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 September 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 or a smaller reporting company.
See definition of "large  accelerated  filer,"  accelerated  filer" and "smaller
reporting companyu" in Rule 12b-2 of the Exchange 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 October 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                                                22

   Item 2 - Management's Discussion and Analysis of Financial                23
            Condition and Results of Operations

   Item 3 - Quantitative and Qualitative Disclosures about Market Risk       36

   Item 4 - Controls and Procedures                                          38

PART II - OTHER INFORMATION                                                  39

   Item 1 - Legal Proceedings                                                39

   Item 1A - Risk Factors                                                    39

   Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds      39

   Item 6 - Exhibits                                                         39

   Signatures                                                                42

   Exhibits                                                                  43



<PAGE>


                           FORWARD-LOOKING STATEMENTS

This  report  on Form  10-Q  contains  forward-looking  statements  about  TriCo
Bancshares (the "Company") that are subject to the protection of the safe harbor
provisions  contained in the Private  Securities  Litigation Reform Act of 1995.
These  forward-looking  statements are based on the current knowledge and belief
of the Company's  management  ("Management") 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 September 30,              At December 31,
                                                         2009              2008                2008
                                                       ----------------------------       ---------------
     <S>                                                    <C>              <C>                <C>
Assets:
     Cash and due from banks                              $48,549           $67,300          $64,375
     Cash at Federal Reserve and other banks              186,021                 -           21,980
                                                       ----------------------------       -------------
          Cash and cash equivalents                       234,570            67,300           86,355
     Securities available-for-sale                        230,962           241,900          266,561
     Federal Home Loan Bank stock, at cost                  9,274             9,147            9,235
     Loans, net of allowance for loan losses
          of $34,551, $24,588 and $27,590               1,496,661         1,538,648        1,563,259
     Foreclosed assets, net of allowance for
          losses of $206, $214 and $230                     2,372             1,178            1,185
     Premises and equipment, net                           18,102            19,094           18,841
     Cash value of life insurance                          47,635            46,061           46,815
     Accrued interest receivable                            7,666             7,874            7,935
     Goodwill                                              15,519            15,519           15,519
     Other intangible assets, net                             389               786              653
     Other assets                                          32,516            28,960           26,832
                                                       ----------------------------       -------------
          Total Assets                                 $2,095,666        $1,976,467       $2,043,190
                                                       ============================       =============
Liabilities:
     Deposits:
          Noninterest-bearing demand                     $349,949          $334,015         $401,247
          Interest-bearing                              1,401,946         1,229,826        1,268,023
                                                       ----------------------------       -------------
          Total deposits                                1,751,895         1,563,841         1,669,270
     Federal funds purchased                                    -            67,000                -
     Accrued interest payable                               4,136             5,217            6,146
     Reserve for unfunded commitments                       3,640             3,365            2,565
     Other liabilities                                     26,623            24,831           24,034
     Other borrowings                                      66,197            79,873          102,005
     Junior subordinated debt                              41,238            41,238           41,238
                                                       ----------------------------       -------------
           Total Liabilities                            1,893,729         1,785,365         1,845,258
                                                       ----------------------------       -------------
Commitments and contingencies
Shareholders' Equity
     Common stock, no par value: 50,000,000 shares
          authorized; issued and outstanding:
          15,787,753 at September 30, 2009                79,400
          15,744,881 at September 30, 2008                                   78,008
          15,756,101 at December 31, 2008                                                     78,246
     Retained earnings                                    118,603           115,549          117,630
     Accumulated other comprehensive income (loss), net     3,934            (2,455)           2,056
                                                       -----------------------------      ----------
          Total Shareholders' Equity                      201,937           191,102          197,932
                                                       -----------------------------      ------------
          Total Liabilities and Shareholders' Equity   $2,095,666        $1,976,467       $2,043,190
                                                       =============================      ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

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

                                                          Three months ended September 30,   Nine months ended September 30,
                                                                      2009           2008            2009           2008
                                                         -------------------------------------------------------------------
<S>                                                             <C>             <C>           <C>            <C>
 Interest and dividend income:
 Loans, including fees                                       $24,909         $26,790        $75,640        $81,531
 Debt securities:
    Taxable                                                    2,616           2,756          8,595          8,607
    Tax exempt                                                   244             287            771            910
 Dividends                                                        19             138             19            382
 Cash at Federal Reserve and other banks                         101               -            178             3
                                                         ------------------------------------------------------------------
 Total interest income                                        27,889          29,971         85,203         91,433
                                                         ------------------------------------------------------------------
 Interest expense:
 Deposits                                                      4,186           5,776         14,166         18,603
 Federal funds purchased                                           -             430              -          1,953
 Other borrowings                                                250             473            604          2,060
 Junior subordinated debt                                        348             573          1,184          1,872
                                                         ------------------------------------------------------------------
 Total interest expense                                        4,784           7,252         15,954         24,488
                                                         ------------------------------------------------------------------
 Net interest income                                          23,105          22,719         69,249         66,945
                                                         ------------------------------------------------------------------
 Provision for loan losses                                     8,000           2,600         23,650         15,500
                                                         ------------------------------------------------------------------
 Net interest income after provision for loan losses          15,105          20,119         45,599         51,445
                                                         ------------------------------------------------------------------
 Noninterest income:
 Service charges and fees                                      5,645           5,224         16,879         16,178
 Gain on sale of loans                                         1,205             341          2,794            915
 Commissions on sale of non-deposit investment products          380             594          1,361          1,539
 Increase in cash value of life insurance                        270             360            820          1,080
 Other                                                           293             273            550          1,210
                                                         ------------------------------------------------------------------
 Total noninterest income                                      7,793           6,792         22,404         20,922
                                                         ------------------------------------------------------------------
 Noninterest expense:
 Salaries and related benefits                                10,263           9,431         30,121         28,556
 Other                                                         9,114           7,158         25,801         23,450
                                                         ------------------------------------------------------------------
 Total noninterest expense                                    19,377          16,589         55,922         52,006
                                                         ------------------------------------------------------------------
 Income before income taxes                                    3,521          10,322         12,081         20,361
 Provision for income taxes                                    1,266           4,087          4,432          7,804
                                                         ------------------------------------------------------------------
 Net income                                                   $2,255          $6,235         $7,649        $12,557
                                                         ==================================================================

 Average shares outstanding                               15,787,264      15,744,881     15,781,547     15,777,282
 Diluted average shares outstanding                       16,015,952      15,951,668     16,010,959     16,021,886
 Per share data:
 Basic earnings                                                $0.14           $0.40          $0.48          $0.80
 Diluted earnings                                              $0.14           $0.39          $0.48          $0.78
 Dividends paid                                                $0.13           $0.13          $0.39          $0.39

 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                                                           12,557                   12,557
Change in net unrealized gain on
   securities available for sale, net                                               (903)       (903)
                                                                                            ---------
Total comprehensive income                                                                    11,654
Cumulative effect of change in
   accounting principle, net of tax                                   (522)                     (522)
Stock option vesting                                        502                                  502
Reversal of tax benefit from
   exercise of stock options                              (444)                                (444)
Repurchase of common stock                 (166,669)       (825)    (1,996)                   (2,821)
Dividends paid ($0.39 per share)                                    (6,145)                   (6,145)
                                       --------------------------------------------------------------
Balance at September 30, 2008            15,744,881     $78,008   $115,549       ($2,455)   $191,102
                                       ==============================================================

Balance at December 31, 2008             15,756,101     $78,246   $117,630        $2,056    $197,932
Comprehensive income:
 Net income                                                          7,649                     7,649
 Change in net unrealized loss on
   Securities available for sale, net                                              1,878       1,878
                                                                                            --------
 Total comprehensive income                                                                    9,527
 Stock option vesting                                                  369                       369
 Stock option exercise                       58,213         887                                  887
 Tax benefit of stock options exercised                      30                                   30
 Repurchase of common stock                 (26,561)       (132)      (520)                     (652)
Dividends paid ($0.39 per share)                                    (6,156)                   (6,156)
                                       --------------------------------------------------------------
Balance at September 30, 2009            15,787,753     $79,400   $118,603        $3,934    $201,937
                                       ==============================================================

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 nine months ended September 30,
                                                                      2009               2008
                                                               --------------------------------------
<s>                                                                  <c>                 <c>
Operating activities:
Net income                                                         $7,649             $12,557
Adjustments to reconcile net income to net cash provided
  by operating activities:
    Depreciation of property and equipment, and amortization        2,532               2,586
    Amortization of intangible assets                                 264                 389
    Provision for loan losses                                      23,650              15,500
    Amortization of investment securities premium, net                272                 250
    Originations of loans for resale                             (157,331)            (61,109)
    Proceeds from sale of loans originated for resale             158,747              61,403
    Gain on sale of loans                                          (2,794)               (915)
    Change in value of mortgage servicing rights                      317                 743
    Provision for losses on other real estate owned                   188                  34
    (Gain) loss on sale of other real estate owned                   (169)                  -
    Loss on disposal of fixed assets                                    9                   2
    Increase in cash value of life insurance                         (820)             (1,080)
    Stock option vesting expense                                      369                 502
    Stock option tax benefits                                         (30)                444
    Change in:
      Reserve for unfunded commitments                              1,075               1,275
      Interest receivable                                             269                 680
      Interest payable                                            (2,010)             (2,654)
      Other assets and liabilities, net                            (3,746)             (2,677)
                                                               -------------------------------
        Net cash provided by operating activities                  28,442              27,930
                                                               -------------------------------
Investing activities:
Proceeds from maturities of securities available-for-sale          67,963              38,938
Purchases of securities available-for-sale                        (29,396)            (50,219)
Purchases of Federal Home Loan Bank stock                             (39)               (381)
Loan originations and principal collections, net                   40,043             (20,538)
Proceeds from sale of premises and equipment                            1                   2
Purchases of premises and equipment                                (1,423)             (1,185)
Proceeds from sale of other real estate sold                        1,698                   -
                                                               ------------------------------
        Net cash provided (used) by investing activities           78,847             (33,383)
                                                               ------------------------------
Financing activities:
Net increase in deposits                                           82,625              18,618
Net increase in Federal funds purchased                                 -              11,000
Payments of principal on long-term other borrowings                   (67)                (58)
Net change in short-term other borrowings                         (35,741)            (36,195)
(Reversal of) stock option tax benefit                                 30                (444)
Repurchase of common stock                                              -              (2,821)
Dividends paid                                                    (6,156)             (6,145)
Exercise of stock options                                             235                   -
                                                               ------------------------------
        Net cash provided (used) by financing activities           40,926             (16,045)
                                                               ------------------------------
Net change in cash and cash equivalents                           148,215             (21,498)
                                                               ------------------------------
Cash and cash equivalents and beginning of period                  86,355              88,798
                                                               ------------------------------
Cash and cash equivalents at end of period                       $234,570             $67,300
                                                               ==============================
Supplemental disclosure of noncash activities:
  Loans transferred to other real estate owned                     $2,905              $1,025
  Unrealized gain (loss) on securities available for sale          $3,240             ($1,558)
  Income tax benefit (expense) from stock option exercises            $30               ($444)
  Market value of shares tendered by employees in-lieu of
    cash to pay for exercise of options and/or related taxes         $652                  $0
Supplemental disclosure of cash flow activity:
  Cash paid for interest expense                                  $17,964             $27,142
  Cash paid for income taxes                                       $9,092             $10,350
     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  traditional  branch  offices  and 26 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 nine months  ended  September  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>


                                                                                 September 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      $201,472           $9,459                 -       $210,931
Obligations of states and political subdivisions                19,119              423               (46)        19,496
Corporate debt securities                                        1,000                -              (465)           535
                                                            --------------------------------------------------------------
             Total securities available-for-sale              $221,591           $9,882             ($511)      $230,962
                                                            ==============================================================


                                                                                 December 31, 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      $236,786           $6,193               ($2)      $242,977
Obligations of states and political subdivision                 22,644              293              (272)        22,665
Corporate debt securities                                        1,000                -               (81)           919
                                                            --------------------------------------------------------------
    Total securities available-for-sale                       $260,430           $6,486             ($355)      $266,561
                                                            ==============================================================
</TABLE>


The amortized cost and estimated fair value of debt  securities at September 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 September 30, 2009,
obligations  of U.S.  government  corporations  and  agencies  with a cost basis
totaling  $201,472,000  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 September 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 2.9 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                                     -                -
   Due after one year through five years         $49,844          $51,035
   Due after five years through ten years         25,400           26,340
   Due after ten years                           146,347          153,587
                                             ------------------------------
   Totals                                       $221,591         $230,962
                                             ==============================

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 nine months ended
September 30, 2009, and throughout 2008, the Company did not sell any investment
securities.

Investment  securities  with an aggregate  carrying  value of  $210,922,000  and
$231,056,000  at September  30, 2009 and December 31, 2008,  respectively,  were
pledged as collateral for specific borrowings,  lines of credit and local agency
deposits. 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:


                                       7


<PAGE>

<TABLE>
<CAPTION>
                                                            Less than 12 months   12 months or more          Total
                                                            -------------------   ------------------    -------------------
                                                            Fair    Unrealized    Fair    Unrealized    Fair    Unrealized
                                                            Value      Loss       Value      Loss       Value      Loss
September 30, 2009                                          ---------------------------------------------------------------
<S>                                                          <C>       <C>         <C>        <C>        <C>       <C>
Securities Available-for-Sale:                                                     (in thousands)
Obligations of U.S. government
   corporations and agencies                                   $56         -           -         -         $56         -
Obligations of states and political subdivisions                 -         -         965       (46)        965       (46)
Corporate debt securities                                      535      (465)          -         -         535      (465)
                                                            ---------------------------------------------------------------
Total securities available-for-sale                           $591     ($465)       $965      ($46)     $1,556     ($511)
                                                            ===============================================================

                                                            Less than 12 months   12 months or more          Total
                                                            ----------------------------------------    -------------------
                                                            Fair    Unrealized    Fair    Unrealized    Fair    Unrealized
                                                            Value      Loss       Value      Loss       Value      Loss
December 31, 2008                                           ---------------------------------------------------------------
Securities Available-for-Sale:                                                      (in thousands)
Obligations of 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 does not intend to sell and more likely
than not will not be  required to sell,  these  investments  are not  considered
other-than-temporarily  impaired.  At  September  30,  2009,  one debt  security
representing  obligations of U.S.  government  corporations  and agencies had an
unrealized loss with aggregate depreciation of 0.7% from the Company's amortized
cost basis.

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  does  not  intend  to sell and  more  likely  than not will not be
required to sell,  these  investments are not considered  other-than-temporarily
impaired. At September 30, 2009, two debt securities representing obligations of
states  and  political   subdivisions  had  unrealized   losses  with  aggregate
depreciation of 4.6% 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 does not intend to sell and more
likely  than  not will  not be  required  to  sell,  these  investments  are not
considered other-than-temporarily impaired. At September 30, 2009, one corporate
debt security had an unrealized  loss with aggregate  depreciation of 46.5% 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 September 30, 2009,  September 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 September 30, 2009,
$8,427,000 of loans are  classified as troubled debt  restructured.  The Company
had obligations to lend $793,000 of additional funds on the  restructured  loans
as of September 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  ($34,551,000)  and the  reserve  for  unfunded
commitments  ($3,640,000),  which collectively stand at $38,191,000 at September
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                Nine months ended
                                           September 30,                     September 30,
                                      -------------------------------------------------------
                                        2009            2008            2009            2008
                                      -------------------------------------------------------
   <S>                                   <C>            <C>             <C>             <C>
Allowance for loan losses:
Balance at beginning of period         $33,624         $24,281       $27,590       $17,331
Provision for loan losses                8,000           2,600        23,650        15,500
Loans charged off:
  Real estate mortgage:
    Residential                              -            (140)         (536)         (361)
    Commercial                            (305)              -          (450)          (19)
  Consumer:
    Home equity lines                   (1,756)         (1,004)       (5,224)       (1,952)
    Home equity loans                     (339)             (8)         (562)         (258)
    Auto indirect                         (855)         (1,014)       (2,148)       (2,186)
    Other consumer                        (346)           (239)         (864)         (818)
  Commercial                            (1,488)           (142)       (2,546)         (531)
  Construction:
    Residential                         (2,293)            (31)       (5,361)       (3,014)
    Commercial                             (89)              -           (89)            -
                                      -------------------------------------------------------
Total loans charged off                 (7,471)         (2,578)      (17,780)       (9,139)
  Recoveries of previously
    charged-off loans:
    Real estate mortgage:
      Residential                              3             -             3             -
      Commercial                              17            15            48            43
    Consumer:
      Home equity lines                       87            12            96            12
      Home equity loans                        -             -             -             -
      Auto indirect                          107           104           367           295
      Other consumer                         170           146           521           520
    Commercial                                14             8            52            26
    Construction:
      Residential                              -             -             4             -
      Commercial                               -             -             -             -
                                      ------------------------------------------------------
Total recoveries of
       previously charged off loans          398           285         1,091           896
                                      ------------------------------------------------------
         Net charge-offs                  (7,073)       (2,293)      (16,689)       (8,243)
                                      ------------------------------------------------------
Balance at end of period                 $34,551       $24,588       $34,551       $24,588
                                      ======================================================
Reserve for unfunded commitments:
Balance at beginning of period          $3,140        $3,465          $2,565        $2,090
Provision for losses -
  unfunded commitments                     500          (100)          1,075         1,275
                                      ------------------------------------------------------
Balance at end of period                $3,640        $3,365          $3,640        $3,365
                                      ======================================================
Balance at end of period:
Allowance for loan losses                                            $34,551       $24,588
Reserve for unfunded commitments                                       3,640         3,365
                                                                     -----------------------
Allowance for losses                                                 $38,191       $27,953
                                                                     =======================
As a percentage of total loans:
Allowance for loan losses                                              2.25%          1.57%
Reserve for unfunded commitments                                       0.24%          0.22%
                                                                     ----------------------
Allowance for losses                                                   2.49%          1.79%
                                                                      =====================
</TABLE>


                                       11
<PAGE>

Loans  classified as nonaccrual  were classified as impaired and are included in
the recorded  balance of impaired loans.  The Company's  recorded  investment in
impaired loans was as follows (dollars in thousands):
<TABLE>
<CAPTION>
                                               September 30,     December 31,     September 30,
                                                   2009              2008             2008
                                               ------------------------------------------------
<S>                                                <C>               <C>                <C>
Impaired loans with no allocated allowance       $31,526           $14,813           $12,526
Impaired loans with allocated allowance           14,273            12,525             4,141
                                               ------------------------------------------------
Total impaired loans                             $45,799           $27,338           $16,667
                                               ------------------------------------------------
Allowance for loan losses
     allocated to impaired loans                  $5,086            $5,430            $1,738
                                               ================================================
</TABLE>


The valuation allowance allocated to impaired loans is included in the allowance
for loan losses shown above. The average  recorded  investment in impaired loans
was  $43.6  million  and $36.6  million  for the  three  and nine  months  ended
September  30, 2009 and $15.7  million and $12.1  million for the three and nine
months ended  September  30, 2008.  The Company  recognized  interest  income on
impaired  loans of $0.6  million and $1.2  million for the three and nine months
ended  September  30, 2009 and $0.5  million and $0.9  million for the three and
nine months ended September 30, 2008.

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.  MSRs arise from residential  mortgage loans that the
Company  originates  and sells,  but retains the right to service.  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 the
Company's MSRs, which  management  believes 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.


                                       12

<PAGE>


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

                                        Nine months ended September 30,
                                        -------------------------------
                                                2009         2008
                                        -------------------------------
Mortgage servicing rights:
Balance at beginning of period                $2,972        $4,088
Additions                                      1,378           621
Change in fair value                            (317)         (743)
                                        -------------------------------
Balance at end of period                      $4,033        $3,966
                                        ===============================
Servicing fees received                         $834          $767
Balance of loans serviced at:
     Beginning of period                    $431,195      $406,743
     End of period                          $492,830      $425,783
Weighted-average prepayment speed (CPR)         17.1%         11.2%
Discount rate                                    9.0%         13.0%

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

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

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

Goodwill and Other Intangible Assets
Goodwill  represents  the  excess  of costs  over  fair  value of 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 September
30, 2009 and December 31, 2008.

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


                                       13

<PAGE>


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

                              December 31,                         September 30,
 (Dollars in Thousands)           2008      Additions  Reductions       2009
                              --------------------------------------------------
 Core deposit intangibles     $3,365          -            -          $3,365
 Accumulated amortization     (2,712)         -        ($264)         (2,976)
                              --------------------------------------------------
 Core deposit intangibles, net  $653          -        ($264)           $389
                              ==================================================

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                   -

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.  No valuation  allowance  was recorded  against
deferred tax assets at September 30, 2009 as management believes that it is more
likely than not that all of the  deferred  tax assets  will be realized  because
they were supported by recoverable taxes paid in prior years.


                                       14

<PAGE>


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 September 30, 2009:

<TABLE>
<CAPTION>
                                                      Currently     Currently Not     Total
(dollars in thousands except exercise price)         Exercisable     Exercisable   Outstanding
<S>                                                      <C>             <C>           <C>
Number of options                                    1,180,438         186,150      1,366,588
Weighted average exercise price                         $13.89          $19.95         $14.71
Intrinsic value                                         $2,964              $0         $2,964
Weighted average remaining contractual term (yrs.)        1.99            8.01           2.81
</TABLE>


The  options  for  186,150  shares  that  are not  currently  exercisable  as of
September 30, 2009 are expected to vest, on a  weighted-average  basis, over the
next 3.01  years,  and the  Company  is  expected  to  recognize  $1,275,000  of
compensation costs related to these options as they vest.

Earnings Per Share
Basic  earnings per share  represent  income  available  to common  shareholders
divided by the  weighted-average  number of common shares outstanding during the
period.  Diluted earnings per share reflect  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.
Earnings per share have been computed based on the following:
<TABLE>
<CAPTION>

                                                       Three months ended         Nine months ended
                                                          September 30,             September 30,
                                                   -------------------------    -----------------------
                                                       2009          2008         2009         2008
                                                   -------------------------    -----------------------
<S>                                                   <C>           <C>           <C>          <C>
(in thousands)
Net income                                          $2,255        $6,235         $7,649      $12,557
Average number of common shares outstanding         15,787        15,745         15,782       15,777
Effect of dilutive stock options                       229           206            229          245
Average number of common shares outstanding        -------------------------    ----------------------
   used to calculate diluted earnings per share     16,016        15,951         16,011       16,022
                                                   =========================    ======================
</TABLE>

There were 552,870 and 603,080 options  excluded from the computation of diluted
earnings  per share for the three month  periods  ended  September  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       Nine months ended
                                                     September 30,           September 30,
                                               ----------------------    --------------------
                                                  2009         2008        2009         2008
(in thousands)                                 ----------------------    --------------------
<S>                                              <C>           <C>         <C>          <C>
Unrealized holding gains (losses) on
   available-for-sale securities                $2,781         $906       $3,240     ($1,558)
Tax effect                                      (1,169)        (381)      (1,362)        655
                                               ---------------------      -------------------
Unrealized holding gains (losses) on
   available-for-sale securities, net of tax    $1,612         $525       $1,878       ($903)
                                               =====================      ===================
</TABLE>

                                       15
<PAGE>


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

                                                     September 30,  December 31,
                                                          2009            2008
                                                     ---------------------------
                                                             (in thousands)
Net unrealized gains on available-for-sale securities   $9,371           $6,131
Tax effect                                              (3,940)          (2,578)
                                                     ---------------------------
  Unrealized holding gains on
    available-for-sale securities, net of tax            5,431            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                  $3,934           $2,056
                                                     ===========================
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 ended    Nine months ended
                                                         September 30,         September 30,
                                                    --------------------   ------------------
                                                      2009      2008         2009    2008
(in thousands)                                       -------------------   ------------------
<S>                                                   <C>        <C>         <C>      <C>
Net pension cost included the following components:
Service cost-benefits earned during the period        $99       $138        $297     $416
Interest cost on projected benefit obligation         174        166         522      498
Amortization of net obligation at transition            -          1           -        1
Amortization of prior service cost                     38         45         114      135
Recognized net actuarial loss                          25         37          75      111
                                                     ---------------------------------------
Net periodic pension cost                            $336       $387      $1,008   $1,161
                                                     =======================================
</TABLE>

During  the  nine  months  ended  September  30,  2009  and  2008,  the  Company
contributed  and paid out as benefits  $562,000 and $453,000,  respectively,  to
participants under the plans. For the year ending December 31, 2009, the Company
expects to contribute and pay out as benefits $737,000 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.

                                       16
<PAGE>


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.

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.  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 September 30, 2009, substantially all of the total
impaired  loans  were  evaluated  based  on the fair  value  of the  collateral.
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 September 30, 2009          Total   Level 1     Level 2    Level 3
Securities available-for-sale          $230,962         -    $230,962          -
Mortgage servicing rights                 4,033         -           -     $4,033
                                       -----------------------------------------
Total assets measured at fair value    $234,995         -    $230,962     $4,033
                                       =========================================

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

Fair value at September 30, 2009          Total   Level 1    Level 2     Level 3
Impaired loans                           $45,865        -          -     $45,865
                                        ----------------------------------------
Total assets measured at fair value      $45,865        -          -     $45,865
                                        ========================================


                                       17

<PAGE>


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.

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.


                                       18

<PAGE>

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>
                                                September 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                     $48,549       $48,549       $64,375       $64,375
  Cash at Federal Reserve and other banks     186,021       186,021        21,980        21,980
  Securities available-for-sale               230,962       230,962       266,561       266,561
  Federal Home Loan Bank stock, at cost         9,274         9,274         9,235         9,235
  Loans, net                                1,496,661     1,544,577     1,563,259     1,623,697
  Cash value of life insurance                 47,635        47,635        46,815        46,815
  Accrued interest receivable                   7,666         7,666         7,935         7,935
Financial liabilities:
  Deposits                                  1,751,895     1,713,162     1,669,270     1,646,561
  Accrued interest payable                      4,136         4,136         6,146         6,146
  Federal funds purchased                           -             -             -             -
  Other borrowings                             66,197        71,292       102,005       101,681
  Junior subordinated debt                     41,238        16,083        41,238        21,856

                                             Contract        Fair        Contract        Fair
Off-balance sheet:                            Amount         Value        Amount         Value
                                             -----------------------    -----------------------
 Commitments                                 $584,117         $5,841     $637,940        $6,379
 Standby letters of credit                      7,219             72        5,425            54
 Overdraft privilege commitments               35,464            355       35,883           359
</TABLE>

Subsequent Events
The  Company has  evaluated  events  subsequent  to the  balance  sheet  through
November  9,  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
The  Financial   Accounting   Standards  Board's  (FASB)  Accounting   Standards
Codification  (ASC)  became  effective  on July 1, 2009.  At that date,  the ASC
became FASB's  officially  recognized  source of  authoritative  U.S.  generally
accepted  accounting  principles  (GAAP) applicable to all public and non-public
non-governmental  entities,  superseding  existing FASB,  American  Institute of
Certified  Public  Accountants  (AICPA),  Emerging  Issues Task Force (EITF) and
related  literature.  Rules  and  interpretive  releases  of the SEC  under  the
authority of federal  securities laws are also sources of authoritative GAAP for
SEC    registrants.    All   other    accounting    literature   is   considered
non-authoritative.  The switch to the ASC  affects the away  companies  refer to
U.S. GAAP in financial  statements and accounting  policies.  Citing  particular
content in the ASC involves  specifying  the unique  numeric path to the content
through the Topic, Subtopic, Section and Paragraph structure.

FASB ASC Topic 260,  "Earnings  Per  Share." On  January  1, 2009,  the  Company
adopted  new  authoritative  accounting  guidance  under  FASB  ASC  Topic  260,
"Earnings Per Share," which  provides that unvested  share-based  payment awards
that contain nonforfeitable rights to dividends or dividend equivalents (whether
paid or  unpaid)  are  participating  securities  and shall be  included  in the
computation of earnings per share pursuant to the two-class method.  Adoption of
the  new  guidance  did  not  significantly   impact  the  Company's   financial
statements.

FASB  ASC  Topic  320,   "Investments  -  Debt  and  Equity   Securities."   New
authoritative  accounting guidance under ASC Topic 320,  "Investments - Debt and
Equity  Securities,"  (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  ASC  Topic  320,  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 the new authoritative  accounting guidance
under ASC Topic  320  during  the first  quarter  of 2009.  Adoption  of the new
guidance did not significantly impact the Company's financial statements.

                                       19
<PAGE>


FASB ASC Topic 715,  "Compensation  - Retirement  Benefits."  New  authoritative
accounting guidance under ASC Topic 715,  "Compensation - Retirement  Benefits,"
provides  guidance  related to an  employer's  disclosures  about plan assets of
defined benefit pension or other post-retirement  benefit plans. Under ASC Topic
715,   disclosures  should  provide  users  of  financial   statements  with  an
understanding of how investment  allocation decisions are made, the factors that
are pertinent to an  understanding  of investment  policies and strategies,  the
major  categories of plan assets,  the inputs and valuation  techniques  used to
measure  the fair value of plan  assets,  the effect of fair value  measurements
using significant  unobservable  inputs on changes in plan assets for the period
and  significant  concentrations  of risk within plan  assets.  The  disclosures
required by ASC Topic 715 will be included in the Company's financial statements
beginning with the financial statements for the year-ended December 31, 2009.

FASB  ASC  Topic  805,   "Business   Combinations."  On  January  1,  2009,  new
authoritative  accounting guidance under ASC Topic 805, "Business Combinations,"
became applicable to the Company's accounting for business  combinations closing
on or after January 1, 2009. ASC Topic 805 applies to all transactions and other
events in which one entity  obtains  control over one or more other  businesses.
ASC Topic 805 requires an acquirer,  upon initially obtaining control of another
entity, to recognize the assets, liabilities and any non-controlling interest in
the acquiree at fair value as of the acquisition date. Contingent  consideration
is  required  to be  recognized  and  measured  at  fair  value  on the  date of
acquisition  rather  than at a later date when the amount of that  consideration
may be determinable beyond a reasonable doubt. This fair value approach replaces
the cost-allocation  process required under previous accounting guidance whereby
the cost of an acquisition  was allocated to the individual  assets acquired and
liabilities  assumed based on their estimated fair value. ASC Topic 805 requires
acquirers  to  expense   acquisition-related   costs  as  incurred  rather  than
allocating  such costs to the assets acquired and  liabilities  assumed,  as was
previously  the case  under  prior  accounting  guidance.  Assets  acquired  and
liabilities assumed in a business  combination that arise from contingencies are
to be  recognized at fair value if fair value can be  reasonably  estimated.  If
fair value of such an asset or liability  cannot be  reasonably  estimated,  the
asset or liability  would  generally be recognized in accordance  with ASC Topic
450,  "Contingencies."  Under ASC Topic 805, the  requirements of ASC Topic 420,
"Exit or Disposal Cost Obligations," would have to be met in order to accrue for
a restructuring plan in purchase accounting.  Pre-acquisition  contingencies are
to be recognized at fair value, unless it is a non-contractual  contingency that
is not likely to  materialize,  in which case,  nothing  should be recognized in
purchase  accounting  and,  instead,  that  contingency  would be subject to the
probable and estimable recognition criteria of ASC Topic 450, "Contingencies."

FASB ASC Topic 810, "Consolidation." New authoritative accounting guidance under
ASC Topic 810,  "Consolidation,"  amended prior guidance to establish accounting
and reporting standards for the non-controlling interest in a subsidiary and for
the  deconsolidation  of a  subsidiary.  Under ASC Topic 810, a  non-controlling
interest in a subsidiary,  which is sometimes  referred to as minority interest,
is an ownership interest in the consolidated entity that should be reported as a
component  of equity  in the  consolidated  financial  statements.  Among  other
requirements,  ASC Topic 810 requires  consolidated net income to be reported at
amounts  that  include  the  amounts  attributable  to both the  parent  and the
non-controlling  interest.  It  also  requires  disclosure,  on the  face of the
consolidated  income  statement,  of the  amounts  of  consolidated  net  income
attributable  to the  parent  and  to  the  non-controlling  interest.  The  new
authoritative  accounting  guidance under ASC Topic 810 became effective for the
Company  on  January  1,  2009  and did not  have a  significant  impact  on the
Company's financial statements.

Further new authoritative  accounting  guidance under ASC Topic 810 amends prior
guidance   to  change  how  a  company   determines   when  an  entity  that  is
insufficiently  capitalized  or is not  controlled  through  voting (or  similar
rights)  should be  consolidated.  The  determination  of  whether a company  is
required to consolidate  an entity is based on, among other things,  an entity's
purpose  and design and a  company's  ability  to direct the  activities  of the
entity that most significantly impact the entity's economic performance. The new
authoritative  accounting  guidance  requires  additional  disclosures about the
reporting  entity's   involvement  with   variable-interest   entities  and  any
significant  changes in risk  exposure  due to that  involvement  as well as its
affect on the entity's financial  statements.  The new authoritative  accounting
guidance  under  ASC  Topic  810 will be  effective  January  1, 2010 and is not
expected to have a significant impact on the Company's financial statements.

                                       20

<PAGE>


FASB ASC Topic 815,  "Derivatives  and  Hedging." New  authoritative  accounting
guidance under ASC Topic 815,  "Derivatives  and Hedging," amends prior guidance
to amend and expand the  disclosure  requirements  for  derivatives  and hedging
activities 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 ASC Topic 815, 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,  the new  authoritative
accounting  guidance  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.  The  new
authoritative  accounting  guidance under ASC Topic 815 became effective for the
Company  on  January  1,  2009  and did not  have a  significant  impact  on the
Company's financial statements.

FASB ASC Topic 820, "Fair Value Measurements and Disclosures." New authoritative
accounting   guidance  under  ASC  Topic  820,  "Fair  Value   Measurements  and
Disclosures,"  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. ASC Topic 820 requires an
entity to base its conclusion about whether a transaction was not orderly on the
weight of the evidence.  The new accounting  guidance  amended prior guidance to
expand   certain   disclosure   requirements.   The  Company   adopted  the  new
authoritative  accounting  guidance under ASC Topic 820 during the first quarter
of 2009. Adoption of the new guidance did not significantly impact the Company's
financial statements.

Further new authoritative  accounting guidance (Accounting  Standards Update No.
2009-5) under ASC Topic 820 provides  guidance for measuring the fair value of a
liability in  circumstances  in which a quoted price in an active market for the
identical liability is not available.  In such instances,  a reporting entity is
required to measure fair value utilizing a valuation technique that uses (i) the
quoted price of the  identical  liability  when traded as an asset,  (ii) quoted
prices for similar  liabilities or similar liabilities when traded as assets, or
(iii)  another  valuation   technique  that  is  consistent  with  the  existing
principles of ASC Topic 820, such as an income approach or market approach.  The
new  authoritative  accounting  guidance also clarifies that when estimating the
fair value of a  liability,  a  reporting  entity is not  required  to include a
separate  input or  adjustment  to other inputs  relating to the  existence of a
restriction  that  prevents  the  transfer of the  liability.  The  forgoing new
authoritative  accounting guidance under ASC Topic 820 will be effective for the
Company's financial  statements beginning October 1, 2009 and is not expected to
have a significant impact on the Company's financial statements.

FASB  ASC  Topic  825  "Financial  Instruments."  New  authoritative  accounting
guidance  under ASC Topic 825,  "Financial  Instruments,"  requires an entity to
provide  disclosures  about the fair value of financial  instruments  in interim
financial  information and amends prior guidance to require those disclosures in
summarized financial information at interim reporting periods.

FASB ASC Topic 855, "Subsequent  Events." New authoritative  accounting guidance
under ASC Topic 855,  "Subsequent  Events,"  establishes  general  standards  of
accounting  for and disclosure of events that occur after the balance sheet date
but before financial  statements are issued or available to be issued. ASC Topic
855 defines (i) the period after the balance sheet date during which a reporting
entity's  management  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,  and (iii)
the disclosures an entity should make about events or transactions that occurred
after the balance sheet date. The new  authoritative  accounting  guidance under
ASC Topic 855  became  effective  for the  Company's  financial  statements  for
periods ending after June 15, 2009 and did not have a significant  impact on the
Company's financial statements.


                                       21
<PAGE>


FASB ASC Topic 860,  "Transfers and  Servicing."  New  authoritative  accounting
guidance under ASC Topic 860, "Transfers and Servicing," amends prior accounting
guidance to enhance  reporting  about transfers of financial  assets,  including
securitizations,  and where  companies  have  continuing  exposure  to the risks
related  to  transferred  financial  assets.  The new  authoritative  accounting
guidance  eliminates  the concept of a "qualifying  special-purpose  entity" and
changes  the  requirements  for   derecognizing   financial   assets.   The  new
authoritative accounting guidance also requires additional disclosures about all
continuing  involvements with transferred financial assets including information
about gains and losses  resulting  from  transfers  during the  period.  The new
authoritative  accounting guidance under ASC Topic 860 will be effective January
1,  2010 and is not  expected  to have a  significant  impact  on the  Company's
financial statements.

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

                                            Three months ended         Nine months ended
                                                September 30,               September 30,
                                         ------------------------------------------------
                                            2009         2008        2009         2008
                                         ------------------------------------------------
<S>                                          <C>         <C>         <C>         <C>

Net Interest Income (FTE)                $23,257      $22,889     $69,696      $67,464
Provision for loan losses                  8,000        2,600      23,650       15,500
Noninterest income                         7,793        6,792      22,404       20,922
Noninterest expense                       19,377       16,589      55,922       52,006
Provision for income taxes (FTE)           1,418        4,257       4,879        8,323
                                         ------------------------------------------------
Net income                                $2,255       $6,235      $7,649      $12,557
                                         ===============================================
Earnings per share:
   Basic                                   $0.14        $0.40       $0.48        $0.80
   Diluted                                 $0.14        $0.39       $0.48        $0.78
Per share:
   Dividends paid                          $0.13        $0.13       $0.39        $0.39
   Book value at period end               $12.79       $12.14
   Tangible book value at period end      $11.78       $11.10

Average common shares outstanding         15,787        15,745     15,782       15,777
Average diluted shares outstanding        16,016        15,952     16,011       16,022
Shares outstanding at period end          15,788       15,745
At period end:
   Loans, net                         $1,496,661   $1,538,648
   Total assets                        2,095,666    1,976,467
   Total deposits                      1,751,895    1,563,841
   Other borrowings                       66,197       79,873
   Junior subordinated debt               41,238       41,238
   Shareholders' equity                  201,937      191,102
Financial Ratios:
During the period (annualized):
   Return on assets                         0.43%        1.26%       0.49%        0.84%
   Return on equity                         4.43%       13.04%       5.02%        8.71%
   Net interest margin(1)                   4.72%        5.07%       4.81%        4.96%
   Net loan charge-offs to average loans    1.84%        0.59%       1.43%        0.71%
   Efficiency ratio(1)                     62.41%       55.89%      60.72%       58.84%
At Period End:
   Equity to assets                         9.64%        9.67%
   Total capital to risk assets            13.17%       12.38%
   Allowance for losses to loans(2)         2.49%        1.79%
</TABLE>

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


                                       22

<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 Nine
months ended

                                      Three months ended      Nine months ended
                                         September 30,          September 30,
                                   ---------------------------------------------
                                       2009       2008         2009       2008
                                   ---------------------------------------------
Net Interest Income (FTE)           $23,257      $22,889      $69,696    $67,464
Provision for loan losses             8,000        2,600       23,650     15,500
Noninterest income                    7,793        6,792       22,404     20,922
Noninterest expense                  19,377       16,589       55,922     52,006
Provision for income taxes (FTE)      1,418        4,257        4,879      8,323
                                    --------------------------------------------
Net income                           $2,255       $6,235       $7,649    $12,557
                                    ============================================

The Company had quarterly  earnings of  $2,255,000,  or $0.14 per diluted share,
for the three months ended  September  30, 2009.  This  represents a decrease of
$3,980,000  (63.8%) when compared  with  earnings of $6,235,000  for the quarter
ended  September  30, 2008.  Diluted  earnings  per share for the quarter  ended
September 30, 2009  decreased  64.1% to $0.14  compared to $0.39 for the quarter
ended September 30, 2008.

The Company reported earnings of $7,649,000, or $0.48 per diluted share, for the
nine months ended  September  30, 2009.  These  results  represent a decrease of
$4,908,000  (39.1%) when  compared  with  earnings of  $12,557,000  for the nine
months ended September 30, 2008.  Diluted earnings per share for the nine months
ended September 30, 2009 decreased 38.5% to $0.48 compared to $0.78 for the nine
months ended September 30, 2008.


                                       23

<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):

                                    Three months ended      Nine months ended
                                       September 30,          September 30,
                                 -----------------------------------------------
                                      2009       2008         2009       2008
                                 -----------------------------------------------
Interest income                     $27,889     $29,971     $85,203     $91,433
Interest expense                     (4,784)     (7,252)    (15,954)    (24,488)
FTE adjustment                          152         170         447         519
                                 -----------------------------------------------
  Net interest income (FTE)         $23,257     $22,889     $69,696     $67,464
                                 ===============================================
Average interest-earning assets  $1,969,043  $1,806,010  $1,930,147  $1,814,103

Net interest margin (FTE)              4.72%       5.07%       4.81%       4.96%

Net interest  income (FTE) during the third quarter of 2009  increased  $368,000
(1.6%) from the same period in 2008 to $23,257,000. The increase in net interest
income (FTE) was due to a $163,033,000  (9.0%)  increase in average  balances of
interest-earning  assets to $1,969,043,000  that was partially offset by a 0.35%
decrease in net interest  margin (FTE) to 4.72% from the quarter ended September
30, 2008.

Net  interest  income  (FTE)  during  the first  nine  months of 2009  increased
$2,232,000  (3.3%) from the same period in 2008 to $69,696,000.  The increase in
net interest  income (FTE) was due to a $116,044,000  (6.4%) increase in average
balances of interest-earning  assets to $1,930,147,000 that was partially offset
by a 0.15%  decrease in net  interest  margin (FTE) to 4.81% from the nine month
period ended September 30, 2008.

Interest and Fee Income
Interest and fee income (FTE) for the third quarter of 2009 decreased $2,100,000
(7.0%) from the third quarter of 2008.  The decrease was due to a 0.98% decrease
in the yield on  average  interest-earning  assets to 5.70%  that was  partially
offset by a $163,033,000 (9.0%) increase in average  interest-earning  assets to
$1,969,043,000.  The growth in average interest-earning assets was mainly due to
a  $161,347,000  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 0.44% decrease in yield on loans to
6.48% and the large increase in interest-bearing  cash balances that earned only
0.25% during the quarter.

Interest  and fee income  (FTE) for the nine  months  ended  September  30, 2009
decreased  $6,302,000  (6.9%) from the same period of 2008. The decrease was due
to a 0.84%  decrease  in the yield on average  interest-earning  assets to 5.92%
that  was  partially  offset  by  a  $116,044,000  (6.4%)  increase  in  average
interest-earning assets to $1,930,147,000. The growth in interest-earning assets
was  primarily   due  to  a   $105,817,000   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 0.55% decrease
in yield on loans to 6.49%  and the  large  increase  in  interest-bearing  cash
balances that earned only 0.22% during the nine months ended September 30, 2009.
The  decrease in loan yields from the nine months ended  September  30, 2008 was
mainly due to a 4.00%  decrease in the prime lending rate from 7.25% at December
31, 2007 to 3.25% at December 31, 2008.


                                       24

<PAGE>


Interest Expense
Interest expense decreased $2,468,000 (34.0%) to $4,784,000 in the third quarter
of  2009  compared  to the  third  quarter  of  2008.  The  average  balance  of
interest-bearing  liabilities  increased $99,474,000 (7.1%) to $1,507,797,000 in
the third quarter of 2009 compared to the third quarter of 2008. The increase in
the average  balance of  interest-bearing  liabilities  was due  primarily to an
increase in interest-bearing deposits of $194,326,000 (16.2%) that was partially
offset by a decrease of $94,582,000  (57.2%) in the average  balances of Federal
funds purchased and other borrowings from the third quarter of 2008. The average
rate paid on  interest-bearing  liabilities  in the quarter ended  September 30,
2009 decreased  0.79% to 1.27% compared to the quarter ended  September 30, 2008
as a result of lower  market  rates  for  almost  all types of  interest-bearing
liabilities.

Interest expense decreased $8,534,000 (34.8%) to $15,954,000 for the nine months
ended  September  30, 2009  compared to  $24,488,000  for the nine months  ended
September  30,  2008.  The  average  balance  of  interest-bearing   liabilities
increased  $69,146,000  (4.9%)  to  $1,479,760,000  for the  nine  months  ended
September  30, 2009 compared to the nine months ended  September  30, 2008.  The
increase  in  the  average  balance  of  interest-bearing  liabilities  was  due
primarily to an increase in  interest-bearing  deposits of $191,146,000  (16.3%)
that was partially  offset by a decrease of $122,000,000  (62.2%) in the average
balances of Federal funds  purchased and other  borrowings  from the nine months
ended September 30, 2008. The average rate paid on interest-bearing  liabilities
in the nine month  period  ended  September  30, 2009  decreased  0.87% to 1.44%
compared to the nine months ended September 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      Nine months ended
                                       September 30,          September 30,
                                  ----------------------------------------------
                                      2009       2008         2009       2008
                                  ----------------------------------------------
Yield on interest-earning assets     5.70%       6.68%        5.92%      6.76%
Rate paid on interest-bearing
  Liabilities                        1.27%       2.06%        1.44%      2.31%
                                  ----------------------------------------------
     Net interest spread             4.43%       4.62%        4.48%      4.45%
Impact of all other net
  noninterest-bearing funds          0.29%       0.45%        0.33%      0.51%
                                  ----------------------------------------------
     Net interest margin             4.72%       5.07%        4.81%      4.96%
                                  ==============================================

Net  interest  margin for the three months ended  September  30, 2009  decreased
0.35%  compared to the three months ended  September 30, 2008.  This decrease in
net  interest  margin was mainly  due to a 0.16%  decrease  in the impact of net
noninterest-bearing  funds  to 0.29%  and a  decrease  of 0.19% in net  interest
spread  compared to the three months ended September 30, 2008. The average yield
on  interest-earning  assets  decreased  0.98%  while the  average  rate paid on
interest-bearing  liabilities  decreased  0.79%  from  the  three  months  ended
September 30, 2008.

Net interest margin for the nine months ended September 30, 2009 decreased 0.15%
compared to the nine months  ended  September  30,  2008.  This  decrease in net
interest  margin  was  mainly  due to a  0.18%  decrease  in the  impact  of net
noninterest-bearing  funds  to  0.33%  offset  by an  increase  of  0.03% in net
interest  spread  compared to the nine months  ended  September  30,  2008.  The
average yield on interest-earning  assets decreased 0.84% while the average rate
paid on interest-bearing  liabilities decreased 0.87% from the nine months ended
September 30, 2008.


                                       25

<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
                                            -------------------------------------------------------------------
                                                   September 30, 2009                 September 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                                        $1,538,239    $24,909    6.48%     $1,549,009   $26,790     6.92%
Investment securities - taxable                 249,254      2,635    4.23%        232,419     2,894     4.98%
Investment securities - nontaxable               20,128        396    7.87%         24,507       457     7.46%
Cash at Federal Reserve and other banks         161,422        101    0.25%             75         -     1.19%
                                            -------------------------------     --------------------------------
Total interest-earning assets                 1,969,043     28,041    5.70%      1,806,010    30,141     6.68%
                                                           -------                            ------
Other assets                                    130,010                            168,382
                                             ----------                         ----------
Total assets                                 $2,099,053                         $1,974,392
                                             ==========                         ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits               $305,767        $565    0.74%       $226,843      $239     0.42%
Savings deposits                                456,839         752    0.66%        376,594     1,041     1.11%
Time deposits                                   632,922       2,869    1.81%        597,765     4,496     3.01%
Federal funds purchased                               -           -       -          84,851       430     2.03%
Other borrowings                                 71,031         250    1.41%         81,032       473     2.33%
Junior subordinated debt                         41,238         348    3.38%         41,238       573     5.56%
                                             --------------------------------   ---------------------------------
Total interest-bearing liabilities            1,507,797       4,784    1.27%      1,408,323     7,252     2.06%
                                                              -----                             -----
Noninterest-bearing deposits                    348,808                             344,233
Other liabilities                                38,995                              30,625
Shareholders' equity                            203,452                             191,211
                                             ----------                          -----------
Total liabilities and shareholders'equity    $2,099,052                          $1,974,392
                                             ==========                          ===========
Net interest spread(1)                                                 4.43%                              4.62%
Net interest income and interest margin(2)                  $23,257    4.72%                  $22,889     5.07%
                                                            ===============                   =================
</TABLE>

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



                                       26

<PAGE>


<TABLE>
<CAPTION>
                                                                   For the nine months ended
                                            -------------------------------------------------------------------
                                                   September 30, 2009                 September 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                                        $1,553,372     $75,640    6.49%    $1,543,571   $81,531     7.04%
Investment securities - taxable                 249,059       8,614    4.61%       244,833     8,989     4.90%
Investment securities - nontaxable               21,706       1,218    7.48%        25,506     1,429     7.47%
Cash at Federal Reserve and other banks         106,010         178    0.22%           193         3     2.07%
                                             -------------------------------    --------------------------------
Total interest-earning assets                 1,930,147      85,650    5.92%     1,814,103    91,952     6.76%
                                                            -------                          -------
Other assets                                    149,003                            169,092
                                             ----------                         -----------
Total assets                                 $2,079,150                         $1,983,195
                                             ==========                         ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits               $282,688      $1,351    0.64%      $220,366      $460     0.28%
Savings deposits                                430,594       2,404    0.74%       385,624     3,715     1.28%
Time deposits                                   650,943      10,411    2.13%       567,089    14,428     3.39%
Federal funds purchased                               -           -       -        106,109     1,953     2.45%
Other borrowings                                 74,297         604    1.08%        90,188     2,060     3.05%
Junior subordinated debt                         41,238       1,184    3.83%        41,238     1,872     6.05%
                                             -------------------------------    --------------------------------
Total interest-bearing liabilities            1,479,760      15,954    1.44%     1,410,614    24,488     2.31%
                                                             ------                           ------
Noninterest-bearing deposits                    358,718                            348,483
Other liabilities                                37,612                             31,882
Shareholders' equity                            203,060                            192,216
                                             ----------                         -----------
Total liabilities and shareholders' equity   $2,079,150                         $1,983,195
                                             ==========                         ===========
Net interest spread(1)                                                 4.48%                             4.45%
Net interest income and interest margin(2)                  $69,696    4.81%                 $67,464     4.96%
                                                            ================                 ===================
</TABLE>
(1) Net interest spread represents the average yield earned on interest-earning
     assets minus the average rate paid on interest-bearing liabilities.
2) Net  interest  margin is computed by  calculating  the  difference  between
     interest   income  and   expense,   divided  by  the  average   balance  of
     interest-earning assets.


                                       27
<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 September 30, 2009
                                                 compared with three months
                                                  ended September 30, 2008
                                           -------------------------------------
                                               Volume        Rate     Total
                                           -------------------------------------
Increase (decrease) in interest income:
Loans                                       ($186)       ($1,695)       ($1,881)
Investment securities                         128           (448)          (320)
Cash at Federal Reserve and other banks       480           (379)           101
                                           -------------------------------------
  Total interest-earning assets               422         (2,522)        (2,100)
                                           -------------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits               83            243            326
Savings deposits                              223           (512)          (289)
Time deposits                                 265         (1,892)        (1,627)
Federal funds purchased                      (431)             1           (430)
Other borrowings                              (58)          (165)          (223)
Junior subordinated debt                        -           (225)          (225)
                                           -------------------------------------
 Total interest-bearing liabilities            82         (2,550)        (2,468)
                                           -------------------------------------
Increase in Net Interest Income              $340            $28           $368
                                           =====================================


                                            Nine months ended September 30, 2009
                                              compared with nine months ended
                                                     September 30, 2008
                                           -------------------------------------
                                              Volume        Rate         Total
                                           -------------------------------------
Increase (decrease) in interest income:
Loans                                        $517        ($6,408)       ($5,891)
Investment securities                         (58)          (528)          (586)
Cash at Federal Reserve and other banks     1,643         (1,468)           175
                                           -------------------------------------
  Total interest-earning assets             2,102         (8,404)        (6,302)
                                           -------------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits              131            760            891
Savings deposits                              432         (1,743)        (1,311)
Time deposits                               2,132         (6,149)        (4,017)
Federal funds purchased                    (1,950)            (3)        (1,953)
Other borrowings                             (364)        (1,092)        (1,456)
Junior subordinated debt                        -           (688)          (688)
                                           -------------------------------------
  Total interest-bearing liabilities          381         (8,915)        (8,534)
                                           -------------------------------------
Increase in Net Interest Income            $1,721           $511         $2,232
                                           =====================================

Provision for Loan Losses

The Company  provided  $8,000,000  for loan losses in the third  quarter of 2009
versus  $7,850,000  in the second  quarter of 2009 and  $2,600,000  in the third
quarter of 2008.  The  allowance  for loan losses  increased  $927,000  from the
second  quarter of 2009.  The  provision  for loan  losses and  increase  in the
allowance  for loan and  lease  losses  during  the third  quarter  of 2009 were
primarily  the result of changes in the  make-up of the loan  portfolio  and the
Bank's loss  factors in reaction to  increased  losses in the  Construction  and
Commercial & Industrial (C&I) loan portfolios.  Management re-evaluates its loss
ratios and  assumptions  quarterly and makes changes as appropriate  based upon,
among other things,  changes in loss rates  experienced,  collateral support for
underlying  loans,  changes and trends in the  economy,  and changes in the loan
mix.

                                       28
<PAGE>


In  the  third  quarter  of  2009,  the  Company  recorded  $7,471,000  in  loan
charge-offs  less  $398,000 in  recoveries  resulting in  $7,073,000 of net loan
charge-offs  versus  $2,293,000 of net loan  charge-offs in the third quarter of
2008.  Primary causes of the charges taken in the third quarter of 2009 were net
charge-offs  of $2,382,000 in  construction  loans,  $2,008,000,  in home equity
lines and loans,  $748,000 in auto indirect loans,  and $1,474,000 in C&I loans.
The $2,382,000 in charge-offs in construction loans were primarily the result of
a $1,804,000  charge taken on a land acquisition and development loan in the San
Joaquin Valley of California, a $219,000 charge taken on a land development loan
in the Sacramento  Valley of California,  and a $200,000 charge on a condominium
construction loan in the Sacramento  Valley. In addition,  the Bank took charges
in its C&I  portfolio of $300,000 on a line of credit to a real estate  investor
in the San Joaquin Valley,  $237,000 on a line of credit to a distributor in the
San Joaquin  Valley,  $207,000 to a contractor  in the  Sacramento  Valley,  and
$172,000 to a real estate investor in the Sacramento  Valley.  Generally  losses
are triggered by  non-performance  by the borrower and  calculated  based on any
difference  between  the  current  loan  amount  and the  current  value  of the
underlying  collateral less any estimated costs  associated with the disposition
of the collateral.

The Company  provided  $23,650,000  for loan losses during the nine months ended
September 30, 2009 versus $15,500,000 during the nine months ended September 30,
2008.  In the nine  months  ended  September  30,  2009,  the  Company  recorded
$16,689,000 of net loan charge-offs versus $8,243,000 of net loan charge-offs in
the nine months ended  September  30, 2008.  A total net of  $5,690,000  in home
equity  lines  and  loans  and  $1,881,000  on auto  indirect  loans  have  been
charged-off  during the nine months ended  September  30, 2009.  During the nine
months ended  September 30, 2009,  the Company  increased its allowance for loan
losses by  $6,961,000  from  December  31,  2008 with such  additional  reserves
allocated primarily to consumer loans,  residential real estate and construction
lending.

Noninterest Income
The following  table  summarizes the  components of  noninterest  income for the
periods indicated (dollars in thousands).
<TABLE>
<CAPTION>
                                                 Three months ended        Nine months ended
                                                    September 30,             September 30,
                                                -----------------------------------------------
                                                   2009        2008         2009         2008
                                                -----------------------------------------------
   <S>                                              <C>         <C>         <C>          <C>
  Service charges on deposit accounts             $4,207      $4,080      $11,928     $11,881
  ATM fees and interchange revenue                 1,287       1,164        3,607       3,411
  Other service fees                                 567         551        1,662       1,629
  Change in value of mortgage servicing rights      (416)       (571)        (318)       (743)
  Gain on sale of loans                            1,205         341        2,794         915
  Commissions on sale of
    Non-deposit investment products                  380         594        1,361       1,539
  Increase in cash value of life insurance           270         360          820       1,080
  Gain from VISA IPO                                   -           -            -         396
  Other noninterest income                           293         273          550         814
                                                 ----------------------------------------------
  Total noninterest income                        $7,793      $6,792      $22,404     $20,922
                                                 ==============================================
</TABLE>


Noninterest  income for the third quarter of 2009 increased  $1,001,000  (14.7%)
from the third quarter of 2008, mainly due to a $864,000 (253%) increase in gain
on sale of loans to $1,205,000. Also contributing to the increase in noninterest
income was a $127,000 (3.1%) increase in service charges on deposit  accounts to
$4,207,000,  a $123,000 (10.6%) increase in ATM fees and interchange  revenue to
$1,287,000,  and a $155,000  (27.1%) increase in the change in value of mortgage
servicing  rights to  ($416,000).  These  increases  were  offset a decrease  of
$214,000  (36.0%) in  commission on sale of  nondeposit  investment  products to
$380,000.  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.

Noninterest  income for the nine  months  ended  September  30,  2009  increased
$1,482,000  (7.1%) to $22,404,000  from the same period in 2008. The increase in
noninterest  income from the nine months ended September 30, 2008 was mainly due
to a $1,879,000  (205%) increase in gain on sale of loans to $2,794,000 that was
partially  offset by a decrease  of  $260,000  (24.1%) in the cash value of life
insurance to $820,000  and a decrease in the gain on VISA IPO of  $396,000.  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 nine
month period ended September 30, 2009.


                                       29
<PAGE>


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

                                              Three months ended        Nine months ended
                                                 September 30,             September 30,
                                             -----------------------------------------------
                                                2009        2008         2009         2008
                                             -----------------------------------------------
   <S>                                           <C>         <C>         <C>          <C>
  Base salaries, net of
     deferred loan origination costs          $6,826       $6,331       $20,079     $18,980
  Incentive compensation                         981          675         2,484       2,065
  Benefits and other compensation costs        2,456        2,425         7,558       7,511
                                             -----------------------------------------------
  Total salaries and related benefits         10,263        9,431        30,121       28,556
                                             ===============================================
  Occupancy                                    1,316        1,289         3,820       3,705
  Equipment                                      953        1,017         2,775       2,997
  Data processing and software                   655          600         1,937       1,811
  ATM network charges                            642          506         1,747       1,529
  Advertising and marketing                      558          451         1,470       1,204
  Telecommunications                             428          402         1,193       1,629
  Professional fees                              478          300         1,212       1,302
  Courier service                                189          258           574         796
  Postage                                        258          185           765         683
  Intangible amortization                         65          133           263         389
  Assessments                                    697          118         2,286         283
  Operational losses                              97           81           224         286
  Provisions for losses-unfunded commitments     500         (100)        1,075       1,275
  Other                                        2,278        1,918         6,460       5,561
                                             -----------------------------------------------
  Total other noninterest expense              9,114        7,158        25,801      23,450
                                             -----------------------------------------------
  Total noninterest expense                  $19,377      $16,589       $55,922     $52,006
                                             ===============================================
  Average full time equivalent staff             645          668           635         638
  Noninterest expense to revenue (FTE)         62.41%       55.89%        60.72%      58.84%
</TABLE>

Noninterest  expense for the third quarter of 2009 increased  $2,788,000 (16.8%)
compared to the third quarter of 2008.  Salaries and benefits expense  increased
$832,000  (8.8%) to  $10,263,000  mainly  due to  annual  salary  increases  and
increased incentive compensation expense related to increased production of sold
loans. Other noninterest expense increased $1,956,000 (27.3%) primarily due to a
$579,000 (491%) increase in assessments and a $600,000 increase in provision for
losses on unfunded commitments.

Noninterest  expense  for the nine months  ended  September  30, 2009  increased
$3,916,000 (7.5%) compared to the nine months ended September 30, 2008. Salaries
and benefits expense increased  $1,565,000  (5.5%) to $30,121,000  mainly due to
annual salary increases and increased incentive  compensation expense related to
increased   production  of  sold  loans.  Other  noninterest  expense  increased
$2,351,000 (10.0%) primarily due to assessments  increasing $2,003,000 (708%) to
$2,286,000.

Provision for Income Tax
The effective  tax rate for the three months ended  September 30, 2009 was 36.0%
and  reflects a decrease  from 39.6% for the three months  ended  September  30,
2008.  The effective  tax rate for the nine months ended  September 30, 2009 was
36.7% and reflects a decrease from 38.3% for the nine months ended September 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.

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.


                                       30
<PAGE>


Consumer loans,  whether  unsecured or secured by real estate,  automobiles,  or
other  personal  property,  are primarily  susceptible  to three primary  risks;
non-payment due to income loss,  over-extension of credit and, when the borrower
is unable to pay, shortfall in collateral value. Typically non-payment is due to
loss of job and will follow general  economic trends in the  marketplace  driven
primarily by rises in the unemployment rate. Loss of collateral value can be due
to market demand  shifts,  damage to collateral  itself or a combination  of the
two.

Problem  consumer  loans are  generally  identified  by  payment  history of the
borrower  (delinquency).  The Bank  manages  its  consumer  loan  portfolios  by
monitoring delinquency and contacting borrowers to encourage repayment,  suggest
modifications  if  appropriate,  and, when continued  scheduled  payments become
unrealistic,  initiate repossession or foreclosure through appropriate channels.
Collateral  values  may  be  determined  by  appraisals  obtained  through  Bank
approved, licensed appraisers, qualified independent third parties, public value
information (blue book values for autos),  sales invoices,  or other appropriate
means.  Appropriate  valuations  are  obtained at  initiation  of the credit and
periodically  (every 3-12 months depending on collateral type) once repayment is
questionable and the loan has been classified.

Commercial real estate loans generally fall into two categories,  owner-occupied
and  non-owner  occupied.  Loans  secured  by owner  occupied  real  estate  are
primarily  susceptible  to changes in the  business  conditions  of the  related
business.  This  may  be  driven  by,  among  other  things,  industry  changes,
geographic business changes,  changes in the individual fortunes of the business
owner,  and general economic  conditions and changes in business  cycles.  These
same risks apply to  commercial  loans  whether  secured by  equipment  or other
personal  property or unsecured.  Losses on loans secured by owner occupied real
estate,  equipment,  or other  personal  property  generally are dictated by the
value of  underlying  collateral at the time of default and  liquidation  of the
collateral.  When  default  is  driven  by issues  related  specifically  to the
business owner,  collateral  values tend to provide better repayment support and
may result in little or no loss.  Alternatively,  when default is driven by more
general economic conditions,  underlying  collateral generally has devalued more
and results in larger losses due to default. Loans secured by non-owner occupied
real  estate  are  primarily  susceptible  to risks  associated  with  swings in
occupancy  or vacancy and related  shifts in lease  rates,  rental rates or room
rates.  Most often these  shifts are a result of changes in general  economic or
market  conditions  or  overbuilding  and  resultant  over-supply.   Losses  are
dependent on value of underlying  collateral at the time of default.  Values are
generally  driven by these same  factors and  influenced  by interest  rates and
required rates of return as well as changes in occupancy costs.

Construction loans, whether owner occupied or non-owner occupied commercial real
estate loans or residential  development  loans, are not only susceptible to the
related  risks  described  above  but the  added  risks of  construction  itself
including cost  over-runs,  mismanagement  of the project,  or lack of demand or
market changes  experienced at time of completion.  Again,  losses are primarily
related to underlying collateral value and changes therein as described above.

Problem  commercial  loans  are  generally  identified  by  periodic  review  of
financial information which may include financial statements,  tax returns, rent
rolls  and  payment  history  of  the  borrower  (delinquency).  Based  on  this
information  the Bank  may  decide  to take any of  several  courses  of  action
including demand for repayment,  additional collateral or guarantors,  and, when
repayment becomes unlikely through Borrower's income and cash flow, repossession
or foreclosure of the underlying collateral.

Collateral  values  may  be  determined  by  appraisals  obtained  through  Bank
approved, licensed appraisers, qualified independent third parties, public value
information (blue book values for autos),  sales invoices,  or other appropriate
means.  Appropriate  valuations  are  obtained at  initiation  of the credit and
periodically  (every 3-12 months depending on collateral type) once repayment is
questionable and the loan has been classified.

Once a loan  becomes  delinquent  and  repayment  becomes  questionable,  a Bank
collection  officer will  address  collateral  shortfalls  with the borrower and
attempt to obtain additional collateral.  If this is not forthcoming and payment
in full is unlikely,  the Bank will estimate its probable  loss,  using a recent
valuation as appropriate to the underlying  collateral  less estimated  costs of
sale, and charge the loan down to the estimated net realizable amount. Depending
on the  length of time  until  ultimate  collection,  the Bank may  revalue  the
underlying collateral and take additional charge-offs as warranted. Revaluations
may occur as often as every 3-12 months  depending on the underlying  collateral
and  volatility  of  values.  Final  charge-offs  or  recoveries  are taken when
collateral  is  liquidated  and actual loss is known.  Unpaid  balances on loans
after or during  collection and  liquidation may also be pursued through lawsuit
and attachment of wages or judgment liens on borrower's other assets.


                                       31
<PAGE>


The following is a summary of classified assets on the dates indicated:

<TABLE>
<CAPTION>
                                                 At September 30, 2009           At June 30, 2008
                                              --------------------------   ---------------------------
                                                Gross  Guaranteed   Net      Gross  Guaranteed   Net
                                              --------------------------------------------------------
<S>                                             <C>       <C>       <C>        <C>      <C>      <C>
(dollars in thousands
Classified loans:
Real estate mortgage:
     Residential                               $5,046        -     $5,046     $4,036       -   $4,036
     Commercial                                58,266    4,710     53,556     48,320   4,884   43,436
Consumer:
     Home equity lines                         10,455        -     10,455      9,845       -    9,845
     Home equity loans                          1,304        -      1,304        802       -      802
     Auto indirect                              4,527        -      4,527      4,685       -    4,685
     Other consumer                               448        -        448        258       -      258
Commercial                                     11,571      442     11,129      7,823       -    7,823
Construction:
     Residential                                1,205        -      1,205      1,123       -    1,123
     Commercial                                23,235        -     23,235     23,973       -   23,973
                                             ---------------------------------------------------------
Total classified loans                       $116,057   $5,152   $110,905   $100,865  $4,884  $95,981
Other classified assets                         2,372        -      2,372      2,622       -    2,622
                                             ---------------------------------------------------------
Total classified assets                      $118,879   $5,152   $113,277   $103,487  $4,884  $98,603
                                             =========================================================
Allowance for loan losses/classified loans                           31.2%                       35.0%

                                                  At March 31, 2009             At December 31, 2008
                                              --------------------------    --------------------------
(dollars in thousands)                          Gross  Guaranteed   Net      Gross  Guaranteed   Net
Classified loans:                             --------------------------------------------------------
Real estate mortgage:
     Residential                               $4,590        -     $4,590     $3,981       -   $3,981
     Commercial                                41,938    5,055     36,883     27,426   5,225   22,201
Consumer:
     Home equity lines                          6,839        -      6,839      4,144       -    4,144
     Home equity loans                            759        -        759        377       -      377
     Auto indirect                              4,449        -      4,449      3,907       -    3,907
     Other consumer                               231        -        231        257       -      257
Commercial                                      4,379        -      4,379      4,505     154    4,351
Construction:
     Residential                                1,466        -      1,466         45       -       45
     Commercial                                20,112        -     20,112     19,208       -   19,208
                                              --------------------------------------------------------
Total classified loans                        $84,763   $5,055    $79,708    $63,850  $5,379  $58,471
Other classified assets                         2,407        -      2,407      1,185       -    1,185
                                              --------------------------------------------------------
Total classified assets                       $87,170   $5,055    $82,115    $65,035  $5,379  $59,656
                                              ========================================================
Allowance for loan losses/classified loans                           41.1%                       47.2%
</TABLE>


Classified  assets,  net of  guarantees  of the U.S.  Government,  including its
agencies and its government-sponsored agencies, increased $53,621,000 (89.9%) to
$113,277,000  at September 30, 2009 from  $59,656,000  at December 31, 2008. The
guarantees noted above are provided by various government agencies including the
United States Department of Agriculture,  Small Business Administration,  Bureau
of Indian Affairs,  Statewide Health Planning  Development,  California  Capital
Financial Development  Corporation,  and Safe Bidco. These guarantees range from
50% to 100% of the loan amount with the  majority at 80% or higher.  We consider
these guarantees when considering the adequacy of the loan loss allowance.


                                       32
<PAGE>


Classified  assets,  net of  guarantees  of the U.S.  Government,  including its
agencies and its government-sponsored agencies, increased $14,674,000 (14.9%) to
$113,277,000 at September 30, 2009 compared to $98,603,000 at June 30, 2009. The
$14,674,000  net increase in classified  assets during the third quarter of 2009
was the result of new  classified  loans of  $23,577,000,  advances  on existing
classified  loans of  $2,280,000,  recoveries  on existing  classified  loans of
$398,000,  less  charge-offs on existing  classified  loans of $7,471,000,  less
reductions to existing  classified  loans of $3,860,000,  and less reductions in
OREO of $250,000.  The primary causes of the $23,577,000 in new classified loans
during the third quarter of 2009 were  increases of  $1,493,000  in  residential
real estate,  $10,163,000 in commercial  real estate,  $4,498,000 in home equity
lines and loans,  $1,179,000 in auto loans,  $431,000 in other  consumer  loans,
$5,217,000 in Commercial  (C&I) loans,  and a $594,000  increase in  residential
construction loans.

The  $10,163,000 in new classified  commercial  real estate loans were primarily
made up of a $2,885,000  loan on a commercial  office building in the Sacramento
Valley, a $2,437,000 loan on a medical office building in the Sacramento Valley,
two loans to the same  borrower  totaling  $1,576,000 on two  commercial  retail
buildings in the Sacramento  Valley, a $735,000 loan on agricultural real estate
in the  Sacramento  Valley,  a  $1,007,000  loan on a  mini-storage  facility in
Northern  California,  a $499,000 loan on an office  building in the  Sacramento
Valley,  and a  $403,000  loan on a  manufacturing  facility  in the  Sacramento
Valley.

The $5,217,000 in new classified  commercial  (C&I) loans were primarily made up
of a  $2,240,000  production  loan to a  dairy  in the San  Joaquin  Valley,  an
$807,000 loan to a contractor in the Sacramento  Valley,  a $557,000  production
loan to a dairy in the San  Joaquin  Valley,  a $496,000  loan to a real  estate
investor in the  Sacramento  Valley,  and a $353,000 crop loan in the Sacramento
Valley.

The $594,000 in new  classified  residential  construction  loans were primarily
made  up of two  single  family  residential  (SFR)  construction  loans  in the
Sacramento Valley and two SFR construction loans in Northern California.


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
nine  months  ended  September  30,  2009 and 2008,  if all such  loans had been
current  in  accordance  with  their  original  terms,  totaled  $3,674,000  and
$1,759,000,  respectively.  Interest income  actually  recognized on these loans
during the nine months  ended  September  30, 2009 and 2008 was  $1,186,000  and
$882,000, 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.

                                       33
<PAGE>


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.

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  $20,269,000  (70.6%) to $48,979,000  during the first nine
months of 2009.  Nonperforming assets net of guarantees represent 2.34% 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 September 30, 2009           At June 30, 2009
                                              --------------------------   ---------------------------
                                                Gross  Guaranteed   Net      Gross  Guaranteed   Net
                                              --------------------------------------------------------
<S>                                             <C>       <C>       <C>        <C>      <C>      <C>
(dollars in thousands)
Performing nonaccrual loans                   $24,824   $5,031    $19,793    $24,886  $4,884  $19,982
Nonperforming, nonaccrual loans                26,128      121     26,007     21,321       -   21,321
                                              --------------------------------------------------------
   Total nonaccrual loans                      50,952    5,152     45,800     46,187   4,884   41,303
Loans 90 days past due and still accruing         807        -        807      2,070      -    2,070
                                              --------------------------------------------------------
Total nonperforming loans                      51,759    5,152     46,607     48,257   4,884   43,373
Other real estate owned                         2,372        -      2,372      2,622       -    2,622
                                              --------------------------------------------------------
Total nonperforming assets                    $54,131   $5,152    $48,979    $50,879  $4,884  $45,995
                                              ========================================================
Nonperforming loans to total loans                                  3.04%                       2.79%
Nonperforming assets to total assets                                2.34%                       2.20%
Allowance for loan losses/nonperforming loans                         74%                         78%


                                                  At March 31, 2009             At December 31, 2008
                                               --------------------------    -------------------------
                                                 Gross  Guaranteed   Net      Gross  Guaranteed   Net
(dollars in thousands)                        --------------------------------------------------------
Performing nonaccrual loans                   $23,467   $4,933    $18,534    $22,600  $5,102  $17,498
Nonperforming, nonaccrual loans                14,989        -     14,989      9,994     154    9,840
                                              --------------------------------------------------------
   Total nonaccrual loans                      38,456    4,933     33,523     32,594   5,256   27,338
Loans 90 days past due and still accruing         837        -        837        187       -      187
                                              --------------------------------------------------------
Total nonperforming loans                      39,293    4,933     34,360     32,781   5,256   27,525
Other real estate owned                         2,407        -      2,407      1,185       -    1,185
                                              --------------------------------------------------------
Total nonperforming assets                    $41,700   $4,933    $36,767    $33,966  $5,256  $28,710
                                              ========================================================
Nonperforming loans to total loans                                   2.19%                       1.73%
Nonperforming assets to total assets                                 1.77%                       1.41%
Allowance for loan losses/nonperforming loans                          95%                        100%
</TABLE>


                                       34


<PAGE>


Nonperforming assets categorized by type were as follows:

<TABLE>
<CAPTION>
                                                 At September 30, 2009           At June 30, 2009
                                            ----------------------------   ---------------------------
                                                Gross  Guaranteed   Net      Gross  Guaranteed   Net
                                            ----------------------------------------------------------
<S>                                             <C>       <C>       <C>        <C>      <C>      <C>
(dollars in thousands):
Loans:
   Real estate mortgage:
     Residential                             $4,065          -     $4,065     $2,964       -   $2,964
     Commercial                              17,475      4,710     12,765     16,632   4,884   11,748
   Consumer:
     Home equity lines                        7,627          -      7,627      6,715       -    6,715
     Home equity loans                          446          -        446        302       -      302
     Auto indirect                            2,492          -      2,492      2,731       -    2,731
     Other consumer                             136          -        136        119       -      119
   Commercial                                 5,331        442      4,889      4,151       -    4,151
   Construction:
     Residential                             13,045          -     13,045     13,691       -   13,691
     Commercial                               1,142          -      1,142        952       -      952
Other real estate owned                       2,372          -      2,372      2,622       -    2,622
                                            ----------------------------------------------------------
Total nonperforming assets                  $54,131     $5,152    $48,979    $50,879  $4,884  $45,995
                                            ==========================================================


                                                  At March 31, 2009             At December 31, 2008
                                            ---------------------------    ---------------------------
(dollars in thousands):                         Gross  Guaranteed    Net     Gross Guaranteed   Net
Loans:                                      ----------------------------------------------------------
   Real estate mortgage:
     Residential                             $3,410          -     $3,410     $3,189       -   $3,189
     Commercial                               9,678      4,933      4,745      9,668   5,102    4,566
   Consumer:
     Home equity lines                        4,679          -      4,679      2,318       -    2,318
     Home equity loans                          107          -        107        122       -      122
     Auto indirect                            2,762          -      2,762      2,233       -    2,233
     Other consumer                              82          -         82        123       -      123
   Commercial                                 1,879          -      1,879      2,221     154    2,067
   Construction:
     Residential                             16,286          -     16,286     12,483       -   12,483
     Commercial                                 410          -        410        424       -      424
Other real estate owned                       2,407          -      2,407      1,185       -    1,185
                                            ----------------------------------------------------------
Total nonperforming assets                  $41,700     $4,933    $36,767    $33,966  $5,256  $28,710
                                            ==========================================================
</TABLE>

Nonperforming  assets, net of guarantees of the U.S.  Government,  including its
agencies and its government-sponsored  agencies,  increased $2,984,000 (6.5%) to
$48,979,000  at September 30, 2009 compared to $45,995,000 at June 30, 2009. The
$2,984,000 increase in nonperforming assets during the third quarter of 2009 was
the  result  new  nonperforming  loans  of  $13,250,000,  advances  on  existing
nonperforming loans of $1,161,000, recoveries on existing nonperforming loans of
$398,000,   less   charge-offs  of  $7,471,000,   less  reductions  to  existing
nonperforming loans of $4,104,000,  and less reductions in OREO of $250,000. The
primary causes of the  $13,250,000 in new  nonperforming  loans during the third
quarter  of 2009 were  increases  of  $1,165,000  in  residential  real  estate,
$2,101,000 in commercial real estate, $4,413,000 in home equity lines and loans,
$959,000  in auto  loans,  $247,000  in  other  consumer  loans,  $3,241,000  in
Commercial  (C&I) loans, and a $1,125,000  increase in residential  construction
loans.

The $2,101,000 in new nonperforming  commercial real estate loans were primarily
made up of a $1,520,000 loan on a construction products  manufacturing  facility
in the Sacramento Valley.

The $3,241,000 in new  nonperforming  commercial (C&I) loans were primarily made
up of a  $2,240,000  production  loan to a dairy in the San  Joaquin  Valley,  a
$557,000  production loan to a dairy in the San Joaquin Valley,  a $300,000 loan
to a real estate investor in the San Joaquin Valley.

The  $1,125,000  in  new  nonperforming   residential  construction  loans  were
primarily made up of a $770,000 SFR construction loan in the Sacramento Valley.


                                       35
<PAGE>


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  September  30, 2009.  This
plan has no stated  expiration  date for the  repurchases.  As of September  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
$201,937,000  at  September  30,  2009.  This amount  represents  an increase of
$4,005,000  from December 31, 2008, the net result of  comprehensive  income for
the period of $9,527,000,  the effect of stock option  vesting of $369,000,  the
exercise of stock  options for $887,000 and the tax benefit from the exercise of
stock options of $30,000 that were partially  offset by the repurchase of common
stock with value of $652,000,  and dividends paid of  $6,156,000.  The Company's
ratio of equity to total assets was 9.64%,  9.67% and 9.69% as of September  30,
2009, September 30, 2008, and December 31, 2008, respectively.

The following  summarizes the ratios of capital to risk-adjusted  assets for the
periods indicated:
                             At September 30,      At             Minimum
                         --------------------    December 31,   Regulatory
                           2009        2008        2008         Requirement
                         ---------------------------------------------------
     Tier I Capital        11.91%     11.13%      11.17%           4.00%
     Total Capital         13.17%     12.38%      12.42%           8.00%
     Leverage ratio        10.64%     11.08%      11.09%           4.00%

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 September
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 $591,336,000 and $643,365,000 at September 30,
2009 and December 31, 2008, respectively, and represented 38.6% and 40.4% of the
total  loans   outstanding   at  September  30,  2009  and  December  31,  2008,
respectively.  Commitments  related to the Bank's  deposit  overdraft  privilege
product  totaled  $35,464,000 and $35,883,000 at September 30, 2009 and December
31, 2008, respectively.

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.


                                       36
<PAGE>


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 September 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 September 30, 2009 and 2008, the Company had no material derivative financial
instruments.

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
September  30,  2009,  cash at Federal  Reserve and other  banks and  investment
securities available for sale totaled $416,983,000,  representing an increase of
$128,442,000  (44.5%) from  December 31, 2008,  and an increase of  $175,083,000
(72.4%) from September 30, 2008. In addition,  the Company generates  additional
liquidity from its operating activities.  The Company's profitability during the
first nine months of 2009  generated  cash flows from  operations of $28,442,000
compared  to  $27,930,000  during the first nine months of 2008.  Maturities  of
investment  securities  produced  cash  inflows of  $67,963,000  during the nine
months ended  September  30, 2009  compared to  $38,938,000  for the nine months
ended  September 30, 2008.  During the nine months ended September 30, 2009, the
Company invested  $29,396,000 in securities and received $40,043,000 of net loan
principal  reductions,  compared  to  $50,219,000  invested  in  securities  and
$20,538,000 invested in net loan principal increases,  respectively,  during the
first  nine  months of 2009.  These  changes  in  investment  and loan  balances
contributed to net cash provided by investing  activities of $78,847,000  during
the nine months ended September 30, 2009, compared to net cash used in investing
activities  of  $33,383,000  during the nine months  ended  September  30, 2008.
Financing  activities  provided net cash of  $40,926,000  during the nine months
ended September 30, 2009,  compared to net cash used in financing  activities of
$16,045,000  during the nine months ended  September 30, 2008.  Deposit  balance
increases  accounted for  $82,625,000  and  $18,618,000 of financing  sources of
funds during the nine months ended  September  30, 2009 and 2008,  respectively.
Net decrease in  short-term  other  borrowings  accounted  for  $35,741,000  and
$36,195,000  of financing  uses of funds during the nine months ended  September
30, 2009 and 2008,  respectively.  Dividends paid used $6,156,000 and $6,145,000
of cash during the nine months ended September 30, 2009 and 2008,  respectively.
Federal funds purchased did not use or provide cash during the nine months ended
September 30, 2009 compared to an increase of Federal funds purchased  providing
$11,000,000 of cash during the nine months ended  September 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.

                                       37
<PAGE>


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 September 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.



                                       38
<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 third 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>
July 1-31, 2009           -                 -                        -                 333,400
Aug. 1-31, 2009           -                 -                        -                 333,400
Sep. 1-30, 2009           -                 -                        -                 333,400
----------------------------------------------------------------------------------------------------------
Total                     -                 -                        -                 333,400
</TABLE>

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  Quarterly  Report on Form 10-Q for the quarter ended June 30,
          2005.


                                       39

<PAGE>

     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.

    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.


                                       40

<PAGE>


    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

     32.1 Section 1350 Certification of CEO

     32.2 Section 1350 Certification of CFO

     * Previously filed and incorporated by reference.



                                       41
<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:  November 9, 2009   /s/Thomas J. Reddish
                          ---------------------
                            Thomas J. Reddish
                            Executive Vice President and Chief Financial Officer
                            (Duly authorized officer and Principal financial
                             officer)






                                       42

<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: November 9, 2009           /s/Richard P. Smith
                                -------------------
                                Richard P. Smith
                                President and Chief Executive Officer



                                       43
<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: November 9, 2009      /s/Thomas J. Reddish
                            --------------------
                            Thomas J. Reddish
                            Executive Vice President and Chief Financial Officer



                                       44
<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.



                                       45
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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": "091170159"}, "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 September 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 or a smaller reporting company.
See definition of "large  accelerated  filer,"  accelerated  filer" and "smaller
reporting companyu" in Rule 12b-2 of the Exchange 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 October 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                                                22

   Item 2 - Management's Discussion and Analysis of Financial                23
            Condition and Results of Operations

   Item 3 - Quantitative and Qualitative Disclosures about Market Risk       36

   Item 4 - Controls and Procedures                                          38

PART II - OTHER INFORMATION                                                  39

   Item 1 - Legal Proceedings                                                39

   Item 1A - Risk Factors                                                    39

   Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds      39

   Item 6 - Exhibits                                                         39

   Signatures                                                                42

   Exhibits                                                                  43
FORWARD-LOOKING STATEMENTS

This  report  on Form  10-Q  contains  forward-looking  statements  about  TriCo
Bancshares (the "Company") that are subject to the protection of the safe harbor
provisions  contained in the Private  Securities  Litigation Reform Act of 1995.
These  forward-looking  statements are based on the current knowledge and belief
of the Company's  management  ("Management") 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 September 30,              At December 31,
                                                         2009              2008                2008
                                                       ----------------------------       ---------------
Assets:
     Cash and due from banks                              $48,549           $67,300          $64,375
     Cash at Federal Reserve and other banks              186,021                 -           21,980
                                                       ----------------------------       -------------
          Cash and cash equivalents                       234,570            67,300           86,355
     Securities available-for-sale                        230,962           241,900          266,561
     Federal Home Loan Bank stock, at cost                  9,274             9,147            9,235
     Loans, net of allowance for loan losses
          of $34,551, $24,588 and $27,590               1,496,661         1,538,648        1,563,259
     Foreclosed assets, net of allowance for
          losses of $206, $214 and $230                     2,372             1,178            1,185
     Premises and equipment, net                           18,102            19,094           18,841
     Cash value of life insurance                          47,635            46,061           46,815
     Accrued interest receivable                            7,666             7,874            7,935
     Goodwill                                              15,519            15,519           15,519
     Other intangible assets, net                             389               786              653
     Other assets                                          32,516            28,960           26,832
                                                       ----------------------------       -------------
          Total Assets                                 $2,095,666        $1,976,467       $2,043,190
                                                       ============================       =============
Liabilities:
     Deposits:
          Noninterest-bearing demand                     $349,949          $334,015         $401,247
          Interest-bearing                              1,401,946         1,229,826        1,268,023
                                                       ----------------------------       -------------
          Total deposits                                1,751,895         1,563,841         1,669,270
     Federal funds purchased                                    -            67,000                -
     Accrued interest payable                               4,136             5,217            6,146
     Reserve for unfunded commitments                       3,640             3,365            2,565
     Other liabilities                                     26,623            24,831           24,034
     Other borrowings                                      66,197            79,873          102,005
     Junior subordinated debt                              41,238            41,238           41,238
                                                       ----------------------------       -------------
           Total Liabilities                            1,893,729         1,785,365         1,845,258
                                                       ----------------------------       -------------
Commitments and contingencies
Shareholders' Equity
     Common stock, no par value: 50,000,000 shares
          authorized; issued and outstanding:
          15,787,753 at September 30, 2009                79,400
          15,744,881 at September 30, 2008                                   78,008
          15,756,101 at December 31, 2008                                                     78,246
     Retained earnings                                    118,603           115,549          117,630
     Accumulated other comprehensive income (loss), net     3,934            (2,455)           2,056
                                                       -----------------------------      ----------
          Total Shareholders' Equity                      201,937           191,102          197,932
                                                       -----------------------------      ------------
          Total Liabilities and Shareholders' Equity   $2,095,666        $1,976,467       $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 September 30,   Nine months ended September 30,
                                                                      2009           2008            2009           2008
                                                         -------------------------------------------------------------------
Interest and dividend income:
 Loans, including fees                                       $24,909         $26,790        $75,640        $81,531
 Debt securities:
    Taxable                                                    2,616           2,756          8,595          8,607
    Tax exempt                                                   244             287            771            910
 Dividends                                                        19             138             19            382
 Cash at Federal Reserve and other banks                         101               -            178             3
                                                         ------------------------------------------------------------------
 Total interest income                                        27,889          29,971         85,203         91,433
                                                         ------------------------------------------------------------------
 Interest expense:
 Deposits                                                      4,186           5,776         14,166         18,603
 Federal funds purchased                                           -             430              -          1,953
 Other borrowings                                                250             473            604          2,060
 Junior subordinated debt                                        348             573          1,184          1,872
                                                         ------------------------------------------------------------------
 Total interest expense                                        4,784           7,252         15,954         24,488
                                                         ------------------------------------------------------------------
 Net interest income                                          23,105          22,719         69,249         66,945
                                                         ------------------------------------------------------------------
 Provision for loan losses                                     8,000           2,600         23,650         15,500
                                                         ------------------------------------------------------------------
 Net interest income after provision for loan losses          15,105          20,119         45,599         51,445
                                                         ------------------------------------------------------------------
 Noninterest income:
 Service charges and fees                                      5,645           5,224         16,879         16,178
 Gain on sale of loans                                         1,205             341          2,794            915
 Commissions on sale of non-deposit investment products          380             594          1,361          1,539
 Increase in cash value of life insurance                        270             360            820          1,080
 Other                                                           293             273            550          1,210
                                                         ------------------------------------------------------------------
 Total noninterest income                                      7,793           6,792         22,404         20,922
                                                         ------------------------------------------------------------------
 Noninterest expense:
 Salaries and related benefits                                10,263           9,431         30,121         28,556
 Other                                                         9,114           7,158         25,801         23,450
                                                         ------------------------------------------------------------------
 Total noninterest expense                                    19,377          16,589         55,922         52,006
                                                         ------------------------------------------------------------------
 Income before income taxes                                    3,521          10,322         12,081         20,361
 Provision for income taxes                                    1,266           4,087          4,432          7,804
                                                         ------------------------------------------------------------------
 Net income                                                   $2,255          $6,235         $7,649        $12,557
                                                         ==================================================================

 Average shares outstanding                               15,787,264      15,744,881     15,781,547     15,777,282
 Diluted average shares outstanding                       16,015,952      15,951,668     16,010,959     16,021,886
 Per share data:
 Basic earnings                                                $0.14           $0.40          $0.48          $0.80
 Diluted earnings                                              $0.14           $0.39          $0.48          $0.78
 Dividends paid                                                $0.13           $0.13          $0.39          $0.39

 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                                                           12,557                   12,557
Change in net unrealized gain on
   securities available for sale, net                                               (903)       (903)
                                                                                            ---------
Total comprehensive income                                                                    11,654
Cumulative effect of change in
   accounting principle, net of tax                                   (522)                     (522)
Stock option vesting                                        502                                  502
Reversal of tax benefit from
   exercise of stock options                              (444)                                (444)
Repurchase of common stock                 (166,669)       (825)    (1,996)                   (2,821)
Dividends paid ($0.39 per share)                                    (6,145)                   (6,145)
                                       --------------------------------------------------------------
Balance at September 30, 2008            15,744,881     $78,008   $115,549       ($2,455)   $191,102
                                       ==============================================================

Balance at December 31, 2008             15,756,101     $78,246   $117,630        $2,056    $197,932
Comprehensive income:
 Net income                                                          7,649                     7,649
 Change in net unrealized loss on
   Securities available for sale, net                                              1,878       1,878
                                                                                            --------
 Total comprehensive income                                                                    9,527
 Stock option vesting                                                  369                       369
 Stock option exercise                       58,213         887                                  887
 Tax benefit of stock options exercised                      30                                   30
 Repurchase of common stock                 (26,561)       (132)      (520)                     (652)
Dividends paid ($0.39 per share)                                    (6,156)                   (6,156)
                                       --------------------------------------------------------------
Balance at September 30, 2009            15,787,753     $79,400   $118,603        $3,934    $201,937
                                       ==============================================================

See accompanying notes to unaudited condensed consolidated financial statements.
4
TRICO BANCSHARES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands; unaudited)

                                                               For the nine months ended September 30,
                                                                      2009               2008
                                                               --------------------------------------
Operating activities:
Net income                                                         $7,649             $12,557
Adjustments to reconcile net income to net cash provided
  by operating activities:
    Depreciation of property and equipment, and amortization        2,532               2,586
    Amortization of intangible assets                                 264                 389
    Provision for loan losses                                      23,650              15,500
    Amortization of investment securities premium, net                272                 250
    Originations of loans for resale                             (157,331)            (61,109)
    Proceeds from sale of loans originated for resale             158,747              61,403
    Gain on sale of loans                                          (2,794)               (915)
    Change in value of mortgage servicing rights                      317                 743
    Provision for losses on other real estate owned                   188                  34
    (Gain) loss on sale of other real estate owned                   (169)                  -
    Loss on disposal of fixed assets                                    9                   2
    Increase in cash value of life insurance                         (820)             (1,080)
    Stock option vesting expense                                      369                 502
    Stock option tax benefits                                         (30)                444
    Change in:
      Reserve for unfunded commitments                              1,075               1,275
      Interest receivable                                             269                 680
      Interest payable                                            (2,010)             (2,654)
      Other assets and liabilities, net                            (3,746)             (2,677)
                                                               -------------------------------
        Net cash provided by operating activities                  28,442              27,930
                                                               -------------------------------
Investing activities:
Proceeds from maturities of securities available-for-sale          67,963              38,938
Purchases of securities available-for-sale                        (29,396)            (50,219)
Purchases of Federal Home Loan Bank stock                             (39)               (381)
Loan originations and principal collections, net                   40,043             (20,538)
Proceeds from sale of premises and equipment                            1                   2
Purchases of premises and equipment                                (1,423)             (1,185)
Proceeds from sale of other real estate sold                        1,698                   -
                                                               ------------------------------
        Net cash provided (used) by investing activities           78,847             (33,383)
                                                               ------------------------------
Financing activities:
Net increase in deposits                                           82,625              18,618
Net increase in Federal funds purchased                                 -              11,000
Payments of principal on long-term other borrowings                   (67)                (58)
Net change in short-term other borrowings                         (35,741)            (36,195)
(Reversal of) stock option tax benefit                                 30                (444)
Repurchase of common stock                                              -              (2,821)
Dividends paid                                                    (6,156)             (6,145)
Exercise of stock options                                             235                   -
                                                               ------------------------------
        Net cash provided (used) by financing activities           40,926             (16,045)
                                                               ------------------------------
Net change in cash and cash equivalents                           148,215             (21,498)
                                                               ------------------------------
Cash and cash equivalents and beginning of period                  86,355              88,798
                                                               ------------------------------
Cash and cash equivalents at end of period                       $234,570             $67,300
                                                               ==============================
Supplemental disclosure of noncash activities:
  Loans transferred to other real estate owned                     $2,905              $1,025
  Unrealized gain (loss) on securities available for sale          $3,240             ($1,558)
  Income tax benefit (expense) from stock option exercises            $30               ($444)
  Market value of shares tendered by employees in-lieu of
    cash to pay for exercise of options and/or related taxes         $652                  $0
Supplemental disclosure of cash flow activity:
  Cash paid for interest expense                                  $17,964             $27,142
  Cash paid for income taxes                                       $9,092             $10,350
     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  traditional  branch  offices  and 26 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 nine months  ended  September  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:
September 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      $201,472           $9,459                 -       $210,931
Obligations of states and political subdivisions                19,119              423               (46)        19,496
Corporate debt securities                                        1,000                -              (465)           535
                                                            --------------------------------------------------------------
             Total securities available-for-sale              $221,591           $9,882             ($511)      $230,962
                                                            ==============================================================

                                                                                 December 31, 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      $236,786           $6,193               ($2)      $242,977
Obligations of states and political subdivision                 22,644              293              (272)        22,665
Corporate debt securities                                        1,000                -               (81)           919
                                                            --------------------------------------------------------------
    Total securities available-for-sale                       $260,430           $6,486             ($355)      $266,561
                                                            ==============================================================
The amortized cost and estimated fair value of debt  securities at September 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 September 30, 2009,
obligations  of U.S.  government  corporations  and  agencies  with a cost basis
totaling  $201,472,000  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 September 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 2.9 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                                     -                -
   Due after one year through five years         $49,844          $51,035
   Due after five years through ten years         25,400           26,340
   Due after ten years                           146,347          153,587
                                             ------------------------------
   Totals                                       $221,591         $230,962
                                             ==============================

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 nine months ended
September 30, 2009, and throughout 2008, the Company did not sell any investment
securities.

Investment  securities  with an aggregate  carrying  value of  $210,922,000  and
$231,056,000  at September  30, 2009 and December 31, 2008,  respectively,  were
pledged as collateral for specific borrowings,  lines of credit and local agency
deposits. 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:

                                       7
Less than 12 months   12 months or more          Total
                                                            -------------------   ------------------    -------------------
                                                            Fair    Unrealized    Fair    Unrealized    Fair    Unrealized
                                                            Value      Loss       Value      Loss       Value      Loss
September 30, 2009                                          ---------------------------------------------------------------
Securities Available-for-Sale:                                                     (in thousands)
Obligations of U.S. government
   corporations and agencies                                   $56         -           -         -         $56         -
Obligations of states and political subdivisions                 -         -         965       (46)        965       (46)
Corporate debt securities                                      535      (465)          -         -         535      (465)
                                                            ---------------------------------------------------------------
Total securities available-for-sale                           $591     ($465)       $965      ($46)     $1,556     ($511)
                                                            ===============================================================

                                                            Less than 12 months   12 months or more          Total
                                                            ----------------------------------------    -------------------
                                                            Fair    Unrealized    Fair    Unrealized    Fair    Unrealized
                                                            Value      Loss       Value      Loss       Value      Loss
December 31, 2008                                           ---------------------------------------------------------------
Securities Available-for-Sale:                                                      (in thousands)
Obligations of 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 does not intend to sell and more likely
than not will not be  required to sell,  these  investments  are not  considered
other-than-temporarily  impaired.  At  September  30,  2009,  one debt  security
representing  obligations of U.S.  government  corporations  and agencies had an
unrealized loss with aggregate depreciation of 0.7% from the Company's amortized
cost basis.

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  does  not  intend  to sell and  more  likely  than not will not be
required to sell,  these  investments are not considered  other-than-temporarily
impaired. At September 30, 2009, two debt securities representing obligations of
states  and  political   subdivisions  had  unrealized   losses  with  aggregate
depreciation of 4.6% 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 does not intend to sell and more
likely  than  not will  not be  required  to  sell,  these  investments  are not
considered other-than-temporarily impaired. At September 30, 2009, one corporate
debt security had an unrealized  loss with aggregate  depreciation of 46.5% 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 September 30, 2009,  September 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 September 30, 2009,
$8,427,000 of loans are  classified as troubled debt  restructured.  The Company
had obligations to lend $793,000 of additional funds on the  restructured  loans
as of September 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  ($34,551,000)  and the  reserve  for  unfunded
commitments  ($3,640,000),  which collectively stand at $38,191,000 at September
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                Nine months ended
                                           September 30,                     September 30,
                                      -------------------------------------------------------
                                        2009            2008            2009            2008
                                      -------------------------------------------------------
Allowance for loan losses:
Balance at beginning of period         $33,624         $24,281       $27,590       $17,331
Provision for loan losses                8,000           2,600        23,650        15,500
Loans charged off:
  Real estate mortgage:
    Residential                              -            (140)         (536)         (361)
    Commercial                            (305)              -          (450)          (19)
  Consumer:
    Home equity lines                   (1,756)         (1,004)       (5,224)       (1,952)
    Home equity loans                     (339)             (8)         (562)         (258)
    Auto indirect                         (855)         (1,014)       (2,148)       (2,186)
    Other consumer                        (346)           (239)         (864)         (818)
  Commercial                            (1,488)           (142)       (2,546)         (531)
  Construction:
    Residential                         (2,293)            (31)       (5,361)       (3,014)
    Commercial                             (89)              -           (89)            -
                                      -------------------------------------------------------
Total loans charged off                 (7,471)         (2,578)      (17,780)       (9,139)
  Recoveries of previously
    charged-off loans:
    Real estate mortgage:
      Residential                              3             -             3             -
      Commercial                              17            15            48            43
    Consumer:
      Home equity lines                       87            12            96            12
      Home equity loans                        -             -             -             -
      Auto indirect                          107           104           367           295
      Other consumer                         170           146           521           520
    Commercial                                14             8            52            26
    Construction:
      Residential                              -             -             4             -
      Commercial                               -             -             -             -
                                      ------------------------------------------------------
Total recoveries of
       previously charged off loans          398           285         1,091           896
                                      ------------------------------------------------------
         Net charge-offs                  (7,073)       (2,293)      (16,689)       (8,243)
                                      ------------------------------------------------------
Balance at end of period                 $34,551       $24,588       $34,551       $24,588
                                      ======================================================
Reserve for unfunded commitments:
Balance at beginning of period          $3,140        $3,465          $2,565        $2,090
Provision for losses -
  unfunded commitments                     500          (100)          1,075         1,275
                                      ------------------------------------------------------
Balance at end of period                $3,640        $3,365          $3,640        $3,365
                                      ======================================================
Balance at end of period:
Allowance for loan losses                                            $34,551       $24,588
Reserve for unfunded commitments                                       3,640         3,365
                                                                     -----------------------
Allowance for losses                                                 $38,191       $27,953
                                                                     =======================
As a percentage of total loans:
Allowance for loan losses                                              2.25%          1.57%
Reserve for unfunded commitments                                       0.24%          0.22%
                                                                     ----------------------
Allowance for losses                                                   2.49%          1.79%
                                                                      =====================
11
Loans  classified as nonaccrual  were classified as impaired and are included in
the recorded  balance of impaired loans.  The Company's  recorded  investment in
impaired loans was as follows (dollars in thousands):
September 30,     December 31,     September 30,
                                                   2009              2008             2008
                                               ------------------------------------------------
Impaired loans with no allocated allowance       $31,526           $14,813           $12,526
Impaired loans with allocated allowance           14,273            12,525             4,141
                                               ------------------------------------------------
Total impaired loans                             $45,799           $27,338           $16,667
                                               ------------------------------------------------
Allowance for loan losses
     allocated to impaired loans                  $5,086            $5,430            $1,738
                                               ================================================
The valuation allowance allocated to impaired loans is included in the allowance
for loan losses shown above. The average  recorded  investment in impaired loans
was  $43.6  million  and $36.6  million  for the  three  and nine  months  ended
September  30, 2009 and $15.7  million and $12.1  million for the three and nine
months ended  September  30, 2008.  The Company  recognized  interest  income on
impaired  loans of $0.6  million and $1.2  million for the three and nine months
ended  September  30, 2009 and $0.5  million and $0.9  million for the three and
nine months ended September 30, 2008.

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.  MSRs arise from residential  mortgage loans that the
Company  originates  and sells,  but retains the right to service.  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 the
Company's MSRs, which  management  believes 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.

                                       12
The following tables summarize the activity in, and the main assumptions used to
determine the fair value of mortgage  servicing rights for the periods indicated
(dollars in thousands):

                                        Nine months ended September 30,
                                        -------------------------------
                                                2009         2008
                                        -------------------------------
Mortgage servicing rights:
Balance at beginning of period                $2,972        $4,088
Additions                                      1,378           621
Change in fair value                            (317)         (743)
                                        -------------------------------
Balance at end of period                      $4,033        $3,966
                                        ===============================
Servicing fees received                         $834          $767
Balance of loans serviced at:
     Beginning of period                    $431,195      $406,743
     End of period                          $492,830      $425,783
Weighted-average prepayment speed (CPR)         17.1%         11.2%
Discount rate                                    9.0%         13.0%

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

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

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

Goodwill and Other Intangible Assets
Goodwill  represents  the  excess  of costs  over  fair  value of 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 September
30, 2009 and December 31, 2008.

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

                                       13
The following  table  summarizes  the Company's  core deposit  intangibles as of
September 30, 2009 and December 31, 2008.

                              December 31,                         September 30,
 (Dollars in Thousands)           2008      Additions  Reductions       2009
                              --------------------------------------------------
 Core deposit intangibles     $3,365          -            -          $3,365
 Accumulated amortization     (2,712)         -        ($264)         (2,976)
                              --------------------------------------------------
 Core deposit intangibles, net  $653          -        ($264)           $389
                              ==================================================

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                   -

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.  No valuation  allowance  was recorded  against
deferred tax assets at September 30, 2009 as management believes that it is more
likely than not that all of the  deferred  tax assets  will be realized  because
they were supported by recoverable taxes paid in prior years.

                                       14
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 September 30, 2009:
Currently     Currently Not     Total
(dollars in thousands except exercise price)         Exercisable     Exercisable   Outstanding
Number of options                                    1,180,438         186,150      1,366,588
Weighted average exercise price                         $13.89          $19.95         $14.71
Intrinsic value                                         $2,964              $0         $2,964
Weighted average remaining contractual term (yrs.)        1.99            8.01           2.81
The  options  for  186,150  shares  that  are not  currently  exercisable  as of
September 30, 2009 are expected to vest, on a  weighted-average  basis, over the
next 3.01  years,  and the  Company  is  expected  to  recognize  $1,275,000  of
compensation costs related to these options as they vest.

Earnings Per Share
Basic  earnings per share  represent  income  available  to common  shareholders
divided by the  weighted-average  number of common shares outstanding during the
period.  Diluted earnings per share reflect  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.
Earnings per share have been computed based on the following:
Three months ended         Nine months ended
                                                          September 30,             September 30,
                                                   -------------------------    -----------------------
                                                       2009          2008         2009         2008
                                                   -------------------------    -----------------------
(in thousands)
Net income                                          $2,255        $6,235         $7,649      $12,557
Average number of common shares outstanding         15,787        15,745         15,782       15,777
Effect of dilutive stock options                       229           206            229          245
Average number of common shares outstanding        -------------------------    ----------------------
   used to calculate diluted earnings per share     16,016        15,951         16,011       16,022
                                                   =========================    ======================
There were 552,870 and 603,080 options  excluded from the computation of diluted
earnings  per share for the three month  periods  ended  September  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       Nine months ended
                                                     September 30,           September 30,
                                               ----------------------    --------------------
                                                  2009         2008        2009         2008
(in thousands)                                 ----------------------    --------------------
Unrealized holding gains (losses) on
   available-for-sale securities                $2,781         $906       $3,240     ($1,558)
Tax effect                                      (1,169)        (381)      (1,362)        655
                                               ---------------------      -------------------
Unrealized holding gains (losses) on
   available-for-sale securities, net of tax    $1,612         $525       $1,878       ($903)
                                               =====================      ===================
15
The components of accumulated  other  comprehensive  income (loss),  included in
shareholders' equity, are as follows:

                                                     September 30,  December 31,
                                                          2009            2008
                                                     ---------------------------
                                                             (in thousands)
Net unrealized gains on available-for-sale securities   $9,371           $6,131
Tax effect                                              (3,940)          (2,578)
                                                     ---------------------------
  Unrealized holding gains on
    available-for-sale securities, net of tax            5,431            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                  $3,934           $2,056
                                                     ===========================
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 ended    Nine months ended
                                                         September 30,         September 30,
                                                    --------------------   ------------------
                                                      2009      2008         2009    2008
(in thousands)                                       -------------------   ------------------
Net pension cost included the following components:
Service cost-benefits earned during the period        $99       $138        $297     $416
Interest cost on projected benefit obligation         174        166         522      498
Amortization of net obligation at transition            -          1           -        1
Amortization of prior service cost                     38         45         114      135
Recognized net actuarial loss                          25         37          75      111
                                                     ---------------------------------------
Net periodic pension cost                            $336       $387      $1,008   $1,161
                                                     =======================================
During  the  nine  months  ended  September  30,  2009  and  2008,  the  Company
contributed  and paid out as benefits  $562,000 and $453,000,  respectively,  to
participants under the plans. For the year ending December 31, 2009, the Company
expects to contribute and pay out as benefits $737,000 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.

                                       16
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.

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.  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 September 30, 2009, substantially all of the total
impaired  loans  were  evaluated  based  on the fair  value  of the  collateral.
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 September 30, 2009          Total   Level 1     Level 2    Level 3
Securities available-for-sale          $230,962         -    $230,962          -
Mortgage servicing rights                 4,033         -           -     $4,033
                                       -----------------------------------------
Total assets measured at fair value    $234,995         -    $230,962     $4,033
                                       =========================================

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

Fair value at September 30, 2009          Total   Level 1    Level 2     Level 3
Impaired loans                           $45,865        -          -     $45,865
                                        ----------------------------------------
Total assets measured at fair value      $45,865        -          -     $45,865
                                        ========================================

                                       17
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.

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.

                                       18
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:
September 30, 2009          December 31, 2008
                                            ------------------------    --------------------------
                                             Carrying        Fair         Carrying       Fair
                                              Amount         Value         Amount        Value
  (in thousands)                            ------------------------     ------------------------
Financial assets:
  Cash and due from banks                     $48,549       $48,549       $64,375       $64,375
  Cash at Federal Reserve and other banks     186,021       186,021        21,980        21,980
  Securities available-for-sale               230,962       230,962       266,561       266,561
  Federal Home Loan Bank stock, at cost         9,274         9,274         9,235         9,235
  Loans, net                                1,496,661     1,544,577     1,563,259     1,623,697
  Cash value of life insurance                 47,635        47,635        46,815        46,815
  Accrued interest receivable                   7,666         7,666         7,935         7,935
Financial liabilities:
  Deposits                                  1,751,895     1,713,162     1,669,270     1,646,561
  Accrued interest payable                      4,136         4,136         6,146         6,146
  Federal funds purchased                           -             -             -             -
  Other borrowings                             66,197        71,292       102,005       101,681
  Junior subordinated debt                     41,238        16,083        41,238        21,856

                                             Contract        Fair        Contract        Fair
Off-balance sheet:                            Amount         Value        Amount         Value
                                             -----------------------    -----------------------
 Commitments                                 $584,117         $5,841     $637,940        $6,379
 Standby letters of credit                      7,219             72        5,425            54
 Overdraft privilege commitments               35,464            355       35,883           359
Subsequent Events
The  Company has  evaluated  events  subsequent  to the  balance  sheet  through
November  9,  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
The  Financial   Accounting   Standards  Board's  (FASB)  Accounting   Standards
Codification  (ASC)  became  effective  on July 1, 2009.  At that date,  the ASC
became FASB's  officially  recognized  source of  authoritative  U.S.  generally
accepted  accounting  principles  (GAAP) applicable to all public and non-public
non-governmental  entities,  superseding  existing FASB,  American  Institute of
Certified  Public  Accountants  (AICPA),  Emerging  Issues Task Force (EITF) and
related  literature.  Rules  and  interpretive  releases  of the SEC  under  the
authority of federal  securities laws are also sources of authoritative GAAP for
SEC    registrants.    All   other    accounting    literature   is   considered
non-authoritative.  The switch to the ASC  affects the away  companies  refer to
U.S. GAAP in financial  statements and accounting  policies.  Citing  particular
content in the ASC involves  specifying  the unique  numeric path to the content
through the Topic, Subtopic, Section and Paragraph structure.

FASB ASC Topic 260,  "Earnings  Per  Share." On  January  1, 2009,  the  Company
adopted  new  authoritative  accounting  guidance  under  FASB  ASC  Topic  260,
"Earnings Per Share," which  provides that unvested  share-based  payment awards
that contain nonforfeitable rights to dividends or dividend equivalents (whether
paid or  unpaid)  are  participating  securities  and shall be  included  in the
computation of earnings per share pursuant to the two-class method.  Adoption of
the  new  guidance  did  not  significantly   impact  the  Company's   financial
statements.

FASB  ASC  Topic  320,   "Investments  -  Debt  and  Equity   Securities."   New
authoritative  accounting guidance under ASC Topic 320,  "Investments - Debt and
Equity  Securities,"  (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  ASC  Topic  320,  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 the new authoritative  accounting guidance
under ASC Topic  320  during  the first  quarter  of 2009.  Adoption  of the new
guidance did not significantly impact the Company's financial statements.

                                       19
FASB ASC Topic 715,  "Compensation  - Retirement  Benefits."  New  authoritative
accounting guidance under ASC Topic 715,  "Compensation - Retirement  Benefits,"
provides  guidance  related to an  employer's  disclosures  about plan assets of
defined benefit pension or other post-retirement  benefit plans. Under ASC Topic
715,   disclosures  should  provide  users  of  financial   statements  with  an
understanding of how investment  allocation decisions are made, the factors that
are pertinent to an  understanding  of investment  policies and strategies,  the
major  categories of plan assets,  the inputs and valuation  techniques  used to
measure  the fair value of plan  assets,  the effect of fair value  measurements
using significant  unobservable  inputs on changes in plan assets for the period
and  significant  concentrations  of risk within plan  assets.  The  disclosures
required by ASC Topic 715 will be included in the Company's financial statements
beginning with the financial statements for the year-ended December 31, 2009.

FASB  ASC  Topic  805,   "Business   Combinations."  On  January  1,  2009,  new
authoritative  accounting guidance under ASC Topic 805, "Business Combinations,"
became applicable to the Company's accounting for business  combinations closing
on or after January 1, 2009. ASC Topic 805 applies to all transactions and other
events in which one entity  obtains  control over one or more other  businesses.
ASC Topic 805 requires an acquirer,  upon initially obtaining control of another
entity, to recognize the assets, liabilities and any non-controlling interest in
the acquiree at fair value as of the acquisition date. Contingent  consideration
is  required  to be  recognized  and  measured  at  fair  value  on the  date of
acquisition  rather  than at a later date when the amount of that  consideration
may be determinable beyond a reasonable doubt. This fair value approach replaces
the cost-allocation  process required under previous accounting guidance whereby
the cost of an acquisition  was allocated to the individual  assets acquired and
liabilities  assumed based on their estimated fair value. ASC Topic 805 requires
acquirers  to  expense   acquisition-related   costs  as  incurred  rather  than
allocating  such costs to the assets acquired and  liabilities  assumed,  as was
previously  the case  under  prior  accounting  guidance.  Assets  acquired  and
liabilities assumed in a business  combination that arise from contingencies are
to be  recognized at fair value if fair value can be  reasonably  estimated.  If
fair value of such an asset or liability  cannot be  reasonably  estimated,  the
asset or liability  would  generally be recognized in accordance  with ASC Topic
450,  "Contingencies."  Under ASC Topic 805, the  requirements of ASC Topic 420,
"Exit or Disposal Cost Obligations," would have to be met in order to accrue for
a restructuring plan in purchase accounting.  Pre-acquisition  contingencies are
to be recognized at fair value, unless it is a non-contractual  contingency that
is not likely to  materialize,  in which case,  nothing  should be recognized in
purchase  accounting  and,  instead,  that  contingency  would be subject to the
probable and estimable recognition criteria of ASC Topic 450, "Contingencies."

FASB ASC Topic 810, "Consolidation." New authoritative accounting guidance under
ASC Topic 810,  "Consolidation,"  amended prior guidance to establish accounting
and reporting standards for the non-controlling interest in a subsidiary and for
the  deconsolidation  of a  subsidiary.  Under ASC Topic 810, a  non-controlling
interest in a subsidiary,  which is sometimes  referred to as minority interest,
is an ownership interest in the consolidated entity that should be reported as a
component  of equity  in the  consolidated  financial  statements.  Among  other
requirements,  ASC Topic 810 requires  consolidated net income to be reported at
amounts  that  include  the  amounts  attributable  to both the  parent  and the
non-controlling  interest.  It  also  requires  disclosure,  on the  face of the
consolidated  income  statement,  of the  amounts  of  consolidated  net  income
attributable  to the  parent  and  to  the  non-controlling  interest.  The  new
authoritative  accounting  guidance under ASC Topic 810 became effective for the
Company  on  January  1,  2009  and did not  have a  significant  impact  on the
Company's financial statements.

Further new authoritative  accounting  guidance under ASC Topic 810 amends prior
guidance   to  change  how  a  company   determines   when  an  entity  that  is
insufficiently  capitalized  or is not  controlled  through  voting (or  similar
rights)  should be  consolidated.  The  determination  of  whether a company  is
required to consolidate  an entity is based on, among other things,  an entity's
purpose  and design and a  company's  ability  to direct the  activities  of the
entity that most significantly impact the entity's economic performance. The new
authoritative  accounting  guidance  requires  additional  disclosures about the
reporting  entity's   involvement  with   variable-interest   entities  and  any
significant  changes in risk  exposure  due to that  involvement  as well as its
affect on the entity's financial  statements.  The new authoritative  accounting
guidance  under  ASC  Topic  810 will be  effective  January  1, 2010 and is not
expected to have a significant impact on the Company's financial statements.

                                       20
FASB ASC Topic 815,  "Derivatives  and  Hedging." New  authoritative  accounting
guidance under ASC Topic 815,  "Derivatives  and Hedging," amends prior guidance
to amend and expand the  disclosure  requirements  for  derivatives  and hedging
activities 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 ASC Topic 815, 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,  the new  authoritative
accounting  guidance  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.  The  new
authoritative  accounting  guidance under ASC Topic 815 became effective for the
Company  on  January  1,  2009  and did not  have a  significant  impact  on the
Company's financial statements.

FASB ASC Topic 820, "Fair Value Measurements and Disclosures." New authoritative
accounting   guidance  under  ASC  Topic  820,  "Fair  Value   Measurements  and
Disclosures,"  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. ASC Topic 820 requires an
entity to base its conclusion about whether a transaction was not orderly on the
weight of the evidence.  The new accounting  guidance  amended prior guidance to
expand   certain   disclosure   requirements.   The  Company   adopted  the  new
authoritative  accounting  guidance under ASC Topic 820 during the first quarter
of 2009. Adoption of the new guidance did not significantly impact the Company's
financial statements.

Further new authoritative  accounting guidance (Accounting  Standards Update No.
2009-5) under ASC Topic 820 provides  guidance for measuring the fair value of a
liability in  circumstances  in which a quoted price in an active market for the
identical liability is not available.  In such instances,  a reporting entity is
required to measure fair value utilizing a valuation technique that uses (i) the
quoted price of the  identical  liability  when traded as an asset,  (ii) quoted
prices for similar  liabilities or similar liabilities when traded as assets, or
(iii)  another  valuation   technique  that  is  consistent  with  the  existing
principles of ASC Topic 820, such as an income approach or market approach.  The
new  authoritative  accounting  guidance also clarifies that when estimating the
fair value of a  liability,  a  reporting  entity is not  required  to include a
separate  input or  adjustment  to other inputs  relating to the  existence of a
restriction  that  prevents  the  transfer of the  liability.  The  forgoing new
authoritative  accounting guidance under ASC Topic 820 will be effective for the
Company's financial  statements beginning October 1, 2009 and is not expected to
have a significant impact on the Company's financial statements.

FASB  ASC  Topic  825  "Financial  Instruments."  New  authoritative  accounting
guidance  under ASC Topic 825,  "Financial  Instruments,"  requires an entity to
provide  disclosures  about the fair value of financial  instruments  in interim
financial  information and amends prior guidance to require those disclosures in
summarized financial information at interim reporting periods.

FASB ASC Topic 855, "Subsequent  Events." New authoritative  accounting guidance
under ASC Topic 855,  "Subsequent  Events,"  establishes  general  standards  of
accounting  for and disclosure of events that occur after the balance sheet date
but before financial  statements are issued or available to be issued. ASC Topic
855 defines (i) the period after the balance sheet date during which a reporting
entity's  management  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,  and (iii)
the disclosures an entity should make about events or transactions that occurred
after the balance sheet date. The new  authoritative  accounting  guidance under
ASC Topic 855  became  effective  for the  Company's  financial  statements  for
periods ending after June 15, 2009 and did not have a significant  impact on the
Company's financial statements.

                                       21
FASB ASC Topic 860,  "Transfers and  Servicing."  New  authoritative  accounting
guidance under ASC Topic 860, "Transfers and Servicing," amends prior accounting
guidance to enhance  reporting  about transfers of financial  assets,  including
securitizations,  and where  companies  have  continuing  exposure  to the risks
related  to  transferred  financial  assets.  The new  authoritative  accounting
guidance  eliminates  the concept of a "qualifying  special-purpose  entity" and
changes  the  requirements  for   derecognizing   financial   assets.   The  new
authoritative accounting guidance also requires additional disclosures about all
continuing  involvements with transferred financial assets including information
about gains and losses  resulting  from  transfers  during the  period.  The new
authoritative  accounting guidance under ASC Topic 860 will be effective January
1,  2010 and is not  expected  to have a  significant  impact  on the  Company's
financial statements.
TRICO BANCSHARES
                                Financial Summary
               (In thousands, except per share amounts; unaudited)

                                            Three months ended         Nine months ended
                                                September 30,               September 30,
                                         ------------------------------------------------
                                            2009         2008        2009         2008
                                         ------------------------------------------------
Net Interest Income (FTE)                $23,257      $22,889     $69,696      $67,464
Provision for loan losses                  8,000        2,600      23,650       15,500
Noninterest income                         7,793        6,792      22,404       20,922
Noninterest expense                       19,377       16,589      55,922       52,006
Provision for income taxes (FTE)           1,418        4,257       4,879        8,323
                                         ------------------------------------------------
Net income                                $2,255       $6,235      $7,649      $12,557
                                         ===============================================
Earnings per share:
   Basic                                   $0.14        $0.40       $0.48        $0.80
   Diluted                                 $0.14        $0.39       $0.48        $0.78
Per share:
   Dividends paid                          $0.13        $0.13       $0.39        $0.39
   Book value at period end               $12.79       $12.14
   Tangible book value at period end      $11.78       $11.10

Average common shares outstanding         15,787        15,745     15,782       15,777
Average diluted shares outstanding        16,016        15,952     16,011       16,022
Shares outstanding at period end          15,788       15,745
At period end:
   Loans, net                         $1,496,661   $1,538,648
   Total assets                        2,095,666    1,976,467
   Total deposits                      1,751,895    1,563,841
   Other borrowings                       66,197       79,873
   Junior subordinated debt               41,238       41,238
   Shareholders' equity                  201,937      191,102
Financial Ratios:
During the period (annualized):
   Return on assets                         0.43%        1.26%       0.49%        0.84%
   Return on equity                         4.43%       13.04%       5.02%        8.71%
   Net interest margin(1)                   4.72%        5.07%       4.81%        4.96%
   Net loan charge-offs to average loans    1.84%        0.59%       1.43%        0.71%
   Efficiency ratio(1)                     62.41%       55.89%      60.72%       58.84%
At Period End:
   Equity to assets                         9.64%        9.67%
   Total capital to risk assets            13.17%       12.38%
   Allowance for losses to loans(2)         2.49%        1.79%
(1)  Fully taxable equivalent (FTE)
(2)  Allowance  for losses  includes  allowance  for loan losses and reserve for
     unfunded commitments.

                                       22
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 Nine
months ended

                                      Three months ended      Nine months ended
                                         September 30,          September 30,
                                   ---------------------------------------------
                                       2009       2008         2009       2008
                                   ---------------------------------------------
Net Interest Income (FTE)           $23,257      $22,889      $69,696    $67,464
Provision for loan losses             8,000        2,600       23,650     15,500
Noninterest income                    7,793        6,792       22,404     20,922
Noninterest expense                  19,377       16,589       55,922     52,006
Provision for income taxes (FTE)      1,418        4,257        4,879      8,323
                                    --------------------------------------------
Net income                           $2,255       $6,235       $7,649    $12,557
                                    ============================================

The Company had quarterly  earnings of  $2,255,000,  or $0.14 per diluted share,
for the three months ended  September  30, 2009.  This  represents a decrease of
$3,980,000  (63.8%) when compared  with  earnings of $6,235,000  for the quarter
ended  September  30, 2008.  Diluted  earnings  per share for the quarter  ended
September 30, 2009  decreased  64.1% to $0.14  compared to $0.39 for the quarter
ended September 30, 2008.

The Company reported earnings of $7,649,000, or $0.48 per diluted share, for the
nine months ended  September  30, 2009.  These  results  represent a decrease of
$4,908,000  (39.1%) when  compared  with  earnings of  $12,557,000  for the nine
months ended September 30, 2008.  Diluted earnings per share for the nine months
ended September 30, 2009 decreased 38.5% to $0.48 compared to $0.78 for the nine
months ended September 30, 2008.

                                       23
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      Nine months ended
                                       September 30,          September 30,
                                 -----------------------------------------------
                                      2009       2008         2009       2008
                                 -----------------------------------------------
Interest income                     $27,889     $29,971     $85,203     $91,433
Interest expense                     (4,784)     (7,252)    (15,954)    (24,488)
FTE adjustment                          152         170         447         519
                                 -----------------------------------------------
  Net interest income (FTE)         $23,257     $22,889     $69,696     $67,464
                                 ===============================================
Average interest-earning assets  $1,969,043  $1,806,010  $1,930,147  $1,814,103

Net interest margin (FTE)              4.72%       5.07%       4.81%       4.96%

Net interest  income (FTE) during the third quarter of 2009  increased  $368,000
(1.6%) from the same period in 2008 to $23,257,000. The increase in net interest
income (FTE) was due to a $163,033,000  (9.0%)  increase in average  balances of
interest-earning  assets to $1,969,043,000  that was partially offset by a 0.35%
decrease in net interest  margin (FTE) to 4.72% from the quarter ended September
30, 2008.

Net  interest  income  (FTE)  during  the first  nine  months of 2009  increased
$2,232,000  (3.3%) from the same period in 2008 to $69,696,000.  The increase in
net interest  income (FTE) was due to a $116,044,000  (6.4%) increase in average
balances of interest-earning  assets to $1,930,147,000 that was partially offset
by a 0.15%  decrease in net  interest  margin (FTE) to 4.81% from the nine month
period ended September 30, 2008.

Interest and Fee Income
Interest and fee income (FTE) for the third quarter of 2009 decreased $2,100,000
(7.0%) from the third quarter of 2008.  The decrease was due to a 0.98% decrease
in the yield on  average  interest-earning  assets to 5.70%  that was  partially
offset by a $163,033,000 (9.0%) increase in average  interest-earning  assets to
$1,969,043,000.  The growth in average interest-earning assets was mainly due to
a  $161,347,000  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 0.44% decrease in yield on loans to
6.48% and the large increase in interest-bearing  cash balances that earned only
0.25% during the quarter.

Interest  and fee income  (FTE) for the nine  months  ended  September  30, 2009
decreased  $6,302,000  (6.9%) from the same period of 2008. The decrease was due
to a 0.84%  decrease  in the yield on average  interest-earning  assets to 5.92%
that  was  partially  offset  by  a  $116,044,000  (6.4%)  increase  in  average
interest-earning assets to $1,930,147,000. The growth in interest-earning assets
was  primarily   due  to  a   $105,817,000   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 0.55% decrease
in yield on loans to 6.49%  and the  large  increase  in  interest-bearing  cash
balances that earned only 0.22% during the nine months ended September 30, 2009.
The  decrease in loan yields from the nine months ended  September  30, 2008 was
mainly due to a 4.00%  decrease in the prime lending rate from 7.25% at December
31, 2007 to 3.25% at December 31, 2008.

                                       24
Interest Expense
Interest expense decreased $2,468,000 (34.0%) to $4,784,000 in the third quarter
of  2009  compared  to the  third  quarter  of  2008.  The  average  balance  of
interest-bearing  liabilities  increased $99,474,000 (7.1%) to $1,507,797,000 in
the third quarter of 2009 compared to the third quarter of 2008. The increase in
the average  balance of  interest-bearing  liabilities  was due  primarily to an
increase in interest-bearing deposits of $194,326,000 (16.2%) that was partially
offset by a decrease of $94,582,000  (57.2%) in the average  balances of Federal
funds purchased and other borrowings from the third quarter of 2008. The average
rate paid on  interest-bearing  liabilities  in the quarter ended  September 30,
2009 decreased  0.79% to 1.27% compared to the quarter ended  September 30, 2008
as a result of lower  market  rates  for  almost  all types of  interest-bearing
liabilities.

Interest expense decreased $8,534,000 (34.8%) to $15,954,000 for the nine months
ended  September  30, 2009  compared to  $24,488,000  for the nine months  ended
September  30,  2008.  The  average  balance  of  interest-bearing   liabilities
increased  $69,146,000  (4.9%)  to  $1,479,760,000  for the  nine  months  ended
September  30, 2009 compared to the nine months ended  September  30, 2008.  The
increase  in  the  average  balance  of  interest-bearing  liabilities  was  due
primarily to an increase in  interest-bearing  deposits of $191,146,000  (16.3%)
that was partially  offset by a decrease of $122,000,000  (62.2%) in the average
balances of Federal funds  purchased and other  borrowings  from the nine months
ended September 30, 2008. The average rate paid on interest-bearing  liabilities
in the nine month  period  ended  September  30, 2009  decreased  0.87% to 1.44%
compared to the nine months ended September 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      Nine months ended
                                       September 30,          September 30,
                                  ----------------------------------------------
                                      2009       2008         2009       2008
                                  ----------------------------------------------
Yield on interest-earning assets     5.70%       6.68%        5.92%      6.76%
Rate paid on interest-bearing
  Liabilities                        1.27%       2.06%        1.44%      2.31%
                                  ----------------------------------------------
     Net interest spread             4.43%       4.62%        4.48%      4.45%
Impact of all other net
  noninterest-bearing funds          0.29%       0.45%        0.33%      0.51%
                                  ----------------------------------------------
     Net interest margin             4.72%       5.07%        4.81%      4.96%
                                  ==============================================

Net  interest  margin for the three months ended  September  30, 2009  decreased
0.35%  compared to the three months ended  September 30, 2008.  This decrease in
net  interest  margin was mainly  due to a 0.16%  decrease  in the impact of net
noninterest-bearing  funds  to 0.29%  and a  decrease  of 0.19% in net  interest
spread  compared to the three months ended September 30, 2008. The average yield
on  interest-earning  assets  decreased  0.98%  while the  average  rate paid on
interest-bearing  liabilities  decreased  0.79%  from  the  three  months  ended
September 30, 2008.

Net interest margin for the nine months ended September 30, 2009 decreased 0.15%
compared to the nine months  ended  September  30,  2008.  This  decrease in net
interest  margin  was  mainly  due to a  0.18%  decrease  in the  impact  of net
noninterest-bearing  funds  to  0.33%  offset  by an  increase  of  0.03% in net
interest  spread  compared to the nine months  ended  September  30,  2008.  The
average yield on interest-earning  assets decreased 0.84% while the average rate
paid on interest-bearing  liabilities decreased 0.87% from the nine months ended
September 30, 2008.

                                       25
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
                                            -------------------------------------------------------------------
                                                   September 30, 2009                 September 30, 2008
                                            -------------------------------       -----------------------------
                                                          Interest    Rates                  Interest    Rates
                                               Average    Income/    Earned       Average    Income/     Earned
                                               Balance    Expense    Paid         Balance    Expense     Paid
                                            -------------------------------      ------------------------------
Assets:
Loans                                        $1,538,239    $24,909    6.48%     $1,549,009   $26,790     6.92%
Investment securities - taxable                 249,254      2,635    4.23%        232,419     2,894     4.98%
Investment securities - nontaxable               20,128        396    7.87%         24,507       457     7.46%
Cash at Federal Reserve and other banks         161,422        101    0.25%             75         -     1.19%
                                            -------------------------------     --------------------------------
Total interest-earning assets                 1,969,043     28,041    5.70%      1,806,010    30,141     6.68%
                                                           -------                            ------
Other assets                                    130,010                            168,382
                                             ----------                         ----------
Total assets                                 $2,099,053                         $1,974,392
                                             ==========                         ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits               $305,767        $565    0.74%       $226,843      $239     0.42%
Savings deposits                                456,839         752    0.66%        376,594     1,041     1.11%
Time deposits                                   632,922       2,869    1.81%        597,765     4,496     3.01%
Federal funds purchased                               -           -       -          84,851       430     2.03%
Other borrowings                                 71,031         250    1.41%         81,032       473     2.33%
Junior subordinated debt                         41,238         348    3.38%         41,238       573     5.56%
                                             --------------------------------   ---------------------------------
Total interest-bearing liabilities            1,507,797       4,784    1.27%      1,408,323     7,252     2.06%
                                                              -----                             -----
Noninterest-bearing deposits                    348,808                             344,233
Other liabilities                                38,995                              30,625
Shareholders' equity                            203,452                             191,211
                                             ----------                          -----------
Total liabilities and shareholders'equity    $2,099,052                          $1,974,392
                                             ==========                          ===========
Net interest spread(1)                                                 4.43%                              4.62%
Net interest income and interest margin(2)                  $23,257    4.72%                  $22,889     5.07%
                                                            ===============                   =================
(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
For the nine months ended
                                            -------------------------------------------------------------------
                                                   September 30, 2009                 September 30, 2008
                                            --------------------------------    -------------------------------
                                                          Interest   Rates                   Interest    Rates
                                               Average    Income/    Earned       Average    Income/     Earned
                                               Balance    Expense    Paid         Balance    Expense     Paid
                                            --------------------------------    --------------------------------
Assets:
Loans                                        $1,553,372     $75,640    6.49%    $1,543,571   $81,531     7.04%
Investment securities - taxable                 249,059       8,614    4.61%       244,833     8,989     4.90%
Investment securities - nontaxable               21,706       1,218    7.48%        25,506     1,429     7.47%
Cash at Federal Reserve and other banks         106,010         178    0.22%           193         3     2.07%
                                             -------------------------------    --------------------------------
Total interest-earning assets                 1,930,147      85,650    5.92%     1,814,103    91,952     6.76%
                                                            -------                          -------
Other assets                                    149,003                            169,092
                                             ----------                         -----------
Total assets                                 $2,079,150                         $1,983,195
                                             ==========                         ==========
Liabilities and shareholders' equity:
Interest-bearing demand deposits               $282,688      $1,351    0.64%      $220,366      $460     0.28%
Savings deposits                                430,594       2,404    0.74%       385,624     3,715     1.28%
Time deposits                                   650,943      10,411    2.13%       567,089    14,428     3.39%
Federal funds purchased                               -           -       -        106,109     1,953     2.45%
Other borrowings                                 74,297         604    1.08%        90,188     2,060     3.05%
Junior subordinated debt                         41,238       1,184    3.83%        41,238     1,872     6.05%
                                             -------------------------------    --------------------------------
Total interest-bearing liabilities            1,479,760      15,954    1.44%     1,410,614    24,488     2.31%
                                                             ------                           ------
Noninterest-bearing deposits                    358,718                            348,483
Other liabilities                                37,612                             31,882
Shareholders' equity                            203,060                            192,216
                                             ----------                         -----------
Total liabilities and shareholders' equity   $2,079,150                         $1,983,195
                                             ==========                         ===========
Net interest spread(1)                                                 4.48%                             4.45%
Net interest income and interest margin(2)                  $69,696    4.81%                 $67,464     4.96%
                                                            ================                 ===================
(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.

                                       27
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 September 30, 2009
                                                 compared with three months
                                                  ended September 30, 2008
                                           -------------------------------------
                                               Volume        Rate     Total
                                           -------------------------------------
Increase (decrease) in interest income:
Loans                                       ($186)       ($1,695)       ($1,881)
Investment securities                         128           (448)          (320)
Cash at Federal Reserve and other banks       480           (379)           101
                                           -------------------------------------
  Total interest-earning assets               422         (2,522)        (2,100)
                                           -------------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits               83            243            326
Savings deposits                              223           (512)          (289)
Time deposits                                 265         (1,892)        (1,627)
Federal funds purchased                      (431)             1           (430)
Other borrowings                              (58)          (165)          (223)
Junior subordinated debt                        -           (225)          (225)
                                           -------------------------------------
 Total interest-bearing liabilities            82         (2,550)        (2,468)
                                           -------------------------------------
Increase in Net Interest Income              $340            $28           $368
                                           =====================================

                                            Nine months ended September 30, 2009
                                              compared with nine months ended
                                                     September 30, 2008
                                           -------------------------------------
                                              Volume        Rate         Total
                                           -------------------------------------
Increase (decrease) in interest income:
Loans                                        $517        ($6,408)       ($5,891)
Investment securities                         (58)          (528)          (586)
Cash at Federal Reserve and other banks     1,643         (1,468)           175
                                           -------------------------------------
  Total interest-earning assets             2,102         (8,404)        (6,302)
                                           -------------------------------------
Increase (decrease) in interest expense:
Interest-bearing demand deposits              131            760            891
Savings deposits                              432         (1,743)        (1,311)
Time deposits                               2,132         (6,149)        (4,017)
Federal funds purchased                    (1,950)            (3)        (1,953)
Other borrowings                             (364)        (1,092)        (1,456)
Junior subordinated debt                        -           (688)          (688)
                                           -------------------------------------
  Total interest-bearing liabilities          381         (8,915)        (8,534)
                                           -------------------------------------
Increase in Net Interest Income            $1,721           $511         $2,232
                                           =====================================

Provision for Loan Losses

The Company  provided  $8,000,000  for loan losses in the third  quarter of 2009
versus  $7,850,000  in the second  quarter of 2009 and  $2,600,000  in the third
quarter of 2008.  The  allowance  for loan losses  increased  $927,000  from the
second  quarter of 2009.  The  provision  for loan  losses and  increase  in the
allowance  for loan and  lease  losses  during  the third  quarter  of 2009 were
primarily  the result of changes in the  make-up of the loan  portfolio  and the
Bank's loss  factors in reaction to  increased  losses in the  Construction  and
Commercial & Industrial (C&I) loan portfolios.  Management re-evaluates its loss
ratios and  assumptions  quarterly and makes changes as appropriate  based upon,
among other things,  changes in loss rates  experienced,  collateral support for
underlying  loans,  changes and trends in the  economy,  and changes in the loan
mix.

                                       28
In  the  third  quarter  of  2009,  the  Company  recorded  $7,471,000  in  loan
charge-offs  less  $398,000 in  recoveries  resulting in  $7,073,000 of net loan
charge-offs  versus  $2,293,000 of net loan  charge-offs in the third quarter of
2008.  Primary causes of the charges taken in the third quarter of 2009 were net
charge-offs  of $2,382,000 in  construction  loans,  $2,008,000,  in home equity
lines and loans,  $748,000 in auto indirect loans,  and $1,474,000 in C&I loans.
The $2,382,000 in charge-offs in construction loans were primarily the result of
a $1,804,000  charge taken on a land acquisition and development loan in the San
Joaquin Valley of California, a $219,000 charge taken on a land development loan
in the Sacramento  Valley of California,  and a $200,000 charge on a condominium
construction loan in the Sacramento  Valley. In addition,  the Bank took charges
in its C&I  portfolio of $300,000 on a line of credit to a real estate  investor
in the San Joaquin Valley,  $237,000 on a line of credit to a distributor in the
San Joaquin  Valley,  $207,000 to a contractor  in the  Sacramento  Valley,  and
$172,000 to a real estate investor in the Sacramento  Valley.  Generally  losses
are triggered by  non-performance  by the borrower and  calculated  based on any
difference  between  the  current  loan  amount  and the  current  value  of the
underlying  collateral less any estimated costs  associated with the disposition
of the collateral.

The Company  provided  $23,650,000  for loan losses during the nine months ended
September 30, 2009 versus $15,500,000 during the nine months ended September 30,
2008.  In the nine  months  ended  September  30,  2009,  the  Company  recorded
$16,689,000 of net loan charge-offs versus $8,243,000 of net loan charge-offs in
the nine months ended  September  30, 2008.  A total net of  $5,690,000  in home
equity  lines  and  loans  and  $1,881,000  on auto  indirect  loans  have  been
charged-off  during the nine months ended  September  30, 2009.  During the nine
months ended  September 30, 2009,  the Company  increased its allowance for loan
losses by  $6,961,000  from  December  31,  2008 with such  additional  reserves
allocated primarily to consumer loans,  residential real estate and construction
lending.

Noninterest Income
The following  table  summarizes the  components of  noninterest  income for the
periods indicated (dollars in thousands).
Three months ended        Nine months ended
                                                    September 30,             September 30,
                                                -----------------------------------------------
                                                   2009        2008         2009         2008
                                                -----------------------------------------------
Service charges on deposit accounts             $4,207      $4,080      $11,928     $11,881
  ATM fees and interchange revenue                 1,287       1,164        3,607       3,411
  Other service fees                                 567         551        1,662       1,629
  Change in value of mortgage servicing rights      (416)       (571)        (318)       (743)
  Gain on sale of loans                            1,205         341        2,794         915
  Commissions on sale of
    Non-deposit investment products                  380         594        1,361       1,539
  Increase in cash value of life insurance           270         360          820       1,080
  Gain from VISA IPO                                   -           -            -         396
  Other noninterest income                           293         273          550         814
                                                 ----------------------------------------------
  Total noninterest income                        $7,793      $6,792      $22,404     $20,922
                                                 ==============================================
Noninterest  income for the third quarter of 2009 increased  $1,001,000  (14.7%)
from the third quarter of 2008, mainly due to a $864,000 (253%) increase in gain
on sale of loans to $1,205,000. Also contributing to the increase in noninterest
income was a $127,000 (3.1%) increase in service charges on deposit  accounts to
$4,207,000,  a $123,000 (10.6%) increase in ATM fees and interchange  revenue to
$1,287,000,  and a $155,000  (27.1%) increase in the change in value of mortgage
servicing  rights to  ($416,000).  These  increases  were  offset a decrease  of
$214,000  (36.0%) in  commission on sale of  nondeposit  investment  products to
$380,000.  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.

Noninterest  income for the nine  months  ended  September  30,  2009  increased
$1,482,000  (7.1%) to $22,404,000  from the same period in 2008. The increase in
noninterest  income from the nine months ended September 30, 2008 was mainly due
to a $1,879,000  (205%) increase in gain on sale of loans to $2,794,000 that was
partially  offset by a decrease  of  $260,000  (24.1%) in the cash value of life
insurance to $820,000  and a decrease in the gain on VISA IPO of  $396,000.  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 nine
month period ended September 30, 2009.

                                       29
Noninterest Expense
The following  table  summarizes the  components of noninterest  expense for the
periods indicated (dollars in thousands).
Three months ended        Nine months ended
                                                 September 30,             September 30,
                                             -----------------------------------------------
                                                2009        2008         2009         2008
                                             -----------------------------------------------
Base salaries, net of
     deferred loan origination costs          $6,826       $6,331       $20,079     $18,980
  Incentive compensation                         981          675         2,484       2,065
  Benefits and other compensation costs        2,456        2,425         7,558       7,511
                                             -----------------------------------------------
  Total salaries and related benefits         10,263        9,431        30,121       28,556
                                             ===============================================
  Occupancy                                    1,316        1,289         3,820       3,705
  Equipment                                      953        1,017         2,775       2,997
  Data processing and software                   655          600         1,937       1,811
  ATM network charges                            642          506         1,747       1,529
  Advertising and marketing                      558          451         1,470       1,204
  Telecommunications                             428          402         1,193       1,629
  Professional fees                              478          300         1,212       1,302
  Courier service                                189          258           574         796
  Postage                                        258          185           765         683
  Intangible amortization                         65          133           263         389
  Assessments                                    697          118         2,286         283
  Operational losses                              97           81           224         286
  Provisions for losses-unfunded commitments     500         (100)        1,075       1,275
  Other                                        2,278        1,918         6,460       5,561
                                             -----------------------------------------------
  Total other noninterest expense              9,114        7,158        25,801      23,450
                                             -----------------------------------------------
  Total noninterest expense                  $19,377      $16,589       $55,922     $52,006
                                             ===============================================
  Average full time equivalent staff             645          668           635         638
  Noninterest expense to revenue (FTE)         62.41%       55.89%        60.72%      58.84%
Noninterest  expense for the third quarter of 2009 increased  $2,788,000 (16.8%)
compared to the third quarter of 2008.  Salaries and benefits expense  increased
$832,000  (8.8%) to  $10,263,000  mainly  due to  annual  salary  increases  and
increased incentive compensation expense related to increased production of sold
loans. Other noninterest expense increased $1,956,000 (27.3%) primarily due to a
$579,000 (491%) increase in assessments and a $600,000 increase in provision for
losses on unfunded commitments.

Noninterest  expense  for the nine months  ended  September  30, 2009  increased
$3,916,000 (7.5%) compared to the nine months ended September 30, 2008. Salaries
and benefits expense increased  $1,565,000  (5.5%) to $30,121,000  mainly due to
annual salary increases and increased incentive  compensation expense related to
increased   production  of  sold  loans.  Other  noninterest  expense  increased
$2,351,000 (10.0%) primarily due to assessments  increasing $2,003,000 (708%) to
$2,286,000.

Provision for Income Tax
The effective  tax rate for the three months ended  September 30, 2009 was 36.0%
and  reflects a decrease  from 39.6% for the three months  ended  September  30,
2008.  The effective  tax rate for the nine months ended  September 30, 2009 was
36.7% and reflects a decrease from 38.3% for the nine months ended September 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.

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.

                                       30
Consumer loans,  whether  unsecured or secured by real estate,  automobiles,  or
other  personal  property,  are primarily  susceptible  to three primary  risks;
non-payment due to income loss,  over-extension of credit and, when the borrower
is unable to pay, shortfall in collateral value. Typically non-payment is due to
loss of job and will follow general  economic trends in the  marketplace  driven
primarily by rises in the unemployment rate. Loss of collateral value can be due
to market demand  shifts,  damage to collateral  itself or a combination  of the
two.

Problem  consumer  loans are  generally  identified  by  payment  history of the
borrower  (delinquency).  The Bank  manages  its  consumer  loan  portfolios  by
monitoring delinquency and contacting borrowers to encourage repayment,  suggest
modifications  if  appropriate,  and, when continued  scheduled  payments become
unrealistic,  initiate repossession or foreclosure through appropriate channels.
Collateral  values  may  be  determined  by  appraisals  obtained  through  Bank
approved, licensed appraisers, qualified independent third parties, public value
information (blue book values for autos),  sales invoices,  or other appropriate
means.  Appropriate  valuations  are  obtained at  initiation  of the credit and
periodically  (every 3-12 months depending on collateral type) once repayment is
questionable and the loan has been classified.

Commercial real estate loans generally fall into two categories,  owner-occupied
and  non-owner  occupied.  Loans  secured  by owner  occupied  real  estate  are
primarily  susceptible  to changes in the  business  conditions  of the  related
business.  This  may  be  driven  by,  among  other  things,  industry  changes,
geographic business changes,  changes in the individual fortunes of the business
owner,  and general economic  conditions and changes in business  cycles.  These
same risks apply to  commercial  loans  whether  secured by  equipment  or other
personal  property or unsecured.  Losses on loans secured by owner occupied real
estate,  equipment,  or other  personal  property  generally are dictated by the
value of  underlying  collateral at the time of default and  liquidation  of the
collateral.  When  default  is  driven  by issues  related  specifically  to the
business owner,  collateral  values tend to provide better repayment support and
may result in little or no loss.  Alternatively,  when default is driven by more
general economic conditions,  underlying  collateral generally has devalued more
and results in larger losses due to default. Loans secured by non-owner occupied
real  estate  are  primarily  susceptible  to risks  associated  with  swings in
occupancy  or vacancy and related  shifts in lease  rates,  rental rates or room
rates.  Most often these  shifts are a result of changes in general  economic or
market  conditions  or  overbuilding  and  resultant  over-supply.   Losses  are
dependent on value of underlying  collateral at the time of default.  Values are
generally  driven by these same  factors and  influenced  by interest  rates and
required rates of return as well as changes in occupancy costs.

Construction loans, whether owner occupied or non-owner occupied commercial real
estate loans or residential  development  loans, are not only susceptible to the
related  risks  described  above  but the  added  risks of  construction  itself
including cost  over-runs,  mismanagement  of the project,  or lack of demand or
market changes  experienced at time of completion.  Again,  losses are primarily
related to underlying collateral value and changes therein as described above.

Problem  commercial  loans  are  generally  identified  by  periodic  review  of
financial information which may include financial statements,  tax returns, rent
rolls  and  payment  history  of  the  borrower  (delinquency).  Based  on  this
information  the Bank  may  decide  to take any of  several  courses  of  action
including demand for repayment,  additional collateral or guarantors,  and, when
repayment becomes unlikely through Borrower's income and cash flow, repossession
or foreclosure of the underlying collateral.

Collateral  values  may  be  determined  by  appraisals  obtained  through  Bank
approved, licensed appraisers, qualified independent third parties, public value
information (blue book values for autos),  sales invoices,  or other appropriate
means.  Appropriate  valuations  are  obtained at  initiation  of the credit and
periodically  (every 3-12 months depending on collateral type) once repayment is
questionable and the loan has been classified.

Once a loan  becomes  delinquent  and  repayment  becomes  questionable,  a Bank
collection  officer will  address  collateral  shortfalls  with the borrower and
attempt to obtain additional collateral.  If this is not forthcoming and payment
in full is unlikely,  the Bank will estimate its probable  loss,  using a recent
valuation as appropriate to the underlying  collateral  less estimated  costs of
sale, and charge the loan down to the estimated net realizable amount. Depending
on the  length of time  until  ultimate  collection,  the Bank may  revalue  the
underlying collateral and take additional charge-offs as warranted. Revaluations
may occur as often as every 3-12 months  depending on the underlying  collateral
and  volatility  of  values.  Final  charge-offs  or  recoveries  are taken when
collateral  is  liquidated  and actual loss is known.  Unpaid  balances on loans
after or during  collection and  liquidation may also be pursued through lawsuit
and attachment of wages or judgment liens on borrower's other assets.

                                       31
The following is a summary of classified assets on the dates indicated:
At September 30, 2009           At June 30, 2008
                                              --------------------------   ---------------------------
                                                Gross  Guaranteed   Net      Gross  Guaranteed   Net
                                              --------------------------------------------------------
(dollars in thousands
Classified loans:
Real estate mortgage:
     Residential                               $5,046        -     $5,046     $4,036       -   $4,036
     Commercial                                58,266    4,710     53,556     48,320   4,884   43,436
Consumer:
     Home equity lines                         10,455        -     10,455      9,845       -    9,845
     Home equity loans                          1,304        -      1,304        802       -      802
     Auto indirect                              4,527        -      4,527      4,685       -    4,685
     Other consumer                               448        -        448        258       -      258
Commercial                                     11,571      442     11,129      7,823       -    7,823
Construction:
     Residential                                1,205        -      1,205      1,123       -    1,123
     Commercial                                23,235        -     23,235     23,973       -   23,973
                                             ---------------------------------------------------------
Total classified loans                       $116,057   $5,152   $110,905   $100,865  $4,884  $95,981
Other classified assets                         2,372        -      2,372      2,622       -    2,622
                                             ---------------------------------------------------------
Total classified assets                      $118,879   $5,152   $113,277   $103,487  $4,884  $98,603
                                             =========================================================
Allowance for loan losses/classified loans                           31.2%                       35.0%

                                                  At March 31, 2009             At December 31, 2008
                                              --------------------------    --------------------------
(dollars in thousands)                          Gross  Guaranteed   Net      Gross  Guaranteed   Net
Classified loans:                             --------------------------------------------------------
Real estate mortgage:
     Residential                               $4,590        -     $4,590     $3,981       -   $3,981
     Commercial                                41,938    5,055     36,883     27,426   5,225   22,201
Consumer:
     Home equity lines                          6,839        -      6,839      4,144       -    4,144
     Home equity loans                            759        -        759        377       -      377
     Auto indirect                              4,449        -      4,449      3,907       -    3,907
     Other consumer                               231        -        231        257       -      257
Commercial                                      4,379        -      4,379      4,505     154    4,351
Construction:
     Residential                                1,466        -      1,466         45       -       45
     Commercial                                20,112        -     20,112     19,208       -   19,208
                                              --------------------------------------------------------
Total classified loans                        $84,763   $5,055    $79,708    $63,850  $5,379  $58,471
Other classified assets                         2,407        -      2,407      1,185       -    1,185
                                              --------------------------------------------------------
Total classified assets                       $87,170   $5,055    $82,115    $65,035  $5,379  $59,656
                                              ========================================================
Allowance for loan losses/classified loans                           41.1%                       47.2%
Classified  assets,  net of  guarantees  of the U.S.  Government,  including its
agencies and its government-sponsored agencies, increased $53,621,000 (89.9%) to
$113,277,000  at September 30, 2009 from  $59,656,000  at December 31, 2008. The
guarantees noted above are provided by various government agencies including the
United States Department of Agriculture,  Small Business Administration,  Bureau
of Indian Affairs,  Statewide Health Planning  Development,  California  Capital
Financial Development  Corporation,  and Safe Bidco. These guarantees range from
50% to 100% of the loan amount with the  majority at 80% or higher.  We consider
these guarantees when considering the adequacy of the loan loss allowance.

                                       32
Classified  assets,  net of  guarantees  of the U.S.  Government,  including its
agencies and its government-sponsored agencies, increased $14,674,000 (14.9%) to
$113,277,000 at September 30, 2009 compared to $98,603,000 at June 30, 2009. The
$14,674,000  net increase in classified  assets during the third quarter of 2009
was the result of new  classified  loans of  $23,577,000,  advances  on existing
classified  loans of  $2,280,000,  recoveries  on existing  classified  loans of
$398,000,  less  charge-offs on existing  classified  loans of $7,471,000,  less
reductions to existing  classified  loans of $3,860,000,  and less reductions in
OREO of $250,000.  The primary causes of the $23,577,000 in new classified loans
during the third quarter of 2009 were  increases of  $1,493,000  in  residential
real estate,  $10,163,000 in commercial  real estate,  $4,498,000 in home equity
lines and loans,  $1,179,000 in auto loans,  $431,000 in other  consumer  loans,
$5,217,000 in Commercial  (C&I) loans,  and a $594,000  increase in  residential
construction loans.

The  $10,163,000 in new classified  commercial  real estate loans were primarily
made up of a $2,885,000  loan on a commercial  office building in the Sacramento
Valley, a $2,437,000 loan on a medical office building in the Sacramento Valley,
two loans to the same  borrower  totaling  $1,576,000 on two  commercial  retail
buildings in the Sacramento  Valley, a $735,000 loan on agricultural real estate
in the  Sacramento  Valley,  a  $1,007,000  loan on a  mini-storage  facility in
Northern  California,  a $499,000 loan on an office  building in the  Sacramento
Valley,  and a  $403,000  loan on a  manufacturing  facility  in the  Sacramento
Valley.

The $5,217,000 in new classified  commercial  (C&I) loans were primarily made up
of a  $2,240,000  production  loan to a  dairy  in the San  Joaquin  Valley,  an
$807,000 loan to a contractor in the Sacramento  Valley,  a $557,000  production
loan to a dairy in the San  Joaquin  Valley,  a $496,000  loan to a real  estate
investor in the  Sacramento  Valley,  and a $353,000 crop loan in the Sacramento
Valley.

The $594,000 in new  classified  residential  construction  loans were primarily
made  up of two  single  family  residential  (SFR)  construction  loans  in the
Sacramento Valley and two SFR construction loans in Northern California.

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
nine  months  ended  September  30,  2009 and 2008,  if all such  loans had been
current  in  accordance  with  their  original  terms,  totaled  $3,674,000  and
$1,759,000,  respectively.  Interest income  actually  recognized on these loans
during the nine months  ended  September  30, 2009 and 2008 was  $1,186,000  and
$882,000, 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.

                                       33
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.

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  $20,269,000  (70.6%) to $48,979,000  during the first nine
months of 2009.  Nonperforming assets net of guarantees represent 2.34% 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 September 30, 2009           At June 30, 2009
                                              --------------------------   ---------------------------
                                                Gross  Guaranteed   Net      Gross  Guaranteed   Net
                                              --------------------------------------------------------
(dollars in thousands)
Performing nonaccrual loans                   $24,824   $5,031    $19,793    $24,886  $4,884  $19,982
Nonperforming, nonaccrual loans                26,128      121     26,007     21,321       -   21,321
                                              --------------------------------------------------------
   Total nonaccrual loans                      50,952    5,152     45,800     46,187   4,884   41,303
Loans 90 days past due and still accruing         807        -        807      2,070      -    2,070
                                              --------------------------------------------------------
Total nonperforming loans                      51,759    5,152     46,607     48,257   4,884   43,373
Other real estate owned                         2,372        -      2,372      2,622       -    2,622
                                              --------------------------------------------------------
Total nonperforming assets                    $54,131   $5,152    $48,979    $50,879  $4,884  $45,995
                                              ========================================================
Nonperforming loans to total loans                                  3.04%                       2.79%
Nonperforming assets to total assets                                2.34%                       2.20%
Allowance for loan losses/nonperforming loans                         74%                         78%

                                                  At March 31, 2009             At December 31, 2008
                                               --------------------------    -------------------------
                                                 Gross  Guaranteed   Net      Gross  Guaranteed   Net
(dollars in thousands)                        --------------------------------------------------------
Performing nonaccrual loans                   $23,467   $4,933    $18,534    $22,600  $5,102  $17,498
Nonperforming, nonaccrual loans                14,989        -     14,989      9,994     154    9,840
                                              --------------------------------------------------------
   Total nonaccrual loans                      38,456    4,933     33,523     32,594   5,256   27,338
Loans 90 days past due and still accruing         837        -        837        187       -      187
                                              --------------------------------------------------------
Total nonperforming loans                      39,293    4,933     34,360     32,781   5,256   27,525
Other real estate owned                         2,407        -      2,407      1,185       -    1,185
                                              --------------------------------------------------------
Total nonperforming assets                    $41,700   $4,933    $36,767    $33,966  $5,256  $28,710
                                              ========================================================
Nonperforming loans to total loans                                   2.19%                       1.73%
Nonperforming assets to total assets                                 1.77%                       1.41%
Allowance for loan losses/nonperforming loans                          95%                        100%
34
Nonperforming assets categorized by type were as follows:
At September 30, 2009           At June 30, 2009
                                            ----------------------------   ---------------------------
                                                Gross  Guaranteed   Net      Gross  Guaranteed   Net
                                            ----------------------------------------------------------
(dollars in thousands):
Loans:
   Real estate mortgage:
     Residential                             $4,065          -     $4,065     $2,964       -   $2,964
     Commercial                              17,475      4,710     12,765     16,632   4,884   11,748
   Consumer:
     Home equity lines                        7,627          -      7,627      6,715       -    6,715
     Home equity loans                          446          -        446        302       -      302
     Auto indirect                            2,492          -      2,492      2,731       -    2,731
     Other consumer                             136          -        136        119       -      119
   Commercial                                 5,331        442      4,889      4,151       -    4,151
   Construction:
     Residential                             13,045          -     13,045     13,691       -   13,691
     Commercial                               1,142          -      1,142        952       -      952
Other real estate owned                       2,372          -      2,372      2,622       -    2,622
                                            ----------------------------------------------------------
Total nonperforming assets                  $54,131     $5,152    $48,979    $50,879  $4,884  $45,995
                                            ==========================================================

                                                  At March 31, 2009             At December 31, 2008
                                            ---------------------------    ---------------------------
(dollars in thousands):                         Gross  Guaranteed    Net     Gross Guaranteed   Net
Loans:                                      ----------------------------------------------------------
   Real estate mortgage:
     Residential                             $3,410          -     $3,410     $3,189       -   $3,189
     Commercial                               9,678      4,933      4,745      9,668   5,102    4,566
   Consumer:
     Home equity lines                        4,679          -      4,679      2,318       -    2,318
     Home equity loans                          107          -        107        122       -      122
     Auto indirect                            2,762          -      2,762      2,233       -    2,233
     Other consumer                              82          -         82        123       -      123
   Commercial                                 1,879          -      1,879      2,221     154    2,067
   Construction:
     Residential                             16,286          -     16,286     12,483       -   12,483
     Commercial                                 410          -        410        424       -      424
Other real estate owned                       2,407          -      2,407      1,185       -    1,185
                                            ----------------------------------------------------------
Total nonperforming assets                  $41,700     $4,933    $36,767    $33,966  $5,256  $28,710
                                            ==========================================================
Nonperforming  assets, net of guarantees of the U.S.  Government,  including its
agencies and its government-sponsored  agencies,  increased $2,984,000 (6.5%) to
$48,979,000  at September 30, 2009 compared to $45,995,000 at June 30, 2009. The
$2,984,000 increase in nonperforming assets during the third quarter of 2009 was
the  result  new  nonperforming  loans  of  $13,250,000,  advances  on  existing
nonperforming loans of $1,161,000, recoveries on existing nonperforming loans of
$398,000,   less   charge-offs  of  $7,471,000,   less  reductions  to  existing
nonperforming loans of $4,104,000,  and less reductions in OREO of $250,000. The
primary causes of the  $13,250,000 in new  nonperforming  loans during the third
quarter  of 2009 were  increases  of  $1,165,000  in  residential  real  estate,
$2,101,000 in commercial real estate, $4,413,000 in home equity lines and loans,
$959,000  in auto  loans,  $247,000  in  other  consumer  loans,  $3,241,000  in
Commercial  (C&I) loans, and a $1,125,000  increase in residential  construction
loans.

The $2,101,000 in new nonperforming  commercial real estate loans were primarily
made up of a $1,520,000 loan on a construction products  manufacturing  facility
in the Sacramento Valley.

The $3,241,000 in new  nonperforming  commercial (C&I) loans were primarily made
up of a  $2,240,000  production  loan to a dairy in the San  Joaquin  Valley,  a
$557,000  production loan to a dairy in the San Joaquin Valley,  a $300,000 loan
to a real estate investor in the San Joaquin Valley.

The  $1,125,000  in  new  nonperforming   residential  construction  loans  were
primarily made up of a $770,000 SFR construction loan in the Sacramento Valley.

                                       35
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  September  30, 2009.  This
plan has no stated  expiration  date for the  repurchases.  As of September  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
$201,937,000  at  September  30,  2009.  This amount  represents  an increase of
$4,005,000  from December 31, 2008, the net result of  comprehensive  income for
the period of $9,527,000,  the effect of stock option  vesting of $369,000,  the
exercise of stock  options for $887,000 and the tax benefit from the exercise of
stock options of $30,000 that were partially  offset by the repurchase of common
stock with value of $652,000,  and dividends paid of  $6,156,000.  The Company's
ratio of equity to total assets was 9.64%,  9.67% and 9.69% as of September  30,
2009, September 30, 2008, and December 31, 2008, respectively.

The following  summarizes the ratios of capital to risk-adjusted  assets for the
periods indicated:
                             At September 30,      At             Minimum
                         --------------------    December 31,   Regulatory
                           2009        2008        2008         Requirement
                         ---------------------------------------------------
     Tier I Capital        11.91%     11.13%      11.17%           4.00%
     Total Capital         13.17%     12.38%      12.42%           8.00%
     Leverage ratio        10.64%     11.08%      11.09%           4.00%

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 September
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 $591,336,000 and $643,365,000 at September 30,
2009 and December 31, 2008, respectively, and represented 38.6% and 40.4% of the
total  loans   outstanding   at  September  30,  2009  and  December  31,  2008,
respectively.  Commitments  related to the Bank's  deposit  overdraft  privilege
product  totaled  $35,464,000 and $35,883,000 at September 30, 2009 and December
31, 2008, respectively.

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.

                                       36
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 September 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 September 30, 2009 and 2008, the Company had no material derivative financial
instruments.

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
September  30,  2009,  cash at Federal  Reserve and other  banks and  investment
securities available for sale totaled $416,983,000,  representing an increase of
$128,442,000  (44.5%) from  December 31, 2008,  and an increase of  $175,083,000
(72.4%) from September 30, 2008. In addition,  the Company generates  additional
liquidity from its operating activities.  The Company's profitability during the
first nine months of 2009  generated  cash flows from  operations of $28,442,000
compared  to  $27,930,000  during the first nine months of 2008.  Maturities  of
investment  securities  produced  cash  inflows of  $67,963,000  during the nine
months ended  September  30, 2009  compared to  $38,938,000  for the nine months
ended  September 30, 2008.  During the nine months ended September 30, 2009, the
Company invested  $29,396,000 in securities and received $40,043,000 of net loan
principal  reductions,  compared  to  $50,219,000  invested  in  securities  and
$20,538,000 invested in net loan principal increases,  respectively,  during the
first  nine  months of 2009.  These  changes  in  investment  and loan  balances
contributed to net cash provided by investing  activities of $78,847,000  during
the nine months ended September 30, 2009, compared to net cash used in investing
activities  of  $33,383,000  during the nine months  ended  September  30, 2008.
Financing  activities  provided net cash of  $40,926,000  during the nine months
ended September 30, 2009,  compared to net cash used in financing  activities of
$16,045,000  during the nine months ended  September 30, 2008.  Deposit  balance
increases  accounted for  $82,625,000  and  $18,618,000 of financing  sources of
funds during the nine months ended  September  30, 2009 and 2008,  respectively.
Net decrease in  short-term  other  borrowings  accounted  for  $35,741,000  and
$36,195,000  of financing  uses of funds during the nine months ended  September
30, 2009 and 2008,  respectively.  Dividends paid used $6,156,000 and $6,145,000
of cash during the nine months ended September 30, 2009 and 2008,  respectively.
Federal funds purchased did not use or provide cash during the nine months ended
September 30, 2009 compared to an increase of Federal funds purchased  providing
$11,000,000 of cash during the nine months ended  September 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.

                                       37
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 September 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.

                                       38
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 third 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
----------------------------------------------------------------------------------------------------------
July 1-31, 2009           -                 -                        -                 333,400
Aug. 1-31, 2009           -                 -                        -                 333,400
Sep. 1-30, 2009           -                 -                        -                 333,400
----------------------------------------------------------------------------------------------------------
Total                     -                 -                        -                 333,400
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  Quarterly  Report on Form 10-Q for the quarter ended June 30,
          2005.

                                       39
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.

    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.

                                       40
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

     32.1 Section 1350 Certification of CEO

     32.2 Section 1350 Certification of CFO

     * Previously filed and incorporated by reference.

                                       41
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:  November 9, 2009   /s/Thomas J. Reddish
                          ---------------------
                            Thomas J. Reddish
                            Executive Vice President and Chief Financial Officer
                            (Duly authorized officer and Principal financial
                             officer)

                                       42
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: November 9, 2009           /s/Richard P. Smith
                                -------------------
                                Richard P. Smith
                                President and Chief Executive Officer

                                       43
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: November 9, 2009      /s/Thomas J. Reddish
                            --------------------
                            Thomas J. Reddish
                            Executive Vice President and Chief Financial Officer

                                       44
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.

                                       45