REDDING, CA--(Marketwire - April 29, 2008) - North Valley Bancorp (NASDAQ: NOVB), a bank holding company with $945 million in assets, today reported results for the quarter ended March 31, 2008. North Valley Bancorp ("the Company") is the parent company for North Valley Bank ("NVB").

The Company reported net income for the first quarter ended March 31, 2008 of $280,000, or $0.04 per diluted share, compared to $2,204,000, or $0.29 per diluted share, for the same period in 2007. This represents a decrease in net income of $1,924,000, or 87.3%, compared to the first quarter of 2007. The Company recorded a provision for loan and lease losses in the amount of $2,400,000 for the quarter ended March 31, 2008 and did not record a provision for the quarter ended March 31, 2007. For the first quarter of 2008, the Company realized an annualized return on average shareholders' equity of 1.35% and an annualized return on average assets of 0.12%, as compared to 11.69% and 1.00%, respectively, for the first quarter of 2007.

At March 31, 2008, total assets were $945,481,000, up from the $906,744,000 at March 31, 2007. The loan portfolio increased $99,935,000, or 15.4% compared to March 31, 2007, and totaled $750,588,000 at March 31, 2008. The loan to deposit ratio at March 31, 2008 was 98.4% as compared to 85.5% at March 31, 2007. Total deposits grew $2,049,000, or 0.3%, to total $762,749,000 at March 31, 2008 compared to March 31, 2007. When compared to December 31, 2007, total assets decreased slightly from $949,019,000, while loans increased by $4,335,000, or 0.6%, from $746,253,000 and deposits increased by $26,010,000, or 3.5%, from $736,739,000. Other borrowed funds decreased $28,797,000, or 33.0%, to $58,395,000 at March 31, 2008 compared to December 31, 2007.

Nonperforming loans (defined as nonaccrual loans and loans 90 days or more past due and still accruing interest) totaled $25,750,000 at March 31, 2008, an increase of $25,291,000 from March 31, 2007, and an increase of $24,142,000 from December 31, 2007. Nonperforming loans as a percentage of total loans were 3.43% at March 31, 2008, compared to 0.08% at March 31, 2007, and 0.24% at December 31, 2007. The increase in nonperforming loans is centered in four real estate projects with loans totaling $24,047,000 at March 31, 2008: two loans are for residential development projects and the other two are residential acquisition and development loans. The two largest loans are residential development projects for $9,509,000 and $6,750,000 located in Placer County and Shasta County, respectively. The other two loans are residential acquisition and development loans totaling $4,876,000 and $2,911,000, respectively, and both are located in Shasta County. Other real estate owned at March 31, 2008 was $902,000, consisting of land originally purchased for bank expansion, which management has listed for sale as the land is no longer needed.

"The effects of a nationwide housing crisis have impacted our markets and our clients as they experience slow sales activity and declining home values. Higher housing inventory as a result of foreclosures has contributed to the problem but more significant are the large price cuts made by the national public home builders as they exit projects and markets. I don't expect to see price stability until inventory levels normalize. However, in our markets, I believe we have already experienced the largest discounts. Our strategy is to work closely with our borrowers and to recognize possible defaults early, while increasing our allowance for loan and lease losses through our provision as considered necessary until a final resolution is accomplished," stated Mike Cushman, President and CEO.

Net interest income, which represents the Company's largest component of revenues and is the difference between interest earned on loans and investments and interest paid on deposits and borrowings, decreased $1,209,000, or 11.7%, for the three months ended March 31, 2008 compared to the same period in 2007. Interest income decreased by $346,000, primarily due to the reversal of interest income of $526,000 previously recorded for the loans placed on nonaccrual status in the first quarter of 2008 and a reduction in the interest earned on investment securities. Interest expense increased $863,000 due primarily to an increase in average balance of time deposits of $45,407,000 and an increase in average borrowings of $44,167,000 for the quarter ended March 31, 2008 compared to the same period in 2007. Average loans increased $89,294,000 in the first quarter of 2008 compared to the first quarter of 2007, however the yield on the loan portfolio decreased 96 basis points to 7.00% over that same period. The increase in average total loans was primarily funded by an increase in average borrowings mentioned above and a decrease in average investments of $35,651,000. Average yields on earning assets decreased 72 basis points from the quarter ended March 31, 2007, to 6.72% for the quarter ended March 31, 2008 and the average rate paid on interest-bearing liabilities increased by 22 basis points to 2.92%. As a result of the above, the Company's net interest margin for the quarter ended March 31, 2008 was 4.35%, a decrease of 98 basis points from the margin of 5.33% for the first quarter in 2007 and a decrease of 54 basis points from the 4.89% net interest margin for the linked quarter ended December 31, 2007. "The repricing of our variable-rate loans tied to prime, which has decreased 300 basis points since September 2007 as a result of the reductions from the Federal Reserve, and the impact of the reversal of interest from loans on nonaccrual during the quarter had a sizable adverse impact on our net interest margin as it contracted 54 basis points from the linked quarter, even though we did recognize some relief from the repricing of certain deposits," commented Kevin R. Watson, Chief Financial Officer.

Noninterest income for the quarter ended March 31, 2008 increased $357,000, or 11.4%, to $3,491,000 compared to $3,134,000 for the same period in 2007. Service charges on deposits increased by $72,000 to $1,716,000 for the first quarter of 2008 compared to $1,644,000 for the same period in 2007. Other fees and charges increased by $73,000 to $965,000 for the first quarter of 2008 compared to $892,000 for the first quarter of 2007. Other noninterest income increased $212,000, to $810,000 for the quarter ended March 31, 2008 compared to $598,000 for the same period in 2007, due to the mandatory redemption of the Company's VISA shares related to VISA's initial public offering completed in March 2008, an increase in sales volume of annuity and security products to customers, and an increase in the amount of gain on loan sales.

Noninterest expense decreased $425,000, or 4.2%, to $9,805,000 for the first quarter of 2008 from $10,230,000 for the first quarter in 2007. Salaries and employee benefits decreased $23,000, occupancy and equipment expense decreased $85,000 and other expenses decreased $317,000 for the first quarter of 2008 compared to the first quarter of 2007.

The Company recorded a $2,400,000 provision for loan and lease losses for the quarter ended March 31, 2008 and did not record a provision for the quarter ended March 31, 2007. The allowance for loan and lease losses at March 31, 2008 was $13,022,000, or 1.73% of total loans, compared to $10,755,000, or 1.44% of total loans at December 31, 2007 and $8,815,000, or 1.35% of total loans, at March 31, 2007. The increase in the provision for loan and lease losses is due primarily to the increase in nonperforming loans, and secondarily to the increase in the Company's loan portfolio.

The provision for income taxes for the quarter ended March 31, 2008 was $134,000, resulting in an effective tax rate of 32.4%, compared to $1,037,000, or an effective tax rate of 32.0%, for the quarter ended March 31, 2007.

The Company continues to maintain strong capital levels. At March 31, 2008, the Company's Tier 1 Capital was $93,888,000, and its risk-based capital ratios were: Tier 1 risk-based Capital ratio -- 10.45%; Total Risk-based Capital ratio -- 12.10%; and Tier 1 Leverage ratio -- 10.15%. "Our capital position remains strong and we remain well-capitalized as we work through the challenges of this credit cycle," remarked Mr. Watson.

North Valley Bancorp is a bank holding company headquartered in Redding, California. Its subsidiary, North Valley Bank ("NVB"), operates twenty-six commercial banking offices in Shasta, Humboldt, Del Norte, Mendocino, Yolo, Solano, Sonoma, Placer and Trinity Counties in Northern California, including two in-store supermarket branches and seven Business Banking Centers. North Valley Bancorp, through NVB, offers a wide range of consumer and business banking deposit products and services including internet banking and cash management services. In addition to these depository services, NVB engages in a full complement of lending activities including consumer, commercial and real estate loans. Additionally, NVB has SBA Preferred Lender status and provides investment services to its customers. Visit the Company's website address at www.novb.com for more information.

Cautionary Statement: This release contains certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those stated herein. Management's assumptions and projections are based on their anticipation of future events and actual performance may differ materially from those projected. Risks and uncertainties which could impact future financial performance include, among others, (a) competitive pressures in the banking industry; (b) changes in the interest rate environment; (c) general economic conditions, either nationally, regionally or locally, including fluctuations in real estate values; (d) changes in the regulatory environment; (e) changes in business conditions or the securities markets and inflation; (f) possible shortages of gas and electricity at utility companies operating in the State of California, and (g) the effects of terrorism, including the events of September 11, 2001, and thereafter, and the conduct of the war on terrorism by the United States and its allies. Therefore, the information set forth herein, together with other information contained in the periodic reports filed by the Company with the Securities and Exchange Commission, should be carefully considered when evaluating the business prospects of the Company. North Valley Bancorp undertakes no obligation to update any forward-looking statements contained in this release, except as required by law.

                           NORTH VALLEY BANCORP
                  CONDENSED CONSOLIDATED FINANCIAL DATA
                                (Unaudited)
          (Dollars in thousands, except share and per share data)


                                    Three Months Ended
                                        March 31,
Statement of Income Data              2008      2007    $ Change  % Change
                                    --------- --------- --------  --------
Interest income
   Loans and leases (including
    fees)                           $  12,976 $  12,824 $    152       1.2%
   Investment securities                1,169     1,535     (366)    -23.8%
   Federal funds sold and other             5       137     (132)    -96.4%
                                    --------- --------- --------  --------
       Total interest income           14,150    14,496     (346)     -2.4%
                                    --------- --------- --------  --------
Interest expense
   Interest on deposits                 3,828     3,256      572      17.6%
   Subordinated debentures                595       608      (13)     -2.1%
   Other borrowings                       599       295      304     103.1%
                                    --------- --------- --------  --------
       Total interest expense           5,022     4,159      863      20.8%
                                    --------- --------- --------  --------
Net interest income                     9,128    10,337   (1,209)    -11.7%
Provision for loan and lease losses     2,400         -    2,400         -
                                    --------- --------- --------  --------
Net interest income after provision
 for loan and lease losses              6,728    10,337   (3,609)    -34.9%
                                    --------- --------- --------  --------

Noninterest income
   Service charges on deposit
    accounts                            1,716     1,644       72       4.4%
   Other fees and charges                 965       892       73       8.2%
   Other                                  810       598      212      35.5%
                                    --------- --------- --------  --------
       Total noninterest income         3,491     3,134      357      11.4%
                                    --------- --------- --------  --------

Noninterest expenses
   Salaries and employee benefits       5,536     5,559      (23)     -0.4%
   Occupancy                              754       769      (15)     -2.0%
   Furniture and equipment                465       535      (70)    -13.1%
   Other                                3,050     3,367     (317)     -9.4%
                                    --------- --------- --------  --------
       Total noninterest expenses       9,805    10,230     (425)     -4.2%
                                    --------- --------- --------  --------
       Income before provision for
        income taxes                      414     3,241   (2,827)    -87.2%
Provision for income taxes                134     1,037     (903)    -87.1%
                                    --------- --------- --------  --------
       Net income                   $     280 $   2,204 $ (1,924)    -87.3%
                                    ========= ========= ========  ========

Common Share Data
  Earnings per share
     Basic                          $    0.04 $    0.30 $  (0.26)    -86.7%
     Diluted                        $    0.04 $    0.29 $  (0.25)    -86.2%

  Weighted average shares
   outstanding                      7,416,867 7,340,456
  Weighted average shares
   outstanding - diluted            7,544,813 7,635,369
  Book value per share              $   10.98 $   10.62
  Tangible book value               $    8.79 $    8.32
  Shares outstanding                7,422,366 7,352,625




                           NORTH VALLEY BANCORP
                  CONDENSED CONSOLIDATED FINANCIAL DATA
                                (Unaudited)
                          (Dollars in thousands)


                                             March    December     March
Balance Sheet Data                         31, 2008   31, 2007   31, 2007
                                           ---------  ---------  ---------
Assets
  Cash and due from banks                  $  28,793  $  28,659  $  27,593
  Federal funds sold and other                     -      6,237     33,295
  Available-for-sale securities - at fair
   value                                      98,586    104,341    124,765
  Held-to-maturity securities - at
   amortized cost                                 31         31         67

  Loans and leases net of deferred loan
   fees                                      750,588    746,253    650,563
    Allowance for loan and lease losses      (13,022)   (10,755)    (8,815)
                                           ---------  ---------  ---------
    Net loans and leases                     737,566    735,498    641,748

  Premises and equipment, net                 12,066     12,431     13,838
  Other real estate owned                        902        902        902
  Goodwill and core deposit intangibles,
   net                                        16,260     16,423     16,911
  Accrued interest receivable and other
   assets                                     51,277     44,587     47,625
                                           ---------  ---------  ---------
Total assets                               $ 945,481  $ 949,109  $ 906,744
                                           =========  =========  =========

Liabilities and Shareholders' Equity
  Deposits:
    Demand, noninterest bearing            $ 158,529  $ 167,615  $ 186,209
    Demand, interest bearing                 174,326    147,056    167,899
    Savings and money market                 181,799    181,192    198,715
    Time                                     248,095    240,876    207,876
                                           ---------  ---------  ---------
        Total deposits                       762,749    736,739    760,699
  Other borrowed funds                        58,395     87,192     25,000
  Accrued interest payable and other
   liabilities                                10,857     11,656     10,973
  Subordinated debentures                     31,961     31,961     31,961
                                           ---------  ---------  ---------
Total liabilities                            863,962    867,548    828,633
  Shareholders' equity                        81,519     81,471     78,111
                                           ---------  ---------  ---------
Total liabilities and shareholders' equity $ 945,481  $ 949,019  $ 906,744
                                           =========  =========  =========

Asset Quality
  Nonaccrual loans and leases              $  25,750  $   1,608  $     459
  Loans and leases past due 90 days and
   accruing interest                               -        156         60
  Other real estate owned                        902        902        902
                                           ---------  ---------  ---------
    Total nonperforming assets             $  26,652  $   2,666  $   1,421
                                           =========  =========  =========

  Allowance for loan and lease losses to
   total loans                                  1.73%      1.44%      1.35%
  Allowance for loan and lease losses to
   NPL's                                       50.57%    609.69%   1698.46%
  Allowance for loan and lease losses to
   NPA's                                       48.86%    403.41%    620.34%




                           NORTH VALLEY BANCORP
                  CONDENSED CONSOLIDATED FINANCIAL DATA
                                (Unaudited)
                          (Dollars in thousands)


                                                     Three Months Ended
                                                          March 31,
Selected Financial Ratios                             2008         2007
                                                  -----------  -----------
  Return on average total assets                         0.12%        1.00%
  Return on average shareholders' equity                 1.35%       11.69%
  Net interest margin (tax equivalent basis)             4.35%        5.33%
  Efficiency ratio                                      77.70%       75.94%

Selected Average Balances
  Loans                                           $   743,004  $   653,710
  Taxable investments                                  88,608      113,306
  Tax-exempt investments                               20,539       21,789
  Federal funds sold and other                            591       10,294
                                                  -----------  -----------
    Total earning assets                          $   852,742  $   799,099
                                                  -----------  -----------
    Total assets                                  $   941,318  $   891,070
                                                  -----------  -----------

  Demand deposits - interest bearing              $   154,950  $   160,598
  Savings and money market                            181,670      199,529
  Time deposits                                       248,202      202,795
  Other borrowings                                    104,924       60,757
                                                  -----------  -----------
    Total interest bearing liabilities            $   689,746  $   623,679
                                                  -----------  -----------
  Demand deposits - noninterest bearing           $   155,541  $   178,232
                                                  -----------  -----------
  Shareholders' equity                            $    83,136  $    76,457
                                                  -----------  -----------



                           NORTH VALLEY BANCORP
                  CONDENSED CONSOLIDATED FINANCIAL DATA
                                (Unaudited)
              (Dollars in thousands, except per share data)


                                            For the Quarter Ended
                                    ---------------------------------------
                                      March   December  September   June
                                      2008      2007      2007      2007
                                    --------- --------- --------- ---------
Interest income                     $  14,150 $  15,345 $  15,083 $  14,600
Interest expense                        5,022     5,133     4,838     4,508
                                    --------- --------- --------- ---------
  Net interest income                   9,128    10,212    10,245    10,092

Provision for loan and lease losses     2,400     1,200       850         -
Noninterest income                      3,491     1,505     3,350     3,170
Noninterest expense                     9,805     9,943     9,481    10,732
                                    --------- --------- --------- ---------

Income before provision for income
 taxes                                    414       574     3,264     2,530
Provision for income taxes                134       184     1,044       810
                                    --------- --------- --------- ---------
  Net income                        $     280 $     390 $   2,220 $   1,720
                                    ========= ========= ========= =========

Earnings per share:
  Basic                             $    0.04 $    0.05 $    0.30 $    0.23
                                    ========= ========= ========= =========
  Diluted                           $    0.04 $    0.05 $    0.29 $    0.22
                                    ========= ========= ========= =========

Contact Information: For further information contact: Michael J. Cushman President & Chief Executive Officer (530) 226-2900 Fax: (530) 221-4877 or Kevin R. Watson Executive Vice President & Chief Financial Officer (530) 226-2900 Fax: (530) 221-4877