UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, 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 March 31, 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, 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 May 12, 2009.



---



AMERICAN
RIVER BANKSHARES

INDEX
TO QUARTERLY REPORT ON FORM 10-Q 
FOR THE QUARTER ENDED MARCH 31, 2009

|              |                                                                                                                                   |     
|------------- | --------------------------------------------------------------------------------------------------------------------------------- | ----
|              |                                                                                                                                   | Page
|Part I.       |                                                                                                                                   |     
|              |                                                                                                                                   |     
|Item
  1.     | Financial Statements                                                                                                              | 3   
|Item
  2.     | Managements Discussion and Analysis
  of Financial Condition and Results of Operations                                           | 12  
|Item
  3.     | Quantitative and Qualitative
  Disclosures About Market Risk                                                                      | 28  
|Item
  4.     | Controls and Procedures                                                                                                           | 29  
|              |                                                                                                                                   |     
|Part II.      |                                                                                                                                   |     
|              |                                                                                                                                   |     
|Item
  1.     | Legal Proceedings                                                                                                                 | 30  
|Item
  1A.    | Risk Factors                                                                                                                      | 30  
|Item
  2.     | Unregistered Sales of Equity
  Securities and Use of Proceeds                                                                     | 30  
|Item
  3.     | Defaults Upon Senior Securities                                                                                                   | 31  
|Item
  4.     | Submission of Matters to a Vote of
  Security Holders                                                                             | 31  
|Item
  5.     | Other Information                                                                                                                 | 31  
|Item
  6.     | Exhibits                                                                                                                          | 31  
|              |                                                                                                                                   |     
|Signatures    |                                                                                                                                   | 35  
|              |                                                                                                                                   |     
|Exhibit Index |                                                                                                                                   | 36  
|              |                                                                                                                                   |     
|31.1          | Certifications of Chief Executive Officer pursuant
  to Section 302 of the Sarbanes-Oxley Act of 2002                             | 37  
|              |                                                                                                                                   |     
|31.2          | Certifications of the Chief Financial Officer pursuant
  to Section 302 of the Sarbanes-Oxley Act of 2002                         | 38  
|              |                                                                                                                                   |     
|32.1          | Certifications of Chief Executive Officer and Chief
  Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | 39  

2

---



PART
I-FINANCIAL INFORMATION

Item 1.
Financial Statements.

AMERICAN RIVER
BANKSHARES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

|                                                                                                                                                                     |  |           |         |              |   |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ------- | ------------ | - | ------- | 
|                                                                                                                                                                     |  | March 31, |         | December 31, |  
|(dollars in
  thousands)                                                                                                                                             |  | 2009      |         | 2008         |  
|                                                                                                                                                                     |  |           |         |              |  
|                                                                                                                                                                     |  |           |         |              |   |         | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|ASSETS                                                                                                                                                               |  |           |         |              |   |         | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|Cash and due
  from banks                                                                                                                                            |  | $         | 9,115   |              | $ | 15,170  | 
|Federal funds sold                                                                                                                                                   |  |           |        |              |   |        | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|Total cash and
  cash equivalents                                                                                                                                    |  |           | 9,115   |              |   | 15,170  | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|Interest-bearing
  deposits in banks                                                                                                                                 |  |           | 2,772   |              |   | 4,248   | 
|Investment
  securities:                                                                                                                                             |  |           |         |              |   |         | 
|Available-for-sale
  (amortized cost: 2009--$66,744; 2008--$62,661)                                                                                                  |  |           | 67,314  |              |   | 63,334  | 
|Held-to-maturity
  (fair value: 2009--$21,765; 2008--$24,889)                                                                                                        |  |           | 21,086  |              |   | 24,365  | 
|Loans and
  leases, less allowance for loan and lease losses of $5,839 at March 31, 2009
  and $5,918 at December 31, 2008                                           |  |           | 410,323 |              |   | 412,356 | 
|Premises and
  equipment, net                                                                                                                                        |  |           | 2,204   |              |   | 2,115   | 
|Federal Home
  Loan Bank stock                                                                                                                                       |  |           | 3,922   |              |   | 3,922   | 
|Goodwill and
  other intangible assets                                                                                                                               |  |           | 17,162  |              |   | 17,228  | 
|Other real
  estate owned                                                                                                                                            |  |           | 4,478   |              |   | 2,158   | 
|Accrued interest
  receivable and other assets                                                                                                                       |  |           | 17,959  |              |   | 18,261  | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|                                                                                                                                                                     |  | $         | 556,335 |              | $ | 563,157 | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|LIABILITIES AND
  SHAREHOLDERS EQUITY                                                                                                                               |  |           |         |              |   |         | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|Deposits:                                                                                                                                                            |  |           |         |              |   |         | 
|Noninterest
  bearing                                                                                                                                                |  | $         | 112,695 |              | $ | 119,143 | 
|Interest-bearing                                                                                                                                                     |  |           | 324,246 |              |   | 317,918 | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|Total deposits                                                                                                                                                       |  |           | 436,941 |              |   | 437,061 | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|Short-term
  borrowings                                                                                                                                              |  |           | 27,121  |              |   | 43,231  | 
|Long-term
  borrowings                                                                                                                                               |  |           | 21,500  |              |   | 14,000  | 
|Accrued interest
  payable and other liabilities                                                                                                                     |  |           | 6,844   |              |   | 5,418   | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|Total
  liabilities                                                                                                                                                  |  |           | 492,406 |              |   | 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 March 31, 2009 and 5,792,283 shares at December 31, 2008 |  |           | 47,522  |              |   | 47,433  | 
|Retained
  earnings                                                                                                                                                  |  |           | 16,071  |              |   | 15,617  | 
|Accumulated
  other comprehensive income, net of taxes                                                                                                               |  |           | 336     |              |   | 397     | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|Total
  shareholders equity                                                                                                                                         |  |           | 63,929  |              |   | 63,447  | 
|                                                                                                                                                                     |  |           |         |              |   |         | 
|                                                                                                                                                                     |  | $         | 556,335 |              | $ | 563,157 | 
|                                                                                                                                                                     |  |           |         |              |   |         | 

See Notes to Unaudited Consolidated Financial
Statements

3

---



AMERICAN RIVER
BANKSHARES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)

|                                                   |  |              |       |      |   |       | 
|-------------------------------------------------- |  | ------------ | ----- | ---- | - | ----- | 
|(In thousands, except per share data)              |  | Three months |      
|For the periods ended March 31,                    |  | 2009         |       | 2008 |  
|                                                   |  |              |       |      |  
|                                                   |  |              |       |      |   |       | 
|Interest income:                                   |  |              |       |      |   |       | 
|Interest and
  fees on loans                       |  | $            | 6,718 |      | $ | 7,244 | 
|Interest on
  Federal funds sold                   |  |              |      |      |   | 2     | 
|Interest on
  deposits in banks                    |  |              | 33    |      |   | 65    | 
|Interest and
  dividends on investment securities: |  |              |       |      |   |       | 
|Taxable                                            |  |              | 735   |      |   | 1,000 | 
|Exempt from
  Federal income taxes                 |  |              | 265   |      |   | 264   | 
|Dividends                                          |  |              |      |      |   | 3     | 
|                                                   |  |              |       |      |   |       | 
|Total interest
  income                            |  |              | 7,751 |      |   | 8,578 | 
|                                                   |  |              |       |      |   |       | 
|Interest expense:                                  |  |              |       |      |   |       | 
|Interest on
  deposits                             |  |              | 1,081 |      |   | 1,743 | 
|Interest on
  borrowings                           |  |              | 331   |      |   | 493   | 
|                                                   |  |              |       |      |   |       | 
|Total interest
  expense                           |  |              | 1,412 |      |   | 2,236 | 
|                                                   |  |              |       |      |   |       | 
|                                                   |  |              |       |      |   |       | 
|Net interest
  income                              |  |              | 6,339 |      |   | 6,342 | 
|                                                   |  |              |       |      |   |       | 
|Provision for loan and lease losses                |  |              | 1,229 |      |   | 337   | 
|                                                   |  |              |       |      |   |       | 
|Net interest
  income after provision for          |  |              |       |      |   |       | 
|loan and lease
  losses                            |  |              | 5,110 |      |   | 6,005 | 
|                                                   |  |              |       |      |   |       | 
|                                                   |  |              |       |      |   |       | 
|Noninterest income                                 |  |              | 510   |      |   | 585   | 
|                                                   |  |              |       |      |   |       | 
|                                                   |  |              |       |      |   |       | 
|Noninterest expense:                               |  |              |       |      |   |       | 
|Salaries and
  employee benefits                   |  |              | 1,872 |      |   | 2,021 | 
|Occupancy                                          |  |              | 358   |      |   | 364   | 
|Furniture and
  equipment                          |  |              | 190   |      |   | 191   | 
|Other expense                                      |  |              | 1,181 |      |   | 1,053 | 
|                                                   |  |              |       |      |   |       | 
|Total
  noninterest expense                        |  |              | 3,601 |      |   | 3,629 | 
|                                                   |  |              |       |      |   |       | 
|                                                   |  |              |       |      |   |       | 
|Income before provision
  for income taxes         |  |              | 2,019 |      |   | 2,961 | 
|                                                   |  |              |       |      |   |       | 
|Provision for income taxes                         |  |              | 736   |      |   | 1,128 | 
|                                                   |  |              |       |      |   |       | 
|                                                   |  |              |       |      |   |       | 
|Net income                                         |  | $            | 1,283 |      | $ | 1,833 | 
|                                                   |  |              |       |      |   |       | 
|                                                   |  |              |       |      |   |       | 
|Basic earnings per share                           |  | $            | 0.22  |      | $ | 0.31  | 
|                                                   |  |              |       |      |   |       | 
|Diluted earnings per share                         |  | $            | 0.22  |      | $ | 0.31  | 
|                                                   |  |              |       |      |   |       | 
|                                                   |  |              |       |      |   |       | 
|Cash dividends per share                           |  | $            | 0.14  |      | $ | 0.14  | 
|                                                   |  |              |       |      |   |       | 

See Notes to Unaudited Consolidated Financial
Statements

4

---



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

|                                                                                      |  |                |           |          |   |               |   |               |        |               |   |        |   |   |        |   |   |       |  
|------------------------------------------------------------------------------------- |  | -------------- | --------- | -------- | - | ------------- | - | ------------- | ------ | ------------- | - | ------ | - | - | ------ | - | - | ----- | -
|(dollars in thousands)                                                                |  |                |           |          |   |               |   |               |        |               |   |        |   |   |       
|                                                                                      |  |                |           |          |   |               |   | Accumulated   |        |               |   |        |  
|                                                                                      |  |                |           |          |   |               |   | Other         |        | Total         |   | Total  |  
|                                                                                      |  | Common
  Stock |           | Retained |   | Comprehensive |   | Shareholders |        | 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                                                                            |  |                |           |          |   |               |   |               | 1,283  |               |   |        |   |   | 1,283  |   | $ | 1,283 |  
|Other comprehensive (loss) income, net of
tax:                                        |  |                |           |          |   |               |   |               |        |               |   |        |   |   |        |   |   |       |  
|Net change in unrealized gains (losses) on
available-for-sale
  investment securities |  |                |           |          |   |               |   |               |        |               |   | (61    | ) |   | (61    | ) |   | (61   | )
|                                                                                      |  |                |           |          |   |               |   |               |        |               |   |        |   |   |        |   |   |       |  
|                                                                                      |  |                |           |          |   |               |   |               |        |               |   |        |   |   |        |   |   |       |  
|Total
  comprehensive income                                                          |  |                |           |          |   |               |   |               |        |               |   |        |   |   |        |   | $ | 1,222 |  
|                                                                                      |  |                |           |          |   |               |   |               |        |               |   |        |   |   |        |   |   |       |  
|                                                                                      |  |                |           |          |   |               |   |               |        |               |   |        |   |   |        |   |   |       |  
|Cash dividends ($0.14 per share)                                                      |  |                |           |          |   |               |   |               | (829   | )             |   |        |   |   | (829   | ) |   |       |  
|Stock options exercised and related tax benefit                                       |  |                | 5,250     |          |   | 34            |   |               |        |               |   |        |   |   | 34     |   |   |       |  
|Stock option compensation expense                                                     |  |                |           |          |   | 55            |   |               |        |               |   |        |   |   | 55     |   |   |       |  
|                                                                                      |  |                |           |          |   |               |   |               |        |               |   |        |   |   |        |   |   |       |  
|                                                                                      |  |                |           |          |   |               |   |               |        |               |   |        |   |   |        |   |   |       |  
|Balance, March 31, 2009                                                               |  |                | 5,797,533 |          | $ | 47,522        |   | $             | 16,071 |               | $ | 336    |   | $ | 63,929 |   |   |       |  
|                                                                                      |  |                |           |          |   |               |   |               |        |               |   |        |   |   |        |   |   |       |  

See Notes to Unaudited Consolidated Financial
Statements

5

---



AMERICAN RIVER BANKSHARES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

|                                                                                          |  |      |         |      |   |         |  
|----------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | -
|(dollars in
  thousands)                                                                  |  |      |         |      |   |         |  
|For the three
  months ended March 31,                                                    |  | 2009 |         | 2008 |  
|                                                                                          |  |      |         |      |  
|                                                                                          |  |      |         |      |   |         |  
|Cash flows from
  operating activities:                                                   |  |      |         |      |   |         |  
|Net income                                                                                |  | $    | 1,283   |      | $ | 1,833   |  
|Adjustments to
  reconcile net income to net cash provided by operating activities:       |  |      |         |      |   |         |  
|Provision for
  loan and lease losses                                                     |  |      | 1,229   |      |   | 337     |  
|Increase
  (decrease) in deferred loan origination fees, net                              |  |      | 69      |      |   | (53     | )
|Depreciation and
  amortization                                                           |  |      | 209     |      |   | 194     |  
|Loss (gain) on
  sale, call and impairment of securities                                  |  |      |        |      |   |        |  
|Amortization of
  investment security premiums and discounts, net                         |  |      | 38      |      |   | 36      |  
|Increase in
  provision for accounts receivable servicing receivable allowance for losses |  |      | 45      |      |   |        |  
|Increase in cash
  surrender value of life insurance polices                              |  |      | (57     | )    |   | (101    | )
|Stock option
  compensation expense                                                       |  |      | 55      |      |   | 68      |  
|Tax benefit from
  exercise of stock options                                              |  |      | (12     | )    |   | (65     | )
|(Increase)
  decrease in accrued interest receivable and other assets                     |  |      | (191    | )    |   | 1,162   |  
|Increase in accrued interest payable and other
liabilities                                |  |      | 1,425   |      |   | 3,236   |  
|                                                                                          |  |      |         |      |   |         |  
|                                                                                          |  |      |         |      |   |         |  
|Net cash
  provided by operating activities                                               |  |      | 4,093   |      |   | 6,647   |  
|                                                                                          |  |      |         |      |   |         |  
|                                                                                          |  |      |         |      |   |         |  
|Cash flows from
  investing activities:                                                   |  |      |         |      |   |         |  
|Proceeds from
  the sale of investment securities                                         |  |      |        |      |   |        |  
|Proceeds from
  matured and called available-for-sale investment securities               |  |      | 115     |      |   | 1,905   |  
|Purchases of
  available-for-sale investment securities                                   |  |      | (6,586  | )    |   |        |  
|Purchases of
  held-to-maturity investment securities                                     |  |      |        |      |   | (3,132  | )
|Proceeds from
  principal repayments for available-for-sale investment securities         |  |      | 2,332   |      |   | 1,339   |  
|Proceeds from
  principal repayments for held-to-maturity investment securities           |  |      | 3,297   |      |   | 2,701   |  
|Net decrease in
  interest-bearing deposits in banks                                      |  |      | 1,476   |      |   | 9       |  
|Net decrease
  (increase) in loans                                                        |  |      | 735     |      |   | (3,732  | )
|Net (increase)
  decrease in other real estate                                            |  |      | (2,320  | )    |   | 61      |  
|Net decrease in
  accounts receivable servicing receivables                               |  |      | 558     |      |   | 45      |  
|Purchases of
  equipment                                                                  |  |      | (231    | )    |   | (148    | )
|Net increase in
  FHLB stock                                                              |  |      |        |      |   | (231    | )
|                                                                                          |  |      |         |      |   |         |  
|                                                                                          |  |      |         |      |   |         |  
|Net cash used in
  investing activities                                                   |  |      | (624    | )    |   | (1,183  | )
|                                                                                          |  |      |         |      |   |         |  
|                                                                                          |  |      |         |      |   |         |  
|Cash flows from
  financing activities:                                                   |  |      |         |      |   |         |  
|Net (decrease)
  increase in demand, interest-bearing and savings deposits                |  | $    | (8,916  | )    | $ | 4,486   |  
|Net increase in
  time deposits                                                           |  |      | 8,796   |      |   | 1,834   |  
|Net decrease in
  short-term borrowings                                                   |  |      | (16,110 | )    |   | (13,212 | )
|Net increase in
  long-term borrowings                                                    |  |      | 7,500   |      |   | 17,500  |  
|Payment of cash
  dividends                                                               |  |      | (828    | )    |   | (839    | )
|Cash paid to
  repurchase common stock                                                    |  |      |        |      |   | (1,384  | )
|Exercise of
  stock options                                                               |  |      | 22      |      |   | 170     |  
|Tax benefit from
  exercise of stock options                                              |  |      | 12      |      |   | 65      |  
|                                                                                          |  |      |         |      |   |         |  
|                                                                                          |  |      |         |      |   |         |  
|Net cash (used
  in) provided by financing activities                                     |  |      | (9,524  | )    |   | 8,620   |  
|                                                                                          |  |      |         |      |   |         |  
|                                                                                          |  |      |         |      |   |         |  
|(Decrease)
  increase in cash and cash equivalents                                        |  |      | (6,055  | )    |   | 14,084  |  
|                                                                                          |  |      |         |      |   |         |  
|Cash and cash
  equivalents at beginning of year                                          |  |      | 15,170  |      |   | 17,945  |  
|                                                                                          |  |      |         |      |   |         |  
|                                                                                          |  |      |         |      |   |         |  
|Cash and cash
  equivalents at end of period                                              |  | $    | 9,115   |      | $ | 32,029  |  
|                                                                                          |  |      |         |      |   |         |  

See Notes to Unaudited Consolidated Financial
Statements

6

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AMERICAN RIVER
BANKSHARES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 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 March 31,
2009 and December 31, 2008, and the results of its operations and its cash
flows for the three-month periods ended March 31, 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 period ended March 31, 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.

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
Plans

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

The Company granted 62,003
and 63,824 options to purchase common stock during the three months ended March
31, 2009 and 2008, respectively. The weighted average grant date fair value of
options granted for the three-month periods ended March 31, 2009 and 2008 was
$0.80 and $2.77, respectively. For the three-month periods ended March
31, 2009 and 2008, the compensation cost recognized for stock option
compensation was $55,000 and $68,000, respectively. The recognized tax benefit
for stock option compensation expense was $11,000 and $8,000, for the
three-month periods ended March 31, 2009 and 2008, respectively. At March 31, 2009, the total compensation
cost related to nonvested awards not yet recorded is expected to be $537,000.
This amount will be recognized over the next five years and the weighted
average period of recognizing these costs is expected to be 3.0 years.

7

---



Stock Option Activity

A summary of option activity
under the stock option plans as of March 31, 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 |  | 338,324 |   | $                                 | 18.67 |                                               |  | 5.7 years                        |  | $ | 31 | 
|Granted                          |  | 62,003  |   | $                                 | 8.50  |                                               |  | 9.8 years                        |  |   |   | 
|Exercised                        |  | (5,250  | ) | $                                 | 4.10  |                                               |  |                                 |  |   |   | 
|Cancelled                        |  | (8,270  | ) | $                                 | 20.46 |                                               |  |                                 |  |   |   | 
|                                 |  |         |   |                                   |       |                                               |  |                                  |  |   |    | 
|Outstanding
  at March 31, 2009  |  | 386,807 |   | $                                 | 17.22 |                                               |  | 7.3 years                        |  | $ | 1  | 
|                                 |  |         |   |                                   |       |                                               |  |                                  |  |  
|Exercisable
  at March 31, 2009  |  | 188,267 |   | $                                 | 18.35 |                                               |  | 6.1 years                        |  | $ |   | 
|                                 |  |         |   |                                   |       |                                               |  |                                  |  |   |    | 

The intrinsic value was
derived from the market price of the Companys common stock of $8.51 as of
March 31, 2009.

3. COMMITMENTS AND CONTINGENCIES

In the normal course of business there are outstanding
various commitments to extend credit that are not reflected in the financial
statements, including loan commitments of approximately $75,102,000 and standby
letters of credit of approximately $4,414,000 at March 31, 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 March 31, 2009 or March 31, 2008.

4. EARNINGS PER SHARE COMPUTATION

Basic earnings per share is computed by dividing net
income by the weighted average common shares outstanding for the period
(5,794,500 shares for the three-month period ended March 31, 2009, and
5,839,155 shares for the three-month period ended March 31, 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 (29,907 shares
for the three-month period ended March 31, 2009 and 32,611 for the three-month
period ended March 31, 2008). Earnings per share is retroactively adjusted for
stock splits and stock dividends for all periods presented.

8

---



5. COMPREHENSIVE INCOME

Comprehensive income is reported in addition to net
income for all periods presented. Comprehensive income is comprised of net
income plus other comprehensive income (loss). Other comprehensive income, net
of taxes, was comprised of the unrealized (losses) gains on available-for-sale
investment securities of ($61,000) for the three-month period ended March 31,
2009 and $504,000 for the three-month period ended March 31, 2008. Comprehensive
income was $1,222,000 for the three-month period ended March 31, 2009 and
$2,337,000 for the three-month period ended March 31, 2008. Reclassification
adjustments resulting from gain or loss on sale of investment securities were
not significant for all periods presented.

6. BORROWING ARRANGEMENTS

At March 31, 2009, the Company has a total of
$37,000,000 in unsecured short-term borrowing arrangements with two of its
correspondent banks. There were no advances under the borrowing arrangements as
of March 31, 2009 or December 31, 2008.

In addition, the Company has a line of credit
available with the Federal Home Loan Bank (the FHLB) that 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 $48,621,000 were outstanding from the FHLB
at March 31, 2009, bearing interest rates ranging from 0.21% to 3.78% and
maturing between April 1, 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 March 31, 2009 and December 31, 2008 totaled
$53,016,000 and $60,012,000, respectively.

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 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.

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 income. There have been no significant changes to
unrecognized tax benefits or accrued interest and penalties for the three-month
period ended March 31, 2009.

9

---



8. FAIR VALUE
MEASUREMENT

The following table presents information about the
Companys assets and liabilities measured at fair value on a recurring and
nonrecurring basis as of March 31, 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.

(dollars in thousands)


|                                                           |  |                               |        |                                                                         |   |                                         |  |                                                    |        |  |   |       | 
|---------------------------------------------------------- |  | ----------------------------- | ------ | ----------------------------------------------------------------------- | - | --------------------------------------- |  | -------------------------------------------------- | ------ |  | - | ----- | 
|Description                                                |  | Fair
  Value
  March 31, 2009 |        | Fair
  Value Measurements
  at March 31, 2009 Using                     |  
|                                                           |  |                               |       
|                                                           |  |                               |        | 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                              |  | $                             | 67,314 |                                                                         | $ | 22                                      |  | $                                                  | 63,058 |  | $ | 4,234 | 
|Total                                                      |  | $                             | 67,314 |                                                                         | $ | 22                                      |  | $                                                  | 63,058 |  | $ | 4,234 | 
|                                                           |  |                               |        |                                                                         |   |                                         |  |                                                    |        |  |   |       | 
|Assets and liabilities measured on a nonrecurring
  basis: |  |                               |        |                                                                         |   |                                         |  |                                                    |        |  |   |       | 
|Impaired loans                                             |  | $                             | 3,880  |                                                                         | $ |                                        |  | $                                                  | 3,880  |  | $ |      | 
|Other real estate owned                                    |  |                               | 4,478  |                                                                         |   |                                        |  |                                                    | 4,478  |  |   |      | 
|Total                                                      |  | $                             | 8,271  |                                                                         | $ |                                        |  | $                                                  | 8,271  |  | $ |      | 

Changes in balances of recurring items valued using
significant unobservable inputs (level 3) are as follows:

|                                      |  |                                     |       |                      |   |                               |  |                             |      |                                |   |   |  |   |       | 
|------------------------------------- |  | ----------------------------------- | ----- | -------------------- | - | ----------------------------- |  | --------------------------- | ---- | ------------------------------ | - | - |  | - | ----- | 
|(dollars in thousands)                |  | Balance
  as of
  January 1,
  2009 |       | Transfers
  In (Out) |   | Unrealized
  Gains
  (Losses) |  | Realized
  Gains
  (Losses) |      | Balance as of March 31,
  2009 |  
|                                      |  |                                     |       |                      |   |                               |  |                             |      |                                |  
|                                      |  |                                     |       |                      |   |                               |  |                             |      |                                |   |   |  |   |       | 
|Level 3 available-for-sale securities |  | $                                   | 2,049 |                      | $ | 2,491                         |  | $                           | (306 | )                              | $ |  |  | $ | 4,234 | 
|                                      |  |                                     |       |                      |   |                               |  |                             |      |                                |   |   |  |   |       | 

There were no changes in the
valuation techniques used during the three months ended March 31, 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.

10

---



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

In April 2009, the Financial
Accounting Standards Board (the FASB) issued the following three FASB Staff
Positions (FSPs) intended to provide additional guidance and enhance disclosures
regarding fair value measurements and impairment of securities:

FSP FAS 157-4, Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly, provides additional
guidance for estimating fair value in accordance with SFAS No. 157 when
the volume and level of activity for the asset or liability have decreased
significantly. FSP FAS 157-4 also provides guidance on identifying
circumstances that indicate a transaction is not orderly. The provisions of FSP
FAS 157-4 are effective for the Companys interim period ending on
June 30, 2009. Management is currently evaluating the effect that the
provisions of FSP FAS 157-4 may have on the Companys condensed consolidated
financial statements.

FSP FAS 107-1 and APB 28-1,
Interim Disclosures about Fair Value
of Financial Instruments,requires
disclosures about fair value of financial instruments in interim reporting
periods of publicly traded companies that were previously only required to be
disclosed in annual financial statements. The provisions of FSP FAS 107-1 and
APB 28-1 are effective for the Companys interim period ending on June 30,
2009. As FSP FAS 107-1 and APB 28-1 amends only the disclosure requirements
about fair value of financial instruments in interim periods, the adoption of
FSP FAS 107-1 and APB 28-1 is not expected to affect the Companys condensed
consolidated financial statements.

FSP FAS 115-2 and FAS 124-2,
Recognition and Presentation of Other-Than-Temporary Impairments, amends
current other-than-temporary impairment guidance in GAAP for debt securities to
make the guidance more operational and to improve the presentation and
disclosure of other-than-temporary impairments on debt and equity securities in
the financial statements. This FSP does not amend existing recognition and
measurement guidance related to other-than-temporary impairments of equity
securities. The provisions of FSP FAS 115-2 and FAS 124-2 are effective for the
Companys interim period ending on June 30, 2009. Management is currently
evaluating the effect that the provisions of FSP FAS 115-2 and FAS 124-2 may
have on the Companys condensed consolidated financial statements.

11

---



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 March 31, 2009 and its income and expense accounts for
the three-month periods ended March 31, 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.

12

---



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.

13

---



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 119 full-time employees as of March 31, 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.

14

---



Overview

The
Company recorded net income of $1,283,000 for the quarter ended March 31, 2009,
which was $550,000 (30.0%) below the $1,833,000 reported for the same period of
2008. Diluted earnings per share for the first quarter of 2009 were $0.22
compared to $0.31 recorded in the first quarter of 2008. The return on average
equity (ROAE) and the return on average assets (ROAA) for the first quarter of
2009 were 8.15% and 0.90%, respectively, as compared to 12.26% and 1.28%,
respectively, for the same period in 2008.

Total
assets of the Company decreased by $6,822,000 (1.2%) from $563,157,000 at
December 31, 2008 to $556,335,000 at March 31, 2009. Net loans totaled $410,323,000
at March 31, 2009, down $2,033,000 (0.5%) from $412,356,000 at December 31,
2008. Deposit balances at March 31, 2009 totaled $436,941,000, consistent with
the $437,061,000 at December 31, 2008.

The
Company ended the first quarter of 2009 with a Tier 1 capital ratio of 10.5%
and a total risk-based capital ratio of 11.7% compared to 10.2% and 11.5%,
respectively, at December 31, 2008. Table One below provides a summary of the
components of net 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 months ended March 31 |        
|                                                                  |  |                                     |        
|(dollars in thousands)                                            |  | 2009                                |         | 2008 |  
|                                                                  |  |                                     |         |      |  
|                                                                  |  |                                     |         |      |   |         |  
|Net interest income*                                              |  | $                                   | 6,425   |      | $ | 6,427   |  
|Provision for loan losses                                         |  |                                     | (1,229  | )    |   | (337    | )
|Noninterest income                                                |  |                                     | 510     |      |   | 585     |  
|Noninterest expense                                               |  |                                     | (3,601  | )    |   | (3,629  | )
|Provision for income taxes                                        |  |                                     | (736    | )    |   | (1,128  | )
|Tax equivalent adjustment                                         |  |                                     | (86     | )    |   | (85     | )
|                                                                  |  |                                     |         |      |   |         |  
|                                                                  |  |                                     |         |      |   |         |  
|Net income                                                        |  | $                                   | 1,283   |      | $ | 1,833   |  
|                                                                  |  |                                     |         |      |   |         |  
|                                                                  |  |                                     |         |      |   |         |  
|                                                                  |  |                                     |         |      |   |         |  
|Average total assets                                              |  | $                                   | 577,601 |      | $ | 573,901 |  
|Net income (annualized) as a percentage of average
  total assets |  |                                     | 0.90    | %    |   | 1.28    | %
|                                                                  |  |                                     |         |      |   |         |  
|                                                                  |  |                                     |         |      |   |         |  

* Fully taxable equivalent basis (FTE)

15

---



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
5.08% for the three months ended March 31, 2009 up 14 basis points from 4.94%
for the three months ended March 31, 2008.

The
fully taxable equivalent interest income component for the first quarter of
2009 decreased $826,000 (9.5%) to $7,837,000 compared to $8,663,000 for the
three months ended March 31, 2008. The decrease in the fully taxable equivalent
interest income for the first quarter of 2009 compared to the same period in
2008 is broken down by rate (down $858,000) and volume (up $32,000). 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. The decrease in
rates was partially mitigated be less interest forgone on non-accrual loans in
2009 compared to 2008. Interest income forgone on non-accrual loans was
approximately $181,000 during the first quarter of 2009 compared to $336,000
for the same period in 2008. The overall decreasing interest rate environment
and the net positive effect of the lower non-accrual loans resulted in a 46
basis point decrease in the yield on average earning assets from 6.66% for 2008
to 6.20% for 2009. The volume increase occurred despite a 2.1% decrease in
average earning assets as a result of 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. This strategy has reduced the average balances on investment
securities by 20.6% from $114,822,000 during the first quarter of 2008 to
$91,208,000 during the first quarter of 2009, while average loan balances
increased $14,273,000 or 3.5% from $403,506,000 during the first quarter of
2008 to $417,779,000 during the first quarter of 2009. The increase in average
loans is the result of the Companys continued concentrated focus on business
lending.

Interest
expense was $824,000 (36.9%) lower in the first quarter of 2009 versus the
prior year period. The average balances on interest bearing liabilities were
$16,017,000 (4.2%) higher in the first quarter of 2009 compared to the same
quarter in 2008. The higher balances accounted for a $278,000 increase in
interest expense. Average borrowings were up $22,308,000 (40.3%) as the Company
used borrowings as a funding source for the increased loan balances as average
deposit balances declined. Average deposit balances decreased $21,577,000 or
4.8% from $451,645,000 during the first quarter of 2008 to $430,068,000 during
the first quarter of 2009. Although the number of deposit relationships and
accounts remains relatively stable, the average balances in those accounts have
experienced a decrease over the past twelve months. As a result of the lower
overall interest rate environment, the decrease in rates accounted for a
$1,102,000 reduction in interest expense for the three-month period ended March
31, 2009. Rates paid on interest bearing liabilities decreased 93 basis points
from the first quarter of 2008 to the first quarter of 2009 from 2.38% to
1.45%. The rate on average borrowings dropped 185 basis points during that same
time period from 3.58% to 1.73%.

16

---



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; the 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 March 31,                                   |  | 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)                                         |  | $             | 417,779 |          | $ | 6,718           |  |               | 6.52 | %        | $ | 403,506         |   | $ | 7,244 |  |  | 7.22 | %
|Taxable
  investment securities                                |  |               | 64,665  |          |   | 735             |  |               | 4.61 | %        |   | 87,971          |   |   | 1,000 |  |  | 4.57 | %
|Tax-exempt
  investment securities (2)                         |  |               | 26,516  |          |   | 351             |  |               | 5.37 | %        |   | 26,607          |   |   | 348   |  |  | 5.26 | %
|Corporate stock
  (2)                                          |  |               | 27      |          |   |                |  |               | 0.00 | %        |   | 244             |   |   | 4     |  |  | 6.59 | %
|Federal funds
  sold                                           |  |               | 38      |          |   |                |  |               | 0.00 | %        |   | 249             |   |   | 2     |  |  | 3.23 | %
|Investments in
  time deposits                                 |  |               | 3,643   |          |   | 33              |  |               | 3.67 | %        |   | 4,943           |   |   | 65    |  |  | 5.29 | %
|                                                               |  |               |         |          |   |                 |  |               |      |          |   |                 |   |   |       |  |  |      |  
|Total earning assets                                           |  |               | 512,668 |          |   | 7,837           |  |               | 6.20 | %        |   | 523,520         |   |   | 8,663 |  |  | 6.66 | %
|                                                               |  |               |         |          |   |                 |  |               |      |          |   |                 |   |   |       |  |  |      |  
|Cash & due from banks                                          |  |               | 28,654  |          |   |                 |  |               |      |          |   | 16,686          |   |   |       |  |  |      |  
|Other assets                                                   |  |               | 42,063  |          |   |                 |  |               |      |          |   | 39,411          |   |   |       |  |  |      |  
|Allowance for loan & lease losses                              |  |               | (5,784  | )        |   |                 |  |               |      |          |   | (5,916          | ) |   |       |  |  |      |  
|                                                               |  |               |         |          |   |                 |  |               |      |          |   |                 |   |   |       |  |  |      |  
|                                                               |  | $             | 577,601 |          |   |                 |  |               |      |          | $ | 573,901         |   |   |       |  |  |      |  
|                                                               |  |               |         |          |   |                 |  |               |      |          |   |                 |   |   |       |  |  |      |  
|                                                               |  |               |         |          |   |                 |  |               |      |          |   |                 |   |   |       |  |  |      |  
|Liabilities & Shareholders
  Equity                           |  |               |         |          |   |                 |  |               |      |          |   |                 |   |   |       |  |  |      |  
|Interest bearing liabilities:                                  |  |               |         |          |   |                 |  |               |      |          |   |                 |   |   |       |  |  |      |  
|Interest
  checking and money market                           |  | $             | 150,408 |          |   | 318             |  |               | 0.86 | %        | $ | 168,500         |   |   | 597   |  |  | 1.42 | %
|Savings                                                        |  |               | 32,423  |          |   | 54              |  |               | 0.68 | %        |   | 36,301          |   |   | 86    |  |  | 0.95 | %
|Time deposits                                                  |  |               | 133,655 |          |   | 709             |  |               | 2.15 | %        |   | 117,976         |   |   | 1,060 |  |  | 3.61 | %
|Other borrowings                                               |  |               | 77,645  |          |   | 331             |  |               | 1.73 | %        |   | 55,337          |   |   | 493   |  |  | 3.58 | %
|                                                               |  |               |         |          |   |                 |  |               |      |          |   |                 |   |   |       |  |  |      |  
|Total interest bearing liabilities                             |  |               | 394,131 |          |   | 1,412           |  |               | 1.45 | %        |   | 378,114         |   |   | 2,236 |  |  | 2.38 | %
|                                                               |  |               |         |          |   |                 |  |               |      |          |   |                 |   |   |       |  |  |      |  
|Noninterest bearing demand deposits                            |  |               | 113,582 |          |   |                 |  |               |      |          |   | 128,868         |   |   |       |  |  |      |  
|Other liabilities                                              |  |               | 6,068   |          |   |                 |  |               |      |          |   | 6,785           |   |   |       |  |  |      |  
|                                                               |  |               |         |          |   |                 |  |               |      |          |   |                 |   |   |       |  |  |      |  
|Total liabilities                                              |  |               | 513,781 |          |   |                 |  |               |      |          |   | 513,767         |   |   |       |  |  |      |  
|Shareholders equity                                           |  |               | 63,820  |          |   |                 |  |               |      |          |   | 60,134          |   |   |       |  |  |      |  
|                                                               |  |               |         |          |   |                 |  |               |      |          |   |                 |   |   |       |  |  |      |  
|                                                               |  | $             | 577,601 |          |   |                 |  |               |      |          | $ | 573,901         |   |   |       |  |  |      |  
|                                                               |  |               |         |          |   |                 |  |               |      |          |   |                 |   |   |       |  |  |      |  
|Net interest income & margin (3)                               |  |               |         |          | $ | 6,425           |  |               | 5.08 | %        |   |                 |   | $ | 6,427 |  |  | 4.94 | %
|                                                               |  |               |         |          |   |                 |  |               |      |          |   |                 |   |   |       |  |  |      |  

|    |                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Loan interest includes loan fees of $10,000 and
  $110,000 during the three months ending March 31, 2009 and
  March 31, 2008, respectively. Average loan balances include
  non-performing loans.                       
|    |                                                                                                                                                                                                                          
|(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 (90 days for 2009 and 91 days for 2008) and annualized to actual days
  in year (365 days in 2009 and 366 days in 2008).                                   

17

---



|                                                                                      
|--------------------------------------------------------------------------------------
|Table Three: Analysis of Volume and
  Rate Changes on Net Interest Income and Expenses
|                                                                                      
|Three Months Ended March 31, 2009 over 2008 (dollars
  in thousands)                  

|                                       |  |        |      |          |   |            |   |   |      |  
|-------------------------------------- |  | ------ | ---- | -------- | - | ---------- | - | - | ---- | -
|Increase (decrease) due to change in:  |  |        |      |          |   |            |   |   |      |  
|Interest-earning assets:               |  | Volume |      | Rate (4) |   | Net Change |  
|                                       |  |        |      |          |   |            |  
|Net loans (1)(2)                       |  | $      | 312  |          | $ | (838       | ) | $ | (526 | )
|Taxable investment
  securities        |  |        | (259 | )        |   | (6         | ) |   | (265 | )
|Tax exempt
  investment securities (3) |  |        | 2    |          |   | 1          |   |   | 3    |  
|Corporate stock                        |  |        | (4   | )        |   |           |   |   | (4   | )
|Federal funds
  sold                   |  |        | (2   | )        |   |           |   |   | (2   | )
|Investment in
  time deposits          |  |        | (17  | )        |   | (15        | ) |   | (32  | )
|                                       |  |        |      |          |   |            |   |   |      |  
|Total                                  |  |        | 32   |          |   | (858       | ) |   | (826 | )
|                                       |  |        |      |          |   |            |   |   |      |  
|Interest-bearing liabilities:          |  |        |      |          |   |            |   |   |      |  
|Interest
  checking and money market   |  |        | (61  | )        |   | (218       | ) |   | (279 | )
|Savings deposits                       |  |        | (9   | )        |   | (23        | ) |   | (32  | )
|Time deposits                          |  |        | 147  |          |   | (498       | ) |   | (351 | )
|Other borrowings                       |  |        | 201  |          |   | (363       | ) |   | (162 | )
|                                       |  |        |      |          |   |            |   |   |      |  
|Total                                  |  |        | 278  |          |   | (1,102     | ) |   | (824 | )
|                                       |  |        |      |          |   |            |   |   |      |  
|Interest differential                  |  | $      | (246 | )        | $ | 244        |   | $ | (2   | )
|                                       |  |        |      |          |   |            |   |   |      |  

|    |                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | The average balance of non-accruing loans and leases
  is immaterial as a percentage of total loans and leases and has been included
  in net loans and leases.                                                          
|    |                                                                                                                                                                                                                          
|(2) | Loan fees of $10,000 and $110,000 during the three
  months ending March 31, 2009 and March 31, 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.                                                                                                                                                       

Provision
for Loan and Lease Losses

The
Company provided $1,229,000 for loan and lease losses for the first quarter of
2009 as compared to $337,000 for the first quarter of 2008. Net loan and lease
losses for the three months ended March 31, 2009 were $1,308,000 or 1.27% (on
an annualized basis) of average loans and leases as compared to $203,000 or
..20% (on an annualized basis) of average loans and leases for the three months
ended March 31, 2008. 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.

|                                               |  |                                 |     |      |   |     | 
|---------------------------------------------- |  | ------------------------------- | --- | ---- | - | --- | 
|Table Four: Components of
  Noninterest Income |  |                                 |     |      |   |     | 
|                                               | 
|(dollars in thousands)                         |  | Three Months Ended 
  March 31, |    
|                                               |  |                                 |    
|                                               |  | 2009                            |     | 2008 |  
|                                               |  |                                 |     |      |  
|Service charges on deposit accounts            |  | $                               | 242 |      | $ | 185 | 
|Accounts receivable servicing fees             |  |                                 | 20  |      |   | 48  | 
|Gain on sale of securities                     |  |                                 |    |      |   |    | 
|Merchant fee income                            |  |                                 | 109 |      |   | 123 | 
|Income from residential lending                |  |                                 | 7   |      |   | 70  | 
|Bank owned life insurance                      |  |                                 | 57  |      |   | 100 | 
|Other                                          |  |                                 | 75  |      |   | 59  | 
|                                               |  |                                 |     |      |   |    
|Total
  noninterest income                     |  | $                               | 510 |      | $ | 585 | 
|                                               |  |                                 |     |      |   |    

18

---



Noninterest
income decreased $75,000 (12.8%) to $510,000 for the three months ended March
31, 2009 as compared to $585,000 for the three months ended March 31, 2008. The
decrease from the first quarter of 2008 to the first quarter of 2009 was
primarily related to lower income from fees from accounts receivable servicing
(down $28,000 or 58.3%) which resulted from lower overall volume; lower fees
from residential lending (down $63,000 or 90.0%) which resulted from lower
volume; lower income from bank owned life insurance (down $43,000 or 43.0%)
which resulted from lowers yields on the bank owned insurance investments.
These decreases were offset by increased service charges on deposit accounts
(up $57,000 or 30.8%) which resulted from increased fees from overdrawn
checking accounts.

Noninterest
Expense

Noninterest
expense remained fairly consistent decreasing $28,000 (0.8%) to a total of
$3,601,000 in the first quarter of 2009 versus $3,629,000 in the first quarter
of 2008. Salary and employee benefits expense decreased $149,000 (7.4%) from
$2,021,000 during the first quarter of 2008 to $1,872,000 during the first
quarter of 2009. The decrease was due in part to a decrease in the Companys
performance based incentive accrual which decreased $107,000 (83.6%) from
$128,000 in the first quarter of 2008 to $21,000 in the first quarter of 2009
and a reduction in the number of employees. At March 31, 2009, the Company
employed 119 persons on a full-time equivalent basis as compared to 125 at
March 31, 2008. On a quarter-over-quarter basis, occupancy expense decreased
$6,000 (1.6%) and furniture and equipment expense was stable, decreasing by
$1,000. Other expense increased $128,000 (12.2%) to a total of $1,181,000 in
the first quarter of 2009 versus the first quarter of 2008. 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 first
quarter of 2009 was $117,000 compared to zero for the same period in 2008. In
addition, FDIC insurance increased by $60,000 (428.6%) from $14,000 in 2008 to
$74,000 in 2009. The efficiency ratios (fully taxable equivalent), excluding
the amortization of intangible assets, for the first quarters of 2009 and 2008
were stable at 51.0% and 50.7%, respectively.

Provision
for Income Taxes

Federal
and State income taxes for the first quarter of 2009 decreased $392,000 (34.8%)
to $736,000 from $1,128,000 for the first quarter of 2008 primarily due to
lower levels of taxable income. The effective tax rate for the quarter ended
March 31, 2009 was 36.5%, a decrease from 38.1% during the first quarter of
2008.

Balance
Sheet Analysis

The
Companys total assets were $556,335,000 at March 31, 2009 as compared to
$563,157,000 at December 31, 2008, representing a decrease of $6,822,000
(1.2%). The average assets for the three months ended March 31, 2009 were
$577,601,000, which represents an increase of $3,700,000 or 0.6% over the
balance of $573,901,000 during the three-month period ended March 31, 2008.

Investment
Securities

The Company
classifies its investment securities at the time of purchase as
held-to-maturity or available-for-sale. 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
March 31, 2009 and December 31, 2008.

19

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|                                             
|---------------------------------------------
|Table Five: Investment Securities Composition
|                                             
|(dollars in thousands)                       

|                                                   |  |                |        |                   |   |        | 
|-------------------------------------------------- |  | -------------- | ------ | ----------------- | - | ------ | 
|Available-for-sale
  (at fair value)               |  | March 31, 2009 |        | December 31, 2008 |  
|                                                   |  |                |        |                   |  
|Debt securities:                                   |  |                |        |                   |   |        | 
|Mortgage-backed securities                         |  |                | 36,526 |                   |   | 32,232 | 
|Obligations of states and political
  subdivisions |  |                | 30,703 |                   |   | 31,012 | 
|Corporate stock                                    |  |                | 85     |                   |   | 90     | 
|                                                   |  |                |        |                   |   |        | 
|Total available-for-sale investment
  securities   |  | $              | 67,314 |                   | $ | 63,334 | 
|                                                   |  |                |        |                   |   |        | 
|Held-to-maturity (at amortized cost)               |  |                |        |                   |   |        | 
|                                                   |  |                |        |                   |   |        | 
|Debt securities:                                   |  |                |        |                   |   |        | 
|Mortgage-backed securities                         |  | $              | 21,086 |                   | $ | 24,365 | 
|                                                   |  |                |        |                   |   |        | 
|Total held-to-maturity investment
  securities     |  | $              | 21,086 |                   | $ | 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 March 31, 2009, these categories accounted for approximately 21%,
54%, 2%, 10%, 6%, 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 resulting in the Company originating
over $20 million in new loans during the first quarter of 2009. Normal pay
downs, loan chargeoffs, and loans transferred to OREO, resulted in an overall
decrease in net loans and leases of $2,043,000 (0.5%) from December 31, 2008.
Table Six below summarizes the composition of the loan portfolio as of March
31, 2009 and December 31, 2008.

|                                                |  |                  |         |                     |   |                      |   |                      |        |   |  |       |   
|----------------------------------------------- |  | ---------------- | ------- | ------------------- | - | -------------------- | - | -------------------- | ------ | - |  | ----- | --
|Table Six: Loan and Lease Portfolio Composition |  |                  |         |                     |   |                      |   |                      |       
|                                                |  |                  |         |                     |   |                      |   |                      |       
|(dollars in
  thousands)                        |  | March 31,
  2009 |         | December 31,
  2008 |   | Change in 
  dollars |   | Percentage 
  change |       
|                                                |  |                  |         |                     |   |                      |   |                      |       
|Commercial                                      |  | $                | 88,377  |                     | $ | 90,625               |   | $                    | (2,248 | ) |  | (2.5  | %)
|Real estate                                     |  |                  |         |                     |   |                      |   |                      |        |   |  |       |   
|Commercial                                      |  |                  | 222,478 |                     |   | 218,626              |   |                      | 3,852  |   |  | 1.8   | % 
|Multi-family                                    |  |                  | 8,495   |                     |   | 8,938                |   |                      | (443   | ) |  | (5.0  | %)
|Construction                                    |  |                  | 43,282  |                     |   | 48,664               |   |                      | (5,382 | ) |  | (11.1 | %)
|Residential                                     |  |                  | 26,680  |                     |   | 24,706               |   |                      | 1,974  |   |  | 8.0   | % 
|Lease financing receivable                      |  |                  | 4,578   |                     |   | 4,475                |   |                      | 103    |   |  | 2.3   | % 
|Agriculture                                     |  |                  | 7,358   |                     |   | 8,015                |   |                      | (657   | ) |  | (8.2  | %)
|Consumer                                        |  |                  | 15,554  |                     |   | 14,796               |   |                      | 758    |   |  | 5.1   | % 
|                                                |  |                  |         |                     |   |                      |   |                      |        |   |  |       |   
|Total loans and leases                          |  |                  | 416,802 |                     |   | 418,845              |   |                      | (2,043 | ) |  | (0.5  | %)
|Deferred loan and lease fees, net               |  |                  | (640    | )                   |   | (571                 | ) |                      | (69    | ) |  |       |   
|Allowance for loan and lease losses             |  |                  | (5,839  | )                   |   | (5,918               | ) |                      | 79     |   |  |       |   
|                                                |  |                  |         |                     |   |                      |   |                      |        |   |  |       |   
|Total net loans and leases                      |  | $                | 410,323 |                     | $ | 412,356              |   | $                    | (2,033 | ) |  | (0.5  | %)
|                                                |  |                  |         |                     |   |                      |   |                      |        |   |  |       |   

20

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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 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 March 31, 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 in connection with 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.

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.

21

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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; real
estate values, supply and demand factors, and rates of return; operating
expenses; inflation; 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 72.2% of the Companys loan and lease portfolio at
March 31, 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, and 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
March 31, 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 $6,441,000 or 1.55% of total loans and leases.
Non-performing loans and leases were $6,241,000 or 1.49% of total loans and
leases at December 31, 2008.

22

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During
the first quarter of 2009, fourteen additional loans and leases in the amount
of $3,375,000 were placed on non-performing status. After charging off $79,000,
these loans are carried at $3,296,000. Of these fourteen loans, eleven loans
totaling $3,131,000 are real estate secured, two loans totaling $148,000 are
unsecured, and there is one lease totaling $17,000. In addition, the Company
has five loans and leases totaling $820,000 that are over 90 days past due and
still accruing interest as they are well secured and in the process of
collection.

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 March 31, 2009.
Management is not aware of any potential problem loans, which were accruing and
current at March 31, 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 March 31, 2009 and December 31, 2008.

|                                            |  |                   |       |                      |   |       | 
|------------------------------------------- |  | ----------------- | ----- | -------------------- | - | ----- | 
|Table Seven:
Non-Performing Loans           |  |                   |       |                      |  
|                                            |  |                   |       |                      |  
|(dollars in
  thousands)                    |  | March 31, 
  2009 |       | December 31, 
  2008 |  
|                                            |  |                   |       |                      |  
|Past Due 90 days or more and still accruing |  |                   |       |                      |   |       | 
|Commercial                                  |  | $                 | 133   |                      | $ |      | 
|Real estate                                 |  |                   | 667   |                      |   | 444   | 
|Lease financing receivable                  |  |                   | 20    |                      |   | 22    | 
|Consumer and other                          |  |                   |      |                      |   | 8     | 
|                                            |  |                   |       |                      |   |       | 
|Nonaccrual                                  |  |                   |       |                      |   |       | 
|Commercial                                  |  |                   | 352   |                      |   | 261   | 
|Real estate                                 |  |                   | 5,187 |                      |   | 5,487 | 
|Lease financing receivable                  |  |                   | 34    |                      |   | 19    | 
|Consumer and other                          |  |                   | 48    |                      |   |      | 
|                                            |  |                   |       |                      |   |       | 
|Total non-performing loans                  |  | $                 | 6,441 |                      | $ | 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. The recorded investment in loans and leases
that were considered to be impaired totaled $3,880,000 at March 31, 2009 and
had a related valuation allowance of $193,000. As of December 31, 2008, the
recorded investment in loans and leases that were considered to be impaired
totaled $6,083,000 and had a related valuation allowance of $788,000. The net
interest due on nonaccrual loans and leases but excluded from interest income
was $181,000 for the first three months of 2009 compared to $336,000 during the
same period in 2008.

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.

23

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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 $5,839,000 or 1.40% of total loans
and leases at March 31, 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. 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.

|                                                                                                  |  |                                  |         |      |   |         |  
|------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | ---- | - | ------- | -
|Table Eight: Allowance for Loan and Lease Losses                                                  |  |                                  |         |      |  
|                                                                                                  |  |                                  |         |      |  
|(dollars in
  thousands)                                                                          |  | Three Months
  Ended
  March 31, |        
|                                                                                                  |  |                                  |        
|                                                                                                  |  | 2009                             |         | 2008 |  
|                                                                                                  |  |                                  |         |      |  
|                                                                                                 
|Average loans and leases outstanding                                                              |  | $                                | 417,779 |      | $ | 403,506 |  
|                                                                                                  |  |                                  |         |      |   |         |  
|                                                                                                  |  |                                  |         |      |   |         |  
|Allowance for loan and lease losses at
  beginning of period                                      |  | $                                | 5,918   |      | $ | 5,883   |  
|                                                                                                  |  |                                  |         |      |   |         |  
|Loans and leases charged off:                                                                     |  |                                  |         |      |   |         |  
|Commercial                                                                                        |  |                                  | (10     | )    |   | (51     | )
|Real estate                                                                                       |  |                                  | (1,293  | )    |   | (150    | )
|Consumer                                                                                          |  |                                  | (7      | )    |   | (7      | )
|Lease financing receivable                                                                        |  |                                  |        |      |   |        |  
|                                                                                                  |  |                                  |         |      |   |         |  
|Total                                                                                             |  |                                  | (1,310  | )    |   | (208    | )
|                                                                                                  |  |                                  |         |      |   |         |  
|Recoveries of loans and leases previously
  charged off:                                          |  |                                  |         |      |   |         |  
|Commercial                                                                                        |  |                                  |        |      |   | 1       |  
|Real estate                                                                                       |  |                                  |        |      |   |        |  
|Consumer                                                                                          |  |                                  |        |      |   |        |  
|Lease financing receivable                                                                        |  |                                  | 2       |      |   | 4       |  
|                                                                                                  |  |                                  |         |      |   |         |  
|Total                                                                                             |  |                                  | 2       |      |   | 5       |  
|                                                                                                  |  |                                  |         |      |   |         |  
|Net loans and leases (charged off)
  recovered                                                    |  |                                  | (1,308  | )    |   | (203    | )
|Additions to allowance charged to operating
  Expenses                                            |  |                                  | 1,229   |      |   | 337     |  
|                                                                                                  |  |                                  |         |      |   |         |  
|Allowance for loan and lease losses at end
  of period                                            |  | $                                | 5,839   |      | $ | 6,017   |  
|                                                                                                  |  |                                  |         |      |   |         |  
|Ratio of net charge-offs to average loans
  and leases outstanding (annualized)                   |  |                                  | 1.27    | %    |   | .20     | %
|Provision for loan and lease losses to
  average loans and leases outstanding (annualized)        |  |                                  | 1.19    | %    |   | .34     | %
|Allowance for loan and lease losses to
  loans and leases, net of deferred fees, at end of period |  |                                  | 1.40    | %    |   | 1.49    | %

24

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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.

Other Real Estate

At
March 31, 2009, the Company had eight other real estate owned (OREO) properties
totaling $4,478,000. At December 31, 2008, the Company had three properties
totaling $2,158,000 in OREO. During the first quarter of 2009, one of these
properties was reevaluated with a corresponding write-down of $169,000 through
a charge to the allowance for loan and lease losses. Also during the first
quarter of 2009, five other properties totaling $2,722,000 were foreclosed upon
and are now carried as OREO. The corresponding loan balances were written down
by $233,000 through a charge to the allowance for loan and lease losses in
conjunction with the transfers to OREO. Subsequent to March 31, 2009, one of
these properties in the amount of $716,000 was sold for its carrying value.

Deposits

At
March 31, 2009, total deposits were $436,941,000 representing a slight decrease
of $120,000 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. However, due to the competitive rate environment and the
overall weak economy that resulted in depositors maintaining lower overall
balances in their account, the Company experienced decreases in noninterest
bearing ($6,448,000 or 5.4%), interest checking ($1,766,000 or 3.9%), and
savings ($1,630,000 or 4.9%), but did have an increase in money market
($928,000 or 0.9%) and time deposits (CDs) of $8,796,000 (6.6%) during 2009.
The increase in CDs includes the addition of $10,137,000 in brokered CDs
during the first quarter.

Other Borrowed Funds

Other
borrowings outstanding as of March 31, 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)          

|                       |  |                |        |                   |  |        |   |      |        |  |  |      |  
|---------------------- |  | -------------- | ------ | ----------------- |  | ------ | - | ---- | ------ |  |  | ---- | -
|                       |  | March 31, 2009 |        | December 31, 2008 | 
|                       |  |                |        |                   | 
|                       |  | Amount         |        | Rate              |  | Amount |   | Rate |       
|                       |  |                |        |                   |  |        |   |      |       
|Short-term borrowings: |  |                |        |                   |  |        |   |      |        |  |  |      |  
|                      
|FHLB advances          |  | $              | 27,121 |                   |  | 2.54   | % | $    | 43,231 |  |  | 1.83 | %
|                       |  |                |        |                   |  |        |   |      |        |  |  |      |  
|                      
|Long-term borrowings:  |  |                |        |                   |  |        |   |      |        |  |  |      |  
|                      
|FHLB advances          |  | $              | 21,500 |                   |  | 2.39   | % | $    | 14,000 |  |  | 3.19 | %
|                       |  |                |        |                   |  |        |   |      |        |  |  |      |  

The
maximum amount of short-term borrowings at any month-end during the first three
quarters of 2009 and 2008 was $69,448,000 and $38,391,000, 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):

25

---



|                |  |              |  |             
|--------------- |  | ------------ |  | ------------
|                |  | Short-term   |  | Long-term   
|Amount          |  | $27,121      |  | $21,500     
|Maturity        |  | 2009 to 2010 |  | 2010 to 2014
|Average
  rates |  | 2.54%        |  | 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
current and projected capital position of the Company and the impact of capital
plans and long-term strategies is reviewed regularly by management. The
Companys capital position represents the level of capital available to support
continuing operations and expansion.

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 March 31, 2009, shareholders equity was $63,929,000, representing
an increase of $482,000 (0.8%) from $63,447,000 at December 31, 2008. The
increase results from the net income for the period, the stock based
compensation, and the proceeds from the exercise of stock options exceeding the
decrease in other comprehensive income and cash dividends paid to shareholders.
The ratio of total risk-based capital to risk adjusted assets was 11.7% at
March 31, 2009 and 11.6% at December 31, 2008. Tier 1 risk-based capital to
risk-adjusted assets was 10.5% at March 31, 2009 and 10.4% at December 31,
2008.

Table
Ten below lists the Companys actual capital ratios at March 31, 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 March 31, 
  2009 | At December 31, 
  2008 | Minimum
  Regulatory 
  Capital Requirements
|                                  |  |                      |                         |                                             
|                                 
|Leverage ratio                    |  |                      | 8.3                     | %                                            |  | 8.3  | % |  | 4.00 | %
|                                  |  |                      |                         |                                              |  |      |   |  |      |  
|Tier 1 Risk-Based Capital         |  |                      | 10.5                    | %                                            |  | 10.2 | % |  | 4.00 | %
|                                  |  |                      |                         |                                              |  |      |   |  |      |  
|Total Risk-Based Capital          |  |                      | 11.7                    | %                                            |  | 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 March 31, 2009 and December 31, 2008.

The
Company, through a Board of Directors authorized plan, may repurchase, as
conditions warrant, up to 6.5% annually of the Companys common stock.
Repurchases are generally made in the open market at market prices. See Part
II, Item 2, for additional disclosure.

26

---



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.

Management
believes that the Companys capital is adequate to support current operations
and anticipated growth, cash dividends and future capital requirements of the
Company and its subsidiaries.

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 March
31, 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
March 31, 2009 and December 31, 2008 were approximately $75,102,000 and
$4,414,000 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.

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
March 31, 2009, consolidated liquid assets totaled $35.0 million or 6.3% 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 $37,000,000 with correspondent banks. At March 31, 2009,
the Company had $37,000,000 available under these credit lines. Additionally,
the Bank is a member of the FHLB. At March 31, 2009, the Bank could have
arranged for up to $103,387,000 in secured borrowings from the FHLB. These
borrowings are secured by pledged mortgage loans and investment securities. At
March 31, 2009, the Company had advances, borrowings and commitments (including
letters of credit) outstanding of $50,371,000, leaving $53,016,000 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 March 31,
2009, the collateral value at the Federal Reserve Bank was $7,612,000. 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.

27

---



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 March 31, 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 $79,516,000 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 19.4% 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 Filingslink located at that address.
Once you have selected the SEC Filingslink 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.

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.

28

---



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 March 31, 2009
and December 31, 2008 | 
|                                                                                                      
|(dollars in
  thousands)                                                                               |  | $ Change in NII
  from Current
  12 Month Horizon
  March 31, 2009 |      | $ Change in NII
  from Current
  12 Month Horizon
  December 31, 2008 |  
|                                                                                                       |  |                                                                    |      |                                                                       |  
|Variation
  from a constant rate scenario                                                              |  |                                                                    |      |                                                                       |  
|+200bp                                                                                                 |  | $                                                                  | (509 | )                                                                     | $ | (191 | )
|- 200bp                                                                                                |  | $                                                                  | 521  |                                                                       | $ | 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 March
31, 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.

During
the quarter ended March
31, 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.

29

---



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 allows 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 may 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 may 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 has reserved the right to suspend, terminate,
modify or cancel the repurchase programs at any time for any reason. The 6.5%
program announced in 2008, replaced a program announced in 2001 whereby the
Company had the ability to repurchase of up to five percent (5.0%) annually of
the Companys outstanding shares of common stock. 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.

|                                              |  |                                                            |  |                                                   |  |                                                                                                               |  |                                                                                                                                          
|--------------------------------------------- |  | ---------------------------------------------------------- |  | ------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|Period                                        |  | (a)
  Total Number of 
  Shares (or 
  Units) 
  Purchased |  | (b)
  Average Price 
  Paid Per Share
  (or Unit) |  | (c)
  Total Number of Shares 
  (or Units) Purchased as 
  Part of Publicly 
  Announced Plans or 
  Programs |  | (d)
  Maximum Number (or 
  Approximate Dollar Value) of 
  Shares (or Units) That May 
  Yet Be Purchased Under the 
  Plans or Programs
|                                              |  |                                                            |  |                                                   |  |                                                                                                               |  |                                                                                                                                          
|Month #1 January 1 through January 31, 2009   |  | None                                                       |  | N/A                                               |  | None                                                                                                          |  | 376,498                                                                                                                                  
|Month #2 February 1 through February 28, 2009 |  | None                                                       |  | N/A                                               |  | None                                                                                                          |  | 376,498                                                                                                                                  
|Month #3 March 1 through March 31, 2009       |  | None                                                       |  | N/A                                               |  | None                                                                                                          |  | 376,498                                                                                                                                  
|                                              |  |                                                            |  |                                                   |  |                                                                                                               |  |                                                                                                                                          
|Total                                         |  | None                                                       |  | N/A                                               |  | None                                                                                                          |  |                                                                                                                                          
|                                              |  |                                                            |  |                                                   |  |                                                                                                               |  |                                                                                                                                          

30

---



Item
3. Defaults Upon Senior Securities.

None.

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

None.

Item
5. Other Information.

None.

Item
6. Exhibits.

| |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                   
| | ---------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Exhibit
  Number |  | 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, incorporated by reference from Exhibit 3.1 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.                                                                                                                                                                        
| |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                   
| | (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.                                                                                                                                                                                           
| |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                   
| | (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 G. Taylor dated April 5,
  1984, and addendum thereto dated July 16, 1997, related to 10123 Fair Oaks
  Boulevard, Fair Oaks, California. **                                                                                                                                                                                           
| |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                   
| | (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.

31

---



| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | *(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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (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. **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

32

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| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | *(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 September 8, 2005, incorporated by reference from Exhibit 99.1 to
  the Registrants Report on Form 8-K, filed with the Commission on September
  9, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | *(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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

33

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| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | *(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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (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.                                                                                                                                                                                                                                                                                                                                                                                                            

34

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

35

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EXHIBIT INDEX

|                 |  |                                                                                                                                                                      |  |     
|---------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Exhibit
  Number |  | Description                                                                                                                                                          |  | Page
|                 |  |                                                                                                                                                                      |  |     
|                
|31.1             |  | Certifications
  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
  of 2002.                                                             |  | 37  
|                 |  |                                                                                                                                                                      |  |     
|31.2             |  | Certifications
  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
  of 2002.                                                             |  | 38  
|                 |  |                                                                                                                                                                      |  |     
|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. |  | 39  

36

---