----

----

| 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)                           |

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| Part      I  Financial Information                                                                                                                         | Page Number |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|
|                                                                                                                                                                 |        |
| Item      1. Financial Statements (Unaudited):                                                                                                                       |        |
|                                                                                                                                                                 |        |
| Consolidated Balance Sheets at March 31,      2008, December 31, 2007 and March 31, 2007                                                                             | 3           |
|                                                                                                                                                                 |        |
| Consolidated Statements of      Operations for the three months ended March 31, 2008 and      2007                                                                   | 4           |
|                                                                                                                                                                 |        |
| Consolidated Statements of Changes in      Shareholders’ Equity for the three months ended March 31, 2008, and the      years ended December 31, 2007 and 2006 | 5           |
|                                                                                                                                                                 |        |
| Consolidated Statements of Cash Flows for the      three months ended March 31, 2008 and 2007                                                                        | 7           |
|                                                                                                                                                                 |        |
| Notes to Consolidated Financial      Statements                                                                                                                      | 8           |
|                                                                                                                                                                 |        |
| Average Balances, Yields and Rates Paid for the      three months ended March 31, 2008 and 2007                                                                      | 10          |
|                                                                                                                                                                 |        |
| Item      2. Management's Discussion and Analysis      of Financial Condition and Results of Operations                                                              | 11          |
|                                                                                                                                                                 |        |
| Item      3. Quantitative and Qualitative      Disclosure About Market Risk                                                                                          | 21          |
|                                                                                                                                                                 |        |
| Item      4. Controls and    Procedures                                                                                                                              | 21          |
|                                                                                                                                                                 |        |
| Part      II  Other Information                                                                                                                            |        |
|                                                                                                                                                                 |        |
| Item      1. Legal Proceedings                                                                                                                                       | 22          |
|                                                                                                                                                                 |        |
| Item      2. Unregistered Sales of Equity Securities      and Use of Proceeds                                                                                        | 22          |
|                                                                                                                                                                 |        |
| Item      3. Defaults Upon Senior      Securities                                                                                                                    | 22          |
|                                                                                                                                                                 |        |
| Item      4. Submission of Matters to a Vote of      Security Holders                                                                                                | 22          |
|                                                                                                                                                                 |        |
| Item      5. Other Information                                                                                                                                       | 22          |
|                                                                                                                                                                 |        |
| Item      6. Exhibits                                                                                                                                                | 22          |
|                                                                                                                                                                 |        |
| Signatures                                                                                                                                                           | 23          |
|                                                                                                                                                                 |        |
| Exhibit Index                                                                                                                                                        | 24          |
|     Exhibit 31.1                                                                                                                                 |        |
|     Exhibit 31.2                                                                                                                                 |        |
|     Exhibit 32.                                                                                                                                  |        |

----

CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                                             |   | March      31, 2008 |        |   | December      31, 2007 |   |        | March      31, 2007 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|-------------|--------|-----------------------------|--------|-------------|--------------------------|--------|
| ASSETS                                                                                                                                                                                                           |   |                     |        |   |                        |   |        |                     |   |
| Cash      and due from banks                                                                                                                                                                                     |   | $                        | 6,375,749   |   |                        | $      | 6,268,091   |                     |   | $ | 4,224,739 |   |
| Federal      funds sold                                                                                                                                                                                          |   |                     | 0           |   |                        |   | 0           |                     |   |   | 0 |   |
| Interest-bearing      due from banks                                                                                                                                                                             |   |                     | 6,895,623   |   |                        |   | 3,065,543   |                     |   |   | 338,125 |   |
| Total      cash and cash equivalents                                                                                                                                                                             |   |                     | 13,271,372  |   |                        |   | 9,333,634   |                     |   |   | 4,562,864 |   |
| Investment      securities available-for-sale at fair value                                                                                                                                                      |   |                     | 3,278,041   |   |                        |   | 8,203,190   |                     |   |   | 15,054,831 |   |
| Investment      securities held-to-maturity (fair value of $14,604,518, $14,754,249 and      $15,915,065 respectively)                                                                                           |   |                     | 14,228,473  |   |                        |   | 14,554,224  |                     |   |   | 15,788,875 |   |
| Loans      and lease financing receivables, net                                                                                                                                                                  |   |                     | 248,126,995 |   |                        |   | 246,738,218 |                     |   |   | 222,256,180 |   |
| Premises      and equipment, net                                                                                                                                                                                 |   |                     | 817,415     |   |                        |   | 792,455     |                     |   |   | 888,395 |   |
| Accrued      interest receivable                                                                                                                                                                                 |   |                     | 1,659,121   |   |                        |   | 1,682,209   |                     |   |   | 1,626,008 |   |
| Other      real estate owned                                                                                                                                                                                     |   |                     | 320,416     |   |                        |   | 0           |                     |   |   | 0 |   |
| Cash      surrender value of life insurance                                                                                                                                                                      |   |                     | 10,460,165  |   |                        |   | 10,354,153  |                     |   |   | 10,032,853 |   |
| Other      assets                                                                                                                                                                                                |   |                     | 5,863,485   |   |                        |   | 6,201,195   |                     |   |   | 4,905,095 |   |
| Total      assets                                                                                                                                                                                                |   | $                        | 298,025,483 |   |                        | $      | 297,859,278 |                     |   | $ | 275,115,101 |   |
| LIABILITIES                                                                                                                                                                                                      |   |                     |        |   |                        |   |        |                     |   |   |   |   |
| Noninterest-bearing      demand deposits                                                                                                                                                                         |   | $                        | 49,534,037  |   |                        | $      | 58,589,202  |                     |   | $ | 50,309,251 |   |
| Interest-bearing      transaction deposits                                                                                                                                                                       |   |                     | 32,523,931  |   |                        |   | 30,135,049  |                     |   |   | 31,070,263 |   |
| Savings      and money market deposits                                                                                                                                                                           |   |                     | 75,938,300  |   |                        |   | 73,528,081  |                     |   |   | 77,869,582 |   |
| Time      deposits, $100,000 and over                                                                                                                                                                            |   |                     | 50,915,989  |   |                        |   | 44,160,741  |                     |   |   | 37,602,997 |   |
| Other      time deposits                                                                                                                                                                                         |   |                     | 31,570,905  |   |                        |   | 29,634,626  |                     |   |   | 27,952,516 |   |
| Total      deposits                                                                                                                                                                                              |   |                     | 240,483,162 |   |                        |   | 236,047,699 |                     |   |   | 224,804,609 |   |
| Other      borrowings                                                                                                                                                                                            |   |                     | 22,300,000  |   |                        |   | 27,500,000  |                     |   |   | 17,500,000 |   |
| Accrued      interest payable and other liabilities                                                                                                                                                              |   |                     | 6,154,221   |   |                        |   | 6,377,299   |                     |   |   | 5,312,639 |   |
| Total      liabilities                                                                                                                                                                                           |   |                     | 268,937,383 |   |                        |   | 269,924,998 |                     |   |   | 247,617,248 |   |
| SHAREHOLDERS'      EQUITY                                                                                                                                                                                        |   |                     |        |   |                        |   |        |                     |   |   |   |   |
| Common      stock, no par value; 10,000,000 shares authorized; 2,288,709 shares at      March 31, 2008, 2,242,809 shares at December 31, 2007 and 2,319,627 shares      at March 31, 2007 issued and outstanding |   |                     | 16,222,864  |   |                        |   | 15,578,903  |                     |   |   | 15,878,269 |   |
| Additional      paid-in-capital                                                                                                                                                                                  |   |                     | 2,583,348   |   |                        |   | 2,455,409   |                     |   |   | 2,449,647 |   |
| Retained      earnings                                                                                                                                                                                           |   |                     | 10,275,643  |   |                        |   | 9,934,967   |                     |   |   | 9,288,259 |   |
| Accumulated      other comprehensive income(loss)                                                                                                                                                                |   |                     | 6,245       |   |                        |   | (34,999     | )                        |   |   | (118,322 | ) |
| Total      shareholders' equity                                                                                                                                                                                  |   |                     | 29,088,100  |   |                        |   | 27,934,280  |                     |   |   | 27,497,853 |   |
| Total      liabilities and shareholders' equity                                                                                                                                                                  |   | $                        | 298,025,483 |   |                        | $      | 297,859,278 |                     |   | $ | 275,115,101 |   |

----

CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                       |   | 2008   |      |   | 2007   |   |
|----------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| INTEREST      INCOME                                                       |   |   |      |   |   |   |
| Loans      and leases                                                      |   | $      | 4,931,754 |   |   | $      | 4,605,806 |   |
| Taxable      securities                                                    |   |   | 51,926    |   |   |   | 155,431 |   |
| Tax-exempt      securities                                                 |   |   | 135,832   |   |   |   | 153,580 |   |
| Federal      funds sold                                                    |   |   | 27,921    |   |   |   | 6,452 |   |
| Dividends                                                                  |   |   | 23,867    |   |   |   | 16,793 |   |
| Total      interest income                                                 |   |   | 5,171,300 |   |   |   | 4,938,062 |   |
| INTEREST      EXPENSE                                                      |   |   |      |   |   |   |   |   |
| Interest-bearing      transaction deposits                                 |   |   | 13,148    |   |   |   | 11,717 |   |
| Savings      and money market deposits                                     |   |   | 415,892   |   |   |   | 466,075 |   |
| Time      deposits, $100,000 and over                                      |   |   | 548,153   |   |   |   | 443,635 |   |
| Other      time deposits                                                   |   |   | 328,293   |   |   |   | 295,362 |   |
| Other      borrowings                                                      |   |   | 294,727   |   |   |   | 246,138 |   |
| Total      interest expense                                                |   |   | 1,600,213 |   |   |   | 1,462,927 |   |
| NET      INTEREST INCOME                                                   |   |   | 3,571,087 |   |   |   | 3,475,135 |   |
| Provision      for loan and lease losses                                   |   |   | 220,000   |   |   |   | 135,000 |   |
| NET      INTEREST INCOME AFTERPROVISION      FOR LOAN ANDLEASE      LOSSES |   |   | 3,351,087 |   |   |   | 3,340,135 |   |
| NON-INTEREST      INCOME                                                   |   |   | 556,934   |   |   |   | 549,788 |   |
| NON-INTEREST      EXPENSE                                                  |   |   |      |   |   |   |   |   |
| Salaries      and employee benefits                                        |   |   | 1,428,292 |   |   |   | 1,447,843 |   |
| Premises      and equipment                                                |   |   | 228,705   |   |   |   | 244,481 |   |
| Other                                                                      |   |   | 724,777   |   |   |   | 505,987 |   |
| Total      non-interest expense                                            |   |   | 2,381,774 |   |   |   | 2,198,311 |   |
| Income      before provision for income taxes                              |   |   | 1,526,247 |   |   |   | 1,691,612 |   |
| Provision      for income taxes                                            |   |   | 498,958   |   |   |   | 675,714 |   |
| NET      INCOME                                                            |   | $      | 1,027,289 |   |   | $      | 1,015,898 |   |
| NET      INCOME PER SHARE                                                  |   | $      | .46       |   |   | $      | .45 |   |
| NET      INCOME PER SHAREASSUMING      DILUTION                            |   | $      | .45       |   |   | $      | .43 |   |

----

CONSOLIDATED STATEMENTS OF CHANGES INSHAREHOLDERS' EQUITY

|                                                                                                                                                                           |                                                                           |                                                                                 |                                                                                                                           |                                                                                                               |                                                                                                                                                                     |                                                               |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------|
|                                                                                                                                                                           | Comprehensive                                                                  | Common Stock                                                                         | Additional      Paid-in                                                                                                        | Retained                                                                                                           | Accumulated      Other Comprehensive                                                                                                                                     |                                                               |
|                                                                                                                                                                           |        Income      |    Shares                                              |      Amount                                                                       |     Capital                                                                |         Earnings                                                                         |      Income      |       Total       |
|                                                                                                                                                                           |                                                                           |                                                                                 |                                                                                                                           |                                                                                                               |                                                                                                                                                                     |                                                               |   |
| BALANCE      AT JANUARY 1, 2006                                                                                                                                                |                                                                           | 2,204,949                                                                            | $  15,004,135                                                                                                        | $  1,252,292                                                                                             | $  7,493,757                                                                                                                                                   | $      (310,391)                                                   | $23,439,793 |
| Redemption      and retirement  of stock                                                                                                                             |                                                                           | (55,028)                                                                             | (410,308)                                                                                                                      |                                                                                                               | (1,025,843)                                                                                                                                                              |                                                               | (1,436,151) |
| Stock      options exercised and related tax benefits                                                                                                                          |                                                                           | 104,126                                                                              | 885,729                                                                                                                        | 438,757                                                                                                            |                                                                                                                                                                     |                                                               | 1,324,486 |
| Cash      dividend of $.55 per share                                                                                                                                           |                                                                           |                                                                                 |                                                                                                                           |                                                                                                               | (1,252,957)                                                                                                                                                              |                                                               | (1,252,957) |
| Stock      options granted                                                                                                                                                     |                                                                           | 29,000                                                                               |                                                                                                                           | 100,224                                                                                                            |                                                                                                                                                                     |                                                               | 100,224 |
| Restricted      stock granted                                                                                                                                                  |                                                                           |                                                                                 |                                                                                                                           | 81,375                                                                                                             |                                                                                                                                                                     |                                                               | 81,375 |
| Net      income for the year                                                                                                                                                   | $   3,991,759                                                   |                                                                                 |                                                                                                                           |                                                                                                               | 3,991,759                                                                                                                                                                |                                                               | 3,991,759 |
| Other      comprehensive income, net of tax: Unrealized holding losses on securities      available- for-sale arising during the year, net of taxes of      $108,781           |       155,542                                    |                                                                                 |                                                                                                                           |                                                                                                               |                                                                                                                                                                     |                                                               |   |
| Other      comprehensive loss, net of taxes                                                                                                                                    |       155,542                                    |                |                       |                     |                              |          155,542      |       155,542 |
| Total      comprehensive income                                                                                                                                                | $   4,147,301                                                   |                                                                                 |                                                                                                                           |                                                                                                               |                                                                                                                                                                     |                                                               |   |
| BALANCE      AT  DECEMBER 31, 2006                                                                                                                                   |                                                                           | 2,283,047                                                                            | 15,479,556                                                                                                                     | 1,872,648                                                                                                          | 9,206,716                                                                                                                                                                | (154,849)                                                          | 26,404,071 |
| Redemption      and retirement  of stock                                                                                                                             |                                                                           | (100,415)                                                                            | (689,422)                                                                                                                      |                                                                                                               | (2,243,816)                                                                                                                                                              |                                                               | (2,933,238) |
| Stock      options exercised and related tax benefits                                                                                                                          |                                                                           | 60,177                                                                               | 626,019                                                                                                                        | 358,353                                                                                                            |                                                                                                                                                                     |                                                               | 984,372 |
| Cash      dividend of $.60 per share                                                                                                                                           |                                                                           |                                                                                 |                                                                                                                           |                                                                                                               | (1,371,471)                                                                                                                                                              |                                                               | (1,371,471) |
| Stock      options granted                                                                                                                                                     |                                                                           |                                                                                 |                                                                                                                           | 216,473                                                                                                            |                                                                                                                                                                     |                                                               | 216,473 |
| Restricted      stock granted                                                                                                                                                  |                                                                           |                                                                                 |                                                                                                                           | 162,750                                                                                                            |                                                                                                                                                                     |                                                               | 162,750 |
| Restricted      stock vested and related tax benefit                                                                                                                           |                                                                           |                                                                                 | 162,750                                                                                                                        | (154,815)                                                                                                          |                                                                                                                                                                     |                                                               | 7,935 |
| Net      income for the year                                                                                                                                                   | $   4,343,538                                                   |                                                                                 |                                                                                                                           |                                                                                                               | 4,343,538                                                                                                                                                                |                                                               | 4,343,538 |
| Other      comprehensive  income, net of tax: Unrealized holding losses on      securities available- for-sale arising during the year, net of taxes of      $83,819 |         119,850                        |                                                                                 |                                                                                                                           |                                                                                                               |                                                                                                                                                                     |                                                               |   |
| Other      comprehensive  loss, net of taxes                                                                                                                         |         119,850                        |                |                       |                     |                              |          119,850      |        119,850 |
| Total      comprehensive income                                                                                                                                                | $   4,463,388                                                   |                                                                                 |                                                                                                                           |                                                                                                               |                                                                                                                                                                     |                                                               |   |

----

|                                                                                                                                                                                     |   | Comprehensive |      |   | Common Stock |      |      | Additional      Paid-in |   |       | Retained   |   |   | Accumulated      Other Comprehensive |      |   |   |      |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-----------|--------|--------------|-----------|-----------|-------------------------|--------|------------|------------|--------|--------|--------------------------------------|-----------|--------|--------|-----------|
|                                                                                                                                                                                     |   | Income        |      |   | Shares       |      |      | Amount                  |   |       | Capital    |   |   | Earnings                             |      |   | Income |      |   | Total |   |
|                                                                                                                                                                                     |   |          |      |   |         |      |      |                    |   |       |       |   |   |                                 |      |   |   |      |   |   |   |
| BALANCE      AT DECEMBER 31, 2007                                                                                                                                                        |   |          |      |   |         | 2,242,809 |      |                    | $      | 15,578,903 |       |   | $      | 2,455,409                            |      |   | $      | 9,934,967 |   |   | $ | (34,999 | ) |   | $ | 27,934,280 |   |
| Redemption      and retirement  of stock                                                                                                                                       |   |          |      |   |         |      |      |                    |   |       |       |   |   |                                 |      |   |   |      |   |   |   |   |   |   |   |   |   |
| Stock      options exercised and related tax benefits                                                                                                                                    |   |          |      |   |         | 45,900    |      |                    |   | 643,961    |       |   |   | 72,313                               |      |   |   |      |   |   |   |   |   |   |   | 716,274 |   |
| Cash      dividend of $.30 per share                                                                                                                                                     |   |          |      |   |         |      |      |                    |   |       |       |   |   |                                 |      |   |   | (686,613  | ) |   |   |   |   |   |   | (686,613 | ) |
| Stock      options granted                                                                                                                                                               |   |          |      |   |         |      |      |                    |   |       |       |   |   | 14,939                               |      |   |   |      |   |   |   |   |   |   |   | 14,939 |   |
| Restricted      stock granted                                                                                                                                                            |   |          |      |   |         |      |      |                    |   |       |       |   |   | 40,687                               |      |   |   |      |   |   |   |   |   |   |   | 40,687 |   |
| Net      income for the year                                                                                                                                                             |   | $             | 1,027,289 |   |         |      |      |                    |   |       |       |   |   |                                 |      |   |   |      | 1,027,289 |   |   |   |   |   |   |   | 1,027,289 |   |
| Other      comprehensive income,  net of tax:  Unrealized holding      gains on securities available- for-sale arising during the year, net of      taxes of $28,843 |   |          | 41,244    |   |         |      |      |                    |   |       |       |   |   |                                 |      |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive loss,  net of taxes                                                                                                                                   |   |          | 41,244    |   |         |      |      |                    |   |       |       |   |   |                                 |      |   |   |      |   |   |   |   | 41,244 |   |   |   | 41,244 |   |
| Total      comprehensive income                                                                                                                                                          |   | $             | 1,068,533 |   |         |      |      |                    |   |       |       |   |   |                                 |      |   |   |      |   |   |   |   |   |   |   |   |   |   |
| BALANCE      AT MARCH 31, 2008                                                                                                                                                           |   |          |      |   |         |      | 2,288,709 |                    |   | $          | 16,222,864 |   |   | $                                    | 2,583,348 |   |   | $         | 10,275,643 |   |   | $ | 6,245 |   |   | $ | 29,088,100 |   |

----

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                        |   | 2008    |       |   | 2007   |   |
|---------------------------------------------------------------------------------------------|--------|---------|------------|--------|--------|--------|
| OPERATING      ACTIVITIES                                                                   |   |    |       |   |   |   |
| Net      income                                                                             |   | $       | 1,027,289  |   |   | $      | 1,015,898 |   |
| Adjustments      to reconcile net income to net cash provided by operating      activities: |   |    |       |   |   |   |   |   |
| Provision      for loan and lease losses                                                    |   |    | 220,000    |   |   |   | 135,000 |   |
| Depreciation                                                                                |   |    | 56,472     |   |   |   | 65,500 |   |
| Amortization      and other                                                                 |   |    | 18,487     |   |   |   | 14,018 |   |
| Stock      options and restricted stock granted                                             |   |    | 55,626     |   |   |   | 233,638 |   |
| Net      change in interest receivable                                                      |   |    | 23,088     |   |   |   | 45,610 |   |
| Net      change in cash surrender value of life insurance                                   |   |    | (106,012   | )      |   |   | (445,547 | ) |
| Net      change in other assets                                                             |   |    | 467,580    |   |   |   | 313,316 |   |
| Net      change in interest payable and other liabilities                                   |   |    | (223,078   | )      |   |   | (569,809 | ) |
| NET      CASH PROVIDED BY OPERATING ACTIVITIES                                              |   |    | 1,539,452  |   |   |   | 807,624 |   |
| INVESTING      ACTIVITIES                                                                   |   |    |       |   |   |   |   |   |
| Purchases      of securities available-for-sale                                             |   |    | (1,007,500 | )      |   |   | 0 |   |
| Proceeds      from maturing securities held-to-maturity                                     |   |    | 310,000    |   |   |   | 0 |   |
| Proceeds      from maturing securities available-for-sale                                   |   |    | 6,000,000  |   |   |   | 6,000,000 |   |
| Net      change in loans and leases                                                         |   |    | (1,929,193 | )      |   |   | (6,060,490 | ) |
| Purchases      of premises and equipment                                                    |   |    | ( 81,432   | )      |   |   | (4,670 | ) |
| NET      CASH PROVIDED(USED) FOR INVESTING ACTIVITIES                                       |   |    | 3,291,875  |   |   |   | (65,160 | ) |
| FINANCING      ACTIVITIES                                                                   |   |    |       |   |   |   |   |   |
| Net      change in demand, interest-bearing transaction and savings      deposits           |   |    | (4,256,064 | )      |   |   | (1,821,083 | ) |
| Net      change in time deposits                                                            |   |    | 8,691,527  |   |   |   | (6,141,723 | ) |
| Stock      repurchases                                                                      |   |    | 0          |   |   |   | (315,338 | ) |
| Cash      dividend paid                                                                     |   |    | (686,613   | )      |   |   | (695,888 | ) |
| Net      change in FHLB borrowings                                                          |   |    | (5,200,000 | )      |   |   | 4,900,000 |   |
| Stock      options exercised                                                                |   |    | 557,561    |   |   |   | 442,176 |   |
| NET      CASH USED BY FINANCING ACTIVITIES                                             |   |    | (893,589   | )      |   |   | (3,631,856 | ) |
| NET      CHANGE IN CASH AND CASH EQUIVALENTS                                                |   |    | 3,937,738  |   |   |   | (2,889,392 | ) |
| Cash      and cash equivalents at beginning of period                                       |   |    | 9,333,634  |   |   |   | 7,452,256 |   |
| CASH      AND CASH EQUIVALENTS AT END OF PERIOD                                             |   | $       | 13,271,372 |   |   | $      | 4,562,864 |   |
|                                                                                        |   |    |       |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURES OF CASH FLOW INFORMATION:                                     |   |    |       |   |   |   |   |   |
| Cash      paid during the year for:                                                         |   |    |       |   |   |   |   |   |
| Interest      expense                                                                       |   | $       | 1,295,781  |   |   | $      | 1,468,656 |   |
| Income      taxes                                                                           |   | $       | 12,156     |   |   | $      | 172,000 |   |
| SUPPLEMENTAL      DISCLOSURES OF NONCASH ACTIVITIES:                                        |   |    |       |   |   |   |   |   |
| Loans      transferred to other real estate owned                                           |   | $  | 320,416    |   |   |   | 0 |   |
| Net      change in unrealized gains and losses on securities                                |   | $       | 70,087     |   |   | $      | 62,072 |   |
| Net      change in deferred income taxes on unrealized gains on      securities             |   | $       | (28,843    | )      |   | $      | (25,545 | ) |

----

NOTES TO CONSOLIDATED FINANCIALSTATEMENTS

----

|                                                      |   | Directors |   |   | Officers |   |
|-----------------------------------------------------------|--------|-----------|--------|--------|----------|--------|
|                                                      |   | 2008      |   |   | 2007     |   |   | 2008 |   |   | 2007 |   |
| Service      cost                                         |   | $         | 9,355  |   |     | $      | (111,740 | ) |   | $ | 68,727 |   |   | $ | 60,491 |   |
| Interest      cost on projected benefit obligation        |   |      | 6,632  |   |     |   | (65,679 | ) |   |   | 38,951 |   |   |   | 19,347 |   |
| Amortization      of unrecognized liability at transition |   |      | (2,320 | )      |     |   | 35,256 |   |   |   | 63,948 |   |   |   | 47,685 |   |
| Net      periodic pension cost recognized                 |   | $         | 13,667 |   |     | $      | (142,163 | ) |   | $ | 171,626 |   |   | $ | 127,523 |   |

----

AVERAGE BALANCES/YIELDS AND RATES PAID

|                                            |                                     2008                                   |                                   2007                                     |
|-------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ASSETS                                          | Average     Balance                                                                                                                                                                                                                                                                                                                                                                    | Income/     Expense                                                                                                                                                                                                                                                                                                                                                                    | Yield/       Rate            | Average     Balance     | Income/     Expense      | Yield/       Rate        |
| Interest-earning      assets:                   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |
| Loans(2):                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |
| Commercial                                      | $      179,736,036                                                                                                                                                                                                                                                                                                                                                                                                                       | $    3,474,731                                                                                                                                                                                                                                                                                                                                                                                                       | 7.78% | $      149,787,097 | $    3,008,134 | 8.14% |
| Consumer                                        | 29,541,266                                                                                                                                                                                                                                                                                                                                                                                                                               | 559,799                                                                                                                                                                                                                                                                                                                                                                                                                                  | 7.62% | 27,379,032 | 638,040 | 9.45% |
| Real      estate construction                   | 24,299,229                                                                                                                                                                                                                                                                                                                                                                                                                               | 512,949                                                                                                                                                                                                                                                                                                                                                                                                                                  | 8.49% | 29,074,047 | 623,700 | 8.70% |
| Real      estate mortgage                       | 18,554,987                                                                                                                                                                                                                                                                                                                                                                                                                               | 353,823                                                                                                                                                                                                                                                                                                                                                                                                                                  | 7.67% | 17,133,436 | 303,901 | 7.19% |
| Tax      exempt loans (1)                       | 2,209,027                                                                                                                                                                                                                                                                                                                                                                                                                                | 45,323                                                                                                                                                                                                                                                                                                                                                                                                                                   | 8.25% | 2,313,766 | 46,908 | 8.22% |
| Leases                                          | 20,980                                                                                                                                                                                                                                                                                                                                                                                                                                   | 539                                                                                                                                                                                                                                                                                                                                                                                                                                      | 10.33% | 34,234 | 1,072 | 12.70% |
| Unearned      loan fees                         |        (393,933)                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                      |   |        (520,838) |                      |   |
| Total      loans                                | 253,967,592                                                                                                                                                                                                                                                                                                                                                                                                                              | 4,947,164                                                                                                                                                                                                                                                                                                                                                                                                                                | 7.83% | 225,200,774 | 4,621,755 | 8.32% |
| Investment      securities                      |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |
| Available      for sale:                        |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |
| Taxable                                         | 5,832,909                                                                                                                                                                                                                                                                                                                                                                                                                                | 52,115                                                                                                                                                                                                                                                                                                                                                                                                                                   | 3.59% | 17,574,301 | 155,584 | 3.59% |
| Hold      to maturity:                          |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |
| Taxable                                         | 0                                                                                                                                                                                                                                                                                                                                                                                                                                        | 0                                                                                                                                                                                                                                                                                                                                                                                                                                        | 0.00% | 0 | 0 | 0.00% |
| Tax      exempt (1)                             |      14,391,616                                                                                                                                                                                                                                                                                                                                                                                                 |        205,806                                                                                                                                                                                                                                                                                                                                                                                        | 5.75% |      15,798,805 |        232,698 | 5.97% |
| Total      investment securities                | 20,224,525                                                                                                                                                                                                                                                                                                                                                                                                                               | 257,921                                                                                                                                                                                                                                                                                                                                                                                                                                  | 5.13% | 33,373,106 | 388,282 | 4.72% |
| Federal      funds sold                         | 171,428                                                                                                                                                                                                                                                                                                                                                                                                                                  | 1,208                                                                                                                                                                                                                                                                                                                                                                                                                                    | 2.83% | 0 | 0 | 0.00% |
| FHLB      stock                                 | 1,808,896                                                                                                                                                                                                                                                                                                                                                                                                                                | 23,678                                                                                                                                                                                                                                                                                                                                                                                                                                   | 5.26% | 1,244,112 | 16,640 | 5.42% |
| Total      due from banks/interest-bearing      |        2,590,792                                                                                                                                                                                                                                                                                                                                                                                      |             26,713                                                                                                                                                                                                                                                                                                                                                           | 4.15% |           501,418 |             6,451 | 5.22% |
| Total      interest-earning assets              | $      278,763,233                                                                                                                                                                                                                                                                                                                                                                                                                       | $   5,256,684                                                                                                                                                                                                                                                                                                                                                                                                             | 7.58% | $      260,319,410 | $   5,033,128 | 7.84% |
| Noninterest-bearing      assets:                |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |
| Reserve      for loan losses                    | (3,753,995)                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (3,353,722) |   |   |
| Cash      and due from banks                    | 5,691,343                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 5,762,938 |   |   |
| Premises      and equipment                     | 817,163                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 925,582 |   |   |
| Other      real estate owned                    | 38,732                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 0 |   |   |
| Other      assets                               |      16,441,433                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |      15,183,151 |   |   |
| Total      assets                               | $      297,997,909                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $      278,837,359 |   |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY       |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |
| Interest-bearing      liabilities:              |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |
| Interest-      bearing deposits                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |
| Interest-bearing      transaction               | $   31,781,651                                                                                                                                                                                                                                                                                                                                                                                                            | $          13,148                                                                                                                                                                                                                                                                                                                                                                      | 0.17% | $   29,076,669 | $          11,717 | 0.16% |
| Savings      deposits                           | 75,213,289                                                                                                                                                                                                                                                                                                                                                                                                                               | 415,892                                                                                                                                                                                                                                                                                                                                                                                                                                  | 2.22% | 78,275,186 | 466,075 | 2.41% |
| Time      deposits over $100,000                | 47,356,638                                                                                                                                                                                                                                                                                                                                                                                                                               | 548,153                                                                                                                                                                                                                                                                                                                                                                                                                                  | 4.66% | 38,728,996 | 443,635 | 4.65% |
| Other      time deposits                        |      30,186,551                                                                                                                                                                                                                                                                                                                                                                                                 |           328,293                                                                                                                                                                                                                                                                                                                                                                      | 4.37% |      27,693,787 |           295,362 | 4.33% |
| Total      interest-bearing deposits            | 184,538,129                                                                                                                                                                                                                                                                                                                                                                                                                              | 1,305,486                                                                                                                                                                                                                                                                                                                                                                                                                                | 2.85% | 173,774,638 | 1,216,789 | 2.84% |
| Other      borrowings                           |      29,791,209                                                                                                                                                                                                                                                                                                                                                                                                 |           294,727                                                                                                                                                                                                                                                                                                                                                                      | 3.98% |      19,013,722 |           246,138 | 5.25% |
| Total      interest-bearing liabilities         | 214,329,338                                                                                                                                                                                                                                                                                                                                                                                                                              | $     1,600,213                                                                                                                                                                                                                                                                                                                                                                                                 | 3.00% | 192,788,360 | $     1,462,927 | 3.08% |
| Non      interest-bearing liabilities:          |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |
| Non      interest-bearing demand deposits       | 48,391,059                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 53,134,334 |   |   |
| Other      liabilities                          | 6,292,439                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 5,604,379 |   |   |
| Shareholders'      equity                       |      28,985,073                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |      27,310,286 |   |   |
| Total      liabilities and shareholders' equity | $      297,997,909                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $      278,837,359 |   |   |
| Interest      rate spread                       |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                     | 4.58% |   |   | 4.76% |
| Interest      income                            |                                                                                                                                                                                                                                                                                                                                                                                                                                     | $     5,256,684                                                                                                                                                                                                                                                                                                                                                                                                 | 7.58% |   | $     5,033,128 | 7.84% |
| Interest      expense                           |                                                                                                                                                                                                                                                                                                                                                                                                                                     |        1,600,213                                                                                                                                                                                                                                                                                                                                                                                      | 2.31% |   |        1,462,927 | 2.28% |
| Net      interest income/margin                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     | $     3,656,471                                                                                                                                                                                                                                                                                                                                                                                                 | 5.27% |   | $     3,570,201 | 5.56% |
| (1)                                             | Fully      tax equivalent adjustments are based on a federal income tax rate of 34%      in 2008 and 2007.                                                                                                                                                                                                                                                                                                                               |
| (2)                                             | Non accrual loans      have been included in loans for the purposes of the above presentation.      Loan fees of approximately $120,322 and $152,708 for the three months      ended March31, 2008 and 2007, respectively,      were amortized to the appropriate interest income      categories.                                                                                                                                       |

| Item      2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF      FINANCIAL CONDITION AND RESULTS OF  OPERATIONS |
|--------------|---------------------------------------------------------------------------------------------|

----

----

----

----

|                                     |   | March      31, 2008 |        |   | Percentage of Total |   |   | December      31, 2007 |   |   | Percentage of Total |   |   | March      31, 2007 |   |   | Percentage of Total |   |
|------------------------------------------|--------|--------------------------|-------------|--------|--------------------------|--------|--------|-----------------------------|--------|--------|--------------------------|--------|--------|--------------------------|--------|--------|--------------------------|--------|
|                                     |   |                     |        |   |                     |   |   |                        |   |   |                     |   |   |                     |   |   |                     |   |
| Commercial                               |   | $                        | 177,950,151 |   |                     |   | 70.5   | %                           |   | $      | 177,989,391              |   |   |                     | 70.9   | %      |                     | $      | 153,985,571 |   |   |   | 68.1 | % |
| Consumer                                 |   |                     | 29,784,989  |   |                     |   | 11.8   | %                           |   |   | 29,163,877               |   |   |                     | 11.6   | %      |                     |   | 27,959,989 |   |   |   | 12.4 | % |
| Real      estate construction            |   |                     | 25,594,481  |   |                     |   | 10.2   | %                           |   |   | 25,772,958               |   |   |                     | 10.3   | %      |                     |   | 26,941,725 |   |   |   | 11.9 | % |
| Real      estate mortgage                |   |                     | 18,930,063  |   |                     |   | 7.5    | %                           |   |   | 17,946,113               |   |   |                     | 7.2    | %      |                     |   | 17,236,128 |   |   |   | 7.6 | % |
| Leases                                   |   |                     | 19,884      |   |                     |   | 0.0    | %                           |   |   | 21,665                   |   |   |                     | 0.0    | %      |                     |   | 31,163 |   |   |   | 0.0 | % |
|                                     |   |                     | 252,279,568 |   |                     |   | 100.0  | %                           |   |   | 250,894,004              |   |   |                     | 100.0  | %      |                     |   | 226,154,576 |   |   |   | 100.0 | % |
| Deferred      loan fees and costs, net   |   |                     | (345,779    | )      |                     |   |   |                        |   |   | (432,569                 | )      |   |                     |   |   |                     |   | (495,561 | ) |   |   |   |   |
| Allowance      for loan and lease losses |   |                     | (3,806,794  | )      |                     |   |   |                        |   |   | (3,723,217               | )      |   |                     |   |   |                     |   | (3,402,835 | ) |   |   |   |   |
|                                     |   |                     |        |   |                     |   |   |                        |   |   |                     |   |   |                     |   |   |                     |   |   |   |   |   |   |   |
|                                     |   | $                        | 248,126,995 |   |                     |   |   |                        |   | $      | 246,738,218              |   |   |                     |   |   |                     | $      | 222,256,180 |   |   |   |   |   |

----

----

|                                                                                         |   | For      the ThreeMonths      Ended 3/31/08  |      |   | For      the YearEnded 12/31/07 |   |          | For      the ThreeMonths      Ended 3/31/07 |   |
|----------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|-----------|--------|--------------------------------------|--------|---------------|--------------------------------------------------|--------|
| Balance      beginning of year                                                               |   | $                                                      | 3,723,217 |   |                                 | $      | 3,276,972     |                                             |   | $ | 3,276,972 |   |
| Charge-offs:                                                                                 |   |                                                   |      |   |                                 |   |          |                                             |   |   |   |   |
| Commercial                                                                                   |   |                                                   | (91,308   | )      |                                 |   | (187,075      | )                                                |   |   | 0 |   |
| Consumer                                                                                     |   |                                                   | (52,773   | )      |                                 |   | (63,901       | )                                                |   |   | (14,856 | ) |
| Total      charge-offs                                                                       |   |                                                   | (144,081  | )      |                                 |   | (250,976      | )                                                |   |   | (14,856 | ) |
| Recoveries:                                                                                  |   |                                                   |      |   |                                 |   |          |                                             |   |   |   |   |
| Commercial                                                                                   |   |                                                   | 4,223     |   |                                 |   | 16,315        |                                             |   |   | 5,269 |   |
| Consumer                                                                                     |   |                                                   | 3,435     |   |                                 |   | 906           |                                             |   |   | 450 |   |
| Total      recoveries                                                                        |   |                                                   | 7,658     |   |                                 |   | 17,221        |                                             |   |   | 5,719 |   |
|                                                                                         |   |                                                   |      |   |                                 |   |          |                                             |   |   |   |   |
| Net      recoveries (charge-offs)                                                            |   |                                                   | (136,423  | )      |                                 |   | (233,755      | )                                                |   |   | (9,137 | ) |
| Provision      charged to operations                                                         |   |                                                   | 220,000   |   |                                 |   |  680,000 |                                             |   |   | 135,000 |   |
| Balance      end of period                                                                   |   | $                                                      | 3,806,794 |   |                                 | $      | 3,723,217     |                                             |   | $ | 3,402,835 |   |
| Ratio      of net charge-offs annualized to average loans                                    |   |                                                   | 0.22      | %      |                                 |   | 0.10          | %                                                |   |   | 0.02 | % |
| Balance      in allowance as a percentage  of loans outstanding at period      end |   |                                                   | 1.51      | %      |                                 |   | 1.49          | %                                                |   |   | 1.51 | % |

|                                            |   | March      31, 2008 |        |   | Percentage      of Total |   |   | December      31, 2007 |   |   | Percentage      of Total |   |   | March      31, 2007 |   |   | Percentage      of Total |   |
|-------------------------------------------------|--------|--------------------------|-------------|--------|--------------------------|--------|--------|-----------------------------|--------|--------|--------------------------|--------|--------|--------------------------|--------|--------|--------------------------|--------|
|                                            |   |                     |        |   |                     |   |   |                        |   |   |                     |   |   |                     |   |   |                     |   |
| Interest-bearing      transaction deposits      |   | $                        | 32,523,931  |   |                     |   | 13.5   | %                           |   | $      | 30,135,049               |   |   |                     | 12.8   | %      |                     | $      | 31,070,263 |   |   |   | 13.8 | % |
| Savings      deposits                           |   |                     | 75,938,300  |   |                     |   | 31.6   | %                           |   |   | 73,528,081               |   |   |                     | 31.1   | %      |                     |   | 77,869,582 |   |   |   | 34.7 | % |
| Time      deposits, $100,000 and over           |   |                     | 50,915,989  |   |                     |   | 21.2   | %                           |   |   | 44,160,741               |   |   |                     | 18.7   | %      |                     |   | 37,602,997 |   |   |   | 16.7 | % |
| Other      time deposits                        |   |                     | 31,570,905  |   |                     |   | 13.1   | %                           |   |   | 29,634,626               |   |   |                     | 12.6   | %      |                     |   | 27,952,516 |   |   |   | 12.4 | % |
| Total      interest-bearing  deposits |   |                     | 190,949,125 |   |                     |   | 79.4   | %                           |   |   | 177,458,497              |   |   |                     | 75,2   | %      |                     |   | 174,495,358 |   |   |   | 77.6 | % |
| Demand      deposits                            |   |                     | 49,534,037  |   |                     |   | 20.6   | %                           |   |   | 58,589,202               |   |   |                     | 24.8   | %      |                     |   | 50,309,251 |   |   |   | 22.4 | % |
| Total      deposits                             |   | $                        | 240,483,162 |   |                     |   | 100.0  | %                           |   | $      | 236,047,699              |   |   |                     | 100.0  | %      |                     | $      | 224,804,609 |   |   |   | 100.0 | % |

----

----

| Variation      from a constant rate scenario |   | $      Change in NII |
|----------------------------------------------|--------|----------------------|
| +200bp                                       |   | $      (336)         |
| +100bp                                       |   | $      (206)         |
| -100bp                                       |   | $      (315)         |
| -200bp                                       |   | $      (566)         |

----

|  MARCH      31, 2008   (dollars in      thousands) | Immediate  Reprice           | Up      to 3  Months                                        | 4      to 6  Months                                       | 7      to 12  Months                                                  | Over      12  Months   |    Total     |
|-------------------------------------------------------------------|--------------------------------------------------|---------------------------------------------------------------------------------|-------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|--------------------------------------------|-------------------------------------------------|
| FFS      + overnight IBB                                          | $     6,895             |                                                                            |                                                                          |                                                                                      |                                       | $     6,895            |
| Securities      + Other IBB                                       | 0                                                | $             250                            | $             405                          | $             809                                      | $    16,043            | 17,507                                          |
| Loans                                                             |     59,445                   |      11,995                                            |      23,804                                          |      44,207                                                      |    108,676                  |    248,127                       |
| Total      RSA                                                    | $   66,340                        | $   12,245                                                       | $   24,209                                                     | $   45,016                                                                 | $ 124,719                                  | $ 272,529                                       |
|                                                              |                                             |                                                                            |                                                                          |                                                                                      |                                       |                                            |
| MMDA/NOW/SAV                                                      | $      108,462                                   |                                                                            |                                                                          |                                                                                      |                                       | $      108,462                                  |
| CD’s      <$100k                                         | 0                                                | $   12,583                                                       | $    8,508                                                | $          8,508                                                      | $     1,853       | 31,452                                          |
| CD’s      >$100k                                         | 0                                                | 19,639                                                                          | 23,055                                                                        | 5,764                                                                                     | 2,578                                      | 51,036                                          |
| Borrowings                                                        |        12,300 |              0 |             5,000 |               5,000 |       0      |      22,300            |
| Total      RSL                                                    | $ 120,762                                        | $  32,222                                                             | $  36,563                                                           | $   19,272                                                                 | $        4,431         | $ 213,250                                       |
|                                                              |                                             |                                                                            |                                                                          |                                                                                      |                                       |                                            |
| GAP                                                               | $(54,422)                                        | $(19,977)                                                                       | $(12,354)                                                                     | $   25,744                                                                 | $      120,288                             | $   59,279                       |
| Cumulative                                                        | $(54,422)                                        | $(74,399)                                                                       | $(86,753)                                                                     | $(61,009)                                                                                 | $   59,279                  |                                            |
| %      Assets                                                     | -18.3%                                           | -25.0%                                                                          | -29.2%                                                                        | -20.5%                                                                                    | 19.9%                                      |                                            |

----

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

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

----

| Item      1. | LEGALPROCEEDINGS |
|--------------|------------------|

| Item      2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF      PROCEEDS |
|--------------|------------------------------------------------------------------|

|                                     | (a)                                                 | (b)                                             | (c)                                                                                                             | (d)                                                                                                                                                  |
|------------------------------------------|-----------------------------------------------------|-------------------------------------------------|-----------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
| Period                                   | Total      Number ofShares      (or Units)Purchased | Average      Price paidper      Share (or Unit) | Total      Number ofShares      (or Units)Purchased      as Partof      PubliclyAnnounced      Plans orPrograms | Maximum      Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be      Purchased Under the Plans or Programs (1)  (2) |
| Month      #1:1/1/08-      1/31/08       | 0                                                   | $.00                                            | 0                                                                                                               | 39,592                                                                                                                                               |
| Month      #2:2/1/08-      2/29/08       | 0                                                   | $.00                                            | 0                                                                                                               | 39,592                                                                                                                                               |
| Month      #3:3/1/08–      3/31/08 | 0                                                   | $.00                                            | 0                                                                                                               | 39,592                                                                                                                                               |
| Total                                    | 0                                                   | $.00                                            | 0                                                                                                               | 39,592                                                                                                                                               |

| (1) | On      January 17, 2001 a repurchase program was approved up to      $1,000,000.  On August 21, 2002 an additional $1,000,000 was      approved.  No expiration. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | On      February 15, 2006, 60,000 shares were approved for repurchase and on      October 18, 2006 an additional 60,000 shares were approved for      repurchase.  Noexpiration. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Item      3. | DEFAULTS UPON SENIOR      SECURITIES |
|--------------|--------------------------------------|

| Item      4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY      HOLDERS |
|--------------|----------------------------------------------------------|

| Item      5. | OTHERINFORMATION |
|--------------|------------------|

| Item      6. | 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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SIGNATURES

|   |                                                 |   | SONOMA      VALLEY BANCORP                                          |   |
|--------|------------------------------------------------------|--------|---------------------------------------------------------------------|--------|
|   |                                                 |   | (Registrant)                                                        |   |
|   |                                                 |   |                                                                |   |
|   |                                                 |   |                                                                |   |
| Date:  |       May      1, 2008 |   |        /s/ Mel Switzer, Jr.                                    |   |
|   |                                                 |   | Mel      Switzer, Jr.                                               |   |
|   |                                                 |   | President      and Chief Executive Officer                          |   |
|   |                                                 |   | (Principal      Executive Officer)                                  |   |
|   |                                                 |   |                                                                |   |
|   |                                                 |   |                                                                |   |
| Date:  |       May      1, 2008 |   |        /s/ Mary Dieter Smith                                   |   |
|   |                                                 |   | Mary      Dieter Smith                                              |   |
|   |                                                 |   | Executive      Vice President and Chief Financial Officer           |   |
|   |                                                 |   | (Principal      Financial Officer and Principal Accounting Officer) |   |

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Exhibit Index

Exhibit31.1

Exhibit 31.2

Exhibit 32.

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