8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) October 22, 2007

Heritage Oaks Bancorp

(Exact Name of Registrant as Specified in Its Charter)

California

(State or Other Jurisdictionof Incorporation)

000-05020	77-0388249
(Commission File Number)	(IRS Employer Identification No.)
545 12th Street, Paso Robles CA	93446
(Address of Principal Executive Offices)	(Zip Code)

(805) 239-5200

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 - RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On October 22, 2007 Heritage Oaks Bancorp (HEOP) issued a Press Release describing the results of operations for the quarter ending, September 30, 2007. A copy of the press release is attached to this 8-K as Exhibit 99.1.

ITEM 9.01 - FINANCIAL STATEMENTS AND EXHIBITS

(d)          Exhibits

99.1 Press Release dated October 22, 2007

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 hereunto duly authorized.

Date: October 22, 2007

Heritage Oaks Bancorp
By:	/s/ Margaret Torres
Margaret Torres
Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated October 22, 2007

EX-99.1

CONTACTS: LAWRENCE P. WARD, CEO

Margaret Torres, CFO

805-369-5200

Heritage Oaks Bancorp Reports 3Q07 Profits of $1.6 Million,

Excellent Deposit Growth and Strong Asset Quality Continue

Paso Robles, CA - October 22, 2007 - Heritage Oaks Bancorp (NASDAQ: HEOP), the parent company of Heritage Oaks Bank, today reported that solid core deposit growth and continued strong asset quality contributed to third quarter profits. For the third quarter of 2007 net income was $1.6 million, or $0.24 per diluted share, compared to $1.7 million, or $0.26 per diluted share, in the third quarter of 2006. For the first nine months of 2007, net income was $4.9 million, or $0.74 per diluted share, compared to $5.0 million, or $0.76 per diluted share for the first nine months of 2006.

On October 12, Heritage Oaks Bancorp closed its acquisition of Business First National Bank of Santa Barbara in a stock and cash transaction valued at approximately $20 million. In connection with the transaction, Business First National Bank was merged with and into Heritage Oaks Bank and now operates as a division of Heritage Oaks Bank. The merger is expected to be accretive to earnings in 2008. The financial results presented in this release for the quarter ended September 30, 2007, do not include the assets, liabilities or results of operations for the acquired company.

“Acquiring Business First National Bank of Santa Barbara, a well established and highly respected community bank located in a premium, high-growth area, is consistent with our ongoing strategy of expanding our community banking franchise,” stated Lawrence P. Ward, President and CEO. “Business First establishes us as the #1 publicly owned community bank in the Santa Barbara market. It brings a sizeable loan portfolio, which has been assembled by a skilled team of commercial lenders, a strong deposit base and a healthy share of a robust market.”

Third Quarter 2007 Highlights:

· Core deposits increased by 12% over a year ago, and represent 69% of total deposits.

· Revenues increased 5% to $8.6 million.

· Return on average equity was 12.1% and return on average assets was 1.12%.

· Net interest margin was 5.44%.

· Gross loans increased 12% to $475 million.

· Asset quality remained strong, non-performing assets were 0.11% of total assets.

Balance Sheet

“Despite heavy competition for loans we continue to be very stringent in our underwriting standards, and as a result, we expect our loan portfolio to grow at a more moderate pace,” noted Ward. The loan portfolio grew 12% to $469 million at September 30, 2007, from $419 million a year earlier. The growth was fueled by a 35% increase in commercial, financial and agricultural loans, as well as an 11% increase in commercial real estate loans. Below is a breakout of these loans illustrating the diversification within the particular portfolios:

Construction / Land

Single Family Residences	Single Family Residences - Spec.	Land	Owner Occupied	Other
8%	8%	18%	26%	40%

Commercial Real Estate

Farmland	Commercial Industrial	Retail	Professional	Hospitality	Other
5%	17%	20%	23%	18%	17%

HEOP 3Q07 Earnings

October 22, 2007

Page 2

“We implemented a strategy earlier this year of funding our loan demand through a new variable interest rate money market account, also with the intention of replacing higher cost borrowing” said Ward. “We have increased savings, NOW and money market balances 48% and increased total deposits 18% since the end of 2006. Additionally, we are able to re-price these deposits immediately after a rate change, making them a more favorable deposit to the Bank than a long-term CD. We believe that we can save approximately 20-30bp by replacing FHLB borrowings with relationship core deposits. ” Total deposits increased 15% to $496 million at the end of September, compared to $430 million at the end of September 2006. Non-interest bearing accounts represent 26% of total deposits and savings, money market and NOW accounts represent 43% of total deposits.

Due to the significant deposit growth, Heritage Oaks reduced its FHLB borrowings by $30 million during the third quarter, and $50 million year-to-date. On September 20, 2007, the company issued $5.0 million in trust preferred securities. The securities were issued by a special purpose business trust formed by Heritage Oaks and were sold to a pooled investment vehicle sponsored by Keefe, Bruyette & Woods in a private transaction. The Company intends to use the funds for general corporate purposes including the acquisition of Business First.

Notwithstanding the payoff of FHLB borrowing, total assets increased 8% to $573 million at quarter-end, compared to $532 million a year earlier and increased 6% compared to $542 million in total assets at December 31, 2006.

Asset Quality

Asset quality remains strong with non-performing assets totaling $641,000, or 0.11% of total assets at September 30, 2007. Three months earlier, Heritage Oaks’ non-performing assets totaled $555,000, or 0.09% of total assets. The allowance for loan losses increased to $4.7 million, or 0.99% of total loans held for investment at quarter-end compared to $3.9 million or 0.91% of total loans held for investment at September 30, 2006. “Our non-performing loans consist of seven loans to six borrowers, of which, one for approximately $186,000 is in process of refinance, one for approximately $272,000 that is real estate secured and has a loan to value of less than 65% and is current, two loans that are less than $20,000 each and are paying as agreed, one less than $50,000 that is paying and one borrower’s loan is collateralized and is in process of workout. We are keeping a close eye on all delinquent loans, reviewing them weekly and do not see any major changes in the make up or quantity of these loans,” added Ward.

Operating Results

“Core deposit growth, generated by the success of our program to increase money market account balances and continued growth in our banking relationships, is helping to moderate the impact of the yield curve on our margin,” said Ward. Third quarter net interest margin was 5.44% compared to 5.56% in the previous quarter and 6.02% in the third quarter a year ago. Year-to-date, the net interest margin was 5.53% compared to 6.02% for the same period in 2006. “On a percentage basis, the single largest factor that is negatively impacting net income for the Company for both quarter to date and year to date results is the increase in interest expense. Because of the changes made to the balance sheet, specifically on the liability funding side, we can already see improvement on a linked quarter basis,” Ward reported.

“Occupancy expense has increased due primarily to the sale leaseback transaction that was finalized on June 27, 2007. The offset to this additional expense is an increase in interest income from investment of the funds received. As reported in the June 30, 2007 10Q, this continues to be an accretive transaction to the bottom line,” Ward indicated.

“While salary and employee benefits have increased by $273 thousand for the three months ended September 30, 2007 compared to the same period in 2006, it should be noted that on a linked quarter basis, the increase was only $44,000,” noted Ward.

The provision for income tax was approximately 200 basis points higher at 38.2% for the nine months ended September 30, 2007 compared to 36.2% for the same period in 2006. The lower rate in 2006 was impacted by timing differences on certain tax issues that flowed through the Income Statement.

Performance Measures

The efficiency ratio was 66.9% in the third quarter of 2007 compared to 64.3% in the previous quarter and 65.3% in the third quarter a year ago. Year-to-date, the efficiency ratio was 66.7% compared to 64.9% in the first nine months of 2006. The efficiency ratio measures operating expenses as a percent of revenues.

HEOP 3Q07 Earnings

October 22, 2007

Page 3

Return on average assets was 1.12% in the third quarter and 1.16% for the first nine months of the year, compared to 1.33% and 1.35% for the respective periods last year. Return on average equity was 12.1% for the third quarter of 2007 and 12.7% year-to-date, compared to 14.4% and 14.3% in their respective periods a year ago.

Book value per share was $ 8.32at September 30, 2007, compared to $7.62 per share a year earlier. Tangible book value per share was $7.44 at September 30, 2007, compared to $6.66 a year earlier. Shareholders’ equity increased 11% to $53.9 million compared to $48.4 million a year ago.

Heritage Oaks Bancorp is the holding company for Heritage Oaks Bank which operates as Heritage Oaks Bank and Business Firs, a division of Heritage Oaks Bank. Heritage Oaks Bank has its headquarters plus two branch offices in Paso Robles, two branch offices in San Luis Obispo, single branch offices in Cambria, Arroyo Grande, Atascadero, Templeton and Morro Bay and three branch offices in Santa Maria. Heritage conducts commercial banking business in San Luis Obispo County and Northern Santa Barbara County. The Business First division has two branch offices in Santa Barbara. Visit Heritage Oaks Bancorp on the Web at www.heritageoaksbancorp.com.

Statements concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to the ability to successfully integrate the operations of Business First National Bank, increased profitability, continued growth, the Bank’s beliefs as to the adequacy of its existing and anticipated allowances for loan losses, beliefs and expectations regarding actions that may be taken by regulatory authorities having oversight of the Bank’s operations, interest rates and financial policies of the United States government, general economic conditions and California’s energy crisis. Additional information on these and other factors that could affect financial results are included in Heritage Oaks Bancorp’s Securities and Exchange Commission filings. If any of these risks or uncertainties materialize or if any of the assumptions underlying such forward-looking statements proves to be incorrect, Heritage Oaks Bancorp’s results could differ materially from those expressed in, implied or projected by such forward-looking statements. Heritage Oaks Bancorp assumes no obligation to update such forward-looking statements.

HEOP 3Q07 Earnings

October 22, 2007

Page 4

Heritage Oaks Bancorp

Consolidated Balance Sheets

(dollars in thousands except share data)

	(unaudited)		(audited)		(unaudited)		Percentage Change Vs.
	9/30/2007		12/31/2006		9/30/2006		12/31/2006			9/30/2006
Assets
Cash and due from banks	$	20,316	$	19,164	$	17,972		6.0	%		13.0	%
Federal funds sold		14,260		3,870		14,195		268.5	%		0.5	%
Total cash and cash equivalents		34,576		23,034		32,167		50.1	%		7.5	%
Interest bearing deposits with other banks		1,718		318		318		440.3	%		440.3	%
Securities available for sale		34,854		38,445		40,294		-9.3	%		-13.5	%
Federal Home Loan Bank Stock, at cost		2,171		2,350		1,955		-7.6	%		11.0	%
Loans held for sale		902		1,764		2,069		-48.9	%		-56.4	%
Loans, net (1)		468,966		439,277		419,314		6.8	%		11.8	%
Property, premises and equipment		5,017		14,581		14,801		-65.6	%		-66.1	%
Cash surrender value of life insurance		9,716		9,435		9,344		3.0	%		4.0	%
Deferred tax assets		4,964		2,414		2,515		105.6	%		97.4	%
Goodwill		4,864		4,865		4,864		0.0	%		0.0	%
Core deposit intangible		883		1,148		1,223		-23.1	%		-27.8	%
Other assets		4,059		4,143		3,517		-2.0	%		15.4	%
Total assets	$	572,690	$	541,774	$	532,381		5.7	%		7.6	%
Liabilities
Deposits:
Non-interest bearing demand	$	130,221	$	153,005	$	157,180		-14.9	%		-17.2	%
Savings, NOW, and money market		215,576		146,110		152,033		47.5	%		41.8	%
Time deposits of $100K or more		50,666		30,630		31,782		65.4	%		59.4	%
Time deposits under $100K		99,847		90,776		89,277		10.0	%		11.8	%
Total deposits		496,310		420,521		430,272		18.0	%		15.3	%
FHLB advances and other borrowings		-		50,000		40,000		-100.0	%		-100.0	%
Securities sold under agreements to repurchase		1,464		1,364		1,219		7.3	%		20.1	%
Junior subordinated debentures		13,403		16,496		8,248		-18.8	%		62.5	%
Other liabilities		7,663		3,921		4,215		95.4	%		81.8	%
Total liabilities		518,840		492,302		483,954		5.4	%		7.2	%
Stockholders' equity
Common stock, no par value; 20,000,000 shares
authorized; issued and outstanding 6,469,653; 6,345,639
and 6,356,021 for September 30, 2007; December 31, 2006
and September 30, 2006 respectively		29,976		29,247		29,648		2.5	%		1.1	%
Additional paid in capital		600		336		-		78.6	%		-
Retained earnings		23,205		19,809		18,668		17.1	%		24.3	%
Accumulated other comprehensive income		69		80		111		-13.8	%		-37.8	%
Total stockholders' equity		53,850		49,472		48,427		8.8	%		11.2	%
Total liabilities and stockholders' equity	$	572,690	$	541,774	$	532,381		5.7	%		7.6	%

(1) Loans are net of deferred loan fees of $1,941; $1,625; $1,489 and allowance for loan losses of $4,720; $4,081; $3,863 for September 30, 2007, December 31, 2006, and September 30, 2006 respectively.

HEOP 3Q07 Earnings

October 22, 2007

Page 5

Heritage Oaks Bancorp

Consolidated Statements of Income

(dollars in thousands except share data)

	(unaudited)		(unaudited)		(unaudited)
	For the Three Months Ended						Percentage Change Vs.
	9/30/2007		6/30/2007		9/30/2006		6/30/2007			9/30/2006
Interest Income:
Interest and fees on loans	$	10,058	$	10,214	$	8,968		-1.5	%		12.2	%
Investment securities		426		437		467		-2.5	%		-8.8	%
Federal funds sold and commercial paper		385		162		131		137.7	%		193.9	%
Time certificates of deposit		1		10		2		-90.0	%		-50.0	%
Total interest income		10,870		10,823		9,568		0.4	%		13.6	%
Interest Expense:
NOW accounts		55		43		22		27.9	%		150.0	%
MMDA accounts		1,216		946		567		28.5	%		114.5	%
Savings accounts		21		23		25		-8.7	%		-16.0	%
Time deposits of $100K or more		610		301		172		102.7	%		254.7	%
Other time deposits		1,229		1,276		1,132		-3.7	%		8.6	%
Other borrowed funds		411		976		628		-57.9	%		-34.6	%
Total interest expense		3,542		3,565		2,546		-0.6	%		39.1	%
Net interest income before provision for loan losses		7,328		7,258		7,022		1.0	%		4.4	%
Provision for loan losses		210		170		180		23.5	%		16.7	%
Net interest income after provision for loan losses		7,118		7,088		6,842		0.4	%		4.0	%
Non Interest Income:
Service charges on deposit accounts		645		686		644		-6.0	%		0.2	%
Other income		664		705		578		-5.8	%		14.9	%
Total non-interest income		1,309		1,391		1,222		-5.9	%		7.1	%
Non-Interest Expense:
Salaries and employee benefits		3,238		3,194		2,965		1.4	%		9.2	%
Occupancy and equipment		830		706		633		17.6	%		31.1	%
Other expenses		1,709		1,663		1,786		2.8	%		-4.3	%
Total non-interest expenses		5,777		5,563		5,384		3.8	%		7.3	%
Income before provision for income taxes		2,650		2,916		2,680		-9.1	%		-1.1	%
Provision for income taxes		1,022		1,116		947		-8.4	%		7.9	%
Net Income	$	1,628	$	1,800	$	1,733		-9.6	%		-6.1	%
Average basic shares outstanding		6,472,653		6,432,687		6,350,727
Average diluted shares outstanding		6,679,114		6,692,467		6,594,626
Basic earnings per share	$	0.25	$	0.28	$	0.27
Fully diluted earnings per share	$	0.24	$	0.27	$	0.26

HEOP 3Q07 Earnings

October 22, 2007

Page 6

Heritage Oaks Bancorp

Consolidated Statements of Income

(dollars in thousands except share data)

	(unaudited)		(unaudited)		Percentage Change Vs.
	For the Nine Months Ended
	9/30/2007		9/30/2006		9/30/2006
Interest Income:
Interest and fees on loans	$	30,087	$	24,475		22.9	%
Investment securities		1,324		1,446		-8.4	%
Federal funds sold and commercial paper		577		513		12.5	%
Time certificates of deposit		7		6		16.7	%
Total interest income		31,995		26,440		21.0	%
Interest Expense:
NOW accounts		126		66		90.9	%
MMDA accounts		2,830		1,687		67.8	%
Savings accounts		69		78		-11.5	%
Time deposits of $100K or more		1,120		428		161.7	%
Other time deposits		3,716		2,671		39.1	%
Other borrowed funds		2,516		1,406		78.9	%
Total interest expense		10,377		6,336		63.8	%
Net interest income before provision for loan losses		21,618		20,104		7.5	%
Provision for loan losses		520		480		8.3	%
Net interest income after provision for loan losses		21,098		19,624		7.5	%
Non Interest Income:
Service charges on deposit accounts		1,944		1,826		6.5	%
Other income		1,988		1,826		8.9	%
Total non-interest income		3,932		3,652		7.7	%
Non-Interest Expense:
Salaries and employee benefits		9,681		8,534		13.4	%
Occupancy and equipment		2,251		1,901		18.4	%
Other expenses		5,101		4,982		2.4	%
Total non-interest expenses		17,033		15,417		10.5	%
Income before provision for income taxes		7,997		7,859		1.8	%
Provision for income taxes		3,058		2,846		7.4	%
Net Income	$	4,939	$	5,013		-1.5	%
Average basic shares outstanding		6,429,830		6,326,743
Average diluted shares outstanding		6,679,987		6,594,800
Basic earnings per share	$	0.77	$	0.79
Fully diluted earnings per share	$	0.74	$	0.76

HEOP 3Q07 Earnings

October 22, 2007

Page 7

Additional Financial Information
(dollars in thousands)
	For the Quarters Ended						Percentage Change Vs.
LOANS (including loans held for sale)	9/30/2007		12/31/2006		9/30/2006		12/31/2006			9/30/2006
Commercial, financial and agricultural	$	101,748	$	84,976	$	75,627		19.7	%		34.5	%
Real estate - construction/land		105,054		105,712		101,665		-0.6	%		3.3	%
Real estate - other		253,860		237,401		229,070		6.9	%		10.8	%
Home equity lines of credit		8,897		10,792		11,777		-17.6	%		-24.5	%
Installment loans to individuals		5,580		5,598		5,660		-0.3	%		-1.4	%
All other loans (including overdrafts)		488		504		867		-3.2	%		-43.7	%
Total loans	$	475,627	$	444,983	$	424,666		6.9	%		12.0	%
Loans held for sale	$	902	$	1,764	$	2,069		-48.9	%		-56.4	%

	Quarter Ended			Year Ended			Quarter Ended			Percentage Change Vs.
ALLOWANCE FOR LOAN LOSSES	9/30/2007			12/31/2006			9/30/2006			12/31/2006			9/30/2006
Balance, beginning of period	$	4,520		$	3,881		$	3,695			16.5	%		22.3	%
Provision expense		210			600			180			-65.0	%		16.7	%
Credit losses charged against allowance		(16	)		(561	)		(17	)		-97.1	%		-5.9	%
Recoveries of loans previously charged off		6			161			5			-96.3	%		20.0	%
Balance, end of period	$	4,720		$	4,081		$	3,863			15.7	%		22.2	%
Net ( charge-offs ) / recoveries	$	(10	)	$	(400	)	$	(12	)		-			-
Net charge-offs / average loans outstanding		0.00	%		0.09	%		0.00	%		-97.7	%		-26.8	%
Allowance for loan losses  /  total loans outstanding		0.99	%		0.92	%		0.91	%		8.2	%		9.1	%

	For the Quarters Ended									Percentage Change Vs.
NON-PERFORMING ASSETS	9/30/2007			12/31/2006			9/30/2006			12/31/2006			9/30/2006
Loans on non-accrual status	$	641		$	55		$	183			1065.5	%		250.3	%
Loans more than 90 days delinquent, still accruing		-			-			-			-			-
Total non-performing loans		641			55			183			1065.5	%		250.3	%
Other real estate owned (OREO) / repossessed assets		-			-			-			-			-
Total non-performing assets	$	641		$	55		$	183			1065.5	%		250.3	%
Total non-performing assets to total assets		0.11	%		0.01	%		0.04	%		1019.3	%		179.8	%

	For the Quarters Ended						Percentage Change Vs.
DEPOSITS	9/30/2007		12/31/2006		9/30/2006		12/31/2006			9/30/2006
Non-interest bearing demand	$	130,221	$	153,005	$	157,180		-14.9	%		-17.2	%
Interest-bearing demand		56,931		45,164		46,100		26.1	%		23.5	%
Regular savings accounts		21,606		23,406		24,755		-7.7	%		-12.7	%
Money market accounts		137,039		77,540		81,178		76.7	%		68.8	%
Total interest-bearing transaction and savings accounts		215,576		146,110		152,033		47.5	%		41.8	%
Time deposits under $100 thousand		99,847		90,776		89,277		10.0	%		11.8	%
Time deposits of $100 thousand or more		50,666		30,630		31,782		65.4	%		59.4	%
Total time deposits		150,513		121,406		121,059		24.0	%		24.3	%
Total deposits	$	496,310	$	420,521	$	430,272		18.0	%		15.3	%

HEOP 3Q07 Earnings

October 22, 2007

Page 8

PROFITABILITY / PERFORMANCE RATIOS	Three Months Ended									Nine Months Ended
	9/30/2007			6/30/2007			9/30/2006			9/30/2007			9/30/2006
Operating efficiency		66.89	%		64.32	%		65.31	%		66.67	%		64.90	%
Return on average equity		12.09	%		13.84	%		14.43	%		12.68	%		14.31	%
Return on average tangible equity		13.54	%		15.58	%		16.54	%		14.25	%		16.45	%
Return on average assets		1.12	%		1.25	%		1.33	%		1.16	%		1.35	%
Other operating income to average assets		0.90	%		0.96	%		0.94	%		0.92	%		0.99	%
Other operating expense to average assets		3.97	%		3.86	%		4.15	%		3.99	%		4.16	%
Net interest income to average assets		5.04	%		5.03	%		5.41	%		5.06	%		5.43	%
Non-interest income to total net revenue		15.16	%		16.08	%		14.82	%		15.39	%		15.37	%
ASSET QUALITY AND CAPITAL RATIOS
Non-performing loans to total gross loans		0.13	%		0.12	%		0.04	%
ALLL to total gross loans		0.99	%		1.00	%		0.91	%
Non-performing loans as a % of ALLL		13.58	%		12.28	%		4.74	%
Net charge-offs to average loans		0.00	%		-0.01	%		0.00	%
Non-performing loans to primary capital		1.19	%		1.06	%		0.38	%
Leverage ratio		10.69	%		9.52	%		9.86	%
Tier I Risk-Based Capital Ratio		11.65	%		10.58	%		10.35	%
Total Risk-Based Capital Ratio		12.58	%		11.48	%		11.18	%

AVERAGE BALANCES AND RATES	For the Three Months Ended												For the Nine Months Ended
(dollars in thousands)	9/30/2007						9/30/2006						9/30/2007						9/30/2006
	Balance			Income			Balance			Income			Balance			Income			Balance			Income
Investments with other banks	$	481		$	1		$	318		$	7		$	373		$	7		$	314		$	22
Investment securities taxable		21,649			251			26,366			285			23,157			794			28,161			905
Investment securities non-taxable		16,036			175			16,467			177			16,434			530			16,209			525
Federal funds sold		29,447			385			9,966			131			15,117			577			14,217			513
Loans		466,749			10,058			409,897			8,968			468,007			30,087			387,627			24,475
Total interest earning assets		534,362			10,870			463,014			9,568			523,088			31,995			446,528			26,440
Allowance for possible loan losses		(4,600	)					(3,767	)					(4,401	)					(3,928	)
Other assets		46,858						56,073						52,443						52,319
Total assets	$	576,620					$	515,320					$	571,130					$	494,919
Savings/NOW/money market accounts	$	206,186		$	1,292		$	154,539		$	614		$	182,369		$	3,025		$	163,506		$	1,831
Time deposits		147,659			1,839			119,162			1,304			135,749			4,836			101,354			3,099
Other borrowings		17,940			251			32,195			429			43,453			1,771			22,577			851
Federal funds purchased		-			-			652			10			1,408			60			305			13
Long-term debt		8,864			160			8,248			189			11,839			685			8,248			542
Total interest bearing liabilities		380,649			3,542			314,796			2,546			374,818			10,377			295,990			6,336
Demand deposits		133,432						148,215						137,706						147,908
Other liabilities		9,098						4,646						6,525						4,178
Total shareholders' equity		53,441						47,663						52,081						46,843
Total liabilities and shareholders' equity	$	576,620					$	515,320					$	571,130					$	494,919
Yield on investments					4.44	%					4.31	%					4.45	%					4.34	%
Yield on federal funds sold					5.19	%					5.22	%					5.10	%					4.82	%
Yield on loans					8.55	%					8.68	%					8.60	%					8.44	%
Yield on interest earning assets					8.07	%					8.20	%					8.18	%					7.92	%
Rate on deposits					2.55	%					1.80	%					2.31	%					1.60	%
Rate on borrowings					6.08	%					6.06	%					5.93	%					6.04	%
Rate on long-term debt					7.16	%					9.09	%					7.74	%					8.79	%
Rate on interest-bearing liabilities					3.69	%					3.21	%					3.70	%					2.86	%
Cost of funds					2.73	%					2.18	%					2.71	%					1.91	%
Average equity to average assets					9.27	%					9.25	%					9.12	%					9.46	%
Net interest margin					5.44	%					6.02	%					5.53	%					6.02	%

NOTE: Transmitted on Prime Newswire on October 22, 2007 at 3:30 a.m. PDT