To Our Shareholders:

The turmoil continues in the financial markets at all levels - international, national, state and local. While the Federal Reserve and other regulatory measures may be helping to stabilize the situation on “Wall Street”, they have done little to improve conditions on “Main Street” - in fact, quite the opposite. Contracting margins caused by historically rapid changes in short term interest rates dramatically impact most community banks, including Premier Valley Bank. However, as recorded by Martina McBride in her duet with Clint Black Still Holding On, PVB “can stand the test of time . . . as far as (we) can see”.

Net income for the first quarter of 2008 totaled $1.0 million ($.09 per share), an increase of 108% over $490,000 ($.04 per share) for the fourth quarter of 2007 but a 29% decrease when compared to the $1.4 million ($.12 per share) for the quarter ended March 31, 2007. At March 31, 2008, total assets stood at $485 million, up from $469 million at December 31, 2007 and from $457 million at March 31, 2007. As of March 31, 2008, deposits totaled $415 million, a 6% increase during the last twelve months, while loans outstanding were $339 million, an 11% improvement over March 31, 2007. Shareholders’ equity at March 31, 2008 was in excess of $59 million, reflecting a very strong capital ratio of over 12% of total assets.

During the first quarter of 2008, your Bank:

Distributed on January 15, 2008 its third consecutive dividend payment of $.05 per share and declared its fourth consecutive dividend also of $.05 per share to shareholders of record on March 31, 2008.
Continued its second stock repurchase program under which approximately $2.7 million (approximately 385,000 shares) remains authorized for future repurchases of PVLY shares throughout 2008.
Continued its Dividend Reinvestment and Stock Purchase Plan under which shareholders may conveniently reinvest proceeds of cash dividends into additional shares of common stock.