California Oaks State Bank Reports 2nd Quarter 2008 Results

THOUSAND OAKS, CA--(Marketwire - July 29, 2008) - California Oaks State Bank (OTCBB: COSB), a community business bank with assets of $123.8 million, today reported net income for the first half of 2008 of $117,716 or $.08 per share, compared to net income of $379,303 or $0.26 per share in the same time period of 2007.

Total assets ended June 30, 2008 at $123.8 million with net loans and deposits at $103.3 million and $90.8 million respectively. Total assets by comparison for second quarter 2007 were $107.6 million with net loans and deposits of $85 million and $89.2 million respectively. During the second quarter of 2008, the Bank grew its net loan portfolio from $101.8 million to $103.3 million. The growth in loans in the quarter can be attributed to the increase in the commercial loan portfolio, while we continue to intentionally shrink the accounts receivable factoring portfolios. The Bank continues to have robust commercial loan demand. During the quarter, we funded over $8 million in new loans and subsequently sold off participations as we felt necessary to meet risk objectives or liquidity needs.

On the deposit side, the Bank saw its deposit base decrease $2.6 million in the second quarter primarily in the money market and now account category where deposits decreased by $6 million. The decrease in money market funds was offset by increases in the demand deposit category, as well as the certificates of deposit category.

The net interest margin as a percentage of average assets for the second quarter remains very healthy at 5.03% verses 5.49% in the first quarter of 2008. The decrease in margin can be attributed to our average cost of funds increasing based on the use of wholesale funding, the Bank's decision in the fourth quarter of 2007 to reduce credit risk in its portfolio and exit the AR lending space and finally, the decrease in the prime rate of 3.25% in the past year.

The provision for loan losses was $1,258,000 for the six months ended June 30, 2008 compared to $936,000 for the six months ended June 30, 2007. Net charge-offs (recoveries) for the six months ended June 30, 2008 totaled ($57,000), or (0.12%) (annualized) of average loans, compared to $213,000 or 0.49% (annualized) of average loans for the six months ended June 30, 2007. Non-performing loans at June 30, 2008 totaled $0.00, a decrease from $720,000 at March 31, 2008.

The Bank's capital ratios remain strong with Tier 1 risk based capital at 13.44%. The Bank remains highly capitalized as far as the regulatory entities are concerned, with total risk based capital in excess of 14.6%. As was previously reported, the Board of Directors recently authorized a stock buyback of $500,000 of the company's shares on the open market. The share repurchase is at the Bank's discretion and as of this time no shares have been repurchased.

John Nerland, the Bank's President and CEO, noted, "We made significant progress during the second quarter in reducing and controlling expenses and in reducing the risk in the loan portfolio of the Bank. Although there are challenges in the banking industry, we feel we are positioning ourselves in a conservative manner to take advantage of opportunities as they present themselves in the future."

About California Oaks State Bank

California Oaks State Bank was founded in 1998 and is a locally owned community bank. Its locations in Thousand Oaks and Simi Valley serve both business and professional services customers. The bank provides a full range of products and services including commercial and real estate loans as well as cash management products and deposit services. Its unique capability in diversified lending in addition to its customary community bank credit products help its customers meet their cash management goals. The bank has earned a reputation for its expertise in commercial real estate financing, accounts receivable financing, as well as SBA loans. For additional information, visit www.caloaks.com.

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to the safe harbors created by the act. These forward-looking statements refer to the Company's current expectations regarding future operating results, and growth in loans, deposits, and assets. These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results, performance, or achievements to differ materially from those expressed, suggested, or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to (1) the impact of changes in interest rates, a decline in economic conditions, and increased competition by financial service providers on the Company's results of operation, (2) the Company's ability to continue its internal growth rate, (3) the Company's ability to build net interest spread, (4) the quality of the Company's earning assets, and (5) governmental regulations.

                              BALANCE SHEET

                      June 30, 2008 (Unaudited) (000)


                                                   6/30/2008     6/30/2007
                                                 ------------  ------------
ASSETS
Cash and Due from Banks                          $      5,790  $      9,187
Federal Funds Sold                                        935         2,970
Investment Securities                                   7,682         7,451
Loans (net)                                           103,293        84,983
Other Assets                                            6,140         3,012
                                                 ------------  ------------
   Total Assets                                  $    123,840  $    107,603
                                                 ============  ============

LIABILITIES & SHAREHOLDERS' EQUITY
Demand Deposits                                  $     35,560  $     35,377
Money Market and NOW Accounts                          20,488        28,649
Savings Accounts                                        4,133         4,134
Time Deposits Under $100,000                           20,167         9,532
Time Deposits $100,000 and Over                        10,402        11,550
                                                 ------------  ------------
   Total Deposits                                      90,750        89,242
FHLB Borrowings                                        17,000         3,000
Other Liabilities                                         814           479
                                                 ------------  ------------
   Total Liabilities                                  108,564        92,721
Total Equity                                           15,276        14,882
                                                 ------------  ------------
Total Liabilities and Equity                     $    123,840  $    107,603
                                                 ============  ============





                          STATEMENT OF EARNINGS

                        June 30, 2008 (Unaudited)
                                   (000)


                                                 6/30/2008      6/30/2007
                                               ------------   ------------
Interest Income                                $      4,073   $      4,479
Interest Expense                                        878            840
                                               ------------   ------------
Net Interest Income                                   3,195          3,639

Provision for Loan Loss                                 219            107
                                               ------------   ------------
Net Interest Income after Provision                   2,976          3,532
Non Interest Income                                     453            463
                                               ------------   ------------
Total Operating Income                                3,429          3,995

Total Non Interest Expense                            3,235          3,377
                                               ------------   ------------
Net Income Before Tax & Extraordinary                   194            618
Tax and Extraordinary Items                              76            239
                                               ------------   ------------
Net Income (Loss)                              $        118   $        379
                                               ============   ============

RATIOS  - Annualized                             6/30/2008      6/30/2007
                                               ------------   ------------
Earnings Per Share                             $       0.16   $       0.51
Book Value Per Share                           $      10.29   $      10.10
Return on Assets                                       0.19%          0.69%
Return on Equity                                       1.55%          5.10%

Contact Information: Media Contact: John Nerland President & CEO (805) 413-0111