California Oaks State Bank Reports 1st Quarter 2009 Results

THOUSAND OAKS, CA--(Marketwire - May 1, 2009) - California Oaks State Bank (OTCBB: COSB), a community business bank with assets of $126.5 million, today reported net income for the first quarter of 2009 of $116,660 or $.08 per share, compared to a net loss of $4,432 or ($0.01) per share in the first quarter of 2008.

Total assets ended March 31, 2009 at $126.5 million with net loans and deposits at $104.4 million and $92.3 million respectively. Total assets by comparison for first quarter 2008 were $131.6 million with net loans and deposits of $101.8 million and $93.4 million respectively. The year over year growth in loans of $2.6 million can be attributed to the increase in the commercial loan portfolio while the Bank continues to intentionally shrink the riskier loan portfolios. A concerted effort has occurred to reposition the portfolio from riskier lending groups to more typical commercial lending. Although this migration is currently having an impact on the net interest margin, the riskier lending was unacceptable from a risk analysis standpoint.

On the deposit side, the Bank saw its deposit base remain stable compared to a year ago due to an increase primarily in the certificate of deposit category while demand deposits decreased $3.5 million and other deposits remained relatively flat. FHLB borrowings decreased, compared to a year ago, by $6.5 million.

The net interest margin as a percentage of average assets ended the first quarter at 4.09% verses 4.73% in the fourth quarter of 2008. The decrease in the Bank's margin in the first quarter can mainly be attributed to the decrease in the prime lending rate late in the fourth quarter of 2008 of 75 basis points which carried into 2009.

A thorough analysis of the Bank's loan portfolio has been completed and appears to be adequately reserved for loan losses. Over the past year, a negative quality migration in the credit portfolio was experienced. This migration can be attributed towards the general economic conditions the country is experiencing.

The Bank's capital ratios remain strong with Tier 1 risk based capital at 13.52%. California Oaks State Bank remains highly capitalized as far as the regulatory entities are concerned, with total risk based capital of 16.15%. In today's Banking environment, this is a very positive position to be in. As was previously reported, the Bank received capital funding in January for $3.3 million that the government made available under the Treasury Capital Purchase Plan (TARP). Upon approval, $3.3 million of preferred stock was sold to the U. S. Treasury to help fortress the balance sheet and enable the Bank to increase lending efforts. The government invests only in "healthy, viable banks."

John Nerland, the Bank's President and CEO, noted, "The Bank is focused on keeping its cost structure in line through the current challenging economic times and has been successful in reducing costs to offset the margin compression. We are not expecting aggressive growth this year; rather we are focused on maintaining and managing our existing credit portfolio. We continue to make progress in aggressively working down the problem and non accrual credits. In addition, we are encouraging core deposits which will build franchise value for Cal Oaks."

Visit the California Oaks State Bank Web site at www.caloaks.com for more information and updates on new products as they become available.

About California Oaks State Bank

California Oaks State Bank (OTCBB: COSB) with $122 million in assets is located in Ventura County with offices in Thousand Oaks and Simi Valley and a Loan Production Office located in Walnut Creek, Calif. California Oaks State Bank was founded in 1998 as a locally owned Community business bank. 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.

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
                     March 31, 2009 (Unaudited)
                               (000)


                                                        3/31/2009 3/31/2008
                                                        --------- ---------
ASSETS
Cash and Due from Banks                                 $   6,526 $   6,265
Federal Funds Sold                                          8,045     9,080
Investment Securities                                       1,928     8,557
Loans (net)                                               104,360   101,849
Other Assets                                                5,656     5,849
                                                        --------- ---------
   Total Assets                                         $ 126,515 $ 131,600
                                                        ========= =========

LIABILITIES & SHAREHOLDERS EQUITY
Demand Deposits                                         $  30,243 $  34,817
Money Market and NOW Accounts                              25,995    26,445
Savings Accounts                                            3,868     4,546
Time Deposits Under $100,000                               17,212    17,668
Time Deposits $100,000 and Over                            15,000     9,899
                                                        --------- ---------
   Total Deposits                                          92,318    93,375
FHLB Borrowings                                            16,000    22,500
Other Liabilities                                             601       515
                                                        --------- ---------
   Total Liabilities                                      108,919   116,390
Total Equity                                               17,596    15,210
                                                        --------- ---------
Total Liabilities and Equity                            $ 126,515 $ 131,600
                                                        ========= =========



                            STATEMENT OF EARNINGS
                          March 31, 2009 (Unaudited)
                                    (000)

                                                3/31/2009     3/31/2008
                                              ------------- -------------
Interest Income                               $       1,752 $       1,988
Interest Expense                                        461           406
                                              ------------- -------------
Net Interest Income                                   1,291         1,582

Provision for Loan Loss                                  60           110
                                              ------------- -------------
Net Interest Income after Provision                   1,231         1,472
Non Interest Income                                     327           228
                                              ------------- -------------
Total Operating Income                                1,558         1,700

Total Non Interest Expense                            1,441         1,706
Net Income Before Tax & Extraordinary                   117            -6
Tax and Extraordinary Items                               0             2
                                              ------------- -------------
Net Income (Loss)                             $         117 $          -4
                                              ============= =============


RATIOS - Annualized                             3/31/2009     3/31/2008
                                              ------------- -------------
Earnings Per Common Share                     $        0.08 $       (0.01)
Book Value Per Common Share                   $        9.64 $       10.24
Return on Assets                                       0.37%        (0.01%)
Return on Equity                                       2.94%        (0.11%)

Contact Information: Media Contact: John Nerland President and CEO (805) 413-0111 johnn@caloaks.com