UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q

|                                             |                                                                                           
|-------------------------------------------- | ------------------------------------------------------------------------------------------
|(Mark One)                                  
|                                             |                                                                                           
|x                                            | QUARTERLY REPORT PURSUANT
 TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  
|                                             |                                                                                           
|For the quarterly period ended June 30, 2009
|or                                          
|                                             |                                                                                           
|o                                            | TRANSITION REPORT PURSUANT
 TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from
___________________________________ to ___________________________________

Commission File Number: 0-31525

|AMERICAN RIVER BANKSHARES                              
|-------------------------------------------------------
|                                                       
|(Exact name of
 registrant as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|California                                                     |  | 68-0352144                          
|                                                              
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

|                                                             |  |           
|------------------------------------------------------------ |  | ----------
|3100
 Zinfandel Drive, Suite 450, Rancho Cordova, California |  | 95670     
|                                                            
|(Address of principal executive offices)                     |  | (Zip Code)

|                                                                                    
|------------------------------------------------------------------------------------
|(916)
 851-0123                                                                     
|                                                                                    
|(Registrants telephone
 number, including area code)                               
|                                                                                    
|Not Applicable                                                                      
|                                                                                    
|(Former name, former
 address and former fiscal year, if changed since last report.)

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

Yes x   No o


Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).

Yes o   No o


Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act.

|                                                                       |                             
|---------------------------------------------------------------------- | ----------------------------
|Large accelerated filer o                                              | Accelerated
 filer o        
|                                                                       |                             
|Non-accelerated filer x (Do not check if a smaller reporting
 company) | Smaller
 reporting company o

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

Yes o   No x


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

No par value Common
Stock  5,797,533 shares outstanding at August 12, 2009.

---



AMERICAN
RIVER BANKSHARES

INDEX
TO QUARTERLY REPORT ON FORM 10-Q 
FOR THE QUARTER ENDED JUNE 30, 2009

|               |  |                                                                                                                                   |  |     
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------- |  | ----
|               |  |                                                                                                                                   |  | Page
|Part I.        |  |                                                                                                                                   |  |     
|               |  |                                                                                                                                   |  |     
|Item
 1.       |  | Financial Statements                                                                                                              |  | 3   
|Item
 2.       |  | Managements Discussion and Analysis
 of Financial Condition and Results of Operations                                            |  | 15  
|Item
 3.       |  | Quantitative and Qualitative
 Disclosures About Market Risk                                                                       |  | 34  
|Item
 4.       |  | Controls and Procedures                                                                                                           |  | 34  
|Item
 4T.      |  | Controls and Procedures                                                                                                           |  | 35  
|               |  |                                                                                                                                   |  |     
|Part II.       |  |                                                                                                                                   |  |     
|               |  |                                                                                                                                   |  |     
|Item
 1.       |  | Legal Proceedings                                                                                                                 |  | 35  
|Item
 1A.      |  | Risk Factors                                                                                                                      |  | 35  
|Item
 2.       |  | Unregistered Sales of Equity
 Securities and Use of Proceeds                                                                      |  | 35  
|Item
 3.       |  | Defaults Upon Senior Securities                                                                                                   |  | 36  
|Item
 4.       |  | Submission of Matters to a Vote of
 Security Holders                                                                              |  | 36  
|Item
 5.       |  | Other Information                                                                                                                 |  | 36  
|Item
 6.       |  | Exhibits                                                                                                                          |  | 36  
|               |  |                                                                                                                                   |  |     
|Signatures     |  | 41                                                                                                                               
|               |  |                                                                                                                                   |  |     
|Exhibit
 Index |  | 42                                                                                                                               
|               |  |                                                                                                                                   |  |     
|3.1            |  | Articles of Incorporation, as
 amended                                                                                            |  | 43  
|               |  |                                                                                                                                   |  |     
|31.1           |  | Certifications of Chief Executive
 Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                              |  | 53  
|               |  |                                                                                                                                   |  |     
|31.2           |  | Certifications of the Chief
 Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                          |  | 54  
|               |  |                                                                                                                                   |  |     
|32.1           |  | Certifications of Chief Executive
 Officer and Chief Financial Officer pursuant to Section 906 of the
 Sarbanes-Oxley Act of 2002 |  | 55  

2

---



PART I-FINANCIAL INFORMATION

Item 1.
Financial Statements.

AMERICAN RIVER
BANKSHARES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

|                                                                                                                                                                  |  |               |         |                   |   |         | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | ----------------- | - | ------- | 
|(dollars in thousands)                                                                                                                                            |  | June 30, 2009 |         | December 31, 2008 |  
|                                                                                                                                                                  |  |               |         |                   |  
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|ASSETS                                                                                                                                                            |  |               |         |                   |   |         | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|Cash and due from banks                                                                                                                                           |  | $             | 25,074  |                   | $ | 15,170  | 
|Interest-bearing deposits in banks                                                                                                                                |  |               | 891     |                   |   | 4,248   | 
|Investment securities:                                                                                                                                            |  |               |         |                   |   |         | 
|Available-for-sale
 (amortized cost: 2009--$64,674; 2008--$62,661)                                                                                                |  |               | 64,951  |                   |   | 63,334  | 
|Held-to-maturity
 (fair value: 2009--$18,600; 2008--$24,889)                                                                                                      |  |               | 17,933  |                   |   | 24,365  | 
|Loans and
 leases, less allowance for loan and lease losses of $7,758 at June 30, 2009 and $5,918 at December 31, 2008                                            |  |               | 398,191 |                   |   | 412,356 | 
|Premises and equipment, net                                                                                                                                       |  |               | 2,164   |                   |   | 2,115   | 
|Federal Home Loan Bank stock                                                                                                                                      |  |               | 3,922   |                   |   | 3,922   | 
|Goodwill and other intangible assets                                                                                                                              |  |               | 17,096  |                   |   | 17,228  | 
|Other real estate owned                                                                                                                                           |  |               | 3,347   |                   |   | 2,158   | 
|Accrued interest receivable and other assets                                                                                                                      |  |               | 18,241  |                   |   | 18,261  | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|                                                                                                                                                                  |  | $             | 551,810 |                   | $ | 563,157 | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                              |  |               |         |                   |   |         | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|Deposits:                                                                                                                                                         |  |               |         |                   |   |         | 
|Noninterest
 bearing                                                                                                                                              |  | $             | 115,036 |                   | $ | 119,143 | 
|Interest-bearing                                                                                                                                                  |  |               | 334,573 |                   |   | 317,918 | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|Total deposits                                                                                                                                                    |  |               | 449,609 |                   |   | 437,061 | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|Short-term borrowings                                                                                                                                             |  |               | 14,500  |                   |   | 43,231  | 
|Long-term borrowings                                                                                                                                              |  |               | 21,500  |                   |   | 14,000  | 
|Accrued interest payable and other liabilities                                                                                                                    |  |               | 3,925   |                   |   | 5,418   | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|Total
 liabilities                                                                                                                                                |  |               | 489,534 |                   |   | 499,710 | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|Commitments and contingencies                                                                                                                                     |  |               |         |                   |   |         | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|Shareholders equity:                                                                                                                                             |  |               |         |                   |   |         | 
|Common stock 
 no par value; 20,000,000 shares authorized; issued and outstanding 
 5,797,533 shares at June 30, 2009 and 5,792,283 shares at December 31, 2008 |  |               | 47,575  |                   |   | 47,433  | 
|Retained
 earnings                                                                                                                                                |  |               | 14,538  |                   |   | 15,617  | 
|Accumulated
 other comprehensive income, net of taxes                                                                                                             |  |               | 163     |                   |   | 397     | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|Total shareholders equity                                                                                                                                        |  |               | 62,276  |                   |   | 63,447  | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 
|                                                                                                                                                                  |  | $             | 551,810 |                   | $ | 563,157 | 
|                                                                                                                                                                  |  |               |         |                   |   |         | 

See Notes to Unaudited Consolidated Financial
Statements

3

---



AMERICAN RIVER
BANKSHARES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)

|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|-------------------------------------------------------------- |  | ------------ | ------ | ---------- | - | ----- |  | ---- | ------ |  | - | ------ | 
|(dollars in thousands, except per share data)                  |  | Three months |        | Six months |  
|For the periods ended June 30,                                 |  | 2009         |        | 2008       |   | 2009  |  | 2008 |       
|                                                               |  |              |        |            |   |       |  |      |       
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Interest income:                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Interest and
 fees on loans                                    |  | $            | 6,364  |            | $ | 6,945 |  | $    | 13,082 |  | $ | 14,189 | 
|Interest on
 Federal funds sold                                |  |              |       |            |   | 6     |  |      |       |  |   | 8      | 
|Interest on
 deposits in banks                                 |  |              | 20     |            |   | 59    |  |      | 53     |  |   | 124    | 
|Interest and
 dividends on investment securities:              |  |              |        |            |   |       |  |      |        |  |   |        | 
|Taxable                                                        |  |              | 676    |            |   | 962   |  |      | 1,411  |  |   | 1,962  | 
|Exempt from
 Federal income taxes                              |  |              | 256    |            |   | 269   |  |      | 521    |  |   | 533    | 
|Dividends                                                      |  |              | 5      |            |   | 11    |  |      | 5      |  |   | 14     | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Total interest
 income                                         |  |              | 7,321  |            |   | 8,252 |  |      | 15,072 |  |   | 16,830 | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Interest expense:                                              |  |              |        |            |   |       |  |      |        |  |   |        | 
|Interest on
 deposits                                          |  |              | 998    |            |   | 1,464 |  |      | 2,079  |  |   | 3,207  | 
|Interest on
 borrowings                                        |  |              | 305    |            |   | 393   |  |      | 636    |  |   | 886    | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Total interest
 expense                                        |  |              | 1,303  |            |   | 1,857 |  |      | 2,715  |  |   | 4,093  | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Net interest
 income                                           |  |              | 6,018  |            |   | 6,395 |  |      | 12,357 |  |   | 12,737 | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Provision for loan and lease losses                            |  |              | 3,800  |            |   | 190   |  |      | 5,029  |  |   | 527    | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Net interest
 income after provision for loan and lease losses |  |              | 2,218  |            |   | 6,205 |  |      | 7,328  |  |   | 12,210 | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Noninterest income:                                            |  |              |        |            |   |       |  |      |        |  |   |        | 
|Service charges
 on deposit accounts                           |  |              | 251    |            |   | 169   |  |      | 493    |  |   | 354    | 
|Gain on sale of
 securities                                    |  |              | 160    |            |   | 33    |  |      | 160    |  |   | 33     | 
|Other
 noninterest income                                      |  |              | 238    |            |   | 437   |  |      | 506    |  |   | 837    | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Total
 noninterest expense                                     |  |              | 649    |            |   | 639   |  |      | 1,159  |  |   | 1,224  | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Noninterest expense:                                           |  |              |        |            |   |       |  |      |        |  |   |        | 
|Salaries and
 employee benefits                                |  |              | 1,826  |            |   | 2,073 |  |      | 3,699  |  |   | 4,094  | 
|Occupancy                                                      |  |              | 344    |            |   | 366   |  |      | 702    |  |   | 730    | 
|Furniture and
 equipment                                       |  |              | 184    |            |   | 199   |  |      | 375    |  |   | 390    | 
|Federal Deposit
 Insurance Corporation assessments             |  |              | 335    |            |   | 13    |  |      | 409    |  |   | 26     | 
|Other expense                                                  |  |              | 1,550  |            |   | 991   |  |      | 2,655  |  |   | 2,031  | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Total
 noninterest expense                                     |  |              | 4,239  |            |   | 3,642 |  |      | 7,840  |  |   | 7,271  | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|(Loss) income
 before provision for income taxes               |  |              | (1,372 | )          |   | 3,202 |  |      | 647    |  |   | 6,163  | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|(Benefit from) provision for income taxes                      |  |              | (668   | )          |   | 1,221 |  |      | 68     |  |   | 2,349  | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Net (loss)
 income                                             |  | $            | (704   | )          | $ | 1,981 |  | $    | 579    |  | $ | 3,814  | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Basic (loss) earnings per share                                |  | $            | (0.12  | )          | $ | 0.34  |  | $    | 0.10   |  | $ | 0.65   | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Diluted (loss) earnings per share                              |  | $            | (0.12  | )          | $ | 0.34  |  | $    | 0.10   |  | $ | 0.65   | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 
|Cash dividends per share                                       |  | $            | 0.14   |            | $ | 0.14  |  | $    | 0.29   |  | $ | 0.29   | 
|                                                               |  |              |        |            |   |       |  |      |        |  |   |        | 

See notes to Unaudited Consolidated Financial
Statements

4

---



AMERICAN RIVER
BANKSHARES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
(Unaudited)

|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|------------------------------------------------------------------------------------ |  | ------------- | --------- | -------- | - | ----------------------------- | - | ---------------------- | ------ | -------------------- | - | ------ | - | - | ------ | - | - | ----- | -
|(dollars in thousands)                                                               |  | Common
 Stock |           | Retained |   | AccumulatedOtherComprehensive |   | Total
 
 Shareholders |        | Total
 Comprehensive |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |  
|                                                                                     |  | Shares        |           | Amount   |   | Earnings                      |   | Income                 |        | Equity               |   | Income |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|Balance, January 1, 2008                                                             |  |               | 5,590,277 |          | $ | 45,668                        |   | $                      | 14,204 |                      | $ | 101    |   | $ | 59,973 |   |   |       |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|Comprehensive income:                                                                |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|Net income                                                                           |  |               |           |          |   |                               |   |                        | 7,571  |                      |   |        |   |   | 7,571  |   | $ | 7,571 |  
|Other comprehensive income, net of tax:                                              |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|Net change in unrealized gains on available-for-sale investment
 securities          |  |               |           |          |   |                               |   |                        |        |                      |   | 296    |   |   | 296    |   |   | 296   |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|Total comprehensive income                                                           |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   | $ | 7,867 |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|Cash dividends ($0.57 per share)                                                     |  |               |           |          |   |                               |   |                        | (3,317 | )                    |   |        |   |   | (3,317 | ) |   |       |  
|Fractional shares redeemed for stock dividend                                        |  |               |           |          |   | (10                           | ) |                        |        |                      |   |        |   |   | (10    | ) |   |       |  
|5% stock dividend                                                                    |  |               | 275,048   |          |   | 2,841                         |   |                        | (2,841 | )                    |   |        |   |   |        |   |   |       |  
|Stock options exercised and related tax benefit                                      |  |               | 37,258    |          |   | 354                           |   |                        |        |                      |   |        |   |   | 354    |   |   |       |  
|Stock option compensation expense                                                    |  |               |           |          |   | 290                           |   |                        |        |                      |   |        |   |   | 290    |   |   |       |  
|Retirement of common stock                                                           |  |               | (110,300  | )        |   | (1,710                        | ) |                        |        |                      |   |        |   |   | (1,710 | ) |   |       |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|Balance,
 December 31, 2008                                                          |  |               | 5,792,283 |          |   | 47,433                        |   |                        | 15,617 |                      |   | 397    |   |   | 63,447 |   |   |       |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|Comprehensive income:                                                                |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|Net income                                                                           |  |               |           |          |   |                               |   |                        | 579    |                      |   |        |   |   | 579    |   | $ | 579   |  
|Other comprehensive (loss) income, net of tax:                                       |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|Net change in unrealized gains (losses) on available-for-sale
 investment securities |  |               |           |          |   |                               |   |                        |        |                      |   | (234   | ) |   | (234   | ) |   | (234  | )
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|Total comprehensive income                                                           |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   | $ | 345   |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|Cash dividends ($0.29 per share)                                                     |  |               |           |          |   |                               |   |                        | (1,658 | )                    |   |        |   |   | (1,658 | ) |   |       |  
|Stock options exercised and related tax benefit                                      |  |               | 5,250     |          |   | 34                            |   |                        |        |                      |   |        |   |   | 34     |   |   |       |  
|Stock option compensation expense                                                    |  |               |           |          |   | 108                           |   |                        |        |                      |   |        |   |   | 108    |   |   |       |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  
|Balance,
 June 30, 2009                                                              |  |               | 5,797,533 |          | $ | 47,575                        |   | $                      | 14,538 |                      | $ | 163    |   | $ | 62,276 |   |   |       |  
|                                                                                     |  |               |           |          |   |                               |   |                        |        |                      |   |        |   |   |        |   |   |       |  

See Notes to Unaudited Consolidated Financial
Statements

5

---



AMERICAN RIVER BANKSHARES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

|                                                                                         |  |      |         |      |   |         |  
|---------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | -
|(dollars in thousands)
For the six months ended June 30,                                 |  | 2009 |         | 2008 |  
|                                                                                         |  |      |         |      |  
|                                                                                         |  |      |         |      |   |         |  
|Cash flows from operating activities:                                                    |  |      |         |      |   |         |  
|Net income                                                                               |  | $    | 579     |      | $ | 3,814   |  
|Adjustments to reconcile net income to net cash provided by operating
 activities:       |  |      |         |      |   |         |  
|Provision for loan and lease losses                                                      |  |      | 5,029   |      |   | 527     |  
|Increase (decrease) in deferred loan origination fees, net                               |  |      | 24      |      |   | (48     | )
|Depreciation and amortization                                                            |  |      | 418     |      |   | 400     |  
|Gain on sale of securities                                                               |  |      | (160    | )    |   | (33     | )
|Amortization of investment security premiums and discounts, net                          |  |      | 114     |      |   | 65      |  
|Decrease in provision for accounts receivable servicing receivable
 allowance for losses |  |      | (36     | )    |   |        |  
|Increase in cash surrender value of life insurance policies                              |  |      | (116    | )    |   | (202    | )
|Stock option compensation expense                                                        |  |      | 108     |      |   | 142     |  
|Tax benefit from exercise of stock options                                               |  |      | (12     | )    |   | (85     | )
|Loss on sale/write-down of other real estate owned                                       |  |      | 301     |      |   |        |  
|(Increase) decrease in accrued interest receivable and other assets                      |  |      | (847    | )    |   | 1,546   |  
|Decrease in accrued interest payable and other liabilities                               |  |      | (1,493  | )    |   | (176    | )
|                                                                                         |  |      |         |      |   |         |  
|                                                                                         |  |      |         |      |   |         |  
|Net cash provided by operating activities                                                |  |      | 3,909   |      |   | 5,950   |  
|                                                                                         |  |      |         |      |   |         |  
|                                                                                         |  |      |         |      |   |         |  
|Cash flows from investing activities:                                                    |  |      |         |      |   |         |  
|Proceeds from the sale of available-for-sale investment securities                       |  |      | 4,836   |      |   | 7,063   |  
|Proceeds from matured and called available-for-sale investment
 securities               |  |      | 575     |      |   | 7,590   |  
|Purchases of available-for-sale investment securities                                    |  |      | (13,351 | )    |   | (19,343 | )
|Proceeds from principal repayments for available-for-sale investment
 securities         |  |      | 5,942   |      |   | 4,103   |  
|Proceeds from principal repayments for held-to-maturity investment
 securities           |  |      | 6,463   |      |   | 5,886   |  
|Net decrease in interest-bearing deposits in banks                                       |  |      | 3,357   |      |   | 10      |  
|Net decrease (increase) in loans                                                         |  |      | 5,675   |      |   | (7,934  | )
|Proceeds from sale of other real estate                                                  |  |      | 1,947   |      |   | 61      |  
|Net decrease in accounts receivable servicing receivables                                |  |      | 1,192   |      |   | 294     |  
|Purchases of equipment                                                                   |  |      | (334    | )    |   | (333    | )
|Net increase in FHLB stock                                                               |  |      |        |      |   | (272    | )
|                                                                                         |  |      |         |      |   |         |  
|                                                                                         |  |      |         |      |   |         |  
|Net cash provided by (used in) investing activities                                      |  |      | 16,302  |      |   | (2,875  | )
|                                                                                         |  |      |         |      |   |         |  

6

---



AMERICAN RIVER BANKSHARES
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
(Unaudited)

|                                                                          |  |      |         |      |   |         |  
|------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | -
|(dollars in thousands)
For the six months ended June 30,                  |  | 2009 |         | 2008 |  
|                                                                          |  |      |         |      |  
|                                                                          |  |      |         |      |   |         |  
|Cash flows from financing
 activities:                                    |  |      |         |      |   |         |  
|Net increase (decrease) in demand, interest-bearing and savings
 deposits |  | $    | 10,774  |      | $ | (3,258  | )
|Net increase in time deposits                                             |  |      | 1,774   |      |   | 6,813   |  
|Net decrease in short-term borrowings                                     |  |      | (28,731 | )    |   | (15,300 | )
|Net increase in long-term borrowings                                      |  |      | 7,500   |      |   | 17,500  |  
|Payment of cash dividends                                                 |  |      | (1,658  | )    |   | (1,668  | )
|Cash paid to repurchase common stock                                      |  |      |        |      |   | (1,384  | )
|Exercise of stock options                                                 |  |      | 22      |      |   | 234     |  
|Tax benefit from exercise of stock options                                |  |      | 12      |      |   | 85      |  
|                                                                          |  |      |         |      |   |         |  
|                                                                          |  |      |         |      |   |         |  
|Net cash (used in) provided by financing activities                       |  | $    | (10,307 | )    | $ | 3,022   |  
|                                                                          |  |      |         |      |   |         |  
|                                                                          |  |      |         |      |   |         |  
|Increase in cash and cash equivalents                                     |  |      | 9,904   |      |   | 6,097   |  
|                                                                          |  |      |         |      |   |         |  
|Cash and cash equivalents
 at beginning of year                           |  |      | 15,170  |      |   | 17,945  |  
|                                                                          |  |      |         |      |   |         |  
|                                                                          |  |      |         |      |   |         |  
|Cash and cash equivalents
 at end of period                               |  | $    | 25,074  |      | $ | 24,042  |  
|                                                                          |  |      |         |      |   |         |  

See Notes to Unaudited Consolidated Financial
Statements

7

---



AMERICAN RIVER
BANKSHARES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2009

1. CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of management, the unaudited
consolidated financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the consolidated
financial position of American River Bankshares (the Company) at June 30,
2009 and December 31, 2008, and the results of its operations for the
three-month and six-month periods ended June 30, 2009 and 2008 and its cash
flows for the six-month periods ended June 30, 2009 and 2008 in conformity with
accounting principles generally accepted in the United States of America.

Certain disclosures normally presented in the notes to
the annual consolidated financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have
been omitted. The Company believes that the disclosures are adequate to make the
information not misleading. These interim consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Companys 2008 annual report on Form 10-K. The
results of operations for the three-month and six-month periods ended June 30,
2009 may not necessarily be indicative of the operating results for the full
year.

In preparing such financial statements, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the balance sheet and revenues and
expenses for the period. Actual results could differ significantly from those
estimates. Material estimates that are particularly susceptible to significant
changes in the near term relate to the determination of the allowance for loan
and lease losses, the provision for taxes and the estimated fair value of
investment securities and other real estate owned.

Management has determined
that since all of the banking products and services offered by the Company are
available in each branch of American River Bank, all branches are located
within the same economic environment and management does not allocate resources
based on the performance of different lending or transaction activities, it is
appropriate to aggregate all of the branches and report them as a single
operating segment. No client accounts for more than ten percent (10%) of
revenues for the Company or American River Bank.

2. STOCK-BASED COMPENSATION

Stock Option Plan

In 2000, the Board of Directors adopted a stock option
plan under which options may be granted to employees and directors under
incentive and nonstatutory agreements. The plan requires that the option price may not be less than the fair
market value of the stock at the date the option is granted. The options under
this plan expire on dates determined by the Board of Directors, but not later
than ten years from the date of grant. The vesting period is generally five
years; however, the vesting period can be modified at the discretion of the
Companys Board of Directors. Outstanding options under the plan are
exercisable until their expiration. New shares are issued upon exercise.

Stock Option
Compensation

There were no stock options
granted during the three-month period ended June 30, 2009. The Company granted
1,575 options to purchase common stock during the three months ended June 30,
2008. The weighted average grant date fair value of options granted for the
three month period ended June 30, 2008 was $1.98. For the three-month
periods ended June 30, 2009 and 2008, the compensation cost recognized for
stock option compensation was $53,000 and $74,000, respectively. For the
six-month periods ended June 30, 2009 and 2008, the compensation cost
recognized for stock option compensation was $108,000 and $142,000, respectively. The
recognized tax benefit for stock option compensation expense was $14,000 and
$9,000, for the three-month periods ended June 30, 2009 and 2008,
respectively. The recognized tax benefit for stock option compensation expense
was $27,000 and $17,000, for the six-month periods ended June 30, 2009 and
2008, respectively.

8

---



At June 30, 2009, the total compensation cost related to nonvested
awards not yet recorded is expected to be $488,000. This amount will be
recognized over the next five years and the weighted average period of
recognizing these costs is expected to be 2.8 years.

Stock Option Activity

A summary of option activity
under the stock option plan as of June 30, 2009 and changes during the period
then ended is presented below:

|                                |  |        |         |                                 |   |                                             |  |                                  |           |  |   |     | 
|------------------------------- |  | ------ | ------- | ------------------------------- | - | ------------------------------------------- |  | -------------------------------- | --------- |  | - | --- | 
|Options                         |  | Shares |         | Weighted Average Exercise Price |   | Weighted Average Remaining Contractual Term |  | Aggregate Intrinsic Value ($000) |          
|                                |  |        |         |                                 |   |                                             |  |                                  |          
|                                |  |        |         |                                 |   |                                             |  |                                  |           |  |   |     | 
|Outstanding at January 1,
 2009 |  |        | 338,295 |                                 | $ | 18.67                                       |  |                                  | 5.7 years |  | $ | 31  | 
|Granted                         |  |        | 62,003  |                                 | $ | 8.50                                        |  |                                  | 9.8 years |  |   |    | 
|Exercised                       |  |        | (5,250  | )                               | $ | 4.10                                        |  |                                  |          |  |   |    | 
|Cancelled                       |  |        | (12,854 | )                               | $ | 20.45                                       |  |                                  |          |  |   |    | 
|                                |  |        |         |                                 |   |                                             |  |                                  |           |  |   |     | 
|Outstanding at June 30,
 2009   |  |        | 382,194 |                                 | $ | 17.19                                       |  |                                  | 7.0 years |  | $ | 131 | 
|                                |  |        |         |                                 |   |                                             |  |                                  |           |  |   |     | 
|Exercisable at June 30,
 2009   |  |        | 194,399 |                                 | $ | 18.23                                       |  |                                  | 5.8 years |  | $ |    | 
|                                |  |        |         |                                 |   |                                             |  |                                  |           |  |   |     | 

The intrinsic value was
derived from the market price of the Companys common stock of $10.61 as of
June 30, 2009.

3. COMMITMENTS AND CONTINGENCIES

In the normal course of business there are outstanding
various commitments to extend credit which are not reflected in the financial
statements, including loan commitments of approximately $67,713,000 and standby
letters of credit of approximately $4,427,000 at June 30, 2009. Such loans
relate primarily to real estate construction loans and revolving lines of
credit and other commercial loans. However, all such commitments will not
necessarily culminate in actual extensions of credit by the Company during 2009
as some of these are expected to expire without being fully drawn upon.

Standby letters of credit are commitments issued to
guarantee the performance or financial obligation of a client to a third
party. These guarantees are issued primarily relating to purchases of inventory
or as security for real estate rents by commercial clients and are typically
short-term in nature. Credit risk is similar to that involved in extending loan
commitments to clients and accordingly, evaluation and collateral requirements
similar to those for loan commitments are used. The majority of all such
commitments are collateralized. The fair value of the liability related to these
standby letters of credit, which represents the fees received for issuing the
guarantees was not significant at June 30, 2009 or June 30, 2008.

4. EARNINGS (LOSS) PER SHARE COMPUTATION

Basic earnings per share is computed by dividing net
income by the weighted average common shares outstanding for the period
(5,797,533 and 5,796,025 shares for the three-month and six-month periods ended
June 30, 2009, and 5,811,578 and 5,825,367 shares for the three-month and
six-month periods ended June 30, 2008). Diluted earnings per share reflect the
potential dilution that could occur if outstanding stock options were
exercised. Diluted earnings per share is computed by dividing net income by the
weighted average common shares outstanding for the period plus the dilutive
effect of options. When a loss occurs there is no effect on the calculation of
diluted loss per share for common stock equivalents because the conversion is
anti-dilutive, as such there are no diluted shares reported for the three
months ended June 30, 2009. There were 46,044 diluted shares for the six-month
period ended June 30, 2009 and 14,725 and 23,668 shares for the three-month and
six-month periods ended June 30, 2008). Earnings per share is retroactively
adjusted for stock dividends and stock splits for all periods presented.

9

---



5. COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) is reported in addition to
net income (loss) for all periods presented. Comprehensive income (loss) is
comprised of net income (loss) plus other comprehensive income (loss). Other
comprehensive loss, net of taxes, was comprised of the unrealized losses on
available-for-sale investment securities of $(173,000) and $(234,000), respectively,
for the three-month and six-month periods ended June 30, 2009 and $(641,000)
and $(137,000), respectively, for the three-month and six month periods ended
June 30, 2008. Comprehensive (loss) income was $(877,000) and $345,000,
respectively, for the three-month and six-month periods ended June 30, 2009 and
$1,340,000 and $3,677,000, respectively, for the three-month and six-month
periods ended June 30, 2008. Reclassification adjustments resulting from
realized gains or loss on sale of investment securities were $160,000 for both
the three and six month periods ending June 30, 2009 and $33,000 for both the
three and six month periods ending June 30, 2008.

6. BORROWING ARRANGEMENTS

The Company has a total of $52,000,000 in unsecured
short-term borrowing arrangements with four of its correspondent banks. There
were no advances under the borrowing arrangements as of June 30, 2009 or
December 31, 2008.

The Company has a line of credit available with the
Federal Home Loan Bank (the FHLB) which is secured by pledged mortgage loans
and investment securities. Borrowings may include overnight advances as well as
loans with terms of up to thirty years. Advances (both short and long-term)
totaling $36,000,000 were outstanding from the FHLB at June 30, 2009, bearing
interest rates ranging from 1.60% to 3.78% and maturing between September 10,
2009 and January 13, 2014. Advances totaling $57,231,000 were outstanding from
the FHLB at December 31, 2008, bearing interest rates ranging from 0.05% to
3.78% and maturing between January 2, 2009 and August 22, 2011. Remaining
amounts available under the borrowing arrangement with the FHLB at June 30,
2009 and December 31, 2008 totaled $67,270,000 and $60,012,000, respectively. In
addition, during 2008 the Company entered into a secured borrowing agreement
with the Federal Reserve Bank of San Francisco (the FRB). The borrowing can be
secured by pledging selected loans and investment securities. Borrowings
generally are short-term including overnight advances as well as loans with
terms up to ninety days. Collateral value at June 30, 2009 and December 31,
2008 was $10,312.000 and $935,000, respectively. There were no advances
outstanding as of June 30, 2009 and December 31, 2008.

The Companys banking subsidiary, American River Bank
(the Bank), is eligible to issue certain debt that is backed by the full
faith and credit of the United States, up to a limit of $10,260,000, under the
FDICs Temporary Liquidity Guarantee Program. Any senior unsecured debt with a
stated maturity of more than thirty days issued by the Bank up to its debt
guarantee limit falls under this program. The Bank will be charged an annualized
assessment from the FDIC, ranging from 50 to 100 basis points, based on the
term and amount of the debt outstanding under the program. At June 30, 2009 and
December 31, 2008, the Company had no borrowings under this debt guarantee
program.

7. INCOME TAXES

The Company files its income taxes on a consolidated
basis with its subsidiaries. The allocation of income tax expense (benefit)
represents each entitys proportionate share of the consolidated (benefit from)
provision for income taxes.

The Company accounts for income taxes using the
balance sheet method, under which deferred tax assets and liabilities are
recognized for the tax consequences of temporary differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax laws and
rates on the date of enactment. On the consolidated balance sheet, net deferred
tax assets are included in accrued interest receivable and other assets.

10

---



The benefit of a tax position is recognized in the
financial statements in the period during which, based on all available
evidence, management believes it is more likely than not that the position will
be sustained upon examination, including the resolution of appeals or
litigation processes, if any. Tax positions that meet the more-likely-than-not
recognition threshold are measured as the largest amount of tax benefit that is
more than 50 percent likely of being realized upon settlement with the applicable
taxing authority. The portion of the benefits associated with tax positions
taken that exceeds the amount measured as described above is reflected as a
liability for unrecognized tax benefits in the accompanying balance sheet along
with any associated interest and penalties that would be payable to the taxing
authorities upon examination. The Company recognizes accrued interest and
penalties related to unrecognized tax benefits, if applicable, as a component
of interest expense in the consolidated statements of operations. There have been no significant changes to
unrecognized tax benefits or accrued interest and penalties for the three and
six-month periods ended June 30, 2009.

8. FAIR VALUE
MEASUREMENT

The carrying amounts and estimated fair values of the
Companys financial instruments are as follows (dollars in thousands):

|                                                 |  |                  |         |                        |   |                  |  |                        |         |  |   |         | 
|------------------------------------------------ |  | ---------------- | ------- | ---------------------- | - | ---------------- |  | ---------------------- | ------- |  | - | ------- | 
|                                                 |  | June 30, 2009    |         | December 31, 2008      |  
|                                                 |  |                  |         |                        |  
|                                                 |  | Carrying
 Amount |         | Estimated
 Fair
 Value |   | Carrying
 Amount |  | Estimated
 Fair
 Value |        
|                                                 |  |                  |         |                        |   |                  |  |                        |        
|                                                 |  |                  |         |                        |   |                  |  |                        |         |  |   |         | 
|Financial
 assets:                               |  |                  |         |                        |   |                  |  |                        |         |  |   |         | 
|                                                 |  |                  |         |                        |   |                  |  |                        |         |  |   |         | 
|Cash and cash
 equivalents                       |  | $                | 25,074  |                        | $ | 25,074           |  | $                      | 15,170  |  | $ | 15,170  | 
|Interest-bearing
 deposits in banks              |  |                  | 891     |                        |   | 891              |  |                        | 4,248   |  |   | 4,249   | 
|Investment
 securities                           |  |                  | 82,884  |                        |   | 83,551           |  |                        | 87,699  |  |   | 88,223  | 
|Loans and
 leases, net                           |  |                  | 398,191 |                        |   | 392,165          |  |                        | 412,356 |  |   | 407,725 | 
|FHLB stock                                       |  |                  | 3,922   |                        |   | 3,922            |  |                        | 3,922   |  |   | 3,922   | 
|Accounts
 receivable servicing receivables       |  |                  | 80      |                        |   | 80               |  |                        | 1,236   |  |   | 1,236   | 
|Accrued interest
 receivable                     |  |                  | 2,026   |                        |   | 2,026            |  |                        | 2,265   |  |   | 2,265   | 
|Cash surrender
 value of life insurance policies |  |                  | 10,612  |                        |   | 10,612           |  |                        | 10,496  |  |   | 10,496  | 
|                                                 |  |                  |         |                        |   |                  |  |                        |         |  |   |         | 
|Financial
 liabilities:                          |  |                  |         |                        |   |                  |  |                        |         |  |   |         | 
|                                                 |  |                  |         |                        |   |                  |  |                        |         |  |   |         | 
|Deposits                                         |  | $                | 449,609 |                        | $ | 450,417          |  | $                      | 437,061 |  | $ | 438,160 | 
|Short-term
 borrowings                           |  |                  | 14,500  |                        |   | 14,500           |  |                        | 43,231  |  |   | 42,231  | 
|Long-term
 borrowings                            |  |                  | 21,500  |                        |   | 22,239           |  |                        | 14,000  |  |   | 14,599  | 
|Accrued interest
 payable                        |  |                  | 393     |                        |   | 393              |  |                        | 462     |  |   | 462     | 

Estimated fair values are disclosed for financial
instruments for which it is practicable to estimate fair value. These estimates
are made at a specific point in time based on relevant market data and
information about the financial instruments. These estimates do not reflect any
premium or discount that could result from offering the Companys entire
holdings of a particular financial instrument for sale at one time, nor do they
attempt to estimate the value of anticipated future business related to the
instruments. In addition, the tax ramifications related to the realization of
unrealized gains and losses can have a significant effect on fair value
estimates and have not been considered in any of these estimates.

Because no market exists for a significant portion of
the Companys financial instruments, fair value estimates are based on
judgments regarding current economic conditions, risk characteristics of
various financial instruments and other factors. These estimates are subjective
in nature and involve uncertainties and matters of significant judgment and
therefore cannot be determined with precision. Changes in assumptions could
significantly affect the fair values presented.

11

---



The following methods and assumptions were used by the
Company to estimate the fair value of its financial instruments at June 30,
2009 and December 31, 2008:

Cash and cash equivalents:
For cash and cash equivalents, the carrying amount is estimated to be fair
value.

Interest-bearing deposits
in banks: The fair values of interest-bearing deposits in
banks are estimated by discounting their future cash flows using rates at each
reporting date for instruments with similar remaining maturities offered by
comparable financial institutions.

Investment securities:
For investment securities, fair values are based on quoted market prices, where
available. If quoted market prices are not available, fair values are estimated
using quoted market prices for similar securities and indications of value
provided by brokers.

Loans and leases:
For variable-rate loans and leases that reprice frequently with no significant
change in credit risk, fair values are based on carrying values. The fair
values for other loans and leases are estimated using discounted cash flow
analyses, using interest rates being offered at each reporting date for loans
and leases with similar terms to borrowers of comparable creditworthiness. The
carrying amount of accrued interest receivable approximates its fair value.

FHLB stock:
The carrying amount of FHLB stock approximates its fair value. This investment
is carried at cost and is redeemable at par with certain restrictions.

Accounts receivable
servicing receivables: The carrying amount of accounts
receivable servicing receivables approximates their fair value because of the
relatively short period of time between the origination of the receivables and
their expected collection.

Cash surrender value of
life insurance policies: The fair value of life insurance
policies are based on cash surrender values at each reporting date as provided
by insurers.

Deposits:
The fair values for non-maturing deposits are, by definition, equal to the
amount payable on demand at the reporting date represented by their carrying
amount. Fair values for fixed-rate certificates of deposit are estimated using
a discounted cash flow analysis using interest rates offered at each reporting
date for certificates with similar remaining maturities. The carrying amount of
accrued interest payable approximates its fair value.

Short-term and long-term
borrowings: The fair value of short-term borrowings is
estimated to be the carrying amount. The fair value of long-term borrowings is
estimated using a discounted cash flow analysis using interest rates currently
available for similar debt instruments.

Commitments to extend
credit: The fair value of commitments is based on fees
currently charged to enter into similar agreements, net of origination fees.
These fees were not material at June 30, 2009 and December 31, 2008.

The following table presents information about the
Companys assets and liabilities measured at fair value on a recurring and
nonrecurring basis as of June 30, 2009, and indicates the fair value hierarchy
of the valuation techniques utilized by the Company to determine such fair
value. In general, fair values determined by Level 1 inputs utilize quoted
prices (unadjusted) in active markets for identical assets or liabilities that
the Company has the ability to access. Fair values determined by Level 2 inputs
utilize information other than the quoted prices included in Level 1 that are
observable for the asset or liability, either directly or indirectly. Level 2
inputs include quoted prices for similar assets and liabilities in active
markets, and inputs other than quoted prices that are observable for the asset
or liability, such as interest rates and yield curves that are observable at
commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset
or liability, and include situations where there is little, if any, market
activity for the asset or liability. In certain cases, the inputs used to
measure fair value may fall into different levels of the fair value hierarchy.
In such cases, the level in the fair value hierarchy within which the fair
value measurement, in its entirety, falls has been determined based on the
lowest level input that is significant to the fair value measurement. The
Companys assessment of the significance of a particular input to the fair
value measurement in its entirety requires judgment, and considers factors
specific to the asset or liability.

12

---



(dollars in thousands)

|                                                          |  |                            |        |                                                                 |   |                                     |  |                                              |        |  |   |       | 
|--------------------------------------------------------- |  | -------------------------- | ------ | --------------------------------------------------------------- | - | ----------------------------------- |  | -------------------------------------------- | ------ |  | - | ----- | 
|                                                          |  |                            |        | Fair
 Value Measurements
 at June 30, 2009 Using                |  
|                                                          |  |                            |        |                                                                 |   |                                    
|Description                                               |  | Fair
 Value
 June 30, 2009 |        | Quoted
 Prices in Active Markets for Identical Assets (Level 1) |   | Other
 Observable Inputs
 (Level 2) |  | Significant
 Unobservable
 Inputs
 (Level 3) |       
|                                                          |  |                            |        |                                                                 |   |                                     |  |                                              |       
|Assets and
 liabilities measured on a recurring basis:    |  |                            |        |                                                                 |   |                                     |  |                                              |        |  |   |       | 
|Available-for-sale
 securities                            |  | $                          | 64,951 |                                                                 | $ | 20                                  |  | $                                            | 60,863 |  | $ | 4,068 | 
|                                                          |  |                            |        |                                                                 |   |                                     |  |                                              |        |  |   |       | 
|Total                                                     |  | $                          | 64,951 |                                                                 | $ | 20                                  |  | $                                            | 60,863 |  | $ | 4,068 | 
|                                                          |  |                            |        |                                                                 |   |                                     |  |                                              |        |  |   |       | 
|                                                          |  |                            |        |                                                                 |   |                                     |  |                                              |        |  |   |       | 
|Assets and
 liabilities measured on a nonrecurring basis: |  |                            |        |                                                                 |   |                                     |  |                                              |        |  |   |       | 
|Impaired loans                                            |  | $                          | 7,188  |                                                                 | $ |                                    |  | $                                            | 2,947  |  | $ | 4,241 | 
|Other real
 estate owned                                  |  |                            | 3,347  |                                                                 |   |                                    |  |                                              | 3,347  |  |   |      | 
|                                                          |  |                            |        |                                                                 |   |                                     |  |                                              |        |  |   |       | 
|Total                                                     |  | $                          | 10,535 |                                                                 | $ |                                    |  | $                                            | 6,294  |  | $ | 4,241 | 
|                                                          |  |                            |        |                                                                 |   |                                     |  |                                              |        |  |   |       | 

Changes in balances of recurring items valued using
significant unobservable inputs (level 3) for available-for-sale securities and
impaired loans are as follows:

(dollars in thousands)

|               |  |                              |       |                    |   |                           |  |                         |      |                            |   |   |  |   |       | 
|-------------- |  | ---------------------------- | ----- | ------------------ | - | ------------------------- |  | ----------------------- | ---- | -------------------------- | - | - |  | - | ----- | 
|               |  | Balance as ofJanuary 1, 2009 |       | Transfers In (Out) |   | Unrealized Gains (Losses) |  | Realized Gains (Losses) |      | Balance as ofJune 30, 2009 |  
|               |  |                              |       |                    |   |                           |  |                         |      |                            |  
|               |  |                              |       |                    |   |                           |  |                         |      |                            |   |   |  |   |       | 
|Securities     |  | $                            | 2,049 |                    | $ | 2,526                     |  | $                       | (507 | )                          | $ |  |  | $ | 4,068 | 
|Impaired loans |  |                              |      |                    |   | 4,241                     |  |                         |     |                            |   |  |  |   | 4,241 | 
|               |  |                              |       |                    |   |                           |  |                         |      |                            |   |   |  |   |       | 
|Total          |  | $                            | 2,049 |                    | $ | 6,767                     |  | $                       | (507 | )                          | $ |  |  | $ | 8,309 | 
|               |  |                              |       |                    |   |                           |  |                         |      |                            |   |   |  |   |       | 

There were no changes in the
valuation techniques used during the three months or six months ended June 30,
2009. The following methods were used to estimate the fair value of each class
of financial instrument above:

Available-for-sale securities -Fair values for investment securities are
based on evaluated pricing models that vary by asset class and incorporate
available trade, bid and other market information. Evaluated pricing
applications apply available information, as applicable, through processes such
as benchmark curves, benchmarking to like securities, sector groupings, and
matrix pricing.

Impaired Loans -The fair value of impaired loans is based on
the fair value of the collateral for all collateral dependent loans and for
other impaired loans is estimated using a discounted cash flow model.

Other real estate owned -Other real estate owned represents
real estate which the Company has taken control of in partial or full
satisfaction of loans. At the time of foreclosure, other real estate owned is
recorded at the fair value of the real estate less costs to sell, which becomes
the propertys new basis.

9. RECENTLY ISSUED
ACCOUNTING PRONOUNCEMENTS

On April 1, 2009, the Financial Accounting Standards Board (the
FASB) issued FASB Staff Position No. FAS 141(R)-1, Accounting for
Assets Acquired and Liabilities Assumed in a Business Combination That Arise
from Contingencies (FSP 141(R)-1). FSP 141(R)-1 provides additional guidance
regarding the recognition, measurement and disclosure of assets and liabilities
arising from contingencies in a business combination. FSP 141(R)-1 is effective
for assets or liabilities arising from contingencies in business combinations
for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. The impact on the
Company of adopting FSP 141(R)-1 will depend on the timing of future
acquisitions, as well as the nature and existence of contingencies associated
with such acquisitions.

13

---



On May 28, 2009, the FASB issued Statement of
Financial Accounting Standards (SFAS) No. 165, Subsequent Events (SFAS
165). Under SFAS 165, companies are required to evaluate events and
transactions that occur after the balance sheet date but before the date the
financial statements are issued, or available to be issued in the case of
non-public entities. SFAS 165 requires entities to recognize in the financial
statements the effect of all events or transactions that provide additional
evidence of conditions that existed at the balance sheet date, including the
estimates inherent in the financial preparation process. Entities shall not
recognize the impact of events or transactions that provide evidence about
conditions that did not exist at the balance sheet date but arose after that
date. SFAS 165 also requires entities to disclose the date through which
subsequent events have been evaluated. SFAS 165 was effective for interim and
annual reporting periods ending after June 15, 2009. The Company adopted the
provisions of SFAS 165 for the quarter ended June 30, 2009, as required, and
adoption did not have a material impact on the Companys financial statements
taken as a whole.

On June 29, 2009, the FASB issued SFAS No. 168, The
FASB Accounting Standards CodificationTM and the Hierarchy of Generally
Accepted Accounting Principles a replacement of FASB Statement No. 162
(SFAS 168). SFAS 168 establishes the FASB Accounting Standards CodificationTM as the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with US GAAP.
SFAS 168 will be effective for financial statements issued for interim and
annual periods ending after September 15, 2009, for most entities. On the
effective date, all non-SEC accounting and reporting standards will be
superceded. The Company will adopt SFAS 168 for the quarterly period ending
September 30, 2009, as required, and adoption is not expected to have a
material impact on the Companys financial statements taken as a whole.

10. SUBSEQUENT EVENTS

Effective this quarter, the Company implemented
Statement of Financial Accounting Standards No. 165, Subsequent Events,or SFAS 165. This standard establishes
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued. The adoption
of SFAS 165 did not impact the Companys financial position or results of
operations. The Company evaluated all events or transactions that occurred from
June 30, 2009 to August
13, 2009 (the filing date), the date the Company issued these financial
statements.

14

---



Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations.

The
following is managements discussion and analysis of the significant changes in
American River Bankshares (the Company) balance sheet accounts between
December 31, 2008 and June 30, 2009 and its income and expense accounts for the
three-month and six-month periods ended June 30, 2009 and 2008. The discussion
is designed to provide a better understanding of significant trends related to
the Companys financial condition, results of operations, liquidity, capital
resources and interest rate sensitivity. This discussion and supporting tables
and the consolidated financial statements and related notes appearing elsewhere
in this report are unaudited. Interest income and net interest income are
presented on a fully taxable equivalent basis (FTE) within managements
discussion and analysis.

Certain
matters discussed or incorporated by reference in this Quarterly Report on Form
10-Q including, but not limited to, matters described in Item 2 - Managements
Discussion and Analysis of Financial Condition and Results of Operations, are
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, Section 27A of the Securities Act
of 1933, as amended, and subject to the safe-harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements may
contain words related to future projections including, but not limited to,
words such as believe, expect, anticipate, intend, may, will,
should, could, would, and variations of those words and similar words
that are subject to risks, uncertainties and other factors that could cause
actual results to differ materially from those projected. Factors
that could cause or contribute to such differences include, but are not limited
to, the following: (1) the duration of financial and economic volatility and
actions taken by the United States Congress and governmental agencies,
including the United States Department of the Treasury, to deal with challenges
to the U.S. financial system; (2) variances in the actual versus projected
growth in assets and return on assets; (3) loan and lease losses; (4) expenses;
(5) changes in the interest rate environment including interest rates charged
on loans, earned on securities investments and paid on deposits and other
borrowed funds; (6) competition effects; (7) fee and other noninterest income
earned; (8) general economic conditions nationally, regionally, and in the
operating market areas of the Company and its subsidiaries; (9) changes in the
regulatory environment including government intervention in the U.S. financial
system; (10) changes in business conditions and inflation; (11) changes in
securities markets, public debt markets, and other capital markets; (12) data processing and other operational systems
failures or fraud; (13) a decline in real estate values in the Companys
operating market areas; (14) the effects of
uncontrollable events such as terrorism, the threat of terrorism or the impact
of the current military conflicts in Afghanistan and Iraq and the conduct of
the war on terrorism by the United States and its allies,
worsening financial and economic conditions, natural disasters, and disruption
of power supplies and communications; and (15) changes in accounting standards,
tax laws or regulations and interpretations of such standards, laws or
regulations, as well as other factors. The factors set forth under Item 1A -
Risk Factors in the Companys Annual Report on Form 10-K for the year ended
December 31, 2008 and other cautionary statements and information set forth in this Quarterly
Report on Form 10-Q should be carefully considered and understood as being
applicable to all related forward-looking statements contained in this
Quarterly Report on Form 10-Q, when evaluating the business prospects of the
Company and its subsidiaries.

Forward-looking
statements are not guarantees of performance. By their nature, they involve
risks, uncertainties and assumptions. The future results and shareholder values
may differ significantly from those expressed in these forward-looking
statements. You are cautioned not to put undue reliance on any forward-looking
statement. Any such statement speaks only as of the date of this report, and in
the case of any documents that may be incorporated by reference, as of the date
of those documents. We do not undertake any obligation to update or release any
revisions to any forward-looking statements, to report any new information,
future event or other circumstances after the date of this report or to reflect
the occurrence of unanticipated events, except as required by law. However,
your attention is directed to any further disclosures made on related subjects
in our subsequent reports filed with the Securities and Exchange Commission
(the SEC) on Forms 10-K, 10-Q and 8-K.

15

---



Critical Accounting Policies

General

The
Companys financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP). The
financial information contained within our statements is, to a significant
extent, financial information that is based on measures of the financial
effects of transactions and events that have already occurred. We use
historical loss data and the economic environment as factors, among others, in
determining the inherent loss that may be present in our loan and lease
portfolio. Actual losses could differ significantly from the factors that we
use. In addition, GAAP itself may change from one previously acceptable method
to another method. Although the economics of our transactions would be the
same, the timing of events that would impact our transactions could change.

Allowance
for Loan and Lease Losses

The
allowance for loan and lease losses is an estimate of the credit loss risk in our
loan and lease portfolio. The allowance is based on two basic principles of
accounting: (1) Statement of Financial Accounting Standards (SFAS) No. 5
Accounting for Contingencies, which requires that losses be accrued when it
is probable that a loss has occurred at the balance sheet date and such loss
can be reasonably estimated; and (2) SFAS No. 114, Accounting by Creditors for
Impairment of a Loan, which requires that losses be accrued on impaired loans
based on the differences between the value of collateral, present value of
future cash flows or values that are observable in the secondary market and the
loan balance.

The
allowance for loan and lease losses is determined based upon estimates that can
and do change when the actual risk, loss events, or changes in other factors,
occur. The analysis of the allowance uses an historical loss view as an
indicator of future losses and as a result could differ from the loss incurred
in the future. If the allowance for loan and lease losses falls below that
deemed adequate (by reason of loan and lease growth, actual losses, the effect
of changes in risk factors, or some combination of these), the Company has a
strategy for supplementing the allowance for loan and lease losses, over the
short-term. For further information regarding our allowance for loan and lease
losses, see Allowance for Loan and Lease Losses Activity discussion later in
this Item 2.

Stock-Based
Compensation

The
Company recognizes compensation expense in an amount equal to the fair value of
the share-based payments such as stock options granted to employees. The
Company records compensation expense (as previous awards continue to vest) for
the unvested portion of previously granted awards that were outstanding on
January 1, 2006 and for all awards granted after that date as they vest. The
fair value of each option is estimated on the date of grant and amortized over
the service period using an option pricing model. Critical assumptions that
affect the estimated fair value of each option include expected stock price
volatility, dividend yields, option life and the risk-free interest rate.

Goodwill

Business
combinations involving the Companys acquisition of the equity interests or net
assets of another enterprise or the assumption of net liabilities in an
acquisition of branches constituting a business may give rise to goodwill.
Goodwill represents the excess of the cost of an acquired entity over the net
of the amounts assigned to assets acquired and liabilities assumed in
transactions accounted for under the purchase method of accounting. The value
of goodwill is ultimately derived from the Companys ability to generate net
earnings after the acquisition. A decline in net earnings could be indicative
of a decline in the fair value of goodwill and result in impairment. For that
reason, goodwill is assessed for impairment at a reporting unit level at least
annually following the year of acquisition. The Company performed an evaluation
of the goodwill, recorded as a result of the Bank of Amador acquisition, during
the fourth quarter of 2008 and determined that there was no impairment. While
the Company believes all assumptions utilized in its assessment of goodwill for
impairment are reasonable and appropriate, changes in earnings, the effective
tax rate, historical earnings multiples and the cost of capital could all cause
different results for the calculation of the present value of future cash
flows.

16

---



Fair
Value

Effective
January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements,
which among other things, requires enhanced disclosures about financial
instruments carried at fair value. SFAS No. 157 establishes a hierarchical
disclosure framework associated with the level of observable pricing scenarios
utilized in measuring financial instruments at fair value. The degree of
judgment utilized in measuring the fair value of financial instruments
generally correlates to the level of the observable pricing scenario. Financial
instruments with readily available active quoted prices or for which fair value
can be measured from actively quoted prices generally will have a higher degree
of observable pricing and a lesser degree of judgment utilized in measuring
fair value. Conversely, financial instruments rarely traded or not quoted will
generally have little or no observable pricing and a higher degree of judgment
utilized in measuring fair value. Observable pricing scenarios are impacted by
a number of factors, including the type of financial instrument, whether the
financial instrument is new to the market and not yet established and the
characteristics specific to the transaction.

General
Development of Business

The
Company is a bank holding company registered under the Bank Holding Company Act
of 1956, as amended. The Company was incorporated under the laws of the State
of California in 1995. As a bank holding company, the Company is authorized to
engage in the activities permitted under the Bank Holding Company Act of 1956,
as amended, and regulations thereunder. Its principal office is located at 3100
Zinfandel Drive, Suite 450, Rancho Cordova, California 95670 and its telephone
number is (916) 854-0123. The
Company employed an equivalent of 117 full-time employees as of June 30, 2009.

The
Company owns 100% of the issued and outstanding common shares of its banking
subsidiary, American River Bank (the Bank), and American River Financial, a
California corporation which has been inactive since its incorporation in 2003.

American
River Bank was incorporated and commenced business in Fair Oaks, California, in
1983 and thereafter moved its headquarters to Sacramento, California in 1985.
The Bank operates: (1) five full service offices and one convenience office in
Sacramento and Placer Counties including the head office located at 1545 River
Park Drive, Suite 107, Sacramento, and branch offices located at 520 Capitol
Mall, Suite 100, Sacramento, 9750 Business Park Drive, Sacramento, 10123 Fair
Oaks Boulevard, Fair Oaks and 2240 Douglas Boulevard, Roseville, and the
convenience office (limited service office) located at 3100 Zinfandel
Drive, Suite 450, Rancho Cordova, and
(2) three full service offices in Sonoma County located at 412 Center Street,
Healdsburg, 8733 Lakewood Drive, Windsor, and 90 South E Street, Suite 110,
Santa Rosa, operated under the name North Coast Bank, a division of American
River Bank. North Coast Bank was acquired by the Company in 2000 as a separate
bank subsidiary and was merged with and into American River Bank in 2003. The
Company acquired Bank of Amador located in Jackson, California in 2004. Bank of
Amador was merged with and into American River Bank and now operates
three full service banking offices as
Bank of Amador, a division of American River Bank within its primary
service area of Amador County, in the cities of Jackson, Pioneer and Ione.

The
Banks deposits are insured by the Federal Deposit Insurance Corporation (the
FDIC) up to applicable legal limits. The Bank is also participating in the FDIC Transaction Account Guarantee
Program (the TAGP). Under the TAGP, all noninterest-bearing transaction
accounts are fully guaranteed by the FDIC for the entire amount in the account
through December 31, 2009. Coverage under the TAGP is in addition to and
separate from the coverage available under the FDICs general deposit insurance
rules. FDIC insurance coverage
and assessments are discussed under Item 1A--Risk Factors in the Companys
Annual Report on Form 10-K for the year ended December 31, 2008. The Bank does
not offer trust services or international banking services and does not plan to
do so in the near future. The Banks primary business is serving the commercial
banking needs of small to mid-sized businesses within those counties listed
above. The Bank accepts checking and savings deposits, offers money market
deposit accounts and certificates of deposit, makes secured and unsecured
commercial, secured real estate, and other installment and revolving credit
loans and offers other customary banking services. The Bank also conducts lease
financing for most types of business equipment, from computer software to heavy
earth-moving equipment. The Bank owns 100% of two inactive companies, ARBCO and
American River Mortgage. ARBCO was formed in 1984 to conduct real estate
development and has been inactive since 1995. American River Mortgage has been
inactive since its formation in 1994. During 2009, the Company conducted
no significant activities other than holding the shares of its subsidiaries.
However, it is authorized, with the prior approval of the Board of Governors of
the Federal Reserve System (the Board of Governors), the Companys principal
regulator, to engage in a variety of activities which are deemed closely related
to the business of banking. The common
stock of the Company is registered under the Securities Exchange Act of 1934,
as amended, and is listed and traded on the Nasdaq Global Select Market under
the symbol AMRB.

17

---



Overview

The
Company recorded a net loss of $704,000 for the quarter ended June 30, 2009,
which was $2,685,000 (135.5%) below the $1,981,000 net income reported for the
same period of 2008. Diluted earnings per share for the second quarter of 2009
were negative $0.12 due to the loss, compared to diluted earnings per share of
$0.34 recorded in the second quarter of 2008. The return on average equity
(ROAE) and the return on average assets (ROAA) for the second quarter of 2009
were (4.41%) and (0.50%), respectively, as compared to 13.11% and 1.38%,
respectively, for the same period in 2008.

Net
income for the six months ended June 30, 2009 and 2008 was $579,000 and
$3,814,000, respectively, with diluted earnings per share of $.10 and $.65,
respectively. For the first six months of 2009, ROAE was 1.83% and ROAA was
0.20% compared to 12.69% and 1.33%, respectively, for the same period in 2008.

Total
assets of the Company decreased by $11,347,000 (2.0%) from $563,157,000 at
December 31, 2008 to $551,810,000 at June 30, 2009. Net loans totaled
$398,191,000 at June 30, 2009, down $14,165,000 (3.4%) from $412,356,000 at
December 31, 2008. Deposit balances at June 30, 2009 totaled $449,609,000, up
$12,548,000 (2.9%) from $437,061,000 at December 31, 2008.

The
Company ended the second quarter of 2009 with a Tier 1 capital ratio of 10.6%
and a total risk-based capital ratio of 11.8% compared to 10.2% and 11.5%,
respectively, at December 31, 2008.

Table
One below provides a summary of the components of net (loss) income for the
periods indicated (See the Results of Operations section that follows for an
explanation of the fluctuations in the individual components):

|                                                                        |  |                                    |         |                                  |   |         |   |      |         |   |   |         |  
|----------------------------------------------------------------------- |  | ---------------------------------- | ------- | -------------------------------- | - | ------- | - | ---- | ------- | - | - | ------- | -
|Table One: Components of Net Income                                     |  |                                    |         |                                  |   |         |   |      |         |   |   |         |  
|                                                                        |  |                                    |         |                                  |   |         |   |      |         |   |   |         |  
|                                                                        |  | For the three monthsended June 30, |         | For the six monthsended June 30, |  
|                                                                        |  |                                    |         |                                  |  
|(dollars in thousands)                                                  |  | 2009                               |         | 2008                             |   | 2009    |   | 2008 |        
|                                                                        |  |                                    |         |                                  |   |         |   |      |        
|                                                                        |  |                                    |         |                                  |   |         |   |      |         |   |   |         |  
|Net interest income*                                                    |  | $                                  | 6,102   |                                  | $ | 6,483   |   | $    | 12,527  |   | $ | 12,910  |  
|Provision for loan and lease losses                                     |  |                                    | (3,800  | )                                |   | (190    | ) |      | (5,029  | ) |   | (527    | )
|Noninterest income                                                      |  |                                    | 649     |                                  |   | 639     |   |      | 1,159   |   |   | 1,224   |  
|Noninterest expense                                                     |  |                                    | (4,239  | )                                |   | (3,642  | ) |      | (7,840  | ) |   | (7,271  | )
|Benefit (provision) for income taxes                                    |  |                                    | 668     |                                  |   | (1,221  | ) |      | (68     | ) |   | (2,349  | )
|Tax equivalent adjustment                                               |  |                                    | (84     | )                                |   | (88     | ) |      | (170    | ) |   | (173    | )
|                                                                        |  |                                    |         |                                  |   |         |   |      |         |   |   |         |  
|                                                                        |  |                                    |         |                                  |   |         |   |      |         |   |   |         |  
|Net (loss) income                                                       |  | $                                  | (704    | )                                | $ | 1,981   |   | $    | 579     |   | $ | 3,814   |  
|                                                                        |  |                                    |         |                                  |   |         |   |      |         |   |   |         |  
|                                                                        |  |                                    |         |                                  |   |         |   |      |         |   |   |         |  
|                                                                        |  |                                    |         |                                  |   |         |   |      |         |   |   |         |  
|Average total assets                                                    |  | $                                  | 569,098 |                                  | $ | 575,827 |   | $    | 573,322 |   | $ | 574,879 |  
|Net (loss) income (annualized) as a
 percentage of average total assets |  |                                    | (0.50   | )%                               |   | 1.38    | % |      | 0.20    | % |   | 1.33    | %
|                                                                        |  |                                    |         |                                  |   |         |   |      |         |   |   |         |  
|                                                                        |  |                                    |         |                                  |   |         |   |      |         |   |   |         |  

* Fully taxable equivalent basis (FTE)

18

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Results
of Operations

Net
Interest Income and Net Interest Margin

Net
interest income represents the excess of interest and fees earned on interest
earning assets (loans and leases, securities, Federal funds sold and
investments in time deposits) over the interest paid on interest-bearing deposits
and borrowed funds. Net interest margin is net interest income expressed as a
percentage of average earning assets. The Companys net interest margin was
4.87% for the three months ended June 30, 2009, 4.99% for the three months
ended June 30, 2008, 4.98% for the six months ended June 30, 2009 and 4.96% for
the six months ended June 30, 2008.

The
fully taxable equivalent interest income component for the second quarter of
2009 decreased $935,000 (11.2%) to $7,405,000 compared to $8,340,000 for the
three months ended June 30, 2008. The decrease in the fully taxable equivalent
interest income for the second quarter of 2009 compared to the same period in
2008 is broken down by rate (down $733,000) and volume (down $202,000). The
rate decrease can be attributed to decreases implemented by the Company during
2007 and 2008 in response to the Federal Reserve Board (the FRB) decreases in
the Federal funds and discount rates. Decreases by the FRB have resulted in ten
rate drops totaling 500 basis points since September 2007. In addition,
interest forgone on non-accrual loans in 2009 increased when compared to 2008.
Interest income forgone on non-accrual loans was approximately $378,000 during
the second quarter of 2009 compared to $260,000 for the same period in 2008.
The overall decreasing interest rate environment and the negative effect of the
higher non-accrual loans resulted in a 51 basis point decrease in the yield on
average earning assets from 6.42% for 2008 to 5.91% for 2009. The volume decrease
occurred due to a 3.8% decrease in average earning assets. The Company did
experience a shift in the mix of earning assets from lower earning investments
to higher earning loans. The change in mix of earning assets was primarily the
result of the Companys decision to use the proceeds from principal reductions
and maturing investment securities to provide funding for loan growth and
offset a decrease in average deposits. This strategy has reduced the average
balances on investment securities by 20.0% from $111,309,000 during the second
quarter of 2008 to $89,061,000 during the second quarter of 2009, while average
loan balances increased $5,862,000 or 1.4% from $405,097,000 during the second
quarter of 2008 to $410,959,000 during the second quarter of 2009. The increase
in average loans is the result of the Companys continued concentrated focus on
business lending.

Total
fully taxable equivalent interest income for the six months ended June 30, 2009
decreased $1,761,000 (10.4%) to $15,242,000 compared to $17,003,000 for the six
months ended June 30, 2008. The breakdown of the fully taxable equivalent
interest income for the six months ended June 30, 2009 over the same period in
2008 resulted from decreases in rate (down $1,516,000) and a decrease in volume
(down $245,000). Average earning assets decreased $15,612,000 (3.0%) during the
first six months of 2009 as compared to the same period in 2008. Average loan
balances increased $10,046,000 (2.5%) during that same period and average
investment securities balances decreased $22,956,000 (20.3%).

Interest
expense was $554,000 (29.8%) lower in the second quarter of 2009 versus the
prior year period. The average balances of interest-bearing liabilities were
$2,098,000 (0.6%) higher in the second quarter of 2009 versus the same quarter
in 2008. The higher balances accounted for a $93,000 increase in interest
expense. Average time deposits were up $16,973,000 (13.8%) as the Company was
able to bring in some lower cost time deposits. The average cost of time
deposits dropped 126 bp from 3.04% in the second quarter of 2008 to 1.78% in
the second quarter of 2009. Decreased rates accounted for a $647,000 reduction
in interest expense for the three-month period ended June 30, 2009. The
decrease in rates is a direct result of the lower overall rate environment.
Rates paid on interest-bearing liabilities decreased 60 basis points from the
second quarter of 2008 to the second quarter of 2009 from 1.96% to 1.36%. The
average rate paid on borrowings dropped 70 basis points during that same time
period from 2.96% to 2.26%.

Interest
expense was $1,378,000 (33.7%) lower in the six-month period ended June 30,
2009 versus the prior year period. The average balances on interest-bearing
liabilities were $9,028,000 (2.4%) higher in the six-month period ended June
30, 2009 compared to the same period in 2008. The higher balances, especially
in the level of average borrowings and time deposits accounted for a $344,000
increase in interest expense. This increase was offset by lower rates, which
accounted for a $1,722,000 decrease in interest expense for the six-month
period. Rates paid on interest-bearing liabilities decreased 76 basis points
from the first six months of 2008 to the first six months of 2009 from 2.17% to
1.41%.

19

---



Table
Two, Analysis of Net Interest Margin on Earning Assets, and Table Three,
Analysis of Volume and Rate Changes on Net Interest Income and Expenses, are
provided to enable the reader to understand the components and trends of the
Companys interest income and expenses. Table Two provides an analysis of net
interest margin on earning assets setting forth average assets, liabilities and
shareholders equity; interest income earned and interest expense paid and
average rates earned and paid; and the net interest margin on earning assets.
Table Three sets forth a summary of the changes in interest income and interest
expense from changes in average asset and liability balances (volume) and
changes in average interest rates.

Table
Two: Analysis of Net Interest Margin on Earning Assets

Three Months Ended June 30,
 
 2009
 
 2008(Taxable Equivalent Basis)
 (dollars in thousands)
 
 Avg
 Balance
 
 Interest
 
 Avg
 Yield (4)
 
 Avg
 Balance
 
 Interest
 
 Avg
 Yield (4)AssetsEarning assets:Loans and leases
 (1)
 
 $
 410,959
 
 $
 6,364
 
 
 6.21
 %
 $
 405,097
 
 $
 6,945
 
 
 6.90
 %Taxable investment
 securities
 
 
 63,584
 
 
 676
 
 
 4.26
 %
 
 83,410
 
 
 962
 
 
 4.64
 %Tax-exempt
 investment securities (2)
 
 
 25,450
 
 
 339
 
 
 5.34
 %
 
 27,664
 
 
 355
 
 
 5.16
 %Corporate stock (2)
 
 
 27
 
 
 6
 
 
 89.13
 %
 
 235
 
 
 13
 
 
 22.25
 %Federal funds sold
 
 
 6
 
 
 
 
 
 0.00
 %
 
 1,202
 
 
 6
 
 
 2.01
 %Interest-bearing deposits in banks
 
 
 2,429
 
 
 20
 
 
 3.30
 %
 
 4,942
 
 
 59
 
 
 4.80
 %Total earning assets
 
 
 502,455
 
 
 7,405
 
 
 5.91
 %
 
 522,550
 
 
 8,340
 
 
 6.42
 %Cash & due from banks
 
 
 34,679
 
 
 
 
 
 
 
 
 21,204Other assets
 
 
 38,122
 
 
 
 
 
 
 
 
 38,145Allowance for loan & lease losses
 
 
 (6,158
 )
 
 
 
 
 
 
 
 (6,072
 )$
 569,098
 
 
 
 
 
 
 
 $
 575,827Liabilities & Shareholders
 EquityInterest-bearing liabilities:Interest checking and money market
 
 $
 155,630
 
 
 323
 
 
 0.83
 %
 $
 168,788
 
 
 471
 
 
 1.12
 %Savings
 
 
 33,380
 
 
 54
 
 
 0.65
 %
 
 35,902
 
 
 64
 
 
 0.72
 %Time deposits
 
 
 139,844
 
 
 621
 
 
 1.78
 %
 
 122,871
 
 
 929
 
 
 3.04
 %Other borrowings
 
 
 54,213
 
 
 305
 
 
 2.26
 %
 
 53,408
 
 
 393
 
 
 2.96
 %Total interest-bearing liabilities
 
 
 383,067
 
 
 1,303
 
 
 1.36
 %
 
 380,969
 
 
 1,857
 
 
 1.96
 %Noninterest-bearing demand deposits
 
 
 116,091
 
 
 
 
 
 
 
 
 128,266Other liabilities
 
 
 5,842
 
 
 
 
 
 
 
 
 5,837Total liabilities
 
 
 505,000
 
 
 
 
 
 
 
 
 515,072Shareholders equity
 
 
 64,098
 
 
 
 
 
 
 
 
 60,755$
 569,098
 
 
 
 
 
 
 
 $
 575,827Net interest income & margin (3)
 
 
 
 
 $
 6,102
 
 
 4.87
 %
 
 
 
 $
 6,483
 
 
 4.99
 %


|    |                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Loan interest includes loan costs of $7,000 and loan
 fees of $73,000 during the three months ending June 30, 2009 and June 30,
 2008, respectively.                                                                  
|(2) | Includes taxable-equivalent adjustments that
 primarily relate to income on certain securities that is exempt from federal
 income taxes. The effective federal statutory tax rate was 34% for 2009 and
 35% for 2008.
|(3) | Net interest margin is computed by dividing net
 interest income by total average earning assets.                                                                                                                     
|(4) | Average yield is calculated based on actual days in
 quarter (91) and annualized to actual days in year (365 days in 2009 and 366
 days in 2008).                                                                     

20

---



|                                                   |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|-------------------------------------------------- |  | ------------ | ------- | -------- | - | -------------- |  | ------------ | ----- | -------- | - | -------------- | - | - | ------ |  |  | ----- | -
|Six Months Ended June 30,                          |  | 2009         |         | 2008     |  
|                                                   |  |              |         |          |  
|(Taxable Equivalent Basis)
 (dollars in thousands) |  | Avg
 Balance |         | Interest |   | Avg
 Yield (4) |  | Avg
 Balance |       | Interest |   | Avg
 Yield (4) |  
|                                                   |  |              |         |          |   |                |  |              |       |          |   |                |  
|                                                  
|Assets                                             |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|Earning assets:                                    |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|Loans and leases
 (1)                              |  | $            | 414,347 |          | $ | 13,082         |  |              | 6.37  | %        | $ | 404,301        |   | $ | 14,189 |  |  | 7.06  | %
|Taxable
 investment securities                     |  |              | 64,113  |          |   | 1,411          |  |              | 4.44  | %        |   | 85,689         |   |   | 1,962  |  |  | 4.60  | %
|Tax-exempt
 investmentsecurities (2)               |  |              | 25,981  |          |   | 690            |  |              | 5.36  | %        |   | 27,140         |   |   | 703    |  |  | 5.21  | %
|Corporate stock (2)                                |  |              | 19      |          |   | 6              |  |              | 63.68 | %        |   | 240            |   |   | 17     |  |  | 14.24 | %
|Federal funds sold                                 |  |              | 22      |          |   |               |  |              | 0.00  | %        |   | 725            |   |   | 8      |  |  | 2.22  | %
|Interest-bearing deposits in banks                 |  |              | 2,943   |          |   | 53             |  |              | 3.63  | %        |   | 4,942          |   |   | 124    |  |  | 5.05  | %
|                                                   |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|Total earning
 assets                              |  |              | 507,425 |          |   | 15,242         |  |              | 6.06  | %        |   | 523,037        |   |   | 17,003 |  |  | 6.54  | %
|                                                   |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|Cash & due
 from banks                             |  |              | 29,843  |          |   |                |  |              |       |          |   | 19,046         |   |   |        |  |  |       |  
|Other assets                                       |  |              | 42,037  |          |   |                |  |              |       |          |   | 38,790         |   |   |        |  |  |       |  
|Allowance for
 loan & lease losses                 |  |              | (5,983  | )        |   |                |  |              |       |          |   | (5,994         | ) |   |        |  |  |       |  
|                                                   |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|                                                   |  | $            | 573,322 |          |   |                |  |              |       |          | $ | 574,879        |   |   |        |  |  |       |  
|                                                   |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|                                                   |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|Liabilities
 & Shareholders Equity                |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|Interest-bearing
 liabilities:                     |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|Interest
 checking and money market                |  | $            | 153,033 |          |   | 641            |  |              | 0.84  | %        | $ | 168,644        |   |   | 1,068  |  |  | 1.27  | %
|Savings                                            |  |              | 32,904  |          |   | 108            |  |              | 0.66  | %        |   | 36,101         |   |   | 150    |  |  | 0.84  | %
|Time deposits                                      |  |              | 136,767 |          |   | 1,330          |  |              | 1.96  | %        |   | 120,424        |   |   | 1,989  |  |  | 3.32  | %
|Other borrowings                                   |  |              | 65,865  |          |   | 636            |  |              | 1.95  | %        |   | 54,372         |   |   | 886    |  |  | 3.28  | %
|                                                   |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|Total
 interest-bearing liabilities                |  |              | 388,569 |          |   | 2,715          |  |              | 1.41  | %        |   | 379,541        |   |   | 4,093  |  |  | 2.17  | %
|                                                   |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|Noninterest-bearing
 demand deposits               |  |              | 114,844 |          |   |                |  |              |       |          |   | 128,572        |   |   |        |  |  |       |  
|Other
 liabilities                                 |  |              | 5,949   |          |   |                |  |              |       |          |   | 6,321          |   |   |        |  |  |       |  
|                                                   |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|Total
 liabilities                                 |  |              | 509,362 |          |   |                |  |              |       |          |   | 514,434        |   |   |        |  |  |       |  
|Shareholders
 equity                              |  |              | 63,960  |          |   |                |  |              |       |          |   | 60,445         |   |   |        |  |  |       |  
|                                                   |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|                                                   |  | $            | 573,322 |          |   |                |  |              |       |          | $ | 574,879        |   |   |        |  |  |       |  
|                                                   |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  
|Net interest
 income & margin (3)                  |  |              |         |          | $ | 12,527         |  |              | 4.98  | %        |   |                |   | $ | 12,910 |  |  | 4.96  | %
|                                                   |  |              |         |          |   |                |  |              |       |          |   |                |   |   |        |  |  |       |  

|    |                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Loan interest includes loan fees of $3,000 and
 $183,000 during the six months ending June 30, 2009 and June 30, 2008,
 respectively.                                                                                 
|(2) | Includes taxable-equivalent adjustments that
 primarily relate to income on certain securities that is exempt from federal
 income taxes. The effective federal statutory tax rate was 34% for 2009 and
 35% for 2008.
|(3) | Net interest margin is computed by dividing net
 interest income by total average earning assets.                                                                                                                     
|(4) | Average yield is calculated based on actual days in
 period (181 days in 2009 and 182 days in 2008) and annualized to actual days
 in year (365 days in 2009 and 366 days in 2008).                                   

21

---



|                                                                                     
|-------------------------------------------------------------------------------------
|Table Three: Analysis of Volume and
 Rate Changes on Net Interest Income and Expenses
|                                                                                     
|Three Months Ended June 30, 2009 over 2008 (dollars
 in thousands)                   
|Increase (decrease) due to change in:                                                

|                                      |  |        |      |          |   |            |   |   |      |  
|------------------------------------- |  | ------ | ---- | -------- | - | ---------- | - | - | ---- | -
|                                      |  | Volume |      | Rate (4) |   | Net Change |  
|                                      |  |        |      |          |   |            |  
|Interest-earning
 assets:             |  |        |      |          |   |            |  
|Net loans (1)(2)                      |  | $      | 100  |          | $ | (681       | ) | $ | (581 | )
|Taxable
 investment securities        |  |        | (227 | )        |   | (59        | ) |   | (286 | )
|Tax exempt
 investment securities (3) |  |        | (28  | )        |   | 12         |   |   | (16  | )
|Corporate stock                       |  |        | (11  | )        |   | 4          |   |   | (7   | )
|Federal funds
 sold                   |  |        | (6   | )        |   |           |   |   | (6   | )
|Interest-bearing
 deposits in banks   |  |        | (30  | )        |   | (9         | ) |   | (39  | )
|                                      |  |        |      |          |   |            |   |   |      |  
|Total                                 |  |        | (202 | )        |   | (733       | ) |   | (935 | )
|                                      |  |        |      |          |   |            |   |   |      |  
|Interest-bearing
 liabilities:        |  |        |      |          |   |            |   |   |      |  
|Interest
 checking and money market   |  |        | (36  | )        |   | (112       | ) |   | (148 | )
|Savings deposits                      |  |        | (4   | )        |   | (6         | ) |   | (10  | )
|Time deposits                         |  |        | 127  |          |   | (435       | ) |   | (308 | )
|Other borrowings                      |  |        | 6    |          |   | (94        | ) |   | (88  | )
|                                      |  |        |      |          |   |            |   |   |      |  
|Total                                 |  |        | 93   |          |   | (647       | ) |   | (554 | )
|                                      |  |        |      |          |   |            |   |   |      |  
|Interest
 differential                |  | $      | (295 | )        | $ | (86        | ) | $ | (381 | )
|                                      |  |        |      |          |   |            |   |   |      |  

|                                                                
|----------------------------------------------------------------
|                                                                
|Six Months Ended June 30, 2009 over 2008 (dollars in
 thousands)
|Increase (decrease) due to change in:                           

|                                      |  |        |      |          |   |            |   |   |        |  
|------------------------------------- |  | ------ | ---- | -------- | - | ---------- | - | - | ------ | -
|                                      |  | Volume |      | Rate (4) |   | Net Change |  
|                                      |  |        |      |          |   |            |  
|Interest-earning
 assets:             |  |        |      |          |   |            |   |   |        |  
|Net loans (1)(2)                      |  | $      | 352  |          | $ | (1,459     | ) | $ | (1,107 | )
|Taxable
 investment securities        |  |        | (493 | )        |   | (58        | ) |   | (551   | )
|Tax exempt
 investment securities (3) |  |        | (30  | )        |   | 17         |   |   | (13    | )
|Corporate stock                       |  |        | (16  | )        |   | 5          |   |   | (11    | )
|Federal funds
 sold                   |  |        | (8   | )        |   |           |   |   | (8     | )
|Interest-bearing
 deposits in banks   |  |        | (50  | )        |   | (21        | ) |   | (71    | )
|                                      |  |        |      |          |   |            |   |   |        |  
|Total                                 |  |        | (245 | )        |   | (1,516     | ) |   | (1,761 | )
|                                      |  |        |      |          |   |            |   |   |        |  
|Interest-bearing
 liabilities:        |  |        |      |          |   |            |   |   |        |  
|Interest
 checking and money market   |  |        | (99  | )        |   | (328       | ) |   | (427   | )
|Savings deposits                      |  |        | (13  | )        |   | (29        | ) |   | (42    | )
|Time deposits                         |  |        | 269  |          |   | (928       | ) |   | (659   | )
|Other borrowings                      |  |        | 187  |          |   | (437       | ) |   | (250   | )
|                                      |  |        |      |          |   |            |   |   |        |  
|Total                                 |  |        | 344  |          |   | (1,722     | ) |   | (1,378 | )
|                                      |  |        |      |          |   |            |   |   |        |  
|Interest differential                 |  | $      | (589 | )        | $ | 206        |   | $ | (383   | )
|                                      |  |        |      |          |   |            |   |   |        |  

|    |                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | The average balance of non-accruing loans is
 immaterial as a percentage of total loans and, as such, has been included in
 net loans.                                                                                                                                                                 
|(2) | Loan costs of $7,000 and loan fees of $73,000 during
 the three months ending June 30, 2009 and June 30, 2008, respectively, and
 loan fees of $3,000 and $183,000 during the six months ending June 30, 2009
 and June 30, 2008, respectively, have been included in the interest income
 computation.
|(3) | Includes taxable-equivalent adjustments that
 primarily relate to income on certain securities that is exempt from federal
 income taxes. The effective federal statutory tax rate was 34% for 2009 and
 35% for 2008.                                                                                 
|(4) | The rate/volume variance has been included in the
 rate variance.                                                                                                                                                                                                                                      

22

---



Provision
for Loan and Lease Losses

The
Company provided $3,800,000 for loan and lease losses for the second quarter of
2009 as compared to $190,000 for the second quarter of 2008. Net loan and lease
losses for the three months ended June 30, 2009 were $1,881,000 or 1.84% (on an
annualized basis) of average loans and leases as compared to $96,000 or 0.10%
(on an annualized basis) of average loans and leases for the three months ended
June 30, 2008. For the first six months of 2009, the Company made provisions
for loan and lease losses of $5,029,000 and net loan and lease losses were
$3,189,000 or 1.55% (on an annualized basis) of average loans and leases
outstanding. This compares to provisions for loan and lease losses of $527,000
and net loan and lease losses of $299,000 for the first six months of 2008 or
..15% (on an annualized basis) of average loans and leases outstanding. The
increase in the provision for loan and lease losses for 2009 results from a
higher level of charged-off loans and leases and non-performing loans and
leases, due mainly to the overall challenging economy in the Companys market
areas and the United States, overall. For additional information see the
Allowance for Loan and Lease Losses Activity.

Noninterest
Income

Table
Four below provides a summary of the components of noninterest income for the
periods indicated (dollars in thousands):

|                                              |  |                             |     |                           |   |      |  |      |       |  |   |       | 
|--------------------------------------------- |  | --------------------------- | --- | ------------------------- | - | ---- |  | ---- | ----- |  | - | ----- | 
|Table Four: Components of
 Noninterest Income
|                                             
|                                              |  | Three Months Ended June 30, |     | Six Months Ended June 30, |  
|                                              |  |                             |     |                           |  
|                                              |  | 2009                        |     | 2008                      |   | 2009 |  | 2008 |      
|                                             
|Service charges
 on deposit accounts          |  | $                           | 251 |                           | $ | 169  |  | $    | 493   |  | $ | 354   | 
|Accounts
 receivable servicing fees           |  |                             | 10  |                           |   | 46   |  |      | 30    |  |   | 94    | 
|Gain on sale of
 securities                   |  |                             | 160 |                           |   | 33   |  |      | 160   |  |   | 33    | 
|Merchant fee
 income                          |  |                             | 112 |                           |   | 124  |  |      | 221   |  |   | 247   | 
|Income from
 residential lending              |  |                             |    |                           |   | 115  |  |      | 7     |  |   | 185   | 
|Bank owned life
 insurance                    |  |                             | 59  |                           |   | 102  |  |      | 116   |  |   | 202   | 
|Other                                         |  |                             | 57  |                           |   | 50   |  |      | 132   |  |   | 109   | 
|                                              |  |                             |     |                           |   |      |  |      |       |  |   |       | 
|Total
 noninterest income                     |  | $                           | 649 |                           | $ | 639  |  | $    | 1,159 |  | $ | 1,224 | 
|                                              |  |                             |     |                           |   |      |  |      |       |  |   |       | 

Noninterest
income increased $10,000 (1.6%) to $649,000 for the three months ended June 30,
2009 as compared to $639,000 for the three months ended June 30, 2008. For the
six months ended June 30, 2009, noninterest income decreased $65,000 (5.3%) to
$1,159,000. The increase from the second quarter of 2008 to the second quarter
of 2009 was primarily related to higher service charges on deposit accounts,
which resulted from increased fees from overdrawn checking accounts (up $82,000
or 48.5%) and gain on sale of securities, which resulted from more volume (up
$127,000 or 384.8%), offset by lower income from fees from accounts receivable
servicing, which resulted from lower overall volume (down $36,000 or 78.3%);
lower fees from residential lending, which resulted from lower volume (down
$115,000); and lower income from bank owned life insurance, which resulted from
lowers yields on the bank owned life insurance investments (down $43,000 or
42.2%).

The
decrease from the first six months of 2008 compared to the same period in 2009
was primarily related to lower income from fees from accounts receivable
servicing (down $64,000 or 68.1%), lower income from fees on residential
lending (down $178,000 or 962.2%), and lower income from bank owned life
insurance (down $86,000 or 42.6%). The decrease was offset by an increase in
higher service charges on deposit accounts (up $139,000 or 39.3%) and gain on
sale of securities (up $127,000 or 384.8%).

23

---



Noninterest
Expense

Noninterest
expense increased $597,000 (16.4%) to a total of $4,239,000 in the second
quarter of 2009 versus $3,642,000 in the second quarter of 2008. Salary and
employee benefit expense decreased $246,000 (11.9%) from $2,073,000 during the
second quarter of 2008 to $1,827,000 during the second quarter of 2009. Most of
this decrease resulted from a reduction in the number of full-time equivalent
employees and a reduction in the Companys performance-based incentive accrual.
Average full-time equivalent employees dropped from 123 during the second
quarter of 2008 to 119 during the second quarter of 2009. The incentive accrual
decreased $151,000 or 91% from $166,000 for the second quarter of 2008 to
$15,000 during the second quarter of 2009. On a quarter-over-quarter basis,
occupancy expense decreased by $22,000 (6.0%) and furniture and equipment
expense decreased $16,000 (8.0%). Other expense increased $581,000 (57.9%) to a
total of $1,585,000 in the second quarter of 2008 compared to $1,004,000 in the
second quarter of 2009. Much of this increase is related to an increase in
costs associated with maintaining the Companys other real estate owned
(OREO). The total OREO expense in second quarter of 2009 was $441,000
compared to zero for the same period in 2008. The OREO expense in 2009 included
$300,000 to establish a valuation allowance. The valuation allowance was
established due to the continued weakness in the real estate market. In
addition, FDIC insurance increased by $322,000 from $13,000 in the second quarter
of 2008 to $335,000 in the second quarter of 2009. Included in this increase is
approximately $253,000 accrued for the special assessment that is due to be
paid to the FDIC on September 30, 2009. The efficiency ratios (fully taxable
equivalent), excluding the amortization of intangible assets, for the 2009 and
2008 second quarters were 61.8% and 50.1%, respectively.

Noninterest
expense for the six-month period ended June 30, 2009 was $7,840,000 versus
$7,271,000 for the same period in 2008 for an increase of $569,000 (7.8%).
Salaries and benefits expense decreased $395,000 (9.6%) from $4,094,000 for the
six months ended June 30, 2008 to $3,699,000 for the same period in 2009. The
decrease resulted from a reduction in the number of full-time equivalent
employees and a reduction in the Companys performance-based incentive accrual.
Occupancy expense decreased $28,000 (3.8%) and furniture and equipment expense
decreased $15,000 (3.8%). Other expense increased $1,007,000 (49.0%) from
$2,057,000 for the six months ended June 30, 2008 to $3,064,000 for the same
period in 2009. Much of this increase is related to an increase in costs
associated with maintaining the Companys OREO. The total OREO expense in 2009
was $567,000 compared to zero for the same period in 2008. In addition, FDIC
insurance increased by $383,000 from $26,000 in 2008 to $409,000 in 2009. The
overhead efficiency ratio (fully taxable equivalent), excluding the
amortization of intangible assets, for the first six months of 2009 was 56.3%
as compared to 50.4% in the same period of 2008.

(Benefit
from) Provision for Income Taxes

The
Company recorded a benefit from Federal and State income taxes for the quarter
ended June 30, 2009 of $668,000, resulting in an effective tax benefit rate of
48.7%, compared to tax provision expense of $1.2 million, or an effective tax
rate of 38.1%, for the second quarter of 2008. The provision for Federal and
State income taxes for the six months ended June 30, 2009 was $68,000,
resulting in an effective tax rate of 10.5%, compared to $2,349,000, or an
effective tax rate of 38.1%, for the same period in 2008. The lower effective
tax rate in 2009 results from the Company realizing the benefits of tax free
income related to such items as municipal bonds and bank owned life insurance
against an overall lower amount of taxable income.

Balance
Sheet Analysis

The
Companys total assets were $551,810,000 at June 30, 2009 as compared to
$563,157,000 at December 31, 2008, representing a decrease of $11,347,000
(2.0%). The average assets for the three months ended June 30, 2009 were
$569,098,000, which represents a decrease of $6,729,000 or 1.2% compared to the
balance of $575,827,000 during the three-month period ended June 30, 2008. The
average assets for the six months ended June 30, 2009 were $573,322,000, which
represents a decrease of $1,557,000 or 0.3% from the balance of $574,879,000
during the six-month period ended June 30, 2008. Although the overall decrease
was slight, there was a positive shift from investment securities to loans.
Average loans increased $5,862,000 (1.4%) from the second quarter of 2008 to
the second quarter of 2009, while average investment securities decreased
$22,248,000 (19.9%) during the same time period. The Company chose to utilize
the proceeds from matured and pay downs of investment securities as a funding
source for the growth in the loans.

Investment
Securities

The
Company classifies its investment securities as available-for-sale or
held-to-maturity. The Companys intent is to hold all securities classified as
held-to-maturity until maturity and management believes that it has the ability
to do so. Securities available-for-sale may be sold to implement
asset/liability management strategies and in response to changes in interest
rates, prepayment rates and similar factors. Table Five below summarizes the
values of the Companys investment securities held on June 30, 2009 and
December 31, 2008.

24

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|                                                                     |  |               |        |                   |   |        | 
|-------------------------------------------------------------------- |  | ------------- | ------ | ----------------- | - | ------ | 
|Table Five: Investment Securities
 Composition(dollars in thousands)
|Available-for-sale (at fair value)                                   |  | June 30, 2009 |        | December 31, 2008 |  
|                                                                     |  |               |        |                   |  
|Debt securities:                                                     |  |               |        |                   |   |        | 
|Mortgage-backed
 securities                                          |  | $             | 37,505 |                   | $ | 32,232 | 
|Obligations of
 states and political subdivisions                    |  |               | 27,359 |                   |   | 31,012 | 
|Corporate stock                                                      |  |               | 87     |                   |   | 90     | 
|                                                                     |  |               |        |                   |   |        | 
|Total
 available-for-sale investment securities                      |  | $             | 64,951 |                   | $ | 63,334 | 
|                                                                     |  |               |        |                   |   |        | 
|Held-to-maturity (at amortized cost)                                 |  |               |        |                   |   |        | 
|                                                                     |  |               |        |                   |   |        | 
|Debt securities:                                                     |  |               |        |                   |   |        | 
|Mortgage-backed
 securities                                          |  | $             | 17,933 |                   | $ | 24,365 | 
|                                                                     |  |               |        |                   |   |        | 
|Total held-to-maturity investment securities                         |  | $             | 17,933 |                   | $ | 24,365 | 
|                                                                     |  |               |        |                   |   |        | 

Management
periodically evaluates each investment security in a loss position for other
than temporary impairment relying primarily on industry analyst reports,
observation of market conditions and interest rate fluctuations. Management has
the ability and intent to hold securities with established maturity dates until
recovery of fair value, which may be maturity, and believes it will be able to
collect all amounts due according to the contractual terms for all of the
underlying investment securities; therefore, management does not consider these
investments to be other-than-temporarily-impaired.

Loans
and Leases

The
Company concentrates its lending activities in the following principal areas:
(1) commercial; (2) commercial real estate; (3) multi-family real estate; (4)
real estate construction (both commercial and residential); (5) residential
real estate; (6) lease financing receivable; (7) agriculture; and (8) consumer
loans. At June 30, 2009, these categories accounted for approximately 20%, 55%,
2%, 9%, 7%, 1%, 2% and 4%, respectively, of the Companys loan portfolio. This
mix was relatively unchanged compared to 22%, 52%, 2%, 12%, 6%, 1%, 2% and 3%
at December 31, 2008. The Companys continuing focus in our market area, new
borrowers developed through the Companys marketing efforts, and credit
extensions expanded to existing borrowers resulted in the Company originating
$30 million in new loans during the first six months of 2009. Normal pay downs,
loan chargeoffs, and loans transferred to OREO, resulted in an overall decrease
in total loans and leases of $12,301,000 (3.9%) from December 31, 2008. Table
Six below summarizes the composition of the loan portfolio as of June 30, 2009
and December 31, 2008.

|                                                 |  |               |         |                   |   |                   |   |                   |         |   |  |       |   
|------------------------------------------------ |  | ------------- | ------- | ----------------- | - | ----------------- | - | ----------------- | ------- | - |  | ----- | --
|Table Six: Loan and Lease Portfolio
 Composition
|                                                
|(dollars in thousands)                           |  | June 30, 2009 |         | December 31, 2008 |   | Change in dollars |   | Percentage change |        
|                                                
|                                                
|Commercial                                       |  | $             | 82,799  |                   | $ | 90,625            |   | $                 | (7,826  | ) |  | (8.6  | )%
|Real estate                                      |  |               |         |                   |   |                   |   |                   |         |   |  |       |   
|Commercial                                       |  |               | 223,018 |                   |   | 218,626           |   |                   | 4,392   |   |  | 2.0   | % 
|Multi-family                                     |  |               | 8,091   |                   |   | 8,938             |   |                   | (847    | ) |  | (9.5  | )%
|Construction                                     |  |               | 38,176  |                   |   | 48,664            |   |                   | (10,488 | ) |  | (21.6 | )%
|Residential                                      |  |               | 27,738  |                   |   | 24,706            |   |                   | 3,092   |   |  | 12.3  | % 
|Lease financing
 receivable                      |  |               | 4,390   |                   |   | 4,475             |   |                   | (85     | ) |  | (1.9  | )%
|Agriculture                                      |  |               | 7,526   |                   |   | 8,015             |   |                   | (489    | ) |  | (6.1  | )%
|Consumer                                         |  |               | 14,806  |                   |   | 14,796            |   |                   | 10      |   |  | 0.1   | % 
|                                                 |  |               |         |                   |   |                   |   |                   |         |   |  |       |   
|Total loans and
 leases                          |  |               | 406,544 |                   |   | 418,845           |   |                   | (12,301 | ) |  | (3.9  | )%
|Deferred loan
 and lease fees, net               |  |               | (595    | )                 |   | (571              | ) |                   | (24     | ) |  |       |   
|Allowance for
 loan and lease losses             |  |               | (7,758  | )                 |   | (5,918            | ) |                   | (1,840  | ) |  |       |   
|                                                 |  |               |         |                   |   |                   |   |                   |         |   |  |       |   
|Total net loans
 and leases                      |  | $             | 398,191 |                   | $ | 412,356           |   | $                 | (14,165 | ) |  | (3.4  | )%
|                                                 |  |               |         |                   |   |                   |   |                   |         |   |  |       |   

25

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A
significant portion of the Companys loans and leases are direct loans and
leases made to individuals and local businesses. The Company relies
substantially on local promotional activity and personal contacts by American
River Bank officers, directors and employees to compete with other financial
institutions. The Company makes loans and leases to borrowers whose
applications include a sound purpose and a viable primary repayment source,
generally supported by a secondary source of repayment.

Commercial
loans consist of credit lines for operating needs, loans for equipment
purchases, working capital, and various other business loan products. Consumer
loans include a range of traditional consumer loan products such as personal
lines of credit and homeowner equity lines of credit and loans to finance
purchases of autos, boats, recreational vehicles, mobile homes and various
other consumer items. Construction loans are generally comprised of commitments
to customers within the Companys service area for construction of commercial
properties, multi-family properties and custom and semi-custom single-family
residences. Other real estate loans consist primarily of loans secured by first
trust deeds on commercial and residential properties typically with maturities
from 3 to 10 years and original loan-to- value ratios generally from 65% to
75%. Agriculture loans consist primarily of vineyard loans and development
loans to plant vineyards. In general, except in the case of loans under SBA programs
or Farm Services Agency guarantees, the Company does not make long-term
mortgage loans.

Subprime
real estate loans generally refer to residential mortgages made to higher-risk
borrowers with lower credit and/or income histories. Within the industry, many
of these loans were originated with adjustable interest rates that reset upward
after an introductory period. These subprime loans coupled with declines in
housing prices have led to an increase in the industrys default rates resulting
in many instances of increased foreclosure rates as the adjustable interest
rates reset to higher levels. The Company does not have any such subprime
loans at June 30, 2009.

Risk
Elements

The
Company assesses and manages credit risk on an ongoing basis through a total
credit culture that emphasizes excellent credit quality, extensive internal
monitoring and established formal lending policies. Additionally, the Company
contracts with an outside loan review consultant to periodically review the
existing loan and lease portfolio. Management believes its ability to identify
and assess risk and return characteristics of the Companys loan and lease
portfolio is critical for profitability and growth. Management strives to
continue its emphasis on credit quality in the loan and lease approval process,
through active credit administration and regular monitoring. With this in mind,
management has designed and implemented a comprehensive loan and lease review
and grading system that functions to continually assess the credit risk
inherent in the loan and lease portfolio. In addition, the Company has taken
actions to further strengthen its lending compliance management system in
accordance with recommendations arising out of its 2008 compliance examination
including, among other matters, enhancement of existing procedures for internal
control of loan compliance functions such as maintenance of required levels of
compliance training, increased monitoring of the compliance program, and
identification of any compliance weaknesses. The Company is taking actions to
further strengthen and improve its asset quality in accordance with
recommendations arising out of its recently concluded 2009 regulatory examination including, among
other matters, enhancement of existing procedures for appraisal and
re-appraisals on loans, leases and other real estate owned, and problem loan
identification, including identification of impaired loans and leases and
identification of troubled debt restructured loans.

Ultimately,
underlying trends in economic and business cycles may influence credit quality.
American River Banks business is concentrated in the Sacramento Metropolitan
Statistical Area, which is a diversified economy, but with a large State of
California government presence and employment base, in Sonoma County, through
North Coast Bank, a division of American River Bank, whose business is focused
on businesses within the three communities in which it has offices (Santa Rosa,
Windsor, and Healdsburg) and in Amador County, through Bank of Amador, a
division of American River Bank, whose business is focused on businesses and
consumers within the three communities in which it has offices (Jackson,
Pioneer, and Ione) as well as a diversified residential construction loan
business in numerous Northern California counties. The economy of Sonoma County
is diversified with professional services, manufacturing, agriculture and real
estate investment and construction, while the economy of Amador County is
reliant upon government, services, retail trade, manufacturing industries and
Indian gaming.

26

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The
Company has significant extensions of credit and commitments to extend credit
that are secured by real estate. The ultimate repayment of these loans is
generally dependent on personal or business cash flows or the sale or
refinancing of the real estate. The Company monitors the effects of current and
expected market conditions and other factors on the collectability of real
estate loans. The more significant factors management considers involve the
following: lease rate and terms, vacancy rates, absorption and sale rates and
capitalization rates; real estate values, supply and demand factors, and rates
of return; operating expenses; inflation and deflation; and sufficiency of
repayment sources independent of the real estate including, in some instances,
personal guarantees.

In
extending credit and commitments to borrowers, the Company generally requires
collateral and/or guarantees as security. The repayment of such loans is expected
to come from cash flow or from proceeds from the sale of selected assets of the
borrowers. The Companys requirement for collateral and/or guarantees is
determined on a case-by-case basis in connection with managements evaluation
of the creditworthiness of the borrower. Collateral held varies but may include
accounts receivable, inventory, property, plant and equipment, income-producing
properties, residences and other real property. The Company secures its
collateral by perfecting its security interest in business assets, obtaining
deeds of trust, or outright possession among other means.

In
managements judgment, a concentration exists in real estate loans which
represented approximately 73.1% of the Companys loan and lease portfolio at
June 30, 2009, up from 71.8% at December 31, 2008. Management believes that the
residential land and residential construction portion of the Companys loan
portfolio carries more than the normal credit risk it has seen in the past
several years, due primarily to severely curtailed demand for new and resale
residential property, a large supply of unsold residential land and new and
resale homes, and observed reductions in values throughout the Companys market
area. Management has responded by evaluating loans that it considers to carry
any significant risk above the normal risk of collectability by taking actions
where possible to reduce credit risk exposure by methods that include, but are
not limited to, seeking liquidation of the loan by the borrower, seeking
additional tangible collateral or other repayment support, converting the
property through judicial or non-judicial foreclosure proceedings, and other
collection techniques. Management currently believes that it maintains its
allowance for loan and lease loss at levels adequate to reflect the loss risk
inherent in its total loan portfolio.

Although
management believes the Companys real estate concentration to have no more
than the normal risk of collectability, a continued substantial further decline
in the economy in general, or a continued additional decline in real estate
values in the Companys primary market areas in particular, could have an
adverse impact on the collectability of these loans and require an increase in
the provision for loan and lease losses which could adversely affect the
Companys future prospects, results of operations, profitability and stock
price. Management believes that its lending policies and underwriting standards
will tend to minimize losses in an economic downturn; however, there is no
assurance that losses will not occur under such circumstances. The Companys
loan policies and underwriting standards include, but are not limited to, the
following: (1) maintaining a thorough understanding of the Companys service
area and originating a significant majority of its loans within that area, (2)
maintaining a thorough understanding of borrowers knowledge, capacity, and
market position in their field of expertise, (3) basing real estate loan
approvals not only on market demand for the project, but also on the borrowers
capacity to support the project financially in the event it does not perform to
expectations (whether sale or income performance), and (4) maintaining
conforming and prudent loan-to-value and loan-to-cost ratios based on
independent outside appraisals and ongoing inspection and analysis by the
Companys lending officers or contracted third-party professionals.

Nonaccrual,
Past Due and Restructured Loans and Leases

Management
generally places loans and leases on nonaccrual status when they become 90 days
past due or if a loss is expected, unless the loan or lease is well secured and
in the process of collection. Loans and leases are partially or fully charged
off when, in the opinion of management, collection of such amount appears
unlikely.

At
June 30, 2009, non-performing loans and leases (those loans and leases on
nonaccrual status and those loans and leases still accruing and past due 90
days or more) were $20,946,000 or 5.16% of total loans and leases. The
$20,946,000 in non-performing loans and leases is made up of thirty loans and
five leases. Four of those loans and two of those leases totaling $7,040,000
are current (less than 30 days past due) pursuant to their original or modified
terms. Non-performing loans and leases were $6,241,000 or 1.49% of total loans
and leases at December 31, 2008.

27

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During
the second quarter of 2009, twelve additional loans and leases in the amount of
$16,274,000 were placed on non-performing status. Of these twelve loans, eight
loans totaling $11,327,000 are real estate secured, three loans totaling
$4,937,000 are secured by non-real estate assets, and there is one lease
totaling $10,000. In addition, the Company has two leases totaling $49,000 that
are over 90 days past due and still accruing interest as they are well secured
and in the process of collection. The net interest due on nonaccrual loans and
leases but excluded from interest income was $378,000 for the three months ended
June 30, 2009, compared to $260,000 during the same period in 2008. The net
interest due on nonaccrual loans and leases but excluded from interest income
was $647,000 for the six months ended June 30, 2009, compared to $597,000
during the same period in 2008.

There
were no loan or lease concentrations in excess of 10% of total loans and leases
not otherwise disclosed as a category of loans and leases as of June 30, 2009.
Management is not aware of any potential problem loans, which were accruing and
current at June 30, 2009, where serious doubt exists as to the ability of the
borrower to comply with the present repayment terms and that would result in a
significant loss to the Company. Table Seven below sets forth nonaccrual loans
and loans past due 90 days or more as of June 30, 2009 and December 31, 2008.

|                                             |  |               |        |                   |   |       | 
|-------------------------------------------- |  | ------------- | ------ | ----------------- | - | ----- | 
|Table Seven: Non-Performing Loans           
|                                            
|(dollars in thousands)                       |  | June 30, 2009 |        | December 31, 2008 |  
|                                            
|Past Due 90 days
 or more and still accruing |  |               |        |                   |   |       | 
|Commercial                                   |  | $             |       |                   | $ |      | 
|Real estate                                  |  |               |       |                   |   | 444   | 
|Lease financing
 receivable                  |  |               | 49     |                   |   | 22    | 
|Consumer and
 other                          |  |               |       |                   |   | 8     | 
|                                             |  |               |        |                   |   |       | 
|Nonaccrual                                   |  |               |        |                   |   |       | 
|Commercial                                   |  |               | 5,070  |                   |   | 261   | 
|Real estate                                  |  |               | 15,804 |                   |   | 5,487 | 
|Lease financing
 receivable                  |  |               | 23     |                   |   | 19    | 
|Consumer and
 other                          |  |               |       |                   |   |      | 
|                                             |  |               |        |                   |   |       | 
|Total
 non-performing loans                  |  | $             | 20,946 |                   | $ | 6,241 | 
|                                             |  |               |        |                   |   |       | 

Impaired
Loans

The
Company considers a loan to be impaired when, based on current information and
events, it is probable that it will be unable to collect all amounts due (principal
and interest) according to the contractual terms of the loan agreement. The
measurement of impairment may be based on (i) the present value of the expected
cash flows of the impaired loan discounted at the loans original effective
interest rate, (ii) the observable market price of the impaired loan, or (iii)
the fair value of the collateral of a collateral-dependent loan. The Company
does not apply this definition to smaller-balance loans that are collectively
evaluated for credit risk. In assessing impairment, the Company reviews all
loans graded substandard or lower with outstanding principal balances in excess
of $250,000. As of June 30, 2009, the recorded investment in loans and leases
that were considered to be impaired totaled $34,459,000, which includes
$19,830,000 in non-performing loans and leases and $14,629,000 in performing
loans and leases. There were $1,116,000 in loans that were either 90-days past
due and still accruing or non-performing but not considered impaired. Of the
total impaired loans of $34,459,000, $24,372,000 was deemed to require no
specific reserve and $10,087,000 was deemed to require a related valuation
allowance of $2,899,000. As of December 31, 2008, the recorded investment in
loans and leases that were considered to be impaired and were deemed to require
specific reserves totaled $6,083,000 and had a related valuation allowance of
$788,000. At June 30, 2009, there were twelve loans that were modified and are
currently performing and considered troubled debt restructures totaling
$8,638,000.

Allowance
for Loan and Lease Losses Activity

The
Company maintains an allowance for loan and lease losses (ALLL) to cover
probable losses inherent in the loan and lease portfolio, which is based upon
managements estimated range of those losses. The ALLL is established through a
provision for loan and lease losses and is increased by provisions charged
against current earnings and recoveries and reduced by charge-offs. Actual
losses for loans and leases can vary significantly from this estimate. The
methodology and assumptions used to calculate the allowance are continually
reviewed as to their appropriateness given the most recent losses realized and
other factors that influence the estimation process. The model assumptions and
resulting allowance level are adjusted accordingly as these factors change.

28

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The
adequacy of the ALLL and the level of the related provision for loan and lease
losses is determined based on managements judgment after consideration of numerous
factors including but not limited to: (i) local and regional economic
conditions, (ii) the financial condition of the borrowers, (iii) loan
impairment and the related level of expected charge-offs, (iv) evaluation of
industry trends, (v) industry and other concentrations, (vi) loans and leases
which are contractually current as to payment terms but demonstrate a higher
degree of risk as identified by management, (vii) continuing evaluations of the
performing loan portfolio, (viii) ongoing review and evaluation of problem
loans identified as having loss potential, (ix) quarterly review by the Board
of Directors, and (x) assessments by banking regulators and other third
parties. Management and the Board of Directors evaluate the ALLL and determine
its appropriate level considering objective and subjective measures, such as
knowledge of the borrowers business, valuation of collateral, the
determination of impaired loans or leases and exposure to potential losses.

The
allowance for loan and lease losses totaled $7,758,000 or 1.91% of total loans
and leases at June 30, 2009 compared to $5,918,000 or 1.41% of total loans and
leases at December 31, 2008. The Company establishes general reserves in
accordance with Statement of Accounting Standards (SFAS) No. 5, Accounting
for Contingencies, and specific reserves in accordance with SFAS No. 114,
Accounting by Creditors for Impairment of a Loan. The ALLL is maintained by
categories of the loan and lease portfolio based on loan type and loan rating;
however, the entire allowance is available to cover actual loan and lease
losses. Table Eight below summarizes, for the periods indicated, the activity
in the ALLL.

|                                                                                                        |  |                              |         |                            |   |         |   |      |         |   |   |         |  
|------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | -------------------------- | - | ------- | - | ---- | ------- | - | - | ------- | -
|Table Eight: Allowance for Loan and
 Lease Losses                                                      
|                                                                                                       
|                                                                                                        |  | Three Months
 Ended June 30, |         | Six Months
 Ended June 30, |  
|                                                                                                        |  |                              |         |                            |  
|(dollars in thousands)                                                                                  |  | 2009                         |         | 2008                       |   | 2009    |   | 2008 |        
|                                                                                                        |  |                              |         |                            |   |         |   |      |        
|                                                                                                       
|Average loans
 and leases outstanding                                                                   |  | $                            | 410,959 |                            | $ | 405,097 |   | $    | 414,347 |   | $ | 404,301 |  
|                                                                                                        |  |                              |         |                            |   |         |   |      |         |   |   |         |  
|                                                                                                        |  |                              |         |                            |   |         |   |      |         |   |   |         |  
|Allowance for
 loan and lease losses at beginning of period                                             |  | $                            | 5,839   |                            | $ | 6,017   |   | $    | 5,918   |   | $ | 5,883   |  
|                                                                                                        |  |                              |         |                            |   |         |   |      |         |   |   |         |  
|Loans and leases
 charged off:                                                                          |  |                              |         |                            |   |         |   |      |         |   |   |         |  
|Commercial                                                                                              |  |                              | (655    | )                          |   | (56     | ) |      | (665    | ) |   | (107    | )
|Real estate                                                                                             |  |                              | (1,203  | )                          |   |        |   |      | (2,496  | ) |   | (150    | )
|Lease financing
 receivable                                                                             |  |                              | (15     | )                          |   | (25     | ) |      | (15     | ) |   | (25     | )
|Consumer                                                                                                |  |                              | (23     | )                          |   | (20     | ) |      | (30     | ) |   | (27     | )
|                                                                                                        |  |                              |         |                            |   |         |   |      |         |   |   |         |  
|Total                                                                                                   |  |                              | (1,896  | )                          |   | (101    | ) |      | (3,206  | ) |   | (309    | )
|                                                                                                        |  |                              |         |                            |   |         |   |      |         |   |   |         |  
|Recoveries of
 loans and leases previously charged off:                                                 |  |                              |         |                            |   |         |   |      |         |   |   |         |  
|Commercial                                                                                              |  |                              | 13      |                            |   | 1       |   |      | 13      |   |   | 2       |  
|Real estate                                                                                             |  |                              | 1       |                            |   |        |   |      | 1       |   |   |        |  
|Lease financing
 receivable                                                                             |  |                              | 1       |                            |   | 4       |   |      | 3       |   |   | 8       |  
|Consumer                                                                                                |  |                              |        |                            |   |        |   |      |        |   |   |        |  
|                                                                                                        |  |                              |         |                            |   |         |   |      |         |   |   |         |  
|Total                                                                                                   |  |                              | 15      |                            |   | 5       |   |      | 17      |   |   | 10      |  
|                                                                                                        |  |                              |         |                            |   |         |   |      |         |   |   |         |  
|Net loans
 charged off                                                                                  |  |                              | (1,881  | )                          |   | (96     | ) |      | (3,189  | ) |   | (299    | )
|Additions to
 allowance charged to operating expenses                                                   |  |                              | 3,800   |                            |   | 190     |   |      | 5,029   |   |   | 527     |  
|                                                                                                        |  |                              |         |                            |   |         |   |      |         |   |   |         |  
|Allowance for
 loan and lease losses at end of period                                                   |  | $                            | 7,758   |                            | $ | 6,111   |   | $    | 7,758   |   | $ | 6,111   |  
|                                                                                                        |  |                              |         |                            |   |         |   |      |         |   |   |         |  
|Ratio of net
 (recoveries) charge-offs to average loans and leases outstanding (annualized)             |  |                              | 1.84    | %                          |   | .10     | % |      | 1.55    | % |   | .15     | %
|Provision of
 allowance for loan and lease losses to average loans and leases outstanding
 (annualized) |  |                              | 3.71    | %                          |   | .19     | % |      | 2.45    | % |   | .26     | %
|Allowance for
 loan and lease losses to loans and leases net of deferred fees at end of
 period         |  |                              | 1.91    | %                          |   | 1.50    | % |      | 1.91    | % |   | 1.50    | %

29

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It
is the policy of management to maintain the allowance for loan and lease losses
at a level believed to be adequate for known and inherent risks in the
portfolio. Our methodology incorporates a variety of risk considerations, both
quantitative and qualitative, in establishing an allowance for loan and lease
losses that management believes is appropriate at each reporting date. Based on
information currently available to analyze inherent credit risk, including
economic factors, overall credit quality, historical delinquencies and a
history of actual charge-offs, management believes that the provision for loan
and lease losses and the allowance for loan and lease losses are prudent and
adequate. Adjustments may be made based on differences from estimated loan and
lease growth, the types of loans constituting this growth, changes in risk
ratings within the portfolio, and general economic conditions. However, no
prediction of the ultimate level of loans and leases charged off in future
periods can be made with any certainty.

While
management uses available information to recognize possible losses on loans and
leases, future additions to the allowance may be necessary, based on changes in
economic conditions and other matters. In addition, various regulatory
agencies, as an integral part of their examination process, periodically review
the Companys ALLL. Such agencies may require the Company to provide
adjustments to the allowance based on their judgment of information available
to them at the time of their examination.

Other
Real Estate Owned

At
June 30, 2009, the Company had twelve other real estate owned (OREO)
properties totaling $3,647,000 with a corresponding valuation allowance of
$300,000. The valuation allowance was established due to the continued weakness
in the real estate market. At December 31, 2008, the Company had three
properties totaling $2,158,000 in OREO.

Deposits

At
June 30, 2009, total deposits were $449,609,000 representing an increase of
$12,548,000 from the December 31, 2008 balance of $437,061,000. The Companys
deposit growth plan for 2009 is to concentrate its efforts on increasing
noninterest-bearing demand, interest-bearing money market and NOW accounts, and
savings accounts. The Company experienced increases in money market
($11,510,000 or 10.9%), savings ($4,119,000 or 12.3%), and time deposits of
$1,774,000 (1.3%) and decreases in noninterest-bearing ($4,107,000 or 3.4%) and
interest-bearing checking ($748,000 or 1.6%) during 2009.

Other
Borrowed Funds

Other
borrowings outstanding as of June 30, 2009 and December 31, 2008, consist of
advances (both long-term and short-term) from the Federal Home Loan Bank
(FHLB). Table Nine below summarizes these borrowings.

|                                 |  |  |  |  |  |  |  |  |  |  |  |  | 
|-------------------------------- |  |  |  |  |  |  |  |  |  |  |  |  | 
|Table Nine: Other Borrowed Funds
|                                
|(dollars in thousands)          

|                        |  |               |        |                   |  |        |   |      |        |  |  |      |  
|----------------------- |  | ------------- | ------ | ----------------- |  | ------ | - | ---- | ------ |  |  | ---- | -
|                        |  | June 30, 2009 |        | December 31, 2008 | 
|                        |  |               |        |                   | 
|                        |  | Amount        |        | Rate              |  | Amount |   | Rate |       
|                        |  |               |        |                   |  |        |   |      |        |  |  |      |  
|Short-term
 borrowings: |  |               |        |                   |  |        |   |      |        |  |  |      |  
|                       
|FHLB advances           |  | $             | 14,500 |                   |  | 2.99   | % | $    | 43,231 |  |  | 1.83 | %
|                        |  |               |        |                   |  |        |   |      |        |  |  |      |  
|                       
|Long-term
 borrowings:  |  |               |        |                   |  |        |   |      |        |  |  |      |  
|                       
|FHLB advances           |  | $             | 21,500 |                   |  | 2.39   | % | $    | 14,000 |  |  | 3.19 | %
|                        |  |               |        |                   |  |        |   |      |        |  |  |      |  

30

---



The
maximum amount of short-term borrowings at any month-end during the first two
quarters of 2009 and 2008 was $69,448,000 and $42,544,000, respectively. The
FHLB advances are collateralized by loans and securities pledged to the FHLB.
The following is a breakdown of rates and maturities on FHLB advances (dollars
in thousands):

|              |  |  |              |  |  |              | 
|------------- |  |  | ------------ |  |  | ------------ | 
|              |  |  | Short-term   |  |  | Long-term    | 
|Amount        |  |  | $ 14,500     |  |  | $ 21,500     | 
|Maturity      |  |  | 2009 to 2010 |  |  | 2010 to 2014 | 
|Average rates |  |  | 2.99%        |  |  | 2.39%        | 

The
Company has also been issued a total of $1,750,000 in a letter of credit by the
FHLB which has been pledged to secure Local Agency Deposits. The letter of
credit acts as a guarantee of payment to certain third parties in accordance
with specified terms and conditions. The letter of credit was not drawn upon in
2009 or 2008 and management does not currently expect to draw upon this line in
the foreseeable future. See the Liquidity section that follows for additional
information on FHLB borrowings.

Capital
Resources

The
Company and American River Bank are subject to certain regulatory capital
requirements administered by the Board of Governors of the Federal Reserve
System and the Federal Deposit Insurance Corporation. Failure to meet these
minimum capital requirements can initiate certain mandatory, and possibly
additional discretionary, actions by regulators that, if undertaken, could have
a direct material effect on the Companys consolidated financial statements.
Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, banks must meet specific capital guidelines that involve
quantitative measures of their assets, liabilities and certain
off-balance-sheet items as calculated under regulatory accounting practices.
The Companys and American River Banks capital amounts and classification are
also subject to qualitative judgments by the regulators about components, risk
weightings and other factors. At June 30, 2009, shareholders equity was
$62,276,000, representing a decrease of $1,171,000 (1.8%) from $63,447,000 at
December 31, 2008. The decrease results from the cash dividends paid to
shareholders and the decrease in other comprehensive income exceeding the net
income for the period, the stock based compensation, and the proceeds from the
exercise of stock options. The ratio of total risk-based capital to risk
adjusted assets was 11.8% at June 30, 2009 and 11.5% at December 31, 2008. Tier
1 risk-based capital to risk-adjusted assets was 10.6% at June 30, 2009 and
10.4% at December 31, 2008.

Table
Ten below lists the Companys actual capital ratios at June 30, 2009 and
December 31, 2008 as well as the minimum capital ratios for capital adequacy.

Table
Ten: Capital Ratios

|                                |  |                   |   |                       |      |                                          |  |      |   | 
|------------------------------- |  | ----------------- | - | --------------------- | ---- | ---------------------------------------- |  | ---- | - | 
|                               
|Capital to Risk-Adjusted Assets |  | At June 30,
 2009 |   | At December 31,
 2008 |      | Minimum Regulatory
 Capital Requirements | 
|                               
|                                |  |                   |   |                       |      |                                          |  |      |   | 
|Leverage ratio                  |  | 8.2               | % |                       | 8.3  | %                                        |  | 4.00 | % | 
|                                |  |                   |   |                       |      |                                          |  |      |   | 
|Tier 1 Risk-Based Capital       |  | 10.6              | % |                       | 10.2 | %                                        |  | 4.00 | % | 
|                                |  |                   |   |                       |      |                                          |  |      |   | 
|Total Risk-Based Capital        |  | 11.8              | % |                       | 11.5 | %                                        |  | 8.00 | % | 

Capital
ratios are reviewed on a regular basis to ensure that capital exceeds the
prescribed regulatory minimums and is adequate to meet future needs. Management
believes that both the Company and the American River Bank met all of their
capital adequacy requirements as of June 30, 2009 and December 31, 2008.

31

---



The
Company filed an application with the U.S. Treasury to preserve its opportunity
to participate in the Capital Purchase Program (CPP) and received approval of
its application on November 21, 2008. However, the Board of Directors
subsequently determined that participation in the CPP was not in the best
interests of the
 Company and its shareholders after evaluation of the
CPP and due diligence reviews of the CPP agreements and documentation including
restrictions imposed upon the Company under the investment agreement and
related documentation which could reduce investment returns to shareholders of
participating bank holding companies and banks by restricting dividends to
common shareholders, diluting existing shareholders interests, and restricting
capital management practices, and consideration of various other factors
including, but not limited to, capital raising alternatives and the condition
of capital markets, the current and projected economic conditions in the
Companys market areas and the Unites States generally, the condition of the
Companys loan and investment portfolios and other financial factors, and with
advice of such advisors as the Companys Board of Directors deemed appropriate.
The Company gave notice to the U.S. Treasury on January 20, 2009 of its
intention not to participate in the CPP. The Company continues to evaluate the
impact of the deteriorating economic conditions in the United States,
California and in the Companys operating markets relative to the inherent
risks to its loan portfolio as borrowers are confronted with extraordinary
economic circumstances of significant increases in unemployment and declines in
the value of investments (including the value of residential and commercial
real estate). The Companys evaluation of such economic circumstances includes
an assessment of its capital requirements in addition to loan reviews and
analysis of the sufficiency of the allowance for loan and lease losses. The
Company anticipates that it may be necessary to augment capital as a
consequence of such economic circumstances in order to maintain safe and sound
banking operations with appropriate capital ratios under applicable regulatory
guidelines, which may include various forms of capital raising transactions and
elimination of cash dividends and stock repurchases. Effective July 27, 2009,
the Company temporarily suspended both the payment of cash dividends and the
stock repurchases. See Part II, Item 2, for additional disclosure.

Inflation

The
impact of inflation on a financial institution differs significantly from that
exerted on manufacturing or other commercial concerns primarily because its
assets and liabilities are largely monetary. In general, inflation primarily
affects the Company and it subsidiaries through its effect on market rates of
interest, which affects the Companys ability to attract loan customers.
Inflation affects the growth of total assets by increasing the level of loan
demand and potentially adversely affects capital adequacy because loan growth
in inflationary periods can increase at rates higher than the rate that capital
grows through retention of earnings which may be generated in the future. In
addition to its effects on interest rates, inflation increases overall
operating expenses. Inflation has not had a significant effect upon the results
of operations of the Company and its subsidiaries during the periods ended June
30, 2009 and 2008.

Liquidity

Liquidity
management refers to the Companys ability to provide funds on an ongoing basis
to meet fluctuations in deposit levels as well as the credit needs and
requirements of its clients. Both assets and liabilities contribute to the
Companys liquidity position. Federal funds lines, borrowing arrangements with
the FHLB, payments at maturity of short-term investments and securities, and
loan repayments contribute to liquidity, along with deposit increases, while
loan funding and deposit withdrawals decrease liquidity. The Company assesses
the likelihood of projected funding requirements by reviewing historical
funding patterns, current and forecasted economic conditions and individual
client funding needs. Commitments to fund loans and outstanding letters of
credit at June 30, 2009 and December 31, 2008 were approximately $67,713,000
and $4,427,000 and $76,937,000 and $3,798,000, respectively. Such loan
commitments relate primarily to revolving lines of credit, other commercial
loans and to real estate construction loans. Since some of the commitments are
expected to expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash requirements.

32

---



The
Companys sources of liquidity consist of cash and due from correspondent
banks, overnight funds sold to correspondent banks, unpledged marketable
investments and loans held for sale and/or pledged for secured borrowings. At
June 30, 2009, consolidated liquid assets totaled $33.0 million or 6.0% of
total assets compared to $41.3 million or 7.3% of total assets on December 31,
2008. In addition to liquid assets, the Company maintains short-term lines of
credit in the amount of $52,000,000 with correspondent banks. At June 30, 2009,
the Company had $52,000,000 available under these credit lines. Additionally,
the Bank is a member of the FHLB. At June 30, 2009, the Bank could have
arranged for up to $105,020,000 in secured borrowings from the FHLB. These borrowings are secured by pledged mortgage loans and
investment securities. At June 30, 2009, the Company had advances, borrowings
and commitments (including letters of credit) outstanding of $37,750,000,
leaving $67,270,000 available under these FHLB secured borrowing arrangements.
American River Bank also has a secured borrowing arrangement with the Federal
Reserve Bank. The borrowing can be secured by pledging selected loans and
investment securities. At June 30, 2009, the collateral value at the Federal
Reserve Bank was $10,312,000. The Bank also has informal agreements with
various other banks to sell participations in loans, if necessary. The Company
serves primarily a business and professional customer base and, as such, its
deposit base is susceptible to economic fluctuations. Accordingly, management
strives to maintain a balanced position of liquid assets and borrowing capacity
to offset the potential runoff of these volatile and/or cyclical deposits.

Liquidity
is also affected by portfolio maturities and the effect of interest rate
fluctuations on the marketability of both assets and liabilities. The Company
can sell any of its unpledged securities held in the available-for-sale
category to meet liquidity needs. These securities are also available to pledge
as collateral for borrowings if the need should arise. The Bank has established
a master repurchase agreement with a correspondent bank to enable such
transactions. The Bank can also pledge securities to borrow from the FRB and
the FHLB.

The
principal cash requirements of the Company are for expenses incurred in the support
of administration and operations. For nonbanking functions, the Company is
dependent upon the payment of cash dividends from the Bank to service its
commitments. The Company expects that the cash dividends paid by the Bank to
the Company will be sufficient to meet this payment schedule.

Off-Balance
Sheet Items

The
Company is a party to financial instruments with off-balance-sheet risk in the
normal course of business in order to meet the financing needs of its customers
and to reduce its exposure to fluctuations in interest rates. These financial
instruments consist of commitments to extend credit and letters of credit.
These instruments involve, to varying degrees, elements of credit and interest
rate risk in excess of the amount recognized on the balance sheet.

The
Companys exposure to credit loss in the event of nonperformance by the other
party for commitments to extend credit and letters of credit is represented by
the contractual amount of those instruments. The Company applies the same
credit policies to commitments and letters of credit as it does for loans
included on the consolidated balance sheet. As of June 30, 2009 and December
31, 2008, commitments to extend credit and standby letters of credit were the
only financial instruments with off-balance sheet risk. The Company has not
entered into any contracts for financial derivative instruments such as
futures, swaps, options or similar instruments. Loan commitments and standby
letters of credit were $72,140,000 and $80,735,000 at March 31, 2009 and
December 31, 2008, respectively. As a percentage of net loans and leases these
off-balance sheet items represent 18.1% and 19.6%, respectively.

The
Company has certain ongoing commitments under operating leases. These commitments
do not significantly impact operating results.

Website
Access

American
River Bankshares maintains a website where certain information about the
Company is posted. Through the website, its annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments
thereto, as well as Section 16 Reports and amendments thereto, are available as
soon as reasonably practicable after such material is electronically filed with
or furnished to the Securities
and Exchange Commission (the SEC). These reports are free of charge
and can be accessed through the address www.amrb.com by clicking on the SEC Filings link located at that address.
Once you have selected the SEC Filings
link you will have the option to access the Section 16 Reports or the other
above-referenced reports filed by the Company by selecting the appropriate
link.

33

---



Item 3.
Quantitative and Qualitative Disclosures About Market Risk.

Market
Risk Management

Overview.
Market risk is the risk of loss from adverse changes in market prices and
rates. The Companys market risk arises primarily from interest rate risk
inherent in its loan, investment and deposit functions. The goal for managing
the assets and liabilities of the Company is to maximize shareholder value and
earnings while maintaining a high quality balance sheet without exposing the
Company to undue interest rate risk. The Board of Directors has overall
responsibility for the interest rate risk management policies. The Company has
a Risk Management Committee, made up of Company management that establishes and
monitors guidelines to control the sensitivity of earnings to changes in
interest rates.

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

Simulation
of earnings is the primary tool used to measure the sensitivity of earnings to
interest rate changes. Using computer-modeling techniques, the Company is able
to estimate the potential impact of changing interest rates on earnings. A
balance sheet forecast is prepared quarterly using inputs of actual loans,
securities and interest-bearing liabilities (i.e. deposits/borrowings)
positions as the beginning base. The forecast balance sheet is processed
against three interest rate scenarios. The scenarios include a 200 basis point
rising rate forecast, a flat rate forecast and a 200 basis point falling rate
forecast which take place within a one-year time frame. The net interest income
is measured during the year assuming a gradual change in rates over the
twelve-month horizon. The simulation modeling indicated below attempts to
estimate changes in the Companys net interest income utilizing a forecast
balance sheet projected from the end of period balances.

Table
Eleven below summarizes the effect on net interest income (NII) of a ±200 basis
point change in interest rates as measured against a constant rate (no change)
scenario.

|                                                                                                       |  |                                                                |      |                                                                    |   |      |  
|------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------- | ---- | ------------------------------------------------------------------ | - | ---- | -
|Table Eleven: Interest Rate Risk Simulation of Net
 Interest as of June 30, 2009 and December 31, 2008
|                                                                                                      
|(dollars in thousands)                                                                                 |  | $ Change in NII
 from Current
 12 Month Horizon
 June 30, 2009 |      | $ Change in NII
 from Current
 12 Month Horizon
 December 31, 2008 |  
|                                                                                                       |  |                                                                |      |                                                                    |  
|Variation from a constant rate scenario                                                                |  |                                                                |      |                                                                    |   |      |  
|+200bp                                                                                                 |  | $                                                              | (323 | )                                                                  | $ | (191 | )
|- 200bp                                                                                                |  | $                                                              | 461  |                                                                    | $ | 540  |  

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

Item 4.
Controls and Procedures.

The
Company, under the supervision and with the participation of its management,
including the Chief Executive Officer and the Chief Financial Officer,
evaluated the effectiveness of the design and operation of the Companys
disclosure controls and procedures (as defined in Rule 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30,
2009. Based on that evaluation, the Chief Executive Officer and the Chief
Financial Officer concluded that the Companys disclosure controls and
procedures are effective in timely making known to them material information relating to
the Company and the Companys consolidated subsidiaries required to be
disclosed in the Companys reports filed or submitted under the Exchange Act.

34

---



During
the quarter ended June 30, 2009, there have been no changes in the Companys internal control over
financial reporting that have significantly affected, or are reasonably likely
to materially affect, these controls.

Item 4T.
Controls and Procedures.

The
information required under Item 308T(b) of Regulation S-K is included in Item 4
above.

PART
II  OTHER INFORMATION

Item 1.
Legal Proceedings.

From
time to time, the Company and/or its subsidiaries is a party to claims and
legal proceedings arising in the ordinary course of business. The Companys
management is not aware of any significant pending legal proceedings to which
either it or its subsidiaries may be a party or has recently been a party,
which will have a significant adverse effect on the financial condition or
results of operations of the Company or its subsidiaries, taken as a whole.

Item 1A.
Risk Factors.

There
have been no significant changes in the risk factors previously disclosed in
the Companys Form 10-K for the period ended December 31, 2008, filed with the
Securities and Exchange Commission on March 6, 2009.

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

On
January 16, 2008, the Board of Directors of the Company authorized a stock
repurchase program which allowed for the repurchase of up to six and one half
percent (6.5%) annually of the Companys outstanding shares of common stock.
Each year the Company could repurchase up to 6.5% of the shares outstanding
(adjusted for stock splits or stock dividends). The number of shares reported
in column (d) of the table as shares that could be repurchased under the plan
represent shares eligible for the calendar year 2009. The repurchases under
this plan can be made from time to time in the open market as conditions allow
and will be structured to comply with Commission Rule 10b-18. Management
reports monthly to the Board of Directors on the status of the repurchase
program. The Board of Directors reserved the right to suspend, terminate,
modify or cancel the repurchase programs at any time for any reason. The
following table lists shares repurchased during the quarter and the maximum
amount available to repurchase under the repurchase plan as of the dates noted.

|                                          |  |                                                   |  |                                             |  |                                                                                                 |  |                                                                                                                             |  |  |  |  | 
|----------------------------------------- |  | ------------------------------------------------- |  | ------------------------------------------- |  | ----------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------- |  |  |  |  | 
|                                          |  |                                                   |  |                                             |  | (c)                                                                                             |  | (d)                                                                                                                         | 
|Period                                    |  | (a)Total Number
 of Shares (or
 Units)
 Purchased |  | (b)Average Price
 Paid Per Share
 (or Unit) |  | Total Number of Shares
 (or Units) Purchased as
 Part of Publicly
 Announced Plans or
 Programs |  | Maximum Number (or
 Approximate Dollar Value) of
 Shares (or Units) That May
 Yet Be Purchased Under the
 Plans or Programs | 
|                                          |  |                                                   |  |                                             |  |                                                                                                 |  |                                                                                                                             | 
|Month #1
 April 1 through
 April 30, 2009 |  | None                                              |  | N/A                                         |  | None                                                                                            |  | 376,498                                                                                                                     | 
|Month #2
 May 1 through
 May 31, 2009     |  | None                                              |  | N/A                                         |  | None                                                                                            |  | 376,498                                                                                                                     | 
|Month #3
 June 1 through
 June 30, 2009   |  | None                                              |  | N/A                                         |  | None                                                                                            |  | 376,498                                                                                                                     | 
|                                          |  |                                                   |  |                                             |  |                                                                                                 |  |                                                                                                                             |  |  |  |  | 
|Total                                     |  | None                                              |  | N/A                                         |  | None                                                                                            |  |                                                                                                                             |  | 
|                                          |  |                                                   |  |                                             |  |                                                                                                 |  |                                                                                                                             |  |  |  |  | 

On July 27, 2009, the Company announced that the Board
of Directors had temporarily suspended the stock repurchase program.

35

---



Item 3.
Defaults Upon Senior Securities.

None.

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

The
following are the voting results of the registrants annual meeting of the
shareholders held on May 21, 2009:

PROPOSAL NO. 1: Election of Directors.

The
following Directors were elected to serve until the 2010 Annual Meeting of
Shareholders and until their successors are duly elected and have qualified
with the following vote tabulation:

Directors
elected to a one-year term expiring in 2009:

|                         |  |  |                 |  |  |              |  |  |                    | 
|------------------------ |  |  | --------------- |  |  | ------------ |  |  | ------------------ | 
|Dorene C. Dominguez:     |  |  | FOR   4,930,103 |  |  | AGAINST    0 |  |  | ABSTAIN     80,983 | 
|Stephen H. Waks:         |  |  | FOR   4,957,453 |  |  | AGAINST    0 |  |  | ABSTAIN     53,633 | 
|Michael A. Ziegler:      |  |  | FOR   4,950,759 |  |  | AGAINST    0 |  |  | ABSTAIN     60,327 | 
|Charles D. Fite:         |  |  | FOR   4,954,577 |  |  | AGAINST    0 |  |  | ABSTAIN     56,509 | 
|Robert J Fox:            |  |  | FOR   4,957,226 |  |  | AGAINST    0 |  |  | ABSTAIN     53,860 | 
|Philip A. Wright:        |  |  | FOR   4,947,453 |  |  | AGAINST    0 |  |  | ABSTAIN     63,633 | 
|Roger J. Taylor, D.D.S.: |  |  | FOR   4,616,171 |  |  | AGAINST    0 |  |  | ABSTAIN   394,915  | 

PROPOSAL NO. 2: To authorize the issuance of preferred
stock.

The
proposal was ratified with the following vote tabulation:

|    |           |         |         |         |         | 
|--- | --------- | ------- | ------- | ------- | ------- | 
|FOR | 3,351,252 | AGAINST | 418,602 | ABSTAIN | 116,684 | 

PROPOSAL NO. 2: To ratify the appointment of
Perry-Smith LLP as independent registered public accountants for the Company
for the 2009 fiscal year.

The
proposal was ratified with the following vote tabulation:

|    |           |         |       |         |        | 
|--- | --------- | ------- | ----- | ------- | ------ | 
|FOR | 4,976,614 | AGAINST | 2,123 | ABSTAIN | 32,349 | 

Item 5.
Other Information.

None.

Item 6.
Exhibits.

| |               |  |                                                                                                                                                                                                    
| | ------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ExhibitNumber |  | Document Description                                                                                                                                                                               
| |               |  |                                                                                                                                                                                                    
|
| | (2.1)         |  | Agreement and Plan of Reorganization and Merger by
 and among the Registrant, ARH Interim National Bank and North Coast Bank,
 N.A., dated as of March 1, 2000 (included as Annex A). **           
| |               |  |                                                                                                                                                                                                    
| | (2.2)         |  | Agreement and Plan of Reorganization and Merger by
 and among the Registrant, American River Bank and Bank of Amador, dated as of
 July 8, 2004 (included as Annex A). ***                         
| |               |  |                                                                                                                                                                                                    
| | (3.1)         |  | Articles of Incorporation, as amended.                                                                                                                                                             
| |               |  |                                                                                                                                                                                                    
| | (3.2)         |  | Bylaws, as amended, incorporated by reference from
 Exhibit 3.2 to the Registrants Quarterly Report on Form 10-Q for the period
 ended June 30, 2008, filed with the Commission on August 8, 2008.

36

---



| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (4.1)    |  | Specimen of the Registrants common stock
 certificate, incorporated by reference from Exhibit 4.1 to the Registrants
 Quarterly Report on Form 10-Q for the period ended June 30, 2004, filed with
 the Commission on August 11, 2004.                                                                                                                                                                                                                                                                                                                                                          
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (10.1)   |  | Lease agreement between American River Bank and
 Spieker Properties, L.P., a California limited partnership, dated April 1,
 2000, related to 1545 River Park Drive, Suite 107, Sacramento, California. **                                                                                                                                                                                                                                                                                                                                                                                        
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (10.2)   |  | Lease agreement between American River Bank and
 Bradshaw Plaza, Associates, Inc. dated November 27, 2006, related to 9750
 Business Park Drive, Sacramento, California incorporated by reference from
 Exhibit 99.1 to the Registrants Report on Form 8-K, filed with the
 Commission on November 28, 2006.                                                                                                                                                                                                                                                                                     
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (10.3)   |  | Lease agreement between American River Bank and
 Marjorie Wood Taylor, Trustee of the Marjorie Wood-Taylor Trust, dated April
 5, 1984, and addendum thereto dated July 16, 1997, related to 10123 Fair Oaks
 Boulevard, Fair Oaks, California (**) and Amendment No. 2 thereto dated May
 14, 2009, incorporated by reference from Exhibit 99.1 to the Registrants
 Report on Form 8-K, filed with the Commission on May 15, 2009.                                                                                                                                                              
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (10.4)   |  | Lease agreement between American River Bank and LUM
 YIP KEE, Limited (formerly Sandalwood Land Company) dated August 28, 1996,
 related to 2240 Douglas Boulevard, Suite 100, Roseville, California (**) and
 Amendment No. 1 thereto dated July 28, 2006, incorporated by reference from
 Exhibit 99.1 to the Registrants Report on Form 8-K, filed with the
 Commission on July 31, 2006.                                                                                                                                                                                                     
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | *(10.5)  |  | Registrants 1995 Stock Option Plan. **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | *(10.6)  |  | Form of Nonqualified Stock Option Agreement under
 the 1995 Stock Option Plan. **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | *(10.7)  |  | Form of Incentive Stock Option Agreement under the
 1995 Stock Option Plan. **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | *(10.8)  |  | Registrants Deferred Compensation Plan,
 incorporated by reference from Exhibit 99.2 to the Registrants Report on
 Form 8-K, filed with the Commission on May 30, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                         
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | *(10.9)  |  | Registrants Deferred Fee Plan, incorporated by
 reference from Exhibit 99.1 to the Registrants Report on Form 8-K, filed
 with the Commission on May 30, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (10.10)  |  | Lease agreement between American River Bank and 520
 Capitol Mall, Inc., dated August 19, 2003, related to 520 Capitol Mall, Suite
 100, Sacramento, California, incorporated by reference from Exhibit 10.29 to
 the Registrants Quarterly Report on Form 10-Q for the period ended September
 30, 2003, filed with the Commission on November 7, 2003 and the First
 Amendment thereto dated April 21, 2004, incorporated by reference from
 Exhibit 10.37 to the Registrants Quarterly Report on Form 10-Q for the
 period ended June 30, 2004, filed with the Commission on August 11, 2004.
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | *(10.11) |  | Employment Agreement between Registrant and David T.
 Taber dated June 2, 2006, incorporated by reference from Exhibit 99.3 to the
 Registrants Report on Form 8-K, filed with the Commission on May 30, 2006.                                                                                                                                                                                                                                                                                                                                                                                   

37

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| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (10.12)  |  | Lease agreement between R & R Partners, a
 California General Partnership and North Coast Bank, dated July 1, 2003, related
 to 8733 Lakewood Drive, Suite A, Windsor, California, incorporated by reference from Exhibit 10.32 to the Registrants
 Quarterly Report on Form 10-Q for the period ended September 30, 2003, filed
 with the Commission on November 7, 2003; the First Amendment thereto, dated January 2,
 2006, incorporated by reference from Exhibit 99.1 to the Registrants
 Report on Form 8-K, filed with the Commission on January 3, 2006; and the
 Second Amendment thereto, dated
 December 8, 2006, incorporated by reference from Exhibit 10.39 to the
 Registrants Quarterly Report on Form 10-Q for the period ended March 31,
 2007, filed with the Commission on May 7, 2007; and the Third Amendment thereto, dated December 31, 2008,
 incorporated by reference from Exhibit 99.1 to the Registrants Report on
 Form 8-K, filed with the Commission on January 2, 2009.
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | *(10.13) |  | Salary Continuation Agreement, as amended on
 February 21, 2008, between American River Bank and Mitchell A. Derenzo,
 incorporated by reference from Exhibit 99.3 to the Registrants Report on
 Form 8-K, filed with the Commission on February 22, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | *(10.14) |  | Salary Continuation Agreement, as amended on
 February 21, 2008, between the Registrant and David T. Taber, incorporated by
 reference from Exhibit 99.1 to the Registrants Report on Form 8-K, filed
 with the Commission on February 22, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | *(10.15) |  | Salary Continuation Agreement, as amended on
 February 21, 2008, between American River Bank and Douglas E. Tow,
 incorporated by reference from Exhibit 99.2 to the Registrants Report on
 Form 8-K, filed with the Commission on February 22, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | *(10.16) |  | Registrants 2000 Stock Option Plan with forms of
 Nonqualified Stock Option Agreement and Incentive Stock Option Agreement. **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | *(10.17) |  | Registrants 401(k) Plan dated December 23, 2008,
 incorporated by reference from Exhibit 99.1 to the Report on Form 8-K, filed
 with the Commission on December 24, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (10.18)  |  | Lease agreement between Bank of Amador and the
 United States Postal Service, dated April 24, 2001, related to 424 Sutter
 Street, Jackson, California (***) and the First Amendment thereto, dated June 5, 2006, incorporated
 by reference from Exhibit 99.1 to the Registrants Report on Form 8-K, filed
 with the Commission on June 6, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | *(10.19) |  | Salary Continuation Agreement, as amended on
 February 21, 2008, between Bank of Amador, a division of American River Bank,
 and Larry D. Standing and related Endorsement Split Dollar Agreement,
 incorporated by reference from Exhibit 99.4 to the Registrants Report on
 Form 8-K, filed with the Commission on February 22, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | *(10.20) |  | Director Retirement Agreement, as amended on
 February 21, 2008, between Bank of Amador, a division of American River Bank,
 and Larry D. Standing, incorporated by reference from Exhibit 99.5 to the
 Registrants Report on Form 8-K, filed with the Commission on February 22,
 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (10.21)  |  | Item Processing Agreement between American River
 Bank and Fidelity Information Services, Inc., dated April 22, 2005,
 incorporated by reference from Exhibit 99.1 to the Registrants Report on
 Form 8-K, filed with the Commission on April 27, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (10.22)  |  | Lease agreement between Registrant and One Capital
 Center, a California limited partnership, dated May 17, 2005, related to 3100
 Zinfandel Drive, Rancho Cordova, California, incorporated by reference from
 Exhibit 99.1 to the Registrants Report on Form 8-K, filed with the
 Commission on May 18, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (10.23)  |  | Managed Services Agreement between American River
 Bankshares and ProNet Solutions, Inc., dated June 16, 2009, incorporated by
 reference from Exhibit 99.1 to the Registrants Report on Form 8-K, filed
 with the Commission on June 18, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

38

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| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | *(10.24) |  | American River Bankshares 2005 Executive Incentive
 Plan, incorporated by reference from Exhibit 99.1 to the Registrants Report
 on Form 8-K, filed with the Commission on October 27, 2005; the First
 Amendment thereto, incorporated by reference from Exhibit 99.1 to the Registrants Report on Form 8-K, filed
 with the Commission on March 17, 2006; and the Second Amendment thereto,
 incorporated by reference from Exhibit 99.1 to the Registrants Report on
 Form 8-K, filed with the Commission on March 23, 2007; and the Third Amendment
 thereto, incorporated by reference from Exhibit 99.1 to the Registrants
 Report on Form 8-K, filed with the Commission on February 22, 2008.
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | *(10.25) |  | American River Bankshares Director Emeritus Program,
 incorporated by reference from Exhibit 10.33 to the Registrants Quarterly
 Report on Form 10-Q for the period ended June 30, 2006, filed with the
 Commission on August 8, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | *(10.26) |  | Employment Agreement dated September 20, 2006
 between American River Bankshares and Mitchell A. Derenzo, incorporated by
 reference from Exhibit 99.1 to the Registrants Report on Form 8-K, filed
 with the Commission on September 20, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | *(10.27) |  | Employment Agreement dated September 20, 2006
 between American River Bankshares and Douglas E. Tow, incorporated by
 reference from Exhibit 99.2 to the Registrants Report on Form 8-K, filed
 with the Commission on September 20, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | *(10.28) |  | Employment Agreement dated September 20, 2006
 between American River Bankshares and Kevin B. Bender, incorporated by
 reference from Exhibit 99.3 to the Registrants Report on Form 8-K, filed
 with the Commission on September 20, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | *(10.29) |  | Employment Agreement dated September 20, 2006
 between American River Bank and Raymond F. Byrne, incorporated by reference
 from Exhibit 99.5 to the Registrants Report on Form 8-K, filed with the
 Commission on September 20, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | *(10.30) |  | Salary Continuation Agreement, as amended on
 February 21, 2008, between American River Bank and Kevin B. Bender,
 incorporated by reference from Exhibit 99.6 to the Registrants Report on
 Form 8-K, filed with the Commission on February 22, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | *(10.31) |  | Salary Continuation Agreement, as amended on
 February 21, 2008, between American River Bank and Raymond F. Byrne, incorporated
 by reference from Exhibit 99.7 to the Registrants Report on Form 8-K, filed
 with the Commission on February 22, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (10.32)  |  | Lease agreement dated May 23, 2007 between Bank of
 Amador, a division of American River Bank, and Joseph Bellamy, Trustee of the
 Joseph T. Bellamy 2005 Trust, related to 26395 Buckhorn Ridge Road, Pioneer,
 California, incorporated by reference from Exhibit 99.1 to the Registrants
 Report on Form 8-K, filed with the Commission on May 24, 2007 and the First Amendment thereto, dated October 15, 2007, incorporated
 by reference from Exhibit 99.1 to the Registrants Report on Form 8-K, filed
 with the Commission on October 16, 2007.                                                                                                                                                
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (10.33)  |  | Sublease agreement dated December 23, 2008 between
 North Coast Bank, a division of American River Bank, and Chicago Title
 Company, a California Corporation; and lease agreement dated December 23,
 2008 between North Coast Bank, a division of American River Bank, and 90 E
 Street LLC, related to 90 E Street, Santa Rosa, California, incorporated by
 reference from Exhibit 99.2 and 99.3 to the Registrants Report on Form 8-K,
 filed with the Commission on December 24, 2008.                                                                                                                                                                                                            
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (14.1)   |  | Registrants Code of Ethics, incorporated by
 reference from Exhibit 14.1 to the Registrants Annual Report on Form 10-K
 for the period ended December 31, 2003, filed with the Commission on March
 19, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (21.1)   |  | The Registrants only subsidiaries are American
 River Bank and American River Financial.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

39

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| |        |  |                                                                                                                                                    
| | ------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | (31.1) |  | Certifications of Chief Executive Officer pursuant
 to Section 302 of the Sarbanes-Oxley Act of 2002.                                              
| |        |  |                                                                                                                                                    
| | (31.2) |  | Certifications of Chief Financial Officer pursuant
 to Section 302 of the Sarbanes-Oxley Act of 2002.                                              
| |        |  |                                                                                                                                                    
| | (32.1) |  | Certification of Registrant by its Chief Executive
 Officer and Chief Financial Officer pursuant to Section 906 of the
 Sarbanes-Oxley Act of 2002.
| |        |  |                                                                                                                                                    
| |        |  | *Denotes management contracts, compensatory plans or
 arrangements.                                                                                
| |        |  |                                                                                                                                                    
| |        |  | **Incorporated by reference to Registrants
 Registration Statement on Form S-4 (No. 333-36326) filed with the Commission
 on May 5, 2000.         
| |        |  |                                                                                                                                                    
| |        |  | ***Incorporated by reference to Registrants
 Registration Statement on Form S-4 (No. 333-119085) filed with the Commission
 on September 17, 2004.

40

---



SIGNATURES

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                |  |                                             
|--------------- |  | --------------------------------------------
|                |  | AMERICAN RIVER BANKSHARES                   
|                |  |                                             
|August 12, 2009 |  | By: /s/ DAVID T. TABER                      
|                |  |                                             
|                |  | David T. Taber                              
|                |  | President and                               
|                |  | Chief Executive Officer                     
|                |  |                                             
|                |  | AMERICAN RIVER BANKSHARES                   
|                |  |                                             
|August 12, 2009 |  | By: /s/ MITCHELL A. DERENZO                 
|                |  |                                             
|                |  | Mitchell A. Derenzo                         
|                |  | Executive Vice President and                
|                |  | Chief Financial Officer                     
|                |  | (Principal Financial and Accounting Officer)

41

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EXHIBIT
INDEX

|               |             |                                                                                                                                                                    |      |   
|-------------- | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---- | --
|Exhibit Number | Description |                                                                                                                                                                    | Page
|               |             |                                                                                                                                                                    |     
|               |             |                                                                                                                                                                    |      |   
|               | 3.1         | Articles of Incorporation, as amended.                                                                                                                             |      | 43
|               |             |                                                                                                                                                                    |      |   
|               | 31.1        | Certifications of Chief Executive Officer pursuant
 to Section 302 of the Sarbanes-Oxley Act of 2002.                                                              |      | 53
|               |             |                                                                                                                                                                    |      |   
|               | 31.2        | Certifications of Chief Financial Officer pursuant
 to Section 302 of the Sarbanes-Oxley Act of 2002.                                                              |      | 54
|               |             |                                                                                                                                                                    |      |   
|               | 32.1        | Certification of American River Bankshares by its
 Chief Executive Officer and Chief Financial Officer pursuant to Section 906
 of the Sarbanes-Oxley Act of 2002. |      | 55

42

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