in thousands)
Net unrealized gains on available-for-sale securities      $6,590      $6,131
Tax effect                                                 (2,771)     (2,578)
                                                          ----------------------
    Unrealized holding gains on
    available-for-sale securities, net of tax               3,819       3,553
                                                          ----------------------
Minimum pension liability                                  (2,677)     (2,677)
Tax effect                                                  1,126       1,126
                                                          ----------------------
   Minimum pension liability, net of tax                   (1,551)     (1,551)

Joint beneficiary agreement liability                          94          94
Tax effect                                                    (40)        (40)
                                                           ---------------------
   Joint beneficiary agreement liability, net of tax           54          54
                                                           ---------------------
Accumulated other comprehensive income                     $2,322      $2,056
                                                           =====================

                                       15
Retirement Plans
The Company has  supplemental  retirement plans for current and former 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 (but is not  required) 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)                                           2009       2008       2009     2008
                                                         ----       ----       ----     ----
Net pension cost included the following components:
Service cost-benefits earned during the period           $99       $139       $198     $278
Interest cost on projected benefit obligation            174        166        348      332
Amortization of net obligation at transition               -          -          -        -
Amortization of prior service cost                        38         45         76       90
Recognized net actuarial loss                             25         37         50       74
                                                        ------------------------------------
Net periodic pension cost                               $336       $387       $672     $774
                                                        ====================================
During the six months ended June 30, 2009 and 2008, the Company  contributed and
paid out as benefits $388,000 and $314,000,  respectively, to participants under
the plans. For the year ending December 31, 2009, the Company  currently expects
to contribute and pay out as benefits $730,000 to participants under the plans.

Fair Value Measurement
The Company utilizes fair value measurements to record fair value adjustments to
certain  assets  and  liabilities  and  to  determine  fair  value  disclosures.
Securities available-for-sale and mortgage servicing rights are recorded at fair
value on a recurring basis. Additionally,  from time to time, the Company may be
required to record at fair value other assets on a nonrecurring  basis,  such as
loans held for sale,  loans held for investment and certain other assets.  These
nonrecurring  fair value adjustments  typically involve  application of lower of
cost or market accounting or impairment write-downs of individual assets.

The Company groups assets and  liabilities at fair value in three levels,  based
on the  markets  in  which  the  assets  and  liabilities  are  traded  and  the
reliability of the assumptions used to determine fair value. These levels are:

Level 1 - Valuation is based upon quoted prices for identical instruments traded
          in active markets
Level 2 - Valuation  is based upon  quoted  prices for  similar  instruments  in
          active markets,  quoted prices for identical or similar instruments in
          markets that are not active, and model-based  valuation techniques for
          which all significant assumptions are observable in the market.
Level 3 - Valuation is generated from  model-based  techniques that use at least
          one  significant  assumption  not  observable  in  the  market.  These
          unobservable  assumptions reflect estimates of assumptions that market
          participants  would use in pricing the asset or  liability.  Valuation
          techniques include use of option pricing models,  discounted cash flow
          models and similar techniques.

Securities  available-for-sale  are recorded at fair value on a recurring basis.
Fair value  measurement  is based upon quoted  prices,  if available.  If quoted
prices are not  available,  fair values are measured using  independent  pricing
models or other  model-based  valuation  techniques such as the present value of
future  cash  flows,  adjusted  for the  security's  credit  rating,  prepayment
assumptions  and  other  factors  such  as  credit  loss  assumptions.  Level  1
securities  include  those  traded on an active  exchange,  such as the New York
Stock Exchange,  U.S. Treasury  securities that are traded by dealers or brokers
in active  over-the-counter  markets and money market funds.  Level 2 securities
include  mortgage-backed  securities  issued by government  sponsored  entities,
municipal bonds and corporate debt securities.  Securities classified as Level 3
include asset-backed securities in less liquid markets.

                                       16
The Company does not record loans at fair value on a recurring  basis.  However,
from time to time,  a loan is  considered  impaired  and an  allowance  for loan
losses is  established.  Loans for which it is probable that payment of interest
and principal will not be made in accordance with the  contractual  terms of the
loan  agreement  are  considered   impaired.   Once  a  loan  is  identified  as
individually  impaired,  management  measures impairment in accordance with SFAS
114, Accounting by Creditors for Impairment of a Loan (SFAS 114). The fair value
of  impaired  loans  is  estimated  using  one  of  several  methods,  including
collateral value,  market value of similar debt,  enterprise value,  liquidation
value and discounted cash flows. Those impaired loans not requiring an allowance
represent  loans  for  which  the  fair  value  of the  expected  repayments  or
collateral  exceed the  recorded  investments  in such loans.  At June 30, 2009,
substantially  all of the total impaired loans were evaluated  based on the fair
value of the collateral.  In accordance  with SFAS 157,  impaired loans where an
allowance  is  established  based  on  the  fair  value  of  collateral  require
classification  in  the  fair  value  hierarchy.  When  the  fair  value  of the
collateral is based on an observable  market price or a current  appraised value
which uses substantially  observable data, the Company records the impaired loan
as nonrecurring  Level 2. When an appraised value is not available or management
determines  the fair  value of the  collateral  is  further  impaired  below the
appraised value, or the appraised value contains a significant  assumption,  and
there is no observable  market price,  the Company  records the impaired loan as
nonrecurring Level 3.

Mortgage servicing rights are carried at fair value. A valuation model, which
utilizes a discounted cash flow analysis using a discount rate and prepayment
speed assumptions is used in the completion of the fair value measurement. While
the prepayment speed assumption is currently quoted for comparable instruments,
the discount rate assumption currently requires a significant degree of
management judgment. As such, the Company classifies mortgage servicing rights
subjected to recurring fair value adjustments as Level 3.

Goodwill and identified  intangible assets are subject to impairment  testing. A
projected  cash flow  valuation  method is used in the  completion of impairment
testing.  This  valuation  method  requires a  significant  degree of management
judgment as there are  unobservable  inputs for these  assets.  In the event the
projected  undiscounted  net  operating  cash  flows are less than the  carrying
value, the asset is recorded at fair value as determined by the valuation model.
As such, the Company  classifies  goodwill and other intangible assets subjected
to nonrecurring fair value adjustments as Level 3.

The table below presents the recorded amount of assets and liabilities  measured
at fair value on a recurring basis (in thousands):

Fair value at June 30, 2009              Total    Level 1     Level 2    Level 3
Securities available-for-sale          $252,104         -    $252,104          -
Mortgage servicing rights                 3,895         -           -     $3,895
                                       -----------------------------------------
Total assets measured at fair value    $255,999         -    $252,104     $3,895
                                       =========================================

The table below presents the recorded amount of assets and liabilities  measured
at fair value on a nonrecurring basis (in thousands):

Fair value at June 30, 2009               Total   Level 1    Level 2     Level 3
Impaired loans                           $40,094        -          -     $40,094
                                        ----------------------------------------
Total assets measured at fair value      $40,094        -          -     $40,094
                                        ========================================

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial  instrument  for which it is practical to estimate  that
value.  Cash and due from banks, fed funds purchased and sold,  accrued interest
receivable  and payable,  and short-term  borrowings  are considered  short-term
instruments. For these short-term instruments their carrying amount approximates
their fair value.

Securities
For all securities, fair values are based on quoted market prices or dealer
quotes.

Loans
The fair  value of  variable  rate  loans is the  current  carrying  value.  The
interest rates on these loans are regularly  adjusted to market rates.  The fair
value of other types of fixed rate loans is estimated by discounting  the future
cash flows using current rates at which similar loans would be made to borrowers
with similar credit ratings for the same remaining maturities. The allowance for
loan losses is a reasonable estimate of the valuation allowance needed to adjust
computed fair values for credit quality of certain loans in the portfolio.

Cash Value of Life Insurance
The  fair  values  of  insurance  policies  owned  are  based  on the  insurance
contract's cash surrender value.

                                       17
Deposit Liabilities and Long-Term Debt
The fair value of demand deposits,  savings  accounts,  and certain money market
deposits is the amount payable on demand at the reporting date.  These values do
not consider the estimated fair value of the Company's core deposit  intangible,
which is a significant unrecognized asset of the Company. The fair value of time
deposits and debt is based on the discounted value of contractual cash flows.

Securities  Sold under  Agreements to Repurchase and Federal Funds  Purchased or
Sold For short-term  instruments,  including securities sold under agreements to
repurchase  and  federal  funds  purchased  or sold,  the  carrying  amount is a
reasonable estimate of fair value.

Other Borrowings
The fair value of other  borrowings is calculated  based on the discounted value
of the  contractual  cash flows using current rates at which such borrowings can
currently be obtained.

Junior Subordinated Debentures
The fair value of junior subordinated debentures is estimated using a discounted
cash flow model. The future cash flows of these  instruments are extended to the
next available  redemption  date or maturity date as appropriate  based upon the
spreads of recent  issuances or quotes from brokers for comparable  bank holding
companies  compared  to the  contractual  spread  of  each  junior  subordinated
debenture measured at fair value.

Commitments to Extend Credit and Standby Letters of Credit
The fair value of commitments is estimated  using the fees currently  charged to
enter into similar  agreements,  taking into account the remaining  terms of the
agreements and the present credit  worthiness of the counter parties.  For fixed
rate loan commitments,  fair value also considers the difference between current
levels of interest rates and the committed  rates.  The fair value of letters of
credit is based on fees  currently  charged  for  similar  agreements  or on the
estimated  cost to terminate them or otherwise  settle the  obligation  with the
counter parties at the reporting date.

Fair values for financial  instruments are management's  estimates of the values
at which the  instruments  could be exchanged in a transaction  between  willing
parties.  These estimates are subjective and may vary significantly from amounts
that would be realized in actual  transactions.  In addition,  other significant
assets are not  considered  financial  assets  including,  any mortgage  banking
operations,  deferred tax assets, and premises and equipment.  Further,  the tax
ramifications  related to the realization of the unrealized gains and losses can
have a  significant  effect  on the  fair  value  estimates  and  have  not been
considered in any of these estimates. The estimated fair values of the Company's
financial instruments are as follows:
June 30, 2009                    December 31, 2008
                                            --------------------------         ----------------------------
                                             Carrying           Fair             Carrying           Fair
                                              Amount            Value             Amount            Value
 (in thousands)                             --------------------------         ----------------------------
Financial assets:
  Cash and due from banks                     $55,071          $55,071           $64,375           $64,375
  Cash at Federal Reserve and other banks     127,852          127,852            21,980            21,980
  Securities available-for-sale               252,104          252,104           266,561           266,561
  Federal Home Loan Bank stock, at cost         9,274            9,274             9,235             9,235
  Loans, net                                1,518,611        1,551,729         1,563,259         1,623,697
  Cash value of life insurance                 47,365           47,365            46,815            46,815
  Accrued interest receivable                   7,575            7,575             7,935             7,935
Financial liabilities:
  Deposits                                  1,737,385        1,696,777         1,669,270         1,646,561
  Accrued interest payable                      5,094            5,094             6,146             6,146
  Federal funds purchased                           -                -                 -                 -
  Other borrowings                             73,898           78,685           102,005           101,681
  Junior subordinated debt                     41,238           17,097            41,238            21,856

                                             Contract           Fair            Contract             Fair
Off-balance sheet:                            Amount            Value            Amount              Value
                                             --------------------------         --------            ------
 Commitments                                 $614,022           $6,140          $637,940            $6,379
 Standby letters of credit                      7,424               74             5,425                54
 Overdraft privilege commitments               37,825              378            35,883               359
18
Subsequent Events

The Company has evaluated events  subsequent to the balance sheet through August
7, 2009, the date the financial  statements were issued, and has determined that
there were no  recognized  or  non-recognized  subsequent  events  that  require
recognition or disclosure in these financial statements.

Recent Accounting Pronouncements
In February 2008, the FASB issued  Financial  Accounting  Standards  Board Staff
Position FAS SFAS157-2  (FSP 157-2),  Effective  Date of FASB Statement No. 157.
FSP SFAS 157-2 delayed the Company's January 1, 2008,  effective date of FAS 157
for  all  nonfinancial  assets  and  nonfinancial   liabilities,   except  those
recognized or disclosed at fair value in the financial statements on a recurring
basis (at  least  annually),  until  January  1,  2009.  Implementation  of this
standard did not have a material effect on the Company's financial statements.

In March 2008, the FASB issued FASB Statement of Financial  Accounting Standards
No. 161,  Disclosures About Derivative  Instruments and Hedging  Activities,  an
Amendment  of FASB  Statement  No. 133 (SFAS  161).  SFAS 161  amends  SFAS 133,
Accounting  for  Derivative  Instruments  and Hedging  Activities,  to amend and
expand the disclosure  requirements of SFAS 133 to provide greater  transparency
about (i) how and why an entity uses derivative instruments, (ii) how derivative
instruments  and related  hedge items are  accounted  for under SFAS 133 and its
related interpretations, and (iii) how derivative instruments and related hedged
items affect an entity's  financial  position,  results of  operations  and cash
flows. To meet those objectives, SFAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives,  quantitative disclosures about
fair value amounts of gains and losses on derivative instruments and disclosures
about credit-risk-related contingent features in derivative agreements. SFAS 161
is effective  for the Company on January 1, 2009 and did not have a  significant
impact on the Company's financial statements.

In May 2008,  the FASB issued FASB Statement of Financial  Accounting  Standards
No. 162, The Hierarchy of Generally Accepted  Accounting  Principles (SFAS 162).
SFAS 162 identifies  the sources of accounting  principles and the framework for
selecting the principles to be used in the  preparation of financial  statements
of  nongovernmental  entities that are presented in  conformity  with  generally
accepted accounting principles (GAAP) in the United States (the GAAP hierarchy).
The hierarchical guidance provided by SFAS 162 did not have a significant impact
on the Company's financial statements.

In April  2009,  the FASB  issued  Financial  Accounting  Standards  Board Staff
Position FAS SFAS 157-4 (FSP SFAS 157-4), Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability  Have  Significantly  Decreased
and Identifying  Transactions That Are Not Orderly.  FSP SFAS 157-4 affirms that
the  objective  of fair  value when the market for an asset is not active is the
price that would be  received to sell the asset in an orderly  transaction,  and
clarifies and includes additional factors for determining whether there has been
a significant  decrease in market activity for an asset when the market for that
asset is not active.  FSP SFAS 157-4  requires an entity to base its  conclusion
about whether a transaction  was not orderly on the weight of the evidence.  FSP
SFAS 157-4 also amended SFAS 157,  Fair Value  Measurements,  to expand  certain
disclosure  requirements.  The Company  adopted the provisions of FSP SFAS 157-4
during  the  first  quarter  of  2009.  Adoption  of  FSP  SFAS  157-4  did  not
significantly impact the Company's financial statements.

In April  2009,  the FASB  issued  Financial  Accounting  Standards  Board Staff
Position  FAS SFAS  115-2  and SFAS  124-2  (FSP  SFAS  115-2  and SFAS  124-2),
Recognition and Presentation of Other-Than-Temporary Impairments. FSP SFAS 115-2
and SFAS  124-2  (i)  changes  existing  guidance  for  determining  whether  an
impairment  is other than  temporary to debt  securities  and (ii)  replaces the
existing  requirement that the entity's management assert it has both the intent
and ability to hold an impaired  security until recovery with a requirement that
management assert: (a) it does not have the intent to sell the security; and (b)
it is more likely than not it will not have to sell the security before recovery
of its cost  basis.  Under FSP SFAS 115-2 and SFAS  124-2,  declines in the fair
value of  held-to-maturity  and  available-for-sale  securities below their cost
that are deemed to be other than temporary are reflected in earnings as realized
losses to the extent the impairment is related to credit  losses.  The amount of
the  impairment  related to other factors is  recognized in other  comprehensive
income.  The  Company  adopted the  provisions  of FSP SFAS 115-2 and SFAS 124-2
during the first quarter of 2009.  Adoption of FSP SFAS 115-2 and SFAS 124-2 did
not significantly impact the Company's financial statements.

                                       19
In April  2009,  the FASB  issued  Financial  Accounting  Standards  Board Staff
Position  FAS SFAS  107-1 and APB 28-1 (FSP SFAS  107-1 and APB  28-1),  Interim
Disclosures  about Fair Value of Financial  Instruments.  FSP SFAS 107-1 and APB
28-1 amends SFAS 107, Disclosures about Fair Value of Financial Instruments,  to
require  an  entity  to  provide  disclosures  about  fair  value  of  financial
instruments in interim financial  information and amends  Accounting  Principles
Board (APB)  Opinion  No. 28,  Interim  Financial  Reporting,  to require  those
disclosures in summarized  financial  information at interim reporting  periods.
Under FSP SFAS  107-1 and APB 28-1,  a publicly  traded  company  shall  include
disclosures about the fair value of its financial instruments whenever it issues
summarized  financial  information for interim reporting  periods.  In addition,
entities  must  disclose,  in the  body  or in  the  accompanying  notes  of its
summarized  financial  information  for  interim  reporting  periods  and in its
financial  statements  for  annual  reporting  periods,  the  fair  value of all
financial  instruments  for which it is  practicable  to  estimate  that  value,
whether recognized or not recognized in the statement of financial position,  as
required by SFAS 107. The new interim disclosures required by FSP SFAS 107-1 and
APB 28-1 are included in the Company's  interim financial  statements  beginning
with the second quarter of 2009.

In May 2009,  the FASB issued  Statement of Financial  Accounting  Standards No.
165,  Subsequent Events (SFAS 165). SFAS 165 is effective with interim or annual
financial  periods  ending after June 15, 2009.  The objective of SFAS 165 is to
establish  general  standards for the  accounting  and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued.  In  particular,  SFAS 165 sets forth (i) the period
after the  balance  sheet date during  which  management  of a reporting  entity
should evaluate events or transactions that may occur for potential  recognition
or disclosure in the financial statements, (ii) the circumstances under which an
entity should recognize events or transactions occurring after the balance sheet
date in its financial  statements,  (iii) the disclosures  that an entity should
make about events or transactions that occurred after the balance sheet date.

                                       20
TRICO BANCSHARES
                                Financial Summary
               (In thousands, except per share amounts; unaudited)

                                            Three months ended         Six months ended
                                                June 30,                   June 30,
                                         ------------------------------------------------
                                           2009           2008        2009         2008
                                         ------------------------------------------------
Net Interest Income (FTE)                  $23,288       $23,029     $46,439      $44,575
Provision for loan losses                   (7,850)       (8,800)    (15,650)     (12,900)
Noninterest income                           7,996         7,280      14,611       14,130
Noninterest expense                        (19,344)      (17,844)    (36,545)     (35,417)
Provision for income taxes (FTE)            (1,578)       (1,391)     (3,461)      (4,066)
                                          ------------------------------------------------
Net income                                  $2,512        $2,274      $5,394       $6,322
                                          ================================================

Earnings per share:
   Basic                                     $0.16         $0.14       $0.34        $0.40
   Diluted                                   $0.16         $0.14       $0.34        $0.39
Per share:
   Dividends paid                            $0.13         $0.13       $0.26        $0.26
   Book value at period end                 $12.67        $11.86
   Tangible book value at period end        $11.66        $10.81

Average common shares outstanding           15,783        15,745      15,779       15,793
Average diluted shares outstanding          15,997        15,953      16,008       16,018
Shares outstanding at period end            15,783        15,745
At period end:
   Loans, net                           $1,518,611    $1,519,043
   Total assets                          2,087,841     1,980,490
   Total deposits                        1,737,385     1,511,053
   Other borrowings                         73,898        85,048
   Junior subordinated debt                 41,238        41,238
Shareholders' equity                      $199,979      $186,686
Financial Ratios:
During the period (annualized):
   Return on assets                           0.48%         0.46%       0.52%        0.64%
   Return on equity                           4.94%         4.74%       5.32%        6.56%
   Net interest margin(1)                     4.82%         5.06%       4.86%        4.90%
   Net loan charge-offs to average loans      1.80%         1.01%       1.23%        0.77%
   Efficiency ratio(1)                       61.83%        58.87%      59.86%       60.33%
At Period End:
   Equity to assets                           9.58%         9.43%
   Total capital to risk-adjusted assets     12.87%        12.26%
   Allowance for losses to loans(2)           2.37%         1.80%

(1) Fully taxable equivalent (FTE).
(2) Allowance  for losses  includes  allowance  for loan losses and reserve for
     unfunded commitments.
21
Item 2. Management's  Discussion and Analysis of Financial Condition 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 consolidated financial statements, which
have been prepared in accordance with accounting  principles  generally accepted
in the United States. 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  Condensed  Consolidated  Financial  Statements  of the Company and the
Notes thereto located at Item 1 of this report.

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,
                                   ---------------------------------------------
                                       2009       2008         2009       2008
                                   ---------------------------------------------
Net Interest Income (FTE)           $23,288     $23,029      $46,439    $44,575
Provision for loan losses            (7,850)     (8,800)     (15,650)   (12,900)
Noninterest income                    7,996       7,280       14,611     14,130
Noninterest expense                 (19,344)    (17,844)     (36,545)   (35,417)
Provision for income taxes (FTE)     (1,578)     (1,391)      (3,461)    (4,066)
                                   ---------------------------------------------
Net income                           $2,512      $2,274       $5,394     $6,322
                                   =============================================

The Company had quarterly  earnings of  $2,512,000,  or $0.16 per diluted share,
for the three  months  ended June 30,  2009.  This  represents  an  increase  of
$238,000 (10.5%) when compared with earnings of $2,274,000 for the quarter ended
June 30, 2008.  Diluted  earnings per share for the quarter  ended June 30, 2009
increased 14.3% to $0.16 compared to $0.14 for the quarter ended June 30, 2008.

The Company reported earnings of $5,394,000, or $0.34 per diluted share, for the
six months ended June 30, 2009.  These results  represent a decrease of $928,000
(14.7%) when compared with earnings of $6,322,000  for the six months ended June
30,  2008.  Diluted  earnings  per share for the six months  ended June 30, 2009
decreased  12.8% to $0.34  compared  to $0.39 for the six months  ended June 30,
2008.

                                       22
Net Interest Income
The  Company's  primary  source  of  revenue  is  net  interest  income,  or the
difference  between  interest  income on  interest-earning  assets and  interest
expense  on  interest-bearing  liabilities.   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,
                                        -----------------------------------------------------
                                            2009         2008            2009         2008
                                        -----------------------------------------------------
Interest income                        $28,432      $30,332          $57,314      $61,462
   Interest expense                        (5,286)      (7,471)         (11,170)     (17,236)
   FTE adjustment                             142          168              295          349
                                       ------------------------------------------------------
      Net interest income (FTE)           $23,288      $23,029          $46,439      $44,575
                                       ======================================================
   Average interest-earning assets     $1,933,633   $1,819,222       $1,910,377   $1,818,217

   Net interest margin (FTE)                 4.82%        5.06%            4.86%       4.90%
Net interest  income (FTE) during the second quarter of 2009 increased  $259,000
(1.1%) from the same period in 2008 to $23,288,000. The increase in net interest
income (FTE) was due to an $114,411,000  (6.3%) increase in average  balances of
interest-earning  assets to $1,933,633,000  that was partially offset by a 0.24%
decrease in net interest  margin (FTE) to 4.82% from the quarter  ended June 30,
2008.

Net  interest  income  (FTE)  during  the  first six  months  of 2009  increased
$1,864,000  (4.2%) from the same period in 2008 to $46,439,000.  The increase in
net interest  income (FTE) was due to a $92,160,000  (5.1%)  increase in average
balances of interest-earning  assets to $1,910,377,000 that was partially offset
by a 0.04%  decrease in net  interest  margin (FTE) to 4.86% from 4.90% from the
six month period ended June 30, 2008.

Interest and Fee Income
Interest  and  fee  income  (FTE)  for the  second  quarter  of  2009  decreased
$1,926,000  (6.3%) from the second  quarter of 2008.  The  decrease was due to a
0.80% decrease in the yield on average interest-earning assets to 5.91% that was
partially offset by a $114,411,000  (6.3%) increase in average  interest-earning
assets to  $1,933,633,000.  The  growth in average  interest-earning  assets was
mainly due to a  $109,805,000  increase in average  balance of  interest-earning
cash at the  Federal  Reserve  and other  banks.  The  decrease  in the yield on
average  interest-earning  assets was mainly due to a 0.51% decrease in yield on
loans to 6.48% and the large  increase in  interest-bearing  cash  balances that
earned only 0.20% during the quarter.

Interest and fee income  (FTE) for the six months ended June 30, 2009  decreased
$4,202,000  (6.8%) from the same period of 2008. The decrease was due to a 0.77%
decrease  in the yield on  average  interest-earning  assets  to 6.03%  that was
partially  offset by a $92,160,000  (5.1%) increase in average  interest-earning
assets to $1,910,377,000.  The growth in  interest-earning  assets was primarily
due to a $20,257,000 (1.3%) increase in average loan balances to $1,561,064,000,
and a $77,592,000  increase in average balance of  interest-earning  cash at the
Federal  Reserve  and  other  banks.  The  decrease  in  the  yield  on  average
interest-earning  assets was mainly due to a 0.61% decrease in yield on loans to
6.50% and the large increase in interest-bearing  cash balances that earned only
0.20%  during the six months  ended June 30,  2009.  The decrease in loan yields
from the six months  ended June 30,  2009 was mainly due to a 4.00%  decrease in
the prime  lending  rate from 7.25% at  December  31,  2007 to 3.25% at June 30,
2009.

                                       23
Interest Expense
Interest  expense  decreased  $2,185,000  (29.2%)  to  $5,286,000  in the second
quarter of 2009 compared to the second quarter of 2008.  The average  balance of
interest-bearing  liabilities  increased $72,837,000 (5.1%) to $1,489,202,000 in
the second  quarter of 2009 compared to the second quarter of 2008. The increase
in the average  balance of  interest-bearing  liabilities  was due  primarily to
increased deposits of $214,226,000  (18.5%) offset by a decrease of $141,389,000
in the  average  balances  of  Federal  funds  purchased  and other  borrowings,
respectively,  from  the  second  quarter  of 2008.  The  average  rate  paid on
interest-bearing  liabilities in the quarter ended June 30, 2009 decreased 0.69%
to 1.42% compared to the quarter ended June 30, 2008 as a result of lower market
rates for almost all types of interest-bearing liabilities.

Interest expense decreased  $6,066,000 (35.2%) to $11,170,000 for the six months
ended June 30, 2009  compared to  $17,236,000  for the six months ended June 30,
2008. The average balance of interest-bearing  liabilities increased $53,730,000
(3.8%) to $1,465,509,000  for the six months ended June 30, 2009 compared to the
six  months  ended  June 30,  2008.  The  increase  in the  average  balance  of
interest-bearing   liabilities  was  due  primarily  to  increased  deposits  of
$189,529,000  (16.4%)  offset  by a  decrease  of  $135,799,000  in the  average
balances of Federal  funds  purchased and other  borrowings  from the six months
ended June 30, 2008.  The average rate paid on  interest-bearing  liabilities in
the six month period ended June 30, 2009  decreased  0.92% to 1.52%  compared to
the six months  ended June 30, 2008 as a result of lower market rates for almost
all types of interest-bearing liabilities.

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,
                                      ------------------------------------------
                                       2009       2008           2009      2008
                                      ------------------------------------------
Yield on interest-earning assets       5.91%      6.71%          6.03%     6.80%
Rate paid on interest-bearing
     Liabilities                       1.42%      2.11%          1.52%     2.44%
                                      ------------------------------------------
     Net interest spread               4.49%      4.60%          4.51%     4.36%
Impact of all other net
     noninterest-bearing funds         0.33%      0.46%          0.35%     0.54%
                                      ------------------------------------------
        Net interest margin            4.82%      5.06%          4.86%     4.90%
                                      ==========================================

Net interest  margin for the three months  ended June 30, 2009  decreased  0.24%
compared to the three months ended June 30, 2008.  This decrease in net interest
margin   was   mainly   due  to  a  0.13%   decrease   in  the   impact  of  net
noninterest-bearing  funds  to 0.33%  and a  decrease  of 0.11% in net  interest
spread  compared to the three months ended June 30, 2008.  The average  yield on
interest-earning   assets  decreased  0.80%  while  the  average  rate  paid  on
interest-bearing  liabilities  decreased  0.69% from the three months ended June
30, 2008.

Net  interest  margin for the six months  ended June 30,  2009  decreased  0.04%
compared to the six months  ended June 30, 2008.  This  decrease in net interest
margin   was   mainly   due  to  a  0.19%   decrease   in  the   impact  of  net
noninterest-bearing  funds  to  0.35%  offset  by an  increase  of  0.15% in net
interest  spread  compared to the six months  ended June 30,  2008.  The average
yield on interest-earning  assets decreased 0.77% while the average rate paid on
interest-bearing  liabilities decreased 0.92% from the six months ended June 30,
2008.

                                       24
Summary  of  Average  Balances,   Yields/Rates  and  Interest  Differential  The
following table presents,  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, 2009                    June 30, 2008
                                            ------------------------------       -----------------------------
                                                         Interest    Rates                  Interest    Rates
                                              Average    Income/    Earned       Average    Income/     Earned
                                              Balance    Expense    Paid         Balance    Expense     Paid
                                            ------------------------------      ------------------------------
Assets:
Loans                                       $1,555,778   $25,218    6.48%       $1,546,257   $27,015     6.99%
Investment securities - taxable                245,489     2,896    4.72%          247,508     3,017     4.88%
Investment securities - nontaxable              22,407       405    7.23%           25,303       467     7.38%
Cash at Federal Reserve and other banks        109,959        55    0.20%              154         1     1.71%
                                            -----------------------------       ------------------------------
Total interest-earning assets                1,933,633    28,574    5.91%        1,819,222    30,500     6.71%
                                                          ------                              ------
Other assets                                   155,242                             167,452
                                               -------                             -------
Total assets                                $2,088,875                          $1,986,674
                                            ==========                          ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits              $283,777      $444    0.63%         $215,661      $134     0.25%
Savings deposits                               425,759       759    0.71%          392,938     1,172     1.19%
Time deposits                                  664,863     3,575    2.15%          551,574     4,344     3.15%
Federal funds purchased                              -         -    -              130,263       711     2.18%
Other borrowings                                73,565       112    0.61%           84,691       524     2.47%
Junior subordinated debt                        41,238       396    3.84%           41,238       586     5.68%
                                            ----------------------------        ------------------------------
Total interest-bearing liabilities           1,489,202     5,286    1.42%        1,416,365     7,471     2.11%
                                                           -----                               -----
Noninterest-bearing deposits                   361,035                             347,079
Other liabilities                               35,042                              31,225
Shareholders' equity                           203,596                             192,005
                                            ----------                          ----------
Total liabilities and shareholders' equity  $2,088,875                          $1,986,674
                                            ==========                          ==========
Net interest spread(1)                                              4.49%                                4.60%
Net interest income and interest margin(2)               $23,288    4.82%                    $23,029     5.06%
                                                         ================                    =================

(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.
25
For the six months ended
                                            ------------------------------------------------------------------
                                                     June 30, 2009                    June 30, 2008
                                            ------------------------------       -----------------------------
                                                         Interest    Rates                  Interest    Rates
                                              Average    Income/    Earned       Average    Income/     Earned
                                              Balance    Expense    Paid         Balance    Expense     Paid
                                            ------------------------------      ------------------------------
Assets:
Loans                                       $1,561,064   $50,731    6.50%       $1,540,807   $54,741     7.11%
Investment securities - taxable                248,960     5,979    4.80%          251,143     6,095     4.85%
Investment securities - nontaxable              22,508       822    7.31%           26,014       972     7.47%
Cash at Federal Reserve and other banks         77,845        77    0.20%              253         3     2.37%
                                            -----------------------------       ------------------------------
Total interest-earning assets                1,910,377    57,609    6.03%        1,818,217    61,811     6.80%
                                                          ------                              ------
Other assets                                   158,657                             169,453
                                               -------                             -------
Total assets                                $2,069,034                          $1,987,670
                                            ==========                          ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits              $270,957      $786    0.58%         $217,074      $221     0.20%
Savings deposits                               417,254     1,652    0.79%          390,214     2,674     1.37%
Time deposits                                  660,103     7,542    2.29%          551,497     9,932     3.60%
Federal funds purchased                              -         -    -              116,914     1,523     2.61%
Other borrowings                                75,957       354    0.93%           94,842     1,587     3.35%
Junior subordinated debt                        41,238       836    4.05%           41,238     1,299     6.30%
                                            ----------------------------        ------------------------------
Total interest-bearing liabilities           1,465,509    11,170    1.52%        1,411,779    17,236     2.44%
                                                          ------                              ------
Noninterest-bearing deposits                   363,755                             350,643
Other liabilities                               36,909                              32,521
Shareholders' equity                           202,861                             192,727
                                               -------                             -------
Total liabilities and shareholders' equity  $2,069,034                          $1,987,670
                                            ==========                          ==========
Net interest spread(1)                                              4.51%                                4.36%
Net interest income and interest margin(2)               $46,439    4.86%                    $44,575     4.90%
                                                         ================                    =================
(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.
26
Summary of  Changes in  Interest  Income and  Expense  due to Changes in Average
Asset and Liability Balances and Yields Earned and 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, 2009
                                                   compared with three months
                                                      ended June 30, 2008
                                                --------------------------------
                                                 Volume        Rate        Total
                                                --------------------------------
Increase (decrease) in interest income:
Loans                                              $166     $(1,963)    $(1,797)
Investment securities                               (63)       (120)       (183)
Cash at Federal Reserve and other banks             469        (415)         54
                                                --------------------------------
   Total interest-earning assets                    572      (2,498)     (1,926)
                                                --------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits                     43         267         310
Savings deposits                                     98        (511)       (413)
Time deposits                                       892      (1,661)       (769)
Federal funds purchased                            (711)          -        (711)
Other borrowings                                    (69)       (343)       (412)
Junior subordinated debt                              -        (190)       (190)
                                                 -------------------------------
   Total interest-bearing liabilities               254      (2,439)     (2,185)
                                                 -------------------------------
Increase in Net Interest Income                    $318        $(59)       $259
                                                 ===============================

                                                  Six months ended June 30, 2009
                                                     compared with six months
                                                        ended June 30, 2008
                                                 -------------------------------
                                                 Volume         Rate       Total
                                                 -------------------------------
Increase (decrease) in interest income:
Loans                                              $720      $(4,730)   $(4,010)
Investment securities                              (145)        (121)      (266)
Cash at Federal Reserve and other banks             919         (845)        74
                                                 -------------------------------
   Total interest-earning assets                  1,494       (5,696)    (4,202)
                                                 -------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits                     54          511        565
Savings deposits                                    185       (1,207)    (1,022)
Time deposits                                     1,955       (4,345)    (2,390)
Federal funds purchased                          (1,523)           -     (1,523)
Other borrowings                                   (316)        (917)    (1,233)
Junior subordinated debt                              -         (463)      (463)
                                                 -------------------------------
   Total interest-bearing liabilities               352       (6,418)    (6,066)
                                                 -------------------------------
Increase in Net Interest Income                  $1,142         $722     $1,864
                                                 ===============================

Provision for Loan Losses
The Company  provided  $7,850,000  for loan losses in the second quarter of 2009
versus  $8,800,000 in the second quarter of 2008. In the second quarter of 2009,
the Company recorded $7,000,000 of net loan charge-offs versus $3,902,000 of net
loan charge-offs in the second quarter of 2008. In addition,  net charge-offs of
$2,236,000  on home equity lines and loans and $504,000 on auto  indirect  loans
were taken during the second quarter of 2009. During the second quarter of 2009,
the Company also  increased  its  allowance for loan losses by $850,000 from the
first  quarter of 2009 with such  additional  reserves  allocated  primarily  to
consumer loans, residential real estate and construction lending.

The Company  provided  $15,650,000  for loan losses  during the six months ended
June 30, 2009 versus  $12,900,000  during the six months ended June 30, 2008. In
the six months ended June 30, 2009, the Company recorded  $9,616,000 of net loan
charge-offs  versus  $5,950,000 of net loan  charge-offs in the six months ended
June 30,  2008.  A total net of  $3,644,000  in home equity  lines and loans and
$1,033,000 on auto indirect  loans have been  charged-off  during the six months
ended June 30,  2009.  During the six months  ended June 30,  2009,  the Company
increased its  allowance  for loan losses by  $6,034,000  from December 31, 2008
with such additional reserves allocated primarily to consumer loans, residential
real estate and construction lending.

                                       27
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,
                                                ------------------------------------------------
                                                   2009        2008         2009         2008
                                                ------------------------------------------------
Service charges on deposit accounts           $4,136      $3,963       $7,721       $7,801
   ATM fees and interchange revenue               1,222       1,168        2,320        2,247
   Other service fees                               553         527        1,095        1,078
   Change in value of mortgage servicing rights     271         168           98         (172)
   Gain on sale of loans                            948         316        1,589          574
   Commissions on sale of
     nondeposit investment products                 492         525          981          945
   Increase in cash value of life insurance         270         360          550          720
   Gain from VISA IPO                                 -           -            -          396
   Other noninterest income                         104         253          257          541
                                                -----------------------------------------------
   Total noninterest income                      $7,996      $7,280      $14,611      $14,130
                                                ===============================================
Noninterest income for the second quarter of 2009 increased $716,000 (9.8%) from
the second quarter of 2008,  mainly due to a $632,000 (200%) increase in gain on
sale of loans to $948,000.  Also  contributing  to the  increase in  noninterest
income was a $173,000 (4.4%) increase in service charges on deposit  accounts to
$4,136,000,  and a $103,000  (61.3%) increase in the change in value of mortgage
servicing rights to $271,000.  These increases were offset a decrease of $90,000
(25.0%) in the cash value of life  insurance to $270,000 and a decrease in other
noninterest  income of $149,000  (58.9%) to $104,000.  The  increases in service
charges on deposit accounts and ATM fees and interchange  revenue were primarily
due to increased numbers of customers.  The increase in gain on sale of loans is
primarily  due  to  increased  refinancing  activity  during  the  quarter.  The
improvement in change in value of mortgage  servicing rights is primarily due to
a decrease in  refinance  activity at the end of the quarter  which  extends the
estimated  life of new mortgages and enhances the value of the related  mortgage
servicing rights.

Noninterest  income for the six months  ended June 30, 2009  increased  $481,000
(3.4%) to $14,611,000  from the same period in 2008. The increase in noninterest
income from the six months  ended June 30,  2009 was mainly due to a  $1,015,000
gain on sale of loans to $1,589,000 (177%),  offset by a decrease of $170,000 in
the cash value of life insurance to $550,000  (23.6%) and a decrease in the gain
on VISA IPO of $396,000  (100%) to $0. The  increase in gain on sale of loans is
primarily  due to  increased  refinancing  activity  in the  low  interest  rate
environment that existed for most of the six month period ended June 30, 2009.

                                       28
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,
                                                ------------------------------------------------
                                                   2009        2008         2009         2008
                                                ------------------------------------------------
Base salaries, net of
      deferred loan origination costs            $6,568       $6,316       $13,144      $12,649
   Incentive compensation                         1,024          830         1,612        1,390
   Benefits and other compensation costs          2,477        2,499         5,102        5,086
                                                ------------------------------------------------
      Total salaries and related benefits        10,069        9,645        19,858       19,125
                                                ------------------------------------------------
   Occupancy                                      1,269        1,228         2,504        2,416
   Equipment                                        905          998         1,822        1,980
   Telecommunications                               433          630           765        1,227
   Data processing and software                     686          596         1,304        1,211
   Provisions for losses - unfunded commitments     400          550           575        1,375
   ATM network charges                              589          529         1,105        1,023
   Professional fees                                423          509           734        1,002
   Advertising and marketing                        514          434           912          753
   Courier service                                  100          275           273          538
   Postage                                          228          216           507          498
   Intangible amortization                           64          133           198          256
   Operational losses                                90           92           127          205
   Provision for OREO losses                          -            -           162            -
   Assessments                                    1,288           83         1,590          165
   Other                                          2,286        1,926         4,109        3,643
                                                ------------------------------------------------
   Total other noninterest expense                9,275        8,199        16,687       16,292
                                                ------------------------------------------------
   Total noninterest expense                    $19,344      $17,844       $36,545      $35,417
                                                ================================================
   Average full time equivalent staff               639          626           630          626
   Noninterest expense to revenue (FTE)           61.83%       58.87%       59.86%        60.33%
Noninterest  expense for the second quarter of 2009 increased  $1,500,000 (8.4%)
compared to the second quarter of 2008.  Salaries and benefits expense increased
$424,000 (4.4%) to $10,069,000 mainly due to annual salary increases,  increased
FTE and increased incentive compensation expense related to increased production
of sold loans. Other noninterest expense increased  $1,076,000 (13.1%) primarily
due  to  a  $1,205,000  (1452%)  increase  in  assessments.   The  FDIC  special
assessment, which is due on September 30, 2009 and recorded in the quarter ended
June 30, 2009, totaled $933,000. The remainder of the increase in assessments is
due to increasing deposits and premium rates on FDIC insurance.  The increase in
assessments was partially offset by decreases in  telecommunications of $197,000
(31.3%) to $433,000 and courier service of $175,000 (63.6%) to $100,000.

Noninterest expense for the six months ended June 30, 2009 increased  $1,128,000
(3.2%)  compared to the six months  ended June 30,  2008.  Salaries and benefits
expense  increased  $733,000  (3.8%) to $19,858,000  mainly due to annual salary
increases, increased FTE and increased incentive compensation expense related to
increased production of sold loans. Other noninterest expense increased $395,000
(2.4%) primarily due to assessments  increasing  $1,425,000 (864%) to $1,590,000
offset by a decrease of  $800,000  (58.2%) in  provision  for losses on unfunded
commitments to $575,000 and a decrease in telecommunications by $462,000 (37.7%)
to $765,000.

Provision for Income Tax
The  effective  tax rate for the three  months ended June 30, 2009 was 36.4% and
reflects an increase  from 35.0% for the three months  ended June 30, 2008.  The
effective tax rate for the six months ended June 30, 2009 was 37.0% and reflects
no change from 37.0% for the six months ended June 30, 2008.  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.

                                       29
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 regarding collection.

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

                              At June 30, 2009            At December 31, 2008
                         --------------------------    -------------------------
                          Gross   Guaranteed   Net     Gross   Guaranteed   Net
                         -------------------------------------------------------
Classified loans         $100,865   $4,884  $95,981     63,850  $5,379  $58,471
Other classified assets     2,622        -    2,622      1,185            1,185
                         -------------------------------------------------------
Total classified assets  $103,487   $4,884  $98,603    $65,035  $5,379  $59,656
                         =======================================================
Allowance for loan losses/classified loans     35.0%                       47.2%

Classified  assets,  net of  guarantees  of the U.S.  Government,  including its
agencies and its government-sponsored  agencies,  increased $38,947,000 (65%) to
$98,603,000 at June 30, 2009 from $59,656,000 at December 31, 2008.

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, 2009 and 2008,  if all such loans had been current in
accordance  with  their  original  terms,   totaled   $2,186,000  and  $952,000,
respectively.  Interest income actually recognized on these loans during the six
months ended June 30, 2009 and 2008 was $605,000 and $415,000, respectively.

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 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.

                                       30
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 $17,285,000 (60%) to $45,995,000 during the first six months
of 2009. Nonperforming assets net of guarantees represent 2.20% 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.
At June 30, 2009            At December 31, 2008
                                              -------------------------    -------------------------
                                                Gross  Guaranteed  Net      Gross  Guaranteed   Net
                                              ------------------------------------------------------
(dollars in thousands):
Performing nonaccrual loans                   $24,886   $4,884  $19,982    $22,600  $5,102  $17,498
Nonperforming, nonaccrual loans                21,321        -   21,321      9,994     154    9,840
                                              ------------------------------------------------------
     Total nonaccrual loans                    46,187    4,884   41,303     32,594   5,256   27,338
Loans 90 days past due and still accruing       2,070        -    2,070        187       -      187
                                              ------------------------------------------------------
Total nonperforming loans                      48,257    4,884   43,373     32,781   5,256   27,525
Other real estate owned                         2,622        -    2,622      1,185       -    1,185
                                              ------------------------------------------------------
Total nonperforming assets                    $50,879   $4,884  $45,995    $33,966  $5,256  $28,710
                                              ======================================================
Nonperforming loans to total loans                                 2.79%                       1.73%
Nonperforming assets to total assets                               2.20%                       1.41%
Allowance for loan losses/nonperforming loans                        78%                        100%
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.

The Company adopted and announced a stock repurchase plan on August 21, 2007 for
the repurchase of up to 500,000  shares of the Company's  common stock from time
to time as market conditions allow. The 500,000 shares authorized for repurchase
under this plan represented  approximately  3.2% of the Company's  approximately
15,815,000 common shares  outstanding as of August 21, 2007. The Company did not
repurchase any shares during the three months ended June 30, 2009. This plan has
no stated expiration date for the repurchases.  As of June 30, 2009, the Company
had  repurchased  166,600  shares  under this plan,  which left  333,400  shares
available for repurchase under the plan.

The  Company's  primary  capital  resource is  shareholders'  equity,  which was
$199,979,000 at June 30, 2009. This amount  represents an increase of $2,047,000
from December 31, 2008, the net result of comprehensive income for the period of
$5,660,000,  the effect of stock  option  vesting of  $262,000,  the exercise of
stock  options  for  $828,000  and the tax  benefit  from the  exercise of stock
options of $53,000 that were partially  offset by the repurchase of common stock
with value of $652,000, and dividends paid of $4,104,000. The Company's ratio of
equity to total assets was 9.58%,  9.43% and 9.69% as of June 30, 2009, June 30,
2008, and December 31, 2008, respectively.

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

                                At June 30,         At              Minimum
                             -----------------      December 31,    Regulatory
                             2009       2008        2008           Requirement
                             -------------------------------------------------
   Tier I Capital            11.61%     11.01%     11.17%           4.00%
   Total Capital             12.87%     12.26%     12.42%           8.00%
   Leverage ratio            10.68%     10.80%     11.09%           4.00%

                                       31
Liquidity
The discussion of "Liquidity" under Item 3 of this report is incorporated herein
by reference.

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,
2009 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 $621,446,000 and $643,365,000 at June 30, 2009
and December  31, 2008,  respectively,  and  represent  40.0% of the total loans
outstanding at June 30, 2009 and 40.4% at December 31, 2008. Commitments related
to the Bank's  deposit  overdraft  privilege  product  totaled  $37,825,000  and
$35,883,000 at June 30, 2009 and December 31, 2008, respectively.

                                       32
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, 2009, 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, 2009 and 2008,  the Company  had no  material  derivative  financial
instruments.

                                       33
Liquidity
The Company's principal source of asset liquidity is cash at Federal Reserve and
other banks and marketable investment securities available for sale. At June 30,
2009,  cash at  Federal  Reserve  and  other  banks  and  investment  securities
available for sale totaled $379,956,000, representing an increase of $91,415,000
(31.7%) from  December 31, 2008,  and an increase of  $126,827,000  (50.1%) from
June 30, 2008. In addition,  the Company generates additional liquidity from its
operating activities. The Company's profitability during the first six months of
2009 generated cash flows from operations of $19,150,000 compared to $15,611,000
during the first six months of 2008.  Additional  cash flows may be  provided by
financing  activities,  primarily the acceptance of deposits and borrowings from
banks.  Sales and maturities of investment  securities  produced cash inflows of
$44,126,000  during the six months ended June 30, 2009  compared to  $26,883,000
for the six months  ended June 30,  2008.  During the six months  ended June 30,
2009, the Company invested $29,435,000 in securities and received $26,722,000 of
net loan principal  reductions,  compared to $50,463,000  invested in securities
and $1,667,000 of net loan principal reductions,  respectively, during the first
six months of 2008. These changes in investment and loan balances contributed to
net cash provided by investing  activities of $41,285,000  during the six months
ended  June 30,  2009,  compared  to net cash used in  investing  activities  of
$23,333,000  during the six months  ended June 30,  2008.  Financing  activities
provided  net cash of  $36,133,000  during the six months  ended June 30,  2009,
compared to net cash used in financing  activities of $4,418,000  during the six
months ended June 30, 2008. Deposit balance increases  accounted for $68,115,000
of  financing  sources  of funds  during the six  months  ended  June 30,  2009,
compared to  $34,170,000  of funds used by decreases in deposits  during the six
months  ended June 30,  2008.  A net  decrease in  short-term  other  borrowings
accounted for $28,068,000 of financing uses of funds during the six months ended
June 30, 2009, compared to $31,039,000 of funds used by a decrease in short-term
other borrowings during the six months ended June 30, 2008.  Dividends paid used
$4,104,000  and $4,099,000 of cash during the six months ended June 30, 2009 and
2008,  respectively.  Federal  funds did not use or provide  cash during the six
months ended June 30, 2009 as compared to an increase of Federal funds purchased
providing  $67,750,000 of cash during the six months ended June 30, 2008.  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 defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act
as of June 30, 2009  ("Evaluation  Date").  Based on that evaluation,  they each
concluded that as of the Evaluation Date the Company's  disclosure  controls and
procedures are effective to ensure that the information required to be disclosed
by the Company in the reports  that it files or submits  under the  Exchange Act
was  recorded,  processed,  summarized  and  reported  within  the time  periods
specified in the SEC's rules and forms and accumulated  and  communicated to the
Company's management,  including the Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.

No changes in the  Company's  internal  control over  financial  reporting  were
identified in connection  with the evaluation  required by paragraph (d) of Rule
13a-15 or 15d-15(e)  under the  Exchange  Act during the second  quarter of 2009
that have materially  affected,  or are reasonably likely to materially  affect,
the Company's internal control over financial reporting.

                                       34
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, 2008.

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 2009 pursuant to the Company's  stock
repurchase  plan adopted on August 21,  2007,  which is discussed in more detail
under  "Capital  Resources"  in  this  report  and  is  incorporated  herein  by
reference:
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, 2008             -                  -                       -                 333,400
May 1-31, 2008              -                  -                       -                 333,400
Jun. 1-30, 2008             -                  -                       -                 333,400
-----------------------------------------------------------------------------------------------------------
Total                       -                  -                       -                 333,400
Item 4 - Submission of Matters to a Vote of Security Holders

(a) The Company's Annual Meeting of Shareholders was held on May 19, 2009.
(b) and (c) The following twelve directors (the entire board of directors) were
elected at the meeting:

                                 Votes For   Votes Against/Withheld  Abstentions
                                 ----------  ----------------------  -----------
     Donald J. Amaral            13,312,263         198,195            N/A
     William J. Casey            13,252,335         258,268            N/A
     L. Gage Chrysler III        13,297,154         213,645            N/A
     Craig S. Compton            13,259,230         251,228            N/A
     John S.A. Hasbrook          13,263,241         247,217            N/A
     Michael W. Koehnen          13,260,553         249,905            N/A
     Donald E. Murphy            13,302,407         208,110            N/A
     Steve G. Nettleton          13,311,608         198,850            N/A
     Richard P. Smith            13,313,219         197,239            N/A
     Carroll R. Taresh           13,291,347         219,111            N/A
     Alex A. Vereschagin, Jr.    13,257,718         252,740            N/A
     W. Virginia Walker          13,300,482         209,976            N/A

The  shareholders  approved the TriCo  Bancshares  2009 Equity  Incentive  Plan.
10,365,872 shares were voted for approval, 551,116 shares were voted against and
130,636 shares abstained.

The  shareholders  ratified  the  appointment  of Moss Adams LLP as  independent
public accountants of the Company for 2009. 13,352,993 shares were voted for the
ratification, 45,370 shares were voted against and 118,910 shares abstained.

                                       35
Item 6 - Exhibits

     3.1* Restated  Articles of  Incorporation,  filed as Exhibit 3.1 to TriCo's
          Form 8-K dated March 10, 2009.

     3.2* Bylaws  of TriCo  Bancshares,  as  amended,  filed as  Exhibit  3.2 to
          TriCo's Form 8-K dated March 10, 2009.

     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 Dan Bailey, Bruce Belton,
          Craig Carney,  Gary Coelho, 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.

     10.5*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).

     10.6*TriCo's 2001 Stock Option Plan,  as amended,  filed as Exhibit 10.7 to
          TriCo's  QuarterlyReport  on Form 10-Q for the quarter  ended June 30,
          2005.

     10.7*TriCo's 2009 Equity Incentive plan,  included as Appendix A to TriCo's
          definitive proxy statement filed on April 4, 2009.

     10.8*Amended Employment  Agreement between TriCo and Richard Smith dated as
          of August 23, 2005 filed as Exhibit 10.8 to TriCo's  Quarterly  Report
          on Form 10-Q for the quarter ended September 30, 2005.

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

    10.10*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.

    10.11*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.

    10.13*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.

    10.14*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.

                                       36
10.15*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.

    10.16*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.

    10.17*Form of Joint Beneficiary  Agreement  effective March 31, 2003 between
          Tri Counties Bank and each of George Barstow,  Dan Bay, Ron Bee, Craig
          Carney, Robert Elmore, Greg Gill, Richard Miller,  Richard O'Sullivan,
          Thomas Reddish,  Jerald Sax, and Richard Smith, filed as Exhibit 10.14
          to  TriCo's  Quarterly  Report  on Form  10-Q  for the  quarter  ended
          September 30, 2003.

    10.18*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  Vereschagin,  filed  as  Exhibit  10.15 to  TriCo's
          Quarterly  Report on Form 10-Q for the  quarter  ended  September  30,
          2003.

    10.19*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.

    10.20*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 Vereschagin,  filed as Exhibit 10.17
          to  TriCo's  Quarterly  Report  on Form  10-Q  for the  quarter  ended
          September 30, 2003.

    10.21*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.

    10.22*Form  of  Indemnification   Agreement  between  TriCo   Bancshares/Tri
          Counties  Bank and each of Dan Bailey,  Craig Carney,  W.R.  Hagstrom,
          Rick Miller, Richard O'Sullivan, Thomas Reddish, Ray Rios, 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

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

                                       37
32.1 Section 1350 Certification of CEO

     32.2 Section 1350 Certification of CFO

        * Previously filed and incorporated by reference.

                                       38
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, 2009     By/s/Thomas J. Reddish
                            --------------------
                            Thomas J. Reddish
                            Executive Vice President and Chief Financial Officer
                            (Duly authorized officer and Principal financial
                              officer)

                                      39
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 report on Form 10-Q of TriCo Bancshares;
   2.     Based on my  knowledge,  this  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(s) 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 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  report  our
               conclusions  about the  effectiveness of the disclosure  controls
               and  procedures,  as of the  end of the  period  covered  by this
               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 (the registrant's  fourth
               fiscal  quarter  in  the  case  of an  annual  report)  that  has
               materially  affected,  or  is  reasonably  likely  to  materially
               affect,   the   registrant's   internal  control  over  financial
               reporting; and
     5.   The  registrant's  other  certifying  officer(s) 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 (or persons performing the equivalent
          functions):
          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, 2009            /s/Richard P. Smith
                                -------------------
                                Richard P. Smith
                                President and Chief Executive Officer

                                       40
Exhibit 31.2

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

I, Thomas J. Reddish, certify that;

     1.  I have reviewed this report on Form 10-Q of TriCo Bancshares;
     2.   Based on my  knowledge,  this  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(s) 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 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  report  our
               conclusions  about the  effectiveness of the disclosure  controls
               and  procedures,  as of the  end of the  period  covered  by this
               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 (the registrant's  fourth
               fiscal  quarter  in  the  case  of an  annual  report)  that  has
               materially  affected,  or  is  reasonably  likely  to  materially
               affect,   the   registrant's   internal  control  over  financial
               reporting; and
     5.   The  registrant's  other  certifying  officer(s) 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 (or persons performing the equivalent
          functions):
          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, 2009        /s/Thomas J. Reddish
                            --------------------
                            Thomas J. Reddish
                            Executive Vice President and Chief Financial Officer

                                       41
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, 2009 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, 2009 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.

                                       42