UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934
         For the period ended September 30, 2001.

[ ]      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 0-10652
                       -------


                              NORTH VALLEY BANCORP
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           California                                          94-2751350
---------------------------------                       ------------------------
   State or other jurisdiction                          (IRS Employer ID Number)
of incorporation or organization)

  300 Park Marina Circle, Redding, CA                                    96001
----------------------------------------                              ----------
(Address of principal executive offices)                              (Zip code)

Registrant's telephone number, including area code (530) 226-2900
                                                   --------------

                   880 East Cypress Avenue, Redding, CA, 96001
              ----------------------------------------------------
              (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 Exchange Act of 1934 during the
preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]  No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practical date.

Common Stock - -4,658,021 shares as of November 13, 2001.

                                       1
<PAGE>

                                      INDEX

                      NORTH VALLEY BANCORP AND SUBSIDIARIES

PART I.  FINANCIAL INFORMATION
------------------------------

Item 1.  Financial Statements (Unaudited)

           Condensed Consolidated Balance Sheets--September 30, 2001 and
           December 31, 2000

           Condensed Consolidated Statements of Income--For the Three and
           Nine months Ended September 30, 2001 and 2000:

           Condensed Consolidated Statement of Cash Flows--For the Nine
           months Ended September 30, 2001 and 2000;

           Notes to Condensed Consolidated Financial Statements

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

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

PART II. OTHER INFORMATION
--------------------------

Item 1.  Legal Proceedings

Item 2.  Changes in Securities

Item 3.  Defaults Upon Senior Securities

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8K


SIGNATURES
----------

                                        2
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

<TABLE>
<CAPTION>
                      NORTH VALLEY BANCORP AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
                       (In thousands except share amounts)

                                                                  September 30, 2001   December 31, 2000
ASSETS                                                            ------------------   -----------------
<S>                                                                    <C>                 <C>
Cash and due from banks                                                $  26,490           $  27,428
Federal funds sold                                                        16,800               1,300
                                                                       ---------           ---------
    Total cash and cash equivalents                                       43,290              28,728

Interest-bearing deposits in other financial institutions                  2,375               1,706
Securities:
  Available for sale, at fair value                                      110,364              78,124
  Held to maturity, at amortized cost (fair value of $1,974 at
    September 30, 2001 and $26,926 at December 31, 2000)                   1,455              25,811
Loans and leases net of allowance for loan and lease losses of
    $5,529 and $4,964 and deferred loan fees of $288 and $69 at
    September 30, 2001 and December 31, 2000                             385,293             364,659
Premises and equipment, net of accumulated
    depreciation and amortization                                         10,324               9,623
Other real estate owned                                                      308                 341
FHLB, FRB stock and other securities                                       2,090               2,155
Core deposit and other intangibles, net                                    3,303               3,451
Accrued interest receivable & other assets                                25,890              25,623
                                                                       ---------           ---------

TOTAL ASSETS                                                           $ 584,692           $ 540,221
                                                                       =========           =========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Deposits:
  Noninterest-bearing demand deposits                                  $  87,338           $  67,863
  Interest-bearing deposits                                              415,297             392,428
                                                                       ---------           ---------
Total deposits                                                           502,635             460,291
Fed funds purchased and other borrowed funds                              20,711              17,001
Accrued interest and other liabilities                                     7,103               8,072
Company obligated mandatorily  redeemable cumulative
  trust preferred securities of subsidiary grantor trust                  10,000                  --
                                                                       ---------           ---------
Total liabilities                                                        540,449             485,364

STOCKHOLDERS' EQUITY:
Preferred stock, no par value: authorized 5,000,000
  Shares; none outstanding
Common stock, no par value:  authorized 20,000,000
  Shares, outstanding  4,747,521 and 5,805,416 at
  September 30, 2001 and December 31, 2000                                24,938              30,301
Retained Earnings                                                         17,717              24,729
Accumulated other comprehensive income (loss), net of tax                  1,588                (173)
                                                                       ---------           ---------
Total stockholders' equity                                                44,243              54,857
                                                                       ---------           ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $ 584,692           $ 540,221
                                                                       =========           =========
</TABLE>


     See notes to condensed consolidated financial statements (unaudited).

                                       3
<PAGE>

<TABLE>
<CAPTION>
                      NORTH VALLEY BANCORP AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                      (In thousands except per share data)

                                                 For the three months ended September 30,
                                                            2001         2000
                                                          --------     --------

<S>                                                       <C>          <C>
INTEREST INCOME
Loans and leases including fees                           $  8,317     $  7,939
Securities
    Taxable                                                  1,289        1,608
    Exempt from federal taxes                                  409          433
Federal funds sold                                             178          164
                                                          --------     --------
    Total interest income                                   10,193       10,144

INTEREST EXPENSE
Deposits                                                     3,508        4,012
Borrowings                                                     121          163
Trust preferred securities                                     211           --
                                                          --------     --------
    Total interest expense                                   3,840        4,175

NET INTEREST INCOME                                          6,353        5,969

PROVISION FOR LOAN AND LEASE LOSSES                            420          230
                                                          --------     --------

NET INTEREST INCOME AFTER PROVISION                          5,933        5,739
  FOR LOAN AND LEASE LOSSES

NONINTEREST INCOME:
  Service charges on deposit accounts                        1,357        1,129
  Other fees and charges                                       251          303
  Gain on sale of loans                                         --           11
  Gain (loss) on sales or calls of securities                   11          (18)
  Other                                                        436          143
                                                          --------     --------
    Total noninterest income                                 2,055        1,568

NONINTEREST EXPENSES:
  Salaries and employee benefits                             2,960        2,522
  Occupancy                                                    295          296
  Furniture and equipment                                      334          247
  Merger & integration                                          --          131
  Other                                                      1,937        1,971
                                                          --------     --------
    Total noninterest expenses                               5,526        5,167

INCOME BEFORE PROVISION FOR INCOME
  TAXES                                                      2,462        2,140

PROVISION FOR INCOME TAXES                                     773          660
                                                          --------     --------

NET INCOME                                                $  1,689     $  1,480
                                                          ========     ========

EARNINGS PER SHARE:
  Basic                                                   $   0.33     $   0.26
                                                          ========     ========
  Diluted                                                 $   0.33     $   0.25
                                                          ========     ========
</TABLE>


     See notes to condensed consolidated financial statements (unaudited).

                                       4
<PAGE>

<TABLE>
<CAPTION>
                      NORTH VALLEY BANCORP AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                      (In thousands except per share data)

                                                  For the nine months ended September 30,
                                                              2001       2000
                                                            --------   --------
<S>                                                         <C>        <C>
INTEREST INCOME
Loans and leases including fees                             $ 24,721   $ 22,812
Securities
    Taxable                                                    3,438      4,815
    Exempt from federal taxes                                  1,257      1,340
Federal funds sold                                               521        740
                                                            --------   --------
    Total interest income                                     29,937     29,707

INTEREST EXPENSE
Deposits                                                      11,571     11,479
Borrowings                                                       252        505
Trust preferred securities                                       211         --
                                                            --------   --------
    Total interest expense                                    12,034     11,984

NET INTEREST INCOME                                           17,903     17,723

PROVISION FOR LOAN AND LEASE LOSSES                              940      1,320
                                                            --------   --------

NET INTEREST INCOME AFTER PROVISION                           16,963     16,403
  FOR LOAN AND LEASE LOSSES

NONINTEREST INCOME:
  Service charges on deposit accounts                          4,124      3,145
  Other fees and charges                                         869        976
  Gain on sale of loans                                            4         52
  Gain (loss) on sales or calls of securities                     13        (14)
  Gain on demutualization of life insurance holdings              --        683
  Other                                                        1,060        301
                                                            --------   --------
    Total noninterest income                                   6,070      5,143

NONINTEREST EXPENSES:
  Salaries and employee benefits                               8,279      7,418
  Occupancy                                                      928        974
  Furniture and equipment                                      1,007        913
  Merger & integration                                           358        680
  Other                                                        5,567      5,450
                                                            --------   --------
    Total noninterest expenses                                16,139     15,435

INCOME BEFORE PROVISION FOR INCOME
  TAXES                                                        6,894      6,111

PROVISION FOR INCOME TAXES                                     2,135      1,860
                                                            --------   --------

NET INCOME                                                  $  4,759   $  4,251
                                                            ========   ========

EARNINGS PER SHARE:
  Basic                                                     $   0.86   $   0.73
                                                            ========   ========
  Diluted                                                   $   0.84   $   0.73
                                                            ========   ========
</TABLE>


     See notes to condensed consolidated financial statements (unaudited).

                                       5
<PAGE>

<TABLE>
<CAPTION>
                      NORTH VALLEY BANCORP AND SUBSIDIARIES
                CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
                                 (In thousands)

                                                                         For the nine months ended September 30,
                                                                                    2001        2000
                                                                                  --------    --------
<S>                                                                               <C>         <C>
CASH FLOW FROM OPERATING ACTIVITIES:
  Net income                                                                      $  4,759    $  4,251
    Adjustments to reconcile net income to net cash provided by
      operating activities:
    Depreciation and amortization                                                      875         980
    Amortization of premium on securities                                              (19)          1
    Amortization of core deposit and other intangibles                                 148         186
    Provision for loan and lease losses                                                940       1,320
    Gain on shares received from demutualization of life insurance company              --        (683)
    (Gain) loss on sale or calls of available for sale                                 (13)         14
    (Gain) loss on sale of loans                                                        (4)        (52)
    Provision (benefits) for deferred taxes                                             --          63
    Effect of changes in:
      Accrued interest receivable                                                      500         (60)
      Other assets                                                                  (1,986)        (54)
      Accrued interest and other liabilities                                          (387)        595
                                                                                  --------    --------
          Net cash provided by operating activities                               $  4,813    $  6,561
                                                                                  --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from sale of other real estate owned                                      307         325
    Net changes in FHLB, FRB and other securities                                       65         231
    Purchases of available for sale                                                (53,647)    (10,500)
    Proceeds from sales of available for sale                                       15,854          56
    Proceeds from maturities/calls of available for sale                            32,921      14,104
    Purchases of held to maturity                                                       --        (998)
    Proceeds from maturities/calls of held to maturity                                  --       2,630
    Proceeds from sales of loans                                                       219       1,167
    Net change in interest-bearing deposits at financial institutions                 (669)      1,246
    Net changes in loans and leases                                                (22,063)    (24,710)
    Purchases of life insurance                                                         --     (10,641)
    Purchases of premises and equipment, net                                        (1,576)     (1,502)
                                                                                  --------    --------
          Net cash used in investing activities                                   $(28,589)   $(28,592)
                                                                                  --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net change in deposits                                                          42,344      12,907
    Net change in other borrowed funds                                               3,710      (2,134)
    Cash dividends paid                                                             (2,227)     (1,115)
    Repurchase of common stock                                                     (15,821)         --
    Cash received for stock options exercised                                          247          68
    Proceeds from Company obligated mandatorily redeemable cumulative
      preferred securities of subsidiary grantor trusts                             10,000
    Compensation expense on stock option grants                                         85          --
                                                                                  --------    --------
          Net cash provided by financing activities                               $ 38,338    $  9,726
                                                                                  --------    --------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    14,562     (12,305)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                        28,728      37,225
                                                                                  --------    --------
CASH AND CASH EQUIVALENTS, END OF YEAR                                              43,290      24,920
                                                                                  ========    ========

ADDITIONAL INFORMATION:
    Cash paid during the period for:
    Interest                                                                        11,899      11,940
    Income taxes                                                                     3,431       2,088

Noncash investing and financing activities
    Transfer of foreclosed loans and leases from loans and leases to other real        274         426
      estate owed
    Transfer of investment securities from held to maturity to available for
      sale                                                                          25,471
</TABLE>


           See notes to consolidated financial statements (unaudited).

                                        6
<PAGE>

                      NORTH VALLEY BANCORP AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE A - BASIS OF PRESENTATION

         The accompanying unaudited condensed consolidated financial statements
of North Valley Bancorp and subsidiaries (the "Company") have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation of the results for the interim periods presented have been
included. They do not, however, include all the information and footnotes
required by accounting principles generally accepted in the United States of
America for annual financial statements. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
annual report on Form 10-K for the fiscal year ended December 31, 2000. The
unaudited condensed financial information presented herein has been restated on
a historical basis to reflect the merger with Six Rivers National Bank, which
closed in October 2000, as a pooling of interests as if the Companies had been
combined for all periods presented. Operating results for the three and nine
months ended September 30, 2001 are not necessarily indicative of the results
that may be expected for the year ended December 31, 2001.

         The condensed consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. Significant intercompany items
and transactions have been eliminated in consolidation.

NOTE B - SECURITIES

At September 30, 2001 and December 31, 2000, the amortized cost of securities
and their approximate fair value were as follows:

<TABLE>
<CAPTION>
(in thousands)                                        Gross        Gross       Carrying
                                        Amortized   Unrealized   Unrealized     Amount
Available for sale securities:             Cost       Gains        Losses    (Fair Value)

<S>                                     <C>         <C>          <C>          <C>
September 30, 2001
  Securities of U.S. government
    Agencies and corporations           $   6,989   $      88                 $   7,077
  Obligations of states and political
    Subdivisions                           24,598       1,321           (6)      25,913
  Mortgage backed securities               66,157       1,216                    67,373
  Corporate securities                      9,947         123         (141)       9,929
  Other securities                             88                      (16)          72
                                        ---------   ---------    ---------    ---------
                                        $ 107,779   $   2,748    $    (163)   $ 110,364
                                        =========   =========    =========    =========

December 31, 2000
  Securities of U.S. government
    Agencies and corporations           $  48,546   $     168    $    (368)   $  48,346
  Obligations of states and political
    Subdivisions                            2,671          21           (1)       2,691
  Mortgage backed securities               20,871         279          (31)      21,119
  Corporate securities                      6,338          21         (458)       5,901
  Other securities                             88                      (21)          67
                                        ---------   ---------    ---------    ---------
                                        $  78,514   $     489    $    (879)   $  78,124
                                        =========   =========    =========    =========
</TABLE>

                                       7
<PAGE>

<TABLE>
<CAPTION>
                                         Carrying
                                          Amount       Gross        Gross
                                        (Amortized   Unrealized   Unrealized
Held to maturity securities:               Cost)       Gains        Losses     Fair Value

<S>                                      <C>          <C>          <C>          <C>
September 30, 2001
  Obligation of states and political
    Subdivisions                         $  1,455     $    519     $            $  1,974
                                         ========     ========     ========     ========
</TABLE>


<TABLE>
<CAPTION>
                                         Carrying
                                          Amount       Gross        Gross
                                        (Amortized   Unrealized   Unrealized
Held to maturity securities:               Cost)       Gains        Losses     Fair Value

<S>                                      <C>          <C>          <C>          <C>
December 31, 2000
  Obligation of states and political
    Subdivisions                         $ 25,811     $  1,115     $            $ 26,926
                                         ========     ========     ========     ========
</TABLE>


         Gross realized gains on sales or calls of available-for-sale securities
were $11,000 and 13,000 for the three and nine months ended September 30, 2001.
There were no gross realized losses on sale of available for sale securities for
the three and nine months ended September 30, 2001. Gross realized losses on
sale or calls of available for sale securities were $18,000 and $14,000 for the
three and nine months ended September 30, 2000. There were no gross realized
gains on sale of available for sale securities for the three and nine months
ended September 30, 2000.

         There were no gross realized gains or losses on calls of held to
maturity securities for the three and nine months ended September 30, 2001 and
2000.

         Scheduled maturities of held to maturity and available for sale
securities (other than equity securities with an amortized cost of approximately
$88,000 and a fair value of approximately $72,000) at September 30, 2001, are
shown below (in thousands). The Company invests in collateralized mortgage
obligations ("CMOs") issued by the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation and Government National Mortgage
Association. Actual maturities of CMOs and other securities may differ from
contractual maturities because borrowers have the right to prepay mortgages
without penalty or call obligations with or without call penalties. The Company
uses the "Wall Street" consensus average life at the time the security is
purchased to schedule maturities of these CMOs and adjusts scheduled maturities
periodically based upon changes in the Wall Street estimates.

                                       Held to Maturity       Available for Sale
                                          Securities              Securities

                                    Amortized
                                      Cost                            Fair Value
                                    (Carrying              Amortized   (Carrying
                                     Amount)   Fair Value     Cost      Amount)

Due in 1 year or less                                       $  4,777   $  4,701
Due after 1 year through 5 years                              25,469     26,269
Due after 5 years through 10 years                            43,873     45,213
Due after 10 years                  $   1,455   $   1,974     33,572     34,109
                                    ---------   ---------     ------     ------


                                    $   1,455   $   1,974   $107,691   $110,292
                                    =========   =========   ========   ========

         At September 30, 2001 and December 31, 2000 securities having fair
value amounts of approximately $23,647,000 and $28,507,000 were pledged to
secure public deposits, short-term borrowings, treasury tax, loans balances and
for other purposes required by law or contract.

                                        8
<PAGE>

         As allowed by SFAS No.133, as of January 1, 2001, the Company
transferred $25,471,000 from their securities held to maturity to their
securities available for sale at fair value. The unrealized gains on the
securities transferred were $1,115,000. The net unrealized gains and losses were
recorded net of tax within accumulated other comprehensive income, which is a
separate component of stockholders' equity.

NOTE C - COMPREHENSIVE INCOME

         Comprehensive income includes net income and other comprehensive
income. The Company's only sources of other comprehensive income are derived
from unrealized gains and losses on investment securities available-for-sale and
adjustments to the minimum pension liability. Reclassification adjustments
resulting from gains or losses on investment securities that were realized and
included in net income of the current period that also had been included in
other comprehensive income as unrealized holding gains or losses in the period
in which they arose are excluded from comprehensive income of the current
period. The Company's total comprehensive income was as follows:

<TABLE>
<CAPTION>
                                                 Nine months ended September 30,   Three months ended September 30,
                                                 -------------------------------   --------------------------------
(in thousands)                                        2001             2000             2001             2000
                                                     ------           ------           ------           ------

<S>                                                  <C>              <C>              <C>              <C>
Net income                                           $4,759           $4,251           $1,689           $1,480
Other comprehensive income:
  Holding gain arising during period, net
    of tax                                            1,761              602              811              721
                                                     ------           ------           ------           ------
Total other comprehensive income                      1,761              602              811              721
                                                     ------           ------           ------           ------

Total comprehensive income                           $6,520           $4,853           $2,500           $2,201
                                                     ======           ======           ======           ======
</TABLE>

NOTE D - EARNINGS PER SHARE

         Basic earnings per share are computed by dividing net income by the
weighted average common shares outstanding for the period. Diluted earnings per
share reflect the potential dilution that could occur if options or other
contracts to issue common stock were exercised and converted into common stock.

         There was no difference in the numerator, net income, used in the
calculation of basic earnings per share and diluted earnings per share. The
denominator used in the calculation of basic earnings per share and diluted
earnings per share for the three-and nine month periods ended September 30, 2001
and 2000 is reconciled as follows:

<TABLE>
<CAPTION>
                                                 Nine months ended September 30,   Three months ended September 30,
                                                 -------------------------------   --------------------------------
(In thousands except earnings per share)              2001             2000             2001             2000
                                                     ------           ------           ------           ------

<S>                                                  <C>              <C>              <C>              <C>
Calculation of Basic Earnings Per Share

Numerator - net income                               $4,759           $4,251           $1,689           $1,480
Denominator - weighted average common
    Shares outstanding                                5,537            5,790            5,054            5,795
                                                     ------           ------           ------           ------

Basic Earnings Per Share                             $ 0.86           $ 0.73           $ 0.33           $ 0.26
                                                     ======           ======           ======           ======


Calculation of Diluted Earnings Per Share

Numerator - net income                               $4,759           $4,251           $1,689           $1,480
Denominator - weighted average common
    Shares outstanding                                5,537            5,790            5,054            5,795
    Dilutive effect of outstanding options              112               41              123               52
                                                     ------           ------           ------           ------

                                                      5,649            5,831            5,177            5,847
                                                     ------           ------           ------           ------

Diluted Earnings Per Share                           $ 0.84           $ 0.73           $ 0.33           $ 0.25
                                                     ======           ======           ======           ======
</TABLE>

                                        9
<PAGE>

NOTE E - SEGMENT DISCLOSURE

         The Company operates as three business segments; North Valley Bank, Six
Rivers National Bank and Other. Management analyzes the operations of NVB, SRNB
and Other separately. Other consists of North Valley Bancorp a multi-bank
holding company registered with and subject to regulation and supervision by the
Board of Governors of the Federal Reserve System and Bank Processing Inc, a
California corporation, both of which provide services to NVB and SRNB.
Management allocates the costs of Bancorp and BPI to NVB and SRNB based
primarily on usage through a variety of statistical data. NVB and SRNB are
separately chartered institutions each with its own Board of Directors and
regulated independently of each other.

         The accounting policies of the segments are the same as those described
in the summary of significant accounting policies. The Company evaluates
performance based on operating results before income taxes not including
nonrecurring gains or losses.

         The Company derives a majority of its revenues from interest income and
the chief operating decision maker relies primarily on net interest income to
assess the performance of the segments and make decisions about resources to be
allocated to the segment. Therefore, the segments are reported below using net
interest income for the nine months ended September 30, 2001 and 2000.

         The Company does not have operating segments other than those reported.
Parent company financial information is included in the Other category in the
disclosures below along with the activity of BPI and represents the Company's
Other operating segment.

         The Company does not have a single external customer from which it
derives 10 percent or more of its revenues and operates in one geographical
area.

         Information about reportable segments, and reconciliation of such
information to the consolidated financial statements as of and for the nine
month periods ended September 30, follows:

                                        NVB       SRNB       Other       Total
     Nine months ended:              ------------------------------------------
     September 30, 2001:

     Total revenues                  $ 20,243   $ 11,683   $  4,081    $ 36,007
     Net income (loss)               $  4,312   $    943   $   (496)   $  4,759
     Interest income                 $ 19,644   $ 10,266   $     27    $ 29,937
     Interest expense                $  7,630   $  4,193   $    211    $ 12,034
     Net interest income             $ 12,014   $  6,073   $   (184)   $ 17,903
     Depreciation and amortization   $    642   $    350   $     12    $  1,004
     Total assets                    $381,196   $200,772   $  2,724    $584,692

     September 30, 2000:

     Total revenues                  $ 21,718   $ 12,763   $    369    $ 34,850
     Net income (loss)               $  4,288   $    617   $   (654)   $  4,251
     Interest income                 $ 18,080   $ 11,616   $     11    $ 29,707
     Interest expense                $  6,929   $  5,055   $     --    $ 11,984
     Net interest income             $ 11,151   $  6,561   $     11    $ 17,723
     Depreciation and amortization   $    610   $    506   $     51    $  1,167
     Total assets                    $324,516   $210,234   $  1,521    $536,271


NOTE F - STOCK REPURCHASE PLANS

         On May 31, 2001, the Company announced a stock repurchase plan whereby
up to 7% of the Company's outstanding common stock would be purchased by the
Company and retired. On June 21, 2001, the Company completed this stock
repurchase plan by repurchasing and retiring 408,200 shares of common stock from
the open market for total consideration of $6,006,000 at an average price per
share of $14.71, which has been recorded as a reduction to common stock and to
retained earnings.

         On July 20, 2001, the Company announced that the Board of Directors of
the Company had authorized an additional stock repurchase plan whereby up to 8%
of the Company's outstanding common stock would be purchased by the Company and
retired. On August 3, 2001, the Company completed this repurchase by purchasing
and retiring 433,000 shares of common stock from the open market for total
consideration of $6,240,000 at an average price per share of $14.41, which has
been recorded as a reduction to common stock and to retained earnings.

                                       10
<PAGE>

         On August 27, 2001, the Company announced that the Board of Directors
of the Company had authorized an additional stock repurchase plan whereby up to
5% of the Company's outstanding common stock would be purchased by the Company
and retired. On September 6, 2001, the Company completed this repurchase by
purchasing and retiring 250,000 shares of common stock from the open market for
total consideration of $3,575,000 at an average price per share of $14.30, which
has been recorded as a reduction to common stock and to retained earnings.

         On September 28, 2001, the Company announced that the Board of
Directors of the Company had authorized an additional stock repurchase plan
whereby up to 2.5% of the Company's outstanding common stock would be purchased
by the Company and retired. As of September 30, 2001 no common stock had been
repurchased under this plan. As of November 13, 2001, the Company had
repurchased and retired 89,500 shares of common stock from the open market for
total consideration of $1,188,875 at an average price per share of $13.28, which
will be recorded as a reduction to common stock and to retained earnings.

NOTE G - COMPANY OBLIGATED MANDATORILY REDEEMABLE CUMULATIVE TRUST PREFERRED
SECURITIES OF SUBSIDIARY GRANTOR TRUST

         North Valley Capital Trust I is a Delaware business trust wholly owned
by the Company and formed for the purpose of issuing Company obligated
mandatorily redeemable cumulative trust preferred securities of Subsidiary
Grantor Trust holding solely junior subordinated debentures.

         During the third quarter of 2001, North Valley Capital Trust I issued
10,000 Trust Preferred Securities with a liquidation value of $1,000 to the
Company for gross proceeds of $10,000,000. The entire proceeds of the issuance
were invested by North Valley Capital Trust I in $10,000,000 aggregate principal
amount of 10.25% subordinated debentures due in 2031 (the Subordinated
Debentures) issued by the Company. The Subordinated Debentures represent the
sole assets of North Valley Capital Trust I. The Subordinated Debentures mature
in 2031, bear interest at the rate of 10.25%, payable semi-annually, and are
redeemable by the company at a premium beginning on or after 2031 based on a
percentage of the principal amount of the Subordinated Debentures stipulated in
the Indenture Agreement, plus any accrued and unpaid interest to the redemption
date. The Subordinated Debentures are redeemable at 100 percent of the principal
amount plus any accrued and unpaid interest to the redemption date at any time
on or after 2031. The Trust Preferred Securities are subject to mandatory
redemption to the extent of any early redemption of the Subordinated Debentures
and upon maturity of the Subordinated Debentures on 2031.

         Holders of the trust preferred securities are entitled to cumulative
cash distributions at an annual rate of 10.25% of the liquidation amount of
$1,000 per security. The company has the option to defer payment of the
distributions for a period of up to five years, as long as the company is not in
default in the payment of interest on the Subordinated Debentures. The company
has guaranteed, on a subordinated basis, distributions and other payments due on
the trust preferred securities (the Guarantee). The Guarantee, when taken
together with the company's obligations under the Subordinated Debentures, the
Indenture Agreement pursuant to which the subordinated Debentures were issued
and the company's obligations under the Trust Agreement governing the subsidiary
trust, provide a full and unconditional guarantee of amounts due on the Trust
Preferred Securities.

         The Subordinated Debentures and related trust investment in the
Subordinated Debentures have been eliminated in consolidation and the Trust
Preferred Securities reflected as outstanding in the accompanying condensed
consolidated financial statements. Under applicable regulatory guidelines all of
the Trust Preferred Securities will qualify as Tier I capital.

NOTE H - RECENT ACCOUNTING PRONOUNCEMENTS

         In June 2001, the Financial Accounting Standards Board ("FASB")
approved for issuance Statement of Financial Accounting Standard (SFAS) No. 141,
"Business Combinations", and SFAS No.142, "Goodwill and Other Intangible
Assets". SFAS No. 141 requires that all business combinations initiated after
September 30, 2001 be accounted for under the purchase method of accounting and
addresses the initial recognition and measurement of goodwill and other
intangible assets acquired in a business combination. SFAS No. 142 addresses the
initial recognition and measurement of intangibles assets acquired outside of a
business combination whether acquired individually or with a group of other
assets and the recognition and measurement of goodwill and other intangibles
assets subsequent to their acquisition. SFAS No. 142 provides that intangible
assets with finite useful lives will be amortized and that goodwill and
intangible assets with indefinite lives will not be amortized, but will be
required to be tested at least annually for impairment. The Company is required
to adopt SFAS No. 142 beginning January 1, 2002. Early adoption is not
permitted. As of September 30, 2001, the Company had core deposit and other
intangibles, net of accumulated amortization of $3,303,000, which will continue
to amortize under SFAS No. 142. The Company does not expect the adoption of SFAS
No. 142 to have a material effect on its consolidated financial position or
results of operations.

                                       11
<PAGE>

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

Overview
--------

         North Valley Bancorp (the "Company") is a multi-bank holding company
registered with and subject to regulation and supervision by the Board of
Governors of the Federal Reserve System (the "Board of Governors"). The Company
was incorporated in 1980 in the State of California. The Company wholly owns its
principal subsidiaries, North Valley Bank ("NVB"), Six Rivers National Bank
("SRNB"), North Valley Trading Company ("Trading Company"), which is inactive,
and Bank Processing, Inc. ("BPI"), a California corporation. The sole subsidiary
of NVB, which is inactive, is North Valley Basic Securities (the "Securities
Company"). Unless otherwise noted, the information presented herein as been
restated on a historical basis to reflect the merger with Six Rivers National
Bank, which closed on October 11, 2000, as a pooling-of-interests transaction as
if the Companies had been combined for all periods presented.

         The Company conducts a commercial and retail banking business with NVB
operating eleven full service banking offices, including two supermarket
branches, in Shasta and Trinity Counties and with SRNB operating seven full
service banking offices in Humboldt, Del Norte and Mendocino counties. The
Company operates as three business segments NVB, SRNB, and Other providing
demand, savings, money market rate deposit accounts, and time deposits, and
making commercial, real estate and consumer loans. The Company also offers
installment note collections, issues cashier's checks and money orders, sells
travelers' checks and provides safe deposit boxes and other customary banking
services. The Company's primary source of revenues is interest income from its
loan and investment securities portfolios. The Company is not dependent on any
single customer for more than 10% of the Company's revenues.

         Certain statements in this Form 10-Q (excluding statements of fact or
historical financial information) involve forward-looking information within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and are subject to the
"safe harbor" created by those sections. These forward-looking statements
involve certain risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements. Such risks and
uncertainties include, but are not limited to, the following factors:
competitive pressure in the banking industry increases significantly; changes in
the interest rate environment reduce margins; general economic conditions,
either nationally or regionally, are less favorable than expected, resulting in,
among other things, a deterioration in credit quality and an increase in the
provision for possible loan losses; changes in the regulatory environment;
changes in business conditions, particularly in Shasta County; volatility of
rate sensitive deposits; operational risks including data processing system
failures or fraud; asset/liability matching risks and liquidity risks; and
changes in the securities markets. In addition, recent events, including those
of September 11, 2001, have increased the uncertainty related to the national
and California economic outlook and could have an effect on the future
operations of the company or its customers, including borrowers.

Earnings Summary
----------------

<TABLE>
<CAPTION>
                                                 Nine months ended September 30,   Three months ended September 30,
                                                 -------------------------------   --------------------------------
(In thousands except per share amounts)               2001             2000             2001             2000
                                                     ------           ------           ------           ------

<S>                                                  <C>              <C>              <C>              <C>
Net interest income                                  $17,903          $17,723          $ 6,353          $ 5,969
Provision for loan losses                                940            1,320              420              230
Noninterest income                                     6,070            5,143            2,055            1,568
Noninterest expense                                   16,139           15,435            5,526            5,167
Provision for income taxes                             2,135            1,860              773              660
                                                     -------          -------          -------          -------
Net income                                           $ 4,759          $ 4,251          $ 1,689          $ 1,480
                                                     =======          =======          =======          =======

Earnings Per Share
    Basic                                            $  0.86          $  0.73          $  0.33          $  0.26
    Diluted                                          $  0.84          $  0.73          $  0.33          $  0.25

Annualized Return on Average Assets                     1.15%            1.07%            1.18%            1.11%
Annualized Return on Average Equity                    11.85%           10.61%           13.86%           10.94%
</TABLE>


         The Company's consolidated net income for the nine months ended
September 30, 2001 was $4,759,000, or $0.84 diluted earnings per share, compared
to $4,251,000, or $0.73 diluted earnings per share for the same period in 2000.
Return on average assets was 1.15% and return on average equity was 11.85% for
the nine months ended September 30, 2001 improving slightly over the 1.07% and
10.61% for the same period in 2000. Net income for the three months ended
September 30, 2001 increased to $1,689,000 or $0.33 per diluted share, compared
to $1,480,000 or $0.25 per diluted share for the same period in 2000. Return on
average assets was 1.18% and return on average equity was 13.86% for the three
months ended September 30, 2001 improving from 1.11% and 10.94% for the same
period in 2000.

                                       12
<PAGE>

         Negatively impacting earnings for the nine months ended September 30,
2001 and 2000 were merger and integration expenses of $358,000 and $680,000.
Included in net earnings for the nine month period ended September 30, 2000 was
a one-time pre-tax revenue item of $683,000 which represents the value of 40,153
shares of common stock acquired by the Company from the demutualization of a
life insurance company. Core earnings, which represents net income excluding
merger and integration charges and other non-recurring income, on an after tax
basis, totaled $5,006,000 or $0.89 per diluted share for the nine months ended
September 30, 2001 as compared to core earnings of $4,249,000 or $0.73 per
diluted share for the same period in 2000 . The increase in core earnings
primarily resulted from increases in noninterest income and a reduction in the
provision for loan losses partially offset by increases in salaries and benefit
expenses.

         For the nine months ended September 30, 2001,the Company added to its
allowance for loan and lease losses through a provision charged to earnings of
$940,000. This compares to $1,320,000 for the same period in 2000. The decreased
level of provision is due primarily to improved asset quality in the loan and
lease portfolio as well as slightly slower growth in the loan and lease
portfolio over the first nine months of 2001 compared to prior periods offset by
additional provisions due to the increased inherent risk in the portfolio
resulting from the current economic environment and the impacts of the events of
September 11, 2001. Management believes that the current level of allowance for
loan and lease losses as of September 30, 2001 of $5,529,000 or 1.41% of total
loans and leases is adequate at this time. The allowance for loan and lease
losses was $4,964,000 or 1.34% of total loans and leases at December 31, 2000.

Net Interest Income
-------------------

         Net interest income is the principal source of the Company's operating
earnings. It represents the difference between interest earned on loans and
leases and other investments and interest paid on deposits and other borrowings.
The amount of interest income and expense is affected by changes in volume and
mix of earning assets and interest-bearing deposits, along with changes in
interest rates.

         The following table is a summary of the Company's net interest income
presented on a fully taxable equivalent (FTE) basis for the periods indicated:

<TABLE>
<CAPTION>
                                 Nine months ended September 30,   Three months ended September 30,
                                 -------------------------------   --------------------------------
(In thousands)                        2001             2000             2001             2000
                                     ------           ------           ------           ------

<S>                                 <C>              <C>              <C>              <C>
Interest income                     $29,937          $29,707          $10,193          $10,144
Less: Interest expense               12,034           11,984            3,840            4,175
FTE adjustment                          620              660              202              213
                                    -------          -------          -------          -------
Net interest income (FTE)           $18,523          $18,383          $ 6,555          $ 6,182
                                    =======          =======          =======          =======
</TABLE>

         Net interest income has been adjusted to a fully taxable equivalent
basis (FTE) for tax-exempt investments included in earning assets. The increase
in net interest income (FTE) for the three-and nine month periods ended
September 30, 2001 resulted primarily from the growth in average earning assets
as well as decreasing rates paid on interest-bearing liabilities offset by lower
yields on earning assets. During the first nine months of 2001, the Federal
Reserve Bank Board reduced short term interest rates by 350 basis points. In
addition, short term interest rates have decreased an additional 100 basis
points through November 13, 2001. As interest rates decreased, rates paid on
interest-bearing liabilities decreased slightly faster than yields on earning
assets. Average loans and leases increased to $374,647,000 for the nine months
ended September 30, 2001, as compared to $337,714,000 for the same period in
2000, a 10.9% increase while average investment securities and overnight
investments decreased from an average of $141,647,000 during the first nine
months of 2000 to $119,784,000 for the same period in 2001 a 15.4% decrease.
Although average interest earning assets for the nine months ended September 30,
2001increased by $15,070,000 from the same period last year, yields on earning
assets decreased by 21 basis points. Average interest bearing liabilities
increased from $393,668,000 for the nine months ended September 30, 2000 to
$413,756,000 for the same period in 2001 while the average rate paid decreased
by 16 basis points over the same period. During the third quarter of 2001,
average interest earning assets increased by $33,088,000 from the same period
last year, however yields on earning assets decreased by 52 basis points. During
the third quarter of 2001, average interest bearing liabilities increased to
$435,688,000 from $401,632,000 for the same period in 2000 while the average
rate paid decreased by 54 basis points.

         The following table is a summary of the Company's net interest margin
(FTE) for the periods indicated:

<TABLE>
<CAPTION>
                                                 Nine months ended September 30,   Three months ended September 30,
                                                 -------------------------------   --------------------------------
                                                      2001             2000             2001             2000
                                                     ------           ------           ------           ------

<S>                                                   <C>              <C>              <C>              <C>
Yield on earning assets                               8.24%            8.45%            8.00%            8.52%
Rate paid on interest-bearing liabilities             3.88%            4.06%            3.50%            4.12%
                                                      ----             ----             ----             ----
  Net interest spread                                 4.36%            4.39%            4.50%            4.39%
                                                      ====             ====             ====             ====
  Net interest margin                                 4.99%            5.11%            5.04%            5.14%
                                                      ====             ====             ====             ====
</TABLE>

                                       13
<PAGE>

Noninterest Income
------------------

         The following table is a summary of the Company's noninterest income
for the periods indicated:

<TABLE>
<CAPTION>
                                                 Nine months ended September 30,   Three months ended September 30,
Noninterest Income                               -------------------------------   --------------------------------
 (In thousands)                                       2001             2000             2001             2000
                                                     ------           ------           ------           ------

<S>                                                  <C>              <C>              <C>              <C>
 Gain on demutualization of life insurance
   holdings                                          $   --           $  683           $   --           $   --
 Service charges on deposit accounts                  4,124            3,145            1,357            1,129
 Other fees and charges                                 869              976              251              303
 Gain on sale of loans                                    4               52               --               11
 Gain (loss) on sale or calls of securities              13              (14)              11              (18)
 Other                                                1,060              301              436              143
                                                     ------           ------           ------           ------
Total noninterest income                             $6,070           $5,143           $2,055           $1,568
                                                     ======           ======           ======           ======
</TABLE>

         Noninterest income increased to $6,070,000 for the nine months ended
September 30, 2001 as compared to $5,143,000 for the same period in 2000, an
increase of $927,000. This increase is primarily the result of service charges
on deposits increasing by $979,000 or 31.1% as well as other income increasing
by $759,000 offset by the $683,000 decrease from the one time gain on the
demutualization of a life insurance holding which occurred in the first quarter
of 2000. The increase in other income was due to the recognition of $613,000 of
earnings on life insurance holdings which were purchased to fund the Company's
salary continuation plan. Excluding the $683,000 one-time gain on the
demutualization of a life insurance holding which occurred in the first quarter
of 2000, noninterest income increased by $1,610,000 or 36.1% during the first
nine months of 2001 compared to the same period in 2000.

         For the quarter ended September 30, 2001, noninterest income increased
by $487,000 or 31.1% over the same period in 2000. As discussed above, service
charges on deposits and other income drove this variance, increasing by $228,000
and $293,000, respectively.

         In March of 2000, NVB began a program called Positively Free
Checking(TM) in which NVB offers retail checking accounts to customers, which
have no per-check fee and no monthly service charge fee. This program has
increased the level of new accounts and new customers at NVB. In October of
2000, this same program was implemented at SRNB. This program has been
instrumental in increasing service charge income for the Company in the first
nine months of 2001 and management believes that this program will continue to
enhance fee income throughout 2001.

Noninterest Expense
-------------------

         The following table is a summary of the Company's noninterest expense
for the periods indicated:

<TABLE>
<CAPTION>
                                                 Nine months ended September 30,   Three months ended September 30,
Noninterest Expense                              -------------------------------   --------------------------------
(In thousands)                                        2001             2000             2001             2000
                                                     ------           ------           ------           ------

<S>                                                 <C>              <C>              <C>              <C>
Salaries & employee benefits                        $ 8,279          $ 7,418          $ 2,960          $ 2,522
Merger & acquisition expense                            358              680               --              131
Furniture & equipment expense                         1,007              913              334              247
Occupancy expense                                       928              974              295              296
Data processing expenses                                277              521               85              206
ATM expense                                             420              452              133              120
Printing & supplies                                     415              330              130               88
Postage                                                 372              298              127              113
Messenger expense                                       206              234               68               81
Professional services                                   499              832              193              256
Other                                                 3,378            2,783            1,201            1,107
                                                    -------          -------          -------          -------
    Total Noninterest expense                       $16,139          $15,435          $ 5,526          $ 5,167
                                                    =======          =======          =======          =======
</TABLE>


         Noninterest expense totaled $16,139,000 for the nine-month period ended
September 30, 2001, compared to $15,435,000 for the same period in 2000.
Salaries and benefits increased by $861,000 or 11.6% to $8,279,000 for the nine
months ended September 30, 2001 compared to $7,418,000 for the same period in
2000. Of this $861,000 increase, $329,000 was due to salary continuation plan
expense accruals. These costs are offset by earnings on the cash surrender value
of life insurance policies purchased by the Company for certain key executives
which are included in  Other income'. The remaining increase in salary expense
was due to regular merit increases for existing employees. The Company's
efficiency ratio for the first nine months of 2001 was 67.3%, slightly lower
than the 67.5% efficiency ratio achieved for the first nine months of 2000. The
efficiency ratio for 2000 includes the $683,000 one-time revenue item recognized
in the first quarter of 2000 from the demutualization of life insurance
holdings. The efficiency ratio for the nine months ended September 30, 2001 as
calculated without this item and without the merger and integration charges was
65.8% as compared to 66.5% for the same period in 2000.

                                       14
<PAGE>

         Noninterest expense for the quarter ended September 30, 2001 was
$5,526,000 compared to $5,167,000 for the same period in 2000. The increase was
driven by salary expense which increased by $438,000 or 17.4% partially offset
by merger and integration charges of $131,000 in the third quarter of 2000 and
zero in the same period in 2001.

Income Taxes
------------

         The provision for income taxes for the nine months ended September 30,
2001 was $2,135,000 as compared to $1,860,000 for the same period in 2000. The
effective income tax rate for state and federal income taxes was 31.0% for the
nine months ended September 30, 2001 compared to 30.4% for the same period in
2000. The provision for income taxes for the three months ended September 30,
2001 was $773,000 as compared to $660,000 for the same period in 2000. The
effective income tax rate for state and federal income taxes was 31.4% for the
three months ended September 30, 2001 compared to 30.8% for the same period in
2000. The difference in the effective tax rate compared to the statutory tax
rate is primarily the result of the Company's investment in municipal securities
which are exempt from Federal taxes.

Impaired, Nonaccrual, Past Due and Restructured Loans and leases and Other Real
Estate Owned
-------------------------------------------------------------------------------

         At September 30, 2001, the recorded investment in loans and leases for
which impairment has been recognized was approximately $499,000 with a related
valuation allowance of $251,000. For the period ended September 30, 2001, the
average recorded investment in loans and leases for which impairment has been
recognized was approximately $528,000. During the portion of the year that the
loans and leases were impaired, the Company recognized interest income of
approximately $30,000 for cash payments received in 2001.

         At December 31, 2000, the recorded investment in loans and leases for
which impairment had been recognized was approximately $811,000 with a related
valuation allowance of $400,000. For the year ended December 31 2000, the
average recorded investment in loans and leases for which impairment had been
recognized was approximately $1,376,000. During the portion of the year that the
loans and leases were impaired, the Company recognized interest income of
approximately $124,000 for cash payments received in 2000.

         Nonaccrual loans and leases consist of loans and leases on which the
accrual of interest has been discontinued and other loans and leases where
management believes that borrowers' financial condition is such that the
collection of interest is doubtful, or when a loan or lease becomes
contractually past due by 90 days or more with respect to interest or principal
(except that when management believes a loan or lease is well secured and in the
process of collection, interest accruals are continued on loans and leases
considered by management to be fully collectible). Loans or leases are charged
off when management determines that the loan or lease is considered
uncollectible. Other real estate owned consists of real property acquired
through foreclosure on the related collateral underlying defaulted loans and
leases.

         A summary of non-performing assets at September 30, 2001, and December
31, 2000, is as follows:

<TABLE>
<CAPTION>
                                                             September 30,   December 31,
                                                                 2001            2000


<S>                                                           <C>             <C>
Total nonaccrual loans and leases                             $     511       $     780
Loans and leases 90 days past due and still accruing
  interest                                                          855             561
                                                              ---------       ---------

Total nonperforming loans and leases                              1,366           1,341
Other real estate owned                                             308             341
                                                              ---------       ---------

Total nonperforming assets                                    $   1,674       $   1,682
                                                              =========       =========

Nonaccrual loans and leases to total gross loans and
  leases                                                           0.13%           0.21%

Nonperforming loans and leases to total gross loans
  and leases                                                       0.35%           0.36%
Total nonperforming assets to total assets                         0.29%           0.31%
</TABLE>

Allowance for Loan and Lease Losses
-----------------------------------

         The allowance for loan losses is established through a provision for
loan losses based on management's evaluation of the risks inherent in the loan
portfolio, including unused commitments to provide financing. In determining
levels of risk, management considers a variety of factors, including, but not
limited to, asset classifications, economic trends, industry experience and
trends, geographic concentrations, estimated collateral values, historical loan
loss experience, and the Company's underwriting policies. The allowance for loan
losses is maintained at an amount management considers adequate to cover losses
in loans receivable, which are deemed probable and estimable. While management
uses the best information available to make these estimates, future adjustments
to allowances may be necessary due to economic, operating, regulatory, and other
conditions that may be beyond the Company's control. In addition, various
regulatory agencies, as an integral part of their examination

                                       15
<PAGE>

process, periodically review the Bank's allowance for loan losses. Such agencies
may require the Bank to recognize additions to the allowance based on judgements
different from those of management.

         The allowance for loan losses is comprised of three primary types of
allowances:

         1.       Formula Allowance

                  Formula allowances are based upon loan loss factors that
         reflect management's estimate of the inherent loss in various segments
         of or pools within the loan portfolio. The loss factor is multiplied by
         the portfolio segment (e.g. multifamily permanent mortgages) balance
         (or credit commitment, as applicable) to derive the formula allowance
         amount. The loss factors are updated periodically by the Company to
         reflect current information that has an effect on the amount of loss
         inherent in each segment.

         2.       Specific Allowance

                  Specific allowances are established in cases where management
         had identified significant conditions or circumstances related to an
         individually impaired credit. In other words, these allowances are
         specific to the loss inherent in a particular loan. The amount for a
         specific allowance is calculated in accordance with SFAS No. 114,
         "Accounting By Creditors For Impairment Of A Loan".

         3.       Unallocated Allowance

                  The Company maintains an unallocated loan loss allowance that
         is based upon management's evaluation of conditions that are not
         directly measured in the determined of the formula and specific
         allowances. The evaluation of inherent loss with respect to these
         conditions is subject to a higher degree of uncertainty because they
         are not identified with specific problem credits or historical
         performance of loan portfolio segments. The conditions evaluated in
         connection with the unallocated allowance at September 30, 2001
         included the following, which existed at the balance sheet date:

         o        General business and economic conditions and affecting the
                  Company's key lending areas

         o        Real estate values in California

         o        Loan volumes and concentrations

         o        Seasoning of the loan portfolio

         o        Status of the current business cycle

         o        Specific industry or market conditions within portfolio
                  segments

         At September 30, 2001, the allowance for loan losses was comprised of
$4,798 thousand in formula allowance, $56 thousand in specific allowance, and
$675 thousand in unallocated allowance. The $4,798 thousand in formula allowance
reflects management's estimate of the inherent loss in various pools or segments
in the portfolio, and includes adjustments for general economic conditions,
trends in the portfolio, and changes in the mix of the portfolio. The $675
thousand in unallocated allowance reflects the Company's consideration of the
following factors, as well as more general factors including the slowing
economy, increased layoffs and unemployment, and consumer and business reactions
to the events of September 11, 2001:

o        The recent potential adverse effects of a decline in tourism impacting
         the hospitality that is a significant component of the economies within
         our service area;

o        Slight increases in local unemployment which may have an impact on our
         retail consumer portfolio;

o        Continued changes in the mix of our loan portfolio toward increased
         emphasis on commercial business and real estate lending.

Management anticipates that should the Company accomplish its strategic plan and
be successful in:

o        generating further growth in loans receivable held for investment

o        emphasizing the origination and purchase of income property real estate
         loans

o        continuing expansion of commercial business lending

Future provisions will result and the ratio of the allowance for loan losses to
loans outstanding will increase. Experience across the financial services
industry indicates that commercial business and income property loans may
present greater risks than residential real estate loans, and therefore should
be accompanied by suitably high levels of reserves.

                                       16
<PAGE>

         A summary of the allowance for loan and lease losses at September 30,
2001, September 30, 2000 and December 31, 2000, is as follows:

<TABLE>
<CAPTION>
                                                                             September 30,   September 30,    December 31,
(In thousands)                                                                    2001            2000            2000
                                                                               ---------       ---------       ---------

<S>                                                                            <C>             <C>             <C>
Balance beginning of period                                                    $   4,964       $   4,606       $   4,606
Provision for loan and lease losses                                                  940           1,320           1,670
Net charge offs                                                                      375           1,353           1,312
                                                                               ---------       ---------       ---------

Balance end of period                                                          $   5,529       $   4,573       $   4,964
                                                                               =========       =========       =========

Allowance for loan and lease losses to nonaccrual loans and
leases                                                                          1,082.00%         525.60%         636.41%
Allowance for loan and lease losses to nonperforming loans and
leases                                                                            404.76%         304.19%         370.17%
Allowance for loan and lease losses to total gross loans and
leases                                                                              1.41%           1.30%           1.34%
Allowance for loan and lease losses to nonperforming assets                       330.29%         200.04%         295.12%
Ratio of net charge-offs to average loans and leases
 outstanding (annualized)                                                           0.10%           0.72%           0.38%
</TABLE>

         The evaluation process is designed to determine the adequacy of the
allowance for loan and lease losses. This process attempts to assess the risk of
losses inherent in the loan and lease portfolio by segregating the allowance for
loan and lease losses into three components: "Specific," "loss migration," and
"general." The specific component is established by allocating a portion of the
allowance for loan and lease losses to individual classified credits on the
basis of specific circumstances and assessments. The loss migration component is
calculated as a function of the historical loss migration experience of the
internal loan credit risk rating categories. The general component is an
unallocated portion that supplements the first two components and includes:
management's judgement of the current economic conditions, borrower's financial
condition, loan and lease impairment, evaluation of the performing loan and
lease portfolio, continual evaluation of problem loans and leases identified as
having a higher degree of risk, off balance sheet risks, net charge off trends,
and other factors. In addition to reserves related to the increase in the
overall level of loans and leases of $21,199,000 for the nine months ended
September 30, 2001 compared to December 31, 2000, management believes the
inherent risks within the portfolio have increased due to the current economic
environment, particularly as it affects the commercial and real estate markets,
the increased levels of layoffs in California and the potential impacts of the
California energy crisis. These factors support the need for an increase in the
allocated and unallocated reserves for commercial lending and consumer loans.
The allowance for loan and lease losses was 1.41% of total loans and leases as
of September 30, 2001, compared to 1.34% on December 31, 2000.

         There is uncertainty concerning future economic trends. Accordingly, it
is not possible to predict the effect future economic trends may have on the
levels of the allowance for loan and lease losses and the related provision for
loan and lease losses in future periods.

Company obligated mandatorily receemable cumulative trust preferred securities
of subsidiary grantor trust
------------------------------------------------------------------------------

         On July 16, 2001, the Company completed an offering of $10,000,000 of
10.25% mandatorily redeemable cumulative trust preferred securities ("trust
preferred securities") through North Valley Capital Trust I, a Delaware
statutory business trust wholly owned by the Company and formed for the
exclusive purpose of issuing Company obligated mandatorily redeemable cumulative
trust preferred securities of the Subsidiary Grantor Trust holding solely junior
subordinated debentures. Payments in respect of the trust preferred securities
are guaranteed by the Company, and the entire proceeds of the offering were used
to purchase Junior Subordinated Deferrable Interest Debentures issued by the
Company. A significant portion of the proceeds were used to fund the common
stock repurchase plans. The trust preferred securities mature in 2031 and
qualify as Tier 1 capital under the capital guidelines of the federal bank
regulatory agencies, including the Board of Governors of the Federal Reserve
System.

Liquidity
---------

         The objective of liquidity management is to ensure the continuous
availability of funds to meet the demands of depositors and borrowers.
Collection of principal and interest on loans and leases, the liquidations and
maturities of investment securities, deposits with other banks, customer
deposits and short term borrowing, when needed, are primary sources of funds
that contribute to liquidity. Unused lines of credit from correspondent banks to
provide federal funds for $11,500,000 as of September 30, 2001 were available to
provide liquidity. In addition, NVB and SRNB are both members of the Federal
Home Loan Bank ("FHLB") System providing additional borrowing capacity of
$23,152,000 secured by certain loans and investment securities. The Company also
has a line of credit with Federal Reserve Bank ("FRB") of $10,933,000 secured by
first deeds of trust on eligible commercial real estate loans and leases. As of
September 30, 2001, borrowings consisted of $20,000,000 in medium-term FHLB
advances, long-term borrowings of $415,000 were outstanding with the FHLB and
$296,000 was outstanding with the FRB under the Treasury, Tax, and Loan program.

                                       17
<PAGE>

         The Company manages both assets and liabilities by monitoring asset and
liability mixes, volumes, maturities, yields and rates in order to preserve
liquidity and earnings stability. Total liquid assets (cash and due from banks,
federal funds sold, and investment securities) totaled $157,199,000 and
$134,818,000 (or 26.9% and 25.0% of total assets) at September 30, 2001 and
December 31, 2000, respectively. Total liquid assets for September 30, 2001 and
December 31, 2000 include investment securities of and $1,455,000 and
$25,811,000, respectively, classified as held to maturity based on the Company's
intent and ability to hold such securities to maturity.

         Core deposits, defined as demand deposits, interest bearing demand
deposits, regular savings, money market deposit accounts and time deposits of
less than $100,000, continue to provide a relatively stable and low cost source
of funds. Core deposits totaled $446,069,000 and $412,807,000 at September 30,
2001 and December 31, 2000, respectively.

         In assessing liquidity, historical information such as seasonal loan
demand, local economic cycles and the economy in general are considered along
with current ratios, management goals and unique characteristics of the Company.
Management believes the Company is in compliance with its policies relating to
liquidity.

Interest Rate Sensitivity
-------------------------

         The Company constantly monitors earning asset and deposit levels,
developments and trends in interest rates, liquidity, capital adequacy and
marketplace opportunities. Management responds to all of these to protect and
possibly enhance net interest income while managing risks within acceptable
levels as set forth in the Company's policies. In addition, alternative business
plans and contemplated transactions are also analyzed for their impact. This
process, known as asset/liability management is carried out by changing the
maturities and relative proportions of the various types of loans, investments,
deposits and other borrowings in the ways prescribed above.

         The tool used to manage and analyze the interest rate sensitivity of a
financial institution is known as a simulation model and is performed with
specialized software built for this specific purpose for financial institutions.
This model allows management to analyze three specific types of risks; market
risk, mismatch risk, and basis risk.

Market Risk

         Market risk results from the fact that the market values of assets or
liabilities on which the interest rate is fixed will increase or decrease with
changes in market interest rates. If the Company invests in a fixed-rate, long
term security and then interest rates rise, the security is worth less than a
comparable security just issued because the older security pays less interest
than the newly issued security. If the security had to be sold before maturity,
then the Company would incur a loss on the sale. Conversely, if interest rates
fall after a fixed-rate security is purchased, its value increases, because it
is paying at a higher rate than newly issued securities. The fixed rate
liabilities of the Company, like certificates of deposit and fixed-rate
borrowings, also change in value with changes in interest rates. As rates drop,
they become more valuable to the depositor and hence more costly to the Company.
As rates rise, they become more valuable to the Company. Therefore, while the
value changes when rates move in either direction, the adverse impacts of market
risk to the Company's fixed-rate assets are due to rising rates and for the
Company's fixed-rate liabilities, they are due to falling rates. In general, the
change in market value due to changes in interest rates is greater in financial
instruments that have longer remaining maturities. Therefore, the exposure to
market risk of assets is lessened by managing the amount of fixed-rate assets
and by keeping maturities relatively short. These steps, however, must be
balanced against the need for adequate interest income because variable-rate and
shorter-term assets generally yield less interest than longer-term or fixed-rate
assets.

Mismatch Risk

         The second interest-related risk, mismatched risk, arises from the fact
that when interest rates change, the changes do not occur equally in the rates
of interest earned and paid because of differences in the contractual terms of
the assets and liabilities held. A difference in the contractual terms, a
mismatch, can cause adverse impacts on net interest income.

         The Company has a certain portion of its loan portfolio tied to the
national prime rate. If these rates are lowered because of general market
conditions, e.g., the prime rate decreases in response to a rate decrease by the
Federal Reserve Open Market Committee ("FOMC"), these loans will be repriced. If
the Company were at the same time to have a large proportion of its deposits in
long-term fixed-rate certificates, interest earned on loans would decline while
interest paid on the certificates would remain at higher levels for a period of
time until they mature. Therefore net interest income would decrease
immediately. A decrease in net interest income could also occur with rising
interest rates if the Company had a large portfolio of fixed-rate loans and
securities that was funded by deposit accounts on which the rate is steadily
rising.

         This exposure to mismatch risk is managed by attempting to match the
maturities and repricing opportunities of assets and liabilities. This may be
done by varying the terms and conditions of the products that are offered to
depositors and borrowers. For example, if many depositors want shorter-term
certificates while most borrowers are requesting longer-term fixed rate loans,
the Company will adjust the interest rates on the certificates and loans to try
to match up demand for similar maturities. The Company can then partially fill
in mismatches by purchasing securities or borrowing funds from the FHLB with the
appropriate maturity or repricing characteristics.

                                       18
<PAGE>

Basis Risk

         The third interest-related risk, basis risk, arises from the fact that
interest rates rarely change in a parallel or equal manner. The interest rates
associated with the various assets and liabilities differ in how often they
change, the extent to which they change, and whether they change sooner or later
than other interest rates. For example, while the repricing of a specific asset
and a specific liability may occur at roughly the same time, the interest rate
on the liability may rise one percent in response to rising market rates while
the asset increases only one-half percent. While the Company would appear to be
evenly matched with respect to mismatch risk, it would suffer a decrease in net
interest income. This exposure to basis risk is the type of interest risk least
able to be managed, but is also the least dramatic. Avoiding concentration in
only a few types of assets or liabilities is the best means of increasing the
chance that the average interest received and paid will move in tandem. The
wider diversification means that many different rates, each with their own
volatility characteristics, will come into play.

Net Interest Income and Net Economic Value Simulations

         The quantify the extent of all of these risks both in its current
position and in transactions it might take in the future, the Company uses
computer modeling to simulate the impact of different interest rate scenarios on
net interest income and on net economic value. Net economic value or the market
value of portfolio equity is defined as the difference between the market value
of financial assets and liabilities. These hypothetical scenarios include both
sudden and gradual interest rate changes, and interest rate changes in both
directions. This modeling is the primary means the Company uses for interest
rate risk management decisions.

         The hypothetical impact of sudden interest rate shocks applied to the
Company's asset and liability balances are modeled quarterly. The results of
this modeling indicate how much of the Company's net interest income and net
economic value are "at risk" (deviation from the base level) from various sudden
rate changes. This exercise is valuable in identifying risk exposures. The
results for the Company's September 30, 2001 simulation analysis indicate that
the Company's net interest income at risk over a one-year period and net
economic value at risk from 2% shocks are within normal expectations for sudden
changes and do not materially differ from those of December 31, 2000.

         For this simulation analysis, the Company has made certain assumptions
about the duration of its non-maturity deposits that are important to
determining net economic value at risk.


Financial Condition as of September 30, 2001 As Compared to December 31, 2000
-----------------------------------------------------------------------------

         Total assets at September 30, 2001, were $584,692,000, compared to
December 31, 2000 assets of $540,221,000. Investment securities and federal
funds sold totaled $127,164,000 at September 30, 2001, compared to $105,235,000
at December 31, 2000.

         Loans and leases, the Company's major component of earning assets
increased during the first nine months of 2001 to $385,293,000 at September 30,
2001 from $364,659,000 at December 31, 2000. The Company's average loan to
deposit ratio was 77.8% for the first nine months of 2001 and 76.4% for the
three months ended September 30, 2001.

         Total deposits increased to $502,635,000 at September 30, 2001 compared
to $460,291,000 at December 31, 2000 with the growth occurring across all
categories of deposits. Of this $42,344,000 increase in total deposits,
$19,475,000 was in non-interest bearing demand deposits which represents the
Company's least expensive source of funding.

         The Company maintains sufficient capital to support future growth and
dividend payouts while maintaining the confidence of depositors and investors by
increasing shareholder value. The Company has provided the majority of its
capital requirements through the retention of earnings. In order to increase
shareholder value, the Company has repurchased a significant amount of its
common stock. (Please see Note F-Stock Repurchase in the accompanying notes to
the financial statements). As a result of this stock repurchase, the Company's
earnings, the exercise of stock options and the changes in other comprehensive
income stockholders' equity decreased to $44,243,000 as of September 30, 2001,
as compared to $54,857,000 at December 31, 2000. Both of the Company's
subsidiary banks were considered well capitalized at September 30, 2001 and
December 31, 2000.

                                       19
<PAGE>

         The Company and the Bank have levels of capital in excess of all
regulatory requirements. The risk-based capital ratios are listed below.

<TABLE>
<CAPTION>
                                                                                       To Be Well
                                                                                   Capitalized Under
                                                              For Capital          Prompt Corrective
                                        Actual             Adequacy Purposes       Action Provisions
                                  -------------------     -------------------     -------------------
                                                          Minimum     Minimum     Minimum     Minimum
                                   Amount      Ratio       Amount      Ratio       Amount      Ratio
<S>                               <C>          <C>        <C>           <C>       <C>          <C>
Company
As of September 30, 2001:
  Total capital
    (to risk weighted assets)     $ 54,640     12.72%     $ 34,373      8.00%          N/A        N/A
  Tier I capital
    (to risk weighted assets)     $ 49,267     11.47%     $ 17,187      4.00%          N/A        N/A
  Tier I capital
    (to average assets)           $ 49,267      8.63%     $ 22,835      4.00%          N/A        N/A


As of December 31, 2000:
  Total capital
    (to risk weighted assets)     $ 56,415     14.30%     $ 31,571      8.00%          N/A        N/A
  Tier I capital
    (to risk weighted assets)     $ 51,482     13.05%     $ 15,785      4.00%          N/A        N/A
  Tier I capital
    (to average assets)           $ 51,482      9.73%     $ 21,161      4.00%          N/A        N/A


North Valley Bank
As of September 30, 2001:
  Total capital
    (to risk weighted assets)     $ 34,644     11.61%     $ 23,862      8.00%     $ 29,828     10.00%
  Tier I capital
    (to risk weighted assets)     $ 31,541     10.57%     $ 11,931      4.00%     $ 17,897      6.00%
  Tier I capital
    (to average assets)           $ 31,541      8.49%     $ 14,858      4.00%     $ 18,572      5.00%

As of December 31, 2000:
  Total capital
    (to risk weighted assets)     $ 37,830     13.96%     $ 21,686      8.00%     $ 27,108     10.00%
  Tier I capital
    (to risk weighted assets)     $ 34,912     12.88%     $ 10,843      4.00%     $ 16,265      6.00%
  Tier I capital
    (to average assets)           $ 34,912     10.51%     $ 13,290      4.00%     $ 16,613      5.00%

Six Rivers National Bank
As of September 30, 2001:
  Total capital
    (to risk weighted assets)     $ 17,632     13.67%     $ 10,322      8.00%     $ 12,902     10.00%
  Tier I capital
    (to risk weighted assets)     $ 16,009     12.41%     $  5,161      4.00%     $  7,741      6.00%
  Tier I capital
    (to average assets)           $ 16,009      8.22%     $  7,787      4.00%     $  9,734      5.00%

As of December 31, 2000:
  Total capital
    (to risk weighted assets)     $ 16,492     13.16%     $ 10,022      8.00%     $ 12,528     10.00%
  Tier I capital
    (to risk weighted assets)     $ 14,920     11.91%     $  5,011      4.00%     $  7,517      6.00%
  Tier I capital
    (to average assets)           $ 14,920      7.61%     $  7,844      4.00%     $  9,805      5.00%
</TABLE>

                                       20
<PAGE>

California Power Crisis
-----------------------

         Various factors including the opening of new power plants, moderate
weather, the national economic slowdown, and energy conservation contributed to
the Sate of California's being able to meet electricity demand during the summer
of 2001 with only minimal disruption. While the peak summer demand season is now
over, longer term aspects of the California energy crisis remain, including
uncertainty regarding the effect of the various financial components of the
crisis. The Company and its vendors or borrowers could be materially and
adversely affected either directly or indirectly by a severe electric power
shortage.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------

         In Management's opinion there has not been a material change in the
Company's market risk profile for the nine months ended September 30, 2001
compared to December 31, 2000.

PART II. OTHER INFORMATION
--------------------------

Item 1.  Legal Proceedings

         There are no material legal proceedings pending against the Company or
against any of its property. The Company, because of the nature of its business,
is generally subject to various legal actions, threatened or filed, which
involve ordinary, routine litigation incidental to its business. Some of the
pending cases seek punitive damages in addition to other relief. Although the
amount of the ultimate exposure, if any, cannot be determined at this time, the
Company does not expect that the final outcome of threatened or filed suits will
have a materially adverse effect on its consolidated financial position.

Item 2.  Changes in Securities

         Not applicable

Item 3.  Defaults Upon Senior Securities

         N/A

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

         N/A

Item 5.  Other Information

         N/A

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits - none.

         (b) Reports on Form 8-K during the quarter ended September 30, 2001:

             Filed July 20, 2001 - Second Quarter 2001 Earnings Press Release

             Filed July 20, 2001 - Stock Repurchase Plan announced by North
             Valley Bancorp

             Filed July 24, 2001 - North Valley Bancorp announces Stock
             Repurchase Program

             Filed August 28, 2001 - North Valley Bancorp announces Stock
             Repurchase Program

             Filed September 10, 2001 - North Valley Bancorp announces
             Completion of Stock Repurchase Plan

                                       21
<PAGE>

SIGNATURES

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

NORTH VALLEY BANCORP
--------------------
(Registrant)


Date    November 14, 2001
        -----------------

By:

/s/ EDWARD J. CZAJKA
--------------------------------------------------
Edward J. Czajka
Executive Vice President & Chief Financial Officer

                                       22