California Oaks State Bank Reports 3rd Quarter 2008 Results

THOUSAND OAKS, CA--(Marketwire - October 24, 2008) - California Oaks State Bank (OTCBB: COSB), a community business bank with assets of $123.2 million, today reported net income for the nine months of 2008 of $140,605 or $0.10 per share, compared to net income of $412,157 or $0.27 per share in the same time period of 2007.

Total assets ended September 30, 2008 at $123.2 million with net loans and deposits at $103.9 million and $90 million respectively. Total assets by comparison for third quarter 2007 were $102.3 million with net loans and deposits of $80.4 million and $83.7 million respectively. During the third quarter of 2008, the Bank grew its net loan portfolio from $103.3 million to $103.9 million. Loan growth in the quarter can be attributed to the increase in the commercial loan portfolio. We continue to have robust commercial loan demand. During the third quarter, we funded over $7.5 million in new loans and then sold off participations as we felt necessary to meet risk objectives or liquidity needs. All new commercial loan relationships require that Cal Oaks be the primary bank for the business relationship. We have made a concerted effort to exit transactions where we were not the primary bank for a client or were not going to get the primary business relationship from the client.

On the deposit side, the Bank saw its deposit base remain stable in the third quarter primarily in the money market and NOW account category where deposits increased $2.4 million but that increase was offset by a decrease of $3.7 million in the demand deposit category.

John Nerland, the Bank's President and CEO, noted, "The biggest challenge that community banks currently face is obtaining deposit growth in low cost deposits. We are starting to see a small uptick in deposits as the market continues its flight to safety."

The net interest margin as a percentage of average assets for the third quarter remains very healthy at 5.06% versus 5.03% in the second quarter of 2008. The increase in margin can be attributed to the slight decrease in the core deposit cost of funds.

The allowance for loan losses totaled $1,184,000 as of September 30, 2008 compared to $985,000 for the nine months ended September 30, 2007. Net charge-offs for the nine months ended September 30, 2008 totaled $157,000, or 0.21% annualized of average loans, compared to $210,000 or 0.33% (annualized) of average loans for the nine months ended September 30, 2007. Non-performing loans at September 30, 2008 totaled $1.05 million, an increase from $0 at June 30, 2008. The non-performing loans consisted of two loans and while we have placed the loans on nonaccrual status, there is no apparent impairment in the loans at this time.

The Bank's capital ratios remain strong with Tier 1 risk based capital at 13.57%. The Bank remains highly capitalized as far as the regulatory entities are concerned, with total risk based capital in excess of 14.66%. In today's Banking environment, this is a very positive position to be in. 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.

Nerland commented, "We continue to look to reduce expenses and risk as we move through these challenging economic times." He added, "The Bank does not participate in subprime lending nor does it hold investment securities backed by subprime loans. Additionally, it does not hold common or preferred stock of Fannie Mae or of Freddie Mac."

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 meets 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
                  September 30, 2008   (Unaudited) (000)



                                                   9/30/2008    9/30/2007
                                                  ------------ ------------
ASSETS
Cash and Due from Banks                           $      5,624 $      9,343
Federal Funds Sold                                       2,785        2,465
Investment Securities                                    5,108        7,273
Loans (net)                                            103,873       80,370
Other Assets                                             5,852        2,894
                                                  ------------ ------------
   Total Assets                                   $    123,242 $    102,345
                                                  ============ ============

LIABILITIES & SHAREHOLDERS EQUITY
Demand Deposits                                   $     31,877 $     34,731
Money Market and NOW Accounts                           22,876       32,001
Savings Accounts                                         3,904        4,305
Time Deposits Under $100,000                            22,036        2,880
Time Deposits $100,000 and Over                          9,322        9,815
                                                  ------------ ------------
   Total Deposits                                       90,015       83,732
FHLB Borrowings                                         17,000        3,000
Other Liabilities                                          838          546
                                                  ------------ ------------
   Total Liabilities                                   107,853       87,278
Total Equity                                            15,389       15,067
                                                  ------------ ------------
Total Liabilities and Equity                      $    123,242 $    102,345
                                                  ============ ============






                          STATEMENT OF EARNINGS
                     September 30, 2008   (Unaudited)
                                   (000)


                                                   9/30/2008    9/30/2007
                                                  -----------  -----------
Interest Income                                   $     6,062  $     6,647
Interest Expense                                        1,356        1,238
                                                  -----------  -----------
Net Interest Income                                     4,706        5,409

Provision for Loan Loss                                   359          153
                                                  -----------  -----------
Net Interest Income after Provision                     4,347        5,256
Non Interest Income                                       632          649
                                                  -----------  -----------
Total Operating Income                                  4,979        5,905

Total Non Interest Expense                              4,728        5,156
                                                  -----------  -----------
Net Income Before Tax & Extraordinary                     251          749
Tax and Extraordinary Items                               110          337
                                                  -----------  -----------
Net Income (Loss)                                 $       141  $       412
                                                  ===========  ===========


RATIOS  - Annualized                               9/30/2008    9/30/2007
                                                  -----------  -----------
Earnings Per Share                                $      0.13  $      0.37
Book Value Per Share                              $     10.36  $     10.22
Return on Assets                                         0.15%        0.51%
Return on Equity                                         1.22%        3.74%

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