|   | x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|---|-----------------------------------------------------------------------------------------|

|   |  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|--------|------------------------------------------------------------------------------------------|

| CALIFORNIA                               | 68-0454068                           |
|------------------------------------------|--------------------------------------|
| (State of Incorporation)                 | (I.R.S. Employer Identification No.) |
|                                     |                                 |
| 202 West Napa Street Sonoma, California  | 95476                                |
| (Address of principal executive offices) | (Zip Code)                           |

----

| Part I  Financial Information                                                                                                                                                       | Page Number |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|
|                                                                                                                                                                                          |        |
| Item 1. Financial Statements (Unaudited):                                                                                                                                                     |        |
|                                                                                                                                                                                          |        |
|      Consolidated Balance Sheets at March 31, 2010, December 31, 2009 and March 31, 2009                                                                             | 3           |
|                                                                                                                                                                                          |        |
|      Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009                                                                   | 4           |
|                                                                                                                                                                                          |        |
|      Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2010, and the years ended December 31, 2009 and 2008 | 5           |
|                                                                                                                                                                                          |        |
|      Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009                                                                   | 7           |
|                                                                                                                                                                                          |        |
|      Notes to Consolidated Financial Statements                                                                                                                      | 8           |
|                                                                                                                                                                                          |        |
|      Average Balances/Yields and Rates Paid for the three months ended March 31, 2010 and 2009                                                                  | 15          |
|                                                                                                                                                                                          |        |
|  Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations                                                                                           | 16          |
|                                                                                                                                                                                          |        |
|  Item 3. Quantitative and Qualitative Disclosure About Market Risk                                                                                                                       | 31          |
|                                                                                                                                                                                          |        |
|  Item 4. Controls and Procedures                                                                                                                                                         | 31          |
|                                                                                                                                                                                          |        |
|  Part II  Other Information                                                                                                                                                    |        |
|                                                                                                                                                                                          |        |
|  Item 1. Legal Proceedings                                                                                                                                                               | 32          |
|                                                                                                                                                                                          |        |
|  Item 1A. Risk Factors                                                                                                                                                                   | 33          |
|                                                                                                                                                                                          |        |
|  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                     | 35          |
|                                                                                                                                                                                          |        |
|  Item 3. Defaults Upon Senior Securities                                                                                                                                                 | 35          |
|                                                                                                                                                                                          |        |
|  Item 4. Submission of Matters to a Vote of Security Holders                                                                                                                             | 35          |
|                                                                                                                                                                                          |        |
|  Item 5. Other Information                                                                                                                                                               | 35          |
|                                                                                                                                                                                          |        |
|  Item 6. Exhibits                                                                                                                                                                        | 35          |
|                                                                                                                                                                                          |        |
|  Signatures                                                                                                                                                                              | 36          |
|                                                                                                                                                                                          |        |
| Certifications                                                                                                                                                                                | 37          |

----

FINANCIAL STATEMENTS

|                                                                                                                                                                                                                |   | March 31, 2010 |        |   | December 31, 2009 |   |             | March 31, 2009 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-------------|--------|------------------------|--------|------------------|---------------------|--------|
| ASSETS                                                                                                                                                                                                              |   |                |        |   |                   |   |             |                |   |
| Cash and due from banks                                                                                                                                                                                             |   | $                   | 3,699,878   |   |                   | $      | 4,709,249        |                |   | $ | 6,266,975 |   |
| Interest-bearing due from banks                                                                                                                                                                                     |   |                | 42,169,596  |   |                   |   | 28,940,255       |                |   |   | 9,626,534 |   |
| Total cash and cash equivalents                                                                                                                                                                                     |   |                | 45,869,474  |   |                   |   | 33,649,504       |                |   |   | 15,893,509 |   |
| Investment securities available-for-sale at fair value                                                                                                                                                              |   |                | 20,542,486  |   |                   |   | 20,450,100       |                |   |   | 6,532,448 |   |
| Investment securities held-to-maturity (fair value of $12,790,905, $13,285,165 and $14,150,697 respectively)                                                                                                        |   |                | 12,417,883  |   |                   |   | 12,899,779       |                |   |   | 13,848,226 |   |
| Loans and lease financing receivables, net                                                                                                                                                                          |   |                | 252,237,384 |   |                   |   | 258,171,969      |                |   |   | 274,661,982 |   |
| Premises and equipment, net                                                                                                                                                                                         |   |                | 567,414     |   |                   |   | 591,271          |                |   |   | 698,879 |   |
| Accrued interest receivable                                                                                                                                                                                         |   |                | 1,673,277   |   |                   |   | 1,604,544        |                |   |   | 1,715,610 |   |
| Other real estate owned                                                                                                                                                                                             |   |                | 2,668,171   |   |                   |   | 3,852,349        |                |   |   | 243,610 |   |
| Cash surrender value of life insurance                                                                                                                                                                              |   |                | 11,251,978  |   |                   |   | 11,161,018       |                |   |   | 10,874,230 |   |
| Other assets                                                                                                                                                                                                        |   |                | 16,113,243  |   |                   |   | 15,385,104       |                |   |   | 7,328,016 |   |
| Total assets                                                                                                                                                                                                        |   | $                   | 363,341,310 |   |                   | $      | 357,765,638      |                |   | $ | 331,796,510 |   |
| LIABILITIES                                                                                                                                                                                                         |   |                |        |   |                   |   |             |                |   |   |   |   |
| Noninterest-bearing demand deposits                                                                                                                                                                                 |   | $                   | 52,674,875  |   |                   | $      | 51,902,932       |                |   | $ | 48,800,308 |   |
| Interest-bearing transaction deposits                                                                                                                                                                               |   |                | 42,034,496  |   |                   |   | 33,110,822       |                |   |   | 29,109,747 |   |
| Savings and money market deposits                                                                                                                                                                                   |   |                | 94,212,987  |   |                   |   | 96,053,335       |                |   |   | 91,953,928 |   |
| Time deposits, $100,000 and over                                                                                                                                                                                    |   |                | 58,507,104  |   |                   |   | 75,730,229       |                |   |   | 58,919,208 |   |
| Other time deposits                                                                                                                                                                                                 |   |                | 32,828,241  |   |                   |   | 34,911,841       |                |   |   | 35,253,932 |   |
| Total deposits                                                                                                                                                                                                      |   |                | 280,257,703 |   |                   |   | 291,709,159      |                |   |   | 264,037,123 |   |
| Other borrowings                                                                                                                                                                                                    |   |                | 60,000,000  |   |                   |   | 40,000,000       |                |   |   | 21,200,000 |   |
| Accrued interest payable and other liabilities                                                                                                                                                                      |   |                | 7,200,623   |   |                   |   | 7,208,298        |                |   |   | 6,990,769 |   |
| Total liabilities                                                                                                                                                                                                   |   |                | 347,458,326 |   |                   |   | 338,917,457      |                |   |   | 292,227,892 |   |
| SHAREHOLDERS' EQUITY                                                                                                                                                                                                |   |                |        |   |                   |   |             |                |   |   |   |   |
| Preferred stock, no par value; $1,000 per share liquidation preference; 2,000,000 shares authorized; 8,653 Series A and 433 Series B at March 31, 2010, December 31, 2009 and March 31, 2009 issued and outstanding |   |                | 8,737,359   |   |                   |   | 8,718,330        |                |   |   | 8,661,334 |   |
| Common stock, no par value; 10,000,000 shares authorized; 2,326,803 shares at March 31, 2010, 2,326,803 shares at December 31, 2009 and 2,313,831 shares at March 31, 2009 issued and outstanding                   |   |                | 16,852,765  |   |                   |   | 16,852,765       |                |   |   | 16,586,608 |   |
| Additional paid-in-capital                                                                                                                                                                                          |   |                | 2,677,838   |   |                   |   | 2,630,473        |                |   |   | 2,664,333 |   |
| Retained earnings (accumulated deficit)                                                                                                                                                                             |   |                | (12,334,898 | )      |                   |   | (9,245,376       | )                   |   |   | 11,666,701 |   |
| Accumulated other comprehensive loss                                                                                                                                                                                |   |                | (50,080     | )      |                   |   | (108,011         | )                   |   |   | (10,358 | ) |
| Total shareholders’ equity                                                                                                                                                                                    |   |                | 15,882,984  |   |                   |   |  18,848,181 |                |   |   | 39,568,618 |   |
| Total liabilities and shareholders' equity                                                                                                                                                                          |   | $                   | 363,341,310 |   |                   | $      | 357,765,638      |                |   | $ | 331,796,510 |   |

----

SONOMA VALLEY BANCORP AND SUBSIDIARY

|                                                                                     |   | 2010   |       |   | 2009   |   |
|------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| INTEREST INCOME                                                                          |   |   |       |   |   |   |
| Loans and leases                                                                         |   | $      | 3,877,751  |   |   | $      | 4,447,587 |   |
| Taxable securities                                                                       |   |   | 104,703    |   |   |   | 52,863 |   |
| Tax-exempt securities                                                                    |   |   | 126,123    |   |   |   | 134,776 |   |
| Federal funds sold and other                                                             |   |   | 23,004     |   |   |   | 6,866 |   |
| Dividends                                                                                |   |   | 33         |   |   |   | 52 |   |
| Total interest income                                                                    |   |   | 4,131,614  |   |   |   | 4,642,144 |   |
| INTEREST EXPENSE                                                                         |   |   |       |   |   |   |   |   |
| Interest-bearing transaction deposits                                                    |   |   | 10,391     |   |   |   | 8,641 |   |
| Savings and money market deposits                                                        |   |   | 140,618    |   |   |   | 228,534 |   |
| Time deposits, $100,000 and over                                                         |   |   | 280,368    |   |   |   | 385,894 |   |
| Other time deposits                                                                      |   |   | 133,971    |   |   |   | 224,070 |   |
| Other borrowings                                                                         |   |   | 305,214    |   |   |   | 236,162 |   |
| Total interest expense                                                                   |   |   | 870,562    |   |   |   | 1,083,301 |   |
| NET INTEREST INCOME                                                                      |   |   | 3,261,052  |   |   |   | 3,558,843 |   |
| Provision for loan and lease losses                                                      |   |   | 1,900,000  |   |   |   | 630,000 |   |
| NET INTEREST INCOME AFTERPROVISION FOR LOAN AND LEASE LOSSES                             |   |   | 1,361,052  |   |   |   | 2,928,843 |   |
| NON-INTEREST INCOME                                                                      |   |   | 445,550    |   |   |   | 479,164 |   |
| NON-INTEREST EXPENSE                                                                     |   |   |       |   |   |   |   |   |
| Salaries and employee benefits                                                           |   |   | 1,345,096  |   |   |   | 1,357,216 |   |
| Premises and equipment                                                                   |   |   | 253,415    |   |   |   | 243,734 |   |
| Other                                                                                    |   |   | 3,160,679  |   |   |   | 1,044,402 |   |
| Total non-interest expense                                                               |   |   | 4,759,190  |   |   |   | 2,645,352 |   |
| Income (loss) before provision for income taxes                                          |   |   | (2,952,588 | )      |   |   | 762,655 |   |
| Provision for income taxes                                                               |   |   | 0          |   |   |   | 204,769 |   |
| NET INCOME (LOSS)                                                                        |   | $      | (2,952,588 | )      |   | $      | 557,886 |   |
| Preferred stock dividends and amortization/accretion of preferred stock premium/discount |   |   | (136,934   | )      |   |   | (60,726 | ) |
| NET INCOME (LOSS) AVAILABLE TO                                                           |   |   |       |   |   |   |   |   |
| COMMON SHAREHOLDERS                                                                      |   | $      | (3,089,522 | )      |   | $      | 497,160 |   |
|                                                                                     |   |   |       |   |   |   |   |   |
| EARNINGS (LOSS) PER SHARE AVAILABLE TO COMMON SHAREHOLDERS                               |   |   |       |   |   |   |   |   |
| Basic                                                                                    |   | $      | (1,33      | )      |   | $      | .22 |   |
| Diluted                                                                                  |   | $      | (1.33      | )      |   | $      | .22 |   |
| Dividends declared per common share                                                      |   | $      | .00        |   |   | $      | .30 |   |
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                                            |   |   |       |   |   |   |   |   |
| Basic                                                                                    |   |   | 2,316,403  |   |   |   | 2,283,580 |   |
| Diluted                                                                                  |   |   | 2,316,403  |   |   |   | 2,295,447 |   |

----

SONOMA VALLEY BANCORP AND SUBSIDIARY

|                                                                                                                                                          |                                                                           | Comprehensive                                                                        | Preferred                                                                            | Common Stock                                                                                                                   | Additional Paid-in                                                                                                 | RetainedEarnings(Accumulated                                                                                             | Accumulated Other Comprehensive                                  |                                                                          |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------|-------------------------------------------------------------------------------|
|                                                                                                                                                          |        Income      | Stock                                                                                |    Shares                                              |     Amount                                                                             |     Capital                                                                |  Deficit)                                                                                                           |      Loss      |       Total       |   |
| BALANCE AT JANUARY 1, 2008                                                                                                                                    |                                                                           |                                                                                 | 2,242,809                                                                            | $  15,578,903                                                                                                        | $  2,455,409                                                                                             | $  9,934,967                                                                                                   | $ (34,999)                                                       | $27,934,280                                                                   |   |
| Redemption and retirement  of stock                                                                                                                 |                                                                           |                                                                                 | (1,190)                                                                              | (8,526)                                                                                                                        |                                                                                                               | (13,414)                                                                                                                 |                                                             | (21,940)                                                                      |   |
| Stock options exercised and related tax benefits                                                                                                              |                                                                           |                                                                                 | 49,038                                                                               | 668,957                                                                                                                        | 72,318                                                                                                             |                                                                                                                     |                                                             | 741,275                                                                       |   |
| Cash dividend of $.60 per share                                                                                                                               |                                                                           |                                                                                 |                                                                                 |                                                                                                                           |                                                                                                               | (1,373,226)                                                                                                              |                                                             | (1,373,226)                                                                   |   |
| Stock options vested                                                                                                                                          |                                                                           |                                                                                 |                                                                                 |                                                                                                                           | 64,805                                                                                                             |                                                                                                                     |                                                             | 64,805                                                                        |   |
| Restricted stock vested and related tax benefits                                                                                                              |                                                                           |                                                                                 |                                                                                 | 162,750                                                                                                                        | (14,677)                                                                                                           |                                                                                                                     |                                                             | 148,073                                                                       |   |
| Net income for the year                                                                                                                                       | $   3,315,361                                                   |                                                                                 |                                                                                 |                                                                                                                           |                                                                                                               | 3,315,361                                                                                                                |                                                             | 3,315,361                                                                     |   |
| Other comprehensive income, net of tax: Unrealized holding gains on securities available- for-sale arising during the year, net of taxes of $35,994           |      51,468                                           |                                                                                 |                                                                                 |                                                                                                                           |                                                                                                               |                                                                                                                     |                                                             |                                                                          |   |
| Other comprehensive loss, net of taxes                                                                                                                        |       51,468                                     |                |                |                       |                     |                      |          51,468     |       51,468                                    |   |
| Total comprehensive income                                                                                                                                    | $   3,366,829                                                   |                                                                                 |                                                                                 |                                                                                                                           |                                                                                                               |                                                                                                                     |                                                             |                                                                          |   |
| BALANCE AT  DECEMBER 31, 2008                                                                                                                       |                                                                           |                                                                                 | 2,290,657                                                                            | 16,402,084                                                                                                                     | 2,577,855                                                                                                          | 11,863,688                                                                                                               | 16,469                                                           | 30,860,096                                                                    |   |
| Issuance of preferred stock                                                                                                                                   |                                                                           | 8,653,000                                                                            |                                                                                 |                                                                                                                           |                                                                                                               |                                                                                                                     |                                                             | 8,653,000                                                                     |   |
| Dividends on preferred stock                                                                                                                                  |                                                                           |                                                                                 |                                                                                 |                                                                                                                           |                                                                                                               | (406,117)                                                                                                                |                                                             | (406,117)                                                                     |   |
| Amortization/Accretion of preferred stock, net                                                                                                                |                                                                           | 65,330                                                                               |                                                                                 |                                                                                                                           |                                                                                                               | (65,330)                                                                                                                 |                                                             |                                                                          |   |
| Stock options exercised and related tax benefits                                                                                                              |                                                                           |                                                                                 | 36,146                                                                               | 287,931                                                                                                                        | 38,618                                                                                                             |                                                                                                                     |                                                             | 326,549                                                                       |   |
| Cash dividend of $.30 per share                                                                                                                               |                                                                           |                                                                                 |                                                                                 |                                                                                                                           |                                                                                                               | (694,146)                                                                                                                |                                                             | (694,146)                                                                     |   |
| Stock options vested                                                                                                                                          |                                                                           |                                                                                 |                                                                                 |                                                                                                                           | 67,312                                                                                                             |                                                                                                                     |                                                             | 67,312                                                                        |   |
| Restricted stock vested and related tax benefit                                                                                                               |                                                                           |                                                                                 |                                                                                 | 162,750                                                                                                                        | (53,312)                                                                                                           |                                                                                                                     |                                                             | 109,438                                                                       |   |
| Net loss for the year                                                                                                                                         | $  (19,943,471)                                                      |                                                                                 |                                                                                 |                                                                                                                           |                                                                                                               | (19,943,471)                                                                                                             |                                                             | (19,943,471)                                                                  |   |
| Other comprehensive  loss, net of tax: Unrealized holding losses on securities available- for-sale arising during the year, net of taxes of $87,057 |         (124,480)                      |                                                                                 |                                                                                 |                                                                                                                           |                                                                                                               |                                                                                                                     |                                                             |                                                                          |   |
| Other comprehensive  loss, net of taxes                                                                                                             |          (124,480)                |                     |                |                       |                     |                      |          (124,480)  |        (124,480)                           |   |
| Total comprehensive income                                                                                                                                    | $ (20,067,951)                                                                 |                                                                                 |                                                                                 |                                                                                                                           |                                                                                                               |                                                                                                                     |                                                             |                                                                          |   |

----

|                                                                                                                                               |                                                                           | Comprehensive                                                                                                | Preferred                                                                                              | Common Stock                                                                                                             | Additional Paid-in                                                                                                                               | RetainedEarnings(Accumulated                                                                                                         | Accumulated Other Comprehensive                                                      |                                                                           |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|--------------------------------------------------------------------------------|
|                                                                                                                                               |        Income      | Stock                                                                                                        |    Shares                                                                |     Amount                                                                       |     Capital                                                                                              |  Deficit)                                                                                                                       |      Loss                          |       Total        |   |
| BALANCE AT DECEMBER 31, 2009                                                                                                                       |                                                                           | $8,718,330                                                                                                   | 2,326,803                                                                                              | $16,852,765                                                                                                              | $ 2,630,473                                                                                                                                      | $(9,245,376)                                                                                                                         | $ (108,011)                                                                          | $18,848,181                                                                    |   |
| Dividends on preferred stock                                                                                                                       |                                                                           |                                                                                                         |                                                                                                   |                                                                                                                     |                                                                                                                                             | (117,905)                                                                                                                            |                                                                                 | (117,905)                                                                      |   |
| Amortization/ Accretion of preferred stock,net                                                                                                     |                                                                           | 19,029                                                                                                       |                                                                                                   |                                                                                                                     |                                                                                                                                             | (19,029)                                                                                                                             |                                                                                 |                                                                           |   |
| Stock options vested                                                                                                                               |                                                                           |                                                                                                         |                                                                                                   |                                                                                                                     | 13,240                                                                                                                                           |                                                                                                                                 |                                                                                 | 13,240                                                                         |   |
| Restricted stock vested                                                                                                                            |                                                                           |                                                                                                         |                                                                                                   |                                                                                                                     | 34,125                                                                                                                                           |                                                                                                                                 |                                                                                 | 34,125                                                                         |   |
| Net loss for the period                                                                                                                            | $ (2,952,588)                                                                  |                                                                                                         |                                                                                                   |                                                                                                                     |                                                                                                                                             | (2,952,588)                                                                                                                          |                                                                                 | (2,952,588)                                                                    |   |
| Other comprehensive income, net of tax: Unrealized holding gain on securities available- for-sale arising during the year, net of taxes of $40,515 |            57,931       |                                                                                                         |                                                                                                   |                                                                                                                     |                                                                                                                                             |                                                                                                                                 |                                                                                 |                                                                           |   |
| Other comprehensive income, net of taxes                                                                                                           |            57,931       |                    |                   |                      |                          |                        |              57,931 |             57,931 |   |
| Total comprehensive loss                                                                                                                           | $ (2,894,657)                                                                  |                                                                                                         |                                                                                                   |                                                                                                                     |                                                                                                                                             |                                                                                                                                 |                                                                                 |                                                                           |   |
|                                                                                                                                               |                                                                           |                                                                                                         |                                                                                                   |                                                                                                                     |                                                                                                                                             |                                                                                                                                 |                                                                                 |                                                                           |   |
| BALANCE AT MARCH 31, 2010                                                                                                                          |                                                                           | $8,737,359                                                                                                   |   2,326,803                                                                                  | $16,852,765                                                                                                              | $ 2,677,838                                                                                                                                      | $(12,334,898)                                                                                                                        | $   (50,080)                                                          | $15,882,984                                                                    |   |
|                                                                                                                                               |                                                                           |                                                                                                         |                                                                                                   |                                                                                                                     |                                                                                                                                             |                                                                                                                                 |                                                                                 |                                                                           |   |

----

SONOMA VALLEY BANCORP AND SUBSIDIARY

|                                                                                               |   | 2010   |        |   | 2009   |   |
|----------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| OPERATING ACTIVITIES                                                                               |   |   |        |   |   |   |
| Net income (loss)                                                                                  |   | $      | (2,952,588  | )      |   | $      | 557,886 |   |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |   |   |        |   |   |   |   |   |
| Provision for loan and lease losses                                                                |   |   | 1,900,000   |   |   |   | 630,000 |   |
| Depreciation                                                                                       |   |   | 47,386      |   |   |   | 57,594 |   |
| Amortization and other                                                                             |   |   | 17,956      |   |   |   | 15,572 |   |
| Stock-based compensation expense                                                                   |   |   | 47,365      |   |   |   | 57,459 |   |
| Provision for foreclosed real estate                                                               |   |   | 1,751,178   |   |   |   | 42,055 |   |
| Net change in interest receivable                                                                  |   |   | (68,733     | )      |   |   | (37,063 | ) |
| Net change in cash surrender value of life insurance                                               |   |   | (90,960     | )      |   |   | (96,748 | ) |
| Net change in other assets                                                                         |   |   | (768,654    | )      |   |   | 140,387 |   |
| Net change in interest payable and other liabilities                                               |   |   | (125,580    | )      |   |   | (204,107 | ) |
| NET CASH (USED IN)PROVIDED BY OPERATING ACTIVITIES                                                 |   |   | (242,630    | )      |   |   | 1,163,035 |   |
| INVESTING ACTIVITIES                                                                               |   |   |        |   |   |   |   |   |
| Proceeds from maturing securities held-to-maturity                                                 |   |   | 470,000     |   |   |   | 0 |   |
| Net change in loans and leases                                                                     |   |   | 3,467,585   |   |   |   | (12,915,198 | ) |
| Purchases of premises and equipment                                                                |   |   | ( 23,529    | )      |   |   | ( 22,382 | ) |
| NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                                |   |   | 3,914,056   |   |   |   | (12,937,580 | ) |
| FINANCING ACTIVITIES                                                                               |   |   |        |   |   |   |   |   |
| Net change in demand, interest-bearing transaction and savings deposits                            |   |   | 7,855,269   |   |   |   | 2,204,230 |   |
| Net change in time deposits                                                                        |   |   | (19,306,725 | )      |   |   | 7,887,392 |   |
| Proceeds from issuance of preferred stock                                                          |   |   | 0           |   |   |   | 8,653,000 |   |
| Cash dividend paid                                                                                 |   |   | 0           |   |   |   | (694,147 | ) |
| Proceeds from FHLB borrowings                                                                      |   |   | 20,000,000  |   |   |   | 1,200,000 |   |
| Repayments on FHLB borrowings                                                                      |   |   | 0           |   |   |   | (10,000,000 | ) |
| Stock options exercised                                                                            |   |   | 0           |   |   |   | 184,524 |   |
| NET CASH PROVIDED BY FINANCING ACTIVITIES                                                          |   |   | 8,548,544   |   |   |   | 9,434,999 |   |
| NET CHANGE IN CASH AND CASH EQUIVALENTS                                                            |   |   | 12,219,970  |   |   |   | (2,339,546 | ) |
| Cash and cash equivalents at beginning of period                                                   |   |   | 33,649,504  |   |   |   | 18,233,055 |   |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                         |   | $      | 45,869,474  |   |   | $      | 15,893,509 |   |
|                                                                                               |   |   |        |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                 |   |   |        |   |   |   |   |   |
| Cash paid during the year for:                                                                     |   |   |        |   |   |   |   |   |
| Interest expense                                                                                   |   | $      | 929,778     |   |   | $      | 1,086,766 |   |
| Income taxes                                                                                       |   | $      | 0           |   |   | $      | 95,570 |   |
| SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:                                                    |   |   |        |   |   |   |   |   |
| Loans transferred to other real estate owned                                                       |   | $      | 567,000     |   |   | $      | 0 |   |
| Net change in unrealized gains and losses on securities                                            |   | $      | 98,446      |   |   | $      | (45,589 | ) |
| Net change in deferred income taxes on unrealized gains and losses on securities                   |   | $      | (40,515     | )      |   | $      | 18,762 |   |
| Accrued preferred stock dividends                                                                  |   | $      | 117,905     |   |   | $      | 52,392 |   |
| Amortization/accretion of preferred stock premium/discount, net                                    |   | $      | 19,029      |   |   | $      | 8,334 |   |

----

SONOMA VALLEY BANCORP AND SUBSIDIARY

----

|                             |   | Amortized Cost |       |   | UnrealizedGain |   |    | Unrealized Losses |   |   | Fair Value |   |
|----------------------------------|--------|----------------|------------|--------|----------------|--------|---------|-------------------|--------|--------|------------|--------|
| March 31, 2010:                  |   |           |       |   |           |   |    |              |   |   |       |   |
| Securities Available-For-Sale    |   |           |       |   |           |   |    |              |   |   |       |   |
| U.S. Treasury securities         |   | $              | 10,598,034 |   |           | $      | 252     |              |   | $      | (127,270   | )      |   | $ | 10,471,016 |   |
| U.S. Government agencysecurities |   |           | 9,982,116  |   |           |   | 75,466  |              |   |   |       |   |   |   | 10,057,582 |   |
| Equity securities                |   |           | 47,440     |   |           |   |    |              |   |   | (33,552    | )      |   |   | 13,888 |   |
|                             |   | $              | 20,627,590 |   |           | $      | 75,718  |              |   | $      | (160,822   | )      |   | $ | 20,542,486 |   |
| Securities Held-to-Maturity      |   |           |       |   |           |   |    |              |   |   |       |   |   |   |   |   |
| Municipal securities             |   | $              | 12,417,883 |   |           | $      | 375,967 |              |   | $      | (2,945     | )      |   | $ | 12,790,905 |   |
|                             |   |           |       |   |           |   |    |              |   |   |       |   |   |   |   |   |

|                         |   | Securities Available-For-Sale |       |   | Securities Held-To-Maturity |   |
|------------------------------|--------|-------------------------------|------------|--------|-----------------------------|--------|
|                         |   | Amortized Cost                |       |   | Fair Value                  |   |   | Amortized Cost |   |   | Fair Value |   |
|                         |   |                          |       |   |                        |   |   |   |   |   |   |   |
| Due in one year or less      |   | $                             | 502,013    |   |                        | $      | 502,266 |   |   | $ | 1,147,843 |   |   | $ | 1,161,697 |   |
| Due after one year through   |   |                          |       |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| five years                   |   |                          | 20,078,137 |   |                        |   | 20,026,332 |   |   |   | 8,021,720 |   |   |   | 8,321,220 |   |
| Due after five years through |   |                          |       |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| ten years                    |   |                          | 0          |   |                        |   | 0 |   |   |   | 2,328,853 |   |   |   | 2,368,745 |   |
| Due after ten years          |   |                          |       |   |                        |   |   |   |   |   | 919,467 |   |   |   | 939,243 |   |
| Equity securities            |   |                          | 47,440     |   |                        |   | 13,888 |   |   |   | 0 |   |   |   | 0 |   |
|                         |   |                          |       |   |                        |   |   |   |   |   |   |   |   |   |   |   |
|                         |   | $                             | 20,627,590 |   |                        | $      | 20,542,486 |   |   | $ | 12,417,883 |   |   | $ | 12,790,905 |   |

----

|                                  |   | 2010                |       |
|---------------------------------------|--------|---------------------|------------|
|                                  |   | Less Than 12 Months |       |   | 12 Months or Greater |   |
|                                  |   | Fair                |       |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| Description of Securities             |   | Value               |       |   | Losses |   |   | Value |   |   | Losses |   |
|                                  |   |                |       |   |   |   |   |   |   |   |   |   |
| U.S. Government agency securities     |   | $                   | 9,968,750  |   |   | $ | 127,270 |   |   |   |   |   |   |   |
| Municipal securities                  |   |                | 188,890    |   |   |   | 1,110 |   |   | $ | 390,692 |   |   | $ | 1,836 |   |
| Equity securities                     |   |                |       |   |   |   |   |   |   |   | 10,548 |   |   |   | 33,675 |   |
| Total temporarily impaired securities |   | $                   | 10,157,640 |   |   | $ | 128,380 |   |   | $ | 401,240 |   |   | $ | 35,511 |   |

----

|                                                 |   | Directors |   |   | Officers |   |
|------------------------------------------------------|--------|-----------|--------|--------|----------|--------|
|                                                 |   | 2010      |   |   | 2009     |   |   | 2010 |   |   | 2009 |   |
| Service cost                                         |   | $         | 15,725 |   |     | $      | 10,305 |   |   | $ | 17,717 |   |   | $ | 31,235 |   |
| Interest cost on projected benefit obligation        |   |      | 12,608 |   |     |   | 7,945 |   |   |   | 57,833 |   |   |   | 65,547 |   |
| Amortization of unrecognized liability at transition |   |      | 432    |   |     |   | (2,259 | ) |   |   | 20,804 |   |   |   | 6,855 |   |
| Net periodic pension cost recognized                 |   | $         | 28,765 |   |     | $      | 15,991 |   |   | $ | 96,354 |   |   | $ | 103,637 |   |

|   | Note 8- Fair Value Measurement |
|--------|--------------------------------|

----

|                                      |   | 2010            |        |
|-------------------------------------------|--------|-----------------|-------------|
|                                      |   | Carrying Amount |        |   | Estimated Fair Value |   |
| Financial assets:                         |   |            |        |   |   |   |
| Cash and due from banks                   |   | $               | 3,699,878   |   |   | $ | 3,699,878 |   |
| Interest-bearing due from banks           |   |            | 42,169,596  |   |   |   | 42,169,596 |   |
| Investment securities available-for-sale  |   |            | 20,542,486  |   |   |   | 20,542,486 |   |
| Investment securities held- to-maturity   |   |            | 12,417,883  |   |   |   | 12,790,905 |   |
| Loans and lease financing receivable, net |   |            | 252,237,384 |   |   |   | 258,165,000 |   |
| Accrued interest receivable               |   |            | 1,673,277   |   |   |   | 1,673,277 |   |
| Cash surrender value of life insurance    |   |            | 11,251,978  |   |   |   | 11,251,978 |   |
|                                      |   |            |        |   |   |   |   |   |
| Financial liabilities:                    |   |            |        |   |   |   |   |   |
| Deposits                                  |   |            | 280,257,703 |   |   |   | 281,243,000 |   |
| Accrued interest payable                  |   |            | 67,294      |   |   |   | 67,294 |   |
| Federal Home Loan Bank Borrowings         |   |            | 60,000,000  |   |   |   | 59,947,000 |   |

----

| At March 31, 2010             |   |
|-------------------------------|--------|
|                          |   | Total |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
| Available-for-sale securities |   | $ | 20,542,486 |   |   | $ | 13,888 |   |   | $ | 20,528,598 |   |   | $ | 0 |   |

----

| March 31, 2010          |   |
|-------------------------|--------|
|                    |   | Total |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
| Impaired Loans          |   | $ | 31,635,789 |   |   | $ | 0 |   |   | $ | 31,635,789 |   |   | $ | 0 |   |
| Other Real Estate Owned |   | $ | 2,668,171 |   |   | $ | 0 |   |   | $ | 2,668,171 |   |   | $ | 0 |   |

----

SONOMA VALLEY BANCORP

|                                       |   | 2010                 |        |   | 2009                 |   |
|--------------------------------------------|--------|----------------------|-------------|--------|----------------------|--------|
| ASSETS                                     |   | Average Balance |        |   | Income/ Expense |   |   | Yield/ Rate  |   |   | Average Balance |   |   | Income/ Expense |   |   | Yield/ Rate |   |
| Interest-earning assets:                   |   |                 |        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans(2):                                  |   |                 |        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                 |   | $                    | 185,001,251 |   |                 | $      | 2,703,750 |   |   |   | 5.93 | % |   | $ | 183,155,354 |   |   | $ | 3,023,922 |   |   |   | 6.70 | % |
| Consumer                                   |   |                 | 36,454,339  |   |                 |   | 545,986 |   |   |   | 6.07 | % |   |   | 38,056,848 |   |   |   | 594,713 |   |   |   | 6.34 | % |
| Real estate construction                   |   |                 | 21,918,379  |   |                 |   | 194,604 |   |   |   | 3.60 | % |   |   | 29,057,761 |   |   |   | 456,510 |   |   |   | 6.37 | % |
| Real estate mortgage                       |   |                 | 22,909,532  |   |                 |   | 406,796 |   |   |   | 7.20 | % |   |   | 20,197,225 |   |   |   | 344,300 |   |   |   | 6.91 | % |
| Tax exempt loans (1)                       |   |                 | 1,982,833   |   |                 |   | 40,327 |   |   |   | 8.25 | % |   |   | 2,099,035 |   |   |   | 42,636 |   |   |   | 8.24 | % |
| Leases                                     |   |                 | 0           |   |                 |   | 0 |   |   |   | 0.00 | % |   |   | 17,634 |   |   |   | 0 |   |   |   | 0.00 | % |
| Unearned loan fees                         |   |                 | (221,829    | )      |                 |   |   |   |   |   |   |   |   |   | (227,360 | ) |   |   |   |   |   |   |   |   |
| Total loans                                |   |                 | 268,044,505 |   |                 |   | 3,891,463 |   |   |   | 5.89 | % |   |   | 272,356,497 |   |   |   | 4,462,081 |   |   |   | 6.64 | % |
| Investment securities                      |   |                 |        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available for sale:                        |   |                 |        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                    |   |                 | 20,559,081  |   |                 |   | 104,704 |   |   |   | 2.07 | % |   |   | 6,562,678 |   |   |   | 52,915 |   |   |   | 3.27 | % |
| Hold to maturity:                          |   |                 |        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                    |   |                 | 0           |   |                 |   | 0 |   |   |   | 0.00 | % |   |   | 0 |   |   |   | 0 |   |   |   | 0.00 | % |
| Tax exempt (1)                             |   |                 | 12,733,462  |   |                 |   | 191,095 |   |   |   | 6.09 | % |   |   | 13,857,462 |   |   |   | 204,206 |   |   |   | 5.98 | % |
| Total investment securities                |   |                 | 33,292,543  |   |                 |   | 295,799 |   |   |   | 3.60 | % |   |   | 20,420,140 |   |   |   | 257,121 |   |   |   | 5.11 | % |
| CA Warrants                                |   |                 | 8,112       |   |                 |   | 32 |   |   |   | 1.60 | % |   |   | 0 |   |   |   | 0 |   |   |   | 0.00 | % |
| FHLB stock                                 |   |                 | 2,720,778   |   |                 |   | 5 |   |   |   | 0.00 | % |   |   | 1,565,200 |   |   |   | 0 |   |   |   | 0.00 | % |
| Total due from banks/interest-bearing      |   |                 | 41,434,354  |   |                 |   | 22,999 |   |   |   | 0.23 | % |   |   | 10,712,227 |   |   |   | 6,868 |   |   |   | 0.26 | % |
| Total interest-earning assets              |   | $                    | 345,500,292 |   |                 | $      | 4,210,298 |   |   |   | 4.94 | % |   | $ | 305,054,064 |   |   | $ | 4,726,070 |   |   |   | 6.28 | % |
| Noninterest-bearing assets:                |   |                 |        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reserve for loan losses                    |   |                 | (11,960,799 | )      |                 |   |   |   |   |   |   |   |   |   | (5,046,979 | ) |   |   |   |   |   |   |   |   |
| Cash and due from banks                    |   |                 | 4,999,975   |   |                 |   |   |   |   |   |   |   |   |   | 5,013,880 |   |   |   |   |   |   |   |   |   |
| Premises and equipment                     |   |                 | 583,301     |   |                 |   |   |   |   |   |   |   |   |   | 719,315 |   |   |   |   |   |   |   |   |   |
| Other real estate owned                    |   |                 | 3,891,726   |   |                 |   |   |   |   |   |   |   |   |   | 284,731 |   |   |   |   |   |   |   |   |   |
| Other assets                               |   |                 | 26,308,451  |   |                 |   |   |   |   |   |   |   |   |   | 18,315,958 |   |   |   |   |   |   |   |   |   |
| Total assets                               |   | $                    | 369,322,946 |   |                 |   |   |   |   |   |   |   |   | $ | 324,340,969 |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY       |   |                 |        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:              |   |                 |        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest- bearing deposits                 |   |                 |        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing transaction               |   | $                    | 43,652,842  |   |                 | $      | 10,391 |   |   |   | 0.10 | % |   | $ | 29,551,433 |   |   | $ | 8,641 |   |   |   | 0.12 | % |
| Savings deposits                           |   |                 | 95,324,586  |   |                 |   | 140,618 |   |   |   | 0.60 | % |   |   | 87,759,695 |   |   |   | 228,534 |   |   |   | 1.06 | % |
| Time deposits over $100,000                |   |                 | 61,559,816  |   |                 |   | 280,368 |   |   |   | 1.85 | % |   |   | 55,168,874 |   |   |   | 385,894 |   |   |   | 2.84 | % |
| Other time deposits                        |   |                 | 33,713,520  |   |                 |   | 133,971 |   |   |   | 1.61 | % |   |   | 34,629,877 |   |   |   | 224,070 |   |   |   | 2.62 | % |
| Total interest-bearing deposits            |   |                 | 234,250,764 |   |                 |   | 565,348 |   |   |   | 0.98 | % |   |   | 207,109,879 |   |   |   | 847,139 |   |   |   | 1.66 | % |
| Other borrowings                           |   |                 | 58,000,000  |   |                 |   | 305,214 |   |   |   | 2.13 | % |   |   | 27,624,444 |   |   |   | 236,162 |   |   |   | 3.47 | % |
| Total interest-bearing liabilities         |   |                 | 292,250,764 |   |                 | $      | 870,562 |   |   |   | 1.21 | % |   |   | 234,734,323 |   |   | $ | 1,083,301 |   |   |   | 1.87 | % |
| Non interest-bearing liabilities:          |   |                 |        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non interest-bearing demand deposits       |   |                 | 50,706,426  |   |                 |   |   |   |   |   |   |   |   |   | 47,422,063 |   |   |   |   |   |   |   |   |   |
| Other liabilities                          |   |                 | 7,282,108   |   |                 |   |   |   |   |   |   |   |   |   | 7,730,856 |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                       |   |                 | 19,083,648  |   |                 |   |   |   |   |   |   |   |   |   | 34,453,727 |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders' equity |   | $                    | 369,322,946 |   |                 |   |   |   |   |   |   |   |   | $ | 324,340,969 |   |   |   |   |   |   |   |   |   |
| Interest rate spread                       |   |                 |        |   |                 |   |   |   |   |   | 3.73 | % |   |   |   |   |   |   |   |   |   |   | 4.41 | % |
| Interest income                            |   |                 |        |   |                 | $      | 4,210,298 |   |   |   | 4.94 | % |   |   |   |   |   | $ | 4,726,070 |   |   |   | 6.28 | % |
| Interest expense                           |   |                 |        |   |                 |   | 870,562 |   |   |   | 1.02 | % |   |   |   |   |   |   | 1,083,301 |   |   |   | 1.44 | % |
| Net interest income/margin                 |   |                 |        |   |                 | $      | 3,339,736 |   |   |   | 3.92 | % |   |   |   |   |   | $ | 3,642,769 |   |   |   | 4.84 | % |

| (1) | Fully tax equivalent adjustments are based on a federal income tax rate of 34% in 2010 and 2009. |
|-----|--------------------------------------------------------------------------------------------------|

| (2) | Non accrual loans have been included in loans for the purposes of the above presentation.  Loan fees of approximately $47,673 and $60,873 for the three months ended March 31, 2010 and 2009, respectively, were amortized to the appropriate interest income categories. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  RESULTS OF OPERATIONS

----

----

----

----

----

|                                     |   | March 31, |        |   | Percentage |   |   | December 31, |   |   | Percentage  |   |   | March 31, |   |   | Percentage |   |
|------------------------------------------|--------|-----------|-------------|--------|------------|--------|--------|--------------|--------|--------|-------------|--------|--------|-----------|--------|--------|------------|--------|
|                                     |   | 2010      |        |   | of Total   |   |   | 2009         |   |   | of Total    |   |   | 2009      |   |   | of Total   |   |
|                                     |   |      |        |   |       |   |   |         |   |   |        |   |   |      |   |   |       |   |
| One to four family residential           |   | $         | 59,371,723  |   |       |   | 22.4   | %            |   | $      | 63,852,298  |   |   |      | 23.5   | %      |       | $      | 60,406,565 |   |   |   | 21.6 | % |
| Multifamily residential                  |   |      | 21,732,494  |   |       |   | 8.2    | %            |   |   | 21,860,559  |   |   |      | 8.1    | %      |       |   | 25,294,423 |   |   |   | 9.0 | % |
| Farmland                                 |   |      | 8,885,416   |   |       |   | 3.4    | %            |   |   | 8,923,453   |   |   |      | 3.3    | %      |       |   | 7,541,203 |   |   |   | 2.7 | % |
| Commercial real estate                   |   |      | 109,529,796 |   |       |   | 41.4   | %            |   |   | 109,146,997 |   |   |      | 40.2   | %      |       |   | 107,228,912 |   |   |   | 38.3 | % |
| Construction/Land Development 1-4 family |   |      | 26,156,915  |   |       |   | 9.9    | %            |   |   | 27,604,056  |   |   |      | 10.2   | %      |       |   | 32,179,727 |   |   |   | 11.5 | % |
| Other construction/land development      |   |      | 15,767,978  |   |       |   | 6.0    | %            |   |   | 16,007,666  |   |   |      | 5.9    | %      |       |   | 23,785,825 |   |   |   | 8.5 | % |
| Consumer loans                           |   |      | 2,957,554   |   |       |   | 1.1    | %            |   |   | 3,273,139   |   |   |      | 1.2    | %      |       |   | 3,815,041 |   |   |   | 1.4 | % |
| Other loans to farmers                   |   |      | 3,839,029   |   |       |   | 1.4    | %            |   |   | 3,934,468   |   |   |      | 1.4    | %      |       |   | 3,737,754 |   |   |   | 1.3 | % |
| Commercial, non real estate              |   |      | 14,680,807  |   |       |   | 5.5    | %            |   |   | 14,881,960  |   |   |      | 5.5    | %      |       |   | 13,849,138 |   |   |   | 5.0 | % |
| Municipalities                           |   |      | 1,982,833   |   |       |   | 0.7    | %            |   |   | 1,982,833   |   |   |      | 0.7    | %      |       |   | 2,099,035 |   |   |   | 0.7 | % |
| Lease financing receivables              |   |      | 0           |   |       |   | 0.0    | %            |   |   | 0           |   |   |      | 0.0    | %      |       |   | 17,634 |   |   |   | 0.0 | % |
| Total gross loans                        |   |      | 264,904,545 |   |       |   | 100.0  | %            |   |   | 271,467,429 |   |   |      | 100.0  | %      |       |   | 279,955,257 |   |   |   | 100.0 | % |
| Deferred loan fees                       |   |      | (212,730    | )      |       |   |   |         |   |   | (229,407    | )      |   |      |   |   |       |   | (250,931 | ) |   |   |   |   |
| Loans net of deferred loan fees          |   | $         | 264,691,815 |   |       |   |   |         |   | $      | 271,238,022 |   |   |      |   |   |       | $      | 279,704,326 |   |   |   |   |   |

----

----

----

|                                                                        |   | March 31, 2010 |       |   | December 31, 2009 |   |
|-----------------------------------------------------------------------------|--------|----------------|------------|--------|-------------------|--------|
| Non-accrual loans                                                           |   | $              | 30,901,475 |   |              | $      | 22,197,070 |   |
| Loans 90 days past due                                                      |   |           | 44,841     |   |              |   | 0 |   |
| Other real estate owned                                                     |   |           | 2,668,171  |   |              |   | 3,852,349 |   |
| Restructured loans                                                          |   |           | 6,019,386  |   |              |   | 7,315,444 |   |
| Total non performing assets                                                 |   | $              | 39,633,873 |   |              | $      | 33,364,863 |   |
|                                                                        |   |           |       |   |              |   |   |   |
| Nonperforming assets as a percent of loans, net of unearned fees, plus OREO |   |           | 14.82      | %      |              |   | 12.13 | % |
| Nonperforming assets as a percent of total assets                           |   |           | 10.91      | %      |              |   | 9.31 | % |

----

|                                                        |   | For the ThreeMonths Ended3/31/10 |       |   | For the YearEnded12/31/09 |   |        | For the ThreeMonths Ended3/31/09 |   |
|-------------------------------------------------------------|--------|----------------------------------|------------|--------|---------------------------|--------|-------------|----------------------------------|--------|
|                                                        |   |                             |       |   |                      |   |        |                             |   |
| Beginning balance                                           |   | $                                | 13,066,053 |   |                      | $      | 5,032,500   |                             |   | $ | 5,032,500 |   |
| Provision for loan and lease losses                         |   |                             | 1,900,000  |   |                      |   | 31,130,000  |                             |   |   | 630,000 |   |
| Loans charged off:                                          |   |                             |       |   |                      |   |        |                             |   |   |   |   |
| Commercial                                                  |   |                             | (2,322,471 | )      |                      |   | (18,890,415 | )                                |   |   | (438,253 | ) |
| Consumer                                                    |   |                             | (10,263    | )      |                      |   | (1,013,025  | )                                |   |   | (58,000 | ) |
| Real Estate Construction                                    |   |                             | (270,959   | )      |                      |   | (2,368,456  | )                                |   |   | 0 |   |
| Real Estate Loans                                           |   |                             | (46,550    | )      |                      |   | (961,920    | )                                |   |   | (154,988 | ) |
| Leases                                                      |   |                             | 0          |   |                      |   | (17,634     | )                                |   |   | 0 |   |
| Overdrafts                                                  |   |                             | (43,607    | )      |                      |   | (144,164    | )                                |   |   | (20,070 | ) |
| Total charge-offs                                           |   |                             | (2,693,850 | )      |                      |   | (23,395,614 | )                                |   |   | (671,311 | ) |
| Recoveries:                                                 |   |                             |       |   |                      |   |        |                             |   |   |   |   |
| Commercial                                                  |   |                             | 33,094     |   |                      |   | 266,497     |                             |   |   | 48,800 |   |
| Consumer                                                    |   |                             | 24,999     |   |                      |   | 12,074      |                             |   |   | 1,882 |   |
|        Real Estate Loans |   |                             | 122,202    |   |                      |   | 0           |                             |   |   | 0 |   |
| Leases                                                      |   |                             | 0          |   |                      |   | 17,634      |                             |   |   | 0 |   |
| Overdrafts                                                  |   |                             | 1,933      |   |                      |   | 2,962       |                             |   |   | 473 |   |
| Total recoveries                                            |   |                             | 182,228    |   |                      |   | 299,167     |                             |   |   | 51,155 |   |
| Net recoveries (charge-offs)                                |   |                             | (2,511,622 | )      |                      |   | (23,096,447 | )                                |   |   | (620,156 | ) |
| Ending balance                                              |   | $                                | 12,454,431 |   |                      | $      | 13,066,053  |                             |   | $ | 5,042,344 |   |

----

|                                       |   | March 31, 2010 |        |   | Percentage  of Total |   |   | December 31, 2009 |   |   | Percentage  of Total |   |   | March 31, 2009 |   |   | Percentage  of Total |   |
|--------------------------------------------|--------|---------------------|-------------|--------|---------------------------|--------|--------|------------------------|--------|--------|--------------------------------|--------|--------|---------------------|--------|--------|---------------------------|--------|
|                                       |   |                |        |   |                      |   |   |                   |   |   |                           |   |   |                |   |   |                      |   |
| Interest-bearing transaction deposits      |   | $                   | 42,034,496  |   |                      |   | 15.0   | %                      |   | $      | 33,110,822                     |   |   |                | 11.3   | %      |                      | $      | 29,109,747 |   |   |   | 11.0 | % |
| Savings deposits                           |   |                | 94,212,987  |   |                      |   | 33.6   | %                      |   |   | 96,053,335                     |   |   |                | 32.9   | %      |                      |   | 91,953,928 |   |   |   | 34.8 | % |
| Time deposits, $100,000 and over           |   |                | 58,507,104  |   |                      |   | 20.9   | %                      |   |   | 75,730,229                     |   |   |                | 26.0   | %      |                      |   | 58,919,208 |   |   |   | 22.3 | % |
| Other time deposits                        |   |                | 32,828,241  |   |                      |   | 11.7   | %                      |   |   | 34,911,841                     |   |   |                | 12.0   | %      |                      |   | 35,253,932 |   |   |   | 13.4 | % |
| Total interest-bearing  deposits |   |                | 227,582,828 |   |                      |   | 81.2   | %                      |   |   | 239,806,227                    |   |   |                | 82.2   | %      |                      |   | 215,236,815 |   |   |   | 81.5 | % |
| Demand deposits                            |   |                | 52,674,875  |   |                      |   | 18.8   | %                      |   |   | 51,902,932                     |   |   |                | 17.8   | %      |                      |   | 48,800,308 |   |   |   | 18.5 | % |
| Total deposits                             |   | $                   | 280,257,703 |   |                      |   | 100.0  | %                      |   | $      | 291,709,159                    |   |   |                | 100.0  | %      |                      | $      | 264,037,123 |   |   |   | 100.0 | % |

----

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| Variation from a constant rate scenario |   |   | $ Change in NII |   |
|-----------------------------------------|--------|--------|-----------------|--------|
|                                    | +400   | bp     |            | $      | 2,765 |   |
|                                    | +300   | bp     |            | $      | 1,922 |   |
|                                    | +200   | bp     |            | $      | 1,145 |   |
|                                    | +100   | bp     |            | $      | 487 |   |
|                                    | -25    | bp     |            | $      | (  198 | ) |

----

|  MARCH 31, 2010   (dollars in thousands) |   | Immediate Reprice |    |   | Up to 3 Months |   |    | 4 to 6 Months |   |   | 7 to 12 Months |   |   | Over 12 Months |    |   | Total  |   |
|--------------------------------------------------------------|--------|------------------------|---------|--------|---------------------|--------|---------|--------------------|--------|--------|---------------------|--------|--------|---------------------|---------|--------|--------|--------|
| FFS + overnight IBB                                          |   | $                      | 31,448  |   |                | $      | 0       |               |   | $      | 0                   |   |   | $                   | 0       |   |   | $      | 0 |   |   | $ | 31,448 |   |
| Securities + Other IBB                                       |   |                   | 0       |   |                |   | 11,428  |               |   |   | 485                 |   |   |                | 970     |   |   |   | 30,804 |   |   |   | 43,687 |   |
| Loans                                                        |   |                   | 61,556  |   |                |   | 10,051  |               |   |   | 15,822              |   |   |                | 29,547  |   |   |   | 135,262 |   |   |   | 252,238 |   |
| Total RSA                                                    |   | $                      | 93,004  |   |                | $      | 21,479  |               |   | $      | 16,307              |   |   | $                   | 30,517  |   |   | $      | 166,066 |   |   | $ | 327,373 |   |
|                                                         |   |                   |    |   |                |   |    |               |   |   |                |   |   |                |    |   |   |   |   |   |   |   |   |   |
| MMDA/NOW/SAV                                                 |   | $                      | 136,248 |   |                | $      | 0       |               |   | $      | 0                   |   |   | $                   | 0       |   |   | $      | 0 |   |   | $ | 136,248 |   |
| CD’s <$100k                                         |   |                   | 0       |   |                |   | 10,471  |               |   |   | 8,280               |   |   |                | 8,280   |   |   |   | 5,798 |   |   |   | 32,829 |   |
| CD’s >$100k                                         |   |                   | 0       |   |                |   | 15,303  |               |   |   | 19,173              |   |   |                | 4,793   |   |   |   | 19,238 |   |   |   | 58,507 |   |
| Borrowings                                                   |   |                   | 0       |   |                |   | 0       |               |   |   | 5,000               |   |   |                | 5,000   |   |   |   | 50,000 |   |   |   | 60,000 |   |
| Total RSL                                                    |   | $                      | 136,248 |   |                | $      | 25,774  |               |   | $      | 32,453              |   |   | $                   | 18,073  |   |   | $      | 75,036 |   |   | $ | 287,584 |   |
|                                                         |   |                   |    |   |                |   |    |               |   |   |                |   |   |                |    |   |   |   |   |   |   |   |   |   |
| GAP                                                          |   | $                      | (43,244 | )      |                | $      | (4,295  | )                  |   | $      | (16,146             | )      |   | $                   | 12,444  |   |   | $      | 91,030 |   |   | $ | 39,789 |   |
| Cumulative                                                   |   | $                      | (43,244 | )      |                | $      | (47,539 | )                  |   | $      | (63,685             | )      |   | $                   | (51,241 | )      |   | $      | 39,789 |   |   |   |   |   |
| % Assets                                                     |   |                   | -11.9   | %      |                |   | -13.1   | %                  |   |   | -17.5               | %      |   |                | -14.1   | %      |   |   | 11.0 | % |   |   |   |   |

| Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK |
|---------|-----------------------------------------------------------|

| Item 4. | CONTROLS AND PROCEDURES |
|---------|-------------------------|

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| Item 1. | LEGAL PROCEEDINGS |
|---------|-------------------|

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Risk Factors

|   | Our Securities Portfolio may be Negatively Impacted by Fluctuations in Market Value. |
|--------|--------------------------------------------------------------------------------------|

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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

DEFAULTS UPON SENIOR SECURITIES

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

OTHER INFORMATION

 EXHIBITS

|   | 31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act |
|--------|------|------------------------------------------------------------------------------------------------|

|   | 31.2 | Certification of Principal Financial Officer and Principal Accounting Officer  pursuant to Section 302 of the Sarbanes-Oxley Act |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32 | Certification of CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act |
|--------|----|--------------------------------------------------------------------------------|

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|   |                                             |   | SONOMA VALLEY BANCORP                                          |   |
|--------|--------------------------------------------------|--------|----------------------------------------------------------------|--------|
|   |                                             |   | (Registrant)                                                   |   |
|   |                                             |   |                                                           |   |
|   |                                             |   |                                                           |   |
| Date:  |       May 14, 2010 |   | /s/Sean C. Cutting                                        |   |
|   |                                             |   | Sean C. Cutting                                                |   |
|   |                                             |   | President and Chief Executive Officer                          |   |
|   |                                             |   | (Principal Executive Officer)                                  |   |
|   |                                             |   |                                                           |   |
|   |                                             |   |                                                           |   |
| Date:  |       May 14, 2010 |   | /s/Mary Dieter Smith                                           |   |
|   |                                             |   | Mary Dieter Smith                                              |   |
|   |                                             |   | Executive Vice President and Chief Financial Officer           |   |
|   |                                             |   | (Principal Financial Officer and Principal Accounting Officer) |   |

----