[AMRBK AND BNKA LOGOS]




                                                                October 15, 2004


Dear American River Bankshares and Bank of Amador Shareholders:

         The boards of directors of American River Bankshares and its
subsidiary, American River Bank, and Bank of Amador have unanimously approved a
merger of Bank of Amador with and into American River Bank. American River
Bankshares and Bank of Amador will hold shareholders meetings to consider and
vote on the principal terms, including the merger, of the Agreement and Plan of
Reorganization and Merger dated as of July 8, 2004 attached as Annex A to the
accompanying document. No other business will be transacted at the special
meetings other than matters incidental to the conduct of the special meetings.


         In the merger, each share of Bank of Amador common stock outstanding at
the effective time of the merger (other than shares with respect to which
dissenters' rights are perfected) will be converted into the right to receive a
combination of (1) cash in the amount of $6.825, subject, however, to a holdback
of $1,362,000 from the total cash paid to all shareholders and allocated to each
shareholder prorata, until the earlier of payment of the balance due on a Bank
of Amador loan or upon determination of the amount of any loss related to the
loan, and (2) a number of shares of American River Bankshares common stock equal
to 12.675 divided by the average closing price of American River Bankshares
common stock over a 20 day trading period prior to the closing date of the
merger if the average trading price is between $18.50 and $23.50; provided,
however, that the number of shares of American River Bankshares common stock
exchanged will be fixed at 0.6851 if the average trading price is $18.50 or
less, or fixed at 0.5394 if the average trading price is $23.50 or more. No
fractional shares of American River Bankshares common stock will be issued to
holders of shares of Bank of Amador common stock. In lieu of such fractional
shares, cash will be paid to Bank of Amador shareholders in accordance with the
terms of the merger agreement. American River Bankshares common stock is listed
and traded on the Nasdaq National Market under the symbol "AMRB" and closed at
$23.25 on October 15, 2004.


         We encourage you to carefully read the accompanying document which we
refer to as the "joint proxy statement-prospectus," and in particular the
section entitled "RISK FACTORS" commencing on page 25, as well as the annexes
attached to it, before voting. Approval of the merger requires the affirmative
vote of the holders of a majority of the outstanding shares of American River
Bankshares' common stock and a majority of the outstanding shares of Bank of
Amador's common stock in addition to receipt of government approvals and
satisfaction of conditions discussed in the joint proxy statement-prospectus. It
is important that your shares be represented at the special meeting. Whether or
not you plan to attend the special meeting, we urge you to sign, date and
promptly mail the enclosed proxy card. Please refer to the joint proxy
statement-prospectus for a complete description of the voting procedures.

                                   Sincerely,



/s/ DAVID T. TABER                           /s/ LARRY D. STANDING
---------------------------------            -----------------------------------
David T. Taber, President and                Larry D. Standing, President and
Chief Executive Officer                      Chief Executive Officer

         Neither the Securities and Exchange Commission nor any state securities
regulators have approved this transaction or the shares of American River
Bankshares common stock to be issued under this joint proxy statement-prospectus
or determined if this joint proxy statement-prospectus is accurate or adequate.
Any representation to the contrary is a criminal offense.

--------------------------------------------------------------------------------
The shares of American River Bankshares common stock offered by this joint proxy
statement-prospectus are not savings accounts, deposits or other obligations of
American River Bank or Bank of Amador or any subsidiary of any of the parties
and are not insured by the Federal Deposit Insurance Corporation or any other
governmental agency.
--------------------------------------------------------------------------------


The date of this joint proxy statement-prospectus is October 15, 2004, and is
first being mailed to American River Bankshares and Bank of Amador shareholders
on or about October 22, 2004.



                                  [AMRBK LOGO]
                           American River Bankshares



                            American River Bankshares
                    Notice of Special Meeting of Shareholders
                         to be held on November 23, 2004

         To the shareholders of American River Bankshares:

         Notice is hereby given that a special meeting of shareholders of
American River Bankshares will be held on November 23, 2004, 5:30 p.m., local
time, at 1545 River Park Drive, Suite 107, Sacramento, California for the
following purposes:

         1.       To consider and vote on a proposal to approve the Agreement
                  and Plan of Reorganization and Merger, dated as of July 8,
                  2004, among American River Bankshares, American River Bank and
                  Bank of Amador and the transactions contemplated by the
                  Agreement and Plan of Reorganization and Merger, including the
                  resulting issuance of shares of American River Bankshares
                  common stock in connection with the merger of Bank of Amador
                  into American River Bank. The terms and conditions of the
                  transaction are more fully described in the accompanying joint
                  proxy statement-prospectus.

         2.       To approve the adjournment of the special meeting for any
                  permitted purpose, including, if necessary, to solicit
                  additional proxies in the event that there are not sufficient
                  votes required to approve the merger as of the date of the
                  special meeting.

         The board of directors of American River Bankshares has unanimously
approved the transactions described above and unanimously recommends that you
vote in favor of the proposals at the special meeting.

         Shareholders of record at the close of business on October 15, 2004,
are entitled to notice of the special meeting and to vote at the special meeting
or any adjournments or postponements of the special meeting.

                                           By Order Of The Board Of Directors,



                                           /s/ STEPHEN H. WAKS
                                           -----------------------------------
                                           Stephen H. Waks, Secretary


--------------------------------------------------------------------------------
         Whether or not you plan to attend the special meeting in person, please
complete, date, sign and return the enclosed proxy card in the enclosed
envelope. No postage is required if you mail the proxy card in the United
States. If you attend the special meeting, you may vote in person if you wish,
even if you have previously returned your proxy card.
--------------------------------------------------------------------------------


                                   [BNKA LOGO]
                                 Bank of Amador



                                 Bank of Amador
                    Notice of Special Meeting of Shareholders
                         to be held on November 23, 2004

         To the shareholders of Bank of Amador:

         Notice is hereby given that a special meeting of shareholders of Bank
of Amador will be held on November 23, 2004, 6:00 p.m., local time, at 422
Sutter Street, Jackson, California for the following purposes:

         1.       To consider and vote on a proposal to approve the Agreement
                  and Plan of Reorganization and Merger, dated as of July 8,
                  2004, among American River Bankshares, American River Bank and
                  Bank of Amador, and the transactions contemplated by the
                  Agreement and Plan of Reorganization and Merger, including the
                  merger of Bank of Amador into American River Bank. The terms
                  and conditions of the transaction are more fully described in
                  the accompanying joint proxy statement-prospectus.

         2.       To approve the adjournment of the special meeting for any
                  permitted purpose, including, if necessary, to solicit
                  additional proxies in the event that there are not sufficient
                  votes required to approve the merger as of the date of the
                  special meeting.

         The board of directors of Bank of Amador has unanimously approved the
transaction described above and unanimously recommends that you vote in favor of
the proposal at the special meeting.

         Shareholders of record at the close of business on October 15, 2004 are
entitled to notice of the special meeting and to vote at the special meeting or
any adjournments or postponements of the special meeting.

                                            By Order Of The Board Of Directors,



                                            /s/ GARETH ABEL
                                            -----------------------------------
                                            Gareth Abel, Secretary


--------------------------------------------------------------------------------
         Whether or not you plan to attend the special meeting in person, please
complete, date, sign and return the enclosed proxy card in the enclosed
envelope. No postage is required if you mail the proxy card in the United
States. If you attend the special meeting, you may vote in person if you wish,
even if you have previously returned your proxy card.
--------------------------------------------------------------------------------



                                TABLE OF CONTENTS


                                                                                                             Page
                                                                                                             ----
                                                                                                          
QUESTIONS AND ANSWERS ABOUT THE MERGER AGREEMENT AND MERGER....................................................1
SUMMARY........................................................................................................4
        Information About American River Bankshares and American River Bank....................................4
        Information About Bank of Amador.......................................................................5
        Consideration to be Received in the Merger.............................................................5
        Special Meetings of Shareholders.......................................................................6
        Conditions to the Completion of the Merger.............................................................6
        Termination of the Merger Agreement....................................................................7
        Termination Fees.......................................................................................8
        Expenses of the Merger.................................................................................9
        Reasons for the Merger and Recommendations of the Boards of Directors..................................9
        Opinions of Financial Advisors........................................................................10
        Federal Income Tax Consequences.......................................................................10
        Accounting Treatment..................................................................................11
        Interests of Officers and Directors in the Merger.....................................................11
        Dissenters' Rights....................................................................................12
        Market Price and Dividend Information.................................................................13
        Comparison of Shareholder Rights......................................................................14
        Forward-Looking Statements............................................................................14
        Selected Historical and Pro Forma Financial Data......................................................14
UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION...............................................18
        Historical and Pro Forma Per Share Data for American River Bankshares and Bank of Amador..............23
RECENT DEVELOPMENTS...........................................................................................24
RISK FACTORS..................................................................................................25
        Risks Related to the Merger...........................................................................25
        Risks Related to American River Bankshares Following Completion of the Merger.........................26
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS..............................................................29
INTRODUCTION..................................................................................................31
        The Special Meetings:  Dates, Times and Places........................................................31
        Purpose of the Meetings...............................................................................31
        Merger Proposal.......................................................................................31
        Record Date and Outstanding Shares....................................................................31
        Voting and Vote Required..............................................................................32
        Solicitation of Proxies...............................................................................32
        Voting of Proxies.....................................................................................33
INFORMATION ABOUT AMERICAN RIVER BANKSHARES AND AMERICAN RIVER BANK...........................................36
        General Development of Business.......................................................................36
        Competition...........................................................................................37
        Properties............................................................................................38
        Legal Proceedings.....................................................................................39
        Security Ownership of Directors, Executive Officers and 5% Shareholders...............................39
        Background and Business Experience of Directors and Executive Officers................................41
        Committees of the Board of Directors..................................................................43
        Compensation of Directors.............................................................................45
        Board Compensation Committee Report on Executive Compensation.........................................47
        Executive Compensation................................................................................48


                                     - i -





                                                                                                          
        Employment Contracts and Termination of Employment and Change in Control
        Arrangements..........................................................................................50
        Other Compensation Arrangements.......................................................................51
        Equity Compensation Plan Information..................................................................51
        Comparison of American River Bankshares Shareholders' Return..........................................51
        Transactions with Management and Others...............................................................53
        Indebtedness of Management............................................................................53
        Section 16(a) Beneficial Ownership Reporting Compliance...............................................53
        Code of Ethics........................................................................................53
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS OF AMERICAN RIVER BANKSHARES....................................................55
        Critical Accounting Policies..........................................................................55
        General Development of Business.......................................................................56
        Overview..............................................................................................57
        Results of Operations.................................................................................58
        Risk Elements.........................................................................................71
        Deposits..............................................................................................77
        Other Borrowed Funds..................................................................................77
        Capital Resources.....................................................................................78
        Off-Balance Sheet Items...............................................................................79
        Contractual Obligations...............................................................................79
        Other Matters.........................................................................................80
        Quantitative and Qualitative Disclosures about Market Risk............................................80
        Inflation.............................................................................................83
        Liquidity.............................................................................................83
        Changes in and Disagreements with Accountants on Accounting
               and Financial Disclosure.......................................................................88
INFORMATION ABOUT BANK OF AMADOR..............................................................................89
        General Development of Business.......................................................................89
        Competition...........................................................................................90
        Properties............................................................................................91
        Legal Proceedings.....................................................................................91
        Security Ownership of Directors, Executive Officers and 5% Shareholders...............................92
        Background and Business Experience of Directors and Executive Officers................................93
        Compensation of Directors.............................................................................94
        Executive Compensation................................................................................95
        Employment Contracts and Termination of Employment and Change in Control
        Arrangements..........................................................................................97
        Equity Compensation Plan Information..................................................................97
        Transactions with Management and Others...............................................................98
        Indebtedness of Management............................................................................98
        Section 16(a) Beneficial Ownership Reporting Compliance...............................................98
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS OF BANK OF AMADOR...............................................................99
        Overview..............................................................................................99
        Results of Operations.................................................................................99
        Risk Elements........................................................................................107
        Deposits.............................................................................................109
        Liquidity............................................................................................110
        Capital Resources....................................................................................112
        Inflation............................................................................................113


                                     - ii -





                                                                                                          
        Commitments, Contingent Liabilities and Off-Balance Sheet Arrangements...............................113
        Other Matters........................................................................................115
        Quantitative and Qualitative Disclosures about Market Risk...........................................116
        Changes in and Disagreements with Accountants on Accounting
               and Financial Disclosure......................................................................118
THE MERGER...................................................................................................119
        General..............................................................................................119
        Background of the Merger.............................................................................119
        Reasons for the Merger and Recommendations of the Boards of Directors................................124
        Consideration to be Received in the Merger...........................................................127
        Bank of Amador Stock Option Plan.....................................................................128
        Opinions of Financial Advisors.......................................................................128
        Interests of Officers and Directors in the Merger....................................................143
        Conduct of Business Pending the Merger...............................................................145
        Additional Agreements................................................................................147
        Representations and Warranties.......................................................................148
        Conditions to the Completion of the Merger...........................................................149
        Termination of the Merger Agreement..................................................................152
        Termination Fees.....................................................................................153
        Expenses of the Merger...............................................................................154
        Amendment............................................................................................154
        Extension; Waiver....................................................................................154
        Management and Operations Following the Merger.......................................................154
        Required Government Approvals........................................................................155
        Accounting Treatment.................................................................................157
        Resales of American River Bankshares Common Stock....................................................157
FEDERAL INCOME TAX CONSEQUENCES..............................................................................159
        General..............................................................................................159
        Tax Opinion of Perry-Smith LLP.......................................................................159
        Consequences to Bank of Amador Shareholders..........................................................160
        Warning Regarding Federal Income Tax Opinions........................................................164
DISSENTERS' RIGHTS - American River Bankshares...............................................................165
DISSENTERS' RIGHTS - Bank of Amador..........................................................................166
MARKET PRICE AND DIVIDEND INFORMATION........................................................................168
        Market Quotations....................................................................................168
        Dividends and Distributions..........................................................................169
        Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.....................171
COMPARISON OF SHAREHOLDER RIGHTS.............................................................................172
        General..............................................................................................172
        Anti-Takeover Measures...............................................................................172
        Quorum Requirements..................................................................................172
        Indemnification of Directors and Executive Officers..................................................172
        Shareholder Meetings and Action by Written Consent...................................................174
        Cumulative Voting....................................................................................174
        Amendment of Articles and Bylaws.....................................................................174
        Filling Vacancies on the Board of Directors..........................................................175
        Classified Board Provisions..........................................................................176
        Call of Annual or Special Meeting of Shareholders....................................................176
DESCRIPTION OF AMERICAN RIVER BANKSHARES CAPITAL STOCK.......................................................177
DESCRIPTION OF BANK OF AMADOR CAPITAL STOCK..................................................................177
SUPERVISION AND REGULATION...................................................................................178


                                    - iii -





                                                                                                          
        General..............................................................................................178
        Capital Standards....................................................................................179
        Prompt Corrective Action ............................................................................180
        Additional Regulations...............................................................................181
        Limitations on Dividends.............................................................................182
        Impact of Legislative and Regulatory Proposals.......................................................182
EXPERTS......................................................................................................189
LEGAL MATTERS................................................................................................189
WHERE YOU CAN FIND MORE INFORMATION..........................................................................189
INDEX TO FINANCIAL STATEMENTS................................................................................191

ANNEX A       Agreement and Plan of Reorganization and Merger, dated as of July 8, 2004
ANNEX B       Opinion of Sandler O'Neill & Partners, L.P.
ANNEX C       Opinion of Hoefer & Arnett Incorporated
ANNEX D       Chapter 13 Dissenters' Rights


                                     - iv -


           QUESTIONS AND ANSWERS ABOUT THE MERGER AGREEMENT AND MERGER

--------------------------------------------------------------------------------
         THIS QUESTION AND ANSWER SUMMARY HIGHLIGHTS SELECTED INFORMATION
CONTAINED IN OTHER SECTIONS OF THIS JOINT PROXY STATEMENT-PROSPECTUS. TO
UNDERSTAND THE MERGER MORE FULLY, YOU SHOULD CAREFULLY READ THIS ENTIRE JOINT
PROXY STATEMENT-PROSPECTUS, INCLUDING ALL ANNEXES AND FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------

         Q: Whom should I contact with questions or to obtain additional copies
of this joint proxy statement-prospectus or information incorporated by
reference into this joint proxy statement-prospectus?

         A: You may contact:

         American River Bankshares
         1545 River Park Drive, Suite 107
         Sacramento, California 95815
         Attention:  David T. Taber, President
         (916) 565-6100

         Bank of Amador
         422 Sutter Street
         Jackson, California 95642
         Attention: Larry D. Standing, President
         (209) 223-2320

         See also "Where You Can Find More Information" on page 189.

         Q: Why is this transaction being proposed?

         A: American River Bankshares and Bank of Amador are proposing this
transaction because their respective boards of directors have concluded that a
combination of the two organizations is in the best interests of shareholders of
American River Bankshares and Bank of Amador and that the combined companies can
offer a broader array of services and products than each could offer on its own.

         Q: As a holder of Bank of Amador common stock, what will I receive in
the merger?


         A: In the merger, each share of Bank of Amador common stock outstanding
at the effective time of the merger will be converted into the right to receive
cash and a number of shares of American River Bankshares common stock, subject
to potential adjustments prior to the closing of the merger. Any fractional
shares will be paid in cash. See "Consideration to be Received in the Merger" on
page 127.


         Q: What will happen to Bank of Amador in this merger?

         A: Bank of Amador will merge with and into American River Bank and
American River Bank will continue to operate as a wholly-owned subsidiary of
American River Bankshares. Upon consummation of the merger, American River Bank
will conduct operations at the former offices of Bank of Amador under the name
"Bank of Amador, a division of American River Bank."

         Q: Will the merger be tax-free to me?

         A: The merger of Bank of Amador with and into American River Bank is
intended to be a tax-free reorganization for federal income tax purposes for the
companies and their shareholders. In general, Bank of Amador shareholders will
not recognize gain or loss on the exchange of their stock, but will recognize
gain or loss on account of cash received for Bank of Amador shares and received
for fractional shares or dissenting shares. American River Bankshares
shareholders will not recognize any gain or loss in connection with the merger.
To review the tax consequences to

                                        1


American River Bankshares and Bank of Amador shareholders in greater detail, see
"The Merger -- Federal Income Tax Consequences" on page 159.

         Q: What risks should I consider?

         A: You should carefully read the information set forth in this joint
proxy statement-prospectus and also consider other specified risk factors. See
"Risk Factors" on page 25.

         Q: How do I vote?

         A: Simply indicate on your proxy card how you want to vote and then
sign and mail your proxy card in the enclosed return envelope as soon as
possible so that your shares may be represented at the special meeting. See
"Introduction -- Voting of Proxies -- Submitting Proxies"commencing on page 33.

         Q: If my shares are held in "street name" by my broker, will my broker
vote my shares for me?

         A: Your broker will not vote your shares for you unless you provide
instructions to your broker on how to vote. See "Introduction -- Voting of
Proxies -- Submitting Proxies"commencing on page 33.

         Q: How does the merger affect outstanding options to purchase Bank of
Amador common stock?


         A: Each person, except directors and executive officers of Bank of
Amador, holding one or more options to purchase Bank of Amador common stock
pursuant to the Bank of Amador 1998 Stock Option Plan has the right, in his or
her discretion, prior to the effective date of the merger, to either (i)
exercise any vested portion of the option, or (ii) surrender his or her stock
option agreement and receive a cash payment for the option at a price equal to
(A) the difference between (1) the per share consideration used to compute the
conversion ratio in the merger and (2) the per share exercise price applicable
to such option; (B) multiplied by the total number of Bank of Amador shares
subject to such option. See "Bank of Amador Stock Option Plan" on page 128.


         Q: Can I change my vote after I have mailed my signed proxy card?

         A: Yes. If you vote by returning a proxy card, you may change your vote
at any time before your proxy is voted at the special meeting. If your shares
are held in your name, you may do this in one of three ways. First, you may send
a written notice stating that you would like to revoke your proxy. Second, you
may complete and submit a new proxy card. If you choose either of these two
methods, you must submit your notice of revocation or your new proxy card to the
appropriate address in the first paragraph of the notice of the special meetings
for American River Bankshares and Bank of Amador and it must be received prior
to the vote at the respective special meeting. Third, you may attend the special
meeting and vote in person if you tell the Secretary that you want to cancel
your proxy and vote in person. Simply attending the special meeting, however,
will not revoke your proxy. See "Introduction -- Voting of Proxies - Revoking
Proxies" commencing on page 33.

         Q: Should I send in my Bank of Amador stock certificates now?

         A: No. After the merger is completed, the exchange agent appointed by
American River Bankshares will send you written instructions for exchanging your
Bank of Amador stock certificates.

         Q: When do you expect the merger to be completed?

         A: We are working toward completing this merger as quickly as possible.
We currently expect to complete this merger during the fourth quarter of 2004.

                                        2


         Q: Why have you sent me this document?

         A: The joint proxy statement-prospectus contains important information
regarding the proposed merger, as well as information about American River
Bankshares and Bank of Amador. It also contains important information about what
the boards of directors and management of American River Bankshares and Bank of
Amador, respectively, considered in evaluating this proposed merger. We urge you
to read this document carefully, including its attachments. You may also want to
review the documents listed under "Where You Can Find More Information" on page
189.

                                        3


                                    SUMMARY

         This summary highlights selected information in this joint proxy
statement-prospectus and may not contain all of the information that is
important to you. To understand the Agreement and Plan of Reorganization and
Merger dated as of July 8, 2004, which is referred to as the "merger agreement"
in this summary and throughout the remainder of this joint proxy
statement-prospectus, and the merger fully and for a more complete description
of the terms of the merger agreement and the merger, you should carefully read
this entire document and the other documents to which we have referred you. See
"Where You Can Find More Information" on page 189. The merger agreement is
attached as Annex A to this document. We encourage you to read the merger
agreement. It is the legal document that governs the proposed transaction.


Information About American River Bankshares and American River Bank (page 36)


         American River Bankshares and American River Bank
         1545 River Park Drive, Suite 107
         Sacramento, California 95815
         (916) 565-6100

         American River Bankshares is a bank holding company registered under
the Bank Holding Company Act of 1956, as amended. The common stock of American
River Bankshares is registered under Section 12(g) of the Securities Exchange
Act of 1934, as amended, and is subject to the periodic reporting requirements
of Section 13 of the Securities Exchange Act of 1934, which include, but are not
limited to, the filing of annual, quarterly, and other current reports with the
Securities and Exchange Commission. Its common stock is listed for trading on
the Nasdaq National Market under the symbol "AMRB."

         American River Bankshares was incorporated under the laws of the State
of California in 1995 under the name American River Holdings and changed its
name in 2004 to American River Bankshares. As a bank holding company, American
River Bankshares is authorized to engage in the activities permitted under the
Bank Holding Company Act of 1956, as amended, and regulations thereunder. Its
principal office is located at 1545 River Park Drive, Suite 107, Sacramento,
California 95815 and its telephone number is (916) 565-6100.

         American River Bankshares owns 100% of the issued and outstanding
common shares of American River Bank, a California state chartered bank, and
American River Financial, a California corporation which has been inactive since
its incorporation in 2003. American River Bank was incorporated and commenced
business in Fair Oaks, California, in 1983 and thereafter moved its headquarters
office to Sacramento, California in 1985. American River Bank operates five full
service offices in Sacramento and Placer Counties. It also operates three full
service offices in Sonoma County under the name "North Coast Bank, a division of
American River Bank" resulting from the merger of North Coast Bank with and into
American River Bank in 2003. American River Bank owns 100% of two inactive
companies, ARBCO and American River Mortgage. ARBCO was formed in 1984 to
conduct real estate development and has been inactive since 1995. American River
Mortgage has been inactive since its formation in 1994. American River Bank is
subject to the supervision of, and is regularly examined by, the California
Department of Financial Institutions and the Federal Deposit Insurance
Corporation. American River Bank offers a full range of commercial banking
services and its deposits are insured by the Federal Deposit Insurance
Corporation up to the maximum legal limit. Its principal office is located at
1545 River Park Drive, Suite 107, Sacramento, California 95815 and its telephone
number is (916) 565-6100.

                                       4



Information About Bank of Amador (page 89)


         Bank of Amador
         422 Sutter Street
         Jackson, California 95642
         (209) 223-2320

         Bank of Amador is a California state chartered bank that commenced
business on November 21, 1983, and operates three full service offices and a
data processing center in Amador County. The common stock of Bank of Amador is
registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended and is subject to the periodic reporting requirements of Section 13 of
the Securities Exchange Act of 1934, which include, but are not limited to, the
filing of annual, quarterly, and other current reports with the Federal Deposit
Insurance Corporation. Its common stock is not listed on any exchange and is
traded in the over-the-counter market and quoted on the OTC Bulletin Board under
the symbol "BNKA." Bank of Amador has no subsidiaries. Bank of Amador is subject
to the supervision of, and is regularly examined by, the California Department
of Financial Institutions and the Federal Deposit Insurance Corporation. Bank of
Amador offers a full range of commercial banking services and its deposits are
insured by the Federal Deposit Insurance Corporation up to the maximum legal
limit. Its principal office is located at 422 Sutter Street, Jackson, California
95642 and its telephone number is (209) 223-2320.


Consideration to be Received in the Merger (page 127)


         When the transactions contemplated by the merger agreement, including
the merger, are completed, each share of Bank of Amador common stock issued and
outstanding immediately prior to the effective time of the merger, except
dissenting shares, will be converted into the right to receive the following:

         o        cash in the amount of $6.825; and

         o        a number of shares of American River Bankshares common stock
                  equal to:

                  o        0.6851 shares of American River Bankshares common
                           stock if the American River Bankshares measuring
                           price is $18.50 or lower;

                  o        0.5394 shares of American River Bankshares common
                           stock if the American River Bankshares measuring
                           price is $23.50 or higher; or

                  o        the number of shares of American River Bankshares
                           common stock equal to 12.675 divided by the American
                           River Bankshares measuring price if the American
                           River Bankshares measuring price is between $18.50
                           and $23.50.

         The "American River Bankshares measuring price" means the average
closing price of American River Bankshares common stock as traded on the Nasdaq
National Market over the twenty (20) consecutive trading day period ending on
the second business day prior to the closing date.

         The aggregate cash payment to be made by American River Bankshares
under the merger agreement based on the above conversion formula is subject to
the holdback from payment by American River Bankshares of an aggregate amount of
$1,362,000 until the earlier of (i) the payment in full of the balance due, or
(ii) the final determination of the amount of loss, if any, related to a
construction loan held in the loan portfolio of Bank of Amador. In the event
that the conditions described for release of the holdback amount are not
satisfied by the closing date, the holdback amount will be withheld on a prorata
basis among all Bank of Amador shareholders otherwise entitled to receipt of
their prorata portion of the

                                       5



cash payable to them under the above conversion formula until the conditions are
satisfied. See "The Merger--Consideration to be Received in the Merger" on page
127 and the sections 2.1 and 2.8 of the merger agreement.


         No fractional shares of American River Bankshares common stock will be
issued to holders of Bank of Amador common stock. Instead, each holder entitled
to a fraction of a share will receive, at the time of surrender of the
certificate or certificates representing the holder's shares, an amount in cash
equal to the American River Bankshares measuring price multiplied by the amount
of a fractional share.

Special Meetings of Shareholders (page 31)

American River Bankshares

         You can vote at the special meeting of American River Bankshares
shareholders if you owned American River Bankshares common stock at the close of
business on the record date, October 15, 2004. You can cast one vote for each
share of American River Bankshares common stock that you owned at that time. In
order to approve the merger of Bank of Amador with and into American River Bank,
a wholly owned subsidiary of American River Bankshares, the holders of at least
a majority of the outstanding shares of American River Bankshares common stock
on the record date must vote in its favor. You can vote your shares by attending
the American River Bankshares special meeting and voting in person, or you can
mark the enclosed proxy card with your vote, sign it and mail it in the enclosed
return envelope. You can revoke your proxy until the voting at the special
meeting by submitting a written revocation, by sending in a new proxy or by
attending the special meeting and voting in person.

Bank of Amador

         You can vote at the special meeting of Bank of Amador shareholders if
you owned Bank of Amador common stock at the close of business on the record
date, October 15, 2004. You can cast one vote for each share of Bank of Amador
common stock that you owned at that time. In order to approve the merger of Bank
of Amador with and into American River Bank, a wholly owned subsidiary of
American River Bankshares, the holders of at least a majority of the outstanding
shares of Bank of Amador common stock on the record date must vote in its favor.
You can vote your shares by attending the Bank of Amador special meeting and
voting in person, or you can mark the enclosed proxy card with your vote, sign
it and mail it in the enclosed return envelope. You can revoke your proxy until
the voting at the special meeting by submitting a written revocation, by sending
in a new proxy or by attending the special meeting and voting in person.

Conditions to the Completion of the Merger (page 149)

         We will not complete the merger unless a number of conditions are
satisfied. These include:

         o        approval of the merger, by American River Bankshares
                  shareholders and by Bank of Amador shareholders;

         o        receipt of all required governmental approvals;

         o        absence of any governmental proceeding that would prohibit the
                  merger;

         o        receipt of a tax opinion to the effect that the merger will be
                  treated as a tax-free reorganization under the Internal
                  Revenue Code;

         o        absence of any orders suspending the effectiveness of the
                  American River Bankshares registration statement on Form S-4
                  filed with the Securities and Exchange Commission

                                       6


                  registering the shares of American River Bankshares common
                  stock to be issued to Bank of Amador shareholders in exchange
                  for shares of Bank of Amador common stock and receipt of all
                  required state securities law approvals;

         o        receipt of written fairness opinions dated as of a date as
                  close as practicable to the mailing date or the date of this
                  joint proxy statement-prospectus from American River
                  Bankshares' and Bank of Amador's financial advisors; and

         o        other customary conditions.

         American River Bankshares or Bank of Amador could decide to complete
the merger even though one or more of these conditions has not been met. It is
not certain when or if the conditions to the merger will be satisfied or waived,
or if the merger will be completed.

Termination of the Merger Agreement (page 152)

         We can terminate the merger agreement at any time before the merger is
completed, even if the shareholders of American River Bankshares and/or Bank of
Amador have approved the merger agreement. The merger agreement can be
terminated either by our mutual agreement or by one of us upon the occurrence of
particular events.

         Either American River Bankshares or Bank of Amador can terminate the
merger agreement if:

         o        The merger is not completed by June 30, 2005, unless this date
                  is further extended by mutual agreement;

         o        Any governmental agency denies or refuses to grant a required
                  approval of the merger, unless we agree to appeal the denial
                  or refusal or we agree to file an amended application for the
                  governmental approval; or

         o        The shareholders of American River Bankshares or Bank of
                  Amador fail to approve the merger.

         American River Bankshares can terminate the merger agreement if:

         o        Any of the conditions to American River Bankshares'
                  obligations under the merger agreement are not satisfied or
                  waived;

         o        A material adverse change has occurred in the business,
                  financial condition, results of operations or assets of Bank
                  of Amador;

         o        Bank of Amador enters into an agreement by which it would be
                  acquired by another entity;

         o        Bank of Amador breaches any covenant in the merger agreement
                  which materially impairs the benefit of the merger to American
                  River Bankshares, unless Bank of Amador cures the breach
                  within 45 days after written notice from American River
                  Bankshares; or

         o        Bank of Amador fails to deliver to American River Bankshares
                  the documents required for the merger.

                                       7


         Bank of Amador can terminate the merger agreement if:

         o        Any of the conditions to Bank of Amador's obligations under
                  the merger agreement are not satisfied or waived;

         o        A material adverse change has occurred in the business,
                  financial condition, results of operations or assets of
                  American River Bankshares;

         o        American River Bankshares breaches any covenant in the merger
                  agreement which materially impairs the benefit of the merger
                  to Bank of Amador unless American River Bankshares cures the
                  breach within 45 days after receipt of written notice from
                  Bank of Amador; or

         o        American River Bankshares fails to deliver to Bank of Amador
                  the documents required for the merger.

Termination Fees (page 153)

         Bank of Amador is required to pay American River Bankshares $1.2
million in liquidated damages if American River Bankshares terminates the merger
agreement for any of the following reasons:

         o        If Bank of Amador or its affiliates enters into an agreement
                  by which Bank of Amador would be acquired by another entity;

         o        If Bank of Amador willfully or deliberately breaches any
                  covenant, condition to closing or agreement in the merger
                  agreement which materially impairs the benefit of the merger
                  to American River Bankshares, provided that compliance was not
                  beyond the reasonable control of Bank of Amador, or unless
                  Bank of Amador cures the breach within 45 days after written
                  notice from American River Bankshares; or

         o        If Bank of Amador willfully or deliberately refuses to deliver
                  to American River Bankshares closing documents required by the
                  merger agreement, provided that compliance was not beyond the
                  reasonable control of Bank of Amador.

         American River Bankshares is required to pay Bank of Amador $400,000 in
liquidated damages if Bank of Amador terminates the merger agreement for any of
the following reasons:

         o        If American River Bankshares willfully or deliberately
                  breaches any covenant in the merger agreement which materially
                  impairs the benefit of the merger to Bank of Amador, provided
                  that compliance was not beyond the reasonable control of
                  American River Bankshares, or unless American River Bankshares
                  cures the breach within 45 days after written notice from Bank
                  of Amador; or

         o        If American River Bankshares willfully or deliberately refuses
                  to deliver to Bank of Amador closing documents required by the
                  merger agreement, provided that compliance was not beyond the
                  reasonable control of American River Bankshares.

                                       8


Expenses of the Merger (page 154)

         Other than in the situations described in "-- Termination Fees" above
and for expenses which we have agreed to share equally, whether or not the
merger is completed in accordance with the merger agreement, all costs and
expenses incurred in connection with the merger agreement and the transactions
covered by the merger agreement will be paid by the party incurring those
expenses.


Reasons for the Merger and Recommendations of the Boards of Directors (page 124)


         The boards of directors of American River Bankshares, American River
Bank and Bank of Amador believe that the merger is in the best interests of
their respective institutions, shareholders, communities and banking customers.
Each board expects that American River Bank, as a larger independent financial
institution in multiple and diverse markets, will be stronger in terms of growth
opportunities and profitability than is either institution standing alone at
present. American River Bankshares and American River Bank will also have the
advantage of consolidation and centralization of management and operations
functions and economies of scale. Furthermore, it is believed that American
River Bank, as a stronger independent financial institution with a primary
market area covering a greater geographic area, will be better able to compete
with major banks in the communities now served by each institution.

American River Bankshares

         The board of directors of American River Bankshares believes that the
merger is fair to you and in your best interests and unanimously recommends that
you vote "FOR" the proposal to approve the merger agreement and the merger.

         The directors and executive officers of American River Bankshares have,
to the extent required by the merger agreement, entered into Shareholder
Agreements with Bank of Amador, agreeing to vote all of his or her shares of
American River Bankshares common stock in favor of the merger agreement and the
merger, and in the case of directors, also agreeing to recommend that all other
shareholders of American River Bankshares vote in favor of the merger agreement
and the merger. As of the record date, the directors and executive officers of
American River Bankshares and their affiliates own an aggregate of 465,843
shares of American River Bankshares common stock, representing approximately
10.9% of all American River Bankshares common stock currently issued and
outstanding (excluding 175,649 shares subject to options exercisable currently
or within 60 days of the record date).


         In evaluating the recommendations of the board of directors summarized
above, American River Bankshares shareholders should carefully consider the
matters described under "Risk Factors" on page 25 and "The Merger -- Background
of the Merger--American River Bankshares" on page 119 and "--Reasons for the
Merger and Recommendations of the Boards of Directors--American River
Bankshares" on page 124.


Bank of Amador

         The board of directors of Bank of Amador believes that the merger is
fair to you and in your best interests and unanimously recommends that you vote
"FOR" the proposal to approve the merger agreement and the merger.

         The directors and executive officers of the Bank of Amador have, to the
extent required by the merger agreement, entered into Shareholder Agreements
with American River Bankshares, agreeing to vote all of his or her shares of
Bank of Amador common stock in favor of the merger agreement and the merger, and
in the case of directors, also agreeing to recommend that all other shareholders
of Bank of Amador vote in favor of the merger agreement and the merger. The
directors and executive officers of Bank of Amador and their affiliates own an
aggregate of 429,788 shares of Bank of Amador common

                                       9


stock, representing approximately 27.4% of all Bank of Amador common stock
currently issued and outstanding (excluding 209,016 shares subject to options
exercisable currently or within 60 days of the record date).


         In evaluating the recommendations of the board of directors summarized
above, Bank of Amador shareholders should carefully consider the matters
described under "Risk Factors" on page 25 and "The Merger -- Background of the
Merger--Bank of Amador" on page 122 and "--Reasons for the Merger and
Recommendations of the Boards of Directors--Bank of Amador" on page 125.


Opinions of Financial Advisors (page 128)

American River Bankshares

         Sandler O'Neill & Partners, L.P. has rendered an opinion, dated July 8,
2004 and updated on October 12, 2004, to the American River Bankshares board of
directors, that the consideration to be paid by American River Bankshares to
Bank of Amador shareholders under the merger agreement is fair, from a financial
point of view, to American River Bankshares, as of the date of the opinion. The
updated opinion of Sandler O'Neill & Partners, L.P., which sets forth
assumptions made, matters considered and limits of review undertaken by Sandler
O'Neill & Partners, L.P., is attached to this joint proxy statement-prospectus
as Annex B. American River Bankshares shareholders are urged to read the Sandler
O'Neill opinion in its entirety. See "The Merger -- Opinions of Financial
Advisors -- American River Bankshares" on page 128. Sandler O'Neill & Partners,
L.P. has been paid a fee of $75,000 in connection with rendering its services
related to the merger and delivering its opinion.

         Sandler O'Neill's opinion is not a recommendation to any American River
Bankshares shareholder as to how such shareholder should vote at the special
meeting with respect to the merger or any other matter.

Bank of Amador


         Hoefer & Arnett Incorporated has rendered an opinion, dated July 8,
2004 and updated on October 12, 2004, to the Bank of Amador board of directors,
that the merger agreement, the merger and the consideration to be paid by
American River Bankshares to Bank of Amador shareholders under the merger
agreement is fair, from a financial point of view, to the shareholders of Bank
of Amador, as of the date of the opinion. The Hoefer & Arnett fairness opinion,
which sets forth assumptions made, matters considered and limits of review
undertaken by Hoefer & Arnett is attached to this joint proxy
statement-prospectus as Annex C. Bank of Amador shareholders are urged to read
the Hoefer & Arnett opinion in its entirety. See "The Merger -- Opinions of
Financial Advisors -- Bank of Amador" on page 139, which also contains a
discussion of the fees to be paid to Hoefer & Arnett, which will be in the
amount of approximately $38,000.


         Hoefer & Arnett's opinion is not a recommendation to any Bank of Amador
shareholder as to how such shareholder should vote at the special meeting with
respect to the merger or any other matter.

Federal Income Tax Consequences (page 159)

         The merger agreement and merger have been structured so that, in
general, American River Bankshares, American River Bank and Bank of Amador and
the shareholders of American River Bankshares and Bank of Amador will not
recognize gain or loss for federal income tax purposes in the merger, except for
taxes payable because of cash received by Bank of Amador shareholders for their
shares, for fractional shares or because of dissenting shares. It is a
condition, at the closing of the merger,

                                       10


that American River Bankshares and Bank of Amador receive an opinion from
Perry-Smith LLP to the effect, among other matters, that the merger should
qualify as a tax-free reorganization.

         Tax matters are very complicated. The tax consequences of the merger to
you will depend on the facts of your own situation. We urge you to consult your
own tax advisors as to the specific tax consequences to you of the merger,
including the applicable federal, state, local and foreign tax laws.

Accounting Treatment (page 157)

         American River Bankshares must account for the merger as a purchase.
Under this method of accounting, the assets and liabilities of the company
acquired are recorded at their respective fair value as of completion of the
merger, and are added to those of the acquiring company. Financial statements of
the acquiring company issued after the merger takes place reflect these values,
but are not restated retroactively to reflect the historical financial position
or results of operations of the company that was acquired.

Interests of Officers and Directors in the Merger (page 143)

American River Bankshares

         Some of American River Bankshares' directors and officers may have
interests in the merger that are different from, or in addition to, yours, which
could create potential conflicts of interest. As a result, these directors and
officers may be more likely to vote to approve the merger agreement and the
merger than shareholders of American River Bankshares generally.

         The merger agreement provides that the directors and executive officers
of American River Bankshares will continue to serve as directors and executive
officers following the merger. Consequently, they will be entitled to, as
applicable, director fees, executive compensation, vesting of stock options,
continuation of indemnification rights and other benefits which may be available
to directors and executive officers. The members of the American River
Bankshares and American River Bank's boards of directors knew about these
additional interests, and considered them, when they approved the transactions
contemplated by the merger agreement, including the merger.

         As of the record date, directors and executive officers of American
River Bankshares and their affiliates owned and were entitled to vote
approximately 465,843 shares of American River Bankshares common stock, which
represented approximately 10.9% of the shares of American River Bankshares
common stock outstanding on that date (excluding 175,649 shares subject to
options exercisable currently or within 60 days of the record date). Each of
those directors has agreed to vote, or cause to be voted, the American River
Bankshares common stock owned by him or her "FOR" approval of the merger
agreement and the merger at American River Bankshares' special meeting.

Bank of Amador

         Some of Bank of Amador's directors and officers may have interests in
the merger that are different from, or in addition to, yours, which could create
potential conflicts of interest. As a result, these directors and officers may
be more likely to vote to approve the merger agreement and the merger than
shareholders of Bank of Amador generally.

         The merger agreement provides that Larry D. Standing and one other
current director of Bank of Amador to be determined by mutual agreement of
American River Bankshares and Bank of Amador, will be appointed to the American
River Bank board of directors. The non-employee director to be determined will
be entitled to receive directors' fees, while Mr. Standing will not. Both
directors will

                                       11


receive additional benefits which American River Bank extends to its directors
including continuation of indemnification and liability insurance benefits.
Under the merger agreement, immediately prior to the closing of the merger, the
eight non-employee directors of Bank of Amador and its Senior Vice President and
Chief Financial Officer will also receive cash payments in connection with the
termination of their respective benefits under an agreement with directors to
provide retirement benefits and a salary continuation agreement to provide
retirement benefits to the Senior Vice President and Chief Financial Officer.
The cash payments for these retirement benefits will be in the approximate
aggregate amount of $1,314,367. The Senior Vice President and Chief Financial
Officer will also receive a cash severance payment in the approximate amount of
$40,128. In addition, all of the directors and executive officers holding vested
stock options of Bank of Amador will receive cash payments in connection with
the cancellation of their outstanding stock options in an amount equal to the
difference between the American River Bankshares measuring price used to
calculate the share exchange conversion ratio in the merger and the stock option
exercise price. Bank of Amador's directors and executive officers hold vested
stock options to acquire 209,016 shares of Bank of Amador common stock in the
aggregate with an average exercise price of $13.78 per share. Based on an
assumed American River Bankshares measuring price of $19.50 per share, it is
anticipated that Bank of Amador's directors and executive officers will receive
an approximate amount of $1,195,572 in the aggregate for the cancellation of
their stock options if the merger is consummated. Mr. Standing will also be
appointed as the President of the division of American River Bank to be known as
"Bank of Amador, a division of American River Bank," and as a member of the
executive management committee of American River Bankshares. Mr. Standing's
existing retirement benefits under a director retirement agreement and a salary
continuation agreement will be assumed by American River Bankshares. Mr.
Standing will also enter into an employment agreement substantially in the form
of Exhibit F to the merger agreement attached as Annex A to this joint proxy
statement-prospectus. Consequently, Mr. Standing will also be entitled to
participate in the benefits described in his employment agreement. The members
of the Bank of Amador board of directors knew about these additional interests,
and considered them, when they approved the transactions contemplated by the
merger agreement, including the merger.

         As of the record date, directors and executive officers of Bank of
Amador and their affiliates owned and were entitled to vote approximately
429,788 shares of Bank of Amador common stock, which represented approximately
27.4% of the shares of Bank of Amador common stock outstanding on that date
(excluding 209,016 shares subject to options exercisable currently or within 60
days of the record date). Each of those directors has agreed to vote, or cause
to be voted, the Bank of Amador common stock owned by him or her "FOR" approval
of the merger agreement and the merger at Bank of Amador's special meeting.

Dissenters' Rights (page 165)

         A copy of Chapter 13 of the California Corporations Code is attached as
Annex D to this proxy statement-prospectus and should be read for more complete
information concerning dissenters' rights. The required procedure set forth in
Chapter 13 of the California Corporations Code must be followed exactly or any
dissenters' rights may be lost.

American River Bankshares

         If the holders of five percent (5%) or more of American River
Bankshares common stock make a written demand upon American River Bankshares for
the purchase of dissenting shares in accordance with Chapter 13 of the
California Corporations Code and the merger is consummated, American River
Bankshares shareholders who dissent from the merger by complying with the
procedures set forth in Chapter 13 of the Corporations Code would be entitled to
receive an amount equal to the fair market value of their shares as of July 8,
2004, the last business day before the public announcement of the merger.
American River Bankshares believes that the fair market value for dissenters'
rights purposes is

                                       12


$20.40 per share which represents the closing price for a share of American
River Bankshares common stock as quoted on the Nasdaq Stock Market on July 8,
2004.

Bank of Amador

         If the merger is consummated, Bank of Amador shareholders who dissent
from the merger by complying with the procedures set forth in Chapter 13 of the
Corporations Code would be entitled to receive an amount equal to the fair
market value of their shares as of July 8, 2004, the last business day before
the public announcement of the merger. Bank of Amador believes that the fair
market value for dissenters' rights purposes is $21.02 per share which
represents the closing price for a share of Bank of Amador common stock as
quoted on the OTC Bulletin Board on July 8, 2004.

Market Price and Dividend Information (page 168)


         American River Bankshares common stock is held by approximately 1,336
shareholders and is listed and traded on the Nasdaq National Market under the
symbol "AMRB." On July 8, 2004, the last trading date prior to the public
rannouncement of the proposed merger, American River Bankshares common stock
closed at $20.40 per share. On October 15, 2004, the latest practicable trading
date prior to the printing of this joint proxy statement-prospectus, American
River Bankshares common stock closed at $23.25 per share.

         Bank of Amador common stock is held by approximately 900 shareholders
and is quoted on the OTC Bulletin Board and traded in the over-the-counter
market under the symbol "BNKA." On July 8, 2004, the last trading date prior to
the public announcement of the proposed merger, the closing price of Bank of
Amador common stock was quoted as $21.02 per share. On October 15, 2004, the
latest practicable trading date prior to the printing of this joint proxy
statement-prospectus, the closing price of Bank of Amador common stock was
quoted as $19.37 per share.


         Following the merger of Bank of Amador with and into American River
Bank, no shares of Bank of Amador common stock will be outstanding, all of the
shares of American River Bank will continue to be held by American River
Bankshares, and American River Bankshares common stock will continue to be
traded on the Nasdaq National Market.

         Bank of Amador has declared cash dividends to its shareholders on a
quarterly basis commencing with the first quarter of 2002 through the third
quarter 2004. Bank of Amador declared cash dividends totaling $0.88 per share in
2002, $0.92 per share in 2003 and $0.69 per share through the first three
quarters of 2004.

         American River Bankshares has declared cash dividends to its
shareholders since the first quarter of 1992. From 1992 until the fourth quarter
of 2003, American River Bankshares declared cash dividends on a semi-annual
basis. Beginning in the first quarter of 2004, American River Bankshares began
declaring cash dividends on a quarterly basis. American River Bankshares
declared cash dividends totaling $.23 per share in 2002, and $.30 per share in
2003, and $.345 per share in 2004. In addition, American River Bankshares
distributed a 3 for 2 stock split in October of 2003 and a 5% stock dividend in
October of 2002. It is the intention of American River Bankshares to continue
declaring cash and stock dividends following the merger, subject to regulatory
restrictions and depending upon the level of earnings, management's assessment
of future capital needs and other factors considered by the American River
Bankshares board of directors.

                                       13



Comparison of Shareholder Rights (page 172)


American River Bankshares

         Your rights as a shareholder of American River Bankshares are currently
governed by federal and California law and the articles of incorporation and
bylaws of American River Bankshares, which are not anticipated to change as a
result of the merger. There are differences between the articles of
incorporation and bylaws of American River Bankshares and those of Bank of
Amador.

Bank of Amador

         Your rights as a shareholder of Bank of Amador are currently governed
by California law and the articles of incorporation and bylaws of Bank of
Amador. If the merger is completed, your rights as an American River Bankshares
shareholder will be governed by federal and California law, but will also be
determined by American River Bankshares' articles of incorporation and bylaws.
There are differences between the articles of incorporation and bylaws of
American River Bankshares and those of Bank of Amador.

Forward-Looking Statements (page 29)

         Statements in this document and in the documents incorporated by
reference are or may be forward-looking statements that involve risks and
uncertainties. Actual results may differ materially from those expressed in the
statements, depending on a variety of factors. You should carefully review all
information, including the financial statements and the notes to the financial
statements, included or incorporated by reference.


Selected Historical and Pro Forma Financial Data (page 15)


         We are providing the following information to aid you in your analysis
of the financial effects of the merger. The following tables show financial
results, consisting of historical figures, actually achieved by each of American
River Bankshares and Bank of Amador. The tables also show per share data,
consisting of pro forma combined figures.

         The financial information as of and for the six months ended June 30,
2004 and 2003 has been derived from the unaudited consolidated financial
statements of American River Bankshares and the unaudited financial statements
of Bank of Amador. In the opinion of management of American River Bankshares and
Bank of Amador, respectively, all adjustments, consisting solely of normal
recurring accruals, considered necessary for the fair presentation of the
results for the periods presented have been included. Annual historical figures
are derived from the consolidated financial statements of American River
Bankshares and the financial statements of Bank of Amador as of December 31,
2003 and 2002. The historical figures for the other years presented have been
derived from the audited consolidated financial statements of American River
Bankshares and the audited financial statements of Bank of Amador.

         We expect to incur merger and other non-recurring expenses as a result
of the merger of Bank of Amador with and into American River Bank. We also
anticipate that the merger will provide the combined institution with financial
benefits such as a reduction in operating expenses and the opportunity to earn
additional revenue. We have not reflected any of these anticipated cost savings
or benefits in the pro forma financial information. Therefore, the pro forma
financial information, while helpful in illustrating the financial
characteristics of the combined company under one set of assumptions, does not
attempt to predict or suggest future results.

                                       14


                           American River Bankshares
                 Selected Historical Consolidated Financial Data
               (in thousands, except per share amounts and ratios)



                                         As of and for the
                                         Six months ended
                                              June 30,                                 Years Ended December 31,
                                       ----------------------      ----------------------------------------------------------------
                                         2004          2003          2003          2002          2001          2000          1999
                                       --------      --------      --------      --------      --------      --------      --------
                                                                                                           
STATEMENT OF OPERATIONS DATA
Net interest income                       9,060         8,356        16,866        15,073        14,577        13,585        11,754
Provision for loan or lease losses          429           412           946           644           791           672           582
Other income                              1,451         1,091         2,253         2,323         2,365         2,183         1,647
Other expenses                            6,212         5,115        10,372         9,389         9,502         9,329         7,770
Income before income taxes                3,870         3,920         7,801         7,363         6,649         5,767         5,049
Income taxes                              1,283         1,568         3,060         2,904         2,612         2,221         1,921
Net income                                2,587         2,352         4,741         4,459         4,037         3,546         3,128

PER SHARE DATA:(1)
Earnings per share - basic                 0.62          0.59          1.19          1.13          1.01          0.90          0.79
Earnings per share - diluted               0.59          0.55          1.10          1.05          0.95          0.86          0.75
Cash dividend per share                    0.23          0.15          0.30          0.23          0.17         0.151         0.133
Book value per share                       8.91          8.46          8.74          8.05          7.04          6.16          5.52
Tangible book value per share              8.89          8.45          8.73          8.04          7.02          6.13          5.48

BALANCE SHEET DATA:
Balance sheet totals-end of period:
   Assets                               431,097       356,421       397,393       342,563       286,559       284,126       248,540
   Loans and leases, net                266,637       248,385       262,464       229,008       195,026       200,658       157,044
   Deposits                             350,022       294,497       322,507       275,796       254,888       239,312       223,077
   Shareholders' equity                  37,509        33,662        35,457        31,726        27,942        24,413        20,611
Average balance sheet amounts:
   Assets                               409,232       350,137       363,175       309,574       279,049       259,315       224,960
   Loans and leases                     270,108       243,993       248,342       209,133       202,624       175,134       148,369
   Earning assets                       376,091       323,479       333,800       280,623       255,904       238,837       207,388
   Deposits                             331,062       284,100       279,883       263,323       246,960       230,822       201,180
   Shareholder's equity                  36,581        32,666        33,461        29,509        26,316        22,258        19,916

SELECTED RATIOS:(2)
Return on average equity                  14.22%        14.52%        14.17%        15.11%        15.34%        15.93%        15.71%
Return on average tangible equity         14.25%        14.55%        14.20%        15.15%        15.40%        16.03%        15.85%
Return on average assets                   1.27%         1.35%         1.31%         1.44%         1.45%         1.37%         1.39%
Efficiency ratio (noninterest
   expense to net interest income
   and noninterest income)                59.10%        54.14%        54.25%        53.97%        56.09%        59.16%        57.98%
Average equity to average assets           8.94%         9.33%         9.21%         9.53%         9.43%         8.58%         8.85%
Leveraged capital ratio                    8.85%         9.08%         8.96%         8.93%         9.49%         8.78%         9.21%
Nonperforming loans and leases to
   total loans and leases                  0.03%         0.08%         0.07%         0.09%         0.43%         0.33%         0.02%
Nonperforming assets to total assets       0.02%         0.06%         0.05%         0.06%         0.30%         0.24%         0.01%
Net chargeoffs to average loans
   and leases                              0.11%         0.09%         0.08%         0.03%         0.31%         0.14%         0.14%
Allowance for loan or lease losses
   to total loans and leases               1.56%         1.39%         1.48%         1.38%         1.32%         1.21%         1.30%
Allowance for loan or lease losses to
   nonperforming loans and leases        5291.3%       1714.7%       2181.6%       1551.9%        305.4%        364.1%       6873.3%


(1)  Adjusted for 5% stock dividends in 2001 and 2002 and a 3 for 2 split in
     2003.
(2)  Selected ratios for the months ended June 30, 2004 and 2003 have been
     annualized.

                                       15


                                 Bank of Amador
                       Selected Historical Financial Data
               (in thousands, except per share amounts and ratios)



                                         As of and for the
                                         Six months ended
                                              June 30,                                 Years Ended December 31,
                                       ----------------------      ----------------------------------------------------------------
                                         2004          2003          2003          2002          2001          2000          1999
                                       --------      --------      --------      --------      --------      --------      --------
                                                                                                           
STATEMENT OF OPERATIONS DATA
Net interest income                       2,684         2,664         5,415         4,884         4,507        5,003         4,601
Provision for loan or lease losses           35            54           104           102            65          150           120
Other income                                314           245           522           354           349          334           372
Other expenses                            1,424         1,226         2,574         2,339         2,549        2,387         2,295
Income before income taxes                1,539         1,629         3,259         2,797         2,242        2,800         2,559
Income taxes                                565           595         1,195         1,000           806        1,045           932
Net Income                                  974         1,033         2,064         1,797         1,436        1,755         1,627

PER SHARE DATA:(1)
Earnings per share - basic                 0.63          0.68          1.36          1.21          0.97         1.17          1.09
Earnings per share - diluted               0.60          0.65          1.28          1.16          0.95         1.17          1.09
Cash dividends per share                   0.46          0.46          0.92          0.88          0.86         0.82          0.69
Book value per share                       9.63          9.92          9.67          9.51          8.79         8.65          8.08
Tangible book value per share              9.63          9.92          9.67          9.51          8.79         8.65          8.08

BALANCE SHEET DATA:
Balance sheet totals-end of period:
   Assets                               129,008       111,483       122,779       104,323       100,999       88,930        84,413
   Loans and leases, net                 79,367        72,689        74,899        64,154        51,919       61,516        57,093
   Deposits                             113,009        96,477       107,233        90,201        87,996       76,002        72,378
   Shareholders' equity                  15,077        14,328        14,973        13,644        12,335       12,308        11,467
Average balance sheet amounts:
   Assets                               124,924       105,935       112,303       100,889        96,450       87,435        83,779
   Loans and leases, net                 76,469        68,827        71,896        55,664        57,034       57,929        54.385
   Earning assets                       115,709       100,512       105,203        95,654        91,449       82,800        78,962
   Deposits                             109,690        92,118        98,047        87,848        83,722       74,896        72,010
   Shareholders' equity                  14,538        13,257        13,594        12,443        12,059       11,878         1,236

SELECTED RATIOS:(2)
Return on average equity                  13.40%        15.58%        15.18%        14.44%        11.91%       14.78%        14.48%
Return on average tangible equity         13.40%        15.58%        15.18%        14.44%        11.91%       14.78%        14.48%
Return on average assets                   1.56%         1.95%         1.84%         1.78%         1.49%        2.01%         1.94%
Efficiency ratio (noninterest
   expense to net interest income
   and noninterest income)                48.66%        44.00%        41.54%        42.50%        49.80%       47.54%        48.55%
Efficiency ratio excluding the
   amortization of intangibles and
   goodwill                               48.66%        44.00%        41.54%        42.50%        49.80%       47.54%        48.55%
Average equity to average assets          11.64%        12.51%        12.10%        12.33%        12.50%       13.58%        13.41%
Leveraged capital ratio                   11.72%        12.62%        11.99%        12.67%        12.55%       13.73%        13.45%
Nonperforming loans and leases
   to total loans and leases               0.75%         0.51%         0.61%         0.16%         0.05%         .61%         1.12%
Nonperforming assets to total assets       0.47%         0.34%         0.38%         0.10%         0.02%         .43%          .76%
Net chargeoffs (recoveries) to average
   loans and leases                        0.00%         0.00%         0.00%        (0.01)%        0.35%         .23%          .02%
Allowance for loan or lease losses to
   total loans and leases                  1.04%         1.03%         1.07%         1.09%         1.24%        1.26%         1.32%
Allowance for loan or lease losses to
   nonperforming loans and leases        138.08%       202.18%       174.51%       684.47%      2380.00%      206.30%       119.60%


(1)  Adjusted for 5% stock dividend in 2003.
(2)  Selected ratios for the months ended June 30, 2004 and 2003 have been
     annualized.

                                       16


                  American River Bankshares and Bank of Amador
              Selected Pro Forma Combined Historical Financial Data
               (in thousands, except per share amounts and ratios)



                                                                                  Year Ended
                                                            Six months ended     December 31,
                                                             June 30, 2004          2003
                                                            ---------------    ---------------
                                                                                     
STATEMENT OF OPERATIONS DATA
Net interest income                                                  11,690             22,174
Provision for loan or lease losses                                      464              1,050
Other income                                                          1,765              2,775
Other expenses                                                        7,782             13,238
Income before income taxes                                            5,209             10,661
Income taxes                                                          1,772              4,103
Net Income                                                            3,437              6,558

PER SHARE DATA:
Earnings per share - basic                                             0.66               1.32
Earnings per share - diluted                                           0.63               1.22
Cash dividends per share                                              0.230              0.297
Book value per share                                                  10.90              10.84
Tangible book value per share                                          7.37               7.21

BALANCE SHEET DATA:
Balance sheet totals-end of period:
   Assets                                                           568,985            529,052
   Loans and leases, net                                            346,004            337,363
   Deposits                                                         463,031            429,740
   Shareholders' equity                                              56,996             54,841
Average balance sheet amounts:
   Assets                                                           543,036            484,304
   Loans and leases, net                                            346,577            320,184
   Earning assets                                                   481,110            428,259
   Deposits                                                         440,752            377,930
   Shareholders' equity                                              55,530             51,466

SELECTED RATIOS:(1)
Return on average equity                                              12.45%             12.74%
Return on average tangible equity                                     18.58%             19.62%
Return on average assets                                               1.27%              1.35%
Efficiency ratio (noninterest expense to net interest
   income and noninterest income)                                     57.84%             53.06%
Efficiency ratio excluding the amortization of
   intangibles and goodwill                                           56.75%             51.89%
Average equity to average assets                                      10.23%             10.63%
Leveraged capital ratio                                                7.12%              7.18%
Nonperforming loans and leases to total loans and leases               0.20%              0.19%
Nonperforming assets to total assets                                   0.12%              0.12%
Net chargeoffs (recoveries) to average loans and leases                0.08%              0.06%
Allowance for loan or lease losses to total loans and leases           1.44%              1.13%
Allowance for loan or lease losses to nonperforming loans and
   leases                                                             739.9%             598.6%


(1)  Selected ratios for the month ended June 30, 2004 have been annualized.

                                       17


                    UNAUDITED PRO FORMA COMBINED CONSOLIDATED
                              FINANCIAL INFORMATION

         The following tables present financial data at and for the six months
ended June 30, 2004 and for the year ended December 31, 2003 for American River
Bankshares after giving effect to the completion of the proposed acquisition of
Bank of Amador.

         The pro forma financial data gives effect to the acquisition under the
purchase accounting method in accordance with accounting principles generally
accepted in the United States of America. The unaudited pro forma combined
consolidated financial statements combine the historical consolidated financial
statements of American River Bankshares and Bank of Amador giving effect to the
acquisition of Bank of Amador as if it had been effective on June 30, 2004 with
respect to the applicable unaudited pro forma combined consolidated balance
sheet and as of the beginning of the period indicated with respect to the
unaudited pro forma combined consolidated statements of income.

         The information for the year ended December 31, 2003 is derived from
American River Bankshares' audited consolidated financial statements, including
the related notes, and from Bank of Amador's audited financial statements,
including the related notes, reflected in the financial statements included in
this joint proxy statement-prospectus. See "Index to Financial Statements" at
page 191 of this proxy statement-prospectus.

         American River Bankshares expects to incur reorganization and
restructuring expenses as a result of the proposed acquisition. The effect of
the estimated merger and reorganization costs expected to be incurred in
connection with the proposed acquisition has not been reflected in the unaudited
pro forma combined condensed consolidated balance sheet. American River
Bankshares also anticipates that the acquisition will provide the combined
company with some future financial benefits that include reduced operating
expenses and opportunities to earn more revenue. However, American River
Bankshares does not reflect any of these anticipated cost savings or benefits in
the pro forma financial information. Therefore, the pro forma financial
information, while helpful in illustrating the financial characteristics of the
combined company under one set of assumptions, does not attempt to predict or
suggest future results. The pro forma financial information also does not
attempt to show how the combined company would actually have performed had the
companies been combined throughout the periods presented. American River
Bankshares has included in the pro forma financial statements all the
adjustments necessary for a fair statement of results of the historical periods.

         Given the information regarding the proposed acquisition, the actual
consolidated financial position and results of operations will differ, perhaps
significantly, from the pro forma amounts reflected herein because, among other
reasons:

         o        assumptions used in preparing the pro forma financial data may
                  be revised in the future due to changes in values of assets or
                  liabilities, including finalization of the calculation of a
                  core deposit intangible, and changes in operating results
                  between the dates of the unaudited pro forma financial data
                  and the date on which the acquisition takes place; and
         o        adjustments may need to be made to the unaudited historical
                  financial data upon which such pro forma data are based.

                                       18


           American River Bankshares & Subsidiaries and Bank of Amador
                  Pro Forma Combined Consolidated Balance Sheet
                                   (Unaudited)
                                  June 30, 2004
                             (dollars in thousands)



                                                               American River    Bank of
                                                                 Bankshares       Amador        Adjustments         Pro Forma
                                                               -------------   -------------   -------------      -------------
                                                                                                                
ASSETS
Cash and cash equivalents
  Cash and due from banks                                      $      27,407   $       5,309   $          --      $      32,716
  Federal funds sold                                                      --          15,227         (10,690)(a)          4,537
                                                               -------------   -------------   -------------      -------------
    Total cash and cash equivalents                                   27,407          20,536         (10,690)            37,253

Interest-bearing deposits in banks                                     5,740             100                              5,840
Investment securities
  Available for sale, at fair value                                   81,963          23,912              --            105,875
  Held to maturity, at amortized cost                                 37,331              --              --             37,331
Loans and leases, net of allowance for loan and lease losses         266,637          79,367              -- (b)        346,004
Premises and equipment, net                                            1,796             303              -- (b)          2,099
FHLB & FRB Stock                                                       2,116              --              --              2,116
Goodwill                                                                  63              --          16,219 (c)         16,282
Core deposit intangible, net                                              --              --           2,336 (c)          2,336
Other assets                                                           8,044           4,790           1,015 (d)         13,849
                                                               -------------   -------------   -------------      -------------
TOTAL ASSETS                                                   $     431,097   $     129,008   $       8,880      $     568,985
                                                               =============   =============   =============      =============

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
Deposits:
  Noninterest-bearing demand deposits                          $     110,109   $      23,601   $          --      $     133,710
  Interest-bearing
    Demand deposits                                                  145,676          11,470              --            157,146
    Savings                                                           23,972          38,770              --             62,742
    Time Certificates                                                 70,265          39,168              --            109,433
                                                               -------------   -------------   -------------      -------------
      Total deposits                                                 350,022         113,009              -- (b)        463,031

Other borrowed funds                                                  40,716              --              -- (b)         40,716
Accrued interest payable and other liabilities                         2,850             923           4,469 (e)          8,242
                                                               -------------   -------------   -------------      -------------
      Total liabilities                                              393,588         113,932           4,469            511,989
                                                               -------------   -------------   -------------      -------------

SHAREHOLDERS' EQUITY

Common stock                                                          17,802           7,158          12,329 (f)         37,289
Retained Earnings                                                     19,515           7,729          (7,729)(g)         19,515
Accumulated other comprehensive loss, net of tax                         192             189            (189)(g)            192
                                                               -------------   -------------   -------------      -------------
Total shareholders' equity                                            37,509          15,076           4,411             56,996
                                                               -------------   -------------   -------------      -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                     $     431,097   $     129,008   $       8,880      $     568,985
                                                               =============   =============   =============      =============


See notes to the Unaudited Pro Forma Combined Consolidated Financial Information

                                       19


           American River Bankshares & Subsidiaries and Bank of Amador
                Pro Forma Combined Consolidated Income Statement
                                   (Unaudited)
                         Six Months ended June 30, 2004
                      (in thousands, except per share data)



                                                                 American River
                                                                   Bankshares     Bank of Amador    Adjustments       Consolidated
                                                                 --------------   --------------   --------------    --------------
                                                                                                                    
Interest Income
   Loans and leases including fees                               $        8,589   $        2,920   $           --    $       11,509
   Investment Securities
      Taxable                                                             1,625              120               --             1,745
      Non-taxable                                                           249              239               --               488
   Federal funds sold                                                         6               67              (54)(h)            19
                                                                 --------------   --------------   --------------    --------------
Total interest income                                                    10,469            3,346              (54)           13,761

Interest Expense
   Deposits                                                               1,086              662               --             1,748
   Other borrowings                                                         323               --               --               323
                                                                 --------------   --------------   --------------    --------------
Total Interest Expense                                                    1,409              662               --             2,071

NET INTEREST INCOME                                                       9,060            2,684              (54)           11,690
PROVISION FOR LOAN AND LEASE LOSSES                                         429               35               --               464
                                                                 --------------   --------------   --------------    --------------
NET INTEREST INCOME AFTER PROVISION FOR
   LOAN AND LEASE LOSSES                                                  8,631            2,649              (54)           11,226

NONINTEREST INCOME
   Service charges on deposit accounts                                      279              113               --               392
   Other fees and charges                                                   440               34               --               474
   Earnings on cash surrender value of life insurance
      policies                                                               36               75               --               111
   Gain on sale of loans                                                     --               73               --                73
   Other                                                                    696               19               --               715
                                                                 --------------   --------------   --------------    --------------
Total noninterest income                                                  1,451              314               --             1,765

NONINTEREST EXPENSE
   Salaries and employee benefits                                         3,155              572               --             3,727
   Equipment expense                                                        367              105               --               472
   Occupancy expense                                                        452               94               --               546
   Other                                                                  2,238              653              146(i)          3,037
                                                                 --------------   --------------   --------------    --------------
Total noninterest expense                                                 6,212            1,424              146             7,782

INCOME BEFORE PROVISION FOR
INCOME TAXES                                                              3,870            1,539             (200)            5,209

PROVISION FOR INCOME TAXES                                                1,283              565              (76)(j)         1,772
                                                                 --------------   --------------   --------------    --------------

NET INCOME                                                       $        2,587   $          974   $         (124)   $        3,437
                                                                 ==============   ==============   ==============    ==============

NET INCOME PER SHARE
   Basic                                                                    .62              .63                                .66
   Diluted                                                                  .59              .60                                .63
Weighted Average Shares
   Basic                                                              4,176,173        1,556,582                          5,187,954
   Diluted                                                            4,391,739        1,628,756                          5,450,430


See notes to the Unaudited Pro Forma Combined Consolidated Financial Information

                                       20


           American River Bankshares & Subsidiaries and Bank of Amador
                Pro Forma Combined Consolidated Income Statement
                                   (Unaudited)
                          Year ended December 31, 2003
                      (in thousands, except per share data)



                                                           American River
                                                             Bankshares     Bank of Amador     Adjustments         Consolidated
                                                           --------------   --------------   --------------       --------------
                                                                                                                 
Interest Income
   Loans and leases including fees                         $       16,744   $        5,672   $           --       $       22,416
   Investment Securities                                                                                 --
      Taxable                                                       2,501              340               --                2,841
      Non-taxable                                                     475              498               --                  973
   Federal funds sold                                                  48              118             (107)(h)               59
                                                           --------------   --------------   --------------       --------------
Total interest income                                              19,768            6,628             (107)              26,289

Interest Expense
   Deposits                                                         2,390            1,213               --                3,603
   Other borrowings                                                   512               --               --                  512
                                                           --------------   --------------   --------------       --------------
Total Interest Expense                                              2,902            1,213               --                4,115

NET INTEREST INCOME                                                16,866            5,415             (107)              22,174
PROVISION FOR LOAN AND LEASE LOSSES                                   946              104                                 1,050
                                                           --------------   --------------   --------------       --------------
NET INTEREST INCOME AFTER PROVISION                                15,920            5,311             (107)              21,124
   FOR LOAN AND LEASE LOSSES


NONINTEREST INCOME
   Service charges on deposit accounts                                534              222               --                  756
   Other fees and charges                                           1,420               45               --                1,465
   Earnings on cash surrender value of life insurance
      policies                                                         27               64               --                   91
   Gain on sale of loans                                               --              149               --                  149
   Gains on sale of securities                                         33               --               --                   33
   Other                                                              239               42               --                  281
                                                           --------------   --------------   --------------       --------------
Total noninterest income                                            2,253              522               --                2,775

NONINTEREST EXPENSE
   Salaries and employee benefits                                   6,233            1,224               --                7,457
   Equipment expense                                                  653              199               --                  852
   Occupancy expense                                                  817              188               --                1,005
   Other                                                            2,669              963              292(i)             3,924
                                                           --------------   --------------   --------------       --------------
Total noninterest expense                                          10,372            2,574              292               13,238

INCOME BEFORE PROVISION FOR
INCOME TAXES                                                        7,801            3,259             (399)              10,661

PROVISION FOR INCOME TAXES                                          3,060            1,195             (152)(j)            4,103
                                                           --------------   --------------   --------------       --------------

NET INCOME                                                 $        4,741   $        2,064   $         (247)      $        6,558
                                                           ==============   ==============   ==============       ==============

NET INCOME PER SHARE
   Basic                                                             1.19             1.36                                  1.32
   Diluted                                                           1.10             1.28                                  1.22
Weighted Average Shares
   Basic                                                        3,988,856        1,519,886                             4,976,782
   Diluted                                                      4,317,793        1,613,064                             5,366,285


See notes to the Unaudited Pro Forma Combined Consolidated Financial Information

                                       21


                        NOTES TO THE UNAUDITRD PRO FORMA
                   COMBINED CONSOLIDATED FINANCIAL INFORMATION

Note 1 -- Basis of Presentation

         The unaudited pro forma combined condensed consolidated statements of
income for the six months ended June 30, 2004 and for the year ended December
31, 2003 are presented as if the merger had occurred at the beginning of the
respective periods. The unaudited pro forma combined condensed consolidated
balance sheet as of June 30, 2004 is presented as if the merger had occurred as
of that date. This information is not intended to reflect the actual results
that would have been achieved had the mergers actually occurred on those dates.

Note 2 -- Merger-Related Costs to Be Incurred by American River Bankshares

         The table below reflects American River Bankshares current estimate,
for pro forma presentation purposes, of the merger-related costs expected to be
incurred (in thousands):

         --------------------------------------------------------------------
         Investment banking and other professional fees                $ 250
         --------------------------------------------------------------------
         Other costs                                                     120
         --------------------------------------------------------------------
         Total merger costs                                            $ 370
         --------------------------------------------------------------------
         Less estimated tax benefit                                     (115)
         --------------------------------------------------------------------
         Merger-related costs after tax                                $ 255
         --------------------------------------------------------------------

         These costs do not include estimated merger-related costs of $2,086,000
(net of estimated tax benefit of $1,195,000) incurred or to be incurred by Bank
of Amador.

         American River Bankshares' cost estimates are forward-looking. While
the costs represent American River Bankshares' current estimate of merger costs
that will be incurred, the type and amount of actual costs could vary materially
from these estimates if future developments differ from the underlying
assumptions used by management in determining the current estimate of these
costs. For additional factors that may cause actual results to differ, see
"Information Regarding Forward-Looking Statements" on page 29. Note 3 -- Pro
Forma Adjustments

         Summarized below are the pro forma adjustments necessary to reflect the
merger based on the purchase method of accounting:

         (a)      Cash consideration paid to Bank of Amador shareholders
                  assuming no holdback of cash at the closing.
         (b)      Adjustments to reflect the fair value of the assets and
                  liabilities are not considered material and are omitted for
                  this presentation.
         (c)      Goodwill of $16.2 million and core deposit intangible of $2.3
                  million, resulting from the application of the purchase method
                  of accounting.
         (d)      Deferred tax asset relates to merger-related costs expected to
                  be incurred.
         (e)      Merger-related cost accrual of $3.6 million (before taxes) and
                  deferred taxes of $.9 million.
         (f)      Issuance of American River Bankshares common stock, based on
                  American River Bankshares' closing price of $20.40 on July 8,
                  2004, to Bank of Amador shareholders, less the elimination of
                  Bank of Amador common stock and less the costs to issue the
                  new shares ($.4 million).
         (g)      Elimination of Bank of Amador retained earnings and unrealized
                  net gains on securities available for sale.

                                       22


         (h)      Opportunity costs on cash consideration paid to Bank of Amador
                  shareholders (assumed interest rate of 1.00%).
         (i)      Amortization expense related to the estimated core deposit
                  intangible asset. The core deposit intangible will be
                  amortized on a straight-line basis over its estimated useful
                  life of 8 years.
         (j)      The provision for income taxes related to pro forma
                  adjustments is computed using a combined federal and state tax
                  rate of 38%.

Historical and Pro Forma Per Share Data for American River Bankshares and Bank
of Amador

         The table below shows the earnings, book value and dividends per share
for American River Bankshares and Bank of Amador both on a historical and a pro
forma basis. The American River Bankshares pro forma data was derived by
combining historical consolidated financial information of American River
Bankshares and Bank of Amador using the purchase method of accounting for
business combinations. Bank of Amador's equivalent pro forma data was derived by
multiplying the American River Bankshares pro forma income per share before
nonrecurring charges or credits directly attributable to the transaction, the
pro forma book value per share, and the pro forma dividends per share by the
assumed consideration of $10,690,000 in cash and 973,167 shares of American
River Bankshares common stock for all shares of Bank of Amador common stock
(based on an estimated American River Bankshares measuring price of $20.40), so
that the per share amounts are equated to the respective values for one share of
Bank of Amador common stock.

         You should read the respective audited financial statements and related
footnotes of American River Bankshares and Bank of Amador included in this joint
proxy statement-prospectus. See "Index to Financial Statements" at page 191 of
this joint proxy statement-prospectus.



                                                          At or for the Six Months    At or for the Year Ended
                                                             Ended June 30, 2004         December 31, 2003
                                                          ------------------------    ------------------------
                                                                                          
        Book value per share
             American River Bankshares                              $ 8.91                   $ 8.74
             Bank of Amador                                         $ 9.63                   $ 9.67
             American River Bankshares pro forma                    $12.00                   $10.83
             Bank of Amador pro forma                               $11.47                   $10.35

        Tangible book value per share
             American River Bankshares                              $ 8.89                   $ 8.73
             Bank of Amador                                         $ 9.63                   $ 9.67
             American River Bankshares pro forma                    $ 7.40                   $ 7.12
             Bank of Amador pro forma                               $ 7.08                   $ 6.84

        Dividends declared per share
             American River Bankshares                              $  .23                   $  .30
             Bank of Amador                                         $  .46                   $  .92
             American River Bankshares pro forma                    $  .23                   $  .30
             Bank of Amador pro forma                               $  .22                   $  .29

        Basic earnings per share
             American River Bankshares                              $  .62                   $ 1.19
             Bank of Amador                                         $  .63                   $ 1.36
             American River Bankshares pro forma                    $  .66                   $ 1.32
             Bank of Amador pro forma                               $  .63                   $ 1.27

        Diluted earnings per share
             American River Bankshares                              $  .59                   $ 1.10
             Bank of Amador                                         $  .60                   $ 1.28
             American River Bankshares pro forma                    $  .63                   $ 1.22
             Bank of Amador pro forma                               $  .60                   $ 1.17


                                       23


                               RECENT DEVELOPMENTS

--------------------------------------------------------------------------------
American River Bankshares
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
As of and for the three months ended September 30,       2004           2003
--------------------------------------------------------------------------------
Statement of Operations Data
--------------------------------------------------------------------------------
Interest income-fully taxable equivalent            $  5,716,000   $  4,995,000
--------------------------------------------------------------------------------
Interest expense                                         803,000        687,000
--------------------------------------------------------------------------------
Provision for loan and lease losses                      266,000        252,000
--------------------------------------------------------------------------------
Noninterest income                                       441,000        645,000
--------------------------------------------------------------------------------
Noninterest expense                                    2,814,000      2,587,000
--------------------------------------------------------------------------------
Merger related expenses (1)                                   --             --
--------------------------------------------------------------------------------
Net income                                             1,339,000      1,260,000
--------------------------------------------------------------------------------
Diluted earnings per share                                  0.30           0.29
--------------------------------------------------------------------------------
Balance Sheet Data
--------------------------------------------------------------------------------
Total assets                                        $456,677,000   $370,260,000
--------------------------------------------------------------------------------
Loans and leases, net                                268,001,000    252,758,000
--------------------------------------------------------------------------------
Deposits                                             375,237,000    312,166,000
--------------------------------------------------------------------------------
Shareholders' equity                                  39,101,000     34,721,000
--------------------------------------------------------------------------------
Selected Ratios (annualized)
--------------------------------------------------------------------------------
Return on average equity                                    1.19%          1.37%
--------------------------------------------------------------------------------
Return on average assets                                   13.96%         14.84%
--------------------------------------------------------------------------------
Net interest margin                                         4.78%          5.11%
--------------------------------------------------------------------------------

(1) American River Bankshares anticipates accounting for the transaction using
the purchase method of accounting and is therefore required to capitalize merger
related costs as goodwill.


--------------------------------------------------------------------------------
Bank of Amador
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
As of and for the three months ended September 30,        2004           2003
--------------------------------------------------------------------------------
Statement of Operations Data
--------------------------------------------------------------------------------
Interest income                                     $  1,813,000   $  1,712,000
--------------------------------------------------------------------------------
Interest expense                                         343,000        310,000
--------------------------------------------------------------------------------
Provision for loan and lease losses                       15,000         30,000
--------------------------------------------------------------------------------
Noninterest income                                       155,000        129,000
--------------------------------------------------------------------------------
Noninterest expense                                      701,000        634,000
--------------------------------------------------------------------------------
Merger related expenses                                  109,000             --
--------------------------------------------------------------------------------
Net income                                               506,000        546,000
--------------------------------------------------------------------------------
Diluted earnings per share                                  0.31           0.34
--------------------------------------------------------------------------------
Balance Sheet Data
--------------------------------------------------------------------------------
Total assets                                        $135,000,000   $122,519,000
--------------------------------------------------------------------------------
Loans and leases, net                                 81,400,000     75,033,000
--------------------------------------------------------------------------------
Deposits                                             119,700,000    107,327,000
--------------------------------------------------------------------------------
Shareholders' equity                                  15,400,000     14,501,000
--------------------------------------------------------------------------------
Selected Ratios (annualized)
--------------------------------------------------------------------------------
Return on average equity                                    1.54%          1.86%
--------------------------------------------------------------------------------
Return on average assets                                   13.62%         15.80%
--------------------------------------------------------------------------------
Net interest margin                                         4.80%          5.20%
--------------------------------------------------------------------------------

                                       24


                                  RISK FACTORS

         If you are a Bank of Amador shareholder, by voting in favor of the
merger, you will be choosing to invest in the combined company's common stock to
the extent you receive American River Bankshares common stock in exchange for
your shares of Bank of Amador common stock. An investment in the combined
company's common stock involves a degree of risk. In addition to the other
information included in this joint proxy statement-prospectus, including the
matters addressed in "Information Regarding Forward-Looking Statements," you
should carefully consider the matters described below in determining whether to
approve the principal terms of the merger.

Risks Related to the Merger

   o     The merger consideration that is paid in American River Bankshares
         common stock can fluctuate based on the price of American River
         Bankshares stock.

         The price of American River Bankshares common stock may vary from the
price of American River Bankshares common stock stated on the date the merger
was announced, on the date that this joint proxy statement-prospectus is mailed
to Bank of Amador shareholders, and on the date of the special meeting of Bank
of Amador shareholders. Therefore, any change in the price of American River
Bankshares common stock prior to the date the American River Bankshares
measuring price is determined may affect the number of shares of American River
Bankshares common stock that you will receive upon completion of the merger. In
addition, any change in the price of American River Bankshares common stock
after the date the American River Bankshares measuring price is determined will
affect the value of the consideration you receive if you receive any
consideration in the form of American River Bankshares common stock. Thus, at
the time of the Bank of Amador special shareholders meeting, you may not know
the exact value of the merger consideration to be paid to Bank of Amador
shareholders. Stock price changes may result from a variety of factors,
including general market and economic conditions, changes in business,
operations and prospects, regulatory considerations and completion of the
merger. Many of these factors are beyond our control. We urge you to obtain
current market quotations for American River Bankshares common stock.

   o     Shares eligible for future sale could have a dilutive effect.

         Shares of American River Bankshares common stock eligible for future
sale, including those that will be issued in the acquisition of Bank of Amador,
could have a dilutive effect on the market for American River Bankshares common
stock and could adversely affect market prices.

         As of June 30, 2004, there were 20,000,000 shares of American River
Bankshares common stock authorized, of which 4,209,881 shares were outstanding
and 776,235 shares were reserved for issuance pursuant to the exercise of
options granted and to be granted under the terms of the stock option plans of
American River Bankshares. In addition, additional shares will be issued to Bank
of Amador shareholders in the merger, which number of shares will be determined
at the closing of the transactions contemplated by the merger agreement in
accordance with the conversion ratio described in the merger agreement.

                                       25


Risks Related to American River Bankshares Following Completion of the Merger

   o     If American River Bankshares is unable to integrate Bank of Amador's
         operations successfully, American River Bankshares' business and
         earnings may be negatively affected.

         The merger involves the integration of companies that have previously
operated independently and no assurance can be given that American River
Bankshares and its subsidiary, American River Bank, will be able to integrate
Bank of Amador's operations without encountering difficulties including, without
limitation, the loss of key employees and customers, the disruption of our
respective ongoing businesses or possible inconsistencies in standards,
controls, procedures and policies. Successful integration of Bank of Amador's
operations will depend primarily on American River Bankshares' ability to
consolidate operations, systems and procedures and to eliminate certain
redundancies and costs. Estimated cost savings and revenue enhancements are
projected to come from various areas that management has identified through the
due diligence and integration planning process. The elimination and
consolidation of duplicate tasks are projected to result in modest annual cost
savings. If American River Bankshares has difficulties with the integration, we
might not achieve the economic benefits we expect to result from the merger, and
this would likely hurt American River Bankshares' business and earnings.

   o     American River Bankshares' business is subject to interest rate risk,
         and variations in interest rates may negatively affect its financial
         performance.

         Changes in the interest rate environment may reduce American River
Bankshares' net interest income. It is expected that the combined entity will
continue to realize income from the differential or "spread" between the
interest earned on loans, securities and other interest-earning assets, and
interest paid on deposits, borrowings and other interest-bearing liabilities.
Net interest spreads are affected by the difference between the maturities and
repricing characteristics of interest-earning assets and interest-bearing
liabilities. In addition, loan volume and yields are affected by market interest
rates on loans, and rising interest rates generally are associated with a lower
volume of loan originations. We cannot assure you that we can minimize the
combined entity's interest rate risk. In addition, an increase in the general
level of interest rates may adversely affect the ability of certain borrowers to
pay the interest on and principal of their obligations. Accordingly, changes in
levels of market interest rates could materially and adversely affect American
River Bankshares' net interest spread, asset quality, loan origination volume
and overall profitability.

   o     American River Bankshares' subsidiary, American River Bank, faces
         strong competition from financial service companies and other companies
         that offer banking services, which can hurt American River Bankshares'
         business.

         American River Bankshares' subsidiary, American River Bank, conducts
banking operations principally in Northern California. Increased competition in
American River Bank's market may result in reduced loans and deposits.
Ultimately, it may not be able to compete successfully against current and
future competitors. Many competitors offer the banking services that are offered
by American River Bank in its service area. These competitors include national
and super-regional banks, finance companies, investment banking and brokerage
firms, credit unions, government-assisted farm credit programs, other community
banks and technology-oriented financial institutions offering online services.
In particular, American River Bank's competitors include several major financial
companies whose greater resources may afford them a marketplace advantage by
enabling them to maintain numerous banking locations and mount extensive
promotional and advertising campaigns. Additionally, banks and other financial
institutions with larger capitalization and financial intermediaries not subject
to bank regulatory restrictions have larger lending limits and are thereby able
to serve the credit needs of larger customers. Areas of competition include
interest rates for loans and deposits, efforts to obtain deposits, and range and
quality of products and services provided, including new technology-driven
products and services. Technological innovation continues to contribute to
greater competition in domestic and

                                       26


international financial services markets as technological advances, such as
Internet-based banking services that cross traditional geographic bounds, enable
more companies to provide financial services. If American River Bank is unable
to attract and retain banking customers, it may be unable to continue its loan
growth and level of deposits, which may adversely affect its and American River
Bankshares' results of operations and financial condition.

   o     Changes in economic conditions could result in an economic slowdown in
         Northern California which could hurt American River Bankshares'
         business materially.

         American River Bankshares' business is directly affected by factors
such as economic, political and market conditions, broad trends in industry and
finance, legislative and regulatory changes, changes in government monetary and
fiscal policies and inflation, all of which are beyond American River
Bankshares' control. A deterioration in economic conditions locally, regionally
or nationally including as the result of terrorist activities within and outside
California could result in an economic slowdown in Northern California and
trigger the following consequences, any of which could hurt American River
Bankshares' business materially:

         o        loan delinquencies may increase;

         o        problem assets and foreclosures may increase;

         o        demand for American River Bankshares' products and services
                  may decline;

         o        low cost or non-interest bearing deposits may decrease; and

         o        collateral for loans, especially real estate, may decline in
                  value, in turn reducing customers' borrowing power, and
                  reducing the value of assets and collateral associated with
                  American River Bankshares' existing loans through its
                  subsidiary, American River Bank.

   o     A downturn in the real estate market could hurt American River
         Bankshares' business.

         A downturn in the real estate market in Northern California could hurt
American River Bankshares' business because many of the loans through its
subsidiary, American River Bank, are secured by real estate. American River
Bankshares' ability to recover on defaulted loans by selling the real estate
collateral would then be diminished, and American River Bankshares would be more
likely to suffer losses on defaulted loans. Substantially all of American River
Bankshares' real property collateral is located in Northern California. If there
is a significant decline in real estate values, especially in Northern
California, the collateral for American River Bankshares' loans will provide
less security. Real estate values in California could be affected by, among
other things, changes in economic conditions including terrorist activities
within and outside of California, and earthquakes, fires, floods and other
natural disasters particular to California.

   o     American River Bankshares is subject to extensive regulation, which
         could adversely affect its business.

         American River Bankshares' operations are subject to extensive
regulation by state and local governmental authorities and are subject to
various laws and judicial and administrative decisions imposing requirements and
restrictions on part or all of its operations. American River Bankshares
believes that it is in substantial compliance in all material respects with
applicable laws, rules and regulations. Because American River Bankshares'
business is highly regulated, the laws, rules and regulations applicable to it
are subject to regular modification and change. There can be no assurance that
these laws, rules and regulations, or any other laws, rules or regulations, will
not be adopted in the future, which could make compliance much more difficult or
expensive, restrict American River Bankshares' ability to originate, broker or
sell loans, further limit or restrict the amount of commissions, interest or

                                       27


other charges earned on loans originated or sold by American River Bankshares or
its subsidiary, American River Bank, or otherwise adversely affect American
River Bankshares' business or prospects.

   o     American River Bankshares' ability to pay dividends is restricted by
         law.


         American River Bankshares' ability to pay dividends to its shareholders
is subject to the restrictions set forth in California law. See "Dividends and
Distributions" beginning on page 169 for more information on these restrictions.
American River Bankshares cannot assure you that it will meet the criteria
specified under California law in the future, in which case we may reduce or
stop paying dividends on its common stock.

         The primary source of American River Bankshares' cash flow from which
dividends are paid to its shareholders is dividends paid to American River
Bankshares by American River Bank. The availability of dividends from American
River Bank is limited by various statutes and regulations. It is possible
depending upon the financial condition of the American River Bank, and other
factors, that the California Department of Financial Institutions could assert
that payment of dividends or other payments is an unsafe or unsound practice.
American River Bank's failure to pay dividends on its common stock could limit
the ability of American River Bankshares to pay dividends on its common stock
which, in turn, could have a material adverse effect on the market price of
American River Bankshares' common stock. See "Dividends and Distributions"
beginning on page 169 for additional information on the regulatory restrictions
to which American River Bankshares and American River Bank are subject.


   o     American River Bank's allowance for loan and lease losses may not be
         adequate to cover actual losses.

         Like all financial institutions, American River Bank maintains an
allowance for loan losses to provide for loan defaults and non-performance, but
its allowance for loan losses may not be adequate to cover actual loan and lease
losses. In addition, future provisions for loan and lease losses could
materially and adversely affect American River Bank's and therefore American
River Bankshares' operating results. American River Bank's allowance for loan
and lease losses is based on prior experience, as well as an evaluation of the
risks in the current portfolio. The amount of future losses is susceptible to
changes in economic, operating and other conditions, including changes in
interest rates that may be beyond American River Bank's control, and these
losses may exceed current estimates. Federal regulatory agencies, as an integral
part of their examination process, review American River Bank's loans and
allowance for loan and lease losses. Although we believe that American River
Bank's allowance for loan and lease losses is adequate to cover current losses,
we cannot assure you that it will not further increase the allowance for loan
and lease losses or that regulators will not require it to increase this
allowance. Either of these occurrences could materially adversely affect
American River Bankshares' earnings.

                                       28


                INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

         This joint proxy statement-prospectus contains forward-looking
statements regarding each of American River Bankshares and Bank of Amador and
the combined company following the merger, including statements relating to:

         o        the financial condition, results of operations and business of
                  American River Bankshares following completion of the merger;

         o        cost savings, enhanced revenues and accretion to reported
                  earnings that are expected to be realized from the merger; and

         o        the restructuring charges expected to be incurred in
                  connection with the merger.

         These forward-looking statements involve risks and uncertainties.
Factors that may cause actual results to differ materially from those
contemplated by the forward-looking statements include, among others, the
following possibilities:

         o        expected cost savings from the merger cannot be fully realized
                  or realized within the expected time frame;

         o        revenues following the merger are lower than expected or
                  deposit withdrawals, operating costs or customer loss and
                  business disruption following the merger may be greater than
                  expected;

         o        competitive pressures among depository and other financial
                  services companies increase significantly;

         o        costs or difficulties related to the integration of the
                  businesses of American River Bank and Bank of Amador are
                  greater than expected;

         o        changes in the interest rate environment reduce interest
                  margins, cause an increase in the prepayment rate on mortgages
                  and other loans or reduce the demand for new loans;

         o        general economic or business conditions, either
                  internationally, nationally or in the regions in which the
                  combined company will be doing business, are less favorable
                  than expected, resulting in, among other things, a
                  deterioration in credit quality or a reduced demand for
                  credit;

         o        the U.S. "war on terrorism" and military action taken or to be
                  taken by the United States in the Middle East and in other
                  regions of the world and terrorist activities in response to
                  such actions;

         o        legislation or regulatory requirements or changes adversely
                  affect the businesses in which the combined company would be
                  engaged;

         o        technology-related changes may be harder to make or more
                  expensive than expected;

         o        changes in the securities markets; and

         o        timing of completion of the merger may be delayed, due to
                  regulatory requirements or other factors which may delay,
                  restrict or prohibit new operations.

                                       29


         With respect to estimated cost savings, American River Bankshares has
made assumptions regarding, among other things, the extent of operational
overlap between American River Bankshares, American River Bank and Bank of
Amador, the amount of general and administrative expense consolidation, costs
relating to converting Bank of Amador operations and data processing to American
River Bankshares systems, the size of anticipated reductions in fixed labor
costs, the amount of severance expenses, the extent of the charges that may be
necessary to align the companies' respective accounting, reserve policies and
the costs related to the merger. The realization of the expected cost savings is
subject to the risk that the foregoing assumptions are inaccurate.

         Management of American River Bankshares believes these forward-looking
statements are reasonable; however, undue reliance should not be placed on the
forward-looking statements, which are based on current expectations.

         Forward-looking statements are not guarantees of performance. They
involve risks, uncertainties and assumptions. The future results and shareholder
values of American River Bankshares following completion of the merger may
differ materially from those expressed in these forward-looking statements. Many
of the factors that will determine these results and values are beyond American
River Bankshares' and Bank of Amador's ability to control or predict. For those
statements, American River Bankshares and Bank of Amador claim the protection of
the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.

                                       30


                                  INTRODUCTION

The Special Meetings:  Dates, Times and Places

American River Bankshares

         This joint proxy statement-prospectus constitutes the proxy statement
of American River Bankshares for use at the special meeting of American River
Bankshares' shareholders to be held at 1545 River Park Drive, Suite 107,
Sacramento, California at 5:30 p.m., local time, on November 23, 2004, and any
adjournments or postponements thereof. This joint proxy statement-prospectus
also constitutes the prospectus for American River Bankshares common stock to be
issued in connection with the transaction.

Bank of Amador

         This joint proxy statement-prospectus constitutes the proxy statement
of Bank of Amador for use at the special meeting of Bank of Amador's
shareholders to be held at 422 Sutter Street, Jackson, California at 6:00 p.m.,
local time, on November 23, 2004.

Purpose of the Meetings

         At their respective special meetings, the shareholders of American
River Bankshares and the shareholders of Bank of Amador will each consider and
vote upon a proposal to approve the principal terms of the merger contemplated
by the merger agreement which is included in this joint proxy
statement-prospectus as Annex A, under the terms of which Bank of Amador would
merge with and into American River Bank, a subsidiary of American River
Bankshares.

Merger Proposal

         Pursuant to the merger agreement, Bank of Amador will be merged with
and into American River Bank and all of the outstanding shares of Bank of Amador
common stock will be automatically cancelled in the merger transaction. Upon
consummation of the merger, Bank of Amador will cease to exist and American
River Bank will continue as the surviving corporation and will conduct
operations at the former offices of Bank of Amador under the name "Bank of
Amador, a division of American River Bank."

         All information contained in this joint proxy statement-prospectus with
respect to Bank of Amador has been supplied by Bank of Amador. All information
contained in this joint proxy statement-prospectus with respect to American
River Bankshares and American River Bank has been supplied by American River
Bankshares.

         The American River Bankshares board of directors unanimously recommends
that its shareholders vote "FOR" the merger proposal.

         The Bank of Amador board of directors unanimously recommends that its
shareholders vote "FOR" the merger proposal.

Record Date and Outstanding Shares

American River Bankshares

         The close of business on October 15, 2004 has been set by the American
River Bankshares' board of directors as the record date for determining
shareholders entitled to receive notice of and to vote at the special meeting of
American River Bankshares. On the record date, there were 4,260,613 shares of
American River Bankshares common stock outstanding, held by 1,336 holders of
record.

                                       31


Bank of Amador

         The close of business on October 15, 2004 has been set by Bank of
Amador's board of directors as the record date for determining shareholders
entitled to receive notice of and to vote at the special meeting of Bank of
Amador. On the record date, there were 1,566,434 shares of Bank of Amador common
stock outstanding, held by approximately 900 holders of record.

Voting and Vote Required

American River Bankshares

         Each holder of American River Bankshares common stock is entitled to
one vote for each share of American River Bankshares common stock held in that
holder's name on the books of American River Bankshares as of the record date on
any matter submitted to the vote of the shareholders of American River
Bankshares at the special meeting. The approval of the principal terms of the
merger will require the affirmative vote, in person or by proxy, of holders
owning at least a majority of the outstanding shares of American River
Bankshares common stock.

Bank of Amador

         Each holder of Bank of Amador common stock is entitled to one vote for
each share of Bank of Amador common stock held in that holder's name on the
books of Bank of Amador as of the record date on any matter submitted to the
vote of the shareholders of Bank of Amador at the special meeting. The approval
of the principal terms of the merger will require the affirmative vote, in
person or by proxy, of holders owning at least a majority of the outstanding
shares of Bank of Amador common stock.

Solicitation of Proxies

American River Bankshares

         American River Bankshares will bear the cost of the solicitation of
proxies from its shareholders. In addition to solicitation by mail, the
directors, officers and employees of American River Bankshares may solicit
proxies from its shareholders by telephone or telegram or in person. Those
persons will not be additionally compensated, but will be reimbursed for
reasonable out-of-pocket expenses incurred in connection with the solicitations.
Arrangements will also be made with brokerage firms, nominees, fiduciaries and
other custodians, for the forwarding of solicitation materials to the beneficial
owners of shares held of record by those persons, and American River Bankshares
will reimburse those persons for their reasonable out-of-pocket expenses in
connection with those solicitations.

Bank of Amador

         Bank of Amador will bear the cost of the solicitation of proxies from
its shareholders. In addition to solicitation by mail, the directors, officers
and employees of Bank of Amador may solicit proxies from its shareholders by
telephone or telegram or in person. Those persons will not be additionally
compensated, but will be reimbursed for reasonable out-of-pocket expenses
incurred in connection with the solicitations. Arrangements will also be made
with brokerage firms, nominees, fiduciaries and other custodians, for the
forwarding of solicitation materials to the beneficial owners of shares held of
record by those persons, and Bank of Amador will reimburse those persons for
their reasonable out-of-pocket expenses in connection with those solicitations.

                                       32


Voting of Proxies

American River Bankshares

         Submitting Proxies

         American River Bankshares shareholders may vote their shares in person
by attending the special meeting or vote their shares by proxy by completing the
enclosed proxy card, signing and dating it and mailing it in the enclosed
postage pre-paid envelope. If a proxy card is signed by a shareholder and
returned without instructions, the shares represented by the proxy will be voted
by the proxy holders "FOR" the proposal presented at the special meeting.
Shareholders whose shares are held in "street name" (i.e., in the name of a
broker, bank or other record holder) must either direct the record holder of
their shares as to how to vote their shares or obtain a proxy from the record
holder to vote at the special meeting. Your broker will not vote your shares for
you unless you provide instructions to your broker regarding how to instruct
your broker to vote your shares. Your failure to instruct your broker regarding
how to vote your shares will have the same effect as a vote "AGAINST" any
proposal, including the merger agreement and the merger.

         The presence, in person or by properly executed proxy, of the holders
of a majority of the outstanding shares is necessary to constitute a quorum at
the special meeting. Abstentions and broker non-votes will be counted solely for
the purpose of determining whether a quorum is present. Under the applicable
rules of the National Association of Securities Dealers, Inc., brokers or
members who hold shares in "street name" for customers who are the beneficial
owners of the shares are prohibited from giving a proxy to vote those shares
with respect to the approval of the transactions contemplated by the merger
agreement including the merger in the absence of specific instructions from the
customers. We refer to these as "broker non-votes." Abstentions and broker
non-votes will not be counted as a vote "FOR" or "AGAINST" any proposal at the
special meeting, but will have the effect of a vote "AGAINST" any proposal,
including the merger agreement and the merger. The effect of abstentions and
broker non-votes on the establishment of dissenters' rights of American River
Bankshares and Bank of Amador shareholders differs due to the different
requirements under California law. See "Dissenters' Rights" commencing on page
165.

         Revoking Proxies

         American River Bankshares shareholders of record may revoke their
proxies at any time before the time their proxies are voted at the American
River Bankshares special meeting. Proxies may be revoked by written notice,
including by telegram or telecopy, to the Corporate Secretary of American River
Bankshares, by a later-dated proxy signed and returned by mail or by attending
the American River Bankshares special meeting, as applicable, and voting in
person. Attendance at the American River Bankshares special meeting will not in
and of itself constitute a revocation of a proxy. The shareholder must inform
the Secretary at the special meeting, prior to the vote, that he or she wants to
revoke his or her proxy and vote in person. Any written notice of a revocation
of a proxy must be sent so as to be received before the taking of the vote at
the special meeting, addressed as follows:

         Stephen H. Waks
         Corporate Secretary
         American River Bankshares
         1545 River Park Drive, Suite 107
         Sacramento, California 95815

         Discretionary Authority

         If any other matters are properly presented for consideration at the
American River Bankshares special meeting, the persons named in the enclosed
form of proxy card will have discretion to vote or not vote on those matters in
accordance with their best judgment, unless authorization to use that discretion
is

                                       33


withheld. If a proposal to adjourn or postpone the special meeting is properly
presented, however, the persons named in the enclosed form of proxy will not
have discretion to vote in favor of the adjournment proposal any shares which
have been voted against the proposal(s) to be presented at the special meeting.
American River Bankshares is not aware of any matters expected to be presented
at its special meeting other than as described in the notice of special meeting.

         Recommendation of the American River Bankshares Board of Directors

         The American River Bankshares board of directors has unanimously
approved the merger described herein and recommends that its shareholders vote
"FOR" the merger proposal.

Bank of Amador

         Submitting Proxies

         Bank of Amador shareholders may vote their shares in person by
attending the special meeting or vote their shares by proxy by completing the
enclosed proxy card, signing and dating it and mailing it in the enclosed
postage pre-paid envelope.

         If a proxy card is signed by a shareholder and returned without
instructions, the shares represented by the proxy will be voted by the proxy
holders "FOR" the proposal presented at the Bank of Amador special meeting. If a
proxy card is signed by a shareholder and returned without instructions, the
shares represented by the proxy will be voted by the proxy holders "FOR" the
proposal presented at the special meeting. Shareholders whose shares are held in
"street name" (i.e., in the name of a broker, bank or other record holder) must
either direct the record holder of their shares as to how to vote their shares
or obtain a proxy from the record holder to vote at the special meeting. Your
broker will not vote your shares for you unless you provide instructions to your
broker regarding how to instruct your broker to vote your shares. Your failure
to instruct your broker regarding how to vote your shares will have the same
effect as a vote "AGAINST" any proposal, including the merger agreement and the
merger.

         The presence, in person or by properly executed proxy, of the holders
of a majority of the outstanding shares is necessary to constitute a quorum at
the special meeting. Abstentions and broker non-votes will be counted solely for
the purpose of determining whether a quorum is present. Under the applicable
rules of the National Association of Securities Dealers, Inc., brokers or
members who hold shares in "street name" for customers who are the beneficial
owners of the shares are prohibited from giving a proxy to vote those shares
with respect to the approval of the transactions contemplated by the merger
agreement including the merger in the absence of specific instructions from the
customers. We refer to these as "broker non-votes." Abstentions and broker
non-votes will not be counted as a vote "FOR" or "AGAINST" any proposal at the
special meeting, but will have the effect of a vote "AGAINST" any proposal,
including the merger agreement and the merger. The effect of abstentions and
broker non-votes on the establishment of dissenters' rights of American River
Bankshares and Bank of Amador shareholders differs due to the different
requirements under California law. See "Dissenters' Rights" commencing on page
165.

         Revoking Proxies

         Bank of Amador shareholders of record may revoke their proxies at any
time before the time their proxies are voted at the Bank of Amador special
meeting. Proxies may be revoked by written notice, including by telegram or
telecopy, to the Corporate Secretary of Bank of Amador, by a later-dated proxy
signed and returned by mail or by attending the special meeting, as applicable,
and voting in person. Attendance at the special meeting will not in and of
itself constitute a revocation of a proxy. The shareholder must inform the
Secretary at the special meeting, prior to the vote, that he or she wants to
revoke his or her proxy and vote in person. Any written notice of a revocation
of a proxy must be sent so as to be received before the taking of the vote at
the special meeting, addressed as follows:

                                       34


         Gareth Abel
         Corporate Secretary
         Bank of Amador
         422 Sutter Street
         Jackson, California 95642

         Discretionary Authority

         If any other matters are properly presented for consideration at the
Bank of Amador special meeting, the persons named in the enclosed form of proxy
card will have discretion to vote or not vote on those matters in accordance
with their best judgment, unless authorization to use that discretion is
withheld. If a proposal to adjourn or postpone the special meeting is properly
presented, however, the persons named in the enclosed form of proxy will not
have discretion to vote in favor of the adjournment proposal any shares which
have been voted against the proposal(s) to be presented at the special meeting.
Bank of Amador is not aware of any matters expected to be presented at its
special meeting other than as described in the notice of special meeting.

         Shareholders who submit proxy cards should not send in any stock
certificates with their proxy cards. Instructions for the surrender of
certificates representing shares of Bank of Amador common stock will be mailed
to former Bank of Amador shareholders by American River Bankshares or its
exchange agent shortly after the merger is completed.

         Recommendation of the Bank of Amador Board of Directors

         The Bank of Amador board of directors has unanimously approved the
merger described herein and recommends that its shareholders vote "FOR" the
merger proposal.

                                       35


                   INFORMATION ABOUT AMERICAN RIVER BANKSHARES
                             AND AMERICAN RIVER BANK

General Development of Business

         American River Bankshares is a bank holding company registered under
the Bank Holding Company Act of 1956, as amended. American River Bankshares was
incorporated under the laws of the State of California in 1995 under the name
American River Holdings and changed its name in 2004 to American River
Bankshares. As a bank holding company, American River Bankshares is authorized
to engage in the activities permitted under the Bank Holding Company Act of
1956, as amended, and regulations thereunder. Its principal office is located at
1545 River Park Drive, Suite 107, Sacramento, California 95815 and its telephone
number is (916) 565-6100. American River Bankshares employed an equivalent of
102 full-time employees as of June 30, 2004.

         American River Bankshares owns 100% of the issued and outstanding
common shares of its banking subsidiary, American River Bank, and American River
Financial, a California corporation which has been inactive since its
incorporation in 2003.

         American River Bank was incorporated and commenced business in Fair
Oaks, California, in 1983 and thereafter moved its headquarters office to
Sacramento, California in 1985. American River Bank operates five full service
offices in Sacramento and Placer Counties including the head office located at
1545 River Park Drive, Suite 107, Sacramento, and branch offices located at 520
Capitol Mall, Suite 100, Sacramento, 9750 Business Park Drive, Sacramento, 10123
Fair Oaks Boulevard, Fair Oaks and 2240 Douglas Boulevard, Roseville, and three
full service offices in Sonoma County located at 412 Center Street, Healdsburg,
8733 Lakewood Drive, Windsor, and 50 Santa Rosa Avenue, Suite 100, Santa Rosa,
operated under the name "North Coast Bank, a division of American River Bank."
North Coast Bank was incorporated and commenced business in 1990 as Windsor Oaks
National Bank in Windsor, California. In 1997, the name was changed to North
Coast Bank. In 2000, North Coast Bank was acquired by American River Bankshares
as a separate bank subsidiary. Effective December 31, 2003, North Coast Bank was
merged with and into American River Bank. American River Bank's deposits are
insured by the Federal Deposit Insurance Corporation up to applicable legal
limits. American River Bank does not offer trust services or international
banking services and does not plan to do so in the near future. American River
Bank's primary business is serving the commercial banking needs of small to
mid-sized businesses within those counties. American River Bank accepts checking
and savings deposits, offers money market deposit accounts and certificates of
deposit, makes commercial, real estate, and other installment and term loans and
offers other customary banking services. American River Bank also conducts lease
financing for most types of business equipment, from computer software to heavy
earth-moving equipment.

         American River Bank owns 100% of two inactive companies, ARBCO and
American River Mortgage. ARBCO was formed in 1984 to conduct real estate
development and has been inactive since 1995. American River Mortgage has been
inactive since its formation in 1994.

         American River Bankshares conducts no significant activities other than
holding the shares of its subsidiaries. However, it is authorized, with the
prior approval of the Board of Governors of the Federal Reserve System, American
River Bankshares' principal regulator, to engage in a variety of activities
which are deemed closely related to the business of banking.

         The common stock of American River Bankshares is registered under the
Securities Exchange Act of 1934, as amended, and is listed and traded on the
Nasdaq National Market under the symbol "AMRB."

                                       36


Competition

         At June 30, 2003, based on the most recent "Data Book Summary of
Deposits in Federal Deposit Insurance Corporation Insured Commercial and Savings
Banks" report at that date, the competing commercial and savings banks had 145
offices in the cities of Fair Oaks, Rancho Cordova, Roseville and Sacramento,
California, where American River Bank has 5 offices, and 55 offices in the
cities of Healdsburg, Santa Rosa and Windsor, California, where American River
Bank's division, "North Coast Bank," has 3 offices. Additionally, American River
Bank competes with thrifts and, to a lesser extent, credit unions, finance
companies and other financial service providers for deposit and loan customers.

         American River Bank's business is concentrated in its service area,
which primarily encompasses cities within Placer, Sacramento and Sonoma
Counties. The economy of American River Bank's service area is dependent upon
government, manufacturing, construction, tourism, retail sales, population
growth and smaller service oriented businesses.

         In order to compete with the major financial institutions in its
primary service areas, American River Bank uses to the fullest extent possible
the flexibility which is accorded by its community bank status. This includes an
emphasis on specialized services, local promotional activity, and personal
contacts by its respective officers, directors and employees. American River
Bank also seeks to provide special services and programs for individuals in its
primary service area who are employed in the agricultural, professional and
business fields, such as loans for equipment, furniture, tools of the trade or
expansion of practices or businesses. In the event there are customers whose
loan demands exceed its lending limits, American River Bank seeks to arrange for
such loans on a participation basis with other financial institutions. It also
assists those customers requiring services not offered by American River Bank to
obtain such services from correspondent banks.

         Commercial banks compete with savings and loan associations, credit
unions, other financial institutions and other entities for funds. For instance,
yields on corporate and government debt securities and other commercial paper
affect the ability of commercial banks to attract and hold deposits. Commercial
banks also compete for loans with savings and loan associations, credit unions,
consumer finance companies, mortgage companies and other lending institutions.

         Banking is a business that depends on interest rate differentials. In
general, the difference between the interest rate paid by a bank to obtain
deposits and other borrowings and the interest rate received by a bank on loans
extended to customers and on securities held in a bank's portfolio comprise the
major portion of a bank's earnings.

         The interest rate differentials of a bank, and therefore its earnings,
are affected not only by general economic conditions, both domestic and foreign,
but also by the monetary and fiscal policies of the United States as set by
statutes and as implemented by federal agencies, particularly the Federal
Reserve Board. The Federal Reserve Board can and does implement national
monetary policy, such as seeking to curb inflation and combat recession, by its
open market operations in United States government securities, adjustments in
the amount of interest free reserves that banks and other financial institutions
are required to maintain, and adjustments to the discount rates applicable to
borrowing by banks from the Federal Reserve Board. These activities influence
the growth of bank loans, investments and deposits and also affect interest
rates charged on loans and paid on deposits. The nature and timing of any future
changes in monetary policies and their impact on American River Bankshares and
American River Bank is not predictable.

         Larger banks may have a competitive advantage because of higher lending
limits and major advertising and marketing campaigns. They also perform
services, such as trust services, international banking, discount brokerage and
insurance services, which American River Bank is not authorized nor prepared to
offer currently. American River Bank has made arrangements with its
correspondent banks and with others to provide some of these services for its
customers. For borrowers requiring loans in excess of American River Bank's
legal lending limits, American River Bank has offered, and intends to offer in
the future, such loans on a participating basis with its correspondent banks and
with other community banks, retaining a portion of such loans which is within
its lending limits. As of June 30,

                                       37


2004, American River Bank's aggregate legal lending limits to a single borrower
and such borrower's related parties were $6,038,000 on an unsecured basis and
$10,063,000 on a fully secured basis based on capital and reserves of
$40,250,000.

         Based upon the most recent "Data Book Summary of Deposits in Federal
Deposit Insurance Corporation Insured Commercial and Savings Banks" report dated
June 30, 2003, there were 181 operating commercial and savings bank offices in
Sacramento County with total deposits of $14,718,627,000. This was an increase
of $1,319,365,000 over the June 30, 2002 balances. American River Bank held a
total of $172,457,000 in deposits, representing approximately 1.2% of total
commercial and savings banks deposits in Sacramento County as of June 30, 2003.

         Based upon the most recent "Data Book Summary of Deposits in Federal
Deposit Insurance Corporation Insured Commercial and Savings Banks" report dated
June 30, 2003, there were 86 operating commercial and savings bank offices in
Placer County with total deposits of $3,810,163,000. This was an increase of
$494,352,000 over the June 30, 2002 balances. American River Bank held a total
of $58,732,000 in deposits, representing approximately 1.5% of total commercial
and savings banks deposits in Placer County as of June 30, 2003.

         Based upon the most recent "Data Book Summary of Deposits in Federal
Deposit Insurance Corporation Insured Commercial and Savings Banks" report dated
June 30, 2003, there were 116 operating commercial and savings bank offices in
Sonoma County with total deposits of $7,765,816,000. This was an increase of
$494,394,000 over the June 30, 2002 balances. American River Bank through its
division, "North Coast Bank," held a total of $63,892,000 in deposits,
representing approximately .8% of total commercial and savings banks deposits in
Sonoma County as of June 30, 2003.

         In 1996, pursuant to Congressional mandate, the Federal Deposit
Insurance Corporation reduced bank deposit insurance assessment rates to a range
from $0 to $0.27 per $100 of deposits, dependent upon a bank's risk. Based upon
the risk-based assessment rate schedule, American River Bank's current capital
ratios and levels of deposits, American River Bank anticipates no change in the
assessment rate applicable to it during 2004 from that in 2003.

Properties

         American River Bankshares and American River Bank lease 7 and own 1 of
their respective premises. American River Bank's head office is located at 1545
River Park Drive, Suite 107, Sacramento, California, in a modern, five floor
building which has offstreet parking for its clients. American River Bank leases
premises in the building from EOP-Point West, L.L.C. The lease term is ten years
and expires on March 31, 2010. The premises consist of 9,498 square feet on the
ground floor. The monthly lease rate is $20,521.

         American River Bank also leases the following premises:

         o        9750 Business Park Drive, Sacramento, California. The office
                  space is leased from Bradshaw Plaza Group, which is owned in
                  part by Charles D. Fite, a director of American River
                  Bankshares. The lease term is seven years and expires on
                  November 30, 2006. The premises consist of 4,590 square feet
                  on the ground floor. The monthly lease rate is $7,500.

         o        10123 Fair Oaks Boulevard, Fair Oaks, California. The office
                  space is leased from Marjorie Taylor, a former director of
                  American River Bankshares. The lease term is 12 years and
                  expires on March 1, 2009. The premises consist of 2,380 square
                  feet on the ground floor. The monthly lease rate is $1,825.

         o        2240 Douglas Boulevard, Roseville, California. The office
                  space is leased from Twin Tree Land Company. The lease term is
                  10 years and expires on December 18, 2006. The premises
                  consist of 3,790 square feet on the ground floor. The monthly
                  lease rate is $8,035.

         o        520 Capitol Mall, Sacramento, California. The office space is
                  leased from 520 Capitol Mall, Inc. The lease term is 10 years
                  and expires on June 1, 2014. The premises consist of 4,010
                  square feet on the ground floor. The monthly lease rate is
                  $10,426.

                                       38


         American River Bank leases or owns premises through its North Coast
Bank division as follows:

         o        8733 Lakewood Drive, Windsor, California. The office space is
                  leased from R. and R. Partners. The two-year lease expires on
                  December 31, 2005. The premises consist of 2,200 square feet
                  on the ground floor. The monthly lease rate is $3,190.

         o        412 Center Street, Healdsburg, California. The premises were
                  purchased June 1, 1993. The purchase price for the land and
                  building was $343,849. The building is 2,620 square feet
                  sitting on 10,835 square feet of land.

         o        50 Santa Rosa Avenue, Santa Rosa, California. The office space
                  is leased from HSG Trust. The lease term is ten (10) years and
                  expires on January 31, 2009. The premises consist of 7,072
                  square feet on the ground floor. The monthly lease rate is
                  $10,263.

         The leases on the premises located at 1545 River Park Drive, 9750
Business Park Drive, 2240 Douglas Boulevard, 50 Santa Rosa Avenue, and 8733
Lakewood Drive contain options to extend for five years. Included in the above
are two facilities leased from current or former directors of American River
Bankshares at terms and conditions which management believes are consistent with
the commercial lease market.

         The foregoing summary descriptions of leased premises are qualified in
their entirety by reference to the lease agreements. For more information, see
"Where You Can Find More Information" on page 189.

Legal Proceedings

         There are no material legal proceedings adverse to American River
Bankshares and American River Bank to which any director, officer, affiliate of
American River Bankshares, or 5% shareholder of American River Bankshares, or
any associate of any such director, officer, affiliate or 5% shareholder of
American River Bankshares are a party, and none of the above persons has a
material interest adverse to the American River Bankshares or American River
Bank.

         From time to time, American River Bankshares and/or American River Bank
is a party to claims and legal proceedings arising in the ordinary course of
business. American River Bankshares' management is not aware of any material
pending legal proceedings to which either it or American River Bank may be a
party or has recently been a party, which will have a material adverse effect on
the financial condition or results of operations of American River Bankshares or
American River Bank, taken as a whole.

Security Ownership of Directors, Executive Officers and 5% Shareholders

         As of the record date, the directors, executive officers and 5%
shareholders of American River Bankshares beneficially owned shares of American
River Bankshares common stock as described in the following tables. No
individual known to American River Bankshares owned more than five percent (5%)
of the outstanding shares of its common stock, except as described below.




--------------------------------------------------------------------------------------------
    Name and Address of          Amount and Nature of Beneficial Ownership        Percent of
     Beneficial Owner                                                                Class
--------------------------------------------------------------------------------------------
                                                                                 
Keefe Managers, LLC
375 Park Avenue, 23rd                           291,083                               6.8%
Floor, New York, New
York 10152
--------------------------------------------------------------------------------------------



         Unless otherwise indicated, each director and executive officer listed
below possesses sole voting power and sole investment power. All of the shares
shown in the following table are owned both of record and beneficially except as
indicated in the notes to the table. The address for beneficial owners, all

                                       39


of whom are incumbent directors and officers of American River Bankshares, is
the address of American River Bankshares, 1545 River Park Drive, Suite 107,
Sacramento, California 95815.



                                                                         Amount and Nature of           Percent of
Name of Beneficial Owner                      Position                   Beneficial Ownership(1)         Class(2)
------------------------                      --------                   -----------------------         --------
                                                                                                    
Amador S. Bustos                              Director                             4,150                     .1%

Raymond F. Byrne                      President of North Coast                       279(3)                  --%
                                   Bank, a division of American
                                            River Bank
Mitchell A. Derenzo                Executive Vice President and                   43,482(4)                 1.0%
                                    Chief Financial Officer of
                                     American River Bankshares
Charles D. Fite                               Director                           102,959(5)                 2.4%
Robert J. Fox                                 Director                            10,000                     .2%
Sam J. Gallina                                Director                           113,612(6)                 2.7%
Gregory H. Patton                 President of American River Bank                17,776(7)                  .4%
William A. Robotham                           Director                            58,930(8)                 1.4%
David T. Taber                     President and Chief Executive                 114,911(9)                 2.7%
                                     Office of American River
                                             Bankshares
Roger J. Taylor, D.D.S.                       Director                           97,894(10)                 2.3%
Douglas E. Tow                        Senior Vice President and                  26,254(11)                  .6%
                                       Credit Administrator of
                                      American River Bankshares
Stephen H. Waks                               Director                           48,761(12)                 1.1%
Michael A. Ziegler                            Director                            2,474(13)                  .1%
All directors and executive officers as a group (13 persons)                    641,492(14)                14.5%

-------------------------
(1)  Except as otherwise noted, may include shares held by or with a spouse
     (except where legally separated) and minor children; shares held by any
     other relative of the person who has the same home; shares held by a family
     trust as to which the person is a beneficiary and trustee with sole vesting
     and investment power (or shared with a spouse); or shares held in an
     individual retirement account or pension plan of which the person is the
     sole beneficiary and as to which shares the person has pass-through voting
     rights and investment power.
(2)  Includes stock options outstanding to purchase common stock exercisable
     within 60 days of the record date. The shares "beneficially owned" are
     determined under Securities and Exchange Commission Rules, and do not
     necessarily indicate ownership for any other purpose. In general,
     beneficial ownership includes shares over which a person has sole or shared
     voting or investment power and shares which the person has the right to
     acquire within 60 days.
(3)  Includes 187 shares which Mr. Byrne has the right to acquire upon the
     exercise of stock options within 60 days of the record date.
(4)  Includes 26,296 shares which Mr. Derenzo has the right to acquire upon the
     exercise of stock options within 60 days of the record date.
(5)  Includes 582 shares which Mr. Fite has the right to acquire upon the
     exercise of stock options within 60 days of the record date.
(6)  Includes 582 shares which Mr. Gallina has the right to acquire upon the
     exercise of stock options within 60 days of the record date.
(7)  Includes 16,573 shares which Mr. Patton has the right to acquire upon the
     exercise of stock options within 60 days of the record date.
(8)  Includes 25,889 shares which Mr. Robotham has the right to acquire upon the
     exercise of stock options within 60 days of the record date.
(9)  Includes 36,732 shares which Mr. Taber has the right to acquire upon the
     exercise of stock options within 60 days of the record date.

                                       40


(10) Includes 30,732 shares which Dr. Taylor has the right to acquire upon the
     exercise of stock options within 60 days of the record date.
(11) Includes 19,248 shares which Mr. Tow has the right to acquire upon the
     exercise of stock options within 60 days of the record date.
(12) Includes 18,673 shares which Mr. Waks has the right to acquire upon the
     exercise of stock options within 60 days of the record date.
(13) Includes 145 shares which Mr. Ziegler has the right to acquire upon the
     exercise of stock options within 60 days of the record date.
(14) Includes 175,649 stock options outstanding to purchase common stock
     exercisable within 60 days of the record date.

Background and Business Experience of Directors and Executive Officers


         The following tables set forth information as of the record date, with
respect to directors and executive officers (1) of American River Bankshares,
including their positions with American River Bankshares and American River
Bank, a brief account of the business experience of each director and executive
officer for a minimum period of five years, their ages and the year first
elected as a director or appointed as an executive officer. American River
Bankshares has a classified board of directors in which the incumbent directors
listed below are divided into three classes. See "Comparison of Shareholder
Rights - Classified Board Provisions" on page 176 for more information regarding
the classified board structure.


         Directors



                                               Class I Directors Elected To Serve to 2007
------------------------------------------------------------------------------------------------------------------------------------

       Name and Title          Principal Occupation During the Last Five Years               Age          Year First Elected
    Other than Director                                                                                         Director
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
      Amador S. Bustos       Chairman and Chief Executive Officer, Bustos Media               53                  2004
                             Corporation (BMC) in Sacramento.

       Robert J. Fox         Partner, S.J. Gallina & Co., LLP, Certified Public               59                  2004
                             Accountants in Sacramento.

     William A. Robotham     Executive Partner, Pisenti & Brinker LLP, Certified Public       62                  2004
                             Accountants in Santa Rosa.


                                               Class II Directors Elected to Serve to 2005
------------------------------------------------------------------------------------------------------------------------------------

       Name and Title          Principal Occupation During the Last Five Years               Age          Year First Elected
    Other than Director                                                                                         Director
------------------------------------------------------------------------------------------------------------------------------------

       Sam J. Gallina        Retired Partner, S.J. Gallina & Co., Certified Public            72                  1986
                             Accountants in Sacramento.


   Roger J. Taylor, D.D.S.   Dentist (Retired) and National Executive Director Impax          59                  1983
        Vice-Chairman        Health Prime and a real estate developer in Sacramento.

     Michael A. Ziegler      President and Chief Executive Officer of PRIDE Industries        59                  2002
                             in Sacramento.


                                       41




                                              Class III Directors Elected to Serve to 2006
------------------------------------------------------------------------------------------------------------------------------------

       Name and Title          Principal Occupation During the Last Five Years               Age          Year First Elected
    Other than Director                                                                                         Director
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
      Charles D. Fite        President, Fite Development Company in Sacramento.               46                  1993
         Chairman

      David T. Taber         President and Chief Executive Officer, American River            44                  1989
     President and CEO       Bankshares.

      Stephen H. Waks        Attorney-at-Law; owner of Stephen H. Waks, Inc. in               57                  1986
    Corporate Secretary      Sacramento.



         None of the directors listed in the table above or executive
officers(1) listed in the table below, were selected pursuant to any arrangement
or understanding other than with the directors and executive officers of
American River Bankshares acting within their capacities as such. There are no
family relationships between any two or more of the directors or executive
officers. No director or executive officer serves as a director of (i) any
company which has a class of securities registered under Section 12, or which is
subject to the periodic reporting requirements of Section 15(d) of the
Securities Exchange Act of 1934, or (ii) any company registered as an investment
company under the Investment Company Act of 1940.

         None of the directors or executive officers were subject to any legal
proceedings involving violations of securities laws, convictions in a criminal
proceeding (excluding traffic violations or minor offenses) or had a petition
under bankruptcy laws filed against themselves or an affiliate within the last
five years.

         American River Bankshares knows of no arrangements, including any
pledge by any person of securities of American River Bankshares, the operation
of which may, at a subsequent date, result in a change in control of American
River Bankshares.

         Executive Officers

         The executive officers of American River Bankshares include David T.
Taber, President and Chief Executive Officer, about whom information is provided
in the list of directors table above, and the persons named in the table below.










--------------------------
(1) As used in this joint proxy statement-prospectus, the term "executive
officer" of American River Bankshares includes the President and CEO of American
River Bankshares, the Executive Vice President and Chief Financial Officer of
American River Bankshares, the President of American River Bank, the Senior Vice
President and Credit Administrator of American River Bankshares, and the
President of North Coast Bank, a division of American River Bank.

                                       42




----------------------------------------------------------------------------------------------------------------------------
                                         Officer                         Principal Occupation
       Name and Title          Age        Since                       During The Past Five Years
----------------------------------------------------------------------------------------------------------------------------
                                                                                                            
    Mitchell A. Derenzo         43        1992     Executive Vice President and Chief Financial Officer of American
                                                   River Bankshares since 1995. Chief Financial Officer of American
                                                   River Bank since 1992.
----------------------------------------------------------------------------------------------------------------------------

      Raymond F. Byrne          56        2000     President of North Coast Bank, a division of American River Bank,
                                                   since 2002. Senior Vice President and Senior Lender of North Coast
                                                   Bank 2000 to 2003.  Vice President and Manager of Bank of the West
                                                   2000 to 2001. Vice President and General Manager of Discovery
                                                   Office Systems 1991 to 1999.
----------------------------------------------------------------------------------------------------------------------------

       Douglas E. Tow           50        1994     Senior Vice President and Credit Administrator of American River
                                                   Bankshares since 2003. Senior Vice President and Credit Administrator
                                                   of American River Bank since 1994.

----------------------------------------------------------------------------------------------------------------------------

     Gregory H. Patton          46        2004     President of American River Bank since January 2004.  Senior Vice
                                                   President and Senior Commercial Loan Officer of American River
                                                   Bank since 2000.  Vice President and Branch Manager of American
                                                   River Bank since 1995.

----------------------------------------------------------------------------------------------------------------------------


Committees of the Board of Directors

         Audit Committee

         The Audit Committee, whose members are Amador S. Bustos, Robert J. Fox,
Sam J. Gallina (Chairman), and William A. Robotham, oversees American River
Bankshares' and its subsidiaries' independent registered public accounting firm,
analyzes the results of internal and regulatory examinations and monitors the
financial and accounting organization and reporting. The Audit Committee met
four (4) times in 2003. Director Gallina has been designated by the board of
directors as an "audit committee financial expert" as defined under rules
promulgated by the Securities and Exchange Commission pursuant to the
Sarbanes-Oxley Act of 2002. In addition, each other member of the Audit
Committee is "financially literate" as defined under applicable Nasdaq Stock
Market Rules. Each member of the Audit Committee is "independent," as that term
is defined under rules promulgated by the Securities and Exchange Commission
pursuant to the Sarbanes-Oxley Act of 2002, and by applicable Nasdaq Stock
Market Rules.

         Nominating Committee

         During 2003, the full board of directors performed the functions of the
Nominating Committee including considering appropriate candidates for election
as directors. In January 2004, the board of directors delegated this function to
a new committee named the Nominating Committee. The Nominating Committee, whose
members are Charles D. Fite, Sam J. Gallina, Roger J. Taylor, D.D.S., and
Stephen H. Waks, has the responsibility to assist the board of directors by (a)
establishing criteria for candidates and identifying, evaluating, and
recommending candidates, including candidates proposed by shareholders, for
election to the board of directors, and (b) periodically reviewing and making
recommendations on the composition of the board of directors. All members of the
Nominating Committee are "independent," as that term is defined under rules
promulgated by the Securities and Exchange Commission pursuant to the
Sarbanes-Oxley Act of 2002, and applicable Nasdaq Stock Market Rules. Candidates
are selected in accordance with a Nominating Charter. The Nominating Charter
includes a policy for consideration of candidates proposed by shareholders. Any
recommendations by shareholders will be evaluated by the

                                       43


board of directors in the same manner as any other recommendation and in each
case in accordance with the Nominating Charter. Shareholders that desire to
recommend candidates for consideration by American River Bankshares' board of
directors should mail or deliver written recommendations to American River
Bankshares addressed as follows: Board of Directors, American River Bankshares,
1545 River Park Drive, Suite 107 Sacramento, California 95815. Each
recommendation should include biographical information indicating the background
and experience of the candidate that qualifies the candidate for consideration
as a director for evaluation by the board of directors. In addition to minimum
standards of independence for non-employee directors and financial literacy, the
board of directors considers various other criteria including the candidate's
experience and expertise, financial resources, ability to devote the time and
effort necessary to fulfill the responsibilities of a director and involvement
in community activities in the market areas served by American River Bankshares
and its subsidiaries that may enhance the reputation of American River
Bankshares and its subsidiaries. American River Bankshares and its subsidiaries
operate in a highly regulated industry and are subject to the supervision,
regulation and periodic examination by state and federal banking regulatory
authorities including the Board of Governors of the Federal Reserve System,
California Commissioner of Financial Institutions and Federal Deposit Insurance
Corporation. Directors of American River Bankshares and its subsidiaries are
subject to certain rules and regulations and potential liabilities not otherwise
applicable to directors of non-banking organizations. Consequently, evaluation
of candidates by American River Bankshares' board of directors may include more
extensive inquiries into personal background information including confirmation
of the accuracy and completeness of background information by (a) requiring
candidates to complete questionnaires to elicit information of the type required
to be disclosed by American River Bankshares in reports filed with the
Securities and Exchange Commission, Nasdaq, or such state and federal banking
regulatory authorities, (b) conducting background investigations by qualified
independent organizations experienced in conducting criminal and civil
investigatory reviews, and (c) such other personal and financial reviews and
analyses as the board of directors may deem appropriate in connection with the
consideration of candidates. Shareholders who wish to nominate a candidate for
election to American River Bankshares' board of directors, as opposed to
recommending a potential nominee for consideration by the board of directors,
are required to comply with the advance notice and any other requirements of
American River Bankshares' bylaws, applicable laws and regulations. The board of
directors may elect to use third parties in the future to identify or evaluate
candidates for consideration by the board of directors.

         Compensation Committee

         The Compensation Committee, whose members include Charles D. Fite
(Chairman), Sam J. Gallina, Roger J. Taylor, D.D.S., and Stephen H. Waks,
oversees the performance and reviews the compensation of the executive officers
of American River Bankshares and its subsidiaries. The Compensation Committee
met seven (7) times during 2003. The board of directors has determined that all
members of the Compensation Committee are "independent," as that term is defined
by applicable Nasdaq Stock Market Rules. See "Board Compensation Committee
Report on Executive Compensation" on page 47 for additional information
regarding the functions of the Compensation Committee.

         Finance and Capital Committee

         The Finance and Capital Committee, whose members include William A.
Robotham, Roger J. Taylor, D.D.S., Stephen H. Waks (Chairman), and Michael A.
Ziegler, has the responsibility to oversee asset liability management and the
investment portfolio including recommending to the full board of directors the
annual investment strategy; and recommending to the full board of directors the
annual operating budget for American River Bankshares and its subsidiaries; and
reviewing premises leases for recommendation to the full board of directors. The
Finance and Capital Committee met five (5) times during 2003.

                                       44


         Executive Committee

         The Executive Committee, whose members include Charles D. Fite
(Chairman), Sam J. Gallina, David T. Taber, Roger J. Taylor, D.D.S., and Stephen
H. Waks, oversees long range planning, formulates and recommends broad policy
positions for the full board of directors to consider; and is responsible for
evaluating and recommending to the full board of directors matters pertaining to
mergers and acquisitions. The Executive Committee met eleven (11) times during
2003.

         Loan Committee

         American River Bank's Loan Committee, whose members are Charles D.
Fite, Robert J. Fox, Sam J. Gallina, Roger J. Taylor, D.D.S. (Chairman), Stephen
H. Waks, and Philip A. Wright, has the responsibility for establishing loan
policy, approving loans which exceed certain dollar limits and reviewing the
outside loan review firm's examinations of the loan portfolio. The Loan
Committee met thirty-eight (38) times during 2003.

         During 2003, American River Bankshares' board of directors held twelve
(12) regular meetings and two (2) special meetings. In addition, American River
Bankshares' board of directors held two (2) "executive sessions" which only the
non-employee directors attended, each of whom is "independent" as defined under
rules promulgated by the Securities and Exchange Commission pursuant to the
Sarbanes-Oxley Act of 2002, and applicable Nasdaq Stock Market Rules. All
directors attended at least 75% of the aggregate of the total number of meetings
of the board of directors and the number of meetings of the committees on which
they served.

         A majority of the members of the board of directors, each of whom is
"independent" as defined under applicable rules promulgated by the Securities
and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002, and
applicable Nasdaq Stock Market Rules, has established procedures for receipt and
delivery of shareholder communications addressed to the board of directors. Any
such shareholder communications, including communications by employees of
American River Bankshares solely in their capacity as shareholders, should be
mailed or delivered to American River Bankshares addressed as follows: Board of
Directors, American River Bankshares, 1545 River Park Drive, Suite 107
Sacramento, California 95815

         American River Bankshares encourages members of its board of directors
to attend American River Bankshares' annual meeting of shareholders each year.
All of the current incumbent directors attended American River Bankshares'
annual meeting of shareholders held in 2003.

Compensation of Directors

         The fees paid to non-employee directors of American River Bankshares
during 2003 included a retainer of $250 per month, a base fee of $250 per month
for attendance at board meetings, and a fee of $150 per month for attendance at
committee meetings, other than the Loan Committee of American River Bank whose
outside director members received a fee of $250 for each meeting attended.
Outside director members of the Executive Committee received an additional
retainer fee of $150 per month. In addition to the fees received as non-employee
directors in connection with the meetings and matters described above, the
Chairman of the board of directors also received a retainer fee of $250 per
month, and the Chairman of the Audit Committee and the Chairman of American
River Bank's Loan Committee also received a retainer fee of $150 per month. In
2003, the total amount of fees paid by American River Bankshares to all
directors as a group was $77,900. In addition, certain directors of American
River Bankshares also served as directors and/or committee members for the
subsidiaries in existence during 2003, including American River Bank, North
Coast Bank (which was subsequently reorganized as a division of American River
Bank), and First Source Capital (a leasing subsidiary which was subsequently
dissolved). In 2003, the total amount of fees paid by the subsidiaries to
directors of American River

                                       45


Bankshares (in their capacities as directors and/or committee members for the
subsidiaries) as a group was $60,200.

         On August 25, 1995, the board of directors authorized the grant to each
outside director of a nonstatutory stock option to purchase 10,000 shares of
American River Bankshares common stock at $10.50 per share (converted to 30,150
shares at $3.483 as adjusted for stock splits and stock dividends). On March 19,
2003, then incumbent Directors Edgar Deas, Charles Fite, Sam Gallina, Dr. Wayne
Matthews, Marjorie Taylor, Dr. Roger Taylor, Stephen Waks, and Larry Wasem were
granted a nonstatutory stock option to purchase 1,940 shares of American River
Bankshares common stock at $22.34 per share (converted to 2,910 shares at
$14.893 as adjusted for a stock split). On May 21, 2003, Director Michael
Ziegler was granted a nonstatutory stock option to purchase 485 shares of
American River Bankshares common stock at $24.22 per share (converted to 727
shares at $16.144 as adjusted for a stock split). The options for Directors
Edgar Deas, Marjorie Taylor, and Larry Wasem expired upon their resignations as
directors.

         On June 18, 1997, the board of directors approved a Gross-Up Plan (the
"Plan") to compensate for the tax effects of the exercise of nonstatutory stock
options. Directors Charles Fite, Sam Gallina, Dr. Roger Taylor and Stephen Waks
are Plan participants. The Plan applies only to those options granted on August
25, 1995. The Plan encourages participating optionees to retain shares acquired
through the exercise of nonstatutory stock options by American River Bankshares
paying to the participating optionee an amount equal to the taxable income
resulting from an exercise of a nonstatutory stock option multiplied by American
River Bankshares' effective tax rate, subject to the optionee's agreement to
hold the shares acquired for a minimum of one (1) year. In the event that the
shares acquired upon exercise are not held for at least one year from the date
of acquisition, the optionee is required to reimburse the amount paid to the
optionee under the Plan.

         Effective December 20, 2001, a Deferred Fee Plan was established for
the purpose of providing the directors an opportunity to defer director fees.
Participating directors may elect to defer a portion, up to 100%, of their
monthly director fees. American River Bankshares bears the administration costs
and pays interest on the deferred balances at a rate equal to the five-year U.S
Treasury Bond plus 4.0%, but does not, otherwise, make contributions to the
Plan. During 2003, two directors participated in the Plan and deferred $15,000.

         In January 2003, the board of directors approved a Directors Retirement
Plan (the "Retirement Plan") whereby each director, upon full retirement from
American River Bankshares' or an affiliate's board of directors, is entitled to
receive installment payments over a 24 month period following retirement which
are equal to the total board of director and committee fees received by a
director for such service during the two full calendar years prior to
retirement. The Retirement Plan contains a ten-year vesting component. A
director vests 10% for each year of service on the board of directors of
American River Bankshares or an affiliate board of directors. During 2003,
former Director Burpo participated in this Retirement Plan and received payments
totaling $5,040.

                                       46


Board Compensation Committee Report on Executive Compensation

         The compensation of the executive officers of American River
Holdings(1) and its subsidiaries is reviewed and approved annually by the board
of directors on recommendation by the Compensation Committee. During 2003,
Charles D. Fite (Chairman), Sam J. Gallina and Roger J. Taylor, D.D.S., served
as members of the Compensation Committee. Each such member of the Committee is
"independent" as defined under applicable rules promulgated by the Securities
and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002, and
applicable Nasdaq Stock Market Rules. Mr. Taber was not present during the
Compensation Committee voting or deliberations regarding his compensation as
required by applicable Nasdaq Stock Market Rules. David T. Taber, Mitchell A.
Derenzo, William L. Young(2), Raymond F. Byrne, and Douglas E. Tow, served as
executive officers of American River Holdings and/or its subsidiaries during
2003 in the capacities reflected in the Summary Compensation Table.

         The Compensation Committee's philosophy is that compensation should be
designed to reflect the value created for shareholders while supporting American
River Holdings' strategic goals. The Compensation Committee reviews annually the
compensation of the executive officers to insure that American River Holdings'
compensation programs are related to financial performance and consistent
generally with employers of comparable size in the industry. Annual compensation
for American River Holdings' executive officers includes the following
components:

         1)       Base salary is related to the individual executive officer's
level of responsibility and comparison with comparable employers in the
industry.

         2)       Executive officers are eligible to participate in the American
River Holdings Incentive Compensation Plan (the "Incentive Plan"). The Incentive
Plan outlines minimum financial performance standards which include performance,
growth, efficiency and asset quality minimums which must be achieved prior to
any payout. If the performance standards are met, the pool amount available for
payment to all employees of the Company is set at a predetermined rate by the
Compensation Committee. The incentive pool for 2003 was set at 18% of net income
prior to incentive accruals and adjusted for taxes. The actual amounts accrued
in 2003 to be paid in 2004 represented 18% of net income prior to incentive
accruals and adjusted for taxes. The incentive pool also includes 401(k)
matching funds.

         3)       Stock option grants are intended to increase the executive
officers' interest in American River Holdings' long-term success and link
interests of the executive officer with those of shareholders as measured by
American River Holdings' share price. Stock options are granted at the
discretion of the board of directors and at the prevailing market value of
American River Holdings common stock. Consequently, the value of the options is
directly connected to the increase in value of American River Holdings' stock
price. See the Summary Compensation Table and Option/SAR Exercise Table, and
notes thereto for a further description of stocks options.

         4)       American River Holdings matches salary deferred by employees
participating in its 401(k) Plan at a rate equal to 50% of the participant's
contribution up to a maximum of 6% of such participant's annual compensation.
Executive officers are eligible to participate in the 401(k) plan. See the
Summary Compensation Table for further 401(k) plan information.

/s/ CHARLES D. FITE           /s/ SAM J. GALLINA             /s/ ROGER J. TAYLOR

(1) American River Holdings is the predecessor name for American River
    Bankshares.
(2) William L. Young retired effective January 2, 2004.

                                       47


Executive Compensation

         Summary Table

         Set forth below is the summary compensation paid during the three years
ended December 31, 2003 to David T. Taber, Mitchell A. Derenzo, Gregory H.
Patton, Raymond F. Byrne, and Douglas E. Tow, the only executive officers of
American River Bankshares and American River Bank.



                           Summary Compensation Table
------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Long-Term Compensation
                                                 Annual Compensation
                                                                                ----------------------------------------------------
                                                                                          Awards             Payouts
------------------------------------------------------------------------------------------------------------------------------------
                   (a)              (b)      (c)        (d)           (e)           (f)             (g)         (h)          (i)

                 Name and          Year    Salary      Bonus     Other Annual    Restricted     Securities     LTIP       All Other
            Principal Position             ($) (1)    ($) (2)    Compensation      Stock        Underlying    Payouts   Compensation
                                                                    ($) (3)       Award(s)     Options/SARs     ($)        ($) (5)
                                                                                    ($)           (#) (4)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        
David T. Taber, President          2003   $200,000    137,617          --            --            6,750         --        $ 38,287
and Chief Executive Officer        2002    175,000     44,688          --            --               --         --          31,472
                                   2001    175,000     94,026          --            --               --         --          27,551

------------------------------------------------------------------------------------------------------------------------------------
Mitchell A. Derenzo,               2003    125,000     41,568          --            --            3,225         --           9,269
Executive Vice President           2002    105,124     18,387          --            --               --         --           5,586
and Chief Financial Officer        2001    102,833     22,617          --            --               --         --           4,918

------------------------------------------------------------------------------------------------------------------------------------
Gregory H. Patton, President,      2003     98,613     30,643          --            --            2,250         --           4,035
American River Bank (6)            2002     95,214     11,669          --            --               --         --           3,207
                                   2001     87,458     15,429          --            --               --         --           3,087

------------------------------------------------------------------------------------------------------------------------------------
Raymond F. Byrne, President,       2003    107,525      2,000          --            --              937         --           3,677
North Coast Bank, a division of    2002    102,000      3,340          --            --               --         --           3,160
American River Bank                2001     92,583         --          --            --               --         --           2,778

------------------------------------------------------------------------------------------------------------------------------------
Douglas E. Tow, Senior Vice        2003    113,000     44,389          --            --            3,225         --          10,247
President and Credit               2002    100,650     15,982          --            --               --         --           5,459
Administrator                      2001     98,457     21,656          --            --               --         --           4,921

------------------------------------------------------------------------------------------------------------------------------------

     (1)  Amounts shown include cash compensation earned and received by
          executive officers as well as amounts earned but deferred at the
          election of those officers under the 401(k) Plan and the Deferred
          Compensation Plan.
     (2)  Amounts indicated as bonus payments are listed in the year paid. The
          amounts listed as paid in 2003 were all earned in 2002. Additional
          amounts accrued in 2003 and paid in 2004 were $133,333 to Mr. Taber;
          $41,417 to Mr. Derenzo; $37,289 to Mr. Patton, $17,148 to Mr. Byrne,
          and $35,880 to Mr. Tow.
     (3)  No executive officer received perquisites or other personal benefits
          in excess of the lesser of $50,000 or 10% of each such officer's total
          annual salary and bonus during 2003, 2002, and 2001.
     (4)  Represents the number of shares granted in the year indicated, as
          adjusted for stock splits and stock dividends. American River
          Bankshares had a 1995 Stock Option Plan (the "1995 Plan") pursuant to
          which options could be granted to directors and key, full-time
          salaried officers and employees of American River Bankshares and its
          subsidiaries. The 1995 Plan was replaced with American River
          Bankshares' 2000 Stock Option Plan (the "2000 Plan"). Options granted
          under the 1995 Plan were either incentive options or nonstatutory
          options. Options granted under the 1995 Plan became exercisable in
          accordance with a vesting schedule established at the time of grant.
          Vesting could not extend beyond ten years from the date of grant. Upon
          a change in control of American River Bankshares, all outstanding
          options under the 1995 Plan will become fully vested and exercisable.
          Options granted under the 1995 Plan are adjusted to protect against
          dilution in the event of certain changes in American River Bankshares'
          capitalization, including stock splits and stock dividends. The 2000
          Plan is substantially similar to the 1995 Plan regarding provisions
          related to option grants, vesting, and dilution. All options granted
          to the named executive officers have an exercise price equal to the
          fair market value of the common stock on the date of grant.
     (5)  Amounts shown for each named executive officer include 401(k) matching
          contributions, the use of an automobile owned by American River
          Bankshares, earned but unpaid interest on amounts deferred under
          American River Bankshares' Deferred Compensation Plan, excess life
          insurance premiums paid by American

                                       48


          River Bankshares, and amounts accrued pursuant to post-retirement
          agreements as described below.
     (6)  Represents compensation paid to Mr. Patton prior to his appointment in
          January 2004 as President of American River Bank.

         Stock Options

         The following table describes stock options that were granted pursuant
to American River Bankshares' 2000 Stock Option Plan (the "2000 Stock Option
Plan") to American River Bankshares' executive officers (except Mr. Patton) in
the fiscal year ended December 31, 2003. The 2000 Stock Option Plan was approved
by shareholders on September 21, 2000. All of the grants were made on March 19,
2003, based on achievement of 2002 corporate and personal performance
objectives.



                      Option/SAR Grants in Last Fiscal Year

------------------------------------------------------------------------------------------------------------
                            Number of       Percent of Total
                           Securities         Options/SARs                                        Grant Date
                           Underlying          Granted to                                          Present
                          Options/SARs        Employees in         Exercise       Expiration      Values ($)
        Name             Granted (#) (1)       Fiscal Year          Price            Date            (2)
                                                                    ($/Sh)
------------------------------------------------------------------------------------------------------------
                                                                                       
David T. Taber                6,750                 18%           $14.89333        3/19/2013      $23,625
------------------------------------------------------------------------------------------------------------
Mitchell A. Derenzo           3,225                  8%            14.89333        3/19/2013       11,288
------------------------------------------------------------------------------------------------------------
Gregory H. Patton             2,250                  6%            14.89333        3/19/2013        7,875
------------------------------------------------------------------------------------------------------------
Raymond F. Byrne                937                  2%            14.89333        3/19/2013        3,280
------------------------------------------------------------------------------------------------------------
Douglas E. Tow                3,225                  8%            14.89333        3/19/2013       11,288
------------------------------------------------------------------------------------------------------------

(1)  All options are incentive stock options, which vest ratably over a
     five-year period commencing one year after the grant date. All options have
     an exercise price equal to the market value on the date of grant. The
     number of shares granted and the option price have been adjusted to reflect
     the 3 for 2 stock split distributed on October 31, 2003. The terms of all
     of American River Bankshares' stock option plans provide that options may
     become exercisable in full in the event of a change of control as defined
     in the 2000 Stock Option Plan.
(2)  The Black-Scholes option-pricing model is used to determine grant date
     present value. To derive the per share option value of $3.50, the
     assumptions used include a risk-free rate equal to the seven-year
     interpolated treasury yield of 3.52%, volatility of 19.6%, and a seven-year
     maturity.

         The following table sets forth the number of shares of common stock
acquired by each of the named executive officers upon the exercise of stock
options during fiscal year 2003, the net value realized upon exercise, the
number of shares of common stock represented by outstanding stock options held
by each of the named executive officers as of December 31, 2003, the value of
such options based on the closing price of American River Bankshares' common
stock, and certain information concerning unexercised options under the 1995 and
2000 Stock Option Plans.



                 Aggregated Option/SAR Exercises In Last Fiscal Year And FY-End Option/SAR Values
---------------------------------------------------------------------------------------------------------------------
                                                             Number of Securities                Value of
                                                                  Underlying                    Unexercised
                                                                  Unexercised                   in-the-Money
                                                                  Options/SARs                  Options/SARs
                               Shares            Value       at Fiscal Year- End (#)       at Fiscal Year-End ($)
                             Acquired on        Realized          Exercisable/                  Exercisable/
           Name              Exercise (#)         ($)            Unexercisable                 Unexercisable

           (a)                   (b)              (c)                (d)                           (e) (1)
---------------------------------------------------------------------------------------------------------------------
                                                                                                    
 David T. Taber                    --          $      --        75,382  /  6,750        $ 1,267,755  /  $    36,495
---------------------------------------------------------------------------------------------------------------------
 Mitchell A. Derenzo            4,500          $  57,889        25,651  /  3,225        $   363,366  /  $    17,437
---------------------------------------------------------------------------------------------------------------------
 Gregory H. Patton                 --          $      --        17,229  /  2,250        $   181,763  /  $    12,165
---------------------------------------------------------------------------------------------------------------------
 Raymond F. Byrne                  --          $      --            --  /    937        $        --  /  $     5,066
---------------------------------------------------------------------------------------------------------------------
 Douglas E. Tow                 2,524          $  50,886        19,803  /  3,225        $   250,267  /  $    17,437
---------------------------------------------------------------------------------------------------------------------

(1)  The aggregate value has been determined based upon the closing price for
     American River Bankshares' common stock at year-end, minus the exercise
     price.

                                       49


Employment Contracts and Termination of Employment and Change in Control
Arrangements

         In August 2003, American River Bankshares entered into an employment
agreement with David T. Taber. The agreement provides for an original term of
two years subject to automatic extensions of two years following expiration of
the original term and one-year extensions thereafter unless terminated in
accordance with the terms of the agreement. The agreement provides for a base
salary which is disclosed in the Summary Compensation Table on page 48. The base
salary is reviewed annually and is subject to adjustment at the discretion of
the board of directors. Additionally, the agreement provides for, among other
things (i) an annual incentive bonus based upon American River Bankshares'
achievement of certain profitability, growth and asset quality standards as set
forth in the agreement; (ii) in the event of disability, payment of base salary
reduced by the amounts received from state disability insurance or workers'
compensation or other similar insurance benefits through policies provided by
American River Bankshares; (iii) stock option grants in the discretion of the
board of directors under American River Bankshares' stock option plan; (iv) four
weeks annual paid vacation leave; (v) use of an automobile; and (vi)
reimbursement for ordinary and necessary expenses incurred in connection with
employment.

         The agreement may be terminated with or without cause, but if the
agreement is terminated without cause due to the occurrence of circumstances
that make it impossible or impractical for American River Bankshares to conduct
or continue its business, the loss by American River Bankshares of its legal
capacity to contract or American River Bankshares' breach of the terms of the
agreement, the employee is entitled to receive severance compensation equal to
six months of the existing base salary plus any incentive bonus due. The
agreement further provides that in the event of a "change in control" as defined
therein and within a period of two years following consummation of such change
in control (i) the employee's employment is terminated; or (ii) any adverse
change occurs in the nature and scope of the employee's salary or benefits; or
(iii) any event occurs which reasonably constitutes a constructive termination
of employment, by resignation or otherwise, then the employee will be entitled
to receive severance compensation in an amount equal to eighteen (18) months of
the employee's annual base salary, less applicable withholding deductions (in
addition to salary, incentive compensation, or other payments, if any, due the
employee).

         On March 18, 1998, American River Bank adopted the American River Bank
Employee Severance Policy. The Policy allows for certain named employees to
receive severance payments equal to six times their monthly base pay should
these named employees be terminated within one year of a "change in control."
The board of directors has designated executive officers, Mitchell A. Derenzo,
Douglas E. Tow, Raymond F. Byrne and Gregory H. Patton to be covered under the
Policy.

         Recognizing the importance of building and retaining a competent
management team, additional agreements were entered into to provide
post-retirement benefits to Messrs. Taber, Derenzo and Tow. The terms of the
agreements include the amounts each employee will receive upon the occurrence of
certain specified events, including formal retirement on or after a specified
age. The agreements generally provide for annual retirement benefit payments of
One Hundred Thousand Dollars ($100,000) to Mr. Taber and Fifty Thousand Dollars
($50,000) each to Mr. Derenzo and Mr. Tow. The annual retirement benefit amount
is payable in equal monthly installments over a fifteen (15) year period. In the
event of an employee's death, all remaining amounts due are anticipated to be
paid to the employee's designated beneficiary over the remaining payout period.
Other events which may alter when payment of the annual retirement benefit is to
begin, or the amount which is to be paid, include: (a) disability prior to
retirement in which case the employee shall be entitled to a lesser benefit
payment amount based upon the length of employment; and (b) termination
following a "change of control," in which case the employee is entitled to
receive the annual benefit payment in equal monthly installments for fifteen
(15) years beginning in the month following the termination or "change of
control" equal to Sixty-Four Thousand Nine Hundred and Seventy Dollars ($64,970)
for Mr. Taber and Thirty-Two Thousand Four Hundred and Eighty-Five Dollars
($32,485) each for Mr. Derenzo and Mr. Tow.

                                       50


         American River Bankshares purchased insurance policies on the lives of
Messrs. Taber, Derenzo, and Tow, paying the premiums for these insurance
policies with a lump-sum premium payment of approximately $954,100.

Other Compensation Arrangements

         Effective May 1, 1998, the American River Bank Deferred Compensation
Plan was established for the purpose of providing certain highly compensated
individuals, which includes the executive officers, an opportunity to defer
compensation. Participants, who are selected by a committee designated by the
board of directors, may elect to defer annually a minimum of $5,000 or a maximum
of eighty percent of their base salary and all of their cash bonus. American
River Bank bears all administration costs, but does not make contributions to
the plan. Effective December 20, 2000, the Deferred Compensation Plan was
renamed the American River Holdings Deferred Compensation Plan and beginning
January 1, 2001, American River Bankshares now bears the administration costs
for participants that are employed by American River Bankshares and each
subsidiary bears the costs for participants that are employed by the subsidiary.

Equity Compensation Plan Information

         The chart below summarizes share information about American River
Bankshares' equity compensation plans including the 1995 Stock Option Plan and
the 2000 Stock Option Plan as of December 31, 2003. Both of these plans have
been approved by American River Bankshares' shareholders. American River
Bankshares has no other equity compensation plan and there are no warrants or
other rights outstanding that would result in the issuance of shares of American
River Bankshares' common stock.



------------------------------------------------------------------------------------------------------------------
      Plan Category             Number of securities to be       Weighted-average         Number of securities
                                 issued upon exercise of        exercise price of        remaining available for
                                   outstanding options,        outstanding options,   future issuance under equity
                                   warrants and rights         warrants and rights         compensation plans
                                                                                         (excluding securities
                                                                                        reflected in column (a))

                                           (a)                          (b)                        (c)
------------------------------------------------------------------------------------------------------------------
                                                                                            
  Equity compensation
   plans approved by
    security holders                   549,349 (1)                    $6.39                      411,243
------------------------------------------------------------------------------------------------------------------
  Equity compensation
 plans not approved by
    security holders                     -0-                           -0-                         -0-
------------------------------------------------------------------------------------------------------------------
        Total                          549,349                        $6.39                      411,243
------------------------------------------------------------------------------------------------------------------

     (1)  Shares reserved but unissued shall remain available for grant during
          any subsequent calendar year. Awards that expire or are cancelled,
          forfeited or terminated before being exercised shall again become
          available for future awards.

Comparison of American River Bankshares Shareholders' Return

         Set forth below is a line graph comparing the annual percentage change
in the cumulative total return on American River Bankshares common stock with
the cumulative total return of the SNL Securities Index of National Peer Banks
(asset size of less than $500 million), NASDAQ--Total U.S., and the S&P 500
Index as of the end of each of the last five fiscal years. The following table
assumes that $100.00 was invested on December 31, 1998 in American River
Bankshares (previously named American River Holdings) common stock and each
index, and that all dividends were reinvested. Returns have been adjusted for
any stock dividends and stock splits declared by American River Bankshares.
Shareholder returns over the indicated period should not be considered
indicative of future shareholder returns.

                                       51


--------------------------------------------------------------------------------

                            AMERICAN RIVER BANKSHARES

--------------------------------------------------------------------------------


                            Total Return Performance

                               [GRAPHIC OMITTED]




                                                                      Period Ending
                                  ------------------------------------------------------------------------------------
Index                                 12/31/98      12/31/99      12/31/00      12/31/01      12/31/02      12/31/03
----------------------------------------------------------------------------------------------------------------------
                                                                                              
American River Bankshares              100.00         90.67         91.95        112.23        180.05        236.00
S&P 500                                100.00        121.11        110.34         97.32         75.75         97.51
NASDAQ--Total US                       100.00        185.95        113.19         89.65         61.67         92.90
SNL <$500M Bank Index                  100.00         92.57         89.30        123.53        158.20        230.92

(1)  American River Holdings is the predecessor name for American River
     Bankshares.

                                       52


Transactions with Management and Others

         There have been no transactions, or series of similar transactions,
during 2003, or any currently proposed transaction, or series of similar
transactions, to which American River Bankshares and its subsidiaries was or is
to be a party, in which the amount involved exceeded or will exceed $60,000 and
in which any director or executive officer of American River Bankshares or its
subsidiaries, any shareholder owning of record or beneficially 5% or more of
American River Bankshares common stock, or any member of the immediate family of
any of the foregoing persons, had, or will have, a direct or indirect material
interest, except as follows:

         American River Bank leases premises at 9750 Business Park Drive,
Sacramento, California, from Bradshaw Plaza Group, which is owned in part by
Charles D. Fite, a director of American River Bankshares, in addition to
ownership by other family members. The lease term is 7 years and expires on
November 30, 2006, subject to extension for one five-year option term. The
premises consist of 4,590 square feet on the ground floor. The current monthly
rent is $7,500. The approximate aggregate rental payments for the period from
January 1, 2004 through the lease term expiring on November 30, 2006 will be
$269,702. If the five-year option is exercised, the approximate aggregate rental
payments for the option term will be $474,000.

         American River Bank leases premises at 10123 Fair Oaks Boulevard, Fair
Oaks, California, from Marjorie Taylor, a former director of American River
Bankshares. The lease term is 12 years and expires on March 1, 2009. The
premises consist of 2,380 square feet on the ground floor and the current
monthly rent is $1,825. The approximate aggregate rental payments for the period
from January 1, 2004 through the lease term expiring on March 1, 2009 will be
$119,352.

Indebtedness of Management

         American River Bankshares, through its subsidiaries, has had, and
expects in the future to have banking transactions in the ordinary course of its
business with many of American River Bankshares' directors and officers and
their associates, including transactions with corporations of which such persons
are directors, officers or controlling shareholders, on substantially the same
terms (including interest rates and collateral) as those prevailing for
comparable transactions with others. Management believes that in 2003 such
transactions comprising loans did not involve more than the normal risk of
collectibility or present other unfavorable features. Loans to executive
officers of American River Bankshares and its subsidiaries are subject to
limitations as to amount and purposes prescribed in part by the Federal Reserve
Act, as amended, and the regulations of the Federal Deposit Insurance
Corporation.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires American River Bankshares' directors, executive officers and any
persons beneficially owning ten percent or more of American River Bankshares'
common stock to timely file initial reports of ownership and reports of changes
in that ownership with the Securities and Exchange Commission. Such persons are
required by Securities and Exchange Commission regulation to send copies of such
reports to American River Bankshares. To American River Bankshares' knowledge,
based solely on a review of the copies of such reports furnished to American
River Bankshares and written representations that no other reports were required
during the fiscal year ended December 31, 2003, American River Bankshares
believes all such filing requirements applicable to its directors, executive
officers and ten percent shareholders were met.

Code of Ethics

         American River Bankshares has adopted a Code of Ethics that complies
with the rules promulgated by the Securities and Exchange Commission pursuant to
the Sarbanes-Oxley Act of 2002

                                       53


and applicable Nasdaq Stock Market Rules. The Code of Ethics requires that
American River Bankshares' directors, officers (including the principal
executive, financial and accounting officers, or controller and persons
performing similar functions) and employees conduct business in accordance with
the highest ethical standards and in compliance with all laws, rules and
regulations applicable to American River Bankshares. The Code of Ethics is
intended to supplement the provisions of any other personnel policies of
American River Bankshares or codes of conduct which may establish additional
standards of ethical behavior applicable to American River Bankshares'
directors, officers and employees.

         American River Bankshares' Code of Ethics was filed as Exhibit 14.1 to
American River Bankshares' 2003 Annual Report on Form 10-K and may be accessed
through American River Bankshares' website by following the instructions for
accessing reports filed with the Securities and Exchange Commission hereafter in
this joint proxy statement-prospectus under the heading "Where You Can Find More
Information" on page 189, or is available, free of charge, upon written request
to Mitchell A. Derenzo, American River Bankshares, 1545 River Park Drive, Suite
107, Sacramento, California, 95815.

                                       54


         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               RESULTS OF OPERATIONS OF AMERICAN RIVER BANKSHARES


         The following is management's discussion and analysis of the
significant changes in American River Bankshares' balance sheet accounts for the
periods ended December 31, 2003, 2002 and 2001 and June 30, 2004 and 2003 and
its income and expense accounts for the years ended December 31, 2003, 2002 and
2001 and the three and six-month periods ended June 30, 2004 and 2003. The
discussion is designed to provide a better understanding of significant trends
related to American River Bankshares' financial condition, results of
operations, liquidity, capital resources and interest rate sensitivity. This
discussion and the consolidated financial statements and related notes appearing
elsewhere in this report are condensed and unaudited.

         In addition to the historical information contained herein, this report
contains certain forward-looking statements. The reader of this report should
understand that all such forward-looking statements are subject to various
uncertainties and risks that could affect their outcome. American River
Bankshares' actual results could differ materially from those suggested by such
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, variances in the actual versus
projected growth in assets, return on assets, loan and lease losses, expenses,
changes in the interest rate environment including interest rates charged on
loans, earned on securities investments and paid on deposits, competition
effects, fee and other noninterest income earned, general economic conditions,
nationally, regionally and in the operating market areas of American River
Bankshares and its subsidiaries, changes in the regulatory environment, changes
in business conditions and inflation, changes in securities markets, data
processing problems, a decline in real estate values in American River
Bankshares' market area, the effects of terrorism, the threat of terrorism or
the impact of the current military conflict in Iraq and the conduct of the war
on terrorism by the United States and its allies, as well as other factors. This
entire report should be read to put such forward-looking statements in context.
To gain a more complete understanding of the uncertainties and risks involved in
American River Bankshares' business, this report should be read in conjunction
with American River Bankshares' annual report on Form 10-K for the year ended
December 31, 2003 and its 2004 reports filed on Forms 10-Q and 8-K.

         Interest income and net interest income are presented on a fully
taxable equivalent basis (FTE) within management's discussion and analysis.

Critical Accounting Policies

         General

         American River Bankshares' financial statements are prepared in
accordance with accounting principles generally accepted in the United States of
America ("GAAP"). The financial information contained within our statements is,
to a significant extent, financial information that is based on measures of the
financial effects of transactions and events that have already occurred. We use
historical loss data, peer group experience and the economic environment as
factors, among others, in determining the inherent loss that may be present in
our loan and lease portfolio. Actual losses could differ significantly from the
historical factors that we use. Other estimates that we use are related to the
expected useful lives of our depreciable assets. In addition GAAP itself may
change from one previously acceptable method to another method. Although the
economics of our transactions would be the same, the timing of events that would
impact our transactions could change.

                                       55


         Allowance for Loan and Lease Losses

         The allowance for loan and lease losses is an estimate of the credit
loss risk in our loan and lease portfolio. The allowance is based on two basic
principles of accounting: (1) Statement of Financial Accountings Standards
("SFAS") No. 5 "Accounting for Contingencies," which requires that losses be
accrued when they are probable of occurring and estimable, and (2) SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," which requires that losses
be accrued based on the differences between the value of collateral, present
value of future cash flows or values that are observable in the secondary market
and the loan balance.

         The allowance for loan and lease losses is determined based upon
estimates that can and do change when the actual risk or loss events occur. The
analysis of the allowance uses an historical loss view as an indicator of future
losses and as a result could differ from the loss incurred in the future.
However, since our analysis of risk and loss potential is updated regularly, the
errors that might otherwise occur are mitigated. The use of factors and ranges
is inherently subjective and our actual losses could be greater or less than the
estimates. American River Bankshares' goal is to maintain an allowance for loan
and lease losses that is between the lower and upper ranges as described above.
If the allowance for loan and lease losses falls below the lower range of
adequate reserves (by reason of loan and lease growth, actual losses, the effect
of changes in risk ratings, or some combination of these factors), American
River Bankshares has a strategy for supplementing the allowance for loan and
lease losses, over the short term, so that it would again fall within the lower
and upper acceptable ranges. For further information regarding our allowance for
loan and lease losses, see "Allowance for Loan and Lease Losses Activity"
discussion later in this Item.

         Stock Based Awards

         American River Bankshares accounts for its stock based awards using the
intrinsic value method in accordance with Accounting Principles Board ("APB")
Opinion No. 25 and related interpretations. Since American River Bankshares'
stock option plan provides for the issuance of options at a price of no less
than the fair market value at the date of the grant, no compensation expense is
recognized in the financial statements unless the options are modified after the
grant date.


General Development of Business

         American River Bankshares is a bank holding company registered under
the Bank Holding Company Act of 1956, as amended. American River Bankshares was
incorporated under the laws of the State of California in 1995 under the name
American River Holdings and changed its name in 2004 to American River
Bankshares. As a bank holding company, American River Bankshares is authorized
to engage in the activities permitted under the Bank Holding Company Act of
1956, as amended, and regulations thereunder. Its principal office is located at
1545 River Park Drive, Suite 107, Sacramento, California 95815 and its telephone
number is (916) 565-6100.

         American River Bankshares owns 100% of the issued and outstanding
common shares of American River Bank. American River Bank was incorporated and
commenced business in Fair Oaks, California, in 1983 and thereafter moved its
headquarters office to Sacramento, California in 1985. American River Bank
operates five full service offices in Sacramento and Placer Counties including
the head office located at 1545 River Park Drive, Suite 107, Sacramento, and
branch offices located at 520 Capitol Mall, Suite 100, Sacramento, 9750 Business
Park Drive, Sacramento, 10123 Fair Oaks Boulevard, Fair Oaks and 2240 Douglas
Boulevard, Roseville, and three full service offices in Sonoma County located at
412 Center Street, Healdsburg, 8733 Lakewood Drive, Windsor, and 50 Santa Rosa
Avenue, Suite 100, Santa Rosa, operated under the name "North Coast Bank, a
division of American River Bank." North Coast Bank was incorporated and
commenced business in 1990 as Windsor Oaks National Bank in Windsor, California.
In 1997, the name was changed to North Coast Bank. In 2000, North Coast Bank was
acquired by American River Bankshares as a separate bank subsidiary. Effective
December 31, 2003, North Coast Bank was merged with and into American River
Bank.

                                       56


American River Bank's deposits are insured by the Federal Deposit Insurance
Corporation up to applicable legal limits. American River Bank does not offer
trust services or international banking services and does not plan to do so in
the near future. American River Bank's primary business is serving the
commercial banking needs of small to mid-sized businesses within those counties.
American River Bank accepts checking and savings deposits, offers money market
deposit accounts and certificates of deposit, makes secured and unsecured
commercial, secured real estate, and other installment and term loans and offers
other customary banking services. American River Bank also conducts lease
financing for most types of business equipment, from computer software to heavy
earth-moving equipment.

         American River Bankshares also owns 100% of an inactive subsidiary,
American River Financial. American River Financial was incorporated on August
26, 2003, and has been inactive since its formation.

         American River Bank owns 100% of two inactive companies, ARBCO and
American River Mortgage. ARBCO was formed in 1984 to conduct real estate
development and has been inactive since 1995. American River Mortgage has been
inactive since its formation in 1994.

         American River Bankshares conducted no significant activities other
than holding the shares of its subsidiaries. However, it is authorized, with the
prior approval of the Board of Governors of the Federal Reserve System (the
"Board of Governors"), American River Bankshares' principal regulator, to engage
in a variety of activities which are deemed closely related to the business of
banking.

Overview

         American River Bankshares recorded net income of $1,427,000 for the
quarter ended June 30, 2004, which was a 9.5% increase over the $1,303,000
reported for the same period of 2003. Diluted earnings per share for the second
quarter of 2004 were $0.32 compared to the $0.30 recorded in the second quarter
of 2003. The return on average equity ("ROAE") and the return on average assets
("ROA") for the second quarter of 2004 were 15.45% and 1.36%, respectively, as
compared to 15.69% and 1.46%, respectively, for the same period in 2003.

         American River Bankshares' net income for the six months ended June 30,
2004 and 2003 was $2,587,000 and $2,352,000, respectively, with diluted earnings
per share of $.59 and $.55, respectively. For the first six months of 2004, the
ROAE was 14.22% and the ROA was 1.27% as compared to 14.52% and 1.35% for the
same period in 2003.

         Net income in 2003 increased 6.3% to $4,741,000 versus $4,459,000 in
2002. Diluted earnings per share for the two years were $1.10 and $1.05,
respectively. For 2003, American River Bankshares realized a return on average
equity of 14.2% and a return on average assets of 1.31%, as compared to 15.1%
and 1.44% for 2002. The net income for 2002 was $422,000 (10.5%) higher than the
$4,037,000 recorded in 2001. Diluted earnings per share in 2001 were $0.95,
return on average assets was 1.45% and return on average equity was 15.3%. All
share and per share data for 2003, 2002 and 2001 have been adjusted for a 3 for
2 stock split distributed on October 31, 2003 and 5 percent stock dividends
distributed on October 18, 2002 and October 19, 2001.

         Total assets of American River Bankshares increased by $33,704,000
(8.5%) from December 31, 2003 to $431,097,000 at June 30, 2004. Net loans
totaled $266,637,000, up $4,173,000 (1.6%) from the ending balances on December
31, 2003. Deposit balances at June 30, 2004 totaled $350,022,000, up $27,515,000
(8.5%) from December 31, 2003.

         During 2003, total assets increased $54,830,000 (16.0%) to a total of
$397,393,000 at year-end. At December 31, 2003, net loans totaled $262,464,000,
up $33,456,000 (14.6%) from the ending balances on December 31, 2002. Deposit
growth for the year was 16.9% resulting in ending deposit balances of
$322,507,000.

                                       57


         American River Bankshares ended the second quarter of 2004 with a Tier
1 capital ratio of 12.2% and a total risk-based capital ratio of 13.4% versus
11.6% and 12.9%, respectively, at December 31, 2003.

         Table One below provides a summary of the components of net income for
the periods indicated:



Table One:  Components of Net Income
-----------------------------------------------------------------------------------------------------------------------------------
                                      For the three                 For the six                         For the twelve
(In thousands, except                 months ended                  months ended                        months ended
percentages)                            June 30,                      June 30,                           December 31
                               -------------------------     -------------------------     ----------------------------------------
                                  2004           2003           2004           2003           2003           2002           2001
                               ----------     ----------     ----------     ----------     ----------     ----------     ----------
                                                                                                           
Net interest income*           $    4,679     $    4,340     $    9,146     $    8,437     $   17,035     $   15,235     $   14,733
Provision for loan and lease
  losses                             (231)          (223)          (429)          (412)          (946)          (644)          (791)
Noninterest income                  1,022            565          1,451          1,091          2,253          2,323          2,365
Noninterest expense                (3,463)        (2,456)        (6,212)        (5,115)       (10,372)        (9,389)        (9,502)
Provision for income taxes           (539)          (882)        (1,283)        (1,568)        (3,060)        (2,904)        (2,612)
Tax equivalent adjustment             (41)           (41)           (86)           (81)          (169)          (162)          (156)
                               ----------     ----------     ----------     ----------     ----------     ----------     ----------

Net income                     $    1,427     $    1,303     $    2,587     $    2,352     $    4,471     $    4,459     $    4,037
                               ==========     ==========     ==========     ==========     ==========     ==========     ==========

-----------------------------------------------------------------------------------------------------------------------------------
Average total assets           $  421,384     $  357,223     $  409,232     $  350,137     $  363,175     $  309,574     $  279,049
Net income (annualized) as
  a percentage of average
  total assets                       1.36%          1.46%          1.27%          1.35%          1.31%          1.44%          1.45%

-----------------------------------------------------------------------------------------------------------------------------------

* Fully taxable equivalent basis (FTE)

Results of Operations

         Net Interest Income and Net Interest Margin

         Net interest income represents the excess of interest and fees earned
on interest earning assets (loans and leases, securities, Federal funds sold and
investments in time deposits) over the interest paid on deposits and borrowed
funds. Net interest margin is net interest income expressed as a percentage of
average earning assets. American River Bankshares' net interest margin was 5.10%
in 2003, 5.43% in 2002, 5.76% in 2001 and 4.85% for the three months ended June
30, 2004, 5.28% for the three months ended June 30, 2003, 4.89% for the six
months ended June 30, 2004 and 5.26% for the six months ended June 30, 2003.

         The fully taxable equivalent interest income component increased from
$18,747,000 in 2002 to $19,937,000 in 2003, representing a 6.3% increase. The
increase in the fully taxable equivalent interest income for 2003 compared to
the same period in 2002 is broken down by rate (down $2,371,000) and volume (up
$3,561,000). The rate decrease can be attributed to decreases implemented by
American River Bankshares during 2001 and 2002 in response to Federal Reserve
Board (the "FRB") decreases in the Federal funds and Discount rates. Although
there was only one FRB rate decrease in 2003, the effects of thirteen such rate
decreases by the FRB since January 1, 2001, resulted in a 71 basis point drop in
the yield on average earning assets from 6.68% for 2002 to 5.97% for 2003. The
volume increase was the result of an 18.9% increase in average earning assets.
Average loan balances were up $39,209,000 (18.7%) in 2003 over the balances in
2002, while average investment securities balances were up $15,056,000 (25.1%).
The increase in average loans is the result of a concentrated focus on business
lending, the demand for commercial real estate and the effects of a favorable
local market in addition to the purchase of a pool of loans in the amount of
$10,664,000 from a competing financial institution.

                                       58


         The fully taxable equivalent interest income component decreased from
$20,999,000 in 2001 to $18,747,000 in 2002, representing a 10.7% decrease. The
decrease in the fully taxable equivalent interest income for 2002 compared to
the same period in 2001 is broken down by rate (down $3,955,000) and volume (up
$1,703,000). The rate decrease can be attributed to decreases implemented by
American River Bankshares during 2001 and 2002 in response to FRB decreases in
the Federal funds and Discount rates. During the two years there were twelve
such rate decreases by the FRB resulting in a 525 basis point drop in the prime
rate, which contributed to the drop in the yield on average earning assets from
8.21% for 2001 to 6.68% for 2002. The volume increase was the result of a 9.7%
increase in average earning assets. Average loan balances were up $6,509,000
(3.2%) in 2002 over the balances in 2001, while average investment securities
balances were up $19,449,000 (41.8%). The increase in investment securities is
primarily due to a change in investment strategy whereby American River
Bankshares has invested its excess funds in investment securities rather than
Federal funds sold and the adoption of an investment strategy that allowed
American River Bankshares to take advantage of a relatively steep yield curve,
to utilize excess capital and to reduce exposure to further declines in
intermediate term interest rates by purchasing mortgage-backed securities with
average lives of 3 to 5 years and funding them with wholesale Federal Home Loan
Bank advances that mature in one year or less.

         The fully taxable equivalent interest income component for the second
quarter of 2004 increased $294,000 (5.8%) to $5,397,000 compared to $5,103,000
for the three months ended June 30, 2003. Total fully taxable equivalent
interest income for the six months ended June 30, 2004 increased $602,000 (6.0%)
to $10,555,000 compared to $9,953,000 for the six months ended June 30, 2003.
The increase in the fully taxable equivalent interest income for the second
quarter of 2004 compared to the same period in 2003 is broken down by rate (down
$399,000) and volume (up $693,000). The rate decrease can be attributed to
decreases implemented by American River Bankshares during 2001 and 2002 in
response to FRB decreases in the Federal funds and Discount rates. Although
there was only one FRB rate decrease in 2003 and one 25 basis point increase on
the last day of the second quarter of 2004, the effects of the rate decreases by
the FRB since January 1, 2001, resulted in a 61 basis point drop in the yield on
average earning assets from 6.21% for the second quarter of 2003 to 5.60% for
the second quarter of 2004. The volume increase was the result of a 17.6%
increase in average earning assets. Average loan balances were up $19,318,000
(7.7%) in 2004 over the balances in 2003, while average investment securities
balances were up $38,761,000 (50.0%). The increase in average loans is the
result of a concentrated focus on business lending, the demand for commercial
real estate and the effects of a favorable local market. The increase in
investment securities is primarily due to American River Bankshares investing
its excess funds in investment securities. The excess funds were created by an
increase in deposit balances. The breakdown of the fully taxable equivalent
interest income for the six months ended June 30, 2004 over the same period in
2003 resulted from increases in volume (up $1,415,000) and decreases in rate
(down $813,000). Average earning assets increased $52,612,000 (16.3%) during the
first six months of 2004 as compared to the same period in 2003. Average loan
balances increased $26,115,000 (10.7%) during that same period and average
investments securities balances increased $26,497,000 (33.3%).

         Interest expense decreased $610,000 (17.4%) in 2003 compared to 2002.
The average balances on interest bearing liabilities were $33,976,000 (16.8%)
higher in 2003 versus 2002. The higher balances accounted for a $455,000
increase in interest expense. The higher balances were due to internal growth of
average interest bearing deposits ($21,620,000) and an increase in other
borrowings ($12,356,000). The decrease in rates paid on interest bearing
liabilities more than offset the increased expense due to the volume growth as
the average rate paid decreased 51 basis points on a year-over-year basis and
accounted for a decrease in interest expense of $1,065,000 for the period.

         Interest expense decreased $2,754,000 (44.0%) in 2002 compared to 2001.
The average balances on interest bearing liabilities were $14,936,000 (8.0%)
higher in 2002 versus 2001. The higher balances accounted for a $556,000
increase in interest expense. The higher balances were due to internal growth of
average deposits ($4,570,000) and an increase in other borrowings ($10,366,000).
The decrease in rates paid on interest bearing liabilities more than offset the
increased expense due to the volume growth as the average rate paid decreased
161 basis points on a year-over-year basis and accounted for a decrease in
interest expense of $3,310,000 for the period.

                                       59


         Interest expense was $45,000 (5.9%) lower in the second quarter of 2004
versus the prior year period. The average balances on interest bearing
liabilities were $38,509,000 (16.4%) higher in the second quarter of 2004 versus
the same quarter in 2003. The higher balances accounted for a $88,000 increase
in interest expense; however, the overall decrease in interest expense for the
three-month period can be related to a drop in rates (down $133,000). The
decrease in rates paid on interest bearing liabilities was a result of the lower
interest rate environment over the past three years. Rates paid on interest
bearing liabilities decreased 25 basis points on a quarter-over-quarter basis.
Interest expense was $107,000 (7.1%) lower in the six month period ended June
30, 2004 versus the prior year period. The average balances on interest bearing
liabilities were $33,846,000 (14.6%) higher in the six-month period ended June
30, 2004 versus the same period in 2003. The higher balances accounted for a
$139,000 increase in interest expense. The increase due to higher balances was
offset by lower rates paid on interest bearing liabilities. The average rate
paid on interest bearing liabilities decreased 25 basis points on a
year-over-year basis and accounted for a decrease in interest expense of
$246,000.

         Table Two, Analysis of Net Interest Margin on Earning Assets, and Table
Three, Analysis of Volume and Rate Changes on Net Interest Income and Expenses,
are provided to enable the reader to understand the components and trends of
American River Bankshares' interest income and expenses. Table Two provides an
analysis of net interest margin on earning assets setting forth average assets,
liabilities and shareholders' equity; interest income earned and interest
expense paid and average rates earned and paid; and the net interest margin on
earning assets. Table Three sets forth a summary of the changes in interest
income and interest expense from changes in average asset and liability balances
(volume) and changes in average interest rates.

                                       60




Table Two:  Analysis of Net Interest Margin on Earning Assets
-----------------------------------------------------------------------------------------------------------------------------------

Year Ended December 31,                    2003                               2002                               2001
                             --------------------------------   --------------------------------   --------------------------------
(Taxable Equivalent Basis)       Avg                   Avg          Avg                   Avg         Avg                    Avg
(In thousands, except          Balance    Interest    Yield       Balance    Interest    Yield      Balance     Interest    Yield
  percentages)               ----------  ---------- ---------   ----------  ---------- ---------   ----------  ---------- ---------
                                                                                                      
Assets:
Earning assets
  Loans and leases (1)       $  248,342  $   16,744      6.74%  $  209,133  $   15,400      7.36%  $  202,624  $   17,883      8.83%
  Taxable investment
    Securities                   64,159       2,312      3.60%      49,875       2,359      4.73%      30,511       1,871      6.13%
  Tax-exempt investment
     securities (2)              10,519         637      6.06%       9,803         616      6.28%       9,656         608      6.30%
  Corporate stock                   376          28      7.45%         320          25      7.81%         820          93     11.34%
  Federal funds sold              5,595          48      0.86%       5,488          80      1.46%       6,727         202      3.00%
  Investments in time
     deposits                     4,809         168      3.49%       6,004         267      4.45%       5,566         342      6.14%
                             ----------  ----------             ----------  ----------             ----------  ----------
Total earning assets            333,800      19,937      5.97%     280,623      18,747      6.68%     255,904      20,999      8.21%
                                         ----------                         ----------                         ----------
  Cash & due from banks          24,914                             21,149                             17,023
           Other assets           7,993                             10,729                              8,774
   Allowance for loan &
           lease losses          (3,532)                            (2,927)                            (2,652)
                             ----------                         ----------                         ----------
                             $  363,175                         $  309,574                         $  279,049
                             ==========                         ==========                         ==========

Liabilities & Shareholders' Equity:
Interest bearing liabilities:
  NOW & MMDA                 $  120,772         912      0.76%  $  100,406         939      0.94%  $   90,440       1,964      2.17%
  Savings                        16,714          35      0.21%      13,918          51      0.37%      13,602         166      1.22%
  Time deposits                  72,078       1,443      2.00%      73,620       2,178      2.96%      79,332       3,912      4.93%
  Other borrowings               26,480         512      1.93%      14,124         344      2.44%       3,758         224      5.96%
                             ----------  ----------             ----------  ----------             ----------  ----------
Total interest bearing
  Liabilities                   236,044       2,902      1.23%     202,068       3,512      1.74%     187,132       6,266      3.35%
                                         ----------                         ----------                         ----------
Demand deposits                  90,685                             75,379                             63,586
Other liabilities                 2,985                              2,618                              2,015
                             ----------                         ----------                         ----------
Total liabilities               329,714                            280,065                            252,733
Shareholders' equity             33,461                             29,509                             26,316
                             ----------                         ----------                         ----------
                             $  363,175                         $  309,574                         $  279,049
                             ==========                         ==========                         ==========
Net interest income & margin (3)         $   17,035      5.10%              $   15,235      5.43%              $   14,733      5.76%
                                         ========== =========               ========== =========               ========== =========


(1)  Loan and lease interest includes loan and lease fees of $814,000, $545,000
     and $506,000 in 2003, 2002 and 2001, respectively.
(2)  Includes taxable-equivalent adjustments that primarily relate to income on
     certain securities that is exempt from federal income taxes. The effective
     federal statutory tax rate was 34% for the periods presented.
(3)  Net interest margin is computed by dividing net interest income by total
     average earning assets.

                                       61




-------------------------------------------------------------------------------------------------------------------
Three Months Ended June 30,                          2004                                     2003
                                     -------------------------------------    -------------------------------------
(Taxable Equivalent Basis)              Avg                        Avg          Avg                         Avg
(In thousands, except percentages)    Balance       Interest     Yield (4)     Balance       Interest     Yield (4)
Assets:                              ----------    ----------   ----------    ----------    ----------   ----------
                                                                                               
Earning assets
  Loans (1)                          $  271,484    $    4,309         6.38%   $  252,166    $    4,299         6.84%
  Taxable investment
     securities                          96,551           875         3.64%       61,354           593         3.88%
  Tax-exempt investment
     securities (2)                      11,273           166         5.92%       10,488           157         6.00%
  Corporate stock (2)                       630            10         6.38%          312             6         7.71%
  Federal funds sold                      2,578             6         0.94%          546             1         0.73%
  Investments in time deposits            5,234            31         2.38%        4,805            47         3.92%
                                     ----------    ----------                 ----------    ----------
Total earning assets                    387,750         5,397         5.60%      329,671         5,103         6.21%
                                                   ----------                               ----------
Cash & due from banks                    26,757                                   23,736
Other assets                             11,044                                    7,322
Allowance for loan & lease losses        (4,167)                                  (3,506)
                                     ----------                               ----------
                                     $  421,384                               $  357,223
                                     ==========                               ==========

Liabilities & Shareholders' Equity
Interest bearing liabilities:
  NOW & MMDA                         $  136,015           214         0.63%   $  115,154           220         0.77%
  Savings                                24,522            11         0.18%       15,805             9         0.23%
  Time deposits                          69,988           305         1.75%       74,449           386         2.08%
  Other borrowings                       43,324           188         1.75%       29,932           148         1.98%
                                     ----------    ----------                 ----------    ----------
Total interest bearing
  liabilities                           273,849           718         1.05%      235,340           763         1.30%
                                                   ----------                               ----------
Demand deposits                         108,367                                   86,313
Other liabilities                         2,019                                    2,266
                                     ----------                               ----------
Total liabilities                       384,235                                  323,919
Shareholders' equity                     37,149                                   33,304
                                     ----------                               ----------
                                     $  421,384                               $  357,223
                                     ==========                               ==========
Net interest income & margin (3)                   $    4,679         4.85%                 $    4,340         5.28%
                                                   ==========   ==========                  ==========   ==========


(1)  Loan interest includes loan fees of $138,000 and $224,000 during the three
     months ending June 30, 2004 and June 30, 2003, respectively.
(2)  Includes taxable-equivalent adjustments that primarily relate to income on
     certain securities that is exempt from federal income taxes. The effective
     federal statutory tax rate was 34% for the periods presented.
(3)  Net interest margin is computed by dividing net interest income by total
     average earning assets.
(4)  Average yield is calculated based on actual days in quarter (92) and
     annualized to actual days in year (366).

                                       62




-------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30,                             2004                                     2003
                                     -------------------------------------    -------------------------------------
(Taxable Equivalent Basis)              Avg                        Avg           Avg                        Avg
(In thousands, except percentages)    Balance       Interest     Yield (4)     Balance       Interest     Yield (4)
Assets                               ----------    ----------   ----------    ----------    ----------   ----------
                                                                                               
Earning assets
  Loans (1)                          $  270,108    $    8,589         6.39%   $  243,993    $    8,280         6.84%
  Taxable investment
    Securities                           87,562         1,548         3.56%       63,272         1,245         3.97%
  Tax-exempt investment
    securities (2)                       11,298           331         5.89%       10,275           312         6.12%
  Corporate stock (2)                       713            21         5.92%          302            11         7.35%
  Federal funds sold                      1,403             6         0.86%          433             2         0.93%
  Investments in time deposits            5,007            60         2.41%        5,204           103         3.99%
                                     ----------    ----------                 ----------    ----------
Total earning assets                    376,091        10,555         5.64%      323,479         9,953         6.20%
                                                   ----------                               ----------
Cash & due from banks                    26,685                                   23,177
Other assets                             10,573                                    7,056
Allowance for loan & lease losses        (4,117)                                  (3,575)
                                     ----------                               ----------
                                     $  409,232                               $  350,137
                                     ==========                               ==========

Liabilities & Shareholders' Equity
Interest bearing liabilities:
  NOW & MMDA                         $  135,149           446         0.66%   $  111,850           401         0.72%
  Savings                                21,434            20         0.19%       16,015            17         0.21%
  Time deposits                          70,176           620         1.78%       72,830           790         2.19%
  Other borrowings                       38,712           323         1.68%       30,930           308         2.01%
                                     ----------    ----------                 ----------    ----------
Total interest bearing
  Liabilities                           265,471         1,409         1.07%      231,625         1,516         1.32%
                                                   ----------                               ----------
Demand deposits                         104,303                                   83,405
Other liabilities                         2,877                                    2,441
                                     ----------                               ----------
Total liabilities                       372,651                                  317,471
Shareholders' equity                     36,581                                   32,666
                                     ----------                               ----------
                                     $  409,232                               $  350,137
                                     ==========                               ==========
Net interest income & margin (3)                   $    9,146         4.89%                 $    8,437         5.26%
                                                   ==========   ==========                  ==========   ==========

(1)  Loan interest includes loan fees of $305,000 and $345,000 during the six
     months ending June 30, 2004 and June 30, 2003, respectively.
(2)  Includes taxable-equivalent adjustments that primarily relate to income on
     certain securities that is exempt from federal income taxes. The effective
     federal statutory tax rate was 34% for the periods presented.
(3)  Net interest margin is computed by dividing net interest income by total
     average earning assets.
(4)  Average yield is calculated based on actual days in period (182) and
     annualized to actual days in year (366).

                                       63




Table Three:  Analysis of Volume and Rate Changes on Net Interest Income and Expenses
----------------------------------------------------------------------------------------------
Year ended December 31, 2003 over 2002 (dollars in thousands)
Increase (decrease) due to change in:

Interest-earning assets:                                  Volume       Rate (4)     Net Change
                                                        ----------    ----------    ----------
                                                                                  
   Net loans and leases (1)(2)                          $    2,887    $   (1,543)   $    1,344
   Taxable investment securities                               676          (723)          (47)
   Tax-exempt investment securities (3)                         45           (24)           21
   Corporate stock                                               4            (1)            3
   Federal funds sold & other                                    2           (34)          (32)
   Investment in time deposits                                 (53)          (46)          (99)
                                                        ----------    ----------    ----------
     Total                                                   3,561        (2,371)        1,190
                                                        ----------    ----------    ----------

Interest-bearing liabilities:
   Demand deposits                                             190          (217)          (27)
   Savings deposits                                             10           (26)          (16)
   Time deposits                                               (46)         (689)         (735)
   Other borrowings                                            301          (133)          168
                                                        ----------    ----------    ----------
     Total                                                     455        (1,065)         (610)
                                                        ----------    ----------    ----------
Interest differential                                   $    3,106    $   (1,306)   $    1,800
                                                        ==========    ==========    ==========

Year Ended December 31, 2002 over 2001 (in thousands)
Increase (decrease) due to change in:

Interest-earning assets:                                  Volume       Rate (4)     Net Change
                                                        ----------    ----------    ----------
   Net loans and leases (1)(2)                          $      574    $   (3,057)   $   (2,483)
   Taxable investment securities                             1,187          (699)          488
   Tax-exempt investment securities (3)                          9            (1)            8
   Corporate stock                                             (57)          (11)          (68)
   Federal funds sold & other                                  (37)          (85)         (122)
   Investment in time deposits                                  27          (102)          (75)
                                                        ----------    ----------    ----------
     Total                                                   1,703        (3,955)       (2,252)
                                                        ----------    ----------    ----------

Interest-bearing liabilities:
   Demand deposits                                             216        (1,241)       (1,025)
   Savings deposits                                              4          (119)         (115)
   Time deposits                                              (282)       (1,452)       (1,734)
   Other borrowings                                            618          (498)          120
                                                        ----------    ----------    ----------
     Total                                                     556        (3,310)       (2,754)
                                                        ----------    ----------    ----------
Interest differential                                   $    1,147    $     (645)   $      502
                                                        ==========    ==========    ==========

(1)  The average balance of non-accruing loans and leases is immaterial as a
     percentage of total loans and leases and, as such, has been included in net
     loans and leases.
(2)  Loan and lease fees of $814,000, $545,000 and $506,000 for the years ended
     December 31, 2003, 2002 and 2001, respectively, have been included in the
     interest income computation.
(3)  Includes taxable-equivalent adjustments that primarily relate to income on
     certain securities that is exempt from federal income taxes. The effective
     federal statutory tax rate was 34% for the periods presented.
(4)  The rate/volume variance has been included in the rate variance.

                                       64




------------------------------------------------------------------------------------------------
Three Months Ended June 30, 2004 over 2003 (in thousands)
Increase (decrease) due to change in:

Interest-earning assets:                                    Volume       Rate (4)     Net Change
                                                          ----------    ----------    ----------
                                                                                    
   Net loans (1)(2)                                       $      328    $     (318)   $       10
   Taxable investment securities                                 339           (58)          282
   Tax exempt investment securities (3)                           12            (2)            9
   Corporate stock                                                 6            (2)            4
   Federal funds sold                                              4             1             5
   Investment in time deposits                                     4           (20)          (16)
                                                          ----------    ----------    ----------
     Total                                                       693          (399)          294
                                                          ----------    ----------    ----------

Interest-bearing liabilities:
   Demand deposits                                                40           (46)           (6)
   Savings deposits                                                5            (3)            2
   Time deposits                                                 (23)          (58)          (81)
   Other borrowings                                               66           (26)           40
                                                          ----------    ----------    ----------
     Total                                                        88          (133)          (45)
                                                          ----------    ----------    ----------
Interest differential                                     $      605    $     (266)   $      339
                                                          ==========    ==========    ==========
------------------------------------------------------------------------------------------------
Six Months Ended June 30, 2004 over 2003 (in thousands)
Increase (decrease) due to change in:

Interest-earning assets:                                    Volume       Rate (4)     Net Change
                                                          ----------    ----------    ----------
   Net loans (1)(2)                                       $      889    $     (580)   $      309
   Taxable investment securities                                 480          (177)          303
   Tax exempt investment securities (3)                           31           (12)           19
   Corporate stock                                                15            (5)           10
   Federal funds sold                                              4            (0)            4
   Investment in time deposits                                    (4)          (39)          (43)
                                                          ----------    ----------    ----------
     Total                                                     1,415          (813)          602
                                                          ----------    ----------    ----------

Interest-bearing liabilities:
   Demand deposits                                                84           (39)           45
   Savings deposits                                                6            (3)            3
   Time deposits                                                 (29)         (141)         (170)
   Other borrowings                                               78           (63)           15
                                                          ----------    ----------    ----------
     Total                                                       139          (246)         (107)
                                                          ----------    ----------    ----------
Interest differential                                     $    1,276    $     (567)   $      709
                                                          ==========    ==========    ==========
------------------------------------------------------------------------------------------------

(1)  The average balance of non-accruing loans is immaterial as a percentage of
     total loans and, as such, has been included in net loans.
(2)  Loan fees of $138,000 and $224,000 during the three months ending June 30,
     2004 and June 30, 2003, respectively, and $305,000 and $345,000 during the
     six months ending June 30, 2004 and June 30, 2003, respectively, have been
     included in the interest income computation.
(3)  Includes taxable-equivalent adjustments that primarily relate to income on
     certain securities that is exempt from federal income taxes. The effective
     federal statutory tax rate was 34% for the periods presented.
(4)  The rate/volume variance has been included in the rate variance.

         Provision for Loan and Lease Losses

         American River Bankshares provided $946,000 for loan and lease losses
in 2003 as compared to $644,000 for 2002. Net loan charge-offs for 2003 were
$194,000 as compared to $61,000 in 2002. In 2003 and 2002, net loan charge-offs
as a percentage of average loans outstanding was .08% and .03%, respectively. In
2001, the American River Bankshares provided $791,000 for loan and lease losses
and net charge-offs were $631,000. American River Bankshares provided $231,000
for loan and lease losses for the second quarter of 2004 as compared to $223,000
for the second quarter of 2003. Net loan and

                                       65


lease charge-offs for the three months ended June 30, 2004 were $96,000 or .14%
(on an annualized basis) of average loans and leases as compared to $156,000 or
.25% (on an annualized basis) of average loans and leases for the three months
ended June 30, 2003. For the first six months of 2004, American River Bankshares
made provisions for loan and lease losses of $429,000 and net loan and lease
charge-offs were $145,000 or .11% (on an annualized basis) of average loans and
leases outstanding. This compares to provisions for loan and lease losses of
$412,000 and net loan and lease charge-offs of $111,000 for the first six months
of 2003 or .09% (on an annualized basis) of average loans and leases
outstanding.

         Noninterest Income

         Table Four below provides a summary of the components of noninterest
income for the periods indicated (dollars in thousands):



Table Four:  Components of Noninterest Income
----------------------------------------------------------------------------------------------------------------------------------
                                                Three Months               Six Months
                                                   Ended                     Ended                         Year Ended
                                                  June 30,                  June 30,                      December 31,
                                          -----------------------   -----------------------   ------------------------------------
                                             2004         2003         2004         2003         2003         2002         2001
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
Service charges on deposit                $      138   $      137   $      279   $      272   $      534   $      563   $      562
   accounts
Accounts receivable servicing fees                75           63          141          112          247          294          459
Fees from lease brokerage services                 9          113            9          206          381          459          264
Merchant fee income                               93           90          177          171          357          344          277
Income from residential lending                   44           90           81          177          366          278          274
Gain on life insurance death benefit             553           --          553           --           --           --           --
Gain on sale of available-for-sale                --           --           --           --           33           --           --
   securities
Other                                            110           72          211          153          335          385          529
----------------------------------------------------------------------------------------------------------------------------------
     Total noninterest income             $    1,022   $      565   $    1,451   $    1,091   $    2,253   $    2,323   $    2,365
----------------------------------------------------------------------------------------------------------------------------------


         Noninterest income was down $70,000 (3.0%) to $2,253,000 in 2003 from
the 2002 level. The decrease in noninterest income can be attributed to a
decrease in accounts receivable servicing fees (down $47,000 or 16.0%) and lower
fees from lease brokerage services (down $78,000 or 17.0%). The decrease in fees
from accounts receivable servicing and lease brokerage services were offset by
an increase in fees from the residential lending division (up $88, 000 or 31.7%)
and an increase in merchant fee income (up $13,000 or 3.8%). The decrease in
accounts receivable servicing fees was a result of a decrease in average
accounts receivable balances outstanding from $2,299,000 in 2002 to $1,540,000
(33.0%) in 2003. The decrease in lease brokerage service fees resulted from an
overall slowdown in the leasing industry over the last two quarters of 2003. The
increase in fees from the residential lending division came from an increase in
loan volume as a result of low interest rates, which caused the number of
refinances to increase.

         Noninterest income was down $42,000 (1.8%) to $2,323,000 in 2002 from
the 2001 level. The decrease in noninterest income can be attributed to a
decrease in accounts receivable servicing fees (down $165,000 or 35.9%) and
lower brokerage fees from the Real Estate Division at North Coast Bank (the
"REDNCB") (down $92,000 or 89.3%). The decrease in fees from accounts receivable
servicing and brokerage fees from the REDNCB were offset by increases in fees
from lease brokerage services (up $195,000 or 73.9%) and an increase in merchant
fee income (up $67,000 or 24.2%). The decrease in accounts receivable servicing
fees was a result of a decrease in average accounts receivable balances
outstanding from $3,467,000 in 2001 to $2,299,000 (33.7%) in 2002. The decrease
in brokerage fees from the REDNCB (which were recorded in "Other" in Table Four)
resulted from the decision to shut down the REDNCB in the first quarter of 2002.
The increase in lease brokerage services resulted from an

                                       66


increase in business due to the development of new relationships and a general
positive increase in the businesses serviced.

         Noninterest income was up $457,000 (80.9%) to $1,022,000 for the three
months ended June 30, 2004 as compared to $565,000 for the three months ended
June 30, 2003. The vast majority of this increase ($553,000) represents the
tax-free net proceeds from a life insurance policy American River Bankshares
received in June of 2004 as a result of the death of a former executive officer.
The primary traditional sources of noninterest income for American River
Bankshares are service charges on deposit accounts, accounts receivable
servicing fees, merchant credit card fees and income from residential lending.
Without the life insurance proceeds, noninterest income would have shown a
decrease of $96,000. The decrease in noninterest income for the quarter can be
attributed to decreases in fees from lease brokerage services (down $104,000 or
92.0%) and a decrease in residential lending fee income (down $46,000 or 51.1%).
The decrease in lease brokerage services results from a decision by American
River Bankshares, which became effective on January 7, 2004, to discontinue
American River Bankshares' leasing subsidiary operations through first source
capital, as a subsidiary of American River Bankshares and commence similar
leasing operations at American River Bank. The majority of the leases originated
by American River Bankshares are now recorded on the books of American River
Bankshares as opposed to receiving fee income for brokering to outside funding
sources. In addition, overall lease volume has decreased (from $1,086,000 in the
second quarter of 2004 to $1,120,000 in the second quarter of 2003) as a result
of the change from a nationwide lessor to a lessor that does business in
California counties that are proximate to our branch locations. The residential
lending division experienced a decrease in loan volume as a result of a slight
increase in mortgage rates, which caused the number of refinances to decrease.

         For the six months ended June 30, 2004, noninterest income was up
$360,000 (33.0%) to $1,451,000. Much of this increase ($553,000) represents the
tax-free net proceeds from a life insurance policy American River Bankshares
received in June of 2004 as a result of the death of a former executive officer.
Without the life insurance proceeds, noninterest income would have shown a
decrease of $193,000. The decrease in noninterest income for the six-month
period can be attributed to decreases in fees from lease brokerage services
(down $206,000 or 100.0%) and a decrease in residential lending fee income (down
$96,000 or 54.2%).

         Noninterest Expense

         Salaries and benefits, which include commissions, were $6,233,000 (up
$638,000 or 11.4%) for 2003 as compared to $5,595,000 in 2002. The increase is
primarily the result of increased salaries ($335,000 or 7.7%) and commissions
($53,000 or 30.6%) mainly as a result of expenses related to employee
departures, normal salary adjustments, cost of living increases and higher
commissions paid to employees in the Residential Lending Division of American
River Bank. The remainder of the increase relates to higher incentive accruals
($122,000 or 16.9%), higher employer taxes ($26,000 or 7.4%) and an increase in
benefits ($129,000 or 23.0%), mainly due to higher health related and workers
compensation insurance premiums. At the end of 2003, the full-time equivalent
staff was 101, up two from the 99 at the end of 2002.

         Occupancy expense decreased $23,000 (2.7%) during 2003 to $817,000,
down from $840,000 in 2002. The decrease represents new lease terms, which
included less space, at the building that houses American River Bank's Windsor
Office. Furniture and equipment expense was $653,000 in 2003 compared to
$620,000 in 2002, representing a $33,000 (5.3%) increase. The increase relates
to the depreciation of technology related equipment purchased over the past
twelve months.

         Other expenses were $2,669,000 (up $335,000 or 14.4%) for 2003 as
compared to $2,334,000 for 2002. Professional fees increased $73,000 (27.9%)
from $262,000 during 2002 to $336,000 in 2003. The increase in professional fees
in 2003 resulted from a recovery of legal fees ($86,000) in 2002 related to the
resolution of a problem loan credit that did not reoccur in 2003. In addition,
directors expenses increased $105,000 (42.3%) from $248,000 during 2002 to
$353,000 in 2003. The increase related to higher amounts accrued under the
Gross-Up Plan (the "Plan"). The Plan compensates for the tax effects

                                       67


of the exercise of nonstatutory stock options. The Plan named certain
non-employee Directors as participants and applies only to those options granted
on August 25, 1995. The Plan encourages participating optionees to retain shares
acquired through the exercise of nonstatutory stock options by American River
Bankshares paying to the participating optionee an amount equal to the taxable
income resulting from an exercise of a nonstatutory stock option multiplied by
American River Bankshares' effective tax rate, subject to the optionee's
agreement to hold the shares acquired for a minimum of one (1) year. American
River Bankshares also recognized a recovery of an operating loss in 2002 in the
amount of $80,000. The loss was originally recognized in 2001 and did not
reoccur in 2003. The overhead efficiency ratio on a taxable equivalent basis for
2003 was 53.8% as compared to 53.5% in 2002.

         Salaries and benefits were $5,595,000 (up $261,000 or 4.9%) for 2002 as
compared to $5,334,000 in 2001. The increase is primarily the result of higher
incentive accruals ($720,000 in 2002 as compared to $277,000 in 2001). The
increased incentive was due to the American River Bankshares exceeding its
performance goals by a greater margin for 2002 than in 2001. The increased
incentive was offset by lower commissions paid to employees in the REDNCB (down
$115,000). At the end of 2002, the full-time equivalent staff was 99, down one
from the 100 at the end of 2001.

         Occupancy expense increased $30,000 (3.7%) during 2002 to $840,000, up
from $810,000 in 2001. The increase represents annual rent adjustments under the
existing lease agreements and higher utility costs passed on to American River
Bankshares from its landlords. Furniture and equipment expense was $620,000 in
2002 compared to $564,000 in 2001, representing a $56,000 (9.9%) increase. This
increase relates to technology upgrades made during 2002, including upgrades to
the network and improvements to the network and internet security and the
network power stability system. In addition the expense includes a full year of
depreciation related to the purchase of a new core banking system in the second
quarter of 2001.

         Other expenses were $2,334,000 (down $460,000 or 16.5%) for 2002 as
compared to $2,794,000 for 2001. Professional fees accounted for $149,000
(32.4%) of the decrease in other expense. The decrease in professional fees
results from a recovery of legal fees ($48,000) related to the resolution of a
problem loan credit and lower legal fees paid to resolve problem loan credits.
American River Bankshares also recognized a recovery of an operating loss in
2002 in the amount of $80,000. The loss was originally recognized in 2001. The
overhead efficiency ratio on a taxable equivalent basis for 2002 was 53.5% as
compared to 55.6% in 2001.

         Noninterest expenses increased $1,007,000 (41.0%) to a total of
$3,463,000 in the second quarter of 2004 versus the second quarter of 2003. A
substantial portion of this increase can be attributed to American River
Bankshares' decision to create a charitable foundation ($503,000) known as the
American River Bankshares Foundation (the "Foundation"), the cost associated
with the new banking office in Downtown Sacramento ($177,000) located at 520
Capitol Mall, Suite 100, Sacramento, CA 95814, and the expense of benefits
related to the death of a former American River Bank executive ($82,000). Salary
and employee benefits, which include commissions, increased $120,000 (8.2%) from
$1,460,000 during the second quarter of 2003 to $1,580,000 during the second
quarter of 2004. Salaries, which include commissions, increased $35,000 mainly
as a result of normal salary adjustments and cost of living increases and
salaries associated with the new banking office in Downtown Sacramento
($40,000), these increases were offset by lower commissions paid out in the
Residential Lending Division of American River Bank. The remainder of the
increase relates to higher employer taxes and an increase in benefits, mainly
due to higher health related insurance premiums and higher 401(k) plan employer
matching. On a quarter-over-quarter basis, occupancy increased $45,000 (22.3%)
and furniture and equipment increased $29,000 (18.4%). The new location
contributed $38,000 to the increased occupancy expense and $15,000 to the
increased furniture and equipment expense. Other expense increased $813,000
(127.8%) to a total of $1,449,000 in the second quarter of 2004 versus the
second quarter of 2003. $585,000 of the increase relates to the funding of the
Foundation and the benefit payments related to the death of a former American
River Bank executive as mentioned above. The remaining increase in other expense
can be attributed to Professional fees (up $49,000 or 58.3%) and directors
expenses (up

                                       68


$58,000 or 76.3%). Professional fees, which includes accounting, legal and other
professional services, was up primarily due to retainer fees paid to a deposit
gathering relationship established earlier in 2004 ($38,000). The increase in
director fees relates to higher amounts accrued under the Gross-Up Plan (the
"Plan"). The Plan compensates for the tax effects of the exercise of
nonstatutory stock options. The Plan named certain non-employee Directors as
participants and applies only to those options granted on August 25, 1995. The
Plan encourages participating optionees to retain shares acquired through the
exercise of nonstatutory stock options by American River Bankshares paying to
the participating optionee an amount equal to the taxable income resulting from
an exercise of a nonstatutory stock option multiplied by American River
Bankshares' effective tax rate, subject to the optionee's agreement to hold the
shares acquired for a minimum of one (1) year. The efficiency ratios (fully
taxable equivalent) for the 2004 and 2003-second quarters were 60.7% and 50.1%,
respectively.

         Noninterest expense for the six-month period ended June 30, 2004 was
$6,212,000 versus $5,115,000 for the same period in 2003 for an increase of
$1,097,000 (21.4%). Salaries and benefits increased $28,000 (0.9%) in 2004 as
compared to 2003. Full time equivalent employees ("FTE's") increased to 102 at
June 30, 2004 from 96 at June 30, 2003. The increase in the FTE's in part
relates to the staff at the new Downtown office, which employed five FTE's as of
June 30, 2004. Occupancy increased $45,000 (11.1%) and furniture and equipment
increased $53,000 (16.9%). The increase in occupancy and furniture and equipment
relates to the opening of the new location in Downtown Sacramento--the office
contributed $39,000 to the increased occupancy expense and $22,000 to the
increased furniture and equipment expense. The remainder of the furniture and
equipment increase is related to the depreciation of technology related
equipment purchased by American River Bankshares over the past twelve months.
Other expense increased $971,000 (76.6%). The increase in other expense relates
to the Foundation ($503,000) and the benefit payments related to the death of a
former American River Bankshares' executive ($82,000), Professional fees (up
$75,000) and director expenses (up $100,000). The overhead efficiency (fully
taxable equivalent) ratio for the first six months of 2004 was 58.6% as compared
to 53.7% in the same period of 2003.

         Provision for Income Taxes

         The effective tax rate on income was 39.2%, 39.4% and 39.3% in 2003,
2002 and 2001, respectively. The effective tax rate was greater than the federal
statutory tax rate due to state tax expense (net of federal tax effect) of
$538,000, $501,000 and $465,000 in these years. Tax-exempt income of $475,000,
$460,000 and $464,000 from investment securities in these years helped to reduce
the effective tax rate. The effective tax rate for the second quarter and first
six months of 2004 was 27.4% and 33.2%, respectively, versus 40.4% and 40.0%,
respectively, for the same two periods of 2003. The decrease in the effective
tax rate is related to the tax-free nature of the above-referenced life
insurance proceeds.

         Balance Sheet Analysis

         American River Bankshares' total assets were $397,393,000 at December
31, 2003 as compared to $342,563,000 at December 31, 2002, representing an
increase of 16.0%. The average balances of total assets during 2003 were
$363,175,000 which represents an increase of $53,601,000 (17.3%) over the
December 31, 2002 total of $309,574,000.

         American River Bankshares' total assets were $431,097,000 at June 30,
2004 as compared to $397,393,000 at December 31, 2003, representing an increase
of 8.5%. The average balances of total assets for the six months ended June 30,
2004 was $409,232,000 which represents an increase of $59,095,000 or 16.9% over
the $350,137,000 during the six month period ended June 30, 2003.

         Loans and Leases

         American River Bankshares concentrates its lending activities in the
following principal areas: 1) commercial; 2) commercial real estate; 3)
multi-family real estate; 4) real estate construction (both commercial and
residential); 5) residential real estate; 6) lease financing receivable; 7)
agriculture; and

                                       69


8) consumer loans. At June 30, 2004, these categories accounted for
approximately 21%, 54%, 1%, 14%, 1%, 4%, 3% and 2%, respectively, of American
River Bankshares' loan portfolio. This mix was relatively unchanged compared to
December 31, 2003. Continuing economic activity in American River Bankshares'
market area, new borrowers developed through American River Bankshares'
marketing efforts and additional credit extensions to existing borrowers, offset
by normal loan paydowns and payoffs, resulted in net increases in balances for
commercial real estate ($3,368,000 or 2.4%), real estate construction
($1,761,000 or 4.7%), residential real estate ($181,000 or 12.0%), lease
financing receivable ($1,457,000 or 15.7%), agriculture ($452,000 or 5.6%) and
consumer ($1,094,000 or 18.4%). American River Bankshares experienced a slight
decrease in commercial ($1,258,000 or 2.2%), and multi-family real estate
($2,643,000 or 49.9%) as a result of normal paydowns. At December 31, 2003,
these categories accounted for approximately 22%, 53%, 2%, 14%, 1%, 3%, 3% and
2%, respectively, of American River Bankshares' loan portfolio. This mix was
relatively unchanged compared to 21%, 52%, 3%, 14%, 1%, 3%, 4% and 2% at
December 31, 2002. Continuing economic activity in American River Bankshares'
market area, new borrowers developed through American River Bankshares'
marketing efforts and credit extensions expanded to existing borrowers, offset
by normal loan and lease paydowns and payoffs, resulted in net increases in
balances for commercial ($8,115,000 or 15.5%), commercial real estate
($22,272,000 or 18.6%), real estate construction ($5,049,000 or 15.6%), and
lease financing receivable ($2,510,000 or 37.1%). Despite the new borrowers,
American River Bankshares experienced decreases in multi-family real estate
($2,272,000 or 30.0%), residential real estate ($153,000 or 9.2%), agriculture
($797,000 or 9.0%) and consumer loans ($421,000 or 6.6%) as a result of normal
paydowns.

         Table Five below summarizes the composition of the loan portfolio as of
the dates indicated.



Table Five: Loan and Lease Portfolio Composition
-------------------------------------------------------------------------------------------------------------
                               June 30,                               December 31,
                             ----------    ------------------------------------------------------------------
(dollars in thousands)           2004          2003          2002          2001          2000          1999
-------------------------------------------------------------------------------------------------------------
                                                                                        
Commercial                   $   56,088    $   57,346    $   49,231    $   43,619    $   52,726    $   42,148
Real estate:
    Commercial                  145,617       142,249       119,977        99,355        96,840        71,655
    Multi-family                  2,658         5,301         7,573           803           550           487
    Construction                 39,195        37,434        32,385        30,821        27,182        25,784
    Residential                   1,689         1,508         1,661         3,119         8,085         6,234
Agriculture                       8,479         8,027         8,824        10,251        10,764         7,200
Consumer                          7,044         5,950         6,371         7,598         6,413         5,896
Lease financing receivable       10,733         9,276         6,766         2,499         1,150           122
-------------------------------------------------------------------------------------------------------------
                                271,503       267,091       232,788       198,065       203,710       159,526
Deferred loan fees, net            (633)         (678)         (583)         (425)         (598)         (420)
Allowance for loan and
    lease losses                 (4,233)       (3,949)       (3,197)       (2,614)       (2,454)       (2,062)
-------------------------------------------------------------------------------------------------------------
Total net loans and leases      266,637    $  262,464    $  229,008    $  195,026    $  200,658    $  157,044
=============================================================================================================


         A significant portion of American River Bankshares' loans and leases
are direct loans and leases made to individuals and local businesses. American
River Bankshares relies substantially on local promotional activity and personal
contacts by bank officers, directors and employees to compete with other
financial institutions. American River Bankshares makes loans and leases to
borrowers whose applications include a sound purpose and a viable primary
repayment source, generally supported by a secondary source of repayment.
Commercial loans consist of credit lines for operating needs, loans for
equipment purchases, working capital, and various other business loan products.
Consumer loans include a range of traditional consumer loan products such as
personal lines of credit and loans to finance purchases of autos, boats,
recreational vehicles, mobile homes and various other consumer items.
Construction loans are generally comprised of commitments to customers within
American River Bankshares' service area for construction of commercial
properties, multi-family properties and custom and production-type single-family
residences. Other real estate loans consist primarily of loans secured by first
trust deeds on commercial and residential properties typically with maturities
from 3 to 10 years

                                       70


and original loan to value ratios generally from 65% to 75%. Agriculture loans
consist primarily of vineyard loans and development loans to plant vineyards. In
general, except in the case of loans under SBA programs or Farm Services Agency
guarantees, American River Bankshares does not make long-term mortgage loans;
however, American River Bank has a residential lending division to assist
customers in securing most forms of longer term single-family mortgage
financing. American River Bank acts as a broker between American River Bank's
customers and the loan wholesalers. American River Bank receives an origination
fee for loans closed.

Risk Elements

         American River Bankshares assesses and manages credit risk on an
ongoing basis through a total credit culture that emphasizes excellent credit
quality, extensive internal monitoring and established formal lending policies.
Additionally, American River Bankshares contracts with an outside loan review
consultant to periodically review the existing loan and lease portfolio.
Management believes its ability to identify and assess risk and return
characteristics of American River Bankshares' loan and lease portfolio is
critical for profitability and growth. Management strives to continue its
emphasis on credit quality in the loan and lease approval process, active credit
administration and regular monitoring. With this in mind, management has
designed and implemented a comprehensive loan and lease review and grading
system that functions to assess the credit risk inherent in the loan and lease
portfolio.

         Ultimately, underlying trends in economic and business cycles may
influence credit quality. American River Bank's business is concentrated in the
Sacramento Metropolitan Statistical Area, which is a diversified economy, but
with a large State of California government presence and employment base, and in
Sonoma County through North Coast Bank, a division of American River Bank.
American River Bankshares' business in Sonoma County is focused mainly on
commercial and real estate enterprises within the three communities in which it
has offices (Santa Rosa, Windsor, and Healdsburg). The economy of Sonoma County
is diversified with professional services, manufacturing, agriculture and real
estate investment and construction.

         American River Bankshares has significant extensions of credit and
commitments to extend credit that are secured by real estate. The ultimate
repayment of these loans is generally dependent on personal or business cash
flows or the sale or refinancing of the real estate. American River Bankshares
monitors the effects of current and expected market conditions and other factors
on the collectability of real estate loans. The more significant factors
management considers involve the following: lease rate and terms, absorption and
sale rates; real estate values and rates of return; operating expenses;
inflation; and sufficiency of repayment sources independent of the real estate
including, in some instances, personal guarantees.

         In extending credit and commitments to borrowers, American River
Bankshares generally requires collateral and/or guarantees as security. The
repayment of such loans is expected to come from cash flow or from proceeds from
the sale of selected assets of the borrowers. American River Bankshares'
requirement for collateral and/or guarantees is determined on a case-by-case
basis in connection with management's evaluation of the creditworthiness of the
borrower. Collateral held varies but may include accounts receivable, inventory,
property, plant and equipment, income-producing properties, residences and other
real property. American River Bankshares secures its collateral by perfecting
its security interest in business assets, obtaining deeds of trust, or outright
possession among other means.

         In management's judgment, a concentration exists in real estate loans
which represented approximately 69.7% of American River Bankshares' loan and
lease portfolio at June 30, 2004. Although management believes this
concentration to have no more than the normal risk of collectability, a
substantial decline in the economy in general, or a decline in real estate
values in American River Bankshares' primary market areas in particular, could
have an adverse impact on the collectability of these loans and require an
increase in the provision for loan and lease losses which could adversely affect
American River Bankshares' future prospects, results of operations,
profitability and stock price.

                                       71


Management believes that its lending policies and underwriting standards will
tend to minimize losses in an economic downturn, however, there is no assurance
that losses will not occur under such circumstances. American River Bankshares'
loan policies and underwriting standards include, but are not limited to, the
following: (1) maintaining a thorough understanding of American River
Bankshares' service area and originating a significant majority of its loans
within that area, (2) maintaining a thorough understanding of borrowers'
knowledge, capacity, and market position in their field of expertise, (3) basing
real estate loan approvals not only on market demand for the project, but also
on the borrowers' capacity to support the project financially in the event it
does not perform to expectations (whether sale or income performance), and (4)
maintaining conforming and prudent loan-to-value and loan-to-cost ratios based
on independent outside appraisals and ongoing inspection and analysis by
American River Bankshares' lending officers.

         Nonaccrual, Past Due and Restructured Loans and Leases

         Management generally places loans on nonaccrual status when they become
90 days past due, unless the loan is well secured and in the process of
collection. Loans are charged off when, in the opinion of management, collection
appears unlikely. Table Six below sets forth nonaccrual loans and loans past due
90 days or more as of June 30, 2004 and December 31, 2003, 2002, 2001, 2000 and
1999.



Table Six:  Non-Performing Loans and Leases
--------------------------------------------------------------------------------------------------------------
                                               June 30,                      December 31,
                                               --------   ----------------------------------------------------
(dollars in thousands)                           2004       2003       2002       2001       2000       1999
--------------------------------------------------------------------------------------------------------------
                                                                                         
Past due 90 days or more and still accruing:
   Commercial                                  $     --   $      2   $      2   $     --   $     --   $     --
   Real estate                                       --         --         --         --         --         --
   Consumer and other                                --         --         --         --         --         --
--------------------------------------------------------------------------------------------------------------
Nonaccrual:
   Commercial                                        --         --         42        534        225         30
   Real estate                                       --         --        160        314        449         --
   Lease financing receivable                        80        179         --         --         --         --
   Consumer and other                                --         --          2          8         --         --
--------------------------------------------------------------------------------------------------------------
Total non-performing loans and leases          $     80   $    181   $    206   $    856   $    674   $     30
==============================================================================================================


         The recorded investments in loans and leases that were considered to be
impaired totaled $80,000, $181,000 and $206,000 at June 30, 2004, December 31,
2003 and 2002, respectively. The related allowance for losses for these loans
and leases at June 30, 2004, December 31, 2003 and December 31, 2002 was
$40,000, $59,000 and $51,000, respectively. Management believes that the
allowance allocations are adequate for the inherent risk of those loans and
leases. The average recorded investment in impaired loans and leases for the
years ended December 31, 2003, 2002 and 2001 was $148,000, $472,000 and
$733,000; respectively, through the first six months of 2004 the amount was
$152,000 and for the second quarter of 2004 the amount was $119,000.

         Interest due but excluded from interest income on nonaccrual loans and
leases was not material during 2004, 2003, 2002 and 2001. In 2004, 2003, 2002
and 2001, interest income recognized from payments received on nonaccrual loans
and leases was also not material.

         At June 30, 2004, non-performing loans and leases were 0.03% of total
loans and leases, compared to .07%, .09% and .43% as of December 31, 2003, 2002
and 2001, respectively.

                                       72


         There were no loan concentrations in excess of 10% of total loans not
otherwise disclosed as a category of loans as of June 30, 2004 or December 31,
2003, 2002 or 2001. Management is not aware of any potential problem loans,
which were accruing interest at June 30, 2004, December 31, 2003 or December 31,
2002, where serious doubt exists as to the ability of the borrower to comply
with the present repayment terms.

         Allowance for Loan and Lease Losses Activity

         American River Bankshares maintains an allowance for loan and lease
losses ("ALLL") to cover potential losses inherent in the loan and lease
portfolio, which is based upon management's estimated range of those losses. The
ALLL is established through a provision for loan and lease losses and is
increased by provisions charged against current earnings and recoveries and
reduced by charge-offs. Actual losses for loans and leases can vary
significantly from this estimate. The methodology and assumptions used to
calculate the allowance are periodically reviewed as to their appropriateness
given the most recent losses realized and other factors that influence the
estimation process. The model assumptions and resulting allowance level are
adjusted accordingly as these factors change. The ALLL totaled $4,233,000 or
1.56% of total loans and leases at June 30, 2004, $3,949,000 or 1.48%, 3,197,000
or 1.38%, and $2,614,000 or 1.32% at December 31, 2003, 2002, and 2001,
respectively. Net charge-offs to average loans and leases were 0.14% (on an
annualized basis) for the second quarter of 2004 and .11% (on an annualized
basis) for the six-month period ended June 30, 2004. Net charge-offs
(recoveries) to average loans and leases were (0.25%) (on an annualized basis)
for the second quarter of 2003 and .09% (on an annualized basis) for the
six-month period ended June 30, 2003. Net charge-offs to average loans and
leases were .08%, .03% and .31% for 2003, 2002 and 2001, respectively.

         Table Seven below summarizes, for the periods indicated, the activity
in the allowance for loan and lease losses.

                                       73




Table Seven: Allowance for Loan and Lease Losses
---------------------------------------------------------------------------------------------------------
                                                         Three Months                   Six Months
(In thousands, except for percentages)                      Ended                         Ended
                                                           June 30,                      June 30,
                                                  -------------------------     -------------------------
                                                      2004           2003           2004           2003
---------------------------------------------------------------------------------------------------------
                                                                                          
Average loans and leases outstanding              $  271,484     $  252,166     $  270,108     $  243,993
---------------------------------------------------------------------------------------------------------

Allowance for possible loan and lease losses at
beginning of period                               $    4,098     $    3,431     $    3,949     $    3,197

Loans and leases charged off:
   Lease financing receivable                            (98)          (164)          (201)          (164)
   Consumer                                               (1)           (12)            (1)           (14)
---------------------------------------------------------------------------------------------------------
Total                                                    (99)          (176)          (202)          (178)
---------------------------------------------------------------------------------------------------------
Recoveries of loans and leases previously
  charged off:
   Commercial                                             --             20             54             20
   Real estate                                            --             --             --             47
   Lease financing receivable                              3             --              3             --
---------------------------------------------------------------------------------------------------------
Total                                                      3             20             57             67
---------------------------------------------------------------------------------------------------------
Net loans (charged off)                                  (96)          (156)          (145)          (111)
Additions to allowance charged
  to operating expenses                                  231            223            429            412
---------------------------------------------------------------------------------------------------------
Allowance for possible loan and lease
  losses at end of period                         $    4,233     $    3,498     $    4,233     $    3,498
---------------------------------------------------------------------------------------------------------
Ratio of net charge-offs to average
  loans and leases outstanding (annualized)              .14%           .25%           .11%           .09%
Provision of allowance for possible
  loan and lease losses to average loans
  and leases outstanding (annualized)                    .34%           .35%           .32%           .34%
Allowance for possible loan and lease losses to
  loans and leases net of deferred fees at end
  of period                                             1.56%          1.39%          1.56%          1.39%


                                       74




----------------------------------------------------------------------------------------------------------
(in thousands, except for percentages)
                                                              Year Ended December 31,
                                       -------------------------------------------------------------------
                                           2003          2002          2001          2000           1999
----------------------------------------------------------------------------------------------------------
                                                                                        
Average loans and leases outstanding   $  248,342    $  209,133    $  202,624    $  175,134     $  148,369
----------------------------------------------------------------------------------------------------------

Allowance for possible loan &
   lease losses at beginning of
   period                              $    3,197    $    2,614    $    2,454    $    2,062     $    1,693

Loans and leases charged off:
   Commercial                                  13            44           556           265            214
   Real estate                                 --            59            85            --             --
   Consumer                                     8            48            13             1              3
   Lease financing receivable                 333            --            57            --             14
----------------------------------------------------------------------------------------------------------
Total                                         354           151           711           266            231
----------------------------------------------------------------------------------------------------------
Recoveries of loans and leases
previously charged off:
   Commercial                                 113             1             9            23             15
   Real estate                                 47            85            --            --             --
   Consumer                                    --             4            --             4              3
   Lease financing receivable                  --            --            71            --             --
----------------------------------------------------------------------------------------------------------
Total                                         160            90            80            27             18
----------------------------------------------------------------------------------------------------------
Net loans and leases charged off              194            61           631           239            213
Amount transferred for accounts
  receivable servicing valuation
  reserve                                      --            --            --           (41)            --
Additions to allowance charged
  to operating expenses                       946           644           791           672            582
----------------------------------------------------------------------------------------------------------
Allowance for possible loan and
  lease losses at end of period        $    3,949    $    3,197    $    2,614    $    2,454     $    2,062

Ratio of net charge-offs to average
  loans and leases outstanding                .08%          .03%          .31%          .14%           .14%

Provision for possible loan and
  lease losses to average loans and
  leases outstanding                          .38%          .31%          .39%          .38%           .39%

Allowance for possible loan and
  lease losses to loans and leases,
  net of deferred fees, at end of
  period                                     1.48%         1.38%         1.32%         1.21%          1.30%


         The adequacy of the ALLL and the level of the related provision for
loan and lease losses is determined based on management's judgment after
consideration of numerous factors including but not limited to: (i) local and
regional economic conditions, (ii) borrowers' financial condition, (iii) loan
impairment and the related level of expected charge-offs, (iv) evaluation of
industry trends, (v) industry and other concentrations, (vi) loans which are
contractually current as to payment terms but demonstrate a higher degree of
risk as identified by management, (vii) continuing evaluations of the performing
loan portfolio, (viii) ongoing review and evaluation of problem loans identified
as having loss potential, (ix) quarterly review by the board of directors, and
(x) assessments by banking regulators and other third parties. Management and
the board of directors evaluate the ALLL and determine its desired level
considering objective and subjective measures, such as knowledge of the
borrowers' business, valuation of collateral, the determination of impaired
loans or leases and exposure to potential losses.

                                       75


         American River Bankshares establishes general reserves in accordance
with Statement of Accounting Standards ("SFAS") No. 5., Accounting for
Contingencies, and specific reserves in accordance with SFAS No. 114, Accounting
by Creditors for Impairment of a Loan. The ALLL is maintained by categories of
the loan portfolio based on loan type and loan rating; however, the entire
allowance is available to cover actual loan and lease losses. While management
uses available information to recognize possible losses on loans and leases,
future additions to the allowance may be necessary, based on changes in economic
conditions and other matters. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review American River
Bankshares' ALLL. Such agencies may require American River Bankshares to provide
additions to the allowance based on their judgment of information available to
them at the time of their examination. The adequacy of the ALLL is determined
based on three components. First is the dollar weighted risk rating of the loan
portfolio, including all outstanding loans and leases. Every extension of credit
has been assigned a loan type and risk rating based upon a comprehensive
definition intended to measure the inherent risk of lending money. Each type and
rating has an assigned risk factor expressed as a reserve percentage. Second,
established specific reserves consistent with SFAS No. 114 "Accounting by
Creditors for Impairment of a Loan" are assigned to individually impaired loans.
These are estimated potential losses associated with specific borrowers based
upon estimated cash flows or collateral value and events affecting the risk
rating. Third, American River Bankshares maintains a reserve for qualitative
factors that may affect the portfolio as a whole, such as those factors
described above, including a reserve for model imprecision consistent with SFAS
No. 5 "Accounting for Contingencies." Table Eight below summarizes the
allocation of the allowance for loan and lease losses for the periods indicated.
The allocation presented should not be interpreted as an indication that charges
to the allowance for loan and lease losses will be incurred in these amounts or
proportions, or that the portion of the allowance allocated to each loan and
lease category represents the total amounts available for charge-offs that may
occur within these categories.



Table Eight:  Allowance for Loan and Lease Losses by Loan Category
-------------------------------------------------------------------------------------------------------------------------
(in thousands,
except percentages)                    June 30, 2004              December 31, 2003              December 31, 2002
-------------------------------------------------------------------------------------------------------------------------
                                           Percent of loans               Percent of loans               Percent of loans
                                           in each category               in each category               in each category
                                Amount      to total loans     Amount      to total loans     Amount     to total loans
-------------------------------------------------------------------------------------------------------------------------
                                                                                                  
Commercial                   $        872           20.7%   $        865           21.5%   $        660           21.1%
Real estate                         2,699           69.6%          2,579           69.8%          2,173           69.5%
Agriculture                           215            3.1%            201            3.0%            116            3.8%
Consumer                              123            2.6%             91            2.2%            152            2.9%
Lease financing receivable            324            4.0%            213            3.5%             96            2.7%
-------------------------------------------------------------------------------------------------------------------------
Total allocated              $      4,233          100.0%   $      3,949          100.0%   $      3,197          100.0%
-------------------------------------------------------------------------------------------------------------------------

                                   December 31, 2001              December 31, 2000              December 31, 1999
-------------------------------------------------------------------------------------------------------------------------
                                           Percent of loans               Percent of loans               Percent of loans
                                           in each category               in each category               in each category
                                Amount      to total loans     Amount      to total loans     Amount     to total loans
-------------------------------------------------------------------------------------------------------------------------
Commercial                   $        923           22.0%   $        781           25.9%   $        642           26.4%
Real estate                         1,288           67.7%          1,392           65.1%          1,252           65.3%
Agriculture                           147            5.3%            105            5.3%             78            4.5%
Consumer                              206            3.8%            153            3.1%             88            3.7%
Lease financing receivable             50            1.2%             23             .6%              2             .1%
-------------------------------------------------------------------------------------------------------------------------
Total allocated              $      2,614          100.0%   $      2,454          100.0%   $      2,062          100.0%
-------------------------------------------------------------------------------------------------------------------------


                                       76


         Other Real Estate

         At June 30, 2004, December 31, 2003, 2002 and 2001, American River
Bankshares did not have any other real estate ("ORE") properties.

Deposits

         At June 30, 2004, total deposits were $350,022,000 representing an
increase of $27,515,000 (8.5%) from the December 31, 2003 balance of
$322,507,000. Noninterest-bearing deposits increased $7,801,000 (7.6%) while
interest-bearing deposits increased $19,714,000 (9.0%). Interest checking, money
market and savings accounts increased $21,070,000 (14.2%) while time deposits
decreased $1,356,000 (1.9%). At December 31, 2003, total deposits were
$322,507,000 representing an increase of $46,711,000 (16.9%) over the December
31, 2002 balance of $275,796,000. The deposit growth in 2003 can be attributed
to a concentrated effort to increase noninterest-bearing demand,
interest-bearing money market and NOW accounts and savings accounts. As a
result, these accounts increased 24.8%, 23.7% and 13.1%, respectively, in 2003.
During 2002, deposits increased $20,908,000 (8.2%) from the total of
$254,888,000 at December 31, 2001.

Other Borrowed Funds

         Other borrowings outstanding as of June 30, 2004, December 31, 2003,
2002 and 2001, consist of advances (both long-term and short-term) from the FHLB
and overnight borrowings from correspondent banks. The following table
summarizes these borrowings (in thousands):



                                   June 30, 2004          December 31, 2003        December 31, 2002         December 31, 2001
                              ----------------------------------------------------------------------------------------------------
                                 Amount       Rate         Amount       Rate        Amount        Rate        Amount        Rate
                                                                                                       
Short-Term borrowings:
      FHLB advances           $   38,800        1.61%   $   25,000        1.40%   $   24,000        1.71%   $       --          --
      Advances from
        correspondent banks           --          --         9,600        1.44%        6,550        1.75%           --          --
                              ----------------------------------------------------------------------------------------------------
Total Short-Term
        Borrowings            $   38,800        1.61%   $   34,600        1.41%   $   30,550        1.72%   $       --          --
                              ----------------------------------------------------------------------------------------------------
Long-Term Borrowings:
      FHLB advances           $    1,916        6.13%   $    1,942        6.13%   $    1,992        6.13%   $    2,039        6.13%
                              ----------------------------------------------------------------------------------------------------


         The maximum amount of short-term borrowings at any month-end during
2004, 2003, 2002 and 2001 was $45,800,000, $38,100,000 $33,900,000, and
$12,390,000, respectively. There were no advances from correspondent banks at
June 30, 2004. The FHLB advances are collateralized by loans and securities
pledged to the FHLB. The following is a breakdown of rates and maturities on
FHLB advances as of June 30, 2004 (dollars in thousands):

                                         Short Term              Long Term

                 Amount                   $38,800                 $ 1,916
                 Maturity               2004 to 2006                2007
                 Average rates             1.61%                    6.13%

         American River Bankshares has also been issued a total of $333,000 in
letters of credit by the FHLB which have been pledged to secure Local Agency
Deposits. The letters of credit act as a guarantee of payment to certain third
parties in accordance with specified terms and conditions. The letters of credit
were not drawn upon in 2004, 2003, 2002, or 2001, and management does not expect
to draw upon these lines in the future.

                                       77


Capital Resources

         The current and projected capital position of American River Bankshares
and the impact of capital plans and long-term strategies is reviewed regularly
by management. American River Bankshares' capital position represents the level
of capital available to support continuing operations and expansion.

         American River Bankshares and American River Bank are subject to
certain regulations issued by the Board of Governors of the Federal Reserve
System and the Federal Deposit Insurance Corporation, which require maintenance
of certain levels of capital. Failure to meet these minimum capital requirements
can initiate certain mandatory, and possibly additional discretionary, actions
by regulators that, if undertaken, could have a direct material effect on
American River Bankshares' consolidated financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the American River Bank must meet specific capital guidelines that involve
quantitative measures of their assets, liabilities and certain off-balance-sheet
items as calculated under regulatory accounting practices. American River
Bankshares' and American River Bank's capital amounts and classification are
also subject to qualitative judgments by the regulators about components, risk
weightings and other factors. At June 30, 2004, shareholders' equity was
$37,509,000, representing an increase of $2,052,000 (5.8%) from $35,457,000 at
December 31, 2003. In 2003, shareholders' equity increased by $3,731,000 (11.8%)
from $31,726,000 at December 31, 2002. In 2002, shareholders' equity increased
$3,800,000 (13.5%) from 2001. The ratio of total risk-based capital to risk
adjusted assets was 13.4% at June 30, 2004, 12.9% at December 31, 2003 and 13.0%
at December 31, 2002. Tier 1 risk-based capital to risk-adjusted assets was
12.2% at June 30, 2004, 11.6% at December 31, 2003 and 11.8% at December 31,
2002.

         Table Nine below lists American River Bankshares' actual capital ratios
at June 30, 2004 and December 31, 2003 and 2002, as well as the minimum capital
ratios for capital adequacy.



Table Nine:  Capital Ratios
------------------------------------------------------------------------------------------------------------
                                                                                               Minimum
Capital to Risk-                                   At December 31,    At December 31,     Regulatory Capital
Adjusted Assets              At June 30, 2004           2003               2003              Requirements
------------------------------------------------------------------------------------------------------------
                                                                                       
Leverage ratio                       8.9%                9.0%               8.9%                 4.00%

Tier 1 Risk-Based Capital           12.2%               11.6%              11.8%                 4.00%

Total Risk-Based Capital            13.4%               12.9%              13.0%                 8.00%


         On September 20, 2001, American River Bankshares announced a plan to
repurchase, as conditions warrant, up to 5% annually of American River
Bankshares' common stock. During the first six months of 2004, American River
Bankshares repurchased 9,300 shares; during 2003, American River Bankshares
repurchased 1,500 shares; during 2002, American River Bankshares repurchased
65,627 shares and in 2001, American River Bankshares repurchased 33,705 shares
under the repurchase plan.

         Capital ratios are reviewed on a regular basis to ensure that capital
exceeds the prescribed regulatory minimums and is adequate to meet future needs.
Management believes that both American River Bankshares and American River Bank
met all their capital adequacy requirements as of June 30, 2004 and December 31,
2003 and 2002. Management believes that the American River Bankshares' capital
is adequate to support current operations and anticipated growth, cash dividends
and future capital requirements of the American River Bankshares and its
subsidiaries.

                                       78


Off-Balance Sheet Items

         American River Bankshares is a party to financial instruments with
off-balance-sheet risk in the normal course of business in order to meet the
financing needs of its customers and to reduce its exposure to fluctuations in
interest rates. These financial instruments consist of commitments to extend
credit and letters of credit. These instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized on
the balance sheet.

         American River Bankshares' exposure to credit loss in the event of
nonperformance by the other party for commitments to extend credit and letters
of credit is represented by the contractual amount of those instruments.
American River Bankshares uses the same credit policies in making commitments
and letters of credit as it does for loans included on the consolidated balance
sheet. As of June 30, 2004 and December 31, 2003 and 2002, commitments to extend
credit and letters of credit were the only financial instruments with
off-balance sheet risk. American River Bankshares has not entered into any
contracts for financial derivative instruments such as futures, swaps, options
or similar instruments. Loan commitments and letters of credit were $68,564,000,
$72,599,000 and $65,382,000 at June 30, 2004, December 31, 2003 and 2002,
respectively. As a percentage of net loans and leases these off-balance sheet
items represent 25.7%, 27.7% and 28.6%, respectively.

         American River Bankshares has certain ongoing commitments under
operating leases. These commitments do not significantly impact operating
results.

         Certain financial institutions have elected to use special purpose
vehicles ("SPV") to dispose of problem assets. The SPV is typically a subsidiary
company with an asset and liability structure and legal status that makes its
obligations secure even if the parent corporation goes bankrupt. Under certain
circumstances, these financial institutions may exclude the problem assets from
their reported impaired and non-performing assets. American River Bankshares
does not use these vehicles or any other structures to dispose of problem
assets.

Contractual Obligations

         American River Bankshares leases certain facilities at which it
conducts its operations. Future minimum lease commitments under non-cancelable
operating leases are noted in Table Ten below. Table Ten below presents certain
of American River Bankshares' contractual obligations as of December 31, 2003.



Table Ten: Contractual Obligations                                 Payments due by period
(dollars in thousands)                         --------------------------------------------------------------
                                                             Less than                             More than
                                                 Total        1 year      1-3 years    3-5 years    5 years
                                               --------------------------------------------------------------
                                                                                           
Long-Term Debt                                 $    1,942   $       54   $      117   $    1,771   $       --
Capital Lease Obligations                              --           --           --           --           --
Operating Leases                                    4,271          673        1,410        1,070        1,118
Purchase Obligations                                   --           --           --           --           --
Other Long-Term Liabilities Reflected on the
    Balance Sheet under GAAP                          615           --           --           --          615
-------------------------------------------------------------------------------------------------------------

Total                                          $    6,828   $      727   $    1,527   $    2,841   $    1,733
=============================================================================================================


         Included in Table Ten, above, are amounts payable under American River
Bankshares' Deferred Compensation and Deferred Fees Plans. These amounts
represented $615,000 and are anticipated to be primarily payable at least five
years in the future. There were no material changes reflected at June 30, 2004
compared to December 31, 2003.

                                       79


Other Matters

         Effects of Terrorism

         The terrorist actions on September 11, 2001 and thereafter and the
current military conflict in Iraq have had significant adverse effects upon the
United States economy. Whether the terrorist activities in the future and the
actions of the United States and its allies in combating terrorism on a
worldwide basis will adversely impact American River Bankshares and the extent
of such impact is uncertain. However, such events have had and may continue to
have an adverse effect on the economy in American River Bankshares' market
areas. Such continued economic deterioration could adversely affect American
River Bankshares' future results of operations by, among other matters, reducing
the demand for loans and other products and services offered by American River
Bankshares, increasing nonperforming loans and the amounts reserved for loan and
lease losses, and causing a decline in American River Bankshares' stock price.

         Website Access

         American River Bankshares maintains a website where certain information
about American River Bankshares is posted. Through the website, its annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K, and amendments thereto are available as soon as reasonably practicable
after such material is electronically filed with or furnished to the Securities
and Exchange Commission. These reports are free of charge and can be accessed
through the address www.amrb.com/financial.html by clicking on the SEC Filings
link located at that address.


Quantitative and Qualitative Disclosures about Market Risk

         Market Risk Management

         Overview. Market risk is the risk of loss from adverse changes in
market prices and rates. American River Bankshares' market risk arises primarily
from interest rate risk inherent in its loan, investment and deposit functions.
The goal for managing the assets and liabilities of American River Bankshares is
to maximize shareholder value and earnings while maintaining a high quality
balance sheet without exposing American River Bankshares to undue interest rate
risk. The board of directors has overall responsibility for the interest rate
risk management policies. American River Bankshares has a Risk Management
Committee, made up of American River Bankshares management that establishes and
monitors guidelines to control the sensitivity of earnings to changes in
interest rates.

         Asset/Liability Management. Activities involved in asset/liability
management include but are not limited to lending, accepting and placing
deposits and investing in securities. Interest rate risk is the primary market
risk associated with asset/liability management. Sensitivity of earnings to
interest rate changes arises when yields on assets change in a different time
period or in a different amount from that of interest costs on liabilities. To
mitigate interest rate risk, the structure of the balance sheet is managed with
the goal that movements of interest rates on assets and liabilities are
correlated and contribute to earnings even in periods of volatile interest
rates. The asset/liability management policy sets limits on the acceptable
amount of variance in net interest margin and market value of equity under
changing interest environments. American River Bankshares uses simulation models
to forecast earnings, net interest margin and market value of equity.

         Simulation of earnings is the primary tool used to measure the
sensitivity of earnings to interest rate changes. Using computer-modeling
techniques, American River Bankshares is able to estimate the potential impact
of changing interest rates on earnings. A balance sheet forecast is prepared
quarterly using inputs of actual loans, securities and interest bearing
liabilities (i.e. deposits/borrowings) positions as the beginning base. The
forecast balance sheet is processed against three interest rate scenarios. The
scenarios include a 200 basis point rising rate forecast, a flat rate forecast
and a 200 basis point falling

                                       80


rate forecast which take place within a one year time frame. The net interest
income is measured during the year assuming a gradual change in rates over the
twelve-month horizon. American River Bankshares' net interest income, as
forecast below, was modeled utilizing a forecast balance sheet projected from
balances as of the date indicated. Table Eleven below summarizes the effect on
net interest income (NII) of a +/-200 basis point change in interest rates as
measured against a constant rate (no change) scenario.



Table Eleven:  Interest Rate Risk Simulation of Net Interest as of June 30, 2004
and December 31, 2003
------------------------------------------------------------------------------------------------
     (In thousands)                                      $ Change in NII        $ Change in NII
                                                          from Current           from Current
                                                        12 Month Horizon       12 Month Horizon
                                                          June 30, 2004        December 31, 2003
                                                          -------------        -----------------
                                                                                 
     Variation from a constant rate scenario
     + 200bp                                                 $  535                 $  427
     - 200bp                                                 $ (444)                $ (592)


         The simulations of earnings do not incorporate any management actions,
which might moderate the negative consequences of interest rate deviations.
Therefore, they do not reflect likely actual results, but serve as conservative
estimates of interest rate risk.

Interest Rate Sensitivity Analysis

         Interest rate sensitivity is a function of the repricing
characteristics of the portfolio of assets and liabilities. These repricing
characteristics are the time frames within which the interest-bearing assets and
liabilities are subject to change in interest rates either at replacement,
repricing or maturity. Interest rate sensitivity management focuses on the
maturity of assets and liabilities and their repricing during periods of changes
in market interest rates. Interest rate sensitivity is measured as the
difference between the volumes of assets and liabilities in the current
portfolio that are subject to repricing at various time horizons. The
differences are known as interest sensitivity gaps.

         A positive cumulative gap may be equated to an asset sensitive
position. An asset sensitive position in a rising interest rate environment will
cause a bank's interest rate margin to expand. This results as floating or
variable rate loans reprice more rapidly than fixed rate certificates of deposit
that reprice as they mature over time. Conversely, a declining interest rate
environment will cause the opposite effect. A negative cumulative gap may be
equated to a liability sensitive position. A liability sensitive position in a
rising interest rate environment will cause a bank's interest rate margin to
contract, while a declining interest rate environment will have the opposite
effect.

         As reflected in Table Twelve below, at June 30, 2004 and December 31,
2003, the cumulative gap through the one-year time horizon indicates a slightly
liability sensitive position.

                                       81




Table Twelve:  Interest Rate Sensitivity
June 30, 2004
-----------------------------------------------------------------------------------------------------------
Assets and Liabilities
  which mature or reprice within (days):
                                                                                      Non-
(dollars in thousands)          0-90         91-180       181-365      Over 365     repricing       Total
-----------------------------------------------------------------------------------------------------------
                                                                                      
Assets:
   Investment securities     $    3,228   $    3,314    $    8,684    $  111,924   $       --    $  127,150
   Loans and leases             131,437       24,298        36,943        73,959           --       266,637
   Other assets                      --           --            --            --       37,310        37,310
-----------------------------------------------------------------------------------------------------------
     Total assets            $  134,665   $   27,612    $   45,627    $  185,883   $   37,310    $  431,097
===========================================================================================================
Liabilities:
   Noninterest bearing       $       --   $       --    $       --    $       --   $  110,109    $  110,109
   Interest bearing:
     Transaction                 15,552        6,221         4,666         4,666           --        31,105
     Money market                57,285       22,914        17,186        17,186           --       114,571
     Savings                     11,986        4,794         2,397         4,794           --        23,971
     Time certificates           31,488       13,388        12,248        13,142           --        70,266
   Short-term borrowings          7,500       10,900        12,400         8,000           --        38,800
   Long-term borrowings               6            6            12         1,892           --         1,916
   Other liabilities                 --           --            --            --        2,850         2,850
   Shareholders' equity              --           --            --            --       37,509        37,509
-----------------------------------------------------------------------------------------------------------
    Total liabilities and
      shareholders' equity   $  123,817   $   58,223    $   48,909    $   49,680   $  150,468    $  431,097
===========================================================================================================
Interest rate
   sensitivity gap           $   10,848   $  (30,611)   $   (3,282)   $  136,203   $ (113,158)
Cumulative interest
   rate sensitivity gap      $   10,848   $  (19,763)   $  (23,045)   $  113,158           --


                                       82




December 31, 2003
-----------------------------------------------------------------------------------------------------------
Assets and Liabilities
  which mature or reprice within (days):
                                                                                      Non-
(dollars in thousands)          0-90         91-180       181-365      Over 365     repricing       Total
-----------------------------------------------------------------------------------------------------------
                                                                                      
Assets:
   Investment securities     $    3,657   $    1,703    $    6,582    $   84,100   $       --    $   96,042
   Loans and leases             139,584       26,256        20,359        76,265           --       262,464
   Other assets                      --           --            --            --       38,887        38,887
-----------------------------------------------------------------------------------------------------------
     Total assets            $  143,241   $   27,959    $   26,941    $  160,365   $   38,887    $  397,393
===========================================================================================================
Liabilities:
   Noninterest bearing       $       --   $       --    $       --    $       --   $  102,308    $  102,308
   Interest bearing:
     Transaction                 14,203        5,681         4,261         4,261           --        28,406
     Money market                51,213       20,547        15,409        15,409           --       102,578
     Savings                      8,797        3,519         1,759         3,519           --        17,594
     Time certificates           33,350       16,020        12,229        10,022           --        71,621
   Short-term borrowings         20,600       14,000            --            --           --        34,600
   Long-term borrowings               5            5            12         1,920           --         1,942
   Other liabilities                 --           --            --            --        2,887         2,887
   Shareholders' equity              --           --            --            --       35,457        35,457
-----------------------------------------------------------------------------------------------------------
    Total liabilities and
      shareholders' equity   $  128,168   $   59,772    $   33,670    $   35,131   $  140,652    $  397,393
===========================================================================================================
Interest rate
   sensitivity gap           $   15,073   $  (31,813)   $   (6,729)   $  125,234   $ (101,765)
Cumulative interest
   rate sensitivity gap      $   15,073   $  (16,740)   $  (23,469)   $  101,765           --


Inflation

         The impact of inflation on a financial institution differs
significantly from that exerted on manufacturing, or other commercial concerns,
primarily because its assets and liabilities are largely monetary. In general,
inflation primarily affects American River Bankshares and it subsidiaries
through its effect on market rates of interest, which affects American River
Bankshares' ability to attract loan customers. Inflation affects the growth of
total assets by increasing the level of loan demand, and potentially adversely
affects capital adequacy because loan growth in inflationary periods can
increase at rates higher than the rate that capital grows through retention of
earnings which may be generated in the future. In addition to its effects on
interest rates, inflation increases overall operating expenses. Inflation has
not had a material effect upon the results of operations of American River
Bankshares and its subsidiaries during the periods ended June 30, 2004 and
December 31, 2003, 2002 and 2001.

Liquidity

         Liquidity management refers to American River Bankshares' ability to
provide funds on an ongoing basis to meet fluctuations in deposit levels as well
as the credit needs and requirements of its clients. Both assets and liabilities
contribute to American River Bankshares' liquidity position. Federal funds
lines, short-term investments and securities, and loan repayments contribute to
liquidity, along with deposit increases, while loan funding and deposit
withdrawals decrease liquidity. American River Bankshares assesses the
likelihood of projected funding requirements by reviewing historical funding
patterns, current and forecasted economic conditions and individual client
funding needs. Commitments to fund loans and outstanding letters of credit at
June 30, 2004 and December 31, 2003 were approximately $62,083,000 and
$1,933,000 and $71,858,000 and $741,000, respectively. Such loans relate
primarily to revolving lines of credit and other commercial loans, and to real
estate construction

                                       83


loans. Since some of the commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash
requirements.

         American River Bankshares' sources of liquidity consist of cash and due
from correspondent banks, overnight funds sold to correspondent banks, unpledged
marketable investments and loans held for sale and/or pledged for secured
borrowings. On June 30, 2004, consolidated liquid assets totaled $55.3 million
or 12.8% of total assets compared to $56.8 million or 14.3% of total assets on
December 31, 2003 and $49.7 million or 14.5% of total assets on December 31,
2002. In addition to liquid assets, American River Bankshares maintains
short-term lines of credit in the amount of $38,000,000 with correspondent
banks. At June 30, 2004, American River Bankshares had $38,000,000 available
under these credit lines. Additionally, American River Bank is member of the
Federal Home Loan Bank (the "FHLB"). At June 30, 2004, American River Bank could
have arranged for up to $56,068,000 in secured borrowings from the FHLB. These
borrowings are secured by pledged mortgage loans and investment securities. At
June 30, 2004, American River Bankshares had advances borrowings and commitments
outstanding of $41,049,000, leaving $15,019,000 available under these secured
borrowing arrangements. American River Bank also has informal agreements with
various other banks to sell participations in loans, if necessary. American
River Bankshares serves primarily a business and professional customer base and,
as such, its deposit base is susceptible to economic fluctuations. Accordingly,
management strives to maintain a balanced position of liquid assets to volatile
and cyclical deposits.

         Liquidity is also affected by portfolio maturities and the effect of
interest rate fluctuations on the marketability of both assets and liabilities.
American River Bankshares can sell any of its unpledged securities held in the
available-for-sale category to meet liquidity needs. Due to the falling interest
rate environment throughout the last half of 2000 and continuing through the end
of 2003, much of the investment portfolio experienced price appreciation, which
has resulted in unrealized gains. During the last part of the second half of the
second quarter of 2004, the bond market experienced an overall drop in price due
to the increase in rates; however, the investment portfolio maintained a large
part of the unrealized gains. These unrealized gains allow American River
Bankshares the ability to sell these securities should the liquidity needs
arise. These securities are also available to pledge as collateral for
borrowings if the need should arise. American River Bank has established a
master repurchase agreement with a correspondent bank to enable such
transactions. American River Bank can also pledge securities to borrow from the
Federal Reserve Bank of San Francisco and the FHLB. The principal cash
requirements of American River Bankshares are for expenses incurred in the
support of administration and operations. For nonbanking functions, American
River Bankshares is dependent upon the payment of cash dividends from its
subsidiaries to service its commitments. American River Bankshares expects that
the cash dividends paid by the subsidiaries to American River Bankshares will be
sufficient to meet this payment schedule.

         The principal cash requirements of American River Bankshares are for
expenses incurred in the support of administration and operations. For
nonbanking functions, the American River Bankshares is dependent upon the
payment of cash dividends from its subsidiaries to service its commitments. The
American River Bankshares expects that the cash dividends paid by its
subsidiaries to the American River Bankshares will be sufficient to meet this
payment schedule. The maturity distribution of certificates of deposit in
denominations of $100,000 or more is set forth in Table Thirteen below for the
periods presented. These deposits are generally more rate sensitive than other
deposits and, therefore, are more likely to be withdrawn to obtain higher yields
elsewhere if available.

                                       84


Table Thirteen:  Maturities of Certificates of Deposits Over $100,000

(dollars in thousands)                  June 30, 2004    December 31, 2003
--------------------------------------------------------------------------
Three months or less                      $   20,497        $   21,668
Over three months through six months           9,729            11,391
Over six months through twelve months          7,904             8,479
Over twelve months                            10,589             7,545
--------------------------------------------------------------------------
Total                                     $   48,719        $   49,083
==========================================================================

         Loan and lease demand also affects the American River Bankshares'
liquidity position. Table Fourteen below presents the maturities of loans and
leases for the period indicated.

Table Fourteen:  Loan and Lease Maturities (Gross Loans and Leases)
-------------------------------------------------------------------------------
(dollars in thousands)
-------------------------------------------------------------------------------
                         One year    One year through      Over
                         or less        five years      five years      Total
June 30, 2004
-------------------------------------------------------------------------------
  Commercial            $   29,776      $   20,366      $    5,946   $   56,088
  Real estate               47,064          30,954         111,141      189,159
  Agriculture                1,000           6,091           1,388        8,479
  Consumer                   1,305           3,010           2,729        7,044
  Leases                       369          10,105             259       10,733
-------------------------------------------------------------------------------
  Total                 $   79,514      $   70,526      $  121,463   $  271,503
===============================================================================
December 31, 2003
-------------------------------------------------------------------------------
  Commercial            $   28,699      $   22,345      $    6,302   $   57,346
  Real estate               41,096          37,110         108,286      186,492
  Agriculture                  943           5,681           1,403        8,027
  Consumer                     658           2,993           2,299        5,950
  Leases                       278           8,905              93        9,276
-------------------------------------------------------------------------------
  Total                 $   71,674      $   77,034      $  118,383   $  267,091
===============================================================================

         Loans and leases shown above with maturities greater than one year
include $161,264,000 of floating interest rate loans and $30,725,000 of fixed
rate loans and leases at June 30, 2004, and $166,132,000 of floating interest
rate loans and $26,108,000 of fixed rate loans and leases at December 31, 2003.

         The carrying amount, maturity distribution and weighted average yield
of the American River Bankshares' investment securities available-for-sale and
held-to-maturity portfolios are presented in Table Fifteen below. The yields on
tax-exempt obligations have been computed on a tax equivalent basis.

                                       85




Table Fifteen:  Securities Maturities and Weighted Average Yields
-----------------------------------------------------------------------------------------------
(Taxable Equivalent Basis)
                                                      June 30, 2004         December 31, 2003
                                                  ---------------------------------------------
                                                               Weighted                Weighted
                                                  Carrying     Average     Carrying    Average
(dollars in thousands)                             Amount       Yield       Amount      Yield
-----------------------------------------------------------------------------------------------
                                                                               
Available-for-sale securities:
U.S. Treasury and agency securities
  Maturing within 1 year                          $   4,823        3.43%  $   3,573        3.70%
  Maturing after 1 year but within 5                 18,409        3.73%     17,877        3.75%
    years
State & political subdivisions
  Maturing within 1 year                                805        6.48%        452        6.17%
  Maturing after 1 year but within                      825        4.14%        967        5.69%
    years
  Maturing after 5 years but within 10                6,735        6.85%      6,188        7.18%
    years
  Maturing after 10 years                             3,929        6.89%      4,454        7.44%
Government sponsored mortgage-backed
 securities                                          45,315        4.46%     26,757        4.47%
Other
  Maturing within 1 year                                514        3.83%      1,514        1.84%
  Maturing after 1 year but within 5                     --          --         273        3.94%
    years
  Non maturing                                          608        6.39%        631        6.64%
-----------------------------------------------------------------------------------------------
Total investment securities                       $  81,963        4.55%  $  62,686        4.55%
===============================================================================================

Held-to-maturity securities:
State & political subdivisions
  Maturing within 1 year                          $     200        6.77%  $     200        6.77%
Government sponsored mortgage-backed
 securities                                          37,131        4.11%     26,960        4.06%
-----------------------------------------------------------------------------------------------
Total investment securities                       $  37,331        4.12%  $  27,160        4.08%
===============================================================================================


                                       86




-----------------------------------------------------------------------------------------------
(Taxable Equivalent Basis)
                                                    December 31, 2002       December 31, 2001
                                                  ---------------------------------------------
                                                               Weighted                Weighted
                                                  Carrying     Average     Carrying    Average
(dollars in thousands)                             Amount       Yield       Amount      Yield
-----------------------------------------------------------------------------------------------
                                                                              
Available-for-sale securities:
U.S. Treasury and agency securities
  Maturing within 1 year                          $   4,907        6.46%  $   6,024        6.31%
  Maturing after 1 year but within 5                 15,660        4.26%     12,479        5.30%
     years
State & political subdivisions
  Maturing within 1 year                                779        6.89%         --          --
  Maturing after 1 year but within 5                  1,139        6.48%      1,889        6.65%
     years
  Maturing after 5 years but within 10                3,215        7.46%      1,903        7.62%
     years
  Maturing after 10 years                             5,475        7.55%      6,148        7.49%
Government sponsored mortgage-backed
 securities                                          29,280        4.57%      1,104        5.26%
Other
  Maturing within 1 year                                254        7.40%      4,533        3.67%
  Maturing after 1 year but within 5                    816        3.55%        789        4.62%
     years
  Non maturing                                          351        6.61%        594        7.54%
-----------------------------------------------------------------------------------------------
Total investment securities                       $  61,876        5.13%  $  35,463        5.86%
===============================================================================================

Held-to-maturity securities:
State & political subdivisions
  Maturing within 1 year                          $   1,133        6.53%  $      --          --
  Maturing after 1 year but within 5                    200        6.77%      1,323        6.51%
     years
  Maturing after 5 years but within 10                   --          --          16       15.84%
     years
Government sponsored mortgage-backed
 securities                                          10,852        5.05%     11,770        5.92%
-----------------------------------------------------------------------------------------------
Total investment securities                       $  12,185        5.22%  $  13,109        5.99%
===============================================================================================


         The carrying values of available-for-sale securities includes net
unrealized gains of $291,000, $1,430,000, $2,149,000 and $796,000 at June 30,
2004 and December 31, 2003, 2002 and 2001, respectively. The carrying values of
held-to-maturity securities do not include unrealized gains, however, the net
unrealized gains at June 30, 2004 and December 31, 2003, 2002 and 2001 were
$31,000, $56,000, $201,000 and $125,000, respectively. Table Fifteen does not
include FHLB or FRB Stock, which do not have stated maturity dates or readily
available market values. The balance in FHLB and FRB Stock at June 30, 2004 and
December 31, 2003, 2002 and 2001 was $2,116,000, $1,546,000, $1,562,000 and
$340,000, respectively.

                                       87


Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure

         There has been no change in the independent registered public
accounting firm engaged to audit the financial statements of American River
Bankshares and its subsidiaries during the last two fiscal years ended December
31, 2003. There have been no disagreements with American River Bankshares'
independent registered public accounting firm during the last two fiscal years
ended December 31, 2003, on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.

                                       88


                        INFORMATION ABOUT BANK OF AMADOR

General Development of Business

         Bank of Amador is a California state chartered bank that opened for
business on November 21, 1983, and serves the individuals, merchants, small and
medium-sized businesses, and professionals located in and adjacent to Amador
County. Bank of Amador operates out of its main office at 422 Sutter Street,
Jackson, California 95642. Branch offices are located at 26675 Tiger Creek Road,
Pioneer, California 95666 and 66 Main Street, Ione, California 95640. Bank of
Amador also operates a data processing center at 933 South Highway 49, Jackson,
California 95642. Bank of Amador employed an equivalent of 35 full-time
employees as of June 30, 2004.

         Bank of Amador offers a full range of commercial banking services
including acceptance of demand, savings and time deposits, as well as the making
of commercial, real estate (including residential construction and mortgage),
Small Business Administration, personal, home improvement, automobile, and other
installment and term loans. Bank of Amador sells cashier's checks, travelers'
checks, and money orders. Bank of Amador also offers night depository, notary
services, telephone and wire transfers, federal tax depository services, and
MasterCard and Visa services. Bank of Amador does not offer trust or
international banking services, but will arrange for such services through a
correspondent bank. Bank of Amador operates an on-site computer system that
provides independent processing of the Bank of Amador's deposits, loans, and
financial accounting.

         Bank of Amador obtains market penetration from the services referred to
above and by the personal solicitation by its officers, directors, and
shareholders. Bank of Amador's deposits are attracted primarily from
individuals, merchants, small and medium-sized businesses, and professionals.
The loss of any single depositor or group of affiliated depositors would not
have a materially adverse effect on the business of Bank of Amador, nor is a
material portion of Bank of Amador's deposits concentrated within a single
industry or group of related industries.

         As of June 30, 2004, Bank of Amador had total deposits of $113,009,000.
Of this total, $23,601,000 were noninterest-bearing demand deposits; $11,470,000
were interest-bearing demand deposits; and $77,938,000 were interest-bearing
savings and time deposits.

         The principal source of Bank of Amador's revenues are: (i) interest and
fees on loans, which account for 79%; (ii) interest on Federal Funds sold, which
account for 2%; and (iii) interest on investments, which account for 12%. The
remaining revenues were from service charges on deposit accounts and fees for
other services.

         The common stock of Bank of Amador is registered under Section 12(g) of
the Securities Exchange Act of 1934, as amended and is subject to the periodic
reporting requirements of Section 13 of the Securities Exchange Act of 1934,
which include, but are not limited to, the filing of annual, quarterly, and
other current reports with the Federal Deposit Insurance Corporation. Its common
stock is not listed on any exchange and is traded in the over-the-counter market
and quoted on the OTC Bulletin Board under the symbol "BNKA." Bank of Amador is
licensed by the California Department of Financial Institutions; its deposits
are insured by the Federal Deposit Insurance Corporation; and it has chosen not
to become a member of the Federal Reserve System, although it is still subject
to certain regulations promulgated by the Federal Reserve Board. Bank of Amador
has no subsidiaries. Bank of Amador is subject to the supervision of, and is
regularly examined by, the California Department of Financial Institutions and
the Federal Deposit Insurance Corporation. Such supervision and regulation
include comprehensive reviews of all major aspects of its business and
condition, including its capital ratios, allowance for possible loan losses, and
other factors. However, no inference should be drawn that such authorities have
approved any such factors. Bank of Amador is required to file reports with the
California Department of Financial Institutions and the Federal Deposit
Insurance Corporation and to provide such

                                       89


additional information as the California Department of Financial Institutions
and the Federal Deposit Insurance Corporation may require.

Competition

         At June 30, 2003, based on the most recent "Data Book Summary of
Deposits in Federal Deposit Insurance Corporation Insured Commercial and Savings
Banks" report at that date, the competing commercial and savings banks had 13
offices in the cities of Jackson, Ione and Pioneer, California, where Bank of
Amador has its 3 banking offices. Bank of Amador also competes with savings and
loan associations and, to a lesser extent, credit unions, finance companies, and
other financial service providers for deposit and loan customers.

         Bank of Amador's service area primarily encompasses Amador County. The
economy of Bank of Amador's service area is predominantly dependent upon
government, services, retail trade, and manufacturing industries. Consequently,
Bank of Amador competes with other financial institutions for deposits from and
loans to individuals and companies who are also dependent upon these industries.

         Commercial banks compete with savings and loan associations, credit
unions, other financial institutions and other entities for funds. For instance,
yields on corporate and government debt securities and other commercial paper
affect the ability of commercial banks to attract and hold deposits. Commercial
banks also compete for loans with savings and loan associations, credit unions,
consumer finance companies, mortgage companies and other lending institutions.

         Banking is a business that depends on interest rate differentials. In
general, the difference between the interest rate paid by a bank to obtain
deposits and other borrowings and the interest rate received by a bank on loans
extended to customers and on securities held in a bank's portfolio comprise the
major portion of a bank's earnings.

         The interest rate differentials of a bank, and therefore its earnings,
are affected not only by general economic conditions, both domestic and foreign,
but also by the monetary and fiscal policies of the United States as set by
statutes and as implemented by federal agencies, particularly the Federal
Reserve Board. The Federal Reserve Board can and does implement national
monetary policy, such as seeking to curb inflation and combat recession, by its
open market operations in United States government securities, adjustments in
the amount of interest free reserves that banks and other financial institutions
are required to maintain, and adjustments to the discount rates applicable to
borrowing by banks from the Federal Reserve Board. These activities influence
the growth of bank loans, investments and deposits and also affect interest
rates charged on loans and paid on deposits. The nature and timing of any future
changes in monetary policies and their impact on Bank of Amador is not
predictable.

         Larger banks may have a competitive advantage because of higher lending
limits and major advertising and marketing campaigns. They also perform
services, such as trust services, international banking, discount brokerage and
insurance services, which Bank of Amador is not authorized nor prepared to offer
currently. Bank of Amador has made arrangements with its correspondent banks and
with others to provide some of these services for its customers. For borrowers
requiring loans in excess of Bank of Amador's legal lending limits, Bank of
Amador has offered, and intends to offer in the future, such loans on a
participating basis with its correspondent banks and with other community banks,
retaining the portion of such loans which is within its lending limits. As of
June 30, 2004, Bank of Amador's aggregate legal lending limits to a single
borrower and such borrower's related parties were $2,369,000 on an unsecured
basis and $3,948,000 on a fully secured basis based on capital and reserves of
$15,792,000.

         Based upon the most recent "Data Book Summary of Deposits in Federal
Deposit Insurance Corporation Insured Commercial and Savings Banks" report dated
June 30, 2003, there were 13 operating commercial and savings bank offices in
Amador County with total deposits of $552,000,000. This was an increase of
$45,000,000 over the June 30, 2002 balances. Bank of Amador held a total of
$96,000,000 in deposits, representing approximately 17% of total commercial and
savings banks deposits in Amador County as of June 30, 2003.

                                       90


         In 1996, pursuant to Congressional mandate, the Federal Deposit
Insurance Corporation reduced bank deposit insurance assessment rates to a range
from $0 to $0.27 per $100 of deposits, dependent upon a bank's risk. Based upon
the risk-based assessment rate schedule, Bank of Amador's current capital ratios
and levels of deposits, Bank of Amador anticipates no change in the assessment
rate applicable to it during 2004 from that in 2003.

Properties

         Bank of Amador conducts operations at its main office located at 422
Sutter Street, Jackson, California which consists of approximately 6,400 square
feet and is leased from the United States Postal Service. The lease has a five
(5) year term expiring on May 31, 2006. The monthly lease rate is $7,000.

         Bank of Amador also leases or owns the following premises:

         o     North Main Street, Lot #20, Jackson, California. The lot is
               leased as an employee parking lot for the Jackson branch office.
               The lease is for a five (5) year term that began on January 1,
               2000, and will expire on December 31, 2004, at a monthly cost of
               $550.

         o     26675 Tiger Creek Road, Pioneer, California. The Buckhorn branch
               office is housed in a modular building owned by Bank of Amador
               consisting of approximately 2,460 square feet. The ground upon
               which the branch is situated is leased at $600 per month until
               the lease expires on June 1, 2007.

         o     66 Main Street, Ione, California. The Ione branch office building
               consists of approximately 2,576 square feet, with approximately
               9,700 square feet of land. The building was purchased in April
               1995, at a cost of $167,500.

         o     933 South Highway 49, Jackson, California. Bank of Amador's Data
               Processing Department is located in separate quarters in Jackson.
               The 2,500 square foot facility is rented at $2,266 per month on a
               month-to-month basis.

         Management believes that the facilities are appropriate and adequate
for the operation of the business of Bank of Amador as it is currently
structured.

         The foregoing summary descriptions of leased premises are qualified in
their entirety by reference to the lease agreements. For more information, see
"Where You Can Find More Information" on page 189.

Legal Proceedings

         Other than routine litigation incidental to the ordinary course of the
its business, Bank of Amador is not a party to nor is its property the subject
of any material legal proceedings. Bank of Amador believes that the ultimate
disposition of all currently pending matters will not have a material adverse
affect on Bank of Amador's financial condition or the results of its operations.
As a result of certain business combination discussions, Bank of Amador
cancelled a technology services agreement which related to processing Bank of
Amador's customer transactions as well as website development and hosting.
Because they believed that Bank of Amador would be entering into a business
combination, the board of directors decided to cancel the technology services
agreement for the following mitigating reasons: (1) if the business combination
was consummated, the acquiring bank would provide its own data processing; (2)
an upgrade had not yet taken place; and (3) the liquidation penalty under the
technology services agreement was substantial and Bank of Amador wanted to
minimize its exposure. As a result of the cancellation, Bank of Amador and the
vendor are currently in discussions concerning the technology services
agreement.

                                       91


Security Ownership of Directors, Executive Officers and 5% Shareholders

         As of the record date, the following table sets forth information
regarding the beneficial ownership of Bank of Amador common stock by: (i) each
Bank of Amador director; (ii) each executive officer(1); (iii) all Bank of
Amador directors and executive officers as a group; and (iv) each 5% shareholder
of Bank of Amador.



Name and address of                                             Amount and Nature of    Percent of
Beneficial Owner(2)                       Position              Beneficial Ownership      Class
------------------------------    -------------------------     --------------------    ----------
                                                                                   
Edward T. Bamert, II                      Director                   45,373(3)             2.9%
Kenneth H. Deaver                         Director                   27,813(4)             1.8%
Jerome F. Forster                         Director                  116,176(5)             7.3%
Jerry W. Jones                            Director                   69,528(6)             4.4%
Nicholas P. Kovacevich                    Director                   69,712(7)             4.4%
Gerry Ninnis                              Director                   96,272(8)             6.1%
Larry D. Standing                    President and Chief             81,000(9)             5.0%
                                      Executive Officer
Richard P. Vinson                         Director                   45,931(10)            2.9%
Ned Vukovich                              Director                   51,473(11)            3.2%
Thomas L. Walker                 Senior Vice President and
                                   Chief Financial Officer           35,526(12)            2.2%
All director and executive officers as a group (10 persons)         638,804(13)           36.0%

----------------------

(1)  As used in this joint proxy statement-prospectus, the term "executive
     officer" of the Bank includes the President and Chief Executive Officer and
     Senior Vice President/Chief Financial Officer.
(2)  The address for beneficial owners is c/o Bank of Amador, 422 Sutter Street,
     Jackson, California 95642.
(3)  Mr. Bamert has shared voting and investment powers as to 32,038 shares.
     Includes 230 shares held in Mr. and Mrs. Bamert's IRAs and 13,335 shares
     subject to stock options exercisable within 60 days of the record date.
(4)  Mr. Deaver has shared voting and investment powers as to 15,296 shares.
     Includes 6,807 shares subject to stock options exercisable within 60 days
     of the record date.
(5)  Includes 16,986 shares subject to stock options exercisable within 60 days
     of the record date.
(6)  Includes 17,826 shares subject to stock options exercisable within 60 days
     of the record date.
(7)  Includes 23,940 shares subject to stock options exercisable within 60 days
     of the record date.
(8)  Mr. Ninnis has shared voting and investment powers as to 54,054 shares.
     Includes 21,540 shares subject to stock options exercisable within 60 days
     of the record date.
(9)  Mr. Standing has shared voting and investment powers as to 40,030 shares.
     Includes 1,470 shares held by Mr. Standing's spouse. Also includes 39,500
     shares subject to stock options exercisable within 60 days of the record
     date.
(10) Mr. Vinson has shared voting and investment powers as to 27,213 shares.
     Includes 18,718 shares subject to stock options exercisable within 60 days
     of the record date.
(11) Includes 4,586 shares held in trust for his daughter and 23,940 shares
     subject to stock options exercisable within 60 days of the record date.
(12) Mr. Walker has shared voting and investment powers as to 9,102 shares.
     Includes 26,424 shares subject to stock options exercisable within 60 days
     of the record date.
(13) Includes 209,016 shares subject to stock options exercisable within 60 days
     of the record date.

                                       92


Background and Business Experience of Directors and Executive Officers

         Directors

         The following table sets forth the names of and certain information, as
of the record date, concerning the directors of the Bank of Amador.



-------------------------------------------------------------------------------------------------------------
         Name and Title                                                  Principal Occupation
     In Addition to Director         Age   Director Since               During the Past Five Years
-------------------------------------------------------------------------------------------------------------
                                                   
Edward T. Bamert, II(1)(3)           64         1983        Farmer-Rancher, Tom Bamert Ranches.
-------------------------------------------------------------------------------------------------------------
Kenneth H. Deaver(1)(2)              56         1983        Grape grower and Rancher.
-------------------------------------------------------------------------------------------------------------
Jerome F. Forster(1)(3)              71         1983        Owner of Vaquero Supplement Co. (a feed stock
                                                            company).
-------------------------------------------------------------------------------------------------------------
Jerry W. Jones(2)(3)                 65         1983        President and owner of J & S Wholesale, Inc., a
                                                            sporting goods distributor.
-------------------------------------------------------------------------------------------------------------
Nicholas P. Kovacevich(2)(3)         66         1989        Surgeon.
-------------------------------------------------------------------------------------------------------------
Gerry Ninnis, Vice Chairman(1)(2)    67         1983        Retired.
-------------------------------------------------------------------------------------------------------------
Larry D. Standing(2)                 61         1991        President and Chief Executive
                                                            Officer of Bank of Amador.
-------------------------------------------------------------------------------------------------------------
Richard P. Vinson, Chairman(1)(2)    76         1983        Retired business owner. Mr. Vinson is a member
                                                            of the Amador County Board of Supervisors.
-------------------------------------------------------------------------------------------------------------
Ned Vukovich(3)                      74         1992        Retired insurance manager.
-------------------------------------------------------------------------------------------------------------

   (1)  Member of Audit Committee.
   (2)  Member of Personnel Committee.
   (3)  Member of Nominating Committee.

         No directors were selected pursuant to any arrangement or
understanding. No director or officer of the Bank of Amador serves as a director
of any company that has a class of securities registered under, or is subject to
the periodic reporting requirements of, the Securities Exchange Act of 1934, or
of any company registered as an investment company under the Investment Company
Act of 1940.

         No directors were subject to any legal proceedings involving violations
of securities laws, convictions in a criminal proceeding (excluding traffic
violations and minor offences) or had a petition under bankruptcy laws filed
against themselves or an affiliate within the last five years.

         Executive Officers

         The following table sets forth, as of the record date, information
concerning the Bank of Amador's executive officers:

--------------------------------------------------------------------------------
                             Executive Officer        Principal Occupation
      Name             Age         Since           During the Past Five Years
--------------------------------------------------------------------------------
Larry D. Standing      61          1983          President and Chief Executive
                                                 Officer of the Bank of Amador.
--------------------------------------------------------------------------------
Thomas L. Walker       60          1996          Senior Vice President/Chief
                                                 Financial Officer of Bank of
                                                 Amador.
--------------------------------------------------------------------------------

         No officers were selected pursuant to any arrangement or understanding.
There are no family relationships between any of the directors and executive
officers of Bank of Amador.

                                       93


Compensation of Directors

         Attendance Fees

         Non-employee members of the board of directors of Bank of Amador are
paid $1,500 a month for serving on the board of directors and their respective
committees. Directors may miss up to four board of directors and committee
meetings per year without losing their director fees. After four absences in a
year, directors lose $750 per board of directors or committee meeting missed.
Directors may also participate in the 1998 Stock Option Plan as discussed below.

         Director Retirement and Consulting Agreements

         In July 2003, the board of directors adopted director retirement and
consulting agreements. The agreements provide annual retirement benefits or
service compensation in the amount of $18,000 per year for each current member
of the board of directors for ten years after the director's retirement from the
board. Under the agreements, such benefits will also be accelerated and be paid
upon a change of control of Bank of Amador. The estimated value of retirement
benefits will accrue from August 2003 through each director's expected
retirement date. In the event a director dies or is disabled, the plan provides
for the payment of benefits corresponding to specified amounts accrued for the
retirement benefits described above. The expense recognized under these
arrangements totalled $61,037 for the year ended December 31, 2003.

         As of December 31, 2003, the future contractual obligations created by
these retirement and consulting agreements are specified below:

--------------------------------------------------------------------------------
Total           Less than 1 year    1-3 years     3-5 years    more than 5 years
--------------------------------------------------------------------------------
$1,620,000      $12,000             $72,000       $160,500     $1,375,500
--------------------------------------------------------------------------------

         In connection with the implementation of these agreements, Bank of
Amador invested $1,839,000 in single premium life insurance policies which
policies had an aggregate cash surrender values totalling $1,876,000 at December
31, 2003. On the balance sheet, the cash surrender values are included in other
assets. Income earned on these policies, net of expenses, totalled $37,168 for
the year ended December 31, 2003.

                                       94


Executive Compensation

         Summary Table

         The following table shows the compensation paid for the past three
years to the Bank of Amador's Chief Executive Officer, and each of the officer
whose compensation exceed $100,000 for the past year.

                           Summary Compensation Table



---------------------------------------------------------------------------------------------------
                                                                       Long Term Compensation
---------------------------------------------------------------------------------------------------
                          Annual Compensation                           Awards             Payouts
------------------------------------------------------------------------------------------------------------------
                                                                              Securities
                                                       Other    Restricted    Underlying     LTIP      All Other
      Name and                 Salary     Bonus ($)    Annual      Stock     Options/SARs   Payouts   Compensation
 Principal Position   Year     ($)(1)        (2)      Comp($)    Award(s)        (#)          ($)        ($)(3)
------------------------------------------------------------------------------------------------------------------
                                                                                     
Larry D. Standing
President and         2003   $  136,443   $  33,366      --         --            --           --       $  9,030
Chief Executive       -------------------------------------------------------------------------------------------
Officer               2002   $  124,545   $  20,000      --         --            --           --       $  8,136
                      -------------------------------------------------------------------------------------------
                      2001   $  119,535   $  38,323      --         --            --           --       $  8,056
-----------------------------------------------------------------------------------------------------------------
Thomas L. Walker
Senior Vice           2003   $  118,227   $  18,537      --         --            --           --       $  6,663
President/Chief       -------------------------------------------------------------------------------------------
Financial Officer     2002   $  109,606   $  11,000      --         --            --           --       $  6,231
                      -------------------------------------------------------------------------------------------
                      2001   $  105,227   $  19,161      --         --            --           --       $  6,013
-----------------------------------------------------------------------------------------------------------------
Richard J. Roy
Senior Vice           2003   $  114,221   $  14,829      --         --            --           --       $  6,824
President/Credit      -------------------------------------------------------------------------------------------
Administrator(4)      2002   $  106,320   $   9,000      --         --            --           --       $  7,316
                      -------------------------------------------------------------------------------------------
                      2001   $  102,200   $  19,161      --         --            --           --       $  7,063
-----------------------------------------------------------------------------------------------------------------

-----------------------

(1)  Amounts shown include cash and non-cash compensation earned and received by
     executive officers, as well as amounts earned but deferred at the election
     of those officers under the 401(k) Plan.
(2)  Amounts indicated as bonus payments for performance earned during the prior
     years.
(3)  Amounts shown for each named executive officer are 401(k) matching
     contributions, life insurance premiums, and, in the case of Mr. Standing,
     an automobile allowance, for the year indicated. Generally, all Bank of
     Amador employees are eligible to participate in the 401(k) Plan.
     Participating employees may defer a portion of their compensation in the
     401(k) Plan, and the Bank, at its option, may make matching contributions
     on participants' deferrals, which for 2003 was at a rate of 5%.
(4)  Mr. Roy retired as of February 3, 2004.

                                       95


         Options Granted in Last Fiscal Year

         There were no options grants made during the past fiscal year.

         1998 Stock Option Plan

         The Bank of Amador 1998 Stock Option Plan (the "1998 Plan") was
approved by shareholders at the 1999 annual meeting held on May 13, 1999.
Pursuant to the 1998 Plan, incentive and nonstatutory stock options may be
granted Bank of Amador employee directors, officers, and employees, and
nonstatutory options may be granted to non-employee directors.

         Options granted become exercisable in accordance with a vesting
schedule established at the time of grant. Vesting may not extend beyond ten
years from the date of grant. Upon a change in control of Bank of Amador,
options do not become fully vested and exercisable, but may be assumed, or
equivalent options may be substituted by a successor corporation. Options are
adjusted to protect against dilution in the event of certain changes in the Bank
of Amador's capitalization, including stock splits and stock dividends. All
options granted to the named executive officers are incentive stock options and
have an exercise price equal to the fair market value of Bank of Amador's Common
Stock on the date of grant.

The total number of shares reserved for issuance under the 1998 Plan was
376,743, subject to adjustment if the outstanding shares of Bank of Amador's
common stock are increased, decreased, or changed into or exchanged for a
different number or kind of shares or securities of Bank of Amador, through a
reorganization, merger, recapitalisation, reclassification, stock split, reverse
stock split, stock dividend, stock consolidation, or otherwise, without
consideration to Bank of Amador. During 2003, no options were issued. Currently,
16,813 shares remain available for future issuance under the 1998 Plan.

         Aggregated Option/SAR Exercises and FY-End Option/SAR Values

         The following table sets forth, with respect to the executive officers
named in the Summary Compensation Table, information concerning options
exercised during 2003 and Fiscal Year-End Values:



--------------------------------------------------------------------------------------------------------------------
                                                        Number of Securities
                                                       Underlying Unexercised         Value of Unexercised In-the-
                       Shares                             Options/SARs at               Money Options/SARs at FY-
                     Acquired on        Value                FY-End (#)                           End ($)
      Name          Exercise (#)   Realized ($)(1)   Exercisable/Unexcercisable       Exercisable/Unexercisable(2)
--------------------------------------------------------------------------------------------------------------------
                                                                                
Larry D. Standing       1,912         $  20,700              37,790/3,672                   $869,170/84,456
--------------------------------------------------------------------------------------------------------------------
Thomas L. Walker        1,200         $  13,200              25,200/2,520                   $579,600/57,960
--------------------------------------------------------------------------------------------------------------------
Richard J. Roy          2,000         $  19,800              24,327/2,448                   $557,521/56,304
--------------------------------------------------------------------------------------------------------------------

----------------------

(1)  The aggregate value has been determined based upon the closing price for a
     share of Bank of Amador's Common Stock at December 31, 2003, minus the
     exercise price.
(2)  The closing price for a share of the of Bank of Amador's Common Stock as of
     December 31, 2003 was $23.00.

         Employee Survivor Benefit Plan

         In July 2003, Bank of Amador implemented an Employee Survivor Benefit
Plan to provide death benefits ranging from $20,000 to $60,000 to the
beneficiaries of certain Bank of Amador employees including executive officers.
In connection with the implementation of the plan, Bank of Amador invested
$1,327,000 in single premium life insurance policies on the lives of these
employees which policies had an aggregate cash surrender values totalling
$1,354,000 at the end of 2003. Although the employees are named as insureds,
Bank of Amador is the owner and beneficiary under these policies however,
sub-agreements provide for Bank of Amador to split any death payments with the
beneficiaries of the covered employee in pre-arranged amounts. Bank of Amador
can discontinue or limit the

                                       96


availability of this insurance benefit at any time. On the balance sheet, the
cash surrender values are included in other assets. Income earned on these
policies, net of expenses, totalled $26,820 for the year ended December 31, 2003
and is included on the balance sheet in other assets.

Employment Contracts and Termination of Employment and Change in Control
Arrangements

         On April 1, 2004, Bank of Amador entered into agreements to provide
post-retirement benefits to Larry D. Standing and Thomas L. Walker. The terms of
the agreements include the amounts each employee will receive upon the
occurrence of certain specified events, including formal retirement on or after
a specified age. The agreements generally provide for annual retirement benefit
payments of $32,000 to Mr. Standing and $36,000 to Mr. Walker. The annual
retirement benefit amount is payable in equal monthly installments over a ten
(10) year period. In the event of an employee's death, all remaining amounts due
are anticipated to be paid to the employee's designated beneficiary over the
remaining payout period. Other events which may alter when payment of the annual
retirement benefit is to begin, or the amount which is to be paid, include: (a)
disability prior to retirement in which case the employee shall be entitled to a
lesser benefit payment amount based upon the length of employment; and (b)
termination following a "change of control," in which case the employee is
entitled to receive a lump sum payment of the lesser of the annual benefit
payment under the employee's agreement or an amount equal to one dollar less
than the amount that would trigger the excise tax under Section 280G of the
Internal Revenue Code of 1986, as amended, taking into account all change in
control payments due to the employee under agreements with Bank of Amador. In
connection with the agreements, Bank of Amador purchased insurance policies on
the lives of Messrs. Standing and Walker, paying the premiums for these
insurance policies with a lump-sum premium payment of approximately $500,000.
The Bank is the owner and beneficiary under the policies.

Equity Compensation Plan Information

         The following table set forth information regarding Bank of Amador's
equity compensation plan as of December 31, 2003.




----------------------------------------------------------------------------------------------------------------------
     Plan Category                 Number of securities to   Weighted-average       Number of securities remaining
                                   be issued upon exercise   exercise price of      available for future issuance under
                                   of outstanding options,   outstanding options,   equity compensation plans
                                   warrants and rights       warrants and rights    (excluding securities reflected in
                                                                                    column (a))
                                             (a)                      (b)                           (c)
----------------------------------------------------------------------------------------------------------------------
                                                                                           
Equity compensation plans
approved by security holders                286,767                   13.65                         16,813
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans
not approved by security
holders                                       -0-                        --                             --
----------------------------------------------------------------------------------------------------------------------
Total                                       286,767                   13.65                         16,813
----------------------------------------------------------------------------------------------------------------------



                                       97


Transactions with Management and Others

         Some of Bank of Amador's directors and officers, and the companies with
which those directors and officers are associated, are customers of Bank of
Amador and have had banking transactions in the ordinary course of Bank of
Amador's business. Bank of Amador expects to have banking transactions with such
persons/entities in the future. In the opinion of Bank of Amador's management,
all loans and commitments to lend in such transactions were made in compliance
with applicable laws and on substantially the same terms, including interest
rates and collateral, as those prevailing for comparable transactions with other
persons of similar creditworthiness and did not involve more than a normal risk
of collectibility or present other unfavorable features. On January 1, 2003,
loans and credit extensions and undisbursed commitments to all Bank of Amador
directors, officers, and principal shareholders and their associates totalled
$935,984. During the period commencing January 1, 2003 and ending December 31,
2003 new loans and disbursements on existing loans totalled $1,052,500 while
amounts repaid on loans and credit extensions were $1,012,028. At December 31,
2003, total loans, credit extensions and undisbursed commitments were $976,456
which amount constituted 6.52% of the equity capital accounts of the Bank of
Amador at that time. As of June 1, 2004, the total aggregate amount of loans and
credit extensions were $914,586, representing 6.14% of the equity capital
accounts of the Bank of Amador at that time.

         Mr. Vinson, a director of Bank of Amador, in his capacity as a
consultant to Bank of Amador also received $500 per month for consulting
services.

Indebtedness of Management

         The Sarbanes-Oxley Act of 2002 generally prohibits an issuer from: (i)
extending or maintaining credit; (ii) arranging for the extension of credit; or
(iii) renewing an extension of credit in the form of a personal loan for an
officer or director. There are several exceptions to this general prohibition,
one of which is applicable to Bank of Amador. Namely, this prohibition does not
apply to loans made by a depository institution that is insured by the Federal
Deposit Insurance Corporation and is subject to the insider lending restrictions
of the Federal Reserve Act. All loans to Bank of Amador's officers and directors
by Bank of Amador are made in conformity with the Federal Reserve Act and
regulation promulgated thereunder.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Securities Exchange Act of 1934 requires Bank of
Amador's executive officers and directors, and persons who own more than ten
percent (10%) of a registered class of Bank of Amador's equity securities, to
file reports of ownership and changes in ownership with the Federal Deposit
Insurance Corporation. Such persons are required by Federal Deposit Insurance
Corporation regulations to furnish Bank of Amador with copies of all Section
16(a) forms they file.

         Based solely on its review of the copies of such forms received by Bank
of Amador, or written representations from certain reporting persons that no
Forms F-8A were required for those persons, Bank of Amador believes that, during
2003, its Executive Officers, directors, and shareholders beneficially owning
more than ten percent of Bank of Amador's outstanding common stock complied with
all filing requirements applicable to them.

                                       98


         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                    RESULTS OF OPERATIONS OF BANK OF AMADOR

         The following discussion is designed to provide a better understanding
of significant changes in income and expense accounts, the financial condition
and results of operations of Bank of Amador for the years ended December 31,
2003, 2002 and 2001 and the three and six months ended June 30, 2004 and 2003.

         Certain matters described in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," are forward-looking statements
that are subject to risks and uncertainties that could impact financial
performance, including, among others: (1) competitive pressures in the banking
industry; (2) changes in the interest rate environment; (3) general economic
conditions, nationally, regionally, and in our operating areas, including a
decline in real estate values in Bank of Amador's market areas; (4) changes in
the regulatory environment; (5) changes in business conditions and inflation;
(6) changes in securities markets; (7) the California power shortage; and (8)
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 therein should be carefully
considered when evaluating the business prospects of the Bank of Amador.

Overview

         Net income for the three months ended June 30, 2004 was $502,000 or
basic earnings per share of $.32 compared to $509,000, or basic earnings per
share of $.34 for the comparable period in 2003. The diluted earnings per share
for the three months ended June 30, 2004 was $.31 per share compared to $.32 per
share for the three-month period ended June 30, 2003. Net income for the six
months ended June 30, 2004 was $974,000 or basic earnings per share of $.63
compared to $1,033,000, or basic earnings per share of $.68 for the comparable
period in 2003. The diluted earnings per share for the six months ended June 30,
2004 was $.60 per share compared to $.65 per share for the six-month period
ended June 30, 2003. Bank of Amador earned net income of $2,064,000 for the year
ended December 31, 2003, representing an increase of $267,000, or 14.9%, over
2002 net income of $1,797,000. Net income reported for 2002 represented an
increase of $361,000, or 25.1%, from 2001 net income of $1,436,000. On a basic
earnings-per-share basis, net income for 2003 was $1.36 compared to $1.21 and
$.97 per share for the preceding two years. The increase in net income for 2003
was primarily due to an increase in interest income and a decrease in interest
expense on deposits. As a result, net interest income increased by $531,000, or
10.9%.

         Shareholders' equity increased to $15,077,000 at June 30, 2004, up
$104,000 for December 31, 2003. Shareholders' equity increased by $1,329,000
during 2003 to $14,973,000 at December 31, 2003 through the retention of
earnings and exercise of stock options. In 2002 and 2001, common shareholders'
equity increased by $1,309,000 and $27,000, respectively, primarily through
retention of earnings and the exercise of stock options.

         During the six months ended June 30, 2004, cash dividends totaling $.46
per share were paid. During 2003, cash dividends totaling $.92 per share were
paid. Cash dividends totaling $.88 per share were paid in 2002 and cash
dividends totaling $.86 per share were paid in 2001.

Results of Operations

         Net Interest Income

         Net interest income refers to the difference between the interest paid
on deposits and borrowings and the interest earned on loans and investments. It
is the primary component of the net earnings of a financial institution. The
primary factors to consider in analyzing the net interest income are the

                                       99


composition and volume of earning assets and interest-bearing liabilities, the
amount of non-interest bearing liabilities and nonaccrual loans, and changes in
market interest rates.

         Net interest income for the three months ended June 30, 2004 was
$1,346,000, representing a decrease of $24,000 from $1,370,000 for the
comparable period in 2003. The decrease in net interest income is primarily the
result of a decrease in interest rates earned offset by an increase in the
volume of loans and investment securities outstanding during the period. The
components of net interest income are discussed below.

         Interest and fees on loans increased 3.0% from $1,416,000 for the
quarter ended June 30, 2003 compared to $1,458,000 for the quarter ended June
30, 2004. This increase was due primarily to an increase in the average loans
outstanding for the quarter ended June 30, 2004.

         Interest on investment securities decreased 16.0% to $194,000 compared
to $231,000 for the comparable period of 2003. The decrease was due primarily to
a decrease in yields on securities and was partially offset by an increase in
the amount of securities held.

         Total interest income in the three months ended June 30, 2004 was
$1,682,000, representing an increase of $8,000 over interest income of
$1,674,000 for the same period of 2003. The increase in total interest income
was primarily due to an increase in the average loans outstanding. This increase
resulted in an increase in interest on loans and an increase in average yield on
average earning assets.

         Earning assets averaged $117,234,000 in the three months ended June 30,
2004 compared to $102,663,000 in the same period in 2003. The increase in
earning assets included an increase in average loans of $5,430,000 and an
increase in average investment securities of $9,141,000.

         Net interest income for the six months ended June 30, 2004 was
$2,684,000, representing an increase of $20,000 over $2,664,000 for the
comparable period in 2003. The increase in net interest income is primarily the
result of an increase in the volume of average loans outstanding during the
period. Interest and fees on loans for the first six months of 2004 was
$2,920,000, representing an increase of $211,000, or 7.8% over interest and fee
income of $2,709,000 for the same period of 2003. This increase was primarily
due to an increase in the average loans outstanding for the period ended June
30, 2004.

         Interest on investment securities and Federal funds sold decreased
21.4% to $426,000 for the first six months of 2004 from $542,000 for the
comparable period in 2003 reflecting a decrease in investment securities during
the first six months of 2004.

         Total interest income in the six months ended June 30, 2004 was
$3,346,000, representing an increase of $95,000 over interest income of
$3,251,000 for the same period of 2003. The increase in total interest income
was due primarily to an increase in loan volume.

         Earning assets averaged $115,709,000 in the six months ended June 30,
2004, compared to $100,512,000 in the same period in 2003, representing an
increase of $15,197,000, or 15.1%. The increase in average earning assets
included an increase in average loans of $7,642,000 and an increase in average
investment securities of $7,555,000. The yield on earning assets was 5.8% for
the first six months of 2004 as compared to 6.5% during the same period in 2003.
The decrease in yield was due primarily to a decrease in the yields on
investment securities. The net interest margin for the first six months of 2004
was 4.6% and compares to 5.3% in the same period one year earlier.

         Interest income for 2003 was $6,628,000, an increase of 7.7% compared
to $6,153,000 for 2002 and a 7.4% decrease compared to $7,158,000 for 2001.
Interest income segments changed in 2003 as follows: Interest and fees on loans
increased by 21% and interest on Federal funds sold decreased by 31% and
interest in investment securities decreased by 35%. The overall increase in
interest income in 2003 was primarily due to an increase in average loans.
Average loans in 2003 were $71,896,000, representing an increase of $16,232,000
from 2002 average loans of $55,664,000. Average investments

                                      100


in 2003 were $18,492,000, representing a decrease of $9,158,000 from 2002
average investments of $27,650,000. The decrease resulted from securities
maturing or being called before maturity. Average Federal funds sold in 2003
were $14,815,000, representing an increase of $2,475,000 from average Federal
funds sold of $12,340,000. Average earnings assets were $105,203,000 in 2003,
representing an increase of 10% over average earnings assets of $95,654,000 in
2002, and 15% over 2001 average earnings assets of $91,449,000.

         Interest expense for the three months ended June 30, 2004 and June 30,
2003 was $336,000 and $304,000, respectively. During the three months ended June
30, 2004, the average rate paid on interest-bearing liabilities was 1.5% as
compared to 1.6% for the same period last year. Average interest-bearing
deposits were $88,788,000 in the three months ended June 30, 2004 compared to
$74,506,000 for the same period in 2003. Average non-interest bearing demand
deposits of $22,731,000 for the quarter ended June 30, 2004 compared to
$19,714,000 for the quarter ended June 30, 2003.

         Interest expense for the six months ended June 30, 2004 was $662,000
and represented an increase of $74,000, or 12.6%, over $588,000 for the
comparable period in 2003. The increase in interest expense for the first six
months of 2004 reflects the increase in deposits during the period. The average
rate paid during the six months ended June 30, 2004 was 1.5% as compared to 1.6%
for the six-month period ended June 30, 2003. Average interest bearing deposits
in the six months ended June 30, 2004 were $87,740,000 compared to $73,398,000
for the same period in 2003. Average noninterest bearing deposits totaled
$21,950,000 for the six months ended June 30, 2004, as compared to $18,720,000
for the same period one year earlier.

         Interest expense was $1,213,000 in 2003, representing a decrease of
$56,000, or 4.4%, from $1,269,000 in 2002. The decrease in interest expense was
a result of a decrease in interest rates paid on deposits. Interest expense for
2002 was $1,269,000, representing a decrease of $1,382,000, or 52.1%, from
$2,651,000 in 2001. The decrease in interest expense from 2001 to 2002 was
primarily a result of a decrease in interest rates paid on deposits.

         The following table sets forth average balance sheet information,
interest income and expense, average yields and rates, and net interest income
and margin for the three and six months ended June 30, 2004 and for the years
ended December 31, 2003, 2002, and 2001.

                                      101




Table I Net Interest Income and Margin
--------------------------------------------------------------------------------------------------------------------
                                                                          (Unaudited)
                                                                  Three months ended June 30,

(in thousands,
except for percentages)                                   2004                                   2003
--------------------------------------------------------------------------------------------------------------------
                                              Avg                       Avg          Avg                      Avg
                                            Balance     Interest      Yield(1)     Balance     Interest     Yield(1)
--------------------------------------------------------------------------------------------------------------------
                                                                                             
Assets
Earning assets:
  Loans(2)(3)                             $   76,986   $    1,458        7.6%    $   71,556   $    1,416       7.9%
  Investment securities and Federal
   funds sold                                 40,248          224        2.2%        31,107          258       3.3%
                                          ----------   ----------                ----------   ----------
Total earning assets                         117,234        1,682        5.7%       102,663        1,674       6.5%
                                                       ----------                             ----------
Cash and due from banks                        4,548                                  4,176
Bank premises and equipment                      313                                    350
Other assets                                   4,896                                    989
                                          ----------                             ----------
Total assets                              $  126,991                             $  108,178
                                          ==========                             ==========

Liabilities and Shareholders' Equity
Interest bearing liabilities:
  Demand deposits                         $   11,083            5        0.2%    $   10,133            8       0.3%
  Savings deposits                            38,156           81        0.8%        31,005           75       1.0%
  Time deposits                               39,549          250        2.5%        33,368          221       2.6%
                                          ----------   ----------                ----------   ----------
Total interest bearing liabilities            88,788          336        1.5%        74,506          304       1.6%
                                                       ----------                             ----------
Demand deposits                               22,731                                 19,714
Other liabilities                                788                                    579
                                          ----------                             ----------
Total liabilities                            112,307                                 94,799
Shareholders' equity                          14,684                                 13,379
                                          ----------                             ----------
Total liabilities and
  shareholders' equity                    $  126,991                             $  108,178
                                          ==========                             ==========

Net interest income
  and margin(4)                                        $    1,346        4.6%                 $    1,370       5.3%
                                                       ==========        ===                  ==========       ===
--------------------------------------------------------------------------------------------------------------------

1.   Annualized.
2.   Loan interest includes loan fees of $136,805 and $137,669 for the
     three-month periods ended June 30, 2004 and 2003, respectively.
3.   Average balances of loans included average allowance for credit losses of
     $809,000 and $745,000 and average deferred loan fees of $244,000 and
     $225,000 for the three-month periods ended June 30, 2004 and 2003,
     respectively.
4.   Net interest margin is computed by dividing net interest income by total
     average earning assets.

                                      102




                                                                          (Unaudited)
                                                                   Six months ended June 30,

(in thousands,
except for percentages)                                   2004                                   2003
---------------------------------------------------------------------------------------------------------------------
                                              Avg                       Avg          Avg                      Avg
                                            Balance     Interest      Yield(1)     Balance     Interest     Yield(1)
---------------------------------------------------------------------------------------------------------------------
                                                                                             
Assets:
Earning assets:
  Loans(2)(3)                             $   76,469   $    2,920        7.6%    $   68,827   $    2,709       7.9%
  Investment securities and Federal
   funds sold                                 39,240          426        2.2%        31,685          542       3.4%
                                          ----------   ----------                ----------   ----------
Total earning assets                         115,709        3,346        5.8%       100,512        3,251       6.5%
                                                       ----------                ----------   ----------
Cash and due from banks                        4,311                                  4,133
Bank premises and equipment                      326                                    324
Other assets                                   4,578                                    966
                                          ----------                             ----------
Total assets                              $  124,924                             $  105,935
                                          ==========                             ==========

Liabilities and Shareholders' Equity
Interest bearing:
  Demand deposits                         $   10,779           11        0.2%    $    9,978           16       0.3%
  Savings                                     37,925          160        0.8%        31,248          149       1.0%
  Time deposits                               39,036          491        2.5%        32,172          423       2.6%
                                          ----------   ----------                ----------   ----------
Total interest bearing liabilities            87,740          662        1.5%        73,398          588       1.6%
                                                       ----------                             ----------
Demand deposits                               21,950                                 18,720
Other liabilities                                696                                    560
                                          ----------                             ----------
Total liabilities                            110,386                                 92,678
Shareholders' equity                          14,538                                 13,257
                                          ----------                             ----------
Total liabilities and
 shareholders' equity                     $  124,924                             $  105,935
                                          ==========                             ==========

Net Interest Income and Margin                         $    2,684        4.6%                 $    2,663       5.3%
                                                       ==========                             ==========
---------------------------------------------------------------------------------------------------------------------

1.   Annualized.
2.   Loan interest income includes fee income of $287,349 and $275,705 for the
     six-month periods ended June 30, 2004 and 2003, respectively.
3.   Includes the average allowance for credit losses of $813,000 and $731,000
     and average deferred loan fees of $240,000 and $230,000 for the six-month
     periods ended June 30, 2004 and 2003, respectively.
4.   Net interest margin is computed by dividing net interest income by total
     average earning assets.

                                      103




     (in thousands                                           Year Ended December 31,
except for percentages)
                                                     2003                                2002
                                       ---------------------------------   ---------------------------------
                                          Avg.                    Avg.        Avg.                    Avg.
                                        Balance     Interest     Yield      Balance    Interest      Yield
                                       ---------------------------------   ---------------------------------
                                                                                    
Assets:
Interest earning:
  Loans (1)(2)                         $  71,896   $   5,672      7.89%    $  55,664   $   4,700      8.44%
  Investment securities                   18,492         838      4.53%       27,650       1,281      4.63%
  Federal funds sold                      14,815         118       .80%       12,340         172      1.40%
                                       ---------   ---------               ---------   ---------
  Total interest
    earning assets                       105,203       6,628      6.30%       95,654       6,153      6.43%
                                       ---------   ---------               ---------   ---------

  Cash & due from banks                    4,384                               3,906
  Bank premises & equipment                  353                                 307
  Other assets                             2,363                               1,022
                                       ---------                           ---------
  Total assets                         $ 112,303                           $ 100,889
                                       =========                           =========

Liabilities & Shareholders' Equity:
Interest bearing:
  Demand deposits                      $  10,318          29       .28%    $   9,861   $      32       .32%
  Savings                                 33,171         294       .89%       29,382         297      1.01%
  Time deposits                           34,345         890      2.59%       31,015         940      3.03%
                                       ---------   ---------               ---------   ---------
Total interest
  bearing liabilities                     77,834   $   1,213      1.56%       70,258       1,269      1.81%
                                                   ---------                           ---------
Demand deposits                           20,213                              17,590
Other liabilities                            662                                 598
                                       ---------                           ---------
Total liabilities                         98,709                              88,446
Shareholders' equity                      13,594                              12,443
                                       ---------                           ---------
                                       $ 112,303                           $ 100,889
                                       =========                           =========

Net interest income
  and margin(3)                                    $   5,415      5.15%                $   4,884      5.11%
                                                   =========                           =========


     (in thousands                           Year Ended December 31,
except for percentages)
                                                     2001
                                       ---------------------------------
                                          Avg.                    Avg.
                                        Balance     Interest     Yield
                                       ---------------------------------
Assets:
Interest earning:
  Loans (1)(2)                         $  57,034   $   5,692      9.98%
  Investment securities                   18,877         943      5.00%
  Federal funds sold                      15,538         523      3.37%
                                       ---------   ---------
  Total interest
    earning assets                        91,449       7,158      7.83%
                                       ---------   ---------

  Cash & due from banks                    3,323
  Bank premises & equipment                  386
  Other assets                             1,292
                                       ---------
  Total assets                         $  96,450
                                       =========

Liabilities & Shareholders' Equity:
Interest bearing:
  Demand deposits                      $   9,454   $     154      1.63%
  Savings                                 22,527         500      2.22%
  Time deposits                           36,868       1,997      5.42%
                                       ---------   ---------
Total interest
  bearing liabilities                     68,849       2,651      3.85%
                                                   ---------
Demand deposits                           14,873
Other liabilities                            669
                                       ---------
Total liabilities                         84,391
Shareholders' equity                      12,059
                                       ---------
                                       $  96,450
                                       =========

Net interest income
  and margin(3)                                    $   4,507      4.93%
                                                   =========

--------------------------------------------------------------------------------
1.   Loan interest includes loan fees of $590,420, $419,043, and $404,363 in
     2003, 2002, and 2001, respectively.
2.   Average balances of loans included average allowance for loan losses of
     $758,035, $692,889, and $753,579, and average deferred loan fees of
     $261,148, $218,158, and $170,509 for the years ended December 31, 2003,
     2002, and 2001, respectively.
3.   Net interest margin is computed by dividing net interest income by total
     average earning assets.

                                      104


         Noninterest Income

         Bank of Amador's noninterest income consists primarily of fees earned
for deposit-related customer services, gains on the sale of Small Business
Administration ("SBA") loans, packaging of mortgage loans and fees for
miscellaneous services. Total noninterest income was $179,000 for the three
months ended June 30, 2004, as compared to $103,000 in the same period one year
earlier. The increase in noninterest income was primarily the result of
increased fees from the packaging and sale of mortgage loans. Total noninterest
income was $314,000 for the six months ended June 30, 2004, as compared to
$245,000 in the same period one year earlier. The increase in noninterest income
is primarily attributed to an increase in fees on the packaging and sale of
mortgage loans.

         Total noninterest income was $522,000 for 2003, $354,000 for 2002, and
$349,000 for 2001. The increase in non-interest income primarily resulted from
changes in the gains on the sale and packaging of loans that totaled $149,000
for 2003, $74,000 in 2002, and $61,000 in 2001.

         Noninterest Expense

         Bank of Amador's noninterest expense reflects the costs of products,
services, systems, facilities, and personnel. Noninterest expense increased
$60,000, or 9.2%, to $712,000 in the quarter ended June 30, 2004, from $652,000
in the same quarter for 2003. The increase in non-interest expenses was
primarily due to increases in other expenses which include director and
executive officer retirement plans, professional fees, director fees and other
administrative expenses. As a percentage of average earning assets, other
expenses, on an annualized basis, were 2.4% in the three-month period ended June
30, 2004 and 2.5% for the three-month period ended June 30, 2003.

         Salary and benefits expense was $226,000 for the three months ended
June 30, 2004 compared to $323,000 for the same period one year earlier, a
decrease of $97,000, or 30.0%. This decrease was in part the result of an
increase in loan origination expenses, which offset salary and benefit expenses.
There was also a reduction in staff during the current quarter as compared to
the same quarter last year.

         Occupancy expense for the quarter ended June 30, 2004 was $98,000 and
represented an increase of $2,000 from $96,000 for the same period last year.

         Other expenses for the quarter ended June 30, 2004 increased to
$388,000, or $155,000, from $233,000 for the same period one year earlier. The
increase was primarily due to the adoption of a director retirement and
consulting plan in July 2003. The expense recognized under these plans totaled
$155,000 for the quarter ended June 30, 2004 as compared to none for the same
period in 2003. Other expenses include professional fees, director fees and
other administrative expenses.

         Noninterest expense increased to $1,424,000 for the six-month period
ended June 30, 2004, from $1,226,000 for the same period in 2003. The increase
in non-interest expense is primarily due to increases in director and officer
retirement plans, correspondent bank charges, director fees and internet banking
costs. As a percentage of average earning assets on an annualized basis,
non-interest expenses were 2.5% in the first six months of 2004 and 2003.

         Salary and benefits expense was $572,000 in the six months ended June
30, 2004, compared to $615,000 in the same period one year earlier. The decrease
in salary and benefits expense was in part due to an increase in loan
origination expenses, which offset salary and benefit expenses. There was also a
reduction in staff during the first six months of 2004 as compared to the first
six months of 2003.

         Occupancy expense for the six months ended June 30, 2004 was $199,000,
compared to $184,000 for the same period one year earlier.

         Other expenses increased to $653,000 for the first six months of 2004,
from $427,000 for the same period in 2003. The increase was primarily due to the
adoption of a director retirement and

                                      105


consulting plan in July 2003. The expense recognized under these plans totaled
$186,000 for the six months ended June 30, 2004 as compared to none for the same
period in 2003. Other expenses also include correspondent bank fees,
professional fees, director fees and other administrative expenses.

         Non-interest expense increased to $2,574,000 in the year ended December
31, 2003 from $2,339,000 in 2002 and $2,549,000 in 2001.

         Salaries and employee benefits expense for 2003 was $1,224,000, a
decrease of 1.8% from $1,246,000 in 2002. Salary and employee benefits expense
for 2002 represented a decrease of 12.1% from $1,418,000 in 2001. The decrease
in salary and benefits for 2003 and 2002 was the result of increased loan
origination expenses which offset salaries and benefits and is amortized to
interest income.

         Occupancy expense was $387,000 in 2003, as compared to $358,000 in 2002
and $344,000 in 2001. The increase in occupancy expense was the result of
increased maintenance and repair costs.

         Other non-interest expenses were $963,000 in 2003, consisting primarily
of legal fees, accounting fees, director fees, deferred compensation costs, and
other operating expenses compared to 2002 expenses of $736,000. Other
non-interest expenses for 2001 were $787,000.

         Provision for Income Taxes

         Bank of Amador's effective income tax rate was 37.1% for the second
quarter of 2004, compared to 36.2% in the second quarter of 2003. For the first
six months of 2004 the effective income tax rate was 36.7% compared to 36.6% in
the first six months of 2003. The effective income tax rate was 36.7% for 2003,
35.8% for 2002, and 36.0% for 2001. The increase in the effective tax rate was
primarily due to a decrease in tax-exempt interest income on obligations of
state and political subdivisions.

         Balance Sheet Analysis

         At June 30, 2004, total assets of Bank of Amador were $129,008,000, an
increase of $6,229,000, or 5.1%, from December 31, 2003 total assets of
$122,779,000. Average total assets for the six months ended June 30, 2004 and
2003 were $124,924,000 and $105,935,000, respectively.

         Total assets of Bank of Amador at December 31, 2003 were $122,779,000,
compared to $104,323,000 in 2002 and $100,999,000 in 2001, representing
increases of 17.7% over 2002 and 21.6% over 2001. Based on average balances,
total assets of $112,303,000 in 2003 represent an increase of $11,414,000, or
11.3%, over $100,889,000 in 2002. Average total assets in 2002 represent an
increase of $4,439,000, or 4.6%, over 2001 average total assets of $96,450,000.

         Loan Portfolio

         The following table summarizes the composition of the loan portfolio as
of June 30, 2004 and as of the past five years as at December 31:

                                      106




Table II Analysis of Loans Outstanding by Type (in thousands)

                       June 30,                              December 31,
-------------------------------------------------------------------------------------------------------

                         2004          2003          2002          2001          2000          1999
-------------------------------------------------------------------------------------------------------
                                                                                
  Real Estate:
      Construction   $   50,504    $   47,644    $   39,149    $   29,493    $   35,727    $   31,100
      Other              23,835        20,657        18,383        15,497        18,622        17,880
  Commercial              5,274         6,874         6,618         6,111         6,459         7,158
  Installment               869           802           950         1,580         1,657         1,907
-------------------------------------------------------------------------------------------------------
  Total Loans            80,482        75,977        65,100        52,681        62,465        58,045
     Allowance for
      loan losses          (835)         (808)         (705)         (595)         (732)         (715)
  Deferred loan fees       (280)         (270)         (241)         (167)         (217)         (236)
-------------------------------------------------------------------------------------------------------
   Total             $   79,367    $   74,899    $   64,154    $   51,919    $   61,516    $   57,094
=======================================================================================================


         Bank of Amador continued to emphasize real estate and real estate
construction lending activities. Net loans at June 30, 2004 were $79,367,000
compared to $74,899,000 at December 31, 2003, an increase of $4,468,000 or 6.0%.
The increase in net loans is primarily the result of an increase in construction
loans and other real estate loans. During 2003, Bank of Amador focused on real
estate construction lending in order to take advantage of the current building
trend in its service areas. Average net loans in 2003 were $71,896,000,
representing an increase of $16,232,000, or 29.2%, from 2002. Average net loans
of $55,664,000 in 2002 represented a decrease of $1,370,000, or 2.4%, over
$57,034,000 in 2001. Average net loans comprised 68.3% of average earning assets
in 2003, compared to 58.2% and 62.4% in 2002 and 2001, respectively.

Risk Elements

         Bank of Amador assesses and manages credit risk on an ongoing basis
through stringent credit review and approval policies, extensive internal
monitoring, and established formal lending policies. Bank of Amador also
contracts with an outside party to periodically review the existing loan
portfolio. Management believes that its ability to identify and assess risk and
return characteristics of the Bank of Amador's loan portfolio is critical for
profitability, safety and growth. Management strives to continue the
historically low level of credit losses by continuing its emphasis on credit
quality in the loan approval process, active credit administration, and regular
monitoring. Management has implemented a loan review and grading system that
functions to continually assess the credit risk inherent in the loan portfolio.

         In extending credit and commitments to real estate and commercial
borrowers, Bank of Amador generally requires collateral and/or guarantees as
security. The repayment of such loans is expected to come from cash flow or from
proceeds from the sale of selected assets of the borrowers. Bank of Amador's
requirement for collateral and/or guarantees is determined on a case-by-case
basis in connection with management's evaluation of the creditworthiness of the
borrower. Collateral held varies, but may include accounts receivable,
inventory, property, plant and equipment, income-producing properties,
residences, and other real property.

         Management believes that its lending policies and underwriting
standards will tend to mitigate losses in an economic downturn; however, there
is no assurance that losses will not occur under such circumstances. The Bank of
Amador's loan policies and underwriting standards include, but are not limited
to, the following: (1) maintaining a thorough understanding of Bank of Amador's
service area and limiting investments outside this area; (2) maintaining a
thorough understanding of borrowers' knowledge and capacity in their field of
expertise; (3) basing real estate construction loan approval not only on
salability of the project, but also on completion within the original projected
time period; and (4) maintaining conforming and prudent loan-to-value and
loan-to-cost ratios based on independent outside

                                      107


appraisals and ongoing inspection and analysis by the Bank of Amador's
construction lending officers. In addition, Bank of Amador strives to diversify
the risk inherent in the construction portfolio by avoiding concentrations to
individual borrowers and on any one project.

         In management's judgment, a concentration exists in real estate
construction loans which represented approximately 63%,63% and 60% of the loan
portfolio at June 30, 2004, December 31, 2003 and 2002, respectively.
Approximately 92%, 92% and 93% of the real estate construction loans were for
planned owner-occupied, single-family residences at June 30, 2004, December 31,
2003 and 2002, respectively. Although management believes the concentration of
real estate loans to have no more than normal risk of collectibility, the
continuing depressed economy in general, or a decline in real estate values in
the Bank's primary market areas in particular, could have an adverse impact on
the collectibility of these loans and require an increase in the provision for
loan loss that could adversely affect the Bank of Amador's future prospects and
results of operations.

         Nonaccrual Loans, Past Due 90 Days and OREO

         Management generally places loans on nonaccrual status when they become
90 days past due, unless the loan is well-secured and in the process of
collection. Loans are charged off when, in the opinion of management, collection
appears unlikely. The following table sets forth nonaccrual loans and loans past
due 90 days or more for June 30, 2004 and December 31, 2003, 2002, 2001, 2000
and 1999:



Table III Non-Performing Loans  (in thousands)

                                  June 30,                      December 31,
------------------------------------------------------------------------------------------------
                                    2004       2003       2002       2001       2000       1999
------------------------------------------------------------------------------------------------
                                                                           
Past due 90 days or more
   and still accruing:
   Real estate                                                               $      1
   Commercial                                                                           $     99
Nonaccrual:
   Real estate                   $    515   $    450   $    103   $     25        357        485
   Commercial                          90         13                               23         59
   Installment and other
------------------------------------------------------------------------------------------------
Total nonperforming loans        $    605   $    463   $    103   $     25   $    381   $    643
================================================================================================


         At June 30, 2004 and December 31, 2003, there were no loans that were
considered impaired, troubled debt restructurings, or loan concentrations in
excess of 10% of total loans not otherwise disclosed. Management is not aware of
any potential problem loans that were accruing and current at June 30, 2004 or
December 31, 2003, where serious doubt exists as to the ability of the borrower
to comply with the current repayment terms.

         Bank of Amador has in the past owned "other real estate" which includes
real estate acquired in full or partial settlement for loan obligations. There
was no such real estate owned by the Bank of Amador at June 30, 2004, December
31, 2003 or December 31, 2002.

         Provision and Allowance for Loan Losses

         The provision for loan losses is based upon management's evaluation of
the adequacy of the existing allowance for loans outstanding. This allowance is
increased by provisions charged to expense and reduced by loan charge-offs net
of recoveries.

         The allowance for loan losses totaled $835,000 or 1.04% of total loans
as of June 30, 2004 as compared to $808,000, or 1.07% of total loans at December
31, 2003, $705,000, or 1.09%, at December

                                      108


31, 2002, and $595,000, or 1.24%, at December 31, 2001. It is the policy of
management to maintain the allowance for loan losses at a level deemed adequate
for known and anticipated risks inherent in the loan portfolio. The allowance
for loan losses is based on estimates, and ultimate losses may vary from current
estimates. These estimates are reviewed periodically, and adjustments, as they
become necessary, are reported in earnings in the period that they become known.

         In addition to the allowance for loan losses, Bank of Amador maintains
a separate reserve for losses related to undisbursed loan commitments.
Management estimates anticipated losses from loan commitments using historical
data. The reserve totaled $70,000 as of June 30, 2004 and December 31, 2003, and
$54,000 for the years ended December 31, 2002 and 2001.

         Investment Portfolio

         All investment securities held by Bank of Amador were designated as
available-for-sale at June 30, 2004 and were carried at an estimated market
value of $23,912,000. The amortized cost of the available-for-sale portfolio at
quarter end was $23,625,000 compared to $14,725,000 at December 31, 2003. During
the six months ended June 30, 2004, Bank of Amador made securities purchases
totaling $12,415,000. Securities totaling $3,500,000 were called or matured
during the six months ended June 30, 2004. At December 31, 2003, unrealized
gains on available-for-sale investment securities totaling $745,000 were
recorded, net of $253,000 in tax liabilities, as "Accumulated other
comprehensive income" within shareholders' equity. This line item decreased from
$524,379 in 2002 to $491,621 in 2003. The available-for-sale portfolio at June
30, 2004 and December 31, 2003, consists of securities issued by U. S.
government-sponsored agencies, securities issued by state and political
subdivisions, and corporate debt securities rated in one of the four highest
grades issued by a nationally recognized rating firm, with ratings such as AAA,
AA, A, BBB or Baa.

         At June 30, 2004 and December 31, 2003, investment securities with
estimated market values totaling $11,755,700 and $1,993,723, respectively, were
in a loss position for less than twelve months. No investment securities held as
of June 30, 2004 and December 31, 2003 were in a loss position for twelve months
or more.

         Other earning assets were Federal funds sold which amounted to
$15,227,000 at June 30, 2004 represent a decrease of $8,679,000 from the balance
of $23,906,000 at December 31, 2003. The decrease in Federal funds sold was a
result of an increase in investment securities. Federal funds sold December 31,
2003 increased $13,866,000 from $10,040,000 recorded on December 31, 2002 to
$23,906,000 on December 31, 2003.

Deposits

         Deposits represent the Bank's principal source of funds for investment.
The Bank's deposits are primarily core deposits in that they are demand,
savings, and time deposits under $100,000 generated from local businesses and
individuals. These sources are considered to be relatively stable, long-term
deposit relationships, thereby enhancing steady growth of the deposit base
without major fluctuations in overall deposit balances. Total deposits were
$113,009,000 at June 30, 2004, which represents an increase of $5,776,000 from
total deposits of $107,233,000 at December 31, 2003. The increase in deposits is
reflected primarily in time deposits which increased 4.1%. Total deposits for
the period ended June 30, 2003 were $96,477,000 or 17.1% less than the period
ended June 30, 2004.

         The increase in 2003 year-end total deposits is reflected in all types
of deposits but primarily in money market deposits and other time deposits.
Average total deposits of $98,047,000 in 2003 represented an increase of
$10,199,000, or 11.6%, over 2002 average total deposits of $87,848,000. Deposits
at December 31, 2003 were $107,233,000 reflecting an increase of approximately
$17,032,000 compared to total deposits of $90,201,000 at the end of 2002. Bank
of Amador experienced increases in every category of deposit accounts during
2003. Total deposits in 2002 reflected a 2.5% increase

                                      109


compared to total deposits at December 31, 2001. The table below presents the
composition of the deposit mix at June 30, 2004 and December 31, 2003, 2002,
2001, 2000 and 1999:

Table IV Composition of Deposits (in thousands)



                         June 30,                      December 31,
----------------------------------------------------------------------------------------
                           2004       2003       2002       2001       2000       1999
----------------------------------------------------------------------------------------
                                                                   
Demand, non-interest     $ 23,601   $ 22,064   $ 18,126   $ 15,729   $ 14,908   $ 11,525
Demand, interest           11,470     10,507      9,493      9,846      8,819      8,250
Savings                    16,047     15,833     15,615     13,767     12,448     12,555
Money market               22,723     21,209     16,201     12,054      8,239      7,425
Time, $100,000 or more      9,764      9,144      6,309      6,793      4,412      5,602
Other time                 29,404     28,476     24,457     29,807     27,178     27,021
----------------------------------------------------------------------------------------
      Total              $113,009   $107,233   $ 90,201   $ 87,996   $ 76,002   $ 72,378
----------------------------------------------------------------------------------------



Liquidity

         Liquidity management refers to the Bank of Amador's ability to provide
funds on an ongoing basis to meet fluctuations in deposit levels as well as the
credit needs and requirements of its customers. Both assets and liabilities
contribute to the Bank of Amador's liquidity position. Federal funds lines,
short-term investments and securities, and loan repayments contribute to
liquidity, along with deposit increases, while loan funding and deposit
withdrawals decrease liquidity. Commitments to fund loans at June 30, 2004 and
December 31, 2003, were approximately $39,250,000 and $35,700,000, respectively.
Such loans relate primarily to revolving lines of credit and other commercial
loans and to real estate construction loans.

         The Bank of Amador's sources of liquidity consist of its
available-for-sale securities, deposits with other banks and overnight funds
sold to correspondent banks. On June 30, 2004, liquid assets totaled
$44,548,000, or 34.5% of total assets, as compared with $43,611,000, or 35.5% of
total assets, on December 31, 2003 and $39,200,000, or 37.6% of total assets on
December 31, 2002. Bank of Amador also maintains a line of credit with a
correspondent bank for up to $3,000,000, which is available on a short-term
basis.

         The following table sets forth the distribution of the expected
maturities of interest-earning assets and interest-bearing liabilities as of
December 31, 2003, as well as the fair value of these instruments. Expected
maturities are based on contractual agreements. Savings accounts and
interest-bearing transaction accounts that have no stated maturity are included
in the 2004 maturity category.

         It is management's objective to maintain stability in the net interest
margin in times of fluctuating interest rates by maintaining an appropriate mix
of interest-sensitive assets and liabilities. Bank of Amador strives to achieve
this goal through the composition and maturities of the investment portfolio and
by adjusting pricing of its interest-bearing liabilities; however, as noted
above, the ability to manage its interest rate exposure may be constrained by
competitive pressures.

                                      110


Table V Expected Maturities
---------------------------



(Dollars in thousands)
(Unaudited)                            2004       2005        2006        2007        2008      Thereafter     Total     Fair Value
                                    ---------   ---------   ---------   ---------   ---------   ----------   ---------   ----------
                                                                                                 
Federal funds sold                  $  23,906                                                                $  23,906   $   23,906

  Weighted average rate                  0.53%                                                                    0.53%

Investment securities(1)            $   1,530   $   2,521   $     999   $     193   $   1,735   $    8,492   $  15,470   $   15,740

  Weighted average rate                  6.00%       2.87%       2.70%       4.66%       4.66%        4.36%       4.20%

Fixed rate loans                    $  45,804   $   4,252   $   2,084   $   3,687   $   3,323   $    2,389   $  61,539   $   62,205

  Weighted average rate                  6.62%       7.86%       7.93%       7.40%       7.37%        7.80%       6.89%

Variable rate loans(2)              $  14,420   $       1               $      17                            $  14,438   $   15,551

  Weighted average rate                  6.13%      18.00%                  10.50%                                6.13%

Total interest-bearing assets       $  85,660   $   6,774   $   3,083   $   3,897   $   5,058   $   10,881   $ 115,353   $  117,402

Savings deposits(3)                 $  47,549                                                                $  47,549   $   47,550

  Weighted average rate                   .67%                                                                    0.67%

Time Deposits                       $  18,863   $   6,473   $  12,284                                        $  37,620   $   38,072

  Weighted average rate                  1.73%       3.29%       3.22%                                            2.49%

Total interest-bearing liabilities  $  66,412   $   6,473   $  12,284   $       0   $       0   $        0   $  85,169   $   85,622

--------------------

(1)  Interest rates on tax-exempt obligations have not been tax effected to
     include the related tax benefit in calculating the weighted average yield.
(2)  Of the total variable rate loans, 99% reprice in one year or less.
(3)  Savings deposits include interest-bearing transaction accounts.

                                      111


Capital Resources

         Bank of Amador's total shareholders' equity was $15,077,000 at June 30,
2004, compared to $14,973,000 at December 31, 2003, $13,644,123 at December 31,
2002 and $12,334,618 at December 31, 2001. Bank of Amador is subject to
regulations issued by the Federal Deposit Insurance Corporation, which require a
certain level of capital. Quantitative measures established by regulation to
ensure capital adequacy require Bank and of Amador to maintain minimum amounts
and ratios of total and Tier l capital to risk-weighted assets and of Tier l
capital to average assets. Management believes that the Bank of Amador meets all
of its capital adequacy requirements as of June 30, 2004 and December 31, 2003.

         The table below presents the Bank of Amador's capital and leverage
ratios as of June 30, 2004 and for the last three years as of December 31:

Table VI Capital and Leverage Ratios
------------------------------------


                                               June 30, 2004          December 31, 2003
                                             Amount      Ratio       Amount        Ratio
----------------------------------------------------------------------------------------
                                                                       
Risk-Based Capital Ratios
Tier l Capital                           $  14,887,092    15.7%  $  14,481,538     16.6%
Total Capital                            $  15,792,367    16.7%  $  15,359,159     17.6%
Total risk-adjusted assets               $  94,657,000           $  87,061,704

Leverage Ratio
Tier l Capital to average total assets   $  14,887,092    11.7%  $  14,481,538     12.0%
Average total assets                     $ 126,991,000           $ 120,739,000

----------------------------------------------------------------------------------------
                                             December 31, 2002        December 31, 2001
                                             Amount      Ratio       Amount        Ratio
----------------------------------------------------------------------------------------
Risk-Based Capital Ratios
Tier l Capital                           $  13,119,744    17.3%  $  12,105,751     18.2%
Total Capital                            $  13,878,705    18.3%  $  12,754,556     19.2%
Total risk-adjusted assets               $  75,958,000           $  69,556,000

Leverage Ratio
Tier l Capital to average total assets   $  13,119,744    12.7%  $  12,105,751     12.6%
Average total assets                     $ 103,581,000           $  96,450,400
----------------------------------------------------------------------------------------


         The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") substantially revised banking regulations and established a framework
for determination of capital adequacy of financial institutions. Under the
FDICIA, financial institutions are placed into one of five capital adequacy
categories as follows: (1) "well capitalized," consisting of institutions with a
total risk-based capital ratio of 10% or greater, a Tier l risk-based capital
ratio of 6% or greater and a leverage ratio of 5% or greater, and the
institution is not subject to an order, written agreement, capital directive or
prompt corrective action directive; (2) "adequately capitalized," consisting of
institutions with a total risk-based capital ratio of 8% or greater, a Tier l
risk-based capital ratio of 4% or greater and a leverage ratio of 4% or greater,
and the institution does not meet the definition of a "well capitalized"
institution; (3) "undercapitalized," consisting of institutions with a total
risk-based capital ratio less than 8%, a Tier 1 risk-based capital ratio of less
than 4%, or a leverage ratio of less than 4%; (4) "significantly
undercapitalized," consisting of institutions with a total risk-based capital
ratio of less than 6%, a Tier 1

                                      112


risk-based capital ratio of less than 3%, or a leverage ratio of less than 3%;
and, (5) "critically undercapitalized," consisting of an institution with a
ratio of tangible equity to total assets that is equal to or less than 2%. Based
upon the above criteria, at June 30, 2004 and December 31, 2003, Bank of Amador
would be classified "well capitalized."

         Financial institutions classified as undercapitalized, or below, are
subject to various limitations including, among other matters, certain
supervisory actions by bank regulatory authorities and restrictions related to
(i) growth of assets, (ii) payment of interest on subordinated indebtedness, and
(iii) payment of dividends or other capital distributions. The FDICIA requires
the bank regulatory authorities to initiate corrective action regarding
financial institutions that fail to meet minimum capital requirements. Such
action may, among other matters, require that the financial institution augment
capital and reduce total assets. Critically undercapitalized financial
institutions may also be subject to appointment of a receiver or conservator
unless the financial institution submits an adequate capitalization plan.

Inflation

         The impact of inflation on a financial institution differs
significantly from that exerted on manufacturing or other commercial concerns
primarily because financial institutions' assets and liabilities are largely
monetary. In general, inflation primarily affects Bank of Amador indirectly
through its effect on market rates of interest and thus the ability of the Bank
of Amador to attract loan customers. Inflation affects the growth of total
assets by increasing the level of loan demand and potentially adversely affects
the Bank of Amador's capital adequacy because loan growth in inflationary
periods can increase at rates higher than the rate that capital grows through
retention of earnings that the Bank of Amador may generate in the future. In
addition to its effects on interest rates, inflation directly affects the Bank
of Amador by increasing operating expenses. The effects of inflation were not
material to the Bank of Amador's results of operations during the six months
ended June 30, 2004 and the years ended December 31, 2003 and 2002.

Commitments, Contingent Liabilities and Off-Balance Sheet Arrangements

         Off-balance sheet commitments are comprised of the unused portions of
commitments to extend credit and letters of credit. Included are loan proceeds
that Bank of Amador is obligated to advance such as loan draws, construction
progress payments and advances under prearranged lines of credit. Bank of Amador
holds no off balance sheet derivatives and engages in no hedging activities. The
following table shows the amounts and expected maturities of significant
commitments as of June 30, 2004 and December 31, 2003.

                                      113


Table VII Off-Balance Sheet Items



June 30, 2004 (in thousands)
-------------
                                    One Year or     One to      Three To Five    Over Five
                                        Less      Three Years       Years          Years          Total
----------------------------------------------------------------------------------------------------------
                                                                                        
Commercial loans and
    lines of credit                 $     2,847            --              --             --   $     2,847
Real estate loan                         36,105            --              --             --        36,105
Letters of credit                         1,265            --              --             --         1,265
                                    -----------   -----------   -------------   ------------   -----------
                                    $    40,217                                                $    40,217

December 31, 2003 (in thousands)
-----------------
                                    One Year or     One to      Three To Five    Over Five
                                        Less      Three Years       Years          Years          Total
----------------------------------------------------------------------------------------------------------

Commercial loans and
    lines of credit                 $     2,217            --              --             --   $     2,217
Real estate loan                         33,480            --              --             --        33,480
Letters of credit                         1,273            --              --             --         1,273
                                    -----------   -----------   -------------   ------------   -----------
                                    $    36,970                                                $    36,970


         Commitments to extend credit do not necessarily represent future cash
requirements, as these commitments may expire without being drawn on based upon
the historical experience.

         Aggregate Contractual Obligations

Table VIII Aggregate Contractual Obligations


                                                       Maturity by Period
                                    ---------------------------------------------------------
                                                  Greater than
                                    Less than 1    1 year to 3    Greater than 3
June 30, 2004 (in thousands)           Year           years           years          Total
---------------------------------------------------------------------------------------------
                                                                         
Deposits                            $    90,802   $     22,207                    $   113,009
Lease commitments                            98             94                            192
                                    ---------------------------------------------------------
  Total                             $    90,900   $     22,301                    $   113,201
                                    =========================================================


                                                       Maturity by Period
                                    ---------------------------------------------------------
                                                  Greater than
                                    Less than 1    1 year to 3    Greater than 3
December 31, 2003 (in thousands)       Year           years           years          Total
---------------------------------------------------------------------------------------------
Deposits                            $    88,476   $     18,757                    $   107,233
Lease commitments                            98            143                            241
                                    ---------------------------------------------------------
Total                               $    88,574   $     18,900                    $   107,474
                                    =========================================================


         Deposits represent noninterest bearing, money market, savings, NOW,
certificates of deposit, brokered and all other deposits held by the Bank of
Amador. Amounts that have an undetermined maturity period are included in the
less than one-year category above. Lease commitments represent the total minimum
lease payments under noncancelable operating leases.

                                      114


Other Matters

         Effects of Terrorism

         The terrorist actions on September 11, 2001 and thereafter have had
significant adverse effects upon the United States economy. For example, in
October 2001, the USA Patriot Act of 2001 was enacted (the "Patriot Act"). The
Patriot Act is intended to strengthen U.S. law enforcement to combat terrorism
and has a potentially significant and wide ranging impact on financial
institutions. The Patriot Act imposes new anti-laundering and financial
transparency laws as well as new reporting obligations.

         Whether the terrorist activities in the future and the actions of the
United States and its allies in combating terrorism on a worldwide basis will
adversely impact the Bank and the extent of such impact is uncertain. However,
such events have had and may continue to have an adverse effect on the economy
in the Bank of Amador's market areas. Such continued economic deterioration
could adversely affect the Bank of Amador's future results of operations by,
among other matters, reducing the demand for loans and other products and
services offered by the Bank of Amador, increasing nonperforming loans and the
amounts reserved for loan losses, and causing a decline in the Bank of Amador's
stock price.

         Corporate Reform Legislation

         On July 20, 2002, the President signed into law the Sarbanes-Oxley Act
of 2002 implementing legislative reforms intended to address corporate and
accounting fraud. In addition to the establishment of a new accounting oversight
board which will enforce auditing, quality control and independence standards
and will be funded by fees from all publicly traded companies, the bill
restricts provisions of both auditing and consulting services by accounting
firms. To ensure auditor independence, any non-audit services being provided to
an audit client will require pre-approval by the company's audit committee
members. In addition, the audit partners must be rotated. The Act requires chief
executive officers and chief financial officers, or their equivalent, to certify
to the accuracy of periodic reports filed with the Securities and Exchange
Commission ("SEC"), subject to civil and criminal penalties if they knowingly or
willfully violate this certification requirement. In addition, under the Act,
legal counsel will be required to report evidence of a material violation of the
securities laws or a breach of fiduciary duty by a company to its chief
executive officer or its chief legal officer, and, if such officer does not
appropriately respond, to report such evidence to the audit committee or other
similar committee of the board of directors or the board itself.

         Longer prison terms and increased penalties will also be applied to
corporate executives who violate federal securities laws, the period during
which certain types of suits can be brought against a company or its officers
has been extended, and bonuses issued to top executives prior to restatement of
a company's financial statements are not subject to disgorgement if such
restatement was due to corporate misconduct. Executives are also prohibited from
insider trading during retirement plan "blackout" periods, and loans to company
executives are restricted. The Act accelerates the time frame for disclosures by
public companies, as they must immediately disclose any material changes in
their financial condition or operations. Directors and executive officers must
also provide information for most changes in ownership in their company's
securities within two business days of the change.

         The Act also prohibits any officer or director of a company or any
other person acting under their direction from taking any action to fraudulently
influence, coerce, manipulate or mislead any independent public or certified
accountant engaged in the audit of the company's financial statements for the
purpose of rendering the financial statements materially misleading. The Act
also requires the SEC to prescribe rules requiring inclusion of an internal
control report and assessment by management in the annual report to
stockholders. In addition, the Act requires that each financial report required
to be prepared in accordance with (or reconciled to) accounting principles
generally accepted in the United States of America and filed with the SEC
reflect all material correcting adjustments that are identified by a

                                      115


"registered public accounting firm" in accordance with accounting principles
generally accepted in the Unites States of America and the rules and regulations
of the SEC.

         Effective August 29, 2002, as directed by Section 302(a) of
Sarbanes-Oxley, the Company's chief executive officer and chief financial
officer are each required to certify that the Company's Quarterly and Annual
Reports do not contain any untrue statement of a material fact. The rules have
several requirements, including having these officers certify that: They are
responsible for establishing, maintaining and regularly evaluating the
effectiveness of the Company's internal controls; they have made certain
disclosures to the Company's auditor and the audit committee of the Board of
Directors about the Company's internal controls; and they have included
information in the Company's Quarterly and Annual Reports about their evaluation
and whether there have been significant changes in the Company's internal
controls or in other factors that could significantly affect internal controls
subsequent to the evaluation.

Quantitative and Qualitative Disclosures about Market Risk

         Market risk is the risk of loss from adverse changes in market prices
and rates. Market risk arises primarily from interest rate risk inherent in its
loan and deposit functions, and management actively monitors and manages this
interest rate risk exposure. Management uses several different tools to monitor
the interest rate risk. One measure of exposure to interest rate risk is gap
analysis. A positive gap for a given period means that the amount of
interest-earning assets maturing or otherwise repricing within such period is
greater than the amount of interest-bearing liabilities maturing or otherwise
repricing within the same period. In addition, management uses interest rate
shock simulations to estimate the effect of certain hypothetical rate changes.
Based upon these simulations, net interest income is expected to rise with
increasing rates and decline with declining rates.

         Interest Rate Sensitivity

         Interest rate sensitivity is a measure of the exposure to fluctuations
in the Bank of Amador's future earnings caused by fluctuations in interest
rates. Such fluctuations result from the mismatch in repricing characteristics
of assets and liabilities at a specific time. This mismatch, or interest rate
sensitivity gap, represents the potential mismatch in the change in the rate of
accrual of interest revenue and interest expense from a change in market
interest rates. Mismatches in interest rate repricing among assets and
liabilities arise primarily from the interaction of various customer businesses
(i.e. types of loans versus the types of deposits maintained) and from
management's discretionary investment and funds gathering activities. Bank of
Amador attempts to manage its exposure to interest rate sensitivity, but due to
its size and direct competition from the major banks, it must offer products
that are competitive in the market place, even if its interest rate exposure is
less than optimal.

         The following table quantifies the Bank of Amador's interest rate
exposure at June 30, 2004 and December 31, 2003 based upon the known repricing
dates of certain assets and liabilities and the assumed repricing dates of
others. This table displays a static view of the Bank's interest rate
sensitivity position and does not consider the dynamics of the balance sheet and
interest rate movements.

                                      116




Table IX Interest Rate Sensitivity
-------------------------------------------------------------------------------------------------------
June 30, 2004 (in thousands, except ratios)

                                                Over three
                                  Next day        months        Over one
Assets and liabilities           and within     and within     and within        Over
which mature or reprice         three months     one year      five years     five years       Total
-------------------------------------------------------------------------------------------------------
                                                                             
Interest earning assets:
  Federal funds sold            $     15,227                                                $    15,227
  Investment securities                  500   $      1,511   $     13,908   $      7,993        23,912
  Loans                               39,244         28,283         10,599          2,356        80,482
Total                                 54,971         29,794         24,507         10,349       119,621
-------------------------------------------------------------------------------------------------------
Interest bearing liabilities:
  Interest bearing demand             11,470                                                     11,470
  Savings                             38,770                                                     38,770
  Time certificates                    4,876         12,084         22,208                       39,168
-------------------------------------------------------------------------------------------------------
Total                           $     55,116   $     12,084   $     22,208                  $    89,408
-------------------------------------------------------------------------------------------------------
Interest rate sensitivity gap   $       (145)  $     17,710   $      2,299   $     10,349   $    30,213
Cumulative interest
   rate sensitivity gap         $       (145)  $     17,565   $     19,864   $     30,213

Ratios:
Interest rate
   sensitivity gap                      1.00           2.47           1.10
Cumulative interest
   rate sensitivity gap                 1.00           1.26           1.22           1.34

December 31, 2003 (in thousands, except ratios)
-------------------------------------------------------------------------------------------------------


                                                Over three
                                  Next day        months        Over one
Assets and liabilities           and within     and within     and within        Over
which mature or reprice         three months     one year      five years     five years       Total
-------------------------------------------------------------------------------------------------------
                                                                             
Interest earning assets:
 Federal funds sold             $     23,906                                                $    23,906
  Investment securities                        $      1,530   $      5,448   $      8,492        15,470
  Loans                               35,692         24,532         13,364          2,389        75,977
-------------------------------------------------------------------------------------------------------
Total                           $     59,598   $     26,062   $     18,812   $     10,881   $   115,353
-------------------------------------------------------------------------------------------------------
Interest bearing liabilities:
  Interest bearing demand       $     31,716                                                $    31,716
  Savings                             15,833                                                     15,833
  Time certificates                    7,152   $     11,710   $     18,758                       37,620
-------------------------------------------------------------------------------------------------------
Total                           $     54,701   $     11,710   $     18,758                  $    85,169
-------------------------------------------------------------------------------------------------------
Interest rate
   sensitivity gap              $      4,897   $     14,352   $         54   $     10,881   $    30,184
Cumulative interest
   rate sensitivity gap         $      4,897   $     19,249   $     19,303   $     30,184

Ratios:
Interest rate
   sensitivity gap                      1.09           2.23           1.00
Cumulative interest
   rate sensitivity gap                 1.09           1.29           1.23           1.35
-------------------------------------------------------------------------------------------------------

         It is management's objective to maintain stability in the net interest
margin in times of fluctuating interest rates by maintaining an appropriate mix
of interest sensitive assets and liabilities. Bank of Amador strives to achieve
this goal through the composition and maturities of the investment portfolio

                                      117


and by adjusting pricing of its interest bearing liabilities; however, as noted
above, the ability to manage its interest rate exposure may be constrained by
competitive pressures.

         The table does not necessarily indicate the impact of general interest
rate movements on the net interest margin, since the repricing of various
categories of assets and liabilities is subject to competitive pressures.
Additionally, this table does not take into consideration changing balances in
forward periods as a result of normal amortization, principal paydowns, changes
in deposit mix, or other such movement of funds as a result of changing interest
rate environments.

Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure

         There has been no change in the independent registered public
accounting firm engaged to audit the financial statements of Bank of Amador and
its subsidiaries during the last two fiscal years ended December 31, 2003. There
have been no disagreements with Bank of Amador's independent registered public
accounting firm during the last two fiscal years ended December 31, 2003, on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure.

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                                   THE MERGER

         The following summary of the material terms and provisions of the
merger agreement is qualified in its entirety by reference to the merger
agreement by and among American River Bankshares, American River Bank and Bank
of Amador, dated as of July 8, 2004. The merger agreement is attached as Annex A
to this joint proxy statement-prospectus and is incorporated by reference
herein.

General

         The boards of directors of Bank of Amador and American River Bankshares
have unanimously approved the merger agreement providing for the merger of Bank
of Amador with and into American River Bank, a California banking corporation
and wholly-owned subsidiary of American River Bankshares, to facilitate the
merger. American River Bank will be the surviving entity in the merger, and upon
completion of the merger, will continue as a wholly-owned subsidiary of American
River Bankshares and conduct operations at the former offices of Bank of Amador
under the name "Bank of Amador, a division of American River Bank." The merger
is expected to be completed in the fourth quarter of 2004. Larry D. Standing,
President and Chief Executive Officer and director of Bank of Amador and one
other director of Bank of Amador to be selected by mutual agreement of American
River Bankshares and Bank of Amador will become directors of American River Bank
after the merger. Mr. Standing will also be appointed as the President of the
division of American River Bank to be known as "Bank of Amador, a division of
American River Bank" after the merger and be appointed as a member of the
executive management committee of American River Bankshares.

         The current incumbent directors and executive officers of American
River Bank will continue as directors and executive officers of American River
Bank after the merger. The board of directors of American River Bankshares
immediately after the merger will be composed of the same directors as
immediately prior to the merger.

Background of the Merger

         The following is a brief description of events that resulted in the
execution of the merger agreement on July 8, 2004, among American River
Bankshares, American River Bank, and Bank of Amador.

American River Bankshares

         On May 24, 2004, David T. Taber, President and Chief Executive Officer
of American River Bankshares and Chief Executive Officer of American River Bank,
met with Larry D. Standing, President and Chief Executive Officer of Bank of
Amador to discuss the possible acquisition of Bank of Amador by American River
Bankshares through the merger of Bank of Amador with and into American River
Bank.

         On May 25, 2004, Mr. Taber contacted Mr. Standing to discuss the
structure of the acquisition, the relative economic strengths and weaknesses of
Sacramento and Amador counties, and prospects for the future.

         On May 28, 2004, Mr. Taber and Mr. Standing toured locations in which
Bank of Amador has branch offices and sites of current and future development in
Amador County. Mr. Taber and Mr. Standing discussed American River Bank's and
Bank of Amador's operations and lending activities and the compatibility of
their operations and lending philosophy. Mr. Taber thereafter advised Mr.
Standing that he would arrange a meeting with the executive committee of the
American River Bankshares board of directors to recommend pursuing discussions
for a possible merger with the Bank of Amador.

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         On June 2, 2004, the executive committee of the American River
Bankshares board of directors, met to discuss the proposed acquisition of Bank
of Amador. The executive committee reviewed information on Amador County, the
history of Bank of Amador, its current and historical financial results, and an
overview of Bank of Amador's loans and deposits. The executive committee
discussed the advantages and disadvantages of acquiring the Bank of Amador
including the fact that Amador County is not as fast growing as the greater
Sacramento area or Sonoma County, the potential cost savings, and various
pricing models showing the impact to American River Bankshares at various price
levels, including $19, $20, and $21 per share assuming 70% of the price to be
paid consisted of stock and 30% consisted of cash. After an extensive discussion
and review of the information and analysis provided to the executive committee,
the members of the executive committee voted unanimously to authorize Mr. Taber
to prepare an expression of interest letter to Bank of Amador for a possible
merger transaction based on a proposed price range of $19 to $20 per Bank of
Amador share with a combination of stock not to exceed 70% in American River
Bankshares common stock and the balance payable in cash, subject to customary
due diligence and other conditions including the approval by the board of
directors of American River Bankshares.

         On June 7, 2004, the American River Bankshares board of directors met
to discuss the merger proposal. During the meeting, the board of directors was
told that the executive committee completed an extensive review of a proposed
merger with Bank of Amador and had authorized Mr. Taber to deliver an expression
of interest letter to Mr. Standing, subject to approval of the board of
directors. Mr. Taber reviewed with the board of directors various pricing
options and responded to questions relative to the pricing and market conditions
of Amador County, the integration of Bank of Amador with and into American River
Bank, whether or not there would be requirements for additional capital, and
potential developments in Amador County. After extensive review of the prospects
for a successful integration of Bank of Amador and benefits anticipated to be
derived from a potential merger, the full board of directors unanimously
authorized Mr. Taber to deliver to Bank of Amador the expression of interest
letter on the terms previously approved by the executive committee.

         On June 8, 2004, Mr. Taber and Mr. Standing met and Mr. Taber delivered
the expression of interest letter outlining a proposed merger between American
River Bankshares, American River Bank and Bank of Amador. The letter proposed
that Bank of Amador merge with and into American River Bank, operate as a
division of American River Bank and be branded as a division of American River
Bank in Amador County. The letter also proposed that Mr. Standing would remain
as the president of Bank of Amador. The economic terms of the letter stated that
Bank of Amador shareholders would receive the equivalent of $19 per share with
70% in American River Bankshares common stock and 30% in cash. As part of the
purchase price, Bank of Amador would be required to expense $2,730,000 in costs
prior to closing in order to purchase all outstanding stock options, accelerate
directors retirement benefits, set aside an amount for a dispute between Bank of
Amador and a technology firm, and set aside an amount for severance paid to
potentially terminated employees. Mr. Standing and Mr. Taber discussed the
letter and Mr. Taber presented a PowerPoint summary which explained the history,
business focus and financial performance of American River Bankshares and
American River Bank.

         Between June 11 and June 18, 2004, due diligence was conducted by
American River Bankshares and Bank of Amador, which included a full review of
the operations of Bank of Amador, including its loan portfolio, financial
information, employee benefits, litigation, accounting reports, regulatory
compliance, and the status of its technology and contractual obligations.

         On June 18, 2004, Mr. Taber delivered a draft of a proposed purchase
agreement to Mr. Standing and they discussed the relevant terms.

         On June 22, 2004, Mr. Taber met with the board of directors of the Bank
of Amador, at the corporate offices of the Bank of Amador in Jackson,
California. At the meeting, Mr. Taber discussed the proposed merger and
presented a PowerPoint review of the history and business of American River Bank

                                      120


and American River Bankshares. After the meeting through July 1, 2004,
discussions continued between Mr. Standing and Mr. Taber regarding the terms of
a proposed merger with advice from their respective counsel and investment
banking advisors, and with consultation from their respective boards of
directors.

         On July 1, 2004, Mr. Taber and Mr. Standing again discussed some of the
terms of the proposed merger and in particular, the pricing proposed by American
River Bankshares. Thereafter, Mr. Standing and Mr. Taber agreed that a
conference call should be held the next day among Mr. Taber, Mr. Standing, and
their respective investment banking advisors to discuss the terms in greater
detail.

         On July 2, 2004, Mr. Taber and Mr. Standing, and their respective
investment banking advisors, participated in a telephone conference call to
discuss various terms including the pricing of the proposed merger. Discussions
continued throughout the day including separate conferences held by Mr. Taber
and Mr. Standing with their respective investment banking advisors. Late in the
day, some of the unresolved terms were agreed upon, subject to board review and
approval, particularly those terms affecting the pricing formula and termination
provisions. Thereafter, counsel for American River Bankshares and Bank of Amador
were instructed to prepare a proposed merger agreement for review and approval
by the respective boards of directors of American River Bankshares, American
River Bank and Bank of Amador. Discussions among the parties and their advisors
continued during the period from July 2, 2004 through July 8, 2004, regarding
the terms of the proposed merger agreement including matters related to the
pricing adjustments for Bank of Amador stock options, retirement benefit
arrangements, a dispute with a technology firm and severance for terminated
employees, and the scope and coverage of the representations and warranties,
covenants and conditions to be included in the merger agreement as adjusted to
reflect any matters that arose in the course of the due diligence reviews
conducted by the parties.

         On July 8, 2004, the boards of directors of American River Bankshares
and American River Bank met to review the proposed final form of merger
agreement negotiated among the parties. The board of directors of Bank of Amador
met the same day to review the proposed merger agreement. Each of the respective
boards of directors reviewed the due diligence reports, the oral and written
reports from their respective investment banking advisors including their
respective opinions related to the fairness from a financial point of view of
the proposed merger consideration, to American River Bankshares and to the
shareholders of Bank of Amador, respectively, and the proposed merger agreement
including the exhibits and accompanying agreements. Late in the evening of July
8, each board of directors unanimously approved the merger agreement and the
transactions contemplated by the merger agreement including the merger of Bank
of Amador with and into American River Bank and authorized the signing of the
merger agreement. Each board of directors reviewed and approved a form of press
release to announce the signing of the merger agreement and authorized its
release before the trading markets opened on July 9, 2004.

         On July 9, 2004, American River Bankshares issued a press release at
3:05 A.M. Pacific Time announcing the signing of the merger agreement.

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Bank of Amador

         Bank of Amador was formed in 1983 to fill a void of community banking
that existed in the area since Wells Fargo Bank acquired the old Bank of Amador
County in 1965. Since that time, Bank of Amador has received a number of
unsolicited inquiries dating back to the mid and late 1980's from other banks,
including American River Bankshares. In each case, Bank of Amador decided not to
pursue the inquiry, believing that it could obtain greater shareholder value by
operating as an independent bank.

         In February 2004, Bank of Amador President, Larry Standing, received an
unsolicited call from Western Sierra Bancorp President, Gary Gall. At a
subsequent lunch meeting, Mr. Gall indicated his desire for Bank of Amador to
join Western Sierra Bancorp's growing list of community banks in its service
area. After extensive discussion at the Bank of Amador board of directors
meeting on March 24, 2004, the members of the board of directors agreed to
travel to Western Sierra's headquarters in Cameron Park, California on March 31,
2004 to hear Mr. Gall's proposal. Under Western Sierra Bancorp's proposal,
Western Sierra Bancorp would pay $6,500,000 and issue 750,083 shares of its
common stock for all of the outstanding shares of Bank of Amador. The cash
portion of the purchase price was subject to adjustment depending on the average
trading price for a share of Western Sierra Bancorp for a stated period. Based
on the then approximate trading price for a share of Western Sierra Bancorp and
under the Western Sierra Bancorp proposal, the estimated value of the proposal
was $29 million. After a lengthy presentation that evening, the board of
directors of Bank of Amador approved the signing of a confidentiality agreement
by President Standing with Western Sierra Bancorp that would govern an exchange
of pertinent information by both banks. During this process, Bank of Amador
consulted its investment bankers, Hoefer & Arnett Incorporated, to assist in the
evaluation of the Western Sierra Bancorp proposal.

         At its April 14, 2004 meeting, the board of directors directed
President Standing to cancel a February 2, 2004 Information Technology Services
Agreement (the "Technology Services Agreement"), which related to processing
Bank of Amador's customer transactions as well as web site development and
hosting. In light of the indication of interest raised by Western Sierra, the
board of directors decided to cancel the Technology Services Agreement for the
following reasons: (1) if the business combination was consummated, Western
Sierra would provide its own data processing; (2) the upgrade had not yet taken
place but was scheduled for June 2004; and (3) the liquidation penalty under the
Technology Services Agreement was substantial and Bank of Amador wanted to
minimize its exposure. As result of the cancellation, Bank of Amador and the
vendor are currently in discussions concerning the Technology Services
Agreement.

         Western Sierra commenced due diligence of Bank of Amador on May 10,
2004, which continued for two and one-half days. On May 14, 2004, President
Standing received a call from Mr. Gall who stated that Western Sierra was no
longer interested in acquiring Bank of Amador. Thereafter, no further
discussions took place.

         Several weeks later, President Standing received a telephone call from
David Taber, President of American River Bankshares expressing an interest in
Bank of Amador. Mr. Taber stated that American River Bankshares had followed
Bank of Amador's success for many years and might be ready to make an
acquisition. Mr. Taber also indicated that greater familiarization with Amador
County would be helpful. On Friday, May 28, 2004, President Standing gave David
Taber an extensive tour of Amador County and Bank of Amador's branch office
locations. Mr. Taber followed up with an "expression of interest" letter dated
June 8, 2004 which was presented to the board of directors on June 9, 2004. The
board of directors of Bank of Amador agreed to press forward with the expression
of interest with the stipulation that Mr. Taber attend the next full board
meeting with a presentation of merits of the proposed transaction. On June 9,
2004, Bank of Amador and American River Bankshares entered into a
confidentiality agreement. On June 11, 2004 through June 18, 2004, American
River Bankshares conducted its due diligence on the Bank of Amador. Bank of
Amador, through its investment bankers, subsequently conducted its due

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diligence. On June 15, 2004, Bank of Amador engaged the law firm of Bartel Eng &
Schroder to assist in reviewing the proposal, and on June 18, 2004, Bank of
Amador received the first draft of the merger agreement. On June 22, 2004, David
Taber attended a Bank of Amador board of directors meeting and made a
presentation to and answered questions from directors.

         On June 29, 2004, the board of directors met to review and discuss the
proposal made by American River Bankshares. Also at the meeting were
representatives of Perry-Smith LLP, Bartel Eng & Schroder, and Hoefer & Arnett
Incorporated. The board of directors discussed the proposed financial terms of
the transaction and the potential growth and strategies of American River
Bankshares and the potential effects of the proposed transaction on Bank of
Amador's customers and employees. The board of directors discussed in further
detail the terms of the offer and in particular the exchange ratio for shares of
American River Bankshares. The board of directors then requested President
Standing to discuss further with American River Bankshares the exchange ratio
for the share consideration portion of the purchase price of the transaction and
in particular, the effect of fluctuations in the market price of American River
Bankshares on the merger price.

         At the June 29, 2004 board of directors meeting, it was also disclosed
that on June 28, 2004, PremierWest Bank had submitted an unsolicited letter of
expression of interest to President Standing indicating that it may be willing
to acquire the Bank of Amador for cash and stock in the range of $20 to $22 per
share, subject to due diligence. The board of directors discussed in detail
PremierWest Bank's letter of interest and weighed it in light of the substantial
due diligence, discussions and negotiations throughout June 2004 with American
River Bankshares, including the anticipated execution of a definitive agreement,
against the fact that PremierWest Bank had not yet done any due diligence and
had never met with members of the board of directors of Bank of Amador. After
discussion, including discussion with its professional advisors, the board of
directors decided not to further pursue PremierWest Bank's expression of
interest primarily for the following reasons: (1) The board of directors
considered the specific synergies that would arise from being part of the
American River Bankshares family, including local brand recognition and
immediate geographic distance to its headquarters, (2) Bank of Amador's
shareholders would be able to participate in the long-term growth of American
River Bankshares by receiving partial equity consideration in the transaction,
and (3) based on Bank of Amador's prior business relationships and familiarity
with American River Bankshares and its executives, in particular Mr. Taber, the
board of directors and senior management believed that the two banks would
present a strategic operational fit and would result in greater shareholder
value. In addition, the substantial progression toward a transaction with
American River Bankshares concerned the Bank of Amador board of directors that
it could potentially lose the opportunity to be acquired at all, especially in
light of the termination of earlier discussions with Western Sierra, and because
PremierWest Bank was unaware of the discussions related to the cancellation of
the Technology Service Agreement and potential liability based on the
cancellation, the Bank of Amador board of directors believed that PremierWest
Bank had an inadequate basis for determining a valuation for the shares of Bank
of Amador. Finally, in light of its termination of the Technology Services
Agreement, Bank of Amador wished to move swiftly to resolve its data processing
issue.

         Subsequent to the June 29, 2004 board of directors meeting, President
Standing, along with Hoefer & Arnett Incorporated, had a series of conversations
with Mr. Taber and American River Bankshares' investment advisor, Sandler
O'Neill & Partners, L.P., to discuss, among other things, the exchange ratio
effect on the purchase price of the merger. These discussions, then led to the
negotiated merger consideration.

         On July 6, 2004, the board of directors met to analyze and discuss the
changes to the proposed merger, to review the findings of senior management and
to receive the advice and recommendations of its financial advisor, Hoefer &
Arnett Incorporated. The representative of Hoefer & Arnett advised the board of
directors of their conclusion and opinion that the proposed transaction was fair
from a financial point of view to the shareholders of the Bank of Amador. After
additional discussion and evaluation of a

                                      123


draft of the merger agreement prepared by American River Bankshares with the
participation of Bartel Eng & Schroder, the board of directors concluded that a
combination with American River Bankshares would be in the best interests of the
Bank of Amador shareholders. Based upon the proposed terms of the transaction
set forth in the draft merger agreement, the board of directors of the Bank of
Amador unanimously approved the proposed merger and the execution and delivery
of the merger agreement in the form attached as Annex A, which was signed on
July 8, 2004. Execution of the merger agreement was publicly announced by a
joint press release of American River Bankshares and the Bank of Amador on
Friday, July 9, 2004.

Reasons for the Merger and Recommendations of the Boards of Directors

American River Bankshares

         The strategy of the board of directors of American River Bankshares for
enhancing long-term value for American River Bankshares shareholders recognizes
that further consolidation will occur in the banking and financial services
industry in the United States and that American River Bankshares must be in a
position to take advantage of this change. Under this strategy, management of
American River Bankshares, at the direction of the board of directors of
American River Bankshares, continually explores and evaluates acquisition
opportunities, such as the acquisition of Bank of Amador through the merger of
Bank of Amador with and into American River Bank. In reaching the conclusion
that the merger is fair and in the best interests of the shareholders of
American River Bankshares, the board of directors of American River Bankshares
considered numerous factors, including:

         o        the board of directors' familiarity with and review of Bank of
                  Amador's business, results of operations, prospects and
                  financial condition and the willingness of the board of
                  directors of Bank of Amador to consider a merger with American
                  River Bank;

         o        Sandler O'Neill & Partners, L.P. has rendered an opinion,
                  dated July 8, 2004 and updated on October 12, 2004, to the
                  American River Bankshares board of directors, that the merger
                  agreement, the merger and the consideration to be paid by
                  American River Bankshares to Bank of Amador shareholders under
                  the merger agreement is fair, from a financial point of view,
                  to American River Bankshares, as of the date of the opinion;

         o        economic conditions and prospects for the markets in which
                  American River Bankshares and Bank of Amador operate, and
                  competitive pressures in the financial services industry in
                  general and the banking industry in particular;

         o        the enhancement of American River Bankshares competitiveness
                  and its ability to serve its customers, depositors, creditors,
                  other constituents and the communities in which it operates as
                  a result of the merger;

         o        information concerning the business, results of operations,
                  asset quality and financial condition of American River
                  Bankshares and Bank of Amador on a stand-alone and combined
                  basis, and the future growth prospects of American River
                  Bankshares and Bank of Amador following the merger. In this
                  regard, the board of directors of American River Bankshares
                  gave consideration to the results of the initial review,
                  conducted by American River Bankshares' management with
                  respect to Bank of Amador's business and operations,
                  including, in particular, its asset quality and related
                  conditions in the merger agreement. That review included an
                  assessment of the opportunities to achieve increased market
                  penetration in its existing market and to expand into Bank of
                  Amador's market area in Northern California;

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         o        the revenue enhancements, cost savings and operational
                  synergies which the management of American River Bankshares
                  believes may be achieved as a result of the merger through the
                  elimination of duplicative efforts;

         o        an assessment that, in the current economic environment,
                  expansion through acquisition of another financial institution
                  is most economically advantageous to American River
                  Bankshares' shareholders when compared to other alternatives
                  such as de novo branch openings or branch acquisitions;

         o        the geographic and business fit of American River Bankshares
                  and Bank of Amador and the complementary nature of their
                  respective businesses, including the compatibility of their
                  existing branch structures;

         o        information with respect to historical trading ranges and
                  multiples for American River Bankshares common stock and Bank
                  of Amador common stock, and possible trading ranges and
                  multiples for each on a stand-alone basis and for the two
                  companies on a combined basis and the evaluation by the board
                  of directors of American River Bankshares of the financial
                  terms of the merger and their effect on the shareholders of
                  American River Bankshares and the belief of the American River
                  Bankshares board of directors that those terms are fair to
                  American River Bankshares and its shareholders;

         o        the expectation that for federal income tax purposes the
                  merger will constitute a tax-free reorganization to American
                  River Bankshares and American River Bank;

         o        the terms and conditions of the merger agreement and the
                  related agreements;

         o        the likelihood of the merger being approved by the appropriate
                  regulatory authorities; and

         o        the structure of the merger and the resulting corporate
                  entities.

         The board of directors of American River Bankshares did not assign any
relative or specific weights to the factors considered and individual directors
may have assigned different weights to the above factors.

         The board of directors of American River Bankshares unanimously
recommends that the merger agreement, the related agreements, the transactions
contemplated by the merger agreement, including the merger and the issuance of
American River Bankshares common stock in connection with the merger, be
approved by the American River Bankshares shareholders.

Bank of Amador

         The board of directors of Bank of Amador believes that the proposed
merger will provide Bank of Amador shareholders with the opportunity for
liquidity and provide a growth opportunity through combination with a profitable
and well-positioned financial institution with a presence in local communities
in the northern part of California. The board of directors believes that some
operational cost savings and increased leverage from a combined entity will
benefit Bank of Amador shareholders and that the proposed transaction is fair,
from a financial point of view, to Bank of Amador shareholders and is in their
best interests. In reaching its decision to approve the merger agreement and
unanimously recommend approval of the merger by its shareholders, the board of
directors of Bank of Amador consulted with its financial and legal advisors, as
well as its management, and considered many factors. These factors include:

                                      125


         o        the board of directors of Bank of Amador considered and
                  discussed the proposed consideration of cash and American
                  River Bankshares common stock to be paid to Bank of Amador
                  shareholders in the merger. The board of directors then sought
                  the opinion of Hoefer & Arnett that such consideration was
                  fair, from a financial point of view, to the shareholders of
                  Bank of Amador;

         o        the board of directors of Bank of Amador considered whether
                  Bank of Amador as an independent enterprise could produce the
                  earnings necessary to result in a value comparable to the
                  value to be received by shareholders in the merger. The board
                  of directors considered the constraint upon Bank of Amador's
                  growth resulting from the challenges of achieving increased
                  operating efficiencies for a financial institution of its
                  size. The board of directors considered the analysis of Hoefer
                  & Arnett of Bank of Amador's historical earnings and
                  anticipated growth. The board of directors also considered the
                  value to American River Bankshares of an extension of its
                  franchise in the Northern California market, the capital
                  position of American River Bankshares and the resulting
                  ability of American River Bankshares to expand its franchise
                  in the Northern California market, and the liquidity of the
                  trading market for American River Bankshares' common stock.
                  The board of directors also considered the expected dividend
                  payout on the shares of American River Bankshares common stock
                  that would be received by Bank of Amador's shareholders in the
                  merger;

         o        the information reviewed by the Bank of Amador board of
                  directors included, but was not limited to, historical stock
                  price performance of American River Bankshares, publicly
                  available financial information with respect to Bank of Amador
                  and American River Bankshares, information with respect to
                  selected merger transactions announced recently and the pro
                  forma effects of the merger as presented by Hoefer & Arnett;

         o        the Bank of Amador board of directors considered the Hoefer &
                  Arnett opinion included in this joint proxy
                  statement-prospectus as Annex C, that, as of October 12, 2004,
                  the merger consideration under the merger agreement was fair,
                  from a financial point of view, to the shareholders of Bank of
                  Amador;

         o        the Bank of Amador board of directors considered that the
                  merger is intended to be tax-free for federal income tax
                  purposes to Bank of Amador shareholders to the extent they
                  receive shares of American River Bankshares common stock;

         o        the Bank of Amador board of directors considered the general
                  impact of the merger on the various constituencies served by
                  Bank of Amador, including its customers, employees and
                  communities. In this regard, the board of directors took into
                  account information about American River Bankshares' approach
                  to its customers, employees and the communities in which it
                  operates;

         o        the board of directors of Bank of Amador considered that the
                  operating philosophies and corporate cultures of Bank of
                  Amador and American River Bankshares are similar and
                  complementary. Historically, Bank of Amador has focused on
                  commercial loans and business as has American River
                  Bankshares. The board of directors also considered that it
                  will have two representatives on American River Bank's board
                  of directors after the merger; and

         o        the board of directors of Bank of Amador also contemplated
                  other factors that could be considered disadvantages of a
                  transaction with American River Bankshares and American River
                  Bank, including the execution of risk of integration, effects
                  on current and potential customers, the performance of
                  American River Bankshares while the proposed transaction is
                  pending, the need to obtain regulatory approvals, transactions
                  with other potential acquirors,

                                      126


                  and the effects of the cancellation of the technology services
                  agreement. See also the discussion in "Risk Factors" for other
                  factors considered by the board of directors.

         The foregoing discussion of information and factors considered by the
Bank of Amador board of directors is not intended to be exhaustive, but is
believed to include the material factors considered by the board of directors.
The Bank of Amador board of directors did not assign relative or specific
weights to the individual factors, and the individual directors may have given
varying weight to different factors.

Consideration to be Received in the Merger

         When the transactions contemplated by the merger agreement, including
the merger, are completed, each share of Bank of Amador common stock issued and
outstanding immediately prior to the effective time of the merger, except
dissenting shares, will be converted into the right to receive the following:

         o        cash in the amount of $6.825; and

         o        a number of shares of American River Bankshares common stock
                  equal to:

                  o        0.6851 shares of American River Bankshares common
                           stock if the American River Bankshares measuring
                           price is $18.50 or lower;

                  o        0.5394 shares of American River Bankshares common
                           stock if the American River Bankshares measuring
                           price is $23.50 or higher; or

                  o        the number of shares of American River Bankshares
                           common stock equal to 12.675 divided by the American
                           River Bankshares measuring price if the American
                           River Bankshares measuring price is between $18.50
                           and $23.50.

         The "American River Bankshares measuring price" means the average
closing price of American River Bankshares common stock as traded on the Nasdaq
National Market over the twenty (20) consecutive trading day period ending on
the second business day prior to the closing date.


         The aggregate cash payment to be made by American River Bankshares
under the merger agreement based on the above conversion formula is subject to
the holdback from payment by American River Bankshares of an aggregate amount of
$1,362,000 until the earlier of (i) the payment in full of the balance due, or
(ii) the final determination of the amount of loss, if any, related to a
construction loan held in the loan portfolio of Bank of Amador. In the event
that the conditions described for release of the holdback amount are not
satisfied by the closing date, the holdback amount will be withheld on a prorata
basis among all Bank of Amador shareholders otherwise entitled to receipt of
their prorata portion of the cash payable to them under the above conversion
formula until the conditions are satisfied. See "The Merger--Consideration to be
Received in the Merger" on page 127 and sections 2.1 and 2.8 of the merger
agreement.


         No fractional shares of American River Bankshares common stock will be
issued to holders of Bank of Amador common stock. Instead, each holder entitled
to a fraction of a share will receive, at the time of surrender of the
certificate or certificates representing the holder's shares, an amount in cash
equal to the American River Bankshares measuring price multiplied by the amount
of a fractional share.

         Do not return your certificates representing shares of Bank of Amador
common stock with the enclosed proxy card. The stock certificates should only be
forwarded to the exchange agent with the Letter of Transmittal to be mailed
after the special meeting.

                                      127


         Following consummation of the merger and upon surrender of all of the
certificates representing shares of Bank of Amador common stock registered in
your name, or a satisfactory indemnity if any of such certificates are lost,
stolen or destroyed, together with a properly completed Letter of Transmittal,
the exchange agent will mail to you the cash and American River Bankshares
common stock to which you are entitled, less the amount of any required
withholding taxes. You will not receive interest on any cash.

         Declaration of dividends by American River Bankshares after the
effective time of the merger will include dividends on all American River
Bankshares common stock issued in the merger, but no dividend or other
distribution payable to the holders of record of American River Bankshares
common stock at or as of any time after the completion of the merger will be
paid to holders of Bank of Amador common stock who receive American River
Bankshares common stock in the merger until they physically surrender all
certificates as described above. After the completion of the merger, the stock
transfer books of Bank of Amador will close, and there will be no further
transfers recorded on the transfer books of Bank of Amador.

Bank of Amador Stock Option Plan

         If you hold one or more options to purchase Bank of Amador common stock
pursuant to the Bank of Amador 1998 Stock Option Plan and you are not a director
or executive officer of Bank of Amador, you will have the right to either:

   (i)      exercise any vested portion of the Bank of Amador stock option to
            acquire Bank of Amador common stock prior to the effective date; or

   (ii)     surrender the option agreement to Bank of Amador prior to the
            effective time of the merger, in which event Bank of Amador will
            purchase the option thereunder at a price equal to (A) the
            difference between (1) the Per Share Consideration and (2) the per
            share exercise price applicable to such Bank of Amador Option; (B)
            multiplied by the total number of Bank of Amador Shares subject to
            such Bank of Amador Option. Bank of Amador shall pay the holders of
            Bank of Amador Options pursuant to this subparagraph (ii)
            immediately prior to the effective time of the merger.

Opinions of Financial Advisors

         Earnings Estimates

         During due diligence, each of American River Bankshares and Bank of
Amador provided to the other party and its financial advisor certain respective
internal operating budget information including earnings estimates for 2004
together with the assumptions underlying those estimates. The earnings estimates
were not prepared with a view toward public disclosure or compliance with
published guidelines of the Securities and Exchange Commission, the guidelines
established by the American Institute of Certified Public Accountants for
Prospective Financial Information or generally accepted accounting principles
and are included in this joint proxy statement-prospectus only because they were
provided to the other party and its financial advisor in connection with the due
diligence conducted during the merger discussions between the parties. Neither
party's independent auditors examined or compiled any of these estimates or
expressed any conclusion or provided any form of assurance with respect to these
estimates.

         The earnings estimates discussed below are forward-looking statements
that are subject to risks and uncertainties that could cause actual results to
differ materially from such estimates and should be read with caution. These
estimates are based upon a variety of assumptions made by American River
Bankshares' and Bank of Amador's managements with respect to, among other
things, industry

                                      128


performance, general economic, market, interest rate and financial conditions,
operating and other revenues and expenses, effective tax rates, capital
expenditures and working capital and other matters. None of the assumptions may
be realized, and as historical performance suggests, they are inherently subject
to significant business, economic and competitive uncertainties and
contingencies, all of which are difficult to predict and many of which are
beyond the control of American River Bankshares and Bank of Amador. Accordingly,
neither American River Bankshares nor Bank of Amador can assure you that the
assumptions made in preparing these estimates will prove accurate, and actual
results may differ materially from such estimates. In addition, the earnings
estimates do not take into account any of the expense savings or charges
expected to result from the merger or any other matters contemplated by the
merger agreement.

         For these reasons, the inclusion of the earnings estimates in the joint
proxy statement-prospectus should not be regarded as an indication that they are
an accurate prediction of future events, and they should not be relied on as
such. No one has made, or makes, any representation regarding these estimates
and, except as may be required by applicable securities laws, neither American
River Bankshares nor Bank of Amador intends to update or otherwise revise the
projections to reflect circumstances existing after the date when made or to
reflect the occurrences of future events even if any or all of the assumptions
are shown to be in error.

         The earnings estimate provided by American River Bankshares was $5.4
million in net income in 2004 with estimated earnings per share growth of 14%
per year thereafter. The earnings estimate provided by Bank of Amador was $1.9
million in net income in 2004 with estimated earnings per share growth of 5% per
year thereafter.

American River Bankshares

         Opinion of American River Bankshares' Financial Advisor

         By letter dated June 14, 2004, American River Bankshares retained
Sandler O'Neill & Partners, L.P. to act as its financial advisor in connection
with a possible business combination with Bank of Amador. Sandler O'Neill is a
nationally recognized investment banking firm whose principal business specialty
is financial institutions. In the ordinary course of its investment banking
business, Sandler O'Neill is regularly engaged in the valuation of financial
institutions and their securities in connection with mergers and acquisitions
and other corporate transactions.

         Sandler O'Neill acted as financial advisor to American River Bankshares
in connection with the proposed merger and participated in certain of the
negotiations leading to the merger agreement. At the July 8, 2004 meeting at
which American River Bankshares' board considered and approved the merger
agreement, Sandler O'Neill delivered to the board its oral opinion, subsequently
confirmed in writing, that, as of such date, the merger consideration was fair
to American River Bankshares from a financial point of view.

         Sandler O'Neill has confirmed its July 8th opinion by delivering to the
board a written opinion updated on October 12, 2004. In rendering its updated
opinion, Sandler O'Neill confirmed the appropriateness of its reliance on the
analyses used to render its earlier opinion by reviewing the assumptions upon
which their analyses were based, performing procedures to update certain of
their analyses and reviewing the other factors considered in rendering its
opinion. The full text of Sandler O'Neill's updated opinion is attached as Annex
B to this joint proxy statement-prospectus. The opinion outlines the procedures
followed, assumptions made, matters considered and qualifications and
limitations on the review undertaken by Sandler O'Neill in rendering its
opinion. The description of the opinion set forth below is qualified in its
entirety by reference to the opinion. We urge you to read the entire opinion
carefully in connection with your consideration of the proposed merger.

                                      129


         Sandler O'Neill's opinion speaks only as of the date of the opinion.
The opinion was directed to the American River Bankshares' board of directors
and is directed only to the fairness of the merger consideration to American
River Bankshares from a financial point of view. It does not address the
underlying business decision of American River Bankshares to engage in the
merger or any other aspect of the merger and is not a recommendation to any
American River Bankshares' shareholder as to how such shareholder should vote at
the special meeting with respect to the merger or any other matter.

         In connection with rendering its opinions, Sandler O'Neill reviewed and
considered, among other things:

         (1)      the merger agreement;

         (2)      certain publicly available financial statements and other
historical financial information of American River Bankshares that Sandler
O'Neill deemed relevant;

         (3)      certain publicly available financial statements and other
historical financial information of Amador that Sandler O'Neill deemed relevant;

         (4)      certain internal operating budget information, including
earnings estimates for American River Bankshares for the year ending December
31, 2004 prepared by and reviewed with senior management of American River
Bankshares and estimates of earnings per share growth for subsequent years
furnished by and discussed with senior management of American River Bankshares;

         (5)      an internal operating budget, including earnings estimates for
Bank of Amador for the year ending December 31, 2004 prepared by and reviewed
with senior management of Bank of Amador and estimates of earnings per share
growth for subsequent years furnished by and discussed with senior management of
Bank of Amador and American River Bankshares;

         (6)      the pro forma financial impact of the merger on American River
Bankshares, based on assumptions relating to transaction expenses, purchase
accounting adjustments and cost savings determined by the senior managements of
American River Bankshares and Bank of Amador;

         (7)      the publicly reported historical price and trading activity
for American River Bankshares' and Bank of Amador's common stock, including a
comparison of certain financial and stock market information for American River
Bankshares and Bank of Amador with similar publicly available information for
certain other companies the securities of which are publicly traded;

         (8)      the financial terms of certain recent business combinations in
the commercial banking industry, to the extent publicly available;

         (9)      the current market environment generally and the banking
environment in particular; and

         (10)     such other information, financial studies, analyses and
investigations and financial, economic and market criteria as Sandler O'Neill
considered relevant.

         Sandler O'Neill also discussed with certain members of senior
management of American River Bankshares the business, financial condition,
results of operations and prospects of American River Bankshares, and held
similar discussions with certain members of senior management of Bank of Amador
regarding the business, financial condition, results of operations and prospects
of Bank of Amador.

         In performing its reviews and analyses and in rendering its opinion,
Sandler O'Neill assumed and relied upon the accuracy and completeness of all the
financial information, analyses and other information

                                      130


that was publicly available or otherwise furnished to, reviewed by or discussed
with it and further relied on the assurances of management of American River
Bankshares and Bank of Amador that they were not aware of any facts or
circumstances that would make such information inaccurate or misleading. Sandler
O'Neill was not asked to and did not independently verify the accuracy or
completeness of any of such information and they did not assume any
responsibility or liability for the accuracy or completeness of any of such
information. Sandler O'Neill did not make an independent evaluation or appraisal
of the assets, the collateral securing assets or the liabilities, contingent or
otherwise, of American River Bankshares or Bank of Amador or any of their
respective subsidiaries, or the collectibility of any such assets, nor was it
furnished with any such evaluations or appraisals. Sandler O'Neill is not an
expert in the evaluation of allowances for loan losses and it did not make an
independent evaluation of the adequacy of the allowance for loan losses of
American River Bankshares or Bank of Amador, nor did it review any individual
credit files relating to American River Bankshares or Bank of Amador. With
American River Bankshares' consent, Sandler O'Neill assumed that the respective
allowances for loan losses for both American River Bankshares and Bank of Amador
were adequate to cover such losses. In addition, Sandler O'Neill did not conduct
any physical inspection of the properties or facilities of American River
Bankshares or Bank of Amador.

         Sandler O'Neill's opinion was necessarily based upon market, economic
and other conditions as they existed on, and could be evaluated as of, the date
of its opinion. Sandler O'Neill assumed, in all respects material to its
analyses, that all of the representations and warranties contained in the merger
agreement and all related agreements were true and correct, that each party to
such agreements would perform all of the covenants required to be performed by
such party under such agreements and that the conditions precedent in the merger
agreement were not waived. Sandler O'Neill also assumed, with American River
Bankshares' consent, that there had been no material change in American River
Bankshares' and Bank of Amador's assets, financial condition, results of
operations, business or prospects since the date of the last financial
statements made available to them; that American River Bankshares and Bank of
Amador would remain as going concerns for all periods relevant to its analyses;
and that the merger would qualify as a tax-free reorganization for federal
income tax purposes. Finally, with American River Bankshares' consent, Sandler
O'Neill relied upon the advice American River Bankshares received from its
legal, accounting and tax advisors as to all legal, accounting and tax matters
relating to the Merger and the other transactions contemplated by the agreement.

         In rendering its July 8, 2004 opinion, Sandler O'Neill performed a
variety of financial analyses. The following is a summary of the material
analyses performed by Sandler O'Neill but is not a complete description of all
the analyses underlying Sandler O'Neill's opinion. The summary includes
information presented in tabular format. In order to fully understand the
financial analyses, these tables must be read together with the accompanying
text. The tables alone do not constitute a complete description of the financial
analyses.

         The preparation of a fairness opinion is a complex process involving
subjective judgments as to the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances. The process, therefore, is not necessarily susceptible to a
partial analysis or summary description. Sandler O'Neill believes that its
analyses must be considered as a whole and that selecting portions of the
factors and analyses without considering all factors and analyses, or attempting
to ascribe relative weights to some or all such factors and analyses, could
create an incomplete view of the evaluation process underlying its opinion.
Also, no company included in Sandler O'Neill's comparative analyses described
below is identical to American River Bankshares or Bank of Amador, and no
transaction is identical to the merger. Accordingly, an analysis of comparable
companies or transactions involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies and other factors that could affect the public trading values or
merger transaction values, as the case may be, of American River Bankshares or
Bank of Amador and the companies to which they are being compared.

                                      131


         The earnings estimates for American River Bankshares and Bank of Amador
used and relied upon by Sandler O'Neill in its analyses were based upon earnings
estimates provided by each company. With respect to such earnings estimates and
all projections of transaction costs, purchase accounting adjustments and
expected cost savings relating to the merger furnished to Sandler O'Neill by
American River Bankshares and Bank of Amador, American River Bankshares' and
Bank of Amador's managements confirmed to Sandler O'Neill that they reflected
the best currently available estimates and judgments of such managements of the
future financial performance of American River Bankshares and Bank of Amador,
respectively, and Sandler O'Neill assumed for purposes of its analyses that such
performances would be achieved. Sandler O'Neill expressed no opinion as to such
earnings estimates, the projections or the assumptions on which they were based.
The earnings estimates for American River Bankshares and Bank of Amador were
prepared for internal purposes only and not with a view towards public
disclosure. These estimates, as well as the other estimates used by Sandler
O'Neill in its analyses, were based on numerous variables and assumptions which
are inherently uncertain and, accordingly, actual results could vary materially
from those set forth in such estimates.

         In performing its analyses, Sandler O'Neill also made numerous
assumptions with respect to industry performance, business and economic
conditions and various other matters, many of which cannot be predicted and are
beyond the control of American River Bankshares, Bank of Amador and Sandler
O'Neill. The analyses performed by Sandler O'Neill are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than suggested by such analyses. Sandler O'Neill prepared its
analyses solely for purposes of rendering its opinion and provided such analyses
to the American River Bankshares' board of directors at the July 8th meeting.
Estimates on the values of companies do not purport to be appraisals or
necessarily reflect the prices at which companies or their securities may
actually be sold. Such estimates are inherently subject to uncertainty and
actual values may be materially different. Accordingly, Sandler O'Neill's
analyses do not necessarily reflect the value of American River Bankshares'
common stock or Bank of Amador's common stock or the prices at which American
River Bankshares' or Bank of Amador's common stock may be sold at any time.

         Summary of Financial Terms of the Merger. Sandler O'Neill reviewed the
financial terms of the proposed transaction. Based upon the closing price of
American River Bankshares' common stock on July 7, 2004 of $19.99 and the
implied resulting merger consideration of $6.825 in cash and 0.6341 shares of
American River Bankshares stock, Sandler O'Neill calculated an implied
transaction value of $19.50 per Bank of Amador share. Based upon Bank of
Amador's financial information as of and for the period ending March 31, 2004,
Sandler O'Neill calculated the following ratios for the transaction:

            Transaction price / LTM EPS                                15.9x
            Transaction price / Book value (1)                         200.6%
            Transaction price / Tangible book value (1)                200.6%
            Tangible book premium/Core deposits (2)                    15.6%
            Premium (discount) to current market price (3)             (8.2%)

            ------------------------
(1) Reflects Bank of Amador's stated book value and tangible book value of $9.72
    per share.
(2) Core deposits exclude all jumbo (balance >$100,000) and brokered
    certificates of deposit.
(3) Based on closing price of Bank of Amador common stock on July 7, 2004 of
    $21.25.

         The aggregate transaction value was approximately $30.5 million, based
upon 1,565,818 shares of Bank of Amador common stock outstanding.

         Stock Trading History. Sandler O'Neill reviewed the history of the
reported trading prices and volume of the common stock of Bank of Amador and
American River Bankshares and the relationship between the movements in the
prices of the common stock of Bank of Amador and American River Bankshares,
respectively, to movements in certain stock indices, including the Standard &
Poor's 500 Index, Standard & Poor's Bank Index, the Nasdaq Bank Index and the
weighted average performance (based upon market capitalization) of a peer group
of publicly traded commercial banks selected by

                                      132


Sandler O'Neill for Bank of Amador and American River Bankshares, respectively.
The composition of the respective peer groups is discussed under "Comparable
Company Analysis" below.

         During the period beginning on July 3, 2003 and ended July 7, 2004,
Bank of Amador's common stock underperformed the Bank of Amador peer group and
each of the indices to which it was compared. During the period beginning on
July 6, 2001 and ended July 7, 2004, Bank of Amador's common stock outperformed
each of the indices to which it was compared, but underperformed the Bank of
Amador peer group.

                            ---------------------------------------------------
                                      Bank of Amador's Stock Performance
-------------------------------------------------------------------------------
                             Beginning Index Value         Ending Index Value
                                  July 3, 2003                July 7, 2004
                            ---------------------------------------------------
Bank of Amador                         100.0%                     88.7%
Bank of Amador Peer Group              100.0                     141.2
Nasdaq Bank Index                      100.0                     115.6
S&P Bank Index                         100.0                     113.3
S&P 500 Index                          100.0                     113.5
                               Beginning Index Value       Ending Index Value
                                  July 6, 2001                July 7, 2004
                            ---------------------------------------------------
Bank of Amador                         100.00%                   140.8%
Bank of Amador Peer Group              100.00                    205.2
Nasdaq Bank Index                      100.00                    139.4
S&P Bank Index                         100.00                    117.4
S&P 500 Index                          100.00                     93.9

         During the period beginning on July 3, 2003 and ended on July 7, 2004
and the period beginning on July 6, 2001 and ended on July 7, 2004, American
River Bankshares' common stock outperformed each of the indices to which it was
compared and the American River Bankshares peer group.

--------------------------------------------------------------------------------
                           American River Bankshares' Stock Performance
--------------------------------------------------------------------------------
                                  Beginning Index Value      Ending Index Value
                                      July 3, 2003              July 7, 2004
                            ---------------------------------------------------
American River Bankshares                100.0%                     129.5%
American River Bankshares                100.0                      119.7
Peer Group
Nasdaq Bank Index                        100.0                      115.6
S&P Bank Index                           100.0                      113.3
S&P 500 Index                            100.0                      113.5
                                  Beginning Index Value      Ending Index Value
                                      July 6, 2001              July 7, 2004
                            ---------------------------------------------------
American River Bankshares                100.0%                     204.7%
American River Bankshares                100.0                      174.7
Peer Group
Nasdaq Bank Index                        100.0                      139.4
S&P Bank Index                           100.0                      117.4
S&P 500 Index                            100.0                       93.9

                                      133


         Comparable Company Analysis. Sandler O'Neill used publicly available
information to compare selected financial and market trading information for
Bank of Amador and American River Bankshares and a comparable group of
commercial banks selected by Sandler O'Neill for the respective institutions.
The Bank of Amador peer group consisted of the following publicly traded
institutions that had total assets ranging from $115.2 million to $211.1
million:

Greater Sacramento Bancorp                         Service 1st Bancorp
Liberty Bancorp                                    Sonoma Valley Bancorp
Norcal Community Bancorp                           Valley Community Bank
Pacific State Bancorp

         The analysis compared publicly available financial information for Bank
of Amador with the median data for the Bank of Amador peer group as of and for
each of the years ended December 31, 1999 through 2003 and as of and for the
twelve months ended March 31, 2004. The table below sets forth the data for Bank
of Amador and the median data for the Bank of Amador peer group as of and for
the twelve-month period ended March 31, 2004 (except as indicated below), with
pricing data as of July 7, 2004.

--------------------------------------------------------------------------------
                   Bank of Amador Comparable Company Analysis
--------------------------------------------------------------------------------
                                                      Amador      Peer Group (1)
                                                      ------      --------------
            Total assets (in millions)                $125.7         $181.6
            Tangible equity/tangible assets             12.00%          7.06%
            LTM return on average assets                 1.72%          0.73%
            LTM return on average equity                14.47%          9.92%
            Price/tangible book value per share        218.51%        187.11%
            Price/LTM earnings per share                17.28x         20.88x
            Market capitalization (in millions)       $ 32.9         $ 24.0

            ------------------------

            (1)  Norcal Community Bancorp data as of or for the 12 months ended
                 December 31, 2003.

                                      134


         The American River Bankshares peer group consisted of the following
publicly traded commercial banking institutions that had total assets ranging
from $327.5 million to $729.6 million:


Bank of Commerce Holdings                          FNB Bancorp
Bank of Marin                                      North Bay Bancorp
BWC Financial Corp.                                North Valley Bancorp
Central Valley Community Bancorp                   Plumas Bancorp
Community Valley Bancorp                           Redwood Empire Bancorp
First Financial Bancorp                            United Security Bancshares
First Northern Community Bancorp

         The analysis compared publicly available financial information for
American River Bankshares with that of each of the institutions in the peer
group as of or for the twelve-month period ended March 31, 2004. The table below
sets forth the data for American River Bankshares and the median data for the
American River Bankshares peer group, with pricing data as of July 7, 2004.



----------------------------------------------------------------------------------------------
                     American River Bankshares Comparable Company Analysis
----------------------------------------------------------------------------------------------
                                                     American River Bankshares      Peer Group
                                                     -------------------------      ----------
                                                                                   
            Total assets (in millions)                         $404.9                 $488.1
            Tangible equity/tangible assets                       9.26%                  8.31%
            LTM return on average assets                          1.29%                  1.11%
            LTM return on average equity                         14.08%                 13.03%
            Price/tangible book value per share                 224.75%                222.24%
            Price/LTM earnings per share                         17.85x                 18.18x
            Market capitalization (in millions)                $ 84.2                 $ 87.2


         Bank of Amador Discounted Dividend Stream and Terminal Value Analysis.
Sandler O'Neill performed an analysis that estimated the future stream of
after-tax dividend flows of Bank of Amador through December 31, 2008 under
various circumstances, assuming Bank of Amador's projected dividend stream and
that Bank of Amador performed in accordance with the earnings estimates for 2004
prepared by and reviewed with Bank of Amador's senior management. For periods
after 2004, Sandler O'Neill assumed an annual earnings per share growth rate of
approximately 5.0% as discussed with senior managements of Bank of Amador and
American River Bankshares. To approximate the terminal value of Bank of Amador's
common stock at December 31, 2008, Sandler O'Neill applied price/last twelve
months' earnings multiples ranging from 10x to 24x, price to projected earnings
multiples ranging from 6x to 20x and multiples of tangible book value ranging
from 150% to 325%. The dividend income streams and terminal values were then
discounted to present values using different discount rates ranging from 8% to
14% chosen to reflect different assumptions regarding required rates of return
of holders or prospective buyers of Bank of Amador common stock. As illustrated
in the following tables, this analysis indicated an imputed range of values per
share of Bank of Amador common stock of $10.81 to $27.34 when applying the
price/last twelve months' earnings multiples, $7.94 to $24.43 when applying the
price/projected earnings multiples and $13.23 to $30.46 when applying multiples
of price/tangible book value. The implied transaction value of the merger as
calculated by Sandler O'Neill was $19.50 per share.

                                      135




                                   Price / Last Twelve Months' Earnings Multiples
---------------------------------------------------------------------------------------------------------------------
Discount Rate       10x          12x          14x          16x          18x          20x          22x          24x
-------------
                                                                                   
     8%         $    13.42   $    15.40   $    17.39   $    19.38   $    21.37   $    23.36   $    25.35   $    27.34
     9%              12.93        14.83        16.74        18.65        20.56        22.47        24.37        26.28
    10%              12.46        14.29        16.12        17.96        19.79        21.62        23.45        25.28
    11%              12.02        13.78        15.53        17.29        19.05        20.81        22.57        24.33
    12%              11.60        13.28        14.97        16.66        18.35        20.04        21.73        23.42
    13%              11.19        12.82        14.44        16.06        17.68        19.30        20.93        22.55
    14%              10.81        12.37        13.93        15.49        17.05        18.60        20.16        21.72
---------------------------------------------------------------------------------------------------------------------

                                        Price / Projected Earnings Multiples
---------------------------------------------------------------------------------------------------------------------
Discount Rate        6x          8x           10x          12x         14x           16x          18x          20x
-------------
     8%         $     9.76   $    11.86   $    13.95   $    16.05   $    18.14   $    20.24   $    22.34   $    24.43
     9%               9.42        11.43        13.44        15.45        17.46        19.47        21.49        23.50
    10%               9.10        11.03        12.96        14.89        16.82        18.75        20.68        22.61
    11%               8.79        10.64        12.49        14.35        16.20        18.05        19.90        21.76
    12%               8.49        10.27        12.05        13.83        15.61        17.39        19.17        20.95
    13%               8.21         9.92        11.63        13.34        15.05        16.76        18.47        20.18
    14%               7.94         9.59        11.23        12.87        14.52        16.16        17.80        19.45
---------------------------------------------------------------------------------------------------------------------

                                        Price / Tangible Book Value Multiples
---------------------------------------------------------------------------------------------------------------------
Discount Rate       150%        175%         200%         225%         250%         275%         300%         325%
-------------
     8%         $    16.47   $    18.47   $    20.47   $    22.47   $    24.47   $    26.46   $    28.46   $    30.46
     9%              15.87        17.78        19.70        21.62        23.53        25.45        27.36        29.28
    10%              15.29        17.13        18.96        20.80        22.64        24.48        26.32        28.16
    11%              14.73        16.50        18.27        20.03        21.80        23.56        25.33        27.10
    12%              14.21        15.90        17.60        19.30        20.99        22.69        24.38        26.08
    13%              13.71        15.33        16.96        18.59        20.22        21.85        23.48        25.11
    14%              13.23        14.79        16.36        17.92        19.49        21.06        22.62        24.19
---------------------------------------------------------------------------------------------------------------------


         American River Bankshares Discounted Dividend Stream and Terminal Value
Analysis. Sandler O'Neill performed an analysis that estimated the future stream
of after-tax dividend flows of American River Bankshares through December 31,
2008 under various circumstances, assuming American River Bankshares' projected
dividend stream and that American River Bankshares performed in accordance with
the internal earnings estimates for 2004 prepared by and reviewed with senior
management of American River Bankshares. For periods after 2004, Sandler O'Neill
assumed an annual earnings per share growth rate of approximately 14% as
discussed with senior management of American River Bankshares. To approximate
the terminal value of American River Bankshares common stock at December 31,
2008, Sandler O'Neill applied price/last twelve months' earnings multiples
ranging from 10x to 24x, price/projected earnings multiples ranging from 6x to
20x and multiples of tangible book value ranging from 150% to 325%. The dividend
income streams and terminal values were then discounted to present values using
different discount rates ranging from 8% to 14% chosen to reflect different
assumptions regarding required rates of return of holders or prospective buyers
of American River Bankshares common stock. As illustrated in the following
table, this analysis indicated an imputed range of values per share of American
River Bankshares common stock of $13.35 to $37.28 when applying the multiples of
price/last twelve months' earnings multiples, $9.75 to $35.59 when applying the
multiples of price/projected earnings multiples and $14.24 to $35.47 when
applying the multiples of price/tangible book value. The closing price of
American River Bankshares' common stock on July 7, 2004 was $19.99.

                                      136




                                   Price / Last Twelve Months' Earnings Multiples
---------------------------------------------------------------------------------------------------------------------
Discount Rate       10x          12x          14x          16x          18x          20x          22x          24x
-------------
                                                                                   
     8%         $    16.82   $    19.74   $    22.66   $    25.59   $    28.51   $    31.44   $    34.36   $    37.28
     9%              16.17        18.97        21.78        24.58        27.39        30.19        33.00        35.80
    10%              15.55        18.24        20.93        23.62        26.32        29.01        31.70        34.39
    11%              14.96        17.54        20.13        22.71        25.30        27.88        30.47        33.05
    12%              14.40        16.88        19.36        21.84        24.33        26.81        29.29        31.77
    13%              13.86        16.25        18.63        21.02        23.40        25.79        28.17        30.56
    14%              13.35        15.65        17.94        20.23        22.52        24.81        27.11        29.40
---------------------------------------------------------------------------------------------------------------------

                                        Price / Projected Earnings Multiples
---------------------------------------------------------------------------------------------------------------------
Discount Rate        6x          8x           10x          12x         14x           16x          18x          20x
-------------
     8%         $    12.22   $    15.56   $    18.90   $    22.23   $    25.57   $    28.91   $    32.25   $    35.59
     9%              11.75        14.96        18.16        21.36        24.57        27.77        30.98        34.18
    10%              11.31        14.39        17.46        20.54        23.61        26.69        29.76        32.83
    11%              10.89        13.84        16.80        19.75        22.70        25.65        28.60        31.56
    12%              10.49        13.33        16.16        19.00        21.83        24.67        27.50        30.34
    13%              10.11        12.83        15.56        18.28        21.01        23.73        26.45        29.18
    14%               9.75        12.36        14.98        17.60        20.22        22.84        25.45        28.07
---------------------------------------------------------------------------------------------------------------------

                                        Price / Tangible Book Value Multiples
---------------------------------------------------------------------------------------------------------------------
Discount Rate       150%        175%         200%         225%         250%         275%         300%         325%
-------------
     8%         $    17.94   $    20.44   $    22.95   $    25.45   $    27.96   $    30.46   $    32.97   $    35.47
     9%              17.25        19.65        22.05        24.45        26.86        29.26        31.66        34.07
    10%              16.59        18.89        21.20        23.50        25.81        28.12        30.42        32.73
    11%              15.96        18.17        20.38        22.60        24.81        27.03        29.24        31.46
    12%              15.36        17.48        19.61        21.74        23.86        25.99        28.12        30.24
    13%              14.79        16.83        18.87        20.92        22.96        25.00        27.05        29.09
    14%              14.24        16.21        18.17        20.13        22.10        24.06        26.03        27.99
---------------------------------------------------------------------------------------------------------------------


         In connection with its analyses, Sandler O'Neill considered and
discussed with the American River Bankshares' board of directors how the present
value analyses would be affected by changes in the underlying assumptions,
including variations with respect to earnings. Sandler O'Neill noted that the
discounted dividend stream and terminal value analysis is a widely used
valuation methodology, but the results of such methodology are highly dependent
upon the numerous assumptions that must be made, and the results thereof are not
necessarily indicative of actual values or future results.

         Analysis of Selected Merger Transactions. Sandler O'Neill reviewed 58
merger transactions announced nationwide from January 1, 2004 through July 7,
2004 involving commercial banks as acquired institutions with transaction values
greater than $15.0 million. Sandler O'Neill also reviewed 10 merger transactions
announced in the western region during the same period involving commercial
banks as acquired institutions with transaction values greater than $15.0
million. Sandler O'Neill reviewed the multiples of transaction price at
announcement to last twelve months' earnings per share, transaction price to
book value per share, transaction price to tangible book value per share,
tangible book premium to core deposits and premium to market price one day prior
to transaction announcement for each transaction and computed high, low, mean
and median multiples and premiums for both groups of transactions. The median
multiples were applied to financial information for Bank of Amador as of and for
the twelve-month period ended March 31, 2004. As illustrated in the following
table, Sandler O'Neill derived an imputed range of values per share of Bank of
Amador common stock of $22.55 to $29.16 based upon the median multiples for
nationwide commercial bank transactions and of $23.04 to $28.91 based upon the
median multiples for the western region commercial bank transactions. The
implied transaction value of the transaction as calculated by Sandler O'Neill as
of July 7, 2004 was $19.50 per share.

                                      137




                                                  Nationwide Transactions    Western Transactions
                                                  -----------------------   -----------------------
                                                    Median      Implied       Median      Implied
                                                   Multiple      Value       Multiple      Value
                                                  ---------    ----------   ---------    ----------
                                                                             
Transaction price / LTM EPS                           23.62x   $    29.16       23.42x   $    28.91
Transaction price / Book value (1)                    255.6%   $    24.61       267.3%   $    25.73
Transaction price / Tangible book value (1)           276.9%   $    26.66       268.1%   $    25.82
Tangible book premium/Core deposits (2)               20.15%   $    22.55       20.90%   $    23.04
Premium (discount) to current market price (3)        23.91%   $    26.33       35.14%   $    28.72


------------------------

(1)  Reflects Bank of Amador's stated book value and tangible book value of
     $9.63 per share as of June 30, 2004.
(2)  Core deposits exclude all jumbo (balance >$100,000) and brokered
     certificates of deposit.
(3)  For the merger, based on the closing price of Bank of Amador common stock
     on July 7, 2004 of $21.25. For comparable transactions, based on market
     price one day prior to announcement of transaction.

         Pro Forma Merger Analysis. Sandler O'Neill analyzed certain potential
pro forma effects of the merger, assuming the following: (1) the merger closes
in the fourth quarter of 2004, (2) outstanding options to purchase Bank of
Amador common stock are, prior to the merger, exchanged for cash equal to the
per share transaction value less the applicable option strike price, and (3)
purchase accounting adjustments, charges and transaction costs associated with
the merger and cost savings determined by senior management of American River
Bankshares and Bank of Amador. This analysis was performed using three potential
exchange ratios for the stock portion of the consideration determined pursuant
to the merger agreement based upon the American River Bankshares measuring price
(with the cash portion of the consideration fixed at $6.825 per share of Bank of
Amador). In order to illustrate the pro forma accretive/dilutive impact of the
transaction at those exchange ratios, Sandler O'Neill used American River
Bankshares measuring prices equal to $19.99 (the closing price of American River
Bankshares' common stock as of July 7, 2004), $18.50 and $23.50. The results of
the analyses illustrate the number of shares issuable in the merger at the
closing price of American River Bankshares' common stock as of July 7, 2004, and
the maximum and minimum, respectively, potential number of American River
Bankshares' shares issuable in the merger and the related accretion to earnings
per share at December 31, 2005 (the first full year following completion of the
merger) and dilution to tangible book value at December 31, 2004 (the assumed
closing date of the merger). The following tables show the results of those
analyses at the alternative exchange ratios:



-----------------------------------------------------------------------------------
 American River
   Bankshares      Exchange    Shares     Transaction   12/31/05 EPS   12/31/04 TBV
Measuring Price     Ratio      Issued       Value        Accretion      Accretion
                                                          
    $ 19.99         0.6341      992,834   $     19.50        5.9%        (17.7%)
    $ 18.50         0.6851    1,072,797   $     19.50        4.4%        (18.9%)
    $ 23.50         0.5394      844,542   $     19.50        8.9%        (15.3%)
-----------------------------------------------------------------------------------


         The actual results achieved by the combined company may vary from
projected results and the variations may be material.

         American River Bankshares has paid Sandler O'Neill a fee of $75,000 in
connection with rendering its services related to the merger and the delivery of
its opinion. American River Bankshares has also agreed to reimburse certain of
Sandler O'Neill's reasonable out-of-pocket expenses incurred in connection with
its engagement and to indemnify Sandler O'Neill and its affiliates and their
respective partners, directors, officers, employees, agents, and controlling
persons against certain expenses and liabilities, including liabilities under
securities laws.

         In the ordinary course of its business as a broker-dealer, Sandler
O'Neill may purchase securities from and sell securities to American River
Bankshares and Bank of Amador and their respective affiliates

                                      138


and may actively trade the debt and/or equity securities of American River
Bankshares and Bank of Amador and their respective affiliates for its own
account and for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities.

Bank of Amador

         Hoefer & Arnett Incorporated was engaged by Bank of Amador to advise
Bank of Amador's board of directors as to the fairness to Bank of Amador, from a
financial point of view, of the merger agreement, the merger and the
consideration to be paid by American River Bankshares to Bank of Amador
shareholders under the merger agreement.

         Bank of Amador's board of directors retained Hoefer & Arnett as its
financial advisor because Hoefer & Arnett is a nationally recognized investment
banking firm with substantial expertise in transactions similar to the proposed
transaction and is familiar with Bank of Amador and its business. The firm is a
member of the National Association of Securities Dealers (NASD) with direct
access to inter-dealer markets in NASD Automated Quotation (NASDAQ) and
Over-the-Counter (OTC) securities, and makes markets in securities under its
symbol HOFR. As part of its investment banking activities, Hoefer & Arnett is
regularly engaged in the independent valuation of financial institutions and
securities in connection with mergers, acquisitions, underwritings, sales and
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.

         Hoefer & Arnett rendered to the board of directors of Bank of Amador an
oral opinion on June 28, 2004. On July 8, 2004 the parties entered into the
merger agreement. Hoefer & Arnett confirmed its oral opinion by delivery of its
written opinion, that pursuant to the terms of the merger agreement and subject
to various assumptions, matters considered and limitations described therein,
the American River Bankshares' common stock and cash to be received is fair,
from a financial point of view, to the shareholders of Bank of Amador. A copy of
Hoefer & Arnett's opinion dated October 12, 2004 is attached as Appendix C to
this proxy statement-prospectus and should be read in its entirety.

         No limitations were imposed by Bank of Amador's board of directors upon
Hoefer & Arnett with respect to the investigations made or procedures followed
in rendering its opinion. Hoefer & Arnett's fairness opinion is based on the
financial analysis described below. Hoefer & Arnett's fairness opinion is for
the use and benefit of Bank of Amador's board of directors in connection with
its consideration of the proposed transaction. Hoefer & Arnett's fairness
opinion is not intended to be and does not constitute a recommendation to any
Bank of Amador shareholder as to how such shareholder should vote with respect
to the proposed transaction. Hoefer & Arnett's fairness opinion does not address
Bank of Amador's underlying business decision to proceed with the proposed
transaction.

         In arriving at its opinion, Hoefer & Arnett reviewed and analyzed,
among other things, the following:

     o   the merger agreement;
     o   annual reports to shareholders and annual reports on Form 10-K of Bank
         of Amador for December 31, 2003, December 31, 2002 and December 31,
         2001; quarterly Reports on Form 10-Q of Bank of Amador for the quarters
         ended March 31, 2004, September 30, 2003, June 30, 2003 and March 31,
         2003;
     o   annual reports to shareholders and annual reports on Form 10-K of
         American River Bankshares for December 31, 2003, December 31, 2002 and
         December 31, 2001; quarterly Reports on Form 10-Q of American River
         Bankshares for the quarters ended March 31, 2004, September 30, 2003,
         June 30, 2003 and March 31, 2003;

                                      139


     o   certain other information relating to Bank of Amador and American River
         Bankshares, including earnings estimates provided to Hoefer & Arnett or
         discussed with Hoefer & Arnett by Bank of Amador and American River
         Bankshares and met with the managements of Bank of Amador and American
         River Bankshares to discuss past and current operations, financial
         condition and prospects, as well as the results of regulatory
         examinations;
     o   the publicly reported historical prices and trading activity for Bank
         of Amador and American River Bankshares stock;
     o   the nature and financial terms of certain other merger and acquisition
         transactions involving banks and bank holding companies; and
     o   certain other information, financial studies, analyses and
         investigations and financial, economic and market criteria which Hoefer
         & Arnett deemed relevant.

         In conducting its review and in rendering its opinion, Hoefer & Arnett
relied upon and assumed the accuracy and completeness of the financial and other
information provided to it or publicly available, and did not attempt to
independently verify the same. Hoefer & Arnett relied upon the management of
Bank of Amador and American River Bankshares as to the reasonableness of the
earnings estimates and projections (and the assumptions and bases therefor)
provided to it, and Hoefer & Arnett assumed that such earnings estimates and
projections reflect the best currently available estimates and judgments of Bank
of Amador and American River Bankshares management.

         Neither Bank of Amador nor American River Bankshares publicly disclose
internal management earnings estimates of the type furnished to Hoefer & Arnett
in connection with its analysis of the financial terms of the proposed
transaction, and such estimates were not prepared with a view towards public
disclosure. These estimates were based on numerous variables and assumptions
which are inherently uncertain and which may not be within the control of the
management of Bank of Amador or American River Bankshares, including without
limitation to, the general economic, regulatory and competitive conditions.
Accordingly, actual results could vary materially from those set forth in such
earnings estimates.

         Hoefer & Arnett did not make or obtain any evaluations or appraisals of
the assets or liabilities of Bank of Amador or American River Bankshares. Hoefer
& Arnett is not an expert in the valuation of allowances for loan losses and it
did not make an independent evaluation of the adequacy of the allowance for loan
losses of either Bank of Amador or American River Bankshares, nor did it review
any individual loan credit files. Hoefer & Arnett assumed that the aggregate
allowance for loan losses set forth in the financial statements of Bank of
Amador and American River Bankshares is adequate to cover such losses. For
purposes of its opinion, Hoefer & Arnett assumed that the reorganization would
have the tax, accounting and legal effects described in the merger agreement.
Hoefer & Arnett's opinion as expressed herein is limited to the fairness, from a
financial point of view, to the shareholders of Bank of Amador with respect to
the terms of the proposed merger of Bank of Amador with and into American River
Bankshares.

         The opinion expressed by Hoefer & Arnett was based upon market,
economic and other relevant considerations as they existed and have been
evaluated as of the date of the opinion and the information made available to it
through that date. Events occurring after the date of issuance of the opinion,
including but not limited to, changes affecting the securities markets, the
results of operations or material changes in the assets or liabilities of Bank
of Amador or American River Bankshares could materially affect the assumptions
used in preparing the opinion. Hoefer & Arnett assumed that all of the
representations and warranties contained in the merger agreement and all related
agreements are true and correct, that each party to such agreements will perform
all of the covenants required to be performed by such party under such
agreements and that the conditions precedent in the merger agreement are not
waived.

                                      140


         The following is a summary of the material financial analyses performed
by Hoefer & Arnett in connection with the preparation of its opinion and does
not purport to be a complete description of all the analyses performed by Hoefer
& Arnett. The summary includes information presented in tabular format, which
should be read together with the text that accompanies those tables. Hoefer &
Arnett believes that its analyses must be considered as a whole and that
selecting portions of such analyses and the factors considered therein, without
considering all factors and analyses, could create an incomplete view of the
analyses and the processes underlying its opinion. The preparation of a fairness
opinion is a complex process involving subjective judgments and is not
necessarily susceptible to partial analysis or summary description. In its
analyses, Hoefer & Arnett made numerous assumptions with respect to industry
performance, business and economic conditions, and other matters, many of which
are beyond the control of Bank of Amador, American River Bankshares and Hoefer &
Arnett. Any estimates contained in Hoefer & Arnett's analyses are not
necessarily indicative of future results or values, which may be significantly
more or less favorable than such estimates. Estimates of values of companies do
not purport to be appraisals or necessarily reflect the prices at which
companies or their securities may actually be sold.

         Summary of Proposal. Hoefer & Arnett reviewed the financial terms of
the proposed transaction. Based on 1,566,281 shares of Bank of Amador common
stock outstanding and a market price of $19.90 per share for American River
Bankshares common stock, the transaction value for Bank of Amador shareholders
equals $19.50 per common share or $30,542,479 in aggregate.

Implied Per Share Transaction Value                                       $19.50

Transaction Value to March 31, 2004 Book Value                            2.01x

Transaction Value to March 31, 2004 Tangible Book Value                   2.01x

Transaction Value to Estimated 2004 Earnings                              15.85x

Transaction Value to March 31, 2004 Assets                                24.31%

Transaction Value to March 31, 2004 Core Deposits                         15.53%

         Analysis of Selected Bank Merger Transactions. Hoefer & Arnett reviewed
selected commercial bank transactions announced between January 1, 2003 and June
30, 2004 in which the acquired banking organization was located in California
and had total assets under $250 million (the "California Transactions"). Hoefer
& Arnett compared financial performance ratios at Bank of Amador with financial
performance ratios of the banking organizations making up the California
Transactions.

         The following table compares selected performance and financial ratios
of Bank of Amador at March 31, 2004 with the median ratios for the California
Transactions:

                                   Amador             California Transactions
                                   ------             -----------------------
Total Assets                   $125.7 million              $101.6 million
Return on Assets                    1.54%                       0.75%
Return on Equity                   13.12%                      10.03%
Equity to Assets                   12.00%                       8.15%

         Hoefer & Arnett reviewed the multiples of transaction value to stated
book value, transaction value to tangible book, transaction value to 2003
earnings and estimated 2004 earnings, transaction value to assets and tangible
book premium to core deposits and calculated high, low, mean and median
multiples for the California Transactions. The median multiples were then
applied to Bank of Amador's balance sheet information as of March 31, 2004, 2003
earnings and estimated 2004 earnings to derive an imputed range of values per
share of Bank of Amador's common stock. The following table sets forth the mean
multiples as well as the imputed values based upon those median multiples.

                                      141


                                                   California           Implied
                                                Median Multiple          Value
                                                ---------------          -----
Transaction Value/Book Value                         2.27x               $22.06
Transaction Value/Tangible Book Value                2.27x               $22.06
Transaction Value/2003 Earnings                     22.65x               $28.99
Transaction Value/Est. 2004 Earnings                22.65x               $27.86
Transaction Value/Assets                            18.25%               $14.82
Tangible Premium/Core Deposits                      13.43%               $18.26

         As illustrated in the above table, Hoefer & Arnett derived a range of
imputed values per share of Bank of Amador's common stock of $14.82 and $28.99
per share, based upon the median multiples for the California Transactions.

         Present Value Analysis. Hoefer & Arnett calculated the present value of
theoretical future earnings of Bank of Amador and compared the transaction value
to the calculated present value of Bank of Amador's stock on a stand-alone
basis. Based on projected earnings for Amador for 2004 through 2008, discount
rates ranging from 10% to 14%, and including a residual value, the stand-alone
present value of Bank of Amador's stock ranged from $10.85 to $15.41 per share.

         Discounted Cash Flow Analysis. Using a discounted cash flow analysis,
Hoefer & Arnett estimated the net present value of the future streams of
after-tax cash flow that Bank of Amador could produce to benefit a potential
acquiror, referred to as dividendable net income, and added a terminal value.
Based on projected earnings for Bank of Amador for 2004 through 2008, we
calculated assumed after-tax distributions to a potential acquiror such that its
tier 1 leverage ratio would be maintained at 7.00%. The terminal values for Bank
of Amador were calculated based on Bank of Amador's projected 2008 equity and
earnings, the median price to book and price to earnings multiples paid in the
California Transactions and utilized a discount rate of 10%. This discounted
cash flow analysis indicated implied values of $17.96 and $28.08.

         Accretion/Dilution Analysis. Hoefer & Arnett analyzed the financial
implications of the merger to the Bank of Amador stockholders. This analysis
indicated the level of accretion to earnings per share and equity per share that
a stockholder of Bank of Amador would achieve on a pro forma equivalent basis,
based on the above mentioned terms of the transaction and including assumed cost
savings and revenue enhancement opportunities. Such cost savings and revenue
enhancements were assumed to equal approximately 29% of Bank of Amador's total
overhead expenses in 2003. The table below summarizes these results:

                                                  Est. 2004         Est. 2005
                                                   Earnings          Earnings
                                                   --------          --------
                Bank of Amador Standalone             $1.23             $1.30
                Pro Forma Equivalent                  $1.22             $1.52
                % Accretion                          -0.81%            16.92%



         Stock Trading History. Hoefer & Arnett reviewed the closing per share
market prices and volumes for Bank of Amador and American River Bankshares
common stock on a daily basis from June 30, 2003 to June 30, 2004. Although Bank
of Amador's common stock is listed for trading on the OTC Bulletin Board the
trading volume in Bank of Amador common stock has been limited. For the last
twelve months, the average daily trading volume for Bank of Amador was 400
shares and on many days there were no trades in Bank of Amador's common stock.
American River Bankshares is listed for trading on Nasdaq and for the previous
twelve months, the average daily trading volume for American River Bankshares
was 3,226 shares. Hoefer & Arnett compared the stock price performance for Bank
of Amador and American River Bankshares to movements in certain stock indices,
including the Standard & Poor's 500 Index, the Nasdaq Bank Index and the median
performance of publicly traded banking


                                      142


organizations located in the West. During the one year period ended June 30,
2004, Bank of Amador's common stock underperformed each of the indices to which
it was compared. During the one year period ended June 30, 2004, American River
Bankshares' common stock outperformed each of the indices to which it was
compared (Source: SNL Financial).

                                     Beginning Index Value    Ending Index Value
                                         June 30, 2003           June 30, 2004
                                         -------------           -------------
        Bank of Amador                      100.00%                  84.00%
        American River Bankshares           100.00%                 120.61%
        Western Banks                       100.00%                 119.51%
        Nasdaq Bank Index                   100.00%                 118.37%
        S&P 500 Index                       100.00%                 117.07%

         Hoefer & Arnett compared selected financial information, ratios and
multiples for American River Bankshares to corresponding financial information,
ratios and multiples of publicly traded California banking organizations with
total assets greater than $300 million. The table below and Section VIII set
forth the comparative data as of March 31, 2004 with pricing data as of June 30,
2004 (Source: SNL Financial).



                                                      American River        Median for
                                                        Bankshares       California Group
                                                        ----------       ----------------
                                                                          
        Total assets                                     $404.9              $904.5
        Equity to assets                                    9.27%               8.43%
        LTM Return on average assets                        1.17%               1.27%
        LTM Return on average equity                       12.88%              14.32%
        Efficiency Ratio                                   56.15%              60.31%
        NPAs/Total Assets                                   0.03%               0.31%
        Dividend Yield                                      2.31%               0.89%
        Price to book value per share                       2.23x               2.33x
        Price to tangible book value per share              2.24x               2.50x
        Price to LTM earnings per share                    17.5x               17.8x


         Hoefer & Arnett has not previously provided investment banking and
financial advisory services to Bank of Amador. Hoefer & Arnett provided
investment banking and financial advisory services to American River Bankshares
in 2000 for which it received compensation. Hoefer & Arnett Incorporated
provides a full range of financial advisory and securities services and, in the
course of its normal trading activities, may effect transactions and hold
securities of Bank of Amador and American River Bankshares for its own account
and for the accounts of customers.

         In its engagement letter, dated June 21, 2004, Bank of Amador agreed to
pay Hoefer & Arnett a fee of approximately $38,000 in connection with Hoefer &
Arnett's acting as financial advisor and rendering its opinion, which is
contingent upon the consummation of the merger. In addition, Bank of Amador has
agreed to indemnify Hoefer & Arnett against certain liabilities and expenses
arising out of or incurred in connection with its engagement, including
liabilities and expenses which may arise under the federal securities laws.

Interests of Officers and Directors in the Merger

American River Bankshares

         American River Bankshares directors and executive officers have
interests in the merger in addition to their interests as American River
Bankshares shareholders. The American River Bankshares

                                      143


board of directors is aware of these interests and considered them, among other
matters, in recommending approval of the merger proposal.


         As of the record date, the directors and executive officers of American
River Bankshares owned an aggregate of 465,843 shares, or 10.9% of the shares of
American River Bankshares common stock outstanding (excluding 175,649 shares
subject to options exercisable currently or within 60 days of the record date).
As of the record date, none of the directors or executive officers of Bank of
Amador owned any shares of American River Bankshares common stock. See
"Information about American River Bankshares and American River Bank - Security
Ownership of Directors, Executive Officers and 5% Shareholders" on page 39.


Bank of Amador

         Bank of Amador directors and executive officers have interests in the
merger in addition to their interests as Bank of Amador shareholders. The Bank
of Amador board of directors is aware of these interests and considered them,
among other matters, in recommending approval of the merger proposal.


         As of the record date, the directors and executive officers of Bank of
Amador owned an aggregate of 429,788 shares, or 27.4% of the shares of Bank of
Amador common stock outstanding (excluding 209,016 shares subject to options
exercisable currently or within 60 days of the record date). As of the record
date, none of the directors or executive officers of American River Bankshares
owned any shares of Bank of Amador common stock, except Mitchell A. Derenzo who
owned 525 shares and Douglas E. Tow who owned 210 shares held in his spouse's
IRA account. See "Information about Bank of Amador - Security Ownership of
Directors, Executive Officers and 5% Shareholders" on page 92.


         Under the merger agreement, American River Bankshares has agreed to
appoint two current directors of Bank of Amador, consisting of Bank of Amador's
current President and Chief Executive Officer, Larry D. Standing, and a second
Bank of Amador director to be determined by mutual agreement of American River
Bankshares and Bank of Amador, to the American River Bank board of directors.
The non-employee director to be determined will be entitled to receive the
directors' fees which American River Bank extends to its directors. Mr. Standing
will also be appointed as the President of the division of American River Bank
to be known as "Bank of Amador, a division of American River Bank," and as a
member of the executive management committee of American River Bankshares. Mr.
Standing's existing retirement benefits under a director retirement agreement
and a salary continuation agreement will be assumed by American River
Bankshares. Mr. Standing will also enter into an employment agreement
substantially in the form of Exhibit F to the merger agreement attached as Annex
A to this joint proxy statement-prospectus. Consequently, Mr. Standing will also
be entitled to participate in the benefits described in his employment
agreement.

         Following the effective time of the merger, American River Bankshares
is obligated to indemnify present and former directors and officers of Bank of
Amador in connection with any claim arising out of actions or omissions
occurring at or prior to the effective time to the fullest extent that Bank of
Amador is permitted to indemnify its directors and officers. In addition,
American River Bankshares is obligated for three years from the effective time,
to provide the portion of directors and officers liability insurance that serves
to reimburse the present and former directors and officers of Bank of Amador on
terms and conditions comparable to those provided by Bank of Amador; provided,
however, that American River Bankshares is not required to spend on an aggregate
basis more than 150% of the current annual amount spent by Bank of Amador to
procure such insurance coverage.

         Immediately prior to the closing of the merger, the eight non-employee
directors and the Senior Vice President and Chief Financial Officer will also
receive cash payments in connection with the termination of their respective
retirement plans in the approximate aggregate amount of $1,314,367. The Senior
Vice President and Chief Financial Officer will also receive a cash severance
payment in the approximate amount of $40,128. In addition, all of the directors
and executive officers holding vested

                                      144


stock options of Bank of Amador will receive cash payments in connection with
the cancellation of their outstanding stock options in an amount equal to the
difference between the American River Bankshares measuring price used to
calculate the share exchange conversion ratio in the merger and the stock option
exercise price. Bank of Amador's directors and executive officers hold vested
stock options to acquire 209,016 shares of Bank of Amador common stock in the
aggregate with an average exercise price of $13.78 per share. Based on an
assumed American River Bankshares measuring price of $19.50 per share, it is
anticipated that Bank of Amador's directors and executive officers will receive
an approximate amount of $1,195,572 in the aggregate for the cancellation of
their stock options if the merger is consummated.

         The members of the Bank of Amador board of directors have each entered
into Shareholder Agreements with American River Bankshares, pursuant to which
they have agreed to vote the shares of Bank of Amador common stock owned or
controlled by them in favor of, and to approve the merger agreement and the
principal terms of the merger. The Shareholder Agreements also prohibit the
directors from entering into any agreement to sell, transfer or otherwise
dispose of their shares of Bank of Amador stock and require the directors,
subject to their fiduciary duties to the shareholders of Bank of Amador, to use
their best efforts to recommend and obtain the approval of the shareholders of
Bank of Amador of the merger agreement, the principal terms of the merger, and
any other matters contemplated by the merger agreement which requires approval
of the shareholders of Bank of Amador. The directors agree not to exercise any
outstanding Bank of Amador stock options held by them prior to the closing.

Conduct of Business Pending the Merger

         Under the merger agreement, American River Bankshares and Bank of
Amador have agreed that, during the period from the date of the merger agreement
to the effective time of the merger, each will:

         o        carry on its business in the ordinary course as conducted
                  prior to the execution of the merger agreement and in
                  compliance with safe and sound banking practices and
                  applicable laws and regulations;

         o        consult with the other parties as to decisions or actions not
                  in the ordinary course of business;

         o        preserve its business and business organizations intact, and
                  preserve the goodwill of its customers and others having
                  business relations with it;

         o        maintain its properties in customary repair, working order and
                  condition;

         o        comply with all applicable laws, regulations, decrees and
                  regulatory requirements, promptly forward to each party all
                  communications received from any regulatory agency that are
                  not prohibited by the regulatory agency from being disclosed,
                  and inform each party of any material restrictions imposed by
                  any regulatory agency on its business;

         o        use its best efforts to keep in force at not less than its
                  present limits all insurance policies (including deposit
                  insurance of the Federal Deposit Insurance Corporation) to the
                  extent reasonably practicable;

         o        use its reasonable best commercial efforts to keep available
                  the services of its present officers and employees;

         o        timely file all reports, tax returns and other documents
                  required to be filed with federal, state, local and other
                  authorities;

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         o        prior to foreclosure on any property concerning which it has
                  knowledge, or should have knowledge, that any hazardous
                  material was or is present, manufactured, recycled, reclaimed,
                  released, stored, treated, or disposed of at or from the
                  property, conduct an environmental audit and provide the
                  results of the audit to and consult with each party regarding
                  the significance of the audit;

         o        not sell, lease, pledge, assign, encumber or otherwise dispose
                  of any of its assets except in the ordinary course of its
                  business, for adequate value, without recourse and consistent
                  with its customary practice;

         o        not take any action with respect to its investments or risk
                  management arrangements which are inconsistent with the
                  policies established by its board of directors;

         o        not take any action to create, locate or terminate the
                  operations of any banking office or branch, or to form any new
                  subsidiary or affiliated entity;

         o        not take any action to file, answer, settle or compromise any
                  litigation or other proceeding involving an amount in excess
                  of $50,000;

         o        not amend its articles of incorporation or bylaws or the
                  articles of incorporation or bylaws of any subsidiary; make
                  any change in its authorized, issued or outstanding capital
                  stock or any other equity security; issue, grant, sell,
                  pledge, assign or otherwise encumber or dispose of, or
                  purchase, redeem, retire or otherwise acquire (other than in a
                  fiduciary capacity), shares of or securities convertible into,
                  capital stock or other equity securities of their respective
                  companies, or enter into any agreement, call or commitment of
                  any character so to do; grant or issue any stock option
                  relating to or right to acquire shares of its capital stock or
                  other equity security; or agree to do any of the foregoing,
                  except as expressly provided in the merger agreement; except
                  for issuance of shares upon exercise of options granted under
                  the American River Bankshares 1995 and 2000 Stock Option
                  Plans, or the Bank of Amador 1998 Stock Option Plan and
                  outstanding at the time the merger agreement was executed; and

         o        not declare, set aside or pay any dividend or other
                  distribution in respect of its common stock other than regular
                  quarterly cash dividends on its common stock in amounts
                  substantially equivalent to cash dividends paid in the years
                  prior to the date of the merger agreement.

         In addition, Bank of Amador has agreed that it will:

         o        take all necessary action to terminate the Bank of Amador 1998
                  Stock Option Plan at the effective time of the merger and to
                  allow the exercise or surrender (in exchange for the cash
                  payment) of Bank of Amador options outstanding thereunder
                  prior to the effective time of the merger;

         o        pending consummation of the merger, not make, approve, or
                  grant to any of its directors, officers, employees or agents
                  with annual salaries in excess of $75,000: (1) any increase in
                  the compensation payable or to become payable by it
                  (including, but not limited to, compensation through any
                  profit sharing, pension, retirement, severance, incentive or
                  other employee benefit program or arrangement; (2) any bonus
                  payment or any agreement to make a bonus payment; (3) any
                  stock option, warrant or other right to acquire capital stock
                  (except as provided in the merger agreement); (4) any
                  employment or consulting agreement, unless American River
                  Bankshares has given its prior written consent, and except for
                  payments to officers and employees of Bank of Amador of
                  regular salary increases, consistent with past practices in
                  connection with regular salary reviews or bonuses consistent
                  with past practices, as disclosed to American River
                  Bankshares;

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         o        not cause, allow or suffer its officers or agents to commit to
                  any loan or renewal which does not comply in all material
                  respects with its credit policies in effect and as disclosed
                  to American River Bankshares prior to the date of the merger
                  agreement, provided, however, that all new stand-alone
                  extensions of credit over $250,000 and $500,000 for real
                  estate secured loans, except for conforming FHLMC and FNMA
                  loans, will be subject to American River Bankshares' prior
                  written consent. The prior written consent of American River
                  Bankshares will be deemed waived for any new stand-alone
                  extension of credit that is below $250,000 and $500,000 for
                  real estate secured loans and where the new stand-alone
                  extension of credit or real estate secured loan is either in
                  compliance with Bank of Amador credit policy and the approving
                  officer has the requisite lending authority or has (have) been
                  approved by the Bank of Amador loan committee or equivalent
                  committee of the Bank of Amador board of directors performing
                  that function. Notwithstanding the foregoing, all loans and
                  extensions of credit, and any renewals, extensions or
                  modifications thereof by Bank of Amador to Bank of Amador
                  directors, officers, employees or their family members,
                  related interests, or affiliates, shall be subject to the
                  prior written consent of American River Bankshares;

         o        notify American River Bankshares promptly in writing upon the
                  occurrence of: (1) the classification of any loan as
                  "Non-Accrual," "Watch," "Other Assets Specially Mentioned,"
                  "Substandard," "Doubtful" or "Loss," or (2) the filing or
                  commencement of any legal action or other proceeding or
                  investigation against Bank of Amador, and will provide to
                  American River Bankshares on request reports on specified
                  loans as described in the merger agreement; and

         o        subject to specified exceptions, incur or commit to any
                  capital expenditures for more than $50,000 in the aggregate.
                  Bank of Amador shall expense and record in its financial
                  records not later than the date of the Effective Date, the
                  amount of Three Million One Hundred Forty-Eight Thousand One
                  Hundred Six Dollars ($3,148,106). Such amount shall be used to
                  (i) pay optionholders in accordance with Section 2.6 hereof,
                  (ii) pay the cost of accelerated retirement benefits for
                  directors and officers who resign their positions as of the
                  Effective Date, (iii) reserve an amount agreed upon by
                  American River Bankshares and American River Bank for a
                  pending data processing contract dispute between Bank of
                  Amador and a third party vendor, and (iv) reserve an amount
                  agreed upon by American River Bankshares and Bank of Amador
                  for severance payments.

         Additionally, American River Bankshares has agreed that it will:

         o        take all necessary action to list American River Bankshares'
                  common stock exchanged in the merger for trading on the Nasdaq
                  National Market, to be effective as soon as practicable
                  following the effective time of the merger.

         o        appoint Larry D. Standing and a second director of Bank of
                  Amador (selected by mutual agreement of American River
                  Bankshares and Bank of Amador) to the American River Bank
                  board of directors. Mr. Standing will also be appointed as the
                  President of "Bank of Amador, a division of American River
                  Bank" and as a member of the executive management committee of
                  American River Bankshares.

Additional Agreements

         No Solicitations. Subject to the fiduciary duty of Bank of Amador board
of directors, prior to the effective time of the merger, Bank of Amador has
agreed not to enter into a transaction or series of transactions with any third
persons or groups providing for the acquisition of all or a substantial part of
Bank of Amador, whether by way of merger, exchange of stock, sale of assets, or
otherwise ("Business

                                      147


Combination"). Bank of Amador has also agreed not to acquire or agree to acquire
any of its own capital stock or the capital stock or assets (except in a
fiduciary capacity or in the ordinary course of business) of any other entity,
or commence any proceedings for winding up and dissolution affecting either of
them, solicit or encourage any inquiries, discussions or proposals for any
Business Combination with any third party. Bank of Amador has also agreed not to
disclose, directly or indirectly, any nonpublic information to any group
concerning Bank of Amador's business, properties, books or records or otherwise
encourage any person, having any actual or prospective role with respect to any
Business Combination. However, in the event the Bank of Amador board receives a
bona fide unsolicited offer for a Business Combination of Bank of Amador with
another entity, and reasonably determines, upon advice of counsel, that as a
result of the offer, any duty to act or to refrain from doing any act under the
merger agreement is inconsistent with the continuing fiduciary duties of the
board to its shareholders, subject to the provisions of the merger agreement,
including payment of a termination fee to American River Bankshares, a violation
of Bank of Amador's covenants described above will be excused, and the violation
will not constitute the failure of any condition or a breach of the merger
agreement. If the merger is terminated because Bank of Amador breaches the
agreement against entering into a Business Combination, Bank of Amador is
required to pay to American River Bankshares a termination fee. See
"--Termination Fees" on page 152.

         Filings and Other Actions. In the merger agreement, American River
Bankshares and Bank of Amador have each agreed to use all reasonable efforts:

         o        to take all actions necessary to comply promptly with all
                  legal requirements which may be imposed on each party or its
                  subsidiaries with respect to the transactions contemplated by
                  the merger agreement;

         o        to obtain (and to cooperate with the other party to obtain)
                  any governmental or private consent, authorization, order,
                  exemption or approval which is required to be obtained or made
                  by each party or any of its subsidiaries in connection with
                  the merger and the other transactions contemplated by the
                  merger agreement; and

         o        to use its best efforts to take all actions necessary and
                  proper or advisable to complete, as soon as practicable, the
                  transactions contemplated by the merger agreement.

         Indemnification; Directors' And Officers' Insurance. Under the merger
agreement, from and after the effective date, American River Bankshares and Bank
of Amador will each indemnify and hold harmless each present or former officer
or director of the other against all losses, claims, damages, liabilities,
costs, expenses or judgments or amounts that are paid in the settlement of or in
connection with any claim, action, suit, proceeding or investigation based on or
arising out of any untrue statement or alleged untrue statement of any material
fact contained in this joint proxy statement-prospectus.

         Additionally, from and after the effective date, American River
Bankshares will include in its director and officer insurance policy persons who
served as directors and officers of Bank of Amador or obtain extended coverage
under Bank of Amador's director and officer insurance policy to cover claims
made for a period of three years after the effective date of the merger
regarding acts or omissions of Bank of Amador's directors or officers prior to
the effective date of the merger. However, American River Bankshares will not be
obligated to make annual premium payments for the insurance to the extent the
premiums exceed 150% of the premiums paid by Bank of Amador for the insurance,
as previously disclosed to American River Bankshares.

Representations and Warranties

         The merger agreement contains customary mutual representations by each
of American River Bankshares and Bank of Amador relating to, among other things
(1) corporate organization, existence and power to enter into the merger
agreement and consummate the merger, (2) capitalization, (3) due

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authorization, execution, delivery, performance and enforceability of the merger
agreement, (4) required governmental and third party consents and approvals and
that neither the merger agreement nor the transactions contemplated by the
merger agreement violate either party's organizational documents, applicable law
and specified material agreements, (5) financial statements, (6) compensation of
officers and employees, (7) the accuracy of the information provided by each of
American River Bankshares and Bank of Amador for inclusion in this joint proxy
statement-prospectus, (8) compliance with applicable laws and possession of
requisite governmental permits and licenses, (9) filing of tax returns, payment
of taxes and related matters, (10) material contracts, (11) employee benefit
plans and agreements, (12) title to properties, (13) transactions with
affiliates, (14) the absence of material litigation, (15) insurance, (16) bank
regulatory matters, (17) the absence of material changes or events since March
31, 2004, (18) the absence of undisclosed liabilities, (19) retention of
brokers, (20) ownership of intellectual property, (21) adequacy of loan
reserves, (22) compliance with the Community Reinvestment Act, (23) review and
performance of Bank of Amador loans, (24) absence of restrictions on ability to
dispose of investments, (25) absence of collective bargaining agreements, (26)
validity and prudence of risk management instruments, (27) accuracy of
information in governmental filings to be made in connection with the merger,
and (28) accuracy of representations and warranties as of the closing date.

         The representations and warranties of American River Bankshares and
Bank of Amador terminate as of the effective time of the merger.

Conditions to the Completion of the Merger

         The merger will occur only if specified conditions are satisfied,
unless the board of directors of American River Bankshares or the board of
directors of Bank of Amador, as applicable, waives any condition that is not
satisfied. It is not certain when or if the conditions to the merger will be
satisfied or waived, or if the merger will be consummated.

         Each party's obligation to complete the merger is subject to various
conditions which include the following, in addition to other customary closing
conditions:

         o        The merger agreement must be approved by the affirmative vote
                  or consent of shareholders holding at least a majority of the
                  outstanding shares of American River Bankshares common stock
                  and Bank of Amador common stock.

         o        All necessary governmental filings must have been made and all
                  necessary governmental approvals must have been obtained and
                  be in effect. In addition, no governmental approval must
                  require either of American River Bankshares or Bank of Amador
                  to divest or cease any of its present businesses or operations
                  or impose any other condition or requirement which it, in its
                  reasonable judgment, considers to be materially burdensome.

         o        No legal, administrative, arbitration, investigatory or other
                  proceeding by any governmental or regulatory authority which
                  seeks to restrain or prohibit the merger must have been
                  commenced or be threatened.

         o        Each of American River Bankshares and Bank of Amador must have
                  received a tax opinion based on customary assumptions and
                  exceptions and factual statements and representations provided
                  by the parties, substantially to the effect that, under
                  federal income tax law and California income and franchise tax
                  law: (a) the merger will not result in any recognized gain or
                  loss to American River Bankshares or Bank of Amador; (b)
                  except for cash received in lieu of any fractional share, no
                  gain or loss will be recognized by holders of Bank of Amador
                  common stock who receive shares of American River Bankshares
                  common stock in exchange for the shares of Bank of Amador
                  common stock they hold; (c) the holding period for the shares
                  of American River Bankshares common stock issued in exchange
                  for the shares of

                                      149


                  Bank of Amador common stock in the merger will include the
                  holding period of the shares of the Bank of Amador common
                  stock for which they are exchanged, assuming that the shares
                  of Bank of Amador common stock are capital assets in the hands
                  of the Bank of Amador shareholder at the effective date of the
                  merger; (d) the basis of the shares of American River
                  Bankshares common stock received by the Bank of Amador
                  shareholders in the merger will be the same as the basis of
                  the shares of Bank of Amador common stock for which they are
                  exchanged, less any basis attributable to fractional shares
                  for which cash is received; and (e) any Bank of Amador
                  shareholder who dissents to the merger and receives cash for
                  his or her shares of Bank of Amador common stock will be
                  treated as having received a distribution in redemption of his
                  or her shares of Bank of Amador common stock, subject to the
                  provisions and limitations of Section 302 of the Internal
                  Revenue Code.

         o        The representations and warranties made by the parties in the
                  merger agreement must remain true and correct in all material
                  respects as of the closing date and effective time of the
                  merger, and each party must have performed and complied, in
                  all material respects, with all of the agreements made in the
                  merger agreement at or prior to the effective time of the
                  merger.

         o        Each party must have received a certificate signed by the
                  other party's president and chief financial officer to the
                  effect that the representations and warranties of each party
                  set forth in the merger agreement, subject to the disclosure
                  schedules delivered by each party to the other party on or
                  prior to the closing date, are true and correct in all
                  material respects as of the closing date.

         o        Holders of not more than ten percent (10%) of the outstanding
                  shares of American River Bankshares common stock and Bank of
                  Amador common stock must have perfected their dissenter's
                  rights in the manner required under Chapter 13 of the
                  California General Corporation Law, as applicable.

         o        Each party must have received from the other party the
                  certificates and other closing documents that their counsel
                  reasonably requires in order to close the merger.

         o        The directors and executive officers of the Bank of Amador
                  must have delivered to American River Bankshares and the
                  directors and executive officers of American River Bankshares
                  must have delivered to the Bank of Amador, a signed
                  director-shareholder agreement, before this joint proxy
                  statement-prospectus is mailed, under which each director and
                  officer agrees to vote his or her shares of common stock, and
                  to recommend to other shareholders of Bank of Amador and
                  American River Bankshares, respectively, that they also vote
                  in favor of the merger.

         The obligation of American River Bankshares to consummate the merger is
subject to the following additional conditions:

         o        No material adverse change must have occurred since March 31,
                  2004, in the business, financial condition, results of
                  operations or assets of Bank of Amador, and Bank of Amador
                  must not have become a party to or threatened with any
                  litigation or governmental proceeding that was not previously
                  disclosed to American River Bankshares.

         o        American River Bankshares must have received a legal opinion
                  from Bartel Eng & Schroder, counsel to Bank of Amador, dated
                  the effective date of the merger and in form and substance
                  reasonably acceptable to American River Bankshares and its
                  counsel.

         o        Not later than five business days prior to the effective date,
                  Bank of Amador will have furnished to American River
                  Bankshares a copy of its most recently prepared unaudited

                                      150


                  month-end consolidated financial statements for the month
                  ended at least 10 business days prior to the effective date of
                  the merger.

         o        Bank of Amador must have received, or American River
                  Bankshares must be satisfied that Bank of Amador will receive,
                  all consents from third parties as may be required to close
                  the merger, and the consents must remain in effect at the
                  closing date.

         o        American River Bankshares must have received signed affiliate
                  agreements from each person who, in its opinion, might be
                  deemed to be an affiliate of Bank of Amador under Rule 144 or
                  Rule 145 of the Securities Act of 1933, as amended. The
                  affiliate agreements include provisions restricting specified
                  actions by the affiliates of Bank of Amador.

         o        Bank of Amador shall have entered into an employment agreement
                  with Larry D. Standing, substantially in the form attached to
                  the merger agreement.

         o        The board of directors of American River Bankshares shall have
                  received a fairness opinion from Sandler O'Neill & Partners,
                  L.P. as to the fairness of the merger consideration, from a
                  financial point of view, to American River Bankshares, and
                  such opinion shall not have been withdrawn.

         o        As of the closing date, Bank of Amador shall have a minimum
                  shareholders equity of $12,800,000.

         o        Bank of Amador shall have paid the severance and retirement
                  benefits due to the directors, officers and employees with
                  agreements regarding the same.

         o        Bank of Amador shall have obtained the written consent of each
                  person holding an option for shares of Bank of Amador common
                  stock to accept payment in lieu of the exercise of such option
                  and waiving the right to exercise such option.

         o        Bank of Amador shall have obtained a written waiver of the
                  right to be paid benefits in connection with the merger
                  agreement with American River Bankshares from Larry D.
                  Standing and each other director, officer and employee of Bank
                  of Amador who has a salary continuation agreement with a
                  change of control provision.

         The obligation of Bank of Amador to consummate the merger is subject to
the following additional conditions:

         o        No material adverse change must have occurred since March 31,
                  2004, in the business, financial condition, results of
                  operations or assets of American River Bankshares and American
                  River Bank, taken together, and American River Bankshares must
                  not have become a party to or threatened with any litigation
                  or governmental proceeding which, in Bank of Amador's
                  reasonable judgment, could have a material adverse effect on
                  the business, financial condition, results of operations or
                  assets of American River Bankshares and American River Bank
                  taken together.

         o        Bank of Amador must have received a legal opinion from
                  DoddoMasonoGeorge LLP, counsel to American River Bankshares,
                  dated the effective date of the merger and in form and
                  substance reasonably acceptable to Bank of Amador and its
                  counsel.

         o        Not later than five business days prior to the effective date,
                  American River Bankshares will have furnished to Bank of
                  Amador a copy of its most recently prepared unaudited
                  month-end

                                      151


                  consolidated financial statements for the month ended at least
                  10 business days prior to the effective date of the merger.

         o        American River Bankshares must have received, or Bank of
                  Amador must be satisfied that American River Bankshares will
                  receive, all consents from third parties as may be required to
                  close the merger, and the consents must remain in effect at
                  the closing date.

         o        The board of directors of Bank of Amador shall have received a
                  fairness opinion from Hoefer & Arnett as to the fairness of
                  the merger consideration, from a financial point of view, to
                  Bank of Amador and its shareholders, and such opinion shall
                  not have been withdrawn.

Termination of the Merger Agreement

         American River Bankshares, American River Bank and Bank of Amador can
agree at any time to terminate the merger agreement without completing the
merger, even if the shareholders of American River Bankshares and Bank of Amador
have approved it. Also, the merger agreement can be terminated either by mutual
agreement or by any party if specified events occur. If the merger agreement is
terminated, the merger will not occur.

         Either American River Bankshares or Bank of Amador can terminate the
merger agreement if any of the following events occurs:

         o        If the merger is not completed by March 31, 2005, or another
                  date that is approved by the board of directors of American
                  River Bankshares and Bank of Amador; provided, however, that
                  if the only conditions to the closing that remain unsatisfied
                  at March 31, 2005 (or other date that is approved by the board
                  of directors of American River Bankshares and Bank of Amador)
                  are the receipt of any requisite governmental approvals or the
                  expiration of any legally required waiting periods, then the
                  closing will be automatically extended to June 30, 2005, or
                  other date the parties approve.

         o        30 days after any governmental agency denies or refuses to
                  grant an approval, consent or qualification that is required
                  for the merger, unless the parties agree, during the 30 day
                  period, to appeal the denial or refusal or we agree to file an
                  amended application for the governmental approval, consent or
                  qualification.

         o        The shareholders of American River Bankshares or Bank of
                  Amador fail to approve the merger agreement and related
                  transactions, by the required vote.

         American River Bankshares can elect to terminate the merger agreement
if any of the following events occur:

         o        Any of the conditions to American River Bankshares'
                  obligations to complete the merger under the merger agreement
                  have not been satisfied or waived by March 31, 2005 (or other
                  date that it may approve).

         o        A material adverse change has occurred since March 31, 2004,
                  in the business, financial condition, results of operations or
                  assets of Bank of Amador.

         o        Bank of Amador or any of its affiliates enters into a
                  transaction or series of transactions with one or more third
                  persons providing for the acquisition of all or a substantial
                  part of Bank of Amador or its subsidiaries, whether by way of
                  merger, exchange or stock, sale of assets, or otherwise.

                                      152


         o        Bank of Amador breaches or fails to satisfy any of its
                  agreements in the merger agreement which would materially
                  impair the benefits reasonably expected to be derived by
                  American River Bankshares and American River Bank from the
                  merger, unless the breach or failure is waived by American
                  River Bankshares or cured by Bank of Amador within 45 days
                  after American River Bankshares gives Bank of Amador written
                  notice of the breach or failure.

         o        Bank of Amador fails to deliver to American River Bankshares,
                  the employment agreement of Larry D. Standing, the severance
                  and retirement benefits agreements, the optionholder's
                  consents, the shareholder agreements, affiliates agreements,
                  officer's certificate or opinion of Bank of Amador's legal
                  counsel which are required by the merger agreement or if those
                  documents are not in a form that is reasonably acceptable to
                  American River Bankshares.

         Bank of Amador can elect to terminate the merger agreement if any of
the following events occur:

         o        Any of the conditions to Bank of Amador's obligations to
                  complete the merger under the merger agreement have not been
                  satisfied or waived by March 31, 2005 (or other date that it
                  may approve).

         o        A material adverse change has occurred since March 31, 2004,
                  in the business, financial condition, results of operations or
                  assets of American River Bankshares.

         o        American River Bankshares breaches or fails to satisfy any of
                  its agreements in the merger agreement which would materially
                  impair the benefits reasonably expected to be derived by Bank
                  of Amador from the merger, unless the breach or failure is
                  waived by Bank of Amador or cured by American River Bankshares
                  within 45 days after Bank of Amador gives American River
                  Bankshares written notice of the breach or failure.

         o        American River Bankshares fails to deliver to Bank of Amador
                  the shareholder's agreements, the officer's certificate or
                  opinion of American River Bankshares' legal counsel which are
                  required by the merger agreement or if those documents are not
                  in a form that is reasonably acceptable to Bank of Amador.

         Any termination described above must be made by written notice from the
party seeking termination to the other party. In the event the merger agreement
is terminated, it will become void and have no effect, except that the
termination will not affect the provisions regarding payment of expenses,
confidentiality, payment of any termination fees if applicable or any relevant
general provisions of the merger agreement. Also, if the merger agreement is
terminated due to a party's breach, the termination will not relieve the
breaching party from its liability and the non-breaching party will retain all
of its legal rights and remedies against the breaching party for its breach.

Termination Fees

         Bank of Amador is required to pay American River Bankshares $1.2
million in liquidated damages if American River Bankshares terminates the merger
agreement for any of the following reasons:

         o        If Bank of Amador or its affiliates enters into an agreement
                  by which Bank of Amador or its subsidiaries would be acquired
                  by another entity;

         o        If Bank of Amador willfully or deliberately breaches any
                  covenant, condition to closing or agreement in the merger
                  agreement which materially impairs the benefit of the merger
                  to American River Bankshares, provided that compliance was not
                  beyond the reasonable control

                                      153


                  of Bank of Amador, or unless Bank of Amador cures the breach
                  within 45 days after written notice from American River
                  Bankshares; or

         o        If Bank of Amador willfully or deliberately refuses to deliver
                  to American River Bankshares closing documents required by the
                  merger agreement, provided that compliance was not beyond the
                  reasonable control of Bank of Amador.

         American River Bankshares is required to pay Bank of Amador $400,000 in
liquidated damages if Bank of Amador terminates the merger agreement for any of
the following reasons:

         o        If American River Bankshares willfully or deliberately
                  breaches any covenant in the merger agreement which materially
                  impairs the benefit of the merger to Bank of Amador, provided
                  that compliance was not beyond the reasonable control of
                  American River Bankshares, or unless American River Bankshares
                  cures the breach within 45 days after written notice from Bank
                  of Amador; or

         o        If American River Bankshares willfully or deliberately refuses
                  to deliver to Bank of Amador closing documents required by the
                  merger agreement, provided that compliance was not beyond the
                  reasonable control of American River Bankshares.

Expenses of the Merger

         Other than in the situations described above and in the following
paragraphs, whether or not the merger is completed in accordance with the merger
agreement, all fees, costs and expenses (including legal and accounting fees)
incurred in connection with the merger agreement and the transactions covered by
the merger agreement will be paid by the party incurring those expenses.

Amendment

         The merger agreement may be amended by mutual written agreement of the
parties at any time before or after approval of the merger agreement by the
shareholders of Bank of Amador and American River Bankshares. However, after the
approval by the shareholders of Bank of Amador and American River Bankshares, no
amendment will be made which by law requires further approval by those
shareholders without that further approval. The merger agreement may not be
amended except by an instrument in writing signed on behalf of all of the
parties.

Extension; Waiver

         At any time prior to the closing of the merger, the parties, by action
taken or authorized by their respective board of directors, may, to the extent
legally allowed, (1) extend the time for the performance of any of the
obligations or other acts of the other parties, (2) waive any inaccuracies in
the representations and warranties contained in the merger agreement or in any
document delivered under it, and (3) waive compliance with any of the agreements
or conditions contained in the merger agreement. To "waive" means to give up
rights.

         Any agreement on the part of a party to the merger agreement to any
extension or waiver will be valid only if set forth in a written instrument
signed on behalf of the party.

Management and Operations Following the Merger

         Upon the consummation of the merger, the separate corporate existence
of Bank of Amador will cease and Bank of Amador will be merged with and into
American River Bank. All rights, franchises and interests of Bank of Amador will
be assumed by and vested in American River Bank and the resulting bank will
continue as a subsidiary of American River Bankshares and conduct operations at
the former

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offices of Bank of Amador under the name "Bank of Amador, a division of American
River Bank." The directors and executive officers of American River Bank prior
to the effective date will be the directors and executive officers of American
River Bank following the merger. Larry D. Standing and a second director of Bank
of Amador to be determined by mutual agreement of American River Bankshares and
Bank of Amador will be appointed to the board of directors of American River
Bank, and Mr. Standing will be appointed as President of the division of
American River Bank to be known as "Bank of Amador, a division of American River
Bank," and he will be appointed to serve on the executive management committee
of American River Bankshares.

Required Government Approvals

         Federal Reserve Board. The merger is subject to receipt from the
Federal Reserve Board of (a) confirmation of exemption from the required
notification under Section 3 of the Bank Holding Company Act of 1956, as
amended, or (b) approval of the required notification application by American
River Bankshares to acquire Bank of Amador pursuant to Section 3 of the Bank
Holding Company Act of 1956, as amended. In reviewing a notification
application, the Federal Reserve Board takes into consideration, among other
things, competition, the financial and managerial resources and future prospects
of the companies, and the convenience and needs of the communities to be served.
Federal law prohibits the Federal Reserve Board from approving the merger if the
merger would result in undue concentration of resources or decreased or unfair
competition, unless the anti-competitive effects of the merger are clearly
outweighed by the benefits to the public.

         The Federal Reserve Board has the authority to deny American River
Bankshares' application if it concludes that the combined organization would
have an inadequate capital structure, taking into account, among other factors,
the nature of the business and operations and plans for expansion. Furthermore,
the Federal Reserve Board must also evaluate the records of American River
Bankshares and American River Bank in meeting the credit needs of its community,
including low- and moderate-income neighborhoods, consistent with safe and sound
operation. American River Bankshares and American River Bank have satisfactory
Community Reinvestment Act evaluations.

         American River Bankshares submitted its request for an exemption from
the notification application requirements of Section 3 of the Bank Holding
Company Act of 1956, as amended, for Federal Reserve Board approval. The
exemption request was submitted on September 3, 2004. In response to the
exemption request, the Federal Reserve Bank of San Francisco, acting on
delegated authority from the Federal Reserve Board, issued a letter dated
September 13, 2004 addressed to American River Bankshares, confirming that it
will not require the filing of an application under Section 3 of the Bank
Holding Company of 1956, as amended, and will not object to the consummation of
the transactions contemplated by the merger agreement as described in the
exemption request filed by American River Bankshares. The determination by the
Federal Reserve Bank of San Francisco is subject to approval of the transactions
contemplated by the merger agreement by the California Department of Financial
Institutions and the Federal Deposit Insurance Corporation as described below.

         California Department of Financial Institutions. The approval of the
California Department of Financial Institutions is required to effect the
merger. In determining whether to approve the merger and the transactions
contemplated by the merger agreement, the California Department of Financial
Institutions must determine, among other things, that:

         o        the merger will not result in a monopoly;

         o        the merger will not have the effect of substantially lessening
                  competition;

         o        the shareholders' equity of American River Bankshares and
                  American River Bank will be adequate and will not jeopardize
                  the surviving bank's financial condition;

                                      155


         o        the directors and executive officers of the surviving bank
                  after the merger will be satisfactory;

         o        the merger will afford a reasonable promise of successful
                  operation and that the surviving bank will be operated in a
                  safe and sound manner, in compliance with all applicable laws;
                  and

         o        the merger will be fair, just and equitable.

         The application for approval of the merger was submitted to the
California Department of Financial Institutions on September 3, 2004, and was
approved on October 7, 2004.

         Federal Deposit Insurance Corporation. The approval of the Federal
Deposit Insurance Corporation is required in order to effect the merger of Bank
of Amador with and into American River Bank. The Federal Deposit Insurance
Corporation evaluates deposit insurance applications based upon the risk that a
new institution poses to the deposit insurance fund. In evaluating risk to the
deposit insurance fund for a new institution, the Federal Deposit Insurance
Corporation takes into consideration, among other things, management, capital
adequacy, liquidity, likelihood of success, business plan and adequacy of
policies. It is also anticipated that the merger will be approved after
evaluation by the Federal Deposit Insurance Corporation of various factors
including the foregoing factors and various additional competitive factors
related to the merging institutions, other depository institutions, and other
providers of similar or equivalent services in the relevant product and
geographic markets including the following:

         o        the type and extent of competition that exists and that will
                  be eliminated, reduced, or enhanced by the proposed merger
                  transaction;

         o        the competitive impact of providers located outside a relevant
                  geographic market where it is shown that such providers
                  individually or collectively influence materially the nature,
                  pricing, or quality of services offered by the providers
                  currently operating within the geographic market;

         o        the share of the banking business in the relevant geographic
                  markets held by the merging institutions and the various other
                  participants with offices in the relevant geographic markets;

         o        the degree of concentration within the relevant geographic
                  markets and, as applicable, analysis of various competitive
                  dynamics including (i) the number, size, financial strength,
                  quality of management, and aggressiveness of the various
                  participants in the market, (ii) the likelihood of new
                  participants entering the market based on its attractiveness
                  in terms of population, income levels, economic growth, and
                  other features, (iii) any legal impediments to entry or
                  expansion, and (iv) definite entry plans by specifically
                  identified entities, (v) the likelihood that new entrants
                  might enter the market by less direct means, and (vi) the
                  extent to which the proposed merger transaction likely would
                  create a stronger, more efficient institution able to compete
                  more vigorously in the relevant geographic markets; and

         o        consideration of the public interest including whether (i) the
                  overall effect of the proposed merger transaction would be to
                  reduce existing competition substantially be limiting the
                  service and price options available to the public in the
                  relevant geographic markets, and (ii) the anticompetitive
                  effects of the proposed merger transaction are clearly
                  outweighed in the public interest by the convenience and needs
                  of the community to be served.

         The merger application has been submitted for Federal Deposit Insurance
Corporation approval. The application was accepted by the Federal Deposit
Insurance Corporation on September 3, 2004, and is currently pending.

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         Statutory Waiting Period. Under federal banking laws, a 30-day waiting
period must expire following the Federal Reserve Board's approval of the merger.
Within that 30-day waiting period the Department of Justice may file objections
to the merger under federal antitrust laws. The Federal Reserve Board may reduce
the waiting period to 15 days with the concurrence of the Department of Justice.
The Department of Justice could take such action under antitrust laws as it
deems necessary or desirable in the public interest, including seeking to enjoin
the merger unless divestiture of an acceptable number of branches to a
competitively suitable purchaser can be made. If the Department of Justice
commences an action challenging the merger on antitrust grounds during either
the 30-day or 15-day waiting periods, commencement of that action would stay the
effectiveness of the government approvals, unless a court of competent
jurisdiction specifically orders otherwise.

         The merger cannot proceed in the absence of the government approvals
and the expiration of the statutory waiting period. American River Bankshares
and Bank of Amador are not aware of any reasons why government approvals will
not be received. American River Bankshares and Bank of Amador have agreed to use
their reasonable best efforts to obtain all necessary government approvals.
However, there can be no assurance that approvals will be obtained, nor can
there be assurance as to the date of any approval. There also can be no
assurance that any approvals will not contain unacceptable conditions or
requirements.

Accounting Treatment

         American River Bankshares must account for the merger under the
purchase method of accounting for financial reporting purposes under accounting
principles generally accepted in the United States of America. Under this
method, American River Bankshares' purchase price will be allocated to Bank of
Amador's assets acquired and liabilities assumed based upon their estimated fair
values as of the consummation of the merger. Deferred tax assets and liabilities
will be adjusted for the difference between the tax basis of the assets and
liabilities and their estimated values. The excess, if any, of the total
acquisition cost over the sum of the assigned fair values of the tangible and
identifiable intangible assets acquired, less liabilities assumed will be
recorded as goodwill and periodically evaluated for impairment. American River
Bankshares' financial statements issued after consummation of the merger will
reflect these values, but historical data are not restated retroactively to
reflect the combined historical financial position or results of operations of
American River Bankshares and Bank of Amador.

Resales of American River Bankshares Common Stock

         Currently outstanding shares of the common stock of American River
Bankshares are listed and traded on the Nasdaq National Market under the symbol
"AMRB." In accordance with the terms of the merger agreement, American River
Bankshares will take appropriate action to list all of the shares of common
stock which are issued to the shareholders of Bank of Amador (upon consummation
of the merger) for trading on the Nasdaq National Market.

         The shares of American River Bankshares common stock issued in the
merger will be freely tradable and transferable under the Securities Act of
1933, as amended (the"Securities Act"), except for shares issued to any Bank of
Amador shareholder who may be deemed to be an "affiliate" of American River
Bankshares for purposes of Rule 145 under the Securities Act, which will be
subject to certain trading restrictions. Each director and executive officer of
Bank of Amador is deemed to be an "affiliate" for purposes of Rule 145 and has
entered into a form of Affiliate Agreement with American River Bankshares.
Pursuant to the terms of the Affiliate Agreement, each "affiliate" has
acknowledged and agreed that all shares of American River Bankshares common
stock received by the "affiliate" in the merger are received subject to the
condition that the "affiliate" will not dispose of any shares in violation of
the Securities Act, or the rules and regulations of the Securities and Exchange
Commission promulgated thereunder and, accordingly, that any public offering or
sale of such shares will require either registration under the Securities Act or
compliance with the resale provisions of Rule 145, or the availability of
another exemption from the registration requirements of the Securities Act. All
shares of

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American River Bankshares common stock subsequently acquired by an "affiliate"
of American River Bankshares will be subject to similar resale restrictions
(under Rule 144 of the Securities and Exchange Commission), regardless of how or
when those shares are acquired. A legend will be placed on all certificates
evidencing shares issued to "affiliates," setting forth the above-described
restrictions on transfer and appropriate stop-transfer instructions will be
given to the transfer agent for the common stock of American River Bankshares
with respect to such certificates.

         The common stock of American River Bankshares is registered under
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, as a result, American River Bankshares is required to file periodic
and other reports with the Securities and Exchange Commission pursuant to
Section 13 of the Exchange Act. Each director or executive officer of Bank of
Amador who becomes a director or executive officer of American River Bankshares
will be required to file individual ownership reports with the Securities and
Exchange Commission, pursuant to Section 16 of the Exchange Act, with regard to
his or her personal holdings (including purchases and sales) of shares of
American River Bankshares common stock, so long as he or she remains a director
or executive officer of American River Bankshares.

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                         FEDERAL INCOME TAX CONSEQUENCES

General

         The following discussion addresses the material federal income tax
considerations of the merger that are generally applicable to Bank of Amador
shareholders. It does not address the tax consequences of the merger under
foreign, state, or local tax laws or the tax consequences of transactions
completed before or after the merger, such as the exercise of options to
purchase Bank of Amador common stock in anticipation of the merger. Also, the
following discussion does not deal with all federal income tax considerations
that may be relevant to certain Bank of Amador shareholders in light of their
particular circumstances, such as shareholders who:

         o   are dealers in securities;
         o   are insurance companies, or tax-exempt organizations;
         o   are subject to alternative minimum tax;
         o   hold their shares as part of a hedge, straddle, or other risk
             reduction transaction;
         o   are foreign persons;
         o   dissent from the merger; or
         o   acquired their Bank of Amador common stock through the exercise of
             stock options or otherwise as compensation.

         You are urged to consult your own tax advisors regarding the tax
consequences of the merger to you based on your own circumstances, including the
applicable federal, state, local, and foreign tax consequences.

         The following discussion is based on the Internal Revenue Code of 1986,
as amended, referred to as the Code, applicable Treasury Regulations, judicial
decisions, and administrative rulings and practice, as of the date of this joint
proxy statement-prospectus, all of which are subject to change. Any such change
could be applied to transactions that were completed before the change, and
could affect the accuracy of the statements and conclusions in this discussion
and the tax consequences of the merger to American River Bankshares, Bank of
Amador and Bank of Amador shareholders.

Tax Opinion of Perry-Smith LLP

         Neither American River Bankshares nor Bank of Amador has requested nor
will they request a ruling from the Internal Revenue Service with regard to any
of the tax consequences of the merger. Instead, as a condition to the closing of
the merger, Perry-Smith LLP, independent registered public accounting firm to
each of American River Bankshares and Bank of Amador individually, will render
its opinion to American River Bankshares and Bank of Amador to the effect that:

         o   the merger constitutes a "reorganization" within the meaning of
             Code Section 368(a)(1)(A) by reason of the application of Code
             Section 368(a)(2)(D);
         o   American River Bankshares, American River Bank and Bank of Amador
             are each a "party" to a reorganization within the meaning of Code
             Section 368(b);
         o   neither American River Bankshares, American River Bank nor Bank of
             Amador will recognize federal taxable gain or loss as a result of
             the merger;
         o   the federal income tax basis and holding periods of the assets
             exchanged between the parties to the merger will be the same as the
             federal income tax basis and holding periods of those assets prior
             to the merger;
         o   to the extent that Bank of Amador shareholders receive a
             combination of cash and shares of American River Bankshares common
             stock in the merger (other than cash in lieu of fractional shares),
             (i) loss, if any, will not be recognized, (ii) gain, if any, will
             be recognized in an amount equal to the lesser of (1) the
             difference between the fair market value of all

                                      159


             consideration received in the exchange (shares of American River
             Bankshares common stock plus cash) and the basis in the shares of
             Bank of Amador common stock surrendered or (2) the amount of cash
             received in the exchange; (iii) the federal income tax basis of the
             shares of American River Bankshares common stock received by
             holders of shares of Bank of Amador common stock in the merger will
             be equal to the total federal income tax basis of the shares of
             Bank of Amador common stock exchanged, decreased by the amount of
             cash (other than cash received in lieu of fractional share
             interests) received in the exchange, and increased by the amount of
             gain recognized in the exchange, if any, and (iv) the holding
             period of the shares of American River Bankshares common stock
             received in the merger will include the holding period for which
             holders of shares of Bank of Amador common stock held their shares
             of Bank of Amador common stock provided, that such shares of Bank
             of Amador common stock were held as a capital asset; and
         o   to the extent that cash is received by holders of shares of Bank of
             Amador common stock in lieu of fractional share interests in shares
             of American River Bankshares common stock, the cash will be treated
             as being received by the holders of shares of Bank of Amador common
             stock as a distribution in redemption of such stockholders'
             fractional share interests, subject to the provisions and
             limitations of IRC Section 302.

         Perry-Smith LLP's opinion will be based upon the assumption that the
merger will take place in the manner described in the merger agreement and will
also assume the truth and accuracy of certain factual representations that have
been made by American River Bankshares and Bank of Amador and which are
customarily given in transactions of this nature.

Consequences to Bank of Amador Shareholders

         Based on the assumption that the merger will constitute a tax-free
reorganization, and subject to the limitations and qualifications referred to in
this discussion, the following federal income tax consequences will result from
the merger.

         Consequences to Bank of Amador Shareholders Receiving Partly Stock and
Partly Cash

         If you exchange your shares of Bank of Amador common stock and receive
partly stock and partly cash, including cash in lieu of fractional share
interests, the tax treatment of the cash portion of your consideration will
depend on whether you pass or fail the dividend equivalence tests of Internal
Revenue Code Section 302 (as more fully described below).

         If the provisions of Section 302 are satisfied, you will be treated as
having sold your stock, or a portion thereof, for cash and any gain recognized
in the sale will be capital gain, provided the Bank of Amador stock was held as
a capital asset.

         If the provisions of Section 302 are not satisfied, you will be treated
as having received an ordinary cash distribution in respect of your Bank of
Amador stock, the tax consequences of which are discussed below.

         Sale of Stock or Dividend Equivalence Under Section 302

         If you exchange your shares of Bank of Amador common stock and receive
partly stock and partly cash, the Internal Revenue Service will: (1) treat you
as having exchanged your Bank of Amador common stock for American River
Bankshares common stock; and then (2) treat you as having sold back all or a
portion of that stock to American River Bankshares in exchange for cash. The
exchange of stock for cash in this fashion is known as a "redemption." Gain
recognized by you in a redemption will be treated as a capital gain if, after
giving effect to the constructive ownership rules of the Code, either:

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         o   your receipt of cash is "substantially disproportionate" to your
             equity interest in Bank of Amador; or

         o   the redemption is "not essentially equivalent to a dividend."

         Additionally, to receive capital gain treatment, you must have held
your Bank of Amador common stock as a capital asset immediately before the
merger. This capital gain would be treated as long-term capital gain if your
holding period for the Bank of Amador common stock was more than one year at the
effective time of the merger.

         Each of the two alternative tests given above, "substantially
disproportionate" and "not essentially equivalent to a dividend," is predicated
on the notion that a shareholder receiving cash for his or her shares should not
receive capital gain treatment unless that shareholder experiences a significant
decrease in corporate voting power as a result of a partial redemption of his or
her share holdings. In making this determination, the Code's constructive
ownership rules must be taken into account. Under these rules, a former Bank of
Amador shareholder is treated as owning, in addition to the American River
Bankshares common stock he or she receives, or is treated as having received in
the merger, those shares of American River Bankshares common stock that are held
or controlled by certain related individuals and entities. Specifically a
shareholder who is:

         o   an individual, is treated as owning the shares owned, directly or
             indirectly, by his or her spouse, children, grandchildren, and
             parents;
         o   a partner in a partnership, a shareholder of an S corporation, or a
             beneficiary of an estate or trust, is treated as owning those
             shares owned, directly or indirectly, by the relevant entity, in
             proportion to his or her ownership interest in the relevant entity;
         o   considered the "owner" of any portion of a so-called "grantor
             trust," is treated as owning those shares owned, directly or
             indirectly, by that portion of the trust;
         o   directly or indirectly, the owner of 50% or more of the value of
             the stock of a corporation, is treated as owning those shares
             owned, directly or indirectly, by the corporation, in proportion to
             his or her ownership interest in the corporation;
         o   a partnership or an S corporation, is treated as owning those
             shares owned, directly or indirectly, by its owners;
         o   an estate, is treated as owning those shares owned, directly or
             indirectly, by its beneficiaries;
         o   a trust, is generally treated as owning those shares owned,
             directly or indirectly, by its beneficiaries, other than any
             beneficiary whose interest in the trust is contingent and worth no
             more than 5% of the value of the trust property, computed
             actuarially;
         o   a corporation, other than an S corporation, is treated as owning
             those shares owned, directly or indirectly, by its shareholders who
             own, directly or indirectly, 50% or more of the value of the stock
             of the corporation; or
         o   someone who has an option to acquire American River Bankshares
             common stock (or any option to acquire such an option), is treated
             as owning that stock.

         Once a shareholder computes the total number of shares that he or she
is treated as owning, after giving effect to the constructive ownership rules,
the shareholder must determine whether the deemed redemption satisfies the
requirements of either the "substantially disproportionate" test or the "not
essentially equivalent to a dividend" test.

         To qualify as "substantially disproportionate" with respect to a
particular shareholder, a redemption must meet three requirements, in each case
taking into account the constructive ownership rules described above. The three
requirements are that, immediately after the redemption:

                                      161


         o   the shareholder must own less than 50% of the total voting power of
             the outstanding American River Bankshares common stock;
         o   the shareholder must own less than 80% of the percentage of voting
             power of the American River Bankshares common stock he or she owned
             or was treated as owning before the redemption; and
         o   the shareholder must own less than 80% of the percentage of
             American River Bankshares common stock measured by fair market
             value he or she owned or was treated as owning before the
             redemption.

         If a shareholder fails any part of the "substantially disproportionate
test," the redemption may still qualify as "not essentially equivalent to a
dividend." In order to meet this test, there must be a "meaningful reduction" of
the shareholder's proportionate interest in Bank of Amador. This is a highly
subjective standard. Accordingly, neither American River Bankshares nor Bank of
Amador can provide any substantial assurance that a particular redemption will
or will not qualify as a meaningful reduction in the Bank of Amador
shareholder's proportionate interest in Bank of Amador. However, based on a
published ruling of the Internal Revenue Service, a shareholder with a
relatively minimal interest in Bank of Amador and no ability to exercise any
substantial measure of control over Bank of Amador's corporate affairs is likely
to be treated as having experienced a meaningful reduction of his or her
proportionate interest in Bank of Amador as a result of the deemed redemption.

         Sale or Exchange of Bank of Amador Stock (Section 302 provisions are
satisfied)

         If you exchange your shares of Bank of Amador common stock, receive a
combination of American River Bankshares common stock and cash and the
provisions of Section 302 are satisfied, you will recognize gain in an amount
equal to the lesser of the amount of cash received in the exchange or of the
difference between (1) the fair market value of all American River Bankshares
common stock and cash received in the exchange and (2) your basis in the Bank of
Amador common stock. You will not be permitted to recognize a loss in the
exchange.

         If you are a dissenting shareholder, exchange your shares of Bank of
Amador common stock solely for cash and the provisions of Section 302 are
satisfied, you will recognize gain or loss equal to the difference between the
amount of cash received and your basis in your Bank of Amador common stock.

         Dividend Equivalent (Section 302 provisions are not satisfied)

         If you exchange your shares of Bank of Amador common stock, receive
partly stock and partly cash and the provisions of Section 302 are not
satisfied, the full amount of cash received will be characterized as a corporate
distribution with respect to your stock and not as a sale or exchange. Corporate
distributions are generally taxed as ordinary dividends. A Corporate shareholder
that receives a dividend may be eligible to claim a dividend-received deduction.

         Tax Basis of American River Bankshares Stock

         The total initial tax basis of the American River Bankshares common
stock received by you in the merger will be equal to the total tax basis of the
Bank of Amador common stock exchanged, decreased by the amount of cash received
in the exchange and increased by the amount of gain recognized in the exchange.

         Holding Period of American River Bankshares Stock

         The holding period of the American River Bankshares common stock you
receive in the merger will include the period for which you held your Bank of
Amador common stock, provided that you held your Bank of Amador common stock as
a capital asset at the time of the merger.

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         Withholding

         Payments in respect of Bank of Amador common stock or a fractional
share of American River Bankshares common stock may be subject to the
information reporting requirements of the Internal Revenue Service and to a 28%
backup withholding tax. Backup withholding will not apply to a payment made to
you if you complete and sign the substitute Form W-9 that will be included as
part of the transmittal letter and notice from American River Bankshares'
exchange agent, or you otherwise prove to American River Bankshares and its
exchange agent that you are exempt from backup withholding.

         Reporting and Record Keeping

         If you exchange shares of Bank of Amador common stock in the merger for
a combination of American River Bankshares common stock and cash, you are
required to retain records of the transaction, and to attach to your federal
income tax return for the year of the merger a statement setting forth all
relevant facts with respect to the nonrecognition of gain or loss upon the
exchange. At a minimum, the statement must include:

         o   your tax basis in the Bank of Amador common stock surrendered; and
         o   the amount of cash and the fair market value, as of the effective
             date of the merger, of the American River Bankshares common stock
             received in exchange.

         Federal Income Tax Treatment of Dissenters

         If you effectively dissent from the merger and receive cash for your
shares, you will recognize a gain (or loss) for federal income tax purposes
equal to the amount by which the cash received for those shares exceeds (or is
less than) your federal income tax basis for the shares. The amount of that gain
(or loss), if any, will be treated as ordinary income (or loss) or long-term or
short-term capital gain (or loss) depending on:

         o   the length of time you held the shares;
         o   whether you held the shares as a capital asset; and
         o   whether you actually own American River Bankshares common stock or
             are deemed to own shares of Bank of Amador common stock or American
             River Bankshares common stock pursuant to the constructive
             ownership rules previously discussed.

         In certain circumstances, you can be deemed for tax purposes to own
shares that are actually owned by a nondissenter who is related to you, or to
own shares of American River Bankshares common stock, with the possible result
that the cash received upon the exercise of your rights could be treated as a
dividend received pursuant to a corporate distribution rather than as an amount
received pursuant to a sale or exchange of Bank of Amador common stock.

                                      163


Warning Regarding Federal Income Tax Opinions

         The opinion of Perry-Smith LLP is not binding on the Internal Revenue
Service or the courts. If the Internal Revenue Service were to successfully
assert that the merger is not a reorganization within the meaning of Section
368(a) of the Code, then you would be required to recognize gain or loss equal
to the difference between:

         o   the fair market of all American River Bankshares common stock and
             cash received in the exchange; and
         o   your federal income tax basis in the Bank of Amador common stock
             surrendered.

         In such an event, your total initial tax basis in the American River
Bankshares common stock received would be equal to its fair market value, and
your holding period for the American River Bankshares common stock would begin
the day after the merger. The gain or loss would be a long-term capital gain or
loss if your holding period for the Bank of Amador common stock was more than
one year and the Bank of Amador common stock was a capital asset in your hands.

         The preceding discussion does not purport to be a complete analysis of
all potential tax consequences of the merger that may be relevant to a
particular Bank of Amador shareholder. You are urged to consult with your own
tax advisor regarding the specific tax consequences to you of the merger,
including the applicability and effect of foreign, state, local, and other tax
laws.

                                      164


                               DISSENTERS' RIGHTS

American River Bankshares

         Dissenters' rights will be available to the American River Bankshares
shareholders only if the holders of five percent (5%) or more of American River
Bankshares common stock make a written demand upon American River Bankshares for
the purchase of dissenting shares in accordance with Chapter 13 of the
California Corporations Code. THE REQUIRED PROCEDURE SET FORTH IN CHAPTER 13 OF
THE CORPORATIONS CODE MUST BE FOLLOWED EXACTLY OR ANY DISSENTERS' RIGHTS MAY BE
LOST.

         The information set forth below is a general summary of dissenters'
rights as they apply to American River Bankshares shareholders and is qualified
in its entirety by reference to Chapter 13 of the Corporations Code which is
attached to this joint proxy statement-prospectus as Annex D.

         Fair Market Value of Shares. If the holders of five percent (5%) or
more of American River Bankshares common stock make a written demand upon
American River Bankshares for the purchase of dissenting shares in accordance
with Chapter 13 of the California Corporations Code and the merger is
consummated, American River Bankshares shareholders who dissent from the merger
by complying with the procedures set forth in Chapter 13 of the Corporations
Code would be entitled to receive an amount equal to the fair market value of
their shares as of July 8, 2004, the last business day before the public
announcement of the merger. American River Bankshares believes that the fair
market value for dissenters' rights purposes is $20.40 per share which
represents the closing price for a share of American River Bankshares common
stock as quoted on the Nasdaq Stock Market on July 8, 2004.

         Voting Procedure. In order to be entitled to exercise dissenters'
rights, the shares of American River Bankshares common stock which are
outstanding and are entitled to be voted at the special meeting must have been
voted by the holder of such shares "AGAINST" the merger. Thus, any American
River Bankshares shareholder who wishes to dissent and executes and returns a
proxy in the accompanying form or votes at the special meeting must vote
"AGAINST" the merger . If the shareholder returns a proxy without voting
instructions or with instructions to vote "ABSTAIN" or "FOR" the merger, or
votes in person or by proxy at the special meeting to "ABSTAIN" or "FOR" the
merger, the shareholder will lose any dissenters' rights.

         Written Demand. Furthermore, in order to preserve his or her
dissenters' rights, a American River Bankshares shareholder must make a written
demand upon American River Bankshares for the purchase of dissenting shares and
payment to the shareholder of their fair market value, specifying the number of
shares held of record by the shareholder and a statement of what the shareholder
claims to be the fair market value of those shares as of July 8, 2004. The
demand must be addressed to American River Bankshares, 1545 River Park Drive,
Suite 107, Sacramento, California 95815; Attention: Corporate Secretary, and the
demand must be received by American River Bankshares not later than the date of
the shareholders' meeting to vote on the merger. A vote "AGAINST" the merger
does not constitute the written demand.

         Notice of Approval. If the merger is approved by the American River
Bankshares shareholders, American River Bankshares will have 10 days after the
approval to send to those shareholders who have timely submitted a written
demand and voted "AGAINST" approval of the merger, a written notice of the
approval accompanied by a copy of Sections 1300 through 1304 of the Corporations
Code, a statement of the price determined by American River Bankshares to
represent the fair market value of the dissenting shares as of July 8, 2004, and
a brief description of the procedure to be followed if a shareholder desires to
exercise dissenters' rights.

         Surrender of Certificates. Within 30 days after the date on which the
notice of the approval of the merger is mailed, the dissenting shareholder must
surrender to American River Bankshares, at the

                                      165


office designated in the notice of approval, the certificates representing the
dissenting shares to be stamped or endorsed with a statement that they are
dissenting shares or to be exchanged for certificates of appropriate
denomination so stamped or endorsed. Any shares of American River Bankshares
common stock that are transferred prior to their submission for endorsement lose
their status as dissenting shares.

         Agreement on Price and Payment. If American River Bankshares and the
dissenting shareholder agree that the surrendered shares are dissenting shares
and agree upon the price of the shares, the dissenting shareholder will be
entitled to the agreed price with interest thereon at the legal rate on
judgments from the date of the agreement. Payment of the fair market value of
the dissenting shares will be made within 30 days after the amount thereof has
been agreed upon or 30 days after any statutory or contractual conditions to the
merger have been satisfied, whichever is later, subject to the surrender of the
certificates therefore, unless provided otherwise by agreement.

         Disagreement on Price and Court Determination. If American River
Bankshares denies that the shares surrendered are dissenting shares, or American
River Bankshares and the dissenting shareholder fail to agree upon a fair market
value of the shares of American River Bankshares common stock, then the
dissenting shareholder of American River Bankshares must, within six months
after the notice of approval is mailed, file a complaint at the Superior Court
of the proper county requesting the court to make the determinations or
intervene in any pending action brought by any other dissenting shareholder. If
the complaint is not filed or intervention in a pending action is not made
within the specified six-month period, the dissenters' rights are lost. If the
fair market value of the dissenting shares is at issue, the court will
determine, or will appoint one or more impartial appraisers to determine, the
fair market value.

         Withdrawal of Demand. A dissenting shareholder may not withdraw his or
her dissent or demand for payment unless American River Bankshares consents to
the withdrawal.

Bank of Amador

         Dissenters' rights will be available to the Bank of Amador shareholders
in accordance with Chapter 13 of the California Corporations Code. THE REQUIRED
PROCEDURE SET FORTH IN CHAPTER 13 OF THE CORPORATIONS CODE MUST BE FOLLOWED
EXACTLY OR ANY DISSENTERS' RIGHTS MAY BE LOST.

         The information set forth below is a general summary of dissenters'
rights as they apply to Bank of Amador shareholders and is qualified in its
entirety by reference to Chapter 13 of the Corporations Code which is attached
to this joint proxy statement-prospectus as Annex D.

         Fair Market Value of Shares. If the merger is consummated, Bank of
Amador shareholders who dissent from the merger by complying with the procedures
set forth in Chapter 13 of the Corporations Code would be entitled to receive an
amount equal to the fair market value of their shares as of July 8, 2004, the
last business day before the public announcement of the merger. Bank of Amador
believes that the fair market value for dissenters' rights purposes is $21.02
per share which represents the closing price for a share of Bank of Amador
common stock as quoted on the OTC Bulletin Board on July 8, 2004.

         Voting Procedure. In order to be entitled to exercise dissenters'
rights, the shares of Bank of Amador common stock which are outstanding and are
entitled to be voted at the special meeting must not have been voted by the
holder of such shares "FOR" the merger. Thus, any Bank of Amador shareholder who
wishes to dissent and executes and returns a proxy in the accompanying form or
votes at the special meeting must not vote "FOR" the merger. If the shareholder
returns a proxy without voting instructions or with instructions to vote "FOR"
the merger, or votes in person or by proxy at the special meeting "FOR" the
merger, his or her shares will be counted as votes in favor of the merger and
the shareholder will lose any dissenters' rights.

                                      166


         Written Demand. Furthermore, in order to preserve his or her
dissenters' rights, a Bank of Amador shareholder must make a written demand upon
Bank of Amador for the purchase of dissenting shares and payment to the
shareholder of their fair market value, specifying the number of shares held of
record by the shareholder and a statement of what the shareholder claims to be
the fair market value of those shares as of July 8, 2004. The demand must be
addressed to Bank of Amador, 422 Sutter Street, Jackson, California 95642;
Attention: Corporate Secretary, and the demand must be received by Bank of
Amador not later than 30 days after the date on which the written notice of
approval, described below, is sent to shareholders who have not voted "FOR"
approval of the merger. A vote "AGAINST" the merger does not constitute the
written demand.

         Notice of Approval. If the merger is approved by the Bank of Amador
shareholders, Bank of Amador will have 10 days after the approval to send to
those shareholders who have not voted "FOR" approval of the merger, a written
notice of the approval accompanied by a copy of Sections 1300 through 1304 of
the Corporations Code, a statement of the price determined by Bank of Amador to
represent the fair market value of the dissenting shares as of July 8, 2004, and
a brief description of the procedure to be followed if a shareholder desires to
exercise dissenters' rights.

         Surrender of Certificates. Within 30 days after the date on which the
notice of the approval of the merger is mailed, the dissenting shareholder must
surrender to Bank of Amador, at the office designated in the notice of approval,
both the written demand and the certificates representing the dissenting shares
to be stamped or endorsed with a statement that they are dissenting shares or to
be exchanged for certificates of appropriate denomination so stamped or
endorsed. Any shares of Bank of Amador common stock that are transferred prior
to their submission for endorsement lose their status as dissenting shares.

         Agreement on Price and Payment. If Bank of Amador and the dissenting
shareholder agree that the surrendered shares are dissenting shares and agree
upon the price of the shares, the dissenting shareholder will be entitled to the
agreed price with interest thereon at the legal rate on judgments from the date
of the agreement. Payment of the fair market value of the dissenting shares will
be made within 30 days after the amount thereof has been agreed upon or 30 days
after any statutory or contractual conditions to the merger have been satisfied,
whichever is later, subject to the surrender of the certificates therefore,
unless provided otherwise by agreement.

         Disagreement on Price and Court Determination. If Bank of Amador denies
that the shares surrendered are dissenting shares, or Bank of Amador and the
dissenting shareholder fail to agree upon a fair market value of the shares of
Bank of Amador common stock, then the dissenting shareholder of Bank of Amador
must, within six months after the notice of approval is mailed, file a complaint
at the Superior Court of the proper county requesting the court to make the
determinations or intervene in any pending action brought by any other
dissenting shareholder. If the complaint is not filed or intervention in a
pending action is not made within the specified six-month period, the
dissenters' rights are lost. If the fair market value of the dissenting shares
is at issue, the court will determine, or will appoint one or more impartial
appraisers to determine, the fair market value.

         Withdrawal of Demand. A dissenting shareholder may not withdraw his or
her dissent or demand for payment unless Bank of Amador consents to the
withdrawal.

                                      167


                      MARKET PRICE AND DIVIDEND INFORMATION

Market Quotations

American River Bankshares

         American River Bankshares common stock is listed and traded on the
Nasdaq National Market under the symbol "AMRB." As of the record date, there
were approximately 1,336 holders of record of American River Bankshares common
stock.

         The following chart sets forth the high and low closing prices for
American River Bankshares common stock and per share cash dividends declared for
the quarters indicated. All per share data has been retroactively restated to
give effect to a 5% stock dividend distributed to shareholders in October 2002
and a 3 for 2 stock split distributed to shareholders in October 2003.

             Calendar Year                High        Low     Dividends Declared
             -------------                ----        ---     ------------------


                 2004
             First Quarter               $21.00      $19.01          $0.115
             Second Quarter              $22.25      $19.88          $0.115
             Third Quarter               $23.38      $19.50          $0.115
             Fourth Quarter
              (thru October 15, 2004)    $23.25      $21.40              --


                 2003
             First Quarter               $15.93      $14.12              --
             Second Quarter              $17.17      $14.57          $0.147
             Third Quarter               $22.90      $15.35              --
             Fourth Quarter              $23.65      $17.25          $0.150

                 2002
             First quarter               $12.22      $ 9.97              --
             Second Quarter              $13.48      $11.87          $0.092
             Third Quarter               $13.45      $11.59              --
             Fourth Quarter              $15.89      $11.17          $0.140


         At the close of business on July 8, 2004, the last trading day
immediately prior to the first public announcement of the merger, the high, low
and closing prices for American River Bankshares common stock on the Nasdaq
National Market were $20.40, $20.24 and $20.40, respectively. As of the record
date, the closing price for American River Bankshares common stock on the Nasdaq
National Market was $23.25.


Bank of Amador

         There is limited trading in and no established public trading market
for Bank of Amador common stock. Bank of Amador's common stock is not listed on
any exchange nor is it quoted by the Nasdaq Stock Market. As of the record date,
there were 1,566,434 shares of its common stock outstanding. Bank of Amador's
common stock is traded in the over-the-counter market and quoted on the OTC
Bulletin Board under the symbol "BNKA." The quotations reflect inter-dealer
prices, without retail markup, markdown, or commission and may not represent
actual transactions. The high and low bid quotations, as well as dividends
declared, for the Bank of Amador's common stock for the periods indicated are
listed in the chart below. All per share data has been retroactively restated to
give effect for a 5% stock dividend distributed to Bank of Amador shareholders
in December 2003.

                                      168


             Calendar Year                High        Low     Dividends Declared
             -------------                ----        ---     ------------------


                 2004
             First Quarter               $24.00      $20.25          $0.23
             Second Quarter              $24.25      $20.25          $0.23
             Third Quarter               $21.75      $19.05          $0.23
             Fourth Quarter
              (thru October 15, 2004)    $19.55      $19.37             --


                 2003
             First Quarter               $20.50      $16.83          $0.23
             Second Quarter              $25.51      $17.46          $0.23
             Third Quarter               $27.37      $22.77          $0.23
             Fourth Quarter              $22.25      $21.78          $0.23

                  2002
             First quarter               $16.54      $15.57          $0.22
             Second Quarter              $17.03      $15.67          $0.22
             Third Quarter               $18.01      $15.86          $0.22
             Fourth Quarter              $17.01      $16.28          $0.22


         At the close of business on July 8, 2004, the last trading day
immediately prior to the first public announcement of the merger, the high, low
and closing bid prices for Bank of Amador common stock as quoted on the OTC
Bulletin Board were $21.75, $21.00 and $21.02, respectively. As of the record
date, the closing price for Bank of Amador common stock on the OTC Bulletin
Board was $19.37. As of the record date, there were approximately 900 holders of
record of Bank of Amador common stock.


Dividends and Distributions

American River Bankshares

         American River Bankshares' board of directors considers the
advisability and amount of proposed dividends each year. Future dividends will
be determined after consideration of American River Bankshares' earnings,
financial condition, future capital funds, regulatory requirements and other
factors as the board of directors may deem relevant. American River Bankshares'
primary source of funds for payment of dividends to its shareholders will be
receipt of dividends and management fees from American River Bank. The payment
of dividends by American River Bank is subject to various state and federal
legal and regulatory restrictions.

         American River Bankshares has paid cash dividends to its shareholders
since the first quarter of 1992. From 1992 until the first quarter of 2004,
American River Bankshares paid cash dividends on a semi-annual basis. Beginning
in the second quarter of 2004, American River Bankshares began paying cash
dividends on a quarterly basis. American River Bankshares paid cash dividends
totaling $.23 per share in 2002, $.30 per share in 2003 and $.345 per share in
paid in the first three quarters of 2004. In addition, American River Bankshares
distributed a 3 for 2 stock split in October of 2003 and a 5% stock dividend in
October of 2002. It is the intention of American River Bankshares to continue
paying cash and stock dividends following the merger, subject to regulatory
restrictions and depending upon the level of earnings, management's assessment
of future capital needs and other factors considered by the American River
Bankshares board of directors.

         Holders of American River Bankshares common stock are entitled to
receive dividends as and when declared by the board of directors of American
River Bankshares out of funds legally available therefor under the laws of the
State of California. The California General Corporation Law provides that

                                      169


a corporation may make a distribution to its shareholders if the corporation's
retained earnings equal at least the amount of the proposed distribution. The
California General Corporation Law further provides that, in the event
sufficient retained earnings are not available for the proposed distribution, a
corporation may nevertheless make a distribution to its shareholders if, after
giving effect to the distribution, it meets two conditions, which generally
stated are as follows: (i) the corporation's assets must equal at least 125% of
its liabilities; and (ii) the corporation's current assets must equal at least
its current liabilities or, if the average of the corporation's earnings before
taxes on income and before interest expense for the two preceding fiscal years
was less than the average of the corporation's interest expense for those fiscal
years, then the corporation's current assets must equal at least 125% of its
current liabilities.

         The Federal Reserve Board generally prohibits a bank holding company
from declaring or paying a cash dividend which would impose undue pressure on
the capital of subsidiary banks or would be funded only through borrowing or
other arrangements that might adversely affect a bank holding company's
financial position. The Federal Reserve Board's policy is that a bank holding
company should not continue its existing rate of cash dividends on its common
stock unless its net income is sufficient to fully fund each dividend and its
prospective rate of earnings retention appears consistent with its capital
needs, asset quality and overall financial condition.

         American River Bank's ability to pay dividends to its sole shareholder,
American River Bankshares, is governed by the California banking laws regarding
payments of dividends. The California Financial Code provides that a bank may
not make a cash distribution to its shareholders in an amount which exceeds the
lesser of (1) the retained earnings or (2) the net income of the bank for its
last three fiscal years, less the amount of any distributions made by the bank
to its shareholders during such period; however, a bank may, with the approval
of the Commissioner, make a distribution to its shareholders in an amount not
exceeding the greater of (i) the retained earnings of the bank, (ii) the net
income of the bank for its last fiscal year, or (iii) the net income of the bank
for its current fiscal year. If the Commissioner finds that the shareholders'
equity of a bank is not adequate or that the payment of a dividend would be
unsafe or unsound for the bank, the Commissioner may order the bank not to pay
any dividend to the shareholders.

         Under the merger agreement, without the prior written consent of Bank
of Amador so long as the merger is pending, American River Bankshares is
prohibited from declaring or paying any dividends on or making other
distributions in respect of any of its capital stock, except regular quarterly
cash dividends in an amount substantially equivalent to cash dividends paid
prior to the date of the merger agreement.

Bank of Amador

         Bank of Amador's shareholders are entitled to receive dividends when
and as declared by its board of directors, out of funds legally available
therefore, subject to various legal and regulatory restrictions.

         Bank of Amador's ability to pay dividends is governed by the California
banking laws regarding payments of dividends. The California Financial Code
provides that a bank may not make a cash distribution to its shareholders in an
amount which exceeds the lesser of (1) the retained earnings or (2) the net
income of the bank for its last three fiscal years, less the amount of any
distributions made by the bank to its shareholders during such period; however,
a bank may, with the approval of the Commissioner, make a distribution to its
shareholders in an amount not exceeding the greater of (i) the retained earnings
of the bank, (ii) the net income of the bank for its last fiscal year, or (iii)
the net income of the bank for its current fiscal year. If the Commissioner
finds that the shareholders' equity of a bank is not adequate or that the
payment of a dividend would be unsafe or unsound for the bank, the Commissioner
may order the bank not to pay any dividend to the shareholders.

                                      170


         Bank of Amador has declared cash dividends to its shareholders on a
quarterly basis commencing with the first quarter of 2002 through the third
quarter 2004. Bank of Amador declared cash dividends totaling $0.88 per share in
2002, $0.92 per share in 2003 and $0.69 per share for the first three quarters
of 2004. Without the prior written consent of American River Bankshares, Bank of
Amador is prohibited from declaring or paying any dividends on or making other
distributions in respect of any of its capital stock under the merger agreement.

Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

American River Bankshares

         On September 20, 2001, the board of directors of American River
Bankshares authorized a stock repurchase program which calls for the repurchase
of up to five percent (5%) annually of American River Bankshares' common stock.
Each year, American River Bankshares may repurchase up to 5% of the shares
outstanding (adjusted for stock splits or stock dividends). The 193,463 shares
reported in the table below as shares that may be repurchased under the plan
represent shares eligible for the calendar year 2004. The repurchases are to be
made from time to time in the open market as conditions allow and will be
structured to comply with Securities and Exchange Commission Rule 10b-18. All
repurchased shares reflected in the table below were made in open market
transactions and then retired. The board of directors has reserved the right to
suspend, terminate, modify or cancel this repurchase program at any time for any
reason.



---------------------------------------------------------------------------------------------------------------------------
         Period                      (a)               (b)                    (c)                         (d)
                                 Total Number     Average Price     Total Number of Shares         Maximum Number (or
                                of Shares (or     Paid Per Share     (or Units) Purchased      Approximate Dollar Value)
                                    Units)          (or Unit)         as Part of Publicly      of Shares (or Units) That
                                  Purchased                           Announced Plans or       May Yet Be Purchased Under
                                                                           Programs              the Plans or Programs
---------------------------------------------------------------------------------------------------------------------------
                                                                                         
        Month #1
     April 1 through
     April 30, 2004                  None              N/A                   None                    196,663 shares
        Month #2
    May 1 through May
        31, 2004                     None              N/A                   None                    196,663 shares
        Month #3
   June 1 through June
        30, 2004                    3,200             $20.55                 3,200                   193,463 shares
---------------------------------------------------------------------------------------------------------------------------
         Total                      3,200                                    3,200
---------------------------------------------------------------------------------------------------------------------------



Bank of Amador

         Bank of Amador repurchased its common stock under a stock repurchase
program approved by the applicable regulatory agencies. The repurchase program
expires on November 5, 2004. During the six month period ended June 30, 2004,
Bank of Amador purchased 12,205 shares of its common stock at an average price
of $22.53 per share.

                                      171


                        COMPARISON OF SHAREHOLDER RIGHTS

General

         American River Bankshares and Bank of Amador are each incorporated
under and subject to the provisions of the California General Corporation Law,
and its respective articles of incorporation and bylaws.

         Upon consummation of the merger, except for those persons, if any, who
perfect dissenters' rights under the California Corporations Code, the
shareholders of Bank of Amador will become shareholders of American River
Bankshares. See "Dissenters' Rights" commencing on page 165.

         The following is a general comparison of similarities and material
differences between the rights of American River Bankshares and Bank of Amador
shareholders under their respective governing articles and bylaws. This
discussion is only a summary of selected provisions and is not a complete
description of the similarities and differences, and is qualified in its
entirety by reference to the California General Corporation Law, the common law
thereunder and the full text of the American River Bankshares articles and
bylaws, and the Bank of Amador articles and bylaws.

         As public companies, American River Bankshares and Bank of Amador are
subject to the periodic and other reporting requirements under the Securities
Exchange Act of 1934, as amended. American River Bankshares is also subject to
the listing and marketplace rules of the Nasdaq Stock Market. American River
Bankshares and Bank of Amador are also subject to the Sarbanes-Oxley Act of
2002.

Anti-Takeover Measures

         Some of the provisions in the American River Bankshares articles and
the American River Bankshares bylaws discussed below may deter efforts to obtain
control of American River Bankshares on a basis which some shareholders might
deem favorable. Those provisions are designed to encourage any person attempting
a change in control of American River Bankshares to enter into negotiations with
the board of directors of American River Bankshares. For example, the American
River Bankshares has eliminated cumulative voting in the election of directors
and established a classified board structure which may have the effect of
delaying or preventing a change in control of American River Bankshares. See
"Cumulative Voting" on page 174 and "Classified Board Provisions--American River
Bankshares" on page 176. These anti-takeover measures may decrease the
likelihood that a person or group would obtain control of American River
Bankshares or may perpetuate incumbent management.

Quorum Requirements

         The American River Bankshares and Bank of Amador bylaws provide that
the presence in person or by proxy of the holders of a majority of the shares
entitled to vote at any meeting of the shareholders will constitute a quorum for
the transaction of business.

Indemnification of Directors and Executive Officers

         Overview of California Law. Section 317 of the California General
Corporation Law expressly grants to each California corporation the power to
indemnify its directors, officers and agents against liabilities and expenses
incurred in the performance of their duties. Rights to indemnification beyond
those provided by Section 317 may be valid to the extent that the rights are
authorized in the corporation's articles of incorporation. Indemnification may
not be made, however, with respect to liability incurred in connection with any
of the following acts for which the liability of directors may not be limited
under the California General Corporation Law: (1) acts or omissions that involve
intentional misconduct or a knowing and culpable violation of law; (2) acts or
omissions that a director believes to be contrary to the

                                      172


best interests of the corporation or its shareholders or that involve the
absence of good faith on the part of the director; (3) any transaction from
which a director derived a personal benefit; (4) acts or omissions that show a
reckless disregard for the director's duty to the corporation or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing a director's duties, of a risk
of serious injury to the corporation or its shareholders; (5) acts or omissions
that constitute an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the corporation or its shareholders; (6)
acts or omissions arising out of interested party transactions; or (7) acts in
connection with illegal distributions, loans or guarantees.

         With respect to all proceedings other than shareholder derivative
actions, Section 317 permits a California corporation to indemnify any of its
directors, officers or other agents only if the person acted in good faith and
in a manner the person reasonably believed to be in the best interests of the
corporation and, in the case of a criminal proceeding, had no reasonable cause
to believe the conduct of the person was unlawful. In the case of derivative
actions, a California corporation may indemnify any of its directors, officers
or agents only if the person acted in good faith and in a manner the person
believed to be in the best interests of the corporation and its shareholders.
Furthermore, in derivative actions, no indemnification is permitted (1) with
respect to any matter with respect to which the person to be indemnified has
been held liable to the corporation, unless the indemnification is approved by
the court; (2) of amounts paid in settling or otherwise disposing of a pending
action without court approval; or (3) of expenses incurred in defending a
pending action which is settled or otherwise disposed of without court approval.
To the extent that a director, officer or agent of a corporation has been
successful on the merits in defense of any proceeding for which indemnification
is permitted by Section 317, a corporation is obligated by Section 317 to
indemnify the person against expenses actually and reasonably incurred by him in
connection with the proceeding.

American River Bankshares

         The American River Bankshares articles eliminate the liability of its
directors for monetary damages to the fullest extent permissible under
California law and obligate American River Bankshares to indemnify its
directors, officers and agents through agreements with the persons, bylaw
provisions, vote of shareholders or disinterested directors, or otherwise, in
excess of the indemnification otherwise permitted by Section 317, subject to
applicable statutory prohibitions upon indemnification.

         The American River Bankshares articles and bylaws obligate American
River Bankshares to indemnify to the maximum extent permitted by California
General Corporation Law its directors, officers and other agents against
liabilities and expenses incurred in the performance of their duties, subject to
the prohibitions of the California General Corporation Law.

         American River Bankshares maintains directors' and officers' liability
insurance policies that indemnify its directors and officers against losses in
connection with claims made against them for specified wrongful acts.

         The American River Bankshares bylaws and indemnification agreements
with its directors entitle the directors of American River Bankshares to be
indemnified against liabilities and reasonable expenses incurred in connection
with any claims brought against them by reason of the fact that they are or were
directors and are expressly stated to be contract rights. American River
Bankshares directors have been granted the right to be paid by American River
Bankshares the expenses incurred in defending the proceedings specified above in
advance of their final disposition, but the directors are required to undertake
to return any amounts advanced to the extent that it is ultimately determined
that they were not legally entitled to be indemnified by American River
Bankshares in the proceeding. The directors are also granted the right to bring
suit against American River Bankshares to recover unpaid amounts claimed with
respect to indemnification and any expenses incurred in bringing an action.
While it is a defense to a suit that indemnification is prohibited by the
California General Corporation Law, the burden of proving a defense is on
American River Bankshares.

                                      173


Bank of Amador

         The Bank of Amador articles obligate Bank of Amador to indemnify to the
maximum extent permitted by California General Corporation Law its directors,
officers and other agents against liabilities and expenses incurred in the
performance of their duties, subject to the prohibitions of the California
General Corporation Law and Section 1828(k) of Title 12 of the United States
Code. Bank of Amador maintains directors' and officers' liability insurance
policies that indemnify its directors and officers against losses in connection
with claims made against them for specified wrongful acts.

Shareholder Meetings and Action by Written Consent

American River Bankshares

         The American River Bankshares articles authorize shareholder action by
written consent only when first authorized by the board of directors.
Additionally, the American River Bankshares bylaws permit a director to be
elected at any time to fill a vacancy on the board of directors (that has not
been filled by the directors) by the written consent of the holders of a
majority of the outstanding shares entitled to vote for the election of
directors.

Bank of Amador

         The Bank of Amador bylaws authorize shareholder action by written
consent for the election of directors by persons holding a majority of the
outstanding shares entitled to vote for the election of directors. Any other
action which, under any provision of the California General Corporation Law, may
be taken at a meeting of the shareholders, may be taken without a meeting if
signed in writing by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote were present and voted.

Cumulative Voting

         Cumulative voting allows a shareholder to cast a number of votes equal
to the number of directors to be elected multiplied by the number of shares held
in the shareholder's name on the record date. The American River Bankshares
articles provide that its shareholders are not entitled to cumulate votes in the
election of directors. Bank of Amador shareholders are entitled to cumulate
votes in the election of directors.

Amendment of Articles and Bylaws

American River Bankshares

         The American River Bankshares articles and bylaws may be amended or
repealed by the affirmative vote or written consent of a majority of the
outstanding shares entitled to vote.

         The American River Bankshares bylaws may be amended or repealed by the
affirmative vote or written consent of a majority of the outstanding shares
entitled to vote, provided that any amendment which reduces (1) the number of
directors on a fixed-number board, or (2) the minimum number of directors on a
variable-number board to a number less than five, cannot be adopted if the votes
cast or consents given opposing the action are equal to or more than 16?% of all
outstanding shares entitled to vote.

         Subject to the rights of shareholders to amend the bylaws, the American
River Bankshares bylaws provide that the bylaws may be adopted, amended or
repealed by its board of directors, except that only the shareholders can adopt
a bylaw or amendment to the bylaws which (1) specifies or changes the number of
directors on a fixed number board, (2) specifies or changes the minimum or
maximum number

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of directors on a variable number board, or (3) changes from a fixed number
board to a variable number board or vice versa.

Bank of Amador

         Subject to the California General Corporation Law, Bank of Amador's
articles of incorporation may be amended or repealed by the affirmative vote or
written consent of a majority of the outstanding shares unless the vote of a
greater amount of shares is required by law, and in that case with the vote or
written consent of the greater amount. Bank of Amador's bylaws may be amended,
altered or repealed by the affirmative vote of a majority of the outstanding
shares entitled to vote or by the Bank of Amador board of directors; provided,
however, that the shareholders may not reduce the minimum number of directors to
fewer than five, and the board of directors may not adopt, amend or repeal a
bylaw fixing or changing the authorized number of directors except to fix the
exact number of directors within specified limits.

Filling Vacancies on the Board of Directors

American River Bankshares

         The American River Bankshares bylaws provide that vacancies occurring
on the board of directors may be filled by a vote of a majority of the remaining
directors, though less than a quorum, or by a sole remaining director, except
that a vacancy created by the removal of a director may only be filled by the
vote of a majority of the shares entitled to vote represented at a duly held
meeting or by unanimous written consent of the outstanding shares entitled to
vote. The American River Bankshares bylaws also provide that the shareholders
may elect a director at any time to fill any vacancy not filled by the
directors, except that any election by written consent, other than to fill a
vacancy created by removal of a director, requires the consent of a majority of
the outstanding shares entitled to vote.

         In addition, the California General Corporation Law provides that if,
after the filling of any vacancy by the directors, the directors then in office
who have been elected by the shareholders constitute less than a majority of the
directors then in office, (1) any holder or holders of an aggregate of 5% or
more of the total number of shares at the time outstanding having the right to
vote for the directors may call a special meeting of shareholders, or (2) the
California Superior Court of the proper county will, upon application of the
shareholder or shareholders, summarily order a special meeting of shareholders,
to be held to elect the entire board of directors.

         The bylaws of American River Bankshares provide for the nomination of
directors for election to the board of directors by the board of directors or by
any shareholder entitled to vote for the election of directors. Notice of a
shareholder's intention to make any nomination must be made in writing to the
President of American River Bankshares not less than 21 days nor more than 60
days prior to any meeting of shareholders called for the election of directors.
Such notification by a shareholder must contain certain information regarding
the nominee and his or her background. Nominations not made in accordance with
the procedures set forth in the bylaws may, in the discretion of the chairman of
the meeting, be disregarded.

Bank of Amador

         Vacancies in the Bank of Amador board of directors, including a vacancy
created by the removal of a director by the shareholders pursuant to the
California General Corporation Law or by court order, may be filled by a
majority of the remaining directors, though less than a quorum, or by a sole
remaining director, and each director so elected shall hold office until his or
her successor is elected at an annual or a special meeting of the shareholders.

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Classified Board Provisions

American River Bankshares

         The American River Bankshares articles and bylaws provide for a
classified board of directors. The articles and bylaws provide that, in the
event that the authorized number of directors is fixed at nine (9) or more, the
board of directors will be divided into three classes: Class I, Class II and
Class III, each consisting of a number of directors equal to as nearly as
practicable one-third the total number of directors. In such event, each
director serves for a term ending at the third annual shareholders meeting
following the annual meeting at which the director was elected. If the
authorized number of directors is fixed with at least six (6) but less than nine
(9) members, the articles and bylaws provide that the board of directors will be
divided into two classes, designated as Class I and Class II, each consisting of
one-half of the directors or as close an approximation as possible. In that
case, each of the successors to the directors of the class whose term will have
expired at an annual meeting will be elected for a term running until the second
annual meeting next succeeding his or her election and until his or her
successor will have been duly elected and qualified. The number of directors is
currently set in a range between 8 and 15 and the number is fixed at nine (9)
with directors divided into three classes. Only directors of the class whose
term is expiring are voted upon, and upon election each such director would
serve for a three-year term and until his or her successor is duly elected and
qualified, subject to any decrease in the total number of authorized directors,
as described above. The use of a classified board may have the effect of
discouraging takeover attempts.

Bank of Amador

         Bank of Amador's articles do not provide for a classified board of
directors.

Call of Annual or Special Meeting of Shareholders

American River Bankshares

         The American River Bankshares bylaws provide that a special meeting of
the shareholders may be called at any time by the board of directors, chairman
of the board, president or one or more shareholders holding shares in the
aggregate entitled to cast not less than 10% of the votes at that special
meeting.

Bank of Amador

         The Bank of Amador bylaws provide that special meetings of the
shareholders may be called at any time by the chairman of the board or the
president, or by the board of directors, or by one or more shareholders holding
not less than 10% of the votes entitled to be cast at the meeting.

                                      176


             DESCRIPTION OF AMERICAN RIVER BANKSHARES CAPITAL STOCK

         The authorized capital stock of American River Bankshares consists of
20,000,000 shares of American River Bankshares common stock, without par value.
As of June 30, 2004, there were 4,209,881 shares of American River Bankshares
common stock issued and outstanding and an additional 776,235 shares of the
authorized American River Bankshares common stock were available for future
grant and reserved for issuance to holders of outstanding stock options under
American River Bankshares' stock option plans.

         Holders of American River Bankshares common stock are entitled to one
vote for each share held of record on all matters submitted to a vote of
shareholders. Shareholders may not cumulate their votes in the election of
directors. Shareholders are entitled to receive ratably dividends as may be
legally declared by American River Bankshares' board of directors. There are
legal and regulatory restrictions on the ability of American River Bankshares to
declare and pay dividends. See "Market Price and Dividend Information--Dividends
and Distributions--American River Bankshares" on page 169. In the event of a
liquidation, common shareholders are entitled to share ratably in all assets
remaining after payment of liabilities and liquidation preferences for
securities with a priority over American River Bankshares common stock.
Shareholders of American River Bankshares common stock have no preemptive,
conversion, or redemption rights or applicable sinking fund provisions rights.
American River Bankshares common stock is not subject to calls or assessments.
The transfer agent and registrar for American River Bankshares common stock is
U.S. Stock Transfer Corporation.

                   DESCRIPTION OF BANK OF AMADOR CAPITAL STOCK

         The authorized capital stock of Bank of Amador consists of 10,000,000
shares of common stock, no par value and 500,000 shares of preferred stock, no
par value. As of June 30, 2004, there were 1,566,434 shares of common stock
issued and outstanding, no shares of preferred stock issued and outstanding, and
an additional 272,793 shares of the authorized Bank of Amador common stock
available for future grant and reserved for issuance to holders of outstanding
stock options under Bank of Amador's 1998 Stock Option Plan.

         Holders of Bank of Amador common stock are entitled to one vote for
each share held of record on all matters submitted to a vote of shareholders,
except that under the Bank of Amador bylaws, shareholders may cumulate their
votes in the election of directors. Cumulative voting entitles a shareholder to
give one nominee as many votes as is equal to the number of directors to be
elected multiplied by the number of shares owned by him or her, or to distribute
his or her votes on the same principle between two or more nominees as he or she
sees fit. No shareholder is entitled to cumulate votes unless the candidate's or
candidates' name(s) have been placed in nomination prior to the voting and the
shareholder has given notice at the meeting prior to the voting of the
shareholder's intention to cumulate the shareholder's votes. If any one
shareholder has given such notice, all shareholders may cumulate their votes for
candidates in nomination.

         Shareholders are entitled to receive ratably dividends as may be
legally declared by Bank of Amador's board of directors. There are legal and
regulatory restrictions on the ability of Bank of Amador to declare and pay
dividends. See "Market Price and Dividend Information--Dividends and
Distributions --Bank of Amador" on page 170. In the event of a liquidation,
common shareholders are entitled to share ratably in all assets remaining after
payment of liabilities and liquidation preferences for securities with a
priority over the Bank of Amador common stock. Shareholders of Bank of Amador
common stock have no preemptive, conversion or redemption rights or applicable
sinking fund provisions. Bank of Amador common stock is not subject to calls or
assessments.

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                           SUPERVISION AND REGULATION
General

American River Bankshares and American River Bank

         The common stock of American River Bankshares is subject to the
registration requirements of the Securities Act of 1933, as amended, and the
qualification requirements of the California Corporate Securities Law of 1968,
as amended. American River Bankshares is also subject to the periodic reporting
requirements of Section 13 of the Securities Exchange Act of 1934, as amended,
which include, but are not limited to, annual, quarterly and other current
reports with the Securities and Exchange Commission. American River Bankshares
is a bank holding company within the meaning of the Bank Holding Company Act of
1956, as amended (the "Bank Holding Company Act"), and is registered as such
with, and subject to the supervision of, the Board of Governors of the Federal
Reserve System ("Board of Governors").

         American River Bank is licensed by the California Commissioner of
Financial Institutions, its deposits are insured by the Federal Deposit
Insurance Corporation up to the applicable legal limits, and it has chosen not
to become a member of the Federal Reserve System. Consequently, American River
Bank is subject to the supervision of, and is regularly examined by, the
California Commissioner of Financial Institutions and the Federal Deposit
Insurance Corporation. The supervision and regulation includes comprehensive
reviews of all major aspects of American River Bank's business and condition,
including its capital ratios, allowance for possible loan losses and other
factors. However, no inference should be drawn that such authorities have
approved any such factors. American River Bankshares and American River Bank are
required to file reports with the Board of Governors, the California
Commissioner of Financial Institutions, and the Federal Deposit Insurance
Corporation and provide the additional information that the Board of Governors,
California Commissioner of Financial Institutions, and Federal Deposit Insurance
Corporation may require.

         American River Bankshares is required to obtain the approval of the
Board of Governors before it may acquire all or substantially all of the assets
of any bank, or ownership or control of the voting shares of any bank if, after
giving effect to such acquisition of shares, American River Bankshares would own
or control more than 5% of the voting shares of such bank. The Bank Holding
Company Act prohibits American River Bankshares from acquiring any voting shares
of, or interest in, all or substantially all of the assets of, a bank located
outside the State of California unless such an acquisition is specifically
authorized by the laws of the state in which such bank is located. Any such
interstate acquisition is also subject to the provisions of the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994.

         American River Bankshares, and any subsidiaries which it may acquire or
organize, are deemed to be "affiliates" within the meaning of that term as
defined in the Federal Reserve Act. This means, for example, that there are
limitations (a) on loans by a subsidiary bank to affiliates, and (b) on
investments by a subsidiary bank in affiliates' stock as collateral for loans to
any borrower. American River Bankshares and its subsidiaries are also subject to
certain restrictions with respect to engaging in the underwriting, public sale
and distribution of securities.

         In addition, regulations of the Board of Governors under the Federal
Reserve Act require that reserves be maintained by a subsidiary bank in
conjunction with any liability of American River Bankshares under any obligation
(promissory note, acknowledgement of advance, banker's acceptance or similar
obligation) with a weighted average maturity of less than seven (7) years to the
extent that the proceeds of such obligations are used for the purpose of
supplying funds to a subsidiary bank for use in its banking business, or to
maintain the availability of such funds.

                                      178


Bank of Amador

         The Common Stock of Bank of Amador is registered under Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "1934 Act"). As such, Bank
of Amador is subject to the information, proxy solicitation, insider trading,
and other requirements and restrictions of the 1934 Act. Bank of Amador is also
subject to the periodic reporting requirements of Section 13 of the 1934 Act
which include, but are not limited to, the filing of annual, quarterly, and
other current reports with the Federal Deposit Insurance Corporation. Bank of
Amador is also subject to the various corporate changes mandated by the
Sarbanes-Oxley Act of 2002.

         Bank of Amador is licensed by the California Department of Financial
Institutions; its deposits are insured by the Federal Deposit Insurance
Corporation; and it has chosen not to become a member of the Federal Reserve
System, although it is still subject to certain regulations promulgated by the
Federal Reserve Board. Bank of Amador has no subsidiaries. Bank of Amador is
subject to the supervision of, and is regularly examined by, the California
Department of Financial Institutions and the Federal Deposit Insurance
Corporation. Such supervision and regulation include comprehensive reviews of
all major aspects of Bank of Amador's business and condition, including its
capital ratios, allowance for possible loan losses, and other factors. However,
no inference should be drawn that such authorities have approved any such
factors. Bank of Amador is required to file reports with the California
Department of Financial Institutions and the Federal Deposit Insurance
Corporation and to provide such additional information as the California
Department of Financial Institutions and the Federal Deposit Insurance
Corporation may require.

Capital Standards

         The Board of Governors and the Federal Deposit Insurance Corporation
have adopted risk-based capital guidelines for evaluating the capital adequacy
of bank holding companies and banks. The guidelines are designed to make capital
requirements sensitive to differences in risk profiles among banking
organizations, to take into account off-balance sheet exposures and to aid in
making the definition of bank capital uniform internationally. Under the
guidelines, American River Bankshares, American River Bank and Bank of Amador
are required to maintain capital equal to at least 8.0% of its assets and
commitments to extend credit, weighted by risk, of which at least 4.0% must
consist primarily of common equity (including retained earnings) and the
remainder may consist of subordinated debt, cumulative preferred stock, or a
limited amount of loan loss reserves.

         Assets, commitments to extend credit, and off-balance sheet items are
categorized according to risk and certain assets considered to present less risk
than others permit maintenance of capital at less than the 8% ratio. For
example, most home mortgage loans are placed in a 50% risk category and
therefore require maintenance of capital equal to 4% of those loans, while
commercial loans are placed in a 100% risk category and therefore require
maintenance of capital equal to 8% of those loans.

         Under the risk-based capital guidelines, assets reported on an
institution's balance sheet and certain off-balance sheet items are assigned to
risk categories, each of which has an assigned risk weight. Capital ratios are
calculated by dividing the institution's qualifying capital by its period-end
risk-weighted assets. The guidelines establish two categories of qualifying
capital: Tier 1 capital (defined to include common shareholders' equity and
noncumulative perpetual preferred stock) and Tier 2 capital which includes,
among other items, limited life (and in the case of banks, cumulative) preferred
stock, mandatory convertible securities, subordinated debt and a limited amount
of reserve for credit losses. Tier 2 capital may also include up to 45% of the
pretax net unrealized gains on certain available-for-sale equity securities
having readily determinable fair values (i.e. the excess, if any, of fair market
value over the book value or historical cost of the investment security). The
federal regulatory agencies reserve the right to exclude all or a portion of the
unrealized gains upon a determination that the equity securities are not
prudently valued. Unrealized gains and losses on other types of assets, such as
bank premises and

                                      179


available-for-sale debt securities, are not included in Tier 2 capital, but may
be taken into account in the evaluation of overall capital adequacy and net
unrealized losses on available-for-sale equity securities will continue to be
deducted from Tier 1 capital as a cushion against risk. Each institution is
required to maintain a minimum risk-based capital ratio (including Tier 1 and
Tier 2 capital) of 8%, of which at least half must be Tier 1 capital.

         A leverage capital standard was adopted as a supplement to the
risk-weighted capital guidelines. Under the leverage capital standard, an
institution is required to maintain a minimum ratio of Tier 1 capital to the sum
of its quarterly average total assets and quarterly average reserve for loan
losses, less intangible assets not included in Tier 1 capital. Period-end assets
may be used in place of quarterly average total assets on a case-by-case basis.
The Board of Governors and the Federal Deposit Insurance Corporation have also
adopted a minimum leverage ratio for bank holding companies as a supplement to
the risk-weighted capital guidelines. The leverage ratio establishes a minimum
Tier 1 ratio of 3% (Tier 1 capital to total assets) for the highest rated bank
holding companies or those that have implemented the risk-based capital market
risk measure. All other bank holding companies must maintain a minimum Tier 1
leverage ratio of 4% with higher leverage capital ratios required for bank
holding companies that have significant financial and/or operational weakness, a
high risk profile, or are undergoing or anticipating rapid growth.

         At June 30, 2004, American River Bankshares, American River Bank and
Bank of Amador were in compliance with the risk-weighted capital and leverage
ratio guidelines.

Prompt Corrective Action

         The Board of Governors and Federal Deposit Insurance Corporation have
adopted regulations implementing a system of prompt corrective action pursuant
to Section 38 of the Federal Deposit Insurance Act and Section 131 of the
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). The
regulations establish five capital categories with the following
characteristics: (1) "Well capitalized" - consisting of institutions with a
total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital
ratio of 6% or greater and a leverage ratio of 5% or greater, and the
institution is not subject to an order, written agreement, capital directive or
prompt corrective action directive; (2) "Adequately capitalized" - consisting of
institutions with a total risk-based capital ratio of 8% or greater, a Tier 1
risk-based capital ratio of 4% or greater and a leverage ratio of 4% or greater,
and the institution does not meet the definition of a "well capitalized"
institution; (3) "Undercapitalized" - consisting of institutions with a total
risk-based capital ratio less than 8%, a Tier 1 risk-based capital ratio of less
than 4%, or a leverage ratio of less than 4%; (4) "Significantly
undercapitalized" - consisting of institutions with a total risk-based capital
ratio of less than 6%, a Tier 1 risk-based capital ratio of less than 3%, or a
leverage ratio of less than 3%; (5) "Critically undercapitalized" - consisting
of an institution with a ratio of tangible equity to total assets that is equal
to or less than 2%.

         The regulations established procedures for classification of financial
institutions within the capital categories, filing and reviewing capital
restoration plans required under the regulations and procedures for issuance of
directives by the appropriate regulatory agency, among other matters. The
regulations impose restrictions upon all institutions to refrain from certain
actions which would cause an institution to be classified within any one of the
three "undercapitalized" categories, such as declaration of dividends or other
capital distributions or payment of management fees, if following the
distribution or payment the institution would be classified within one of the
"undercapitalized" categories. In addition, institutions which are classified in
one of the three "undercapitalized" categories are subject to certain mandatory
and discretionary supervisory actions. Mandatory supervisory actions include (1)
increased monitoring and review by the appropriate federal banking agency; (2)
implementation of a capital restoration plan; (3) total asset growth
restrictions; and (4) limitations upon acquisitions, branch expansion, and new
business activities without prior approval of the appropriate federal banking
agency. Discretionary supervisory actions may include (1) requirements to
augment capital; (2) restrictions upon affiliate transactions; (3)

                                      180


restrictions upon deposit gathering activities and interest rates paid; (4)
replacement of senior executive officers and directors; (5) restrictions upon
activities of the institution and its affiliates; (6) requiring divestiture or
sale of the institution; and (7) any other supervisory action that the
appropriate federal banking agency determines is necessary to further the
purposes of the regulations. Further, the federal banking agencies may not
accept a capital restoration plan without determining, among other things, that
the plan is based on realistic assumptions and is likely to succeed in restoring
the depository institution's capital. In addition, for a capital restoration
plan to be acceptable, the depository institution's parent holding company must
guarantee that the institution will comply with such capital restoration plan.
The aggregate liability of the parent holding company under the guaranty is
limited to the lesser of (i) an amount equal to 5 percent of the depository
institution's total assets at the time it became undercapitalized, and (ii) the
amount that is necessary (or would have been necessary) to bring the institution
into compliance with all capital standards applicable with respect to such
institution as of the time it fails to comply with the plan. If a depository
institution fails to submit an acceptable plan, it is treated as if it were
"significantly undercapitalized." The FDICIA also restricts the solicitation and
acceptance of and interest rates payable on brokered deposits by insured
depository institutions that are not "well capitalized." An "undercapitalized"
institution is not allowed to solicit deposits by offering rates of interest
that are significantly higher than the prevailing rates of interest on insured
deposits in the particular institution's normal market areas or in the market
areas in which such deposits would otherwise be accepted.

         Any financial institution which is classified as "critically
undercapitalized" must be placed in conservatorship or receivership within 90
days of such determination unless it is also determined that some other course
of action would better serve the purposes of the regulations. Critically
undercapitalized institutions are also prohibited from making (but not accruing)
any payment of principal or interest on subordinated debt without prior
regulatory approval and regulators must prohibit a critically undercapitalized
institution from taking certain other actions without prior approval, including
(1) entering into any material transaction other than in the usual course of
business, including investment expansion, acquisition, sale of assets or other
similar actions; (2) extending credit for any highly leveraged transaction; (3)
amending articles or bylaws unless required to do so to comply with any law,
regulation or order; (4) making any material change in accounting methods; (5)
engaging in certain affiliate transactions; (6) paying excessive compensation or
bonuses; and (7) paying interest on new or renewed liabilities at rates which
would increase the weighted average costs of funds beyond prevailing rates in
the institution's normal market areas.

Additional Regulations

         Under the FDICIA, the federal financial institution agencies have
adopted regulations which require institutions to establish and maintain
comprehensive written real estate policies which address certain lending
considerations, including loan-to-value limits, loan administrative policies,
portfolio diversification standards, and documentation, approval and reporting
requirements. The FDICIA further generally prohibits an insured state bank from
engaging as a principal in any activity that is impermissible for a national
bank, absent Federal Deposit Insurance Corporation determination that the
activity would not pose a significant risk to the Bank Insurance Fund, and that
the bank is, and will continue to be, within applicable capital standards.

         The Federal Financial Institution Examination Counsel ("FFIEC")
utilizes the Uniform Financial Institutions Rating System ("UFIRS") commonly
referred to as "CAMELS" to classify and evaluate the soundness of financial
institutions. Bank examiners use the CAMELS measurements to evaluate capital
adequacy, asset quality, management, earnings, liquidity and sensitivity to
market risk.

         The federal financial institution agencies have established bases for
analysis and standards for assessing a financial institution's capital adequacy
in conjunction with the risk-based capital guidelines including analysis of
interest rate risk, concentrations of credit risk, risk posed by non-traditional

                                      181


activities, and factors affecting overall safety and soundness. The safety and
soundness standards for insured financial institutions include analysis of (1)
internal controls, information systems and internal audit systems; (2) loan
documentation; (3) credit underwriting; (4) interest rate exposure; (5) asset
growth; (6) compensation, fees and benefits; and (7) excessive compensation for
executive officers, directors or principal shareholders which could lead to
material financial loss. If an agency determines that an institution fails to
meet any standard, the agency may require the financial institution to submit to
the agency an acceptable plan to achieve compliance with the standard. If the
agency requires submission of a compliance plan and the institution fails to
timely submit an acceptable plan or to implement an accepted plan, the agency
must require the institution to correct the deficiency. The agencies may elect
to initiate enforcement action in certain cases rather than rely on an existing
plan particularly where failure to meet one or more of the standards could
threaten the safe and sound operation of the institution.

         Community Reinvestment Act ("CRA") regulations evaluate banks' lending
to low and moderate income individuals and businesses across a four-point scale
from "outstanding" to "substantial noncompliance," and are a factor in
regulatory review of applications to merge, establish new branches or form bank
holding companies. In addition, any bank rated in "substantial noncompliance"
with the CRA regulations may be subject to enforcement proceedings. American
River Bank and Bank of Amador each have a rating of "satisfactory" for CRA
compliance as of the dates of their most recent examinations.

Limitations on Dividends

         American River Bankshares' ability to pay cash dividends is subject to
restrictions set forth in the California General Corporation Law. Funds for
payment of any cash dividends by American River Bankshares would be obtained
from its investments as well as dividends and/or management fees from its
subsidiaries. The payment of cash dividends and/or management fees by American
River Bank and Bank of Amador is subject to restrictions set forth in the
California Financial Code, as well as restrictions established by the Federal
Deposit Insurance Corporation. See "Market Price and Dividend Information" on
page 168 for more information regarding cash dividends.

Impact of Legislative and Regulatory Proposals

         Since 1996, California law implementing certain provisions of prior
federal law has (1) permitted interstate merger transactions; (2) prohibited
interstate branching through the acquisition of a branch business unit located
in California without acquisition of the whole business unit of the California
bank; and (3) prohibited interstate branching through de novo establishment of
California branch offices. Initial entry into California by an out-of-state
institution must be accomplished by acquisition of or merger with an existing
whole bank which has been in existence for at least five years.

         In 1999, the Gramm-Leach-Bliley Act (the "GLB Act") was signed into
law. The GLB Act eliminates most of the remaining depression-era "firewalls"
between banks, securities firms and insurance companies which was established by
The Banking Act of 1933, also known as the Glass-Steagall Act
("Glass-Steagall"). Glass-Steagall sought to insulate banks as depository
institutions from the perceived risks of securities dealing and underwriting,
and related activities. The GLB Act repeals Section 20 of Glass-Steagall which
prohibited banks from affiliating with securities firms. Bank holding companies
that can qualify as "financial holding companies" can now acquire securities
firms or create them as subsidiaries, and securities firms can now acquire banks
or start banking activities through a financial holding company. The GLB Act
includes provisions which permit national banks to conduct financial activities
through a subsidiary that are permissible for a national bank to engage in
directly, as well as certain activities authorized by statute, or that are
financial in nature or incidental to financial activities to the same extent as
permitted to a "financial holding company" or its affiliates. This
liberalization of United States banking and financial services regulation
applies both to domestic institutions and foreign institutions conducting
business in the United States. Consequently, the common ownership of banks,
securities firms and insurance firms is now possible, as is the conduct of
commercial banking, merchant

                                      182


banking, investment management, securities underwriting and insurance within a
single financial institution using a "financial holding company" structure
authorized by the GLB Act.

         Prior to the GLB Act, significant restrictions existed on the
affiliation of banks with securities firms and on the direct conduct by banks of
securities dealing and underwriting and related securities activities. Banks
were also (with minor exceptions) prohibited from engaging in insurance
activities or affiliating with insurers. The GLB Act removes these restrictions
and substantially eliminates the prohibitions under the Bank Holding Company Act
on affiliations between banks and insurance companies. Bank holding companies
which qualify as financial holding companies can now insure, guarantee, or
indemnify against loss, harm, damage, illness, disability, or death; issue
annuities; and act as a principal, agent, or broker regarding such insurance
services.

         In order for a commercial bank to affiliate with a securities firm or
an insurance company pursuant to the GLB Act, its bank holding company must
qualify as a financial holding company. A bank holding company will qualify if
(i) its banking subsidiaries are "well capitalized" and "well managed" and (ii)
it files with the Board of Governors a certification to such effect and a
declaration that it elects to become a financial holding company. The amendment
of the Bank Holding Company Act now permits financial holding companies to
engage in activities, and acquire companies engaged in activities, that are
financial in nature or incidental to such financial activities. Financial
holding companies are also permitted to engage in activities that are
complementary to financial activities if the Board of Governors determines that
the activity does not pose a substantial risk to the safety or soundness of
depository institutions or the financial system in general. These standards
expand upon the list of activities "closely related to banking" which have to
date defined the permissible activities of bank holding companies under the Bank
Holding Company Act.

         One further effect of the GLB Act is to require that federal financial
institution and securities regulatory agencies prescribe regulations to
implement the policy that financial institutions must respect the privacy of
their customers and protect the security and confidentiality of customers'
non-public personal information. These regulations require, in general, that
financial institutions (1) may not disclose non-public personal information of
customers to non-affiliated third parties without notice to their customers, who
must have the opportunity to direct that such information not be disclosed; (2)
may not disclose customer account numbers except to consumer reporting agencies;
and (3) must give prior disclosure of their privacy policies before establishing
new customer relationships.

         Neither American River Bankshares, American River Bank nor Bank of
Amador have determined whether or when they may seek to acquire and exercise
powers or activities under the GLB Act, and the extent to which competition will
change among financial institutions affected by the GLB Act has not yet become
clear.

         On October 26, 2001, President Bush signed the USA Patriot Act (the
"Patriot Act"), which includes provisions pertaining to domestic security,
surveillance procedures, border protection, and terrorism laws to be
administered by the Secretary of the Treasury. Title III of the Patriot Act
entitled, "International Money Laundering Abatement and Anti-Terrorist Financing
Act of 2001" includes amendments to the Bank Secrecy Act which expand the
responsibilities of financial institutions in regard to anti-money laundering
activities with particular emphasis upon international money laundering and
terrorism financing activities through designated correspondent and private
banking accounts.

         Effective December 25, 2001, Section 313(a) of the Patriot Act
prohibits any insured financial institution such as the Subsidiary Banks, from
providing correspondent accounts to foreign banks which do not have a physical
presence in any country (designated as "shell banks"), subject to certain
exceptions for regulated affiliates of foreign banks. Section 313(a) also
requires financial institutions to take reasonable steps to ensure that foreign
bank correspondent accounts are not being used to indirectly provide banking
services to foreign shell banks, and Section 319(b) requires financial
institutions to

                                      183


maintain records of the owners and agent for service of process of any such
foreign banks with whom correspondent accounts have been established.

         Effective July 23, 2002, Section 312 of the Patriot Act created a
requirement for special due diligence for correspondent accounts and private
banking accounts. Under Section 312, each financial institution that
establishes, maintains, administers, or manages a private banking account or a
correspondent account in the United States for a non-United States person,
including a foreign individual visiting the United States, or a representative
of a non-United States person shall establish appropriate, specific, and, where
necessary, enhanced, due diligence policies, procedures, and controls that are
reasonably designed to detect and record instances of money laundering through
those accounts.

         American River Bankshares, American River Bank and Bank of Amador are
not currently aware of any account relationships between them and any foreign
bank or other person or entity as described above under Sections 313(a) or 312
of the Patriot Act. The terrorist attacks on September 11, 2001 have realigned
national security priorities of the United States and it is reasonable to
anticipate that the United States Congress may enact additional legislation in
the future to combat terrorism including modifications to existing laws such as
the Patriot Act to expand powers as deemed necessary. The effects which the
Patriot Act and any additional legislation enacted by Congress may have upon
financial institutions is uncertain; however, such legislation could increase
compliance costs and thereby potentially may have an adverse effect upon the
results of operations of American River Bankshares, American River Bank and Bank
of Amador.

         Certain legislative and regulatory proposals that could affect American
River Bankshares, American River Bank, Bank of Amador and the banking business
in general are periodically introduced before the United States Congress, the
California State Legislature and Federal and state government agencies. It is
not known to what extent, if any, legislative proposals will be enacted and what
effect such legislation would have on the structure, regulation and competitive
relationships of financial institutions. It is likely, however, that such
legislation could subject American River Bankshares, American River Bank and
Bank of Amador to increased regulation, disclosure and reporting requirements,
competition, and costs of doing business.

         On July 30, 2002, President George W. Bush signed into law the
Sarbanes-Oxley Act of 2002 (the "Act") which responds to recent issues in
corporate governance and accountability. Among other matters, key provisions of
the Act and rules promulgated by the Securities and Exchange Commission pursuant
to the Act include the following:

         o        Expanded oversight of the accounting profession by creating a
                  new independent public company oversight board to be monitored
                  by the Securities and Exchange Commission.
         o        Revised rules on auditor independence to restrict the nature
                  of non-audit services provided to audit clients and to require
                  such services to be pre-approved by the audit committee.
         o        Improved corporate responsibility through mandatory listing
                  standards relating to audit committees, certifications of
                  periodic reports by the CEO and CFO and making issuer
                  interference with an audit a crime.
         o        Enhanced financial disclosures, including periodic reviews for
                  largest issuers and real time disclosure of material company
                  information.
         o        Enhanced criminal penalties for a broad array of white collar
                  crimes and increases in the statute of limitations for
                  securities fraud lawsuits.
         o        Disclosure of whether a company has adopted a code of ethics
                  that applies to the company's principal executive officer,
                  principal financial officer, principal accounting officer or
                  controller, or persons performing similar functions, and
                  disclosure of any amendments or waivers to such code of
                  ethics. The ethics code must contain written standards that
                  are reasonably designed to deter wrongdoing and to promote:

                                      184


                  o        Honest and ethical conduct, including the ethical
                           handling of actual or apparent conflicts of interest
                           between personal and professional relationships;
                  o        Full, fair, accurate, timely, and understandable
                           disclosure in reports and documents that a registrant
                           files with, or submits to, the Securities and
                           Exchange Commission and in other public
                           communications made by the registrant;
                  o        Compliance with applicable governmental laws, rules
                           and regulations;
                  o        The prompt internal reporting to an appropriate
                           person or persons identified in the code of
                           violations of the code; and
                  o        Accountability for adherence to the code.

         o        Disclosure of whether a company's audit committee of its board
                  of directors has a member of the audit committee who qualifies
                  as an "audit committee financial expert." To qualify as an
                  "audit committee financial expert," a person must have:

                  o        An understanding of generally accepted accounting
                           principles and financial statements;
                  o        The ability to assess the general application of
                           such principles in connection with the accounting for
                           estimates, accruals and reserves;
                  o        Experience preparing, auditing, analyzing or
                           evaluating financial statements that present a
                           breadth and level of complexity of accounting issues
                           that are generally comparable to the breadth and
                           complexity of issues that can reasonably be expected
                           to be raised by the registrant's financial
                           statements, or experience actively supervising one or
                           more persons engaged in such activities;
                  o        An understanding of internal controls and
                           procedures for financial reporting; and
                  o        An understanding of audit committee functions.

         A person must have acquired the above listed attributes to be deemed to
qualify as an "audit committee financial expert" through any one or more of the
following:

                  o        Education and experience as a principal financial
                           officer, principal accounting officer, controller,
                           public accountant or auditor or experience in one or
                           more positions that involve the performance of
                           similar functions;
                  o        Experience actively supervising a principal
                           financial officer, principal accounting officer,
                           controller, public accountant, auditor or person
                           performing similar functions;
                  o        Experience overseeing or assessing the performance
                           of companies or public accountants with respect to
                           the preparation, auditing or evaluation of financial
                           statements; or
                  o        Other relevant experience.

         The rule contains a specific safe harbor provision to clarify that the
designation of a person as an "audit committee financial expert" does not cause
that person to be deemed to be an "expert" for any purpose under Section 11 of
the Securities Act of 1933, as amended, or impose on such person any duties,
obligations or liability greater that the duties, obligations and liability
imposed on such person as a member of the audit committee and the board of
directors, absent such designation. Such a designation also does not affect the
duties, obligations or liability of any other member of the audit committee or
board of directors.

         o        A prohibition on insider trading during pension plan black-out
                  periods.
         o        Disclosure of off-balance sheet transactions.
         o        A prohibition on personal loans to directors and officers.
         o        Conditions on the use of non-GAAP (generally accepted
                  accounting principles) financial measures.
         o        Standards on professional conduct for attorneys requiring
                  attorneys having an attorney-client relationship with a
                  company, among other matters, to report "up the ladder" to the
                  audit

                                      185


                  committee, another board committee or the entire board of
                  directors certain material violations.
         o        Expedited filing requirements for Form 4 reports of changes in
                  beneficial ownership of securities reducing the filing
                  deadline to within 2 business days of the date a transaction
                  triggers an obligation to report.
         o        Accelerated filing requirements for Forms 10-K and 10-Q by
                  public companies which qualify as "accelerated filers" to be
                  phased-in over a four year period reducing the filing deadline
                  for Form 10-K reports from 90 days after the fiscal year end
                  to 60 days and Form 10-Q reports from 45 days after the fiscal
                  quarter end to 35 days.
         o        Disclosure concerning website access to reports on Forms 10-K,
                  10-Q and 8-K, and any amendments to those reports, by
                  "accelerated filers" as soon as reasonably practicable after
                  such reports and material are filed with or furnished to the
                  Securities and Exchange Commission.
         o        Rules requiring national securities exchanges and national
                  securities associations to prohibit the listing of any
                  security whose issuer does not meet audit committee standards
                  established pursuant to the Act including:

                  o        Independence standards for members;
                  o        Responsibility for selecting and overseeing the
                           issuer's independent accountant;
                  o        Responsibility for handling complaints regarding
                           the issuer's accounting practices;
                  o        Authority to engage advisers; and
                  o        Funding requirements for the independent auditor
                           and outside advisers engaged by the audit committee.

         On November 4, 2003, the Securities and Exchange Commission adopted
changes to the standards for the listing of issuer securities by the New York
Stock Exchange and Nasdaq Stock Market. The revised standards for listing
conform to and supplement Rule 10A-3 under the Securities Exchange Act of 1934,
as amended, which the Securities and Exchange Commission adopted in April 2003
pursuant to the Act.

         American River Bankshares' securities are listed on the Nasdaq Stock
Market. Consequently, in addition to the rules promulgated by the Securities and
Exchange Commission pursuant to the Act, American River Bankshares must also
comply with revised listing standards applicable to Nasdaq listed companies. The
revised Nasdaq listing standards applicable to American River Bankshares include
the following:

         o        A majority of directors of a listed company must be
                  "independent", which excludes:

                  o        Any director who is, or at any time in the past
                           three years was, employed by a listed company, its
                           parent or a subsidiary;
                  o        Any director or any family member who received
                           payments in excess of $60,000 in the current year or
                           prior three years from a listed company, its parent
                           or a subsidiary;
                  o        Any director whose family member is employed or
                           during the last three years was employed as an
                           executive officer of a listed company, its parent or
                           a subsidiary;
                  o        Any director or any family member who is a partner,
                           controlling shareholder or executive officer of an
                           organization to which a listed company made payments
                           or from which a listed company received payments, for
                           services or property, in the current year or prior
                           three years in excess of the greater of $200,000 or
                           5% of the recipient's consolidated gross revenues in
                           the year of payment;
                  o        Any director or any family member who is employed
                           as an executive officer of another organization where
                           during the current year or prior three years an
                           executive officer of a listed company served on the
                           compensation committee of such organization; and

                                      186


                  o        Any director or any family member who is a partner
                           of the outside auditor of a listed company or was a
                           partner or employee of the listed company's auditor
                           and worked on the company's audit in the prior three
                           years.

         o        Independent directors of a listed company must meet alone in
                  executive sessions at least two times annually.
         o        Listed companies must certify adoption of a resolution or
                  written charter dealing with nominations of directors and
                  select nominees for election as directors either by
                  determination of a majority of independent directors or by a
                  nominating committee consisting solely of independent
                  directors, with certain exceptions.
         o        Compensation of a listed company's chief executive officer
                  must be determined either by a majority of independent
                  directors or by a compensation committee consisting solely of
                  independent directors, with certain exceptions.
         o        The audit committee of a listed company, subject to certain
                  exceptions, must comply with requirements that include:

                  o        The committee be comprised of at least three
                           independent directors who have not participated in
                           the preparation of financial statements for the
                           company, its parent or subsidiaries during the last
                           three years; 
                  o        Each director must be able to read and understand
                           financial statements;
                  o        At least one director must meet the "financial
                           sophistication" criteria which the company must
                           certify;
                  o        The committee must adopt a written charter; and
                  o        The committee is responsible for the review and
                           approval of all related-party transactions, except
                           those approved by another board committee comprised
                           of independent directors.

         o        The adoption or amendment of any equity compensation
                  arrangement after June 30, 2003, such as a stock option plan,
                  requires shareholder approval, subject to certain exemptions.
         o        A code of conduct must be adopted by May 4, 2004 that (i)
                  complies with the code of ethics requirements of the Act; (ii)
                  covers all directors, officers and employees; (iii) includes
                  an enforcement mechanism; and (iv) permits only the board of
                  directors to grant waivers from or changes to the code of
                  conduct affecting directors and executive officers and
                  requires prompt disclosure thereof on a Form 8-K filing with
                  the Securities and Exchange Commission.

         The effect of the Act upon American River Bankshares and Bank of Amador
is uncertain; however, it is likely that American River Bankshares and Bank of
Amador will incur increased costs to comply with the Act and the rules and
regulations promulgated pursuant to the Act by the Securities and Exchange
Commission, Federal Deposit Insurance Corporation, Nasdaq and other regulatory
agencies having jurisdiction over American River Bankshares and Bank of Amador
or the issuance and listing of their securities. They do not currently
anticipate, however, that compliance with the Act and such rules and regulations
will have a material adverse effect upon their financial position or results of
operations or cash flows.

         On September 28, 2002, California Governor Gray Davis signed into law
the California Corporate Disclosure Act (the "CCD Act"), which became effective
January 1, 2003. The CCD Act requires publicly traded corporations incorporated
or qualified to do business in California to disclose information about their
past history, auditors, directors and officers. The CCD Act requires companies
like American River Bankshares to disclose:

                                      187


         o        The name of the company's independent auditor and a
                  description of services, if any, performed for the company
                  during the previous 24 months;
         o        The annual compensation paid to each director and executive
                  officer, including stock or stock options not otherwise
                  available to other company employees;
         o        A description of any loans made to a director at a
                  "preferential" loan rate during the previous 24 months,
                  including the amount and terms of the loans;
         o        Whether any bankruptcy was filed by a company or any of its
                  directors or executive officers within the previous 10 years;
         o        Whether any director or executive officer of a company has
                  been convicted of fraud during the previous 10 years; and
         o        Whether a company violated any federal securities laws or any
                  securities or banking provisions of California law during the
                  previous 10 years for which the company was found liable or
                  fined more than $10,000.

         American River Bankshares does not currently anticipate that compliance
with the CCD Act will have a material adverse effect upon its financial position
or results of its operations or its cash flows.

         In addition to legislative changes, the various Federal and state
financial institution regulatory agencies frequently propose rules and
regulations to implement and enforce already existing legislation. It cannot be
predicted whether or in what form any such rules or regulations will be enacted
or the effect that such regulations may have on American River Bankshares,
American River Bank and Bank of Amador.

                                      188


                                     EXPERTS

         The consolidated financial statements of American River Bankshares
included in this joint proxy statement-prospectus for the year ended December
31, 2003, have been audited by Perry-Smith LLP, independent accountants, as
stated in their report and given upon their authority as experts in accounting
and auditing.

         The financial statements of Bank of Amador included in this joint proxy
statement-prospectus for the year ended December 31, 2003, have been audited by
Perry-Smith LLP, independent accountants, as stated in their report and given
upon their authority as experts in accounting and auditing.


                                  LEGAL MATTERS

         The validity of the shares of American River Bankshares common stock
offered hereby and material legal matters in connection with the merger will be
passed upon for American River Bankshares by DoddoMasonoGeorge LLP, San Jose,
California. Certain federal and California tax matters will be passed upon by
Perry-Smith LLP, Sacramento, California.


                       WHERE YOU CAN FIND MORE INFORMATION

         American River Bankshares has filed with the Securities and Exchange
Commission a registration statement on Form S-4 under the Securities Act of
1933, as amended, relating to the shares of American River Bankshares common
stock to be issued in connection with the merger. This document also constitutes
the prospectus of American River Bankshares filed as part of the registration
statement and does not contain all the information set forth in the registration
statement and exhibits thereto. You may copy and read the registration statement
and its exhibits at the Securities and Exchange Commission's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. You may
also obtain copies of this information by mail from the Public Reference Section
of the Securities and Exchange Commission, 450 5th Street, N.W., Room 1024,
Washington, D.C. 20549 at prescribed rates. Please call the Securities and
Exchange Commission at (800) SEC-0330 for further information on the public
reference rooms. The Securities and Exchange Commission maintains an Internet
Website at "http://www.sec.gov" at which information filed by American River
Bankshares will be available. In addition, the registration statement and its
exhibits and other information concerning American River Bankshares may be
inspected at the offices of The Nasdaq Stock Market, 1735 K Street, Washington,
D.C. 20006.

         Bank of Amador files periodic reports, beneficial ownership reports,
proxy statements and other information with the Federal Deposit Insurance
Corporation. You may inspect these reports, proxy statements and other
information Bank of Amador has filed with the Federal Deposit Insurance
Corporation at its offices located at 550 17th Street, N.W., Washington, D.C.
20429. Such periodic reports, beneficial ownership reports, proxy statements and
other information may also be obtained by writing the Federal Deposit Insurance
Corporation's Accounting and Securities Disclosure Section at 550 17th Street,
N.W.-- Rm. F-6043, Washington, D.C. 20429 or by calling (202) 898-8913 or by FAX
at (202) 898-8505. Email requests may be sent to mfields@fdic.gov. You may also
request copies of these reports, proxy statements and other information by
contacting Bank of Amador, 422 Sutter Street, Jackson, California 95642,
Attention: Corporate Secretary.

         American River Bankshares and Bank of Amador incorporate by reference
any additional documents that American River Bankshares may file with the
Securities and Exchange Commission and Bank of Amador may file with the Federal
Deposit Insurance Corporation between the date of this

                                      189


document and the date of the special meetings of American River Bankshares' and
Bank of Amador's shareholders. These include periodic reports, such as annual
reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form
8-K, as well as proxy statements.

         Any statement incorporated by reference from the above documents will
be deemed to be modified or superseded for purposes of this document to the
extent that a statement contained herein or in any other document subsequently
filed by American River Bankshares and Bank of Amador which also is or is deemed
to be incorporated here by this reference modifies or supersedes the statement.
Any statement so modified or superseded will not be deemed, except as so
modified or superseded, to constitute a part of this document.


         American River Bankshares has supplied all information contained or
incorporated by reference in the document relating to American River Bankshares
and American River Bank, and Bank of Amador has supplied all such information
relating to Bank of Amador. In deciding how to vote on the transactions
contemplated by the merger agreement, including the merger, you should rely only
on the information contained or incorporated by reference in this document.
Neither American River Bankshares nor Bank of Amador has authorized any person
to provide you with any information that is different from what is contained in
this document. This document is dated October 15, 2004. You should not assume
that the information contained in this document is accurate as of any date other
than the date of this document, and neither the mailing to you of this document
nor the issuance to you of shares of American River Bankshares common stock will
create any implication to the contrary. This document does not constitute an
offer to sell or a solicitation of any offer to buy any securities, or the
solicitation of a proxy in any jurisdiction in which, or to any person to whom,
it is unlawful.


                                      190


                          INDEX TO FINANCIAL STATEMENTS

                                                                            PAGE
                                                                            ----

AMERICAN RIVER BANKSHARES AND SUBSIDIARIES FINANCIAL STATEMENTS


Consolidated Balance Sheets (unaudited) as of June 30, 2004 and
            December 31, 2003.............................................. F-1
Consolidated Statement of Income for the Six Months Ended
            June 30, 2004 and 2003 (unaudited)............................. F-2
Consolidated Statement of Changes in Shareholders' Equity (unaudited)...... F-3
Consolidated Statements of Cash Flows for the Six Months Ended
            June 30, 2004 and 2003 (unaudited)............................. F-4
Notes to Unaudited Consolidated Financial Statements....................... F-6
Independent Auditor's Report of Perry-Smith LLP............................ F-10
Consolidated Balance Sheets as of December 31, 2003 and 2002............... F-11
Consolidated Statement of Income for the Years Ended
            December 31, 2003, 2002 and 2001............................... F-12
Consolidated Statement of Changes in Shareholders' Equity for
            the Years Ended December 31, 2003, 2002 and 2001............... F-13
Consolidated Statement of Cash Flows for the Years Ended
            December 31, 2003, 2002 and 2001............................... F-14
Notes to Consolidated Financial Statements................................. F-16



BANK OF AMADOR FINANCIAL STATEMENTS


Balance Sheets (unaudited) as of June 30, 2004 and
            December 31, 2003.............................................. F-45
Statement of Income for the Six Months Ended June 30, 2004
            and 2003 (unaudited)........................................... F-46
Statement of Changes in Shareholders' Equity (unaudited) .................. F-47
Statements of Cash Flows for the Six Months Ended June 30, 2004
            and 2003 (unaudited)........................................... F-48
Notes to Unaudited Financial Statements.................................... F-49
Independent Auditor's Report of Perry-Smith LLP............................ F-55
Balance Sheets as of December 31, 2003 and 2002............................ F-56
Statement of Income for the Years Ended December 31, 2003,
            2002 and 2001.................................................. F-57
Statement of Changes in Shareholders' Equity for the Years Ended
            December 31, 2003, 2002 and 2001............................... F-58
Statement of Cash Flows for the Years Ended December 31, 2003,
            2002 and 2001.................................................. F-60
Notes to Financial Statements.............................................. F-62


                                      191



                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES
                              FINANCIAL STATEMENTS





                   UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE PERIOD ENDED JUNE 30, 2004

                                       AND

                      CONSOLIDATED FINANCIAL STATEMENTS AND
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                               FOR THE YEARS ENDED
                        DECEMBER 31, 2003, 2002 AND 2001



                            AMERICAN RIVER BANKSHARES
                      UNAUDITED CONSOLIDATED BALANCE SHEETS
                     (In thousands, except number of shares)



                                                                     June 30,     December 31,
                                                                       2004           2003
                                                                   ------------   ------------
                                                                                     
ASSETS

Cash and due from banks                                            $     27,407   $     29,797
Federal funds sold                                                           --             --
Interest-bearing deposits in banks                                        5,740          4,650
Investment securities:
    Available-for-sale (amortized cost: 2004--$81,672; 2003
    --$61,256)                                                           81,963         62,686
    Held-to-maturity (market value: 2004--$37,362 2003--$27,216)         37,331         27,160
Loans and leases, less allowance for loan and lease
    losses of $4,233 at June 30, 2004 and $3,949 at
    December 31, 2003                                                   266,637        262,464
Premises and equipment, net                                               1,796          1,505
FHLB and FRB stock                                                        2,116          1,546
Accounts receivable servicing receivables, net                            2,040          1,778
Accrued interest receivable and other assets                              6,067          5,807
                                                                   ------------   ------------
                                                                   $    431,097   $    397,393
                                                                   ============   ============

LIABILITIES AND
SHAREHOLDERS' EQUITY

Deposits:
     Noninterest bearing                                           $    110,109   $    102,308
     Interest bearing                                                   239,913        220,199
                                                                   ------------   ------------
          Total deposits                                                350,022        322,507

Short-term borrowed funds (Note 6)                                       38,800         34,600
Long-term debt                                                            1,916          1,942
Accrued interest payable and other liabilities                            2,850          2,887
                                                                   ------------   ------------

          Total liabilities                                             393,588        361,936
                                                                   ------------   ------------

Commitments and contingencies (Note 3)
Shareholders' equity:
     Common stock - no par value; 20,000,000 shares
       authorized; issued and outstanding - 4,209,881
       shares at June 30, 2004 and 4,055,260 at
       December 31, 2003                                                 17,802         16,693
     Retained earnings                                                   19,515         17,900
     Accumulated other comprehensive income (Note 5)                        192            864
                                                                   ------------   ------------

          Total shareholders' equity                                     37,509         35,457
                                                                   ------------   ------------
                                                                   $    431,097   $    397,393
                                                                   ============   ============


See notes to Unaudited Consolidated Financial Statements

                                      F-1


                                   AMERICAN RIVER BANKSHARES
                          UNAUDITED CONSOLIDATED STATEMENT OF INCOME



(In thousands, except per share data)
For the periods ended June 30,                             Three months          Six months
                                                         2004       2003       2004       2003
                                                      -----------------------------------------
                                                                                
Interest income:
   Interest and fees on loans                         $  4,309   $  4,299   $  8,589   $  8,280
   Interest on Federal funds sold                            6          1          6          2
   Interest on deposits in banks                            31         47         60        103
   Interest and dividends on investment securities:
      Taxable                                              875        593      1,548      1,245
      Exempt from Federal income taxes                     126        117        249        233
      Dividends                                              9          5         17          9
                                                      -----------------------------------------
           Total interest income                         5,356      5,062     10,469      9,872
                                                      -----------------------------------------
Interest expense:
   Interest on deposits                                    530        615      1,086      1,208
   Interest on short-term borrowings                       159        118        264        247
   Interest on long-term debt                               29         30         59         61
           Total interest expense                          718        763      1,409      1,516
                                                      -----------------------------------------

           Net interest income                           4,638      4,299      9,060      8,356

Provision for loan and lease losses                        231        223        429        412
                                                      -----------------------------------------
           Net interest income after provision for
             loan and lease losses                       4,407      4,076      8,631      7,944
                                                      -----------------------------------------

Noninterest income                                       1,022        565      1,451      1,091
                                                      -----------------------------------------

Noninterest expense:
   Salaries and employee benefits                        1,580      1,460      3,155      3,127
   Occupancy                                               247        202        452        407
   Furniture and equipment                                 187        158        367        314
   Other expense                                         1,449        636      2,238      1,267
                                                      -----------------------------------------
          Total noninterest expense                      3,463      2,456      6,212      5,115
                                                      -----------------------------------------

          Income before income taxes                     1,966      2,185      3,870      3,920

Income taxes                                               539        882      1,283      1,568
                                                      -----------------------------------------

          Net income                                  $  1,427   $  1,303   $  2,587   $  2,352
                                                      =========================================

Basic earnings per share (Note 4)                     $    .34   $    .33   $   0.62   $   0.59
                                                      =========================================
Diluted earnings per share (Note 4)                   $    .32   $    .30   $   0.59   $   0.55
                                                      =========================================

Cash dividends per share                              $    .12   $    .15   $    .23   $    .15
                                                      =========================================


            See notes to Unaudited Consolidated Financial Statements

                                      F-2


AMERICAN RIVER BANKSHARES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands, except number of shares) (Unaudited)


                                                                                       Accumulated
                                                Common Stock                             Other
                                         ----------------------------     Retained    Comprehensive   Shareholders'  Comprehensive
                                             Shares        Amount         Earnings    Income (Loss)      Equity         Income
                                         -------------  -------------  -------------  -------------  -------------   -------------
                                                                                                             
Balance, January 1, 2003                     3,938,883         16,064         14,358          1,304         31,726
Comprehensive income (Note 5):
   Net income                                                                  4,741                         4,741   $       4,741
   Other comprehensive loss,
   net of tax:
       Unrealized losses on
         available-for-sale investment
         securities                                                                            (440)          (440)  $        (440)
                                                                                                                     -------------

         Total comprehensive income                                                                                  $       4,301
                                                                                                                     =============

Cash dividends ($0.30 per share)                                              (1,192)                       (1,192)
Fractional shares redeemed                        (225)                           (7)                           (7)
Stock options exercised                        135,704            653                                          653
Retirement of common stock                     (19,102)           (24)                                         (24)
                                         -------------  -------------  -------------  -------------  -------------

Balance, December 31, 2003                   4,055,260         16,693         17,900            864         35,457

Comprehensive income (Note 5):
   Net income                                                                  2,587                         2,587   $       2,587
   Other comprehensive loss,
   net of tax:
       Unrealized losses on
         available-for-sale investment
         securities                                                                            (672)          (672)           (672)
                                                                                                                     -------------

         Total comprehensive income                                                                                  $       1,915
                                                                                                                     =============

Cash dividends ($0.23 per share)                                                (972)                         (972)
Stock options exercised                        184,357          1,293                                        1,293
Retirement of common stock                     (29,736)          (184)                                        (184)
                                         -------------  -------------  -------------  -------------  -------------

Balance, June 30, 2004                       4,209,881  $      17,802  $      19,515  $         192  $      37,509
                                         =============  =============  =============  =============  =============


See Notes to Unaudited Consolidated Financial Statements

                                      F-3


AMERICAN RIVER BANKSHARES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
For the six months ended June 30,


                                                                      2004          2003
                                                                   ----------    ----------
                                                                                  
Cash flows from operating activities:
   Net income                                                      $    2,587    $    2,352
   Adjustments to reconcile net income to net cash
      provided by operating activities:
          Provision for loan and lease losses                             429           412
          (Decrease) increase in deferred loan origination
               fees, net                                                  (45)           91
          Depreciation and amortization                                   260           236
          Amortization of investment security
              premiums, net                                               601           399
          Provision for accounts receivable servicing
              asset                                                        --             1
          Gain on sale of securities                                       --            --
          Gain on life insurance death benefit                           (553)           --
          Increase in cash surrender value of life insurance
              polices                                                     (36)           --
          (Increase) decrease in accrued interest receivable
              and other assets                                           (440)           55
          Increase (decrease) in accrued interest payable
              and other liabilities                                        87          (238)
                                                                   ----------    ----------

                  Net cash provided by operating activities             2,890         3,308
                                                                   ----------    ----------

Cash flows from investing activities:
   Proceeds from the sale of available-for-sale
      investment securities                                                --            --
   Proceeds from matured available-for-sale investment
      securities                                                        2,250         4,250
   Proceeds from matured held-to-maturity investment
      securities                                                           --            --
   Purchases of available-for-sale investment securities              (26,199)         (368)
   Purchases of held-to-maturity investment securities                (13,951)       (5,068)
   Proceeds from principal repayments for available-
      for-sale mortgage-related securities                              3,274         4,430
   Proceeds from principal repayments for held-to-
      maturity mortgage-related securities                              3,438         3,301
   Net (increase) decrease in interest-bearing deposits in banks       (1,090)        1,584
   Net increase in loans                                               (4,554)      (19,877)
   Net increase in accounts receivable servicing
      receivables                                                        (262)          (23)
   Death benefit from life insurance policy                             1,236            --
   Purchases of equipment                                                (554)         (111)
   Net increase in FHLB and FRB stock                                    (570)          (36)
                                                                   ----------    ----------

                  Net cash used in investing activities               (36,982)      (11,918)
                                                                   ----------    ----------


                                      F-4





                                                                                    
Cash flows from financing activities:
   Net increase in demand, interest-bearing and
      savings deposits                                               $   28,871    $   16,035
   Net (decrease) increase in time deposits                              (1,356)        2,666
   Repayment of long-term debt                                              (26)          (24)
   Net increase (decrease) in short-term borrowings                       4,200        (6,550)
   Payment of cash dividends                                             (1,096)         (551)
   Cash paid to repurchase common stock                                    (184)          (24)
   Cash paid for fractional shares                                           --            --
   Exercise of stock options                                              1,293           219
                                                                     ----------    ----------

                  Net cash provided by financing activities              31,702        11,771
                                                                     ----------    ----------

                  (Decrease) increase in cash and cash equivalents       (2,390)        3,161

Cash and cash equivalents at beginning of period                         29,797        25,899
                                                                     ----------    ----------

Cash and cash equivalents at end of period                           $   27,407    $   29,060
                                                                     ==========    ==========


See notes to Unaudited Consolidated Financial Statements

                                      F-5


                            AMERICAN RIVER BANKSHARES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2004

1.  UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of management, the unaudited consolidated financial statements
contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the consolidated financial position of American
River Bankshares (the "Company") at June 30, 2004 and December 31, 2003, and the
results of its operations for the three and six month periods ended June 30,
2004 and 2003 and cash flows for the six month periods ended June 30, 2004 and
2003 in conformity with accounting principles generally accepted in the United
States of America.

Certain disclosures normally presented in the notes to the financial statements
prepared in accordance with generally accepted accounting principles have been
omitted. These interim consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's 2003 Annual Report to Shareholders. The results of
operations for the three and six month periods ended June 30, 2004 may not
necessarily be indicative of the operating results for the full year.

In preparing such financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of
the date of the balance sheet and revenues and expenses for the period. Actual
results could differ significantly from those estimates. Material estimates that
are particularly susceptible to significant changes in the near term relate to
the determination of the allowance for loan and lease losses, the provision for
taxes and the estimated fair value of investment securities.

2.  STOCK-BASED COMPENSATION

At June 30, 2004, the Company had two stock-based compensation plans. The
Company accounts for these plans under the recognition and measurement
principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations. Under APB Opinion No. 25, stock-based compensation cost
is only reflected in net income when options granted under these plans have an
exercise price less than the market value of the underlying common stock on the
date of grant or if the original terms are later modified.

Pro forma adjustments to the Company's consolidated net earnings and earnings
per share are disclosed during the years in which the options become vested. The
following table illustrates the effect on net income and earnings per share if
the Company had applied the fair value recognition provisions of FASB Statement
No. 123, Accounting for Stock-Based Compensation, to stock-based compensation.



                                                         Three Months Ended           Six Months Ended
                                                               June 30,                    June 30,
                                                       ------------------------    ------------------------
                                                          2004          2003          2004          2003
                                                       ----------    ----------    ----------    ----------
(Dollars in thousands, except per share data)
                                                                                            
Net income, as reported                                $    1,427    $    1,303    $    2,587    $    2,352
Add: Stock-based compensation expense included
in reported net income, net of tax effect                      --            --            --            20
Deduct: Total stock-based compensation expense
        determined under the fair value based method
        for all awards, net of related tax effects            (14)          (39)          (27)          (70)
                                                       ----------    ----------    ----------    ----------

Pro forma net income                                   $    1,413    $    1,264    $    2,560    $    2,302
                                                       ==========    ==========    ==========    ==========

Basic earnings per share - as reported                 $     0.34    $     0.33    $     0.62    $     0.59
Basic earnings per share - pro forma                   $     0.34    $     0.32    $     0.61    $     0.58
Diluted earnings per share - as reported               $     0.32    $     0.30    $     0.59    $     0.55
Diluted earnings per share - pro forma                 $     0.32    $     0.30    $     0.59    $     0.54


                                      F-6


The fair value of each option granted is estimated on the date of grant using an
option-pricing model with the following weighted-average assumptions:



Options granted during the periods ended June 30, 2004:             Three Months        Six Months
                                                                    ------------        ----------
                                                                                          
Dividend yield                                                          2.15%               2.15%
Expected life                                                           7 years             7 years
Expected volatility                                                    58.16%              58.16%
Risk-free rate                                                          4.01%               4.01%
Weighted average fair value of options granted during the period       $5.17               $5.17

Options granted during the periods ended June 30, 2003:

Dividend yield                                                          1.74%            1.74%-1.88%
Expected life                                                           7 years             7 years
Expected volatility                                                    51.39%          51.39%-56.41%
Risk-free rate                                                          2.91%           2.91%-3.52%
Weighted average fair value of options granted during the period       $5.06               $5.25


3.  COMMITMENTS AND CONTINGENCIES

In the normal course of business there are outstanding various commitments to
extend credit which are not reflected in the financial statements, including
loan commitments of approximately $66,631,000 and letters of credit of
$1,933,000 at June 30, 2004. However, all such commitments will not necessarily
culminate in actual extensions of credit by the Company during 2004.

Approximately $18,881,000 of the loan commitments outstanding at June 30, 2004
are for real estate construction loans and are expected to fund within the next
twelve months. The remaining commitments primarily relate to revolving lines of
credit or other commercial loans, and many of these are expected to expire
without being fully drawn upon. Therefore, the total commitments do not
necessarily represent future cash requirements. Each potential borrower and the
necessary collateral are evaluated on an individual basis. Collateral varies,
but may include real property, bank deposits, debt or equity securities or
business assets.

Stand-by letters of credit are commitments written to guarantee the performance
of a customer to a third party. These guarantees are issued primarily relating
to purchases of inventory by commercial customers and are typically short-term
in nature. Credit risk is similar to that involved in extending loan commitments
to customers and accordingly, evaluation and collateral requirements similar to
those for loan commitments are used. Virtually all such commitments are
collateralized.

4.  EARNINGS PER SHARE COMPUTATION

Basic earnings per share is computed by dividing net income by the weighted
average common shares outstanding for the period (4,211,603 and 4,176,173 shares
for the three and six month periods ended June 30, 2004, and 3,978,950 and
3,966,059 shares for the three and six month periods ended June 30, 2003).
Diluted earnings per share reflect the potential dilution that could occur if
outstanding stock options were exercised. Diluted earnings per share is computed
by dividing net income by the weighted average common shares outstanding for the
period plus the dilutive effect of options (196,467 and 215,566 shares for the
three and six month periods ended June 30, 2004 and 318,719 and 322,205 shares
for the three and six month periods ended June 30, 2003). Earnings per share is
retroactively adjusted for stock dividends and stock splits for all periods
presented.

                                      F-7


5.  COMPREHENSIVE INCOME

Comprehensive income is reported in addition to net income for all periods
presented. Comprehensive income is made up of net income plus other
comprehensive income (loss). Other comprehensive income (loss), net of taxes,
was comprised of the unrealized gains (losses) on available-for-sale investment
securities of $(908,000) and $(672,000), respectively, for the three and six
month periods ended June 30, 2004 and $78,000 and $(27,000), respectively, for
the three and six month periods ended June 30, 2003. Comprehensive income was
$519,000 and $1,915,000, respectively, for the three and six month periods ended
June 30, 2004 and $1,381,000 and $2,325,000, respectively, for the three and six
month periods ended June 30, 2003.

6.  SHORT-TERM BORROWING ARRANGEMENTS

The Company has a total of $38,000,000 in unsecured short-term borrowing
arrangements with four of its correspondent banks. There were no advances
outstanding with these correspondent banks at June 30, 2004. An advance totaling
$9,600,000 was outstanding from one of its correspondent banks at December 31,
2003, bearing an interest rate of 1.44% and maturing on January 1, 2004.

In addition, the Company has a line of credit available with the Federal Home
Loan Bank (the "FHLB") which is secured by pledged mortgage loans and investment
securities. Borrowings may include overnight advances as well as loans with
terms of up to thirty years. Advances totaling $38,800,000 were outstanding from
the FHLB at June 30, 2004, bearing interest rates ranging from 1.12% to 2.66%
and maturing between July 26, 2004 and May 5, 2006. Advances totaling
$25,000,000 were outstanding from the FHLB at December 31, 2003, bearing
interest rates ranging from 1.03% to 1.45% and maturing between January 2, 2004
and November 1, 2004.

7.  INVESTMENT SECURITIES

Investment securities with unrealized losses at June 30, 2004 are summarized and
classified according to the duration of the loss period as follows (dollars in
thousands):



---------------------------------------------------------------------------------------------------------------------------------
                                                Less than 12 Months        Greater than 12 Months               Total
---------------------------------------------------------------------------------------------------------------------------------
                                              Fair         Unrealized      Fair         Unrealized        Fair        Unrealized
                                              Value           Loss         Value           Loss           Value          Loss
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                             
Available-for-Sale:
---------------------------------------------------------------------------------------------------------------------------------
  U.S. Treasury securities and agencies   $      6,971   $        (90)  $         --   $         --   $      6,971   $        (90)
---------------------------------------------------------------------------------------------------------------------------------
  Mortgage-backed securities                    39,220           (480)           240             (3)        39,460           (483)
---------------------------------------------------------------------------------------------------------------------------------
  Corporate stock                                  230            (17)            --             --            230            (17)
---------------------------------------------------------------------------------------------------------------------------------
                                          $     46,421   $       (587)           240   $         (3)  $     46,661   $       (590)
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
Held-to-Maturity:
---------------------------------------------------------------------------------------------------------------------------------
  Mortgage-backed securities              $     13,031   $       (153)  $        240   $         (3)  $     13,271   $       (156)
---------------------------------------------------------------------------------------------------------------------------------


Management periodically evaluates each investment security relying primarily on
industry analyst reports, observation of market conditions and interest rate
fluctuations. Management believes it will be able to collect all amounts due
according to the contractual terms of the underlying investment securities and
that the noted decline in fair value is due only to interest rate fluctuations.

8.  SUBSEQUENT EVENTS

On July 9, 2004, the Company and Jackson, California-based Bank of Amador,
announced jointly the signing of an Agreement and Plan of Reorganization and
Merger on July 8, 2004 whereby the Company will acquire Bank of Amador. Under
the terms of the merger agreement, Bank of Amador shareholders could receive
$6.825 per share in cash and $12.675 per share in stock in exchange for their
Bank of Amador shares so long as the 20-day average closing price of American
River Bankshares remains between $18.50-$23.50. Based upon American River
Bankshares' closing price of $20.40 as of July 8, 2004, the transaction is
currently valued at approximately $19.50 per share, or $30.5 million for Bank of

                                      F-8


Amador shareholders. Upon completion of the transaction, Bank of Amador will
operate as a division of American River Bank under the name "Bank of Amador, a
division of American River Bank." The definitive agreement was unanimously
approved by the Board of Directors of both companies. The transaction is subject
to regulatory approvals and the approval by the shareholders of American River
Bankshares and Bank of Amador. The transaction is expected to close in the
fourth quarter of 2004.

                                      F-9


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------




The Shareholders and Board of Directors
American River Bankshares and Subsidiaries

         We have audited the accompanying consolidated balance sheet of American
River Bankshares and subsidiaries as of December 31, 2003 and 2002 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for each of the years in the three-year period ended December 31,
2003. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

         We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
American River Bankshares and subsidiaries as of December 31, 2003 and 2002, and
the consolidated results of their operations and their consolidated cash flows
for each of the years in the three-year period ended December 31, 2003, in
conformity with accounting principles generally accepted in the United States of
America.


                                              /s/ Perry-Smith LLP





Sacramento, California
February 4, 2004

                                      F-10


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                           December 31, 2003 and 2002
                             (Dollars in thousands)



                                                                         2003         2002
                                                                      ----------   ----------

                            ASSETS
                                                                                    
Cash and due from banks                                               $   29,797   $   25,899
Interest-bearing deposits in banks                                         4,650        5,938
Investment securities (Notes 3 and 8):
    Available for sale, at fair value                                     62,686       61,876
    Held to maturity, at amortized cost (fair value of $27,216 and
       $12,386 at December 31, 2003 and 2002, respectively)               27,160       12,185
Loans and leases, less allowance for loan and lease losses of
    $3,949 in 2003 and $3,197 in 2002 (Notes 4, 8, 9, 11 and 16)         262,464      229,008
Premises and equipment, net (Note 5)                                       1,505        1,665
Federal Home Loan Bank and Federal Reserve Bank stock                      1,546        1,562
Accounts receivable servicing receivables, net (Note 6)                    1,778        1,396
Accrued interest receivable and other assets (Notes 10 and 15)             5,807        3,034
                                                                      ----------   ----------

                                                                      $  397,393   $  342,563
                                                                      ==========   ==========

                        LIABILITIES AND
                     SHAREHOLDERS' EQUITY

Deposits:
    Noninterest bearing                                               $  102,308   $   81,974
    Interest-bearing (Note 7)                                            220,199      193,822
                                                                      ----------   ----------

              Total deposits                                             322,507      275,796

Short-term borrowings (Note 8)                                            34,600       30,550
Long-term debt (Note 9)                                                    1,942        1,992
Accrued interest payable and other liabilities                             2,887        2,499
                                                                      ----------   ----------

              Total liabilities                                          361,936      310,837
                                                                      ----------   ----------

Commitments and contingencies (Note 11)

Shareholders' equity (Notes 12 and 13):
    Common stock - no par value; 20,000,000 shares authorized;
       issued and outstanding - 4,055,260 shares in 2003 and
       3,938,883 shares in 2002                                           16,693       16,064
    Retained earnings                                                     17,900       14,358
    Accumulated other comprehensive income (Notes 3 and 17)                  864        1,304
                                                                      ----------   ----------

              Total shareholders' equity                                  35,457       31,726
                                                                      ----------   ----------

                                                                      $  397,393   $  342,563
                                                                      ==========   ==========


                     The accompanying notes are an integral
                part of these consolidated financial statements.

                                      F-11


                             AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                                  CONSOLIDATED STATEMENT OF INCOME

                        For the Years Ended December 31, 2003, 2002 and 2001
                           (Dollars in thousands, except per share data)



                                                                  2003         2002         2001
                                                               ----------   ----------   ----------
                                                                                       
Interest income:
    Interest and fees on loans and leases                      $   16,744   $   15,400   $   17,883
    Interest on Federal funds sold                                     48           80          202
    Interest on deposits in banks                                     168          267          342
    Interest and dividends on investment securities:
       Taxable                                                      2,312        2,359        1,871
       Exempt from Federal income taxes                               475          460          464
       Dividends                                                       21           19           81
                                                               ----------   ----------   ----------

              Total interest income                                19,768       18,585       20,843
                                                               ----------   ----------   ----------

Interest expense:
    Interest on deposits (Note 7)                                   2,390        3,168        6,042
    Interest on short-term borrowings (Note 8)                        391          220           97
    Interest on long-term debt (Note 9)                               121          124          127
                                                               ----------   ----------   ----------

              Total interest expense                                2,902        3,512        6,266
                                                               ----------   ----------   ----------

              Net interest income                                  16,866       15,073       14,577

Provision for loan and lease losses (Note 4)                          946          644          791
                                                               ----------   ----------   ----------

              Net interest income after provision for loan
                 and lease losses                                  15,920       14,429       13,786
                                                               ----------   ----------   ----------

Noninterest income:
    Service charges                                                   534          563          562
    Gain on sale of available-for-sale investment securities
       (Note 3)                                                        33
    Other income (Note 14)                                          1,686        1,760        1,803
                                                               ----------   ----------   ----------

              Total noninterest income                              2,253        2,323        2,365
                                                               ----------   ----------   ----------

Noninterest expense:
    Salaries and employee benefits (Notes 4 and 15)                 6,233        5,595        5,334
    Occupancy (Notes 5 and 11)                                        817          840          810
    Furniture and equipment (Notes 5 and 11)                          653          620          564
    Other expense (Note 14)                                         2,669        2,334        2,794
                                                               ----------   ----------   ----------

              Total noninterest expense                            10,372        9,389        9,502
                                                               ----------   ----------   ----------

              Income before income taxes                            7,801        7,363        6,649

Income taxes (Note 10)                                              3,060        2,904        2,612
                                                               ----------   ----------   ----------

              Net income                                       $    4,741   $    4,459   $    4,037
                                                               ==========   ==========   ==========


Basic earnings per share (Note 12)                             $     1.19   $     1.13   $     1.01
                                                               ==========   ==========   ==========

Diluted earnings per share (Note 12)                           $     1.10   $     1.05   $      .95
                                                               ==========   ==========   ==========

Cash dividends per share of issued and outstanding common
    stock, adjusted for stock dividends                        $      .30   $      .23   $      .17
                                                               ==========   ==========   ==========


                     The accompanying notes are an integral
                part of these consolidated financial statements.

                                      F-12



                                           AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                                   CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

                                      For the Years Ended December 31, 2003, 2002 and 2001
                                                     (Dollars in thousands)

                                                                                           Accum-
                                                                                           ulated
                                                                                           Other
                                                    Common Stock                           Compre-       Share-        Compre-
                                               ------------------------     Retained       hensive       holders'      hensive
                                                 Shares        Amount       Earnings       Income        Equity        Income
                                               ----------    ----------    ----------    ----------    ----------    ----------
                                                                                                          
Balance, January 1, 2001                        3,592,737    $   12,320    $   11,876    $      217    $   24,413
Comprehensive income (Note 17):
   Net income                                                                   4,037                       4,037    $    4,037
   Other comprehensive income, net of tax:
     Unrealized gains on available-for-sale
       investment securities                                                                    268           268           268
                                                                                                                     ----------
         Total comprehensive income                                                                                  $    4,305
                                                                                                                     ==========

Cash dividends ($.17 per share)                                                  (681)                       (681)
5% stock dividend                                 180,797         1,935        (1,935)
Fractional shares redeemed                                                         (7)                         (7)
Stock options exercised                            39,849           265                                       265
Retirement of common stock (Note 12)              (33,807)         (353)                                     (353)
                                               ----------    ----------    ----------    ----------    ----------

Balance, December 31, 2001                      3,779,576        14,167        13,290           485        27,942

Comprehensive income (Note 17):
   Net income                                                                   4,459                       4,459    $    4,459
   Other comprehensive income, net of tax:
     Unrealized gains on available-for-sale
       investment securities                                                                    819           819           819
                                                                                                                     ----------
         Total comprehensive income                                                                                  $    5,278
                                                                                                                     ==========

Cash dividend ($.23 per share)                                                   (914)                       (914)
5% stock dividend                                 186,906         2,469        (2,469)
Fractional shares redeemed                                                         (8)                         (8)
Stock options exercised                            38,911           236                                       236
Retirement of common stock (Note 12)              (66,510)         (808)                                     (808)
                                               ----------    ----------    ----------    ----------    ----------

Balance, December 31, 2002                      3,938,883        16,064        14,358         1,304        31,726

Comprehensive income (Note 17):
   Net income                                                                   4,741                       4,741    $    4,741
   Other comprehensive loss, net of tax:
     Unrealized losses on available-for-sale
       investment securities (Note 3)                                                          (440)         (440)         (440)
                                                                                                                     ----------
         Total comprehensive income                                                                                  $    4,301
                                                                                                                     ==========

Cash dividend ($.30 per share)                                                 (1,192)                     (1,192)
Fractional shares redeemed                           (225)                         (7)                         (7)
Stock options exercised                           135,704           653                                       653
Retirement of common stock (Note 12)              (19,102)          (24)                                      (24)
                                               ----------    ----------    ----------    ----------    ----------

Balance, December 31, 2003                      4,055,260    $   16,693    $   17,900    $      864    $   35,457
                                               ==========    ==========    ==========    ==========    ==========


                     The accompanying notes are an integral
                part of these consolidated financial statements.

                                      F-13


                                 AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                                    CONSOLIDATED STATEMENT OF CASH FLOWS

                            For the Years Ended December 31, 2003, 2002 and 2001
                                           (Dollars in thousands)



                                                                        2003          2002          2001
                                                                     ----------    ----------    ----------
                                                                                               
Cash flows from operating activities:
   Net income                                                        $    4,741    $    4,459    $    4,037
   Adjustments to reconcile net income to net cash
     provided by operating activities:
       Provision for loan and lease losses                                  946           644           791
       Increase (decrease) in deferred loan and lease origination
         fees, net                                                           95           158          (173)
       Depreciation and amortization                                        484           464           439
       Amortization (accretion) of investment security premiums
         and discounts, net                                                 936           394           (46)
       Provision for (reduction in) accounts receivable servicing
         receivable allowance for losses                                      1           (27)           10
       Gain on sale of available-for-sale investment securities             (33)
       Gain on sale of other real estate                                                  (13)
       Increase in cash surrender value of life insurance policies          (27)
       Deferred tax benefit                                                (474)         (304)         (179)
       (Increase) decrease in accrued interest receivable and
         other assets                                                      (389)          679          (180)
       Increase (decrease) in accrued interest payable
         and other liabilities                                              331           611          (678)
                                                                     ----------    ----------    ----------

           Net cash provided by operating activities                      6,611         7,065         4,021
                                                                     ----------    ----------    ----------

Cash flows from investing activities:
   Proceeds from the sale of available-for-sale investment
     securities                                                           6,274           252         1,979
   Proceeds from called available-for-sale investment
     securities                                                                           250         1,500
   Proceeds from matured available-for-sale investment
     securities                                                           6,840        10,880         9,020
   Proceeds from matured held-to-maturity investment
     securities                                                           1,125                       2,050
   Purchases of available-for-sale investment securities                (24,015)      (39,112)      (13,203)
   Purchases of held-to-maturity investment securities                  (25,432)       (4,249)       (5,193)
   Proceeds from principal repayments for available-for-sale
     mortgage-backed securities                                           8,911         2,399            92
   Proceeds from principal repayments for held-to-maturity
     mortgage-backed securities                                           8,890         5,050         3,378
   Net decrease (increase) in interest-bearing deposits in banks          1,288          (198)         (200)
   Net (increase) decrease in loans and leases                          (34,491)      (34,826)        5,023
   Net (increase) decrease in accounts receivable servicing
     receivables                                                           (383)        1,500           301
   Purchases of equipment                                                  (320)         (222)         (629)
   Net decrease (increase) in FHLB and FRB stock                             16        (1,222)          (25)
   Proceeds from the sale of other real estate                                             61
   Purchase of life insurance policies                                   (1,614)
                                                                     ----------    ----------    ----------

           Net cash (used in) provided by investing activities          (52,911)      (59,437)        4,093
                                                                     ----------    ----------    ----------


                                   (Continued)

                                      F-14


                               AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                                  CONSOLIDATED STATEMENT OF CASH FLOWS
                                              (Continued)
                          For the Years Ended December 31, 2003, 2002 and 2001
                                         (Dollars in thousands)



                                                                    2003          2002          2001
                                                                 ----------    ----------    ----------
                                                                                           
Cash flows from financing activities:
   Net increase in demand, interest-bearing and savings
     deposits                                                    $   47,477    $   24,691    $    7,764
   Net (decrease) increase in time deposits                            (766)       (3,783)        7,812
   Repayment of long-term debt                                          (50)          (47)          (45)
   Increase (decrease) in short-term borrowings                       4,050        30,550       (15,990)
   Exercise of stock options                                            653           236           265
   Cash paid to repurchase common stock                                 (24)         (808)         (353)
   Payment of cash dividends                                         (1,135)         (716)         (640)
   Cash paid for fractional shares in connection with stock
     dividends and stock splits                                          (7)           (8)           (7)
                                                                 ----------    ----------    ----------

           Net cash provided by (used in) financing activities       50,198        50,115        (1,194)
                                                                 ----------    ----------    ----------

           Increase (decrease) in cash and cash
              equivalents                                             3,898        (2,257)        6,920

Cash and cash equivalents at beginning of year                       25,899        28,156        21,236
                                                                 ----------    ----------    ----------

Cash and cash equivalents at end of year                         $   29,797    $   25,899    $   28,156
                                                                 ==========    ==========    ==========

Supplemental disclosure of cash flow information:
   Cash paid during the year for:
     Interest expense                                            $    2,980    $    3,473    $    6,299
     Income taxes                                                $    3,242    $    2,753    $    2,954

Non-cash investing activities:
   Net change in unrealized gain on available-for-sale
     investment securities                                       $     (719)   $    1,353    $      446
   Transfer of corporate debt securities from the held-to-
     maturity category to the available-for-sale category                                    $    3,089
   Other real estate acquired                                                  $       48

Non-cash financing activities:
   Dividends declared and unpaid                                 $      608    $      551    $      353


                     The accompanying notes are an integral
                part of these consolidated financial statements.

                                      F-15


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       THE BUSINESS OF THE COMPANY

         American River Bankshares (the "Company") was incorporated under the
         laws of the State of California in 1995. As a bank holding company, the
         Company is authorized to engage in the activities permitted under the
         Bank Holding Company Act of 1956, as amended, and regulations
         thereunder. As a community oriented bank holding company, the principal
         communities served are located in Sacramento, Placer, Yolo, El Dorado,
         Sonoma, Napa, Marin and Mendocino counties.

         The Company's active wholly-owned subsidiaries include American River
         Bank (ARB), First Source Capital and North Coast Bank (NCB). ARB was
         incorporated in 1983. ARB accepts checking and savings deposits, offers
         money market deposit accounts and certificates of deposit, makes
         secured and unsecured commercial, secured real estate, and other
         installment and term loans and offers other customary banking services.
         ARB operates four banking offices in Sacramento and Placer counties.

         First Source Capital was formed in July 1999 to conduct lease financing
         activities for most types of business assets. First Source Capital acts
         as a lease broker and receives a fee for each lease recorded on the
         books of the party acting as the funding source.

         In January 2004, NCB was merged with and into ARB. NCB will now operate
         as a division of ARB with three full service banking offices within its
         primary service area of Sonoma County, in the cities of Healdsburg,
         Santa Rosa and Windsor.

         The Company also owns one inactive subsidiary, American River
         Financial.

         The deposits of ARB are insured by the Federal Deposit Insurance
         Corporation (the "FDIC") up to applicable legal limits. ARB does not
         offer trust services or international banking services and does not
         plan to do so in the near future.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         General
         -------

         The accounting and reporting policies of the Company and its
         subsidiaries conform with accounting principles generally accepted in
         the United States of America and prevailing practices within the
         financial services industry.

         Reclassifications
         -----------------

         Certain reclassifications have been made to prior years' balances to
         conform to classifications used in 2003.

         Principles of Consolidation
         ---------------------------

         The consolidated financial statements include the accounts of the
         Company and its wholly-owned subsidiaries. All material intercompany
         transactions and accounts have been eliminated in consolidation.

         Use of Estimates
         ----------------

         The preparation of consolidated financial statements in conformity with
         generally accepted accounting principles requires management to make
         estimates and assumptions. These estimates and assumptions affect the
         reported amounts of assets and liabilities at the date of the
         consolidated financial statements and the reported amounts of revenues
         and expenses during the reporting period. Actual results could differ
         from these estimates.

                                      F-16


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Cash Equivalents
         ----------------

         For the purpose of the statement of cash flows, cash and due from banks
         and Federal funds sold are considered to be cash equivalents.
         Generally, Federal funds are sold for one day periods. There were no
         Federal funds sold on the consolidated balance sheet at December 31,
         2003 or 2002.

         Investment Securities
         ---------------------

         Investments are classified into the following categories:

               o    Available-for-sale securities, reported at fair value, with
                    unrealized gains and losses excluded from earnings and
                    reported, net of taxes, as accumulated other comprehensive
                    income (loss) within shareholders' equity.

               o    Held-to-maturity securities, which management has the
                    positive intent and ability to hold, reported at amortized
                    cost, adjusted for the accretion of discounts and
                    amortization of premiums.

         Management determines the appropriate classification of its investments
         at the time of purchase and may only change the classification in
         certain limited circumstances. All transfers between categories are
         accounted for at fair value.

         Gains or losses on the sale of investment securities are computed on
         the specific identification method. Interest earned on investment
         securities is reported in interest income, net of applicable
         adjustments for accretion of discounts and amortization of premiums. In
         addition, unrealized losses that are other than temporary are
         recognized in earnings for all investments.

         Federal Reserve Bank and Federal Home Loan Bank Stock
         -----------------------------------------------------

         Investments in Federal Reserve Bank (FRB) and Federal Home Loan Bank
         (FHLB) stock are carried at cost and are redeemable at par with certain
         restrictions. Members of the FRB are required to purchase restricted
         stock in the FRB. Investments in FHLB are required to participate in
         FHLB programs.

         Loans and Leases
         ----------------

         Loans and leases are reported at the principal amounts outstanding,
         adjusted for unearned income, deferred loan origination fees and costs,
         purchase premiums and discounts, write-downs and the allowance for loan
         and lease losses. Loan and lease origination fees, net of certain
         deferred origination costs, and purchase premiums and discounts are
         recognized as an adjustment to the yield of the related loans and
         leases.

         The accrual of interest on loans and leases is discontinued when, in
         the opinion of management, there is an indication that the borrower may
         be unable to meet payments as they become due. Upon such
         discontinuance, all unpaid accrued interest is reversed against current
         income unless the loan or lease is in the process of collection.
         Interest received on nonaccrual loans and leases is either applied
         against principal or reported as interest income, according to
         management's judgment as to the collectibility of principal. Generally,
         loans and leases are restored to accrual status when the obligation is
         brought current and has performed in accordance with the contractual
         terms for a reasonable period of time and the ultimate collectibility
         of the total contractual principal and interest is no longer in doubt.

         Direct financing leases are carried net of unearned income. Income from
         leases is recognized by a method that approximates a level yield on the
         outstanding net investment in the lease.

                                      F-17


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Loan Sales and Servicing
         ------------------------

         Included in the portfolio are Small Business Administration (SBA) loans
         and Farmer Mac guaranteed loans that may be sold in the secondary
         market. Loans held for sale are carried at the lower of cost or market
         value. Market value is determined by the specific identification method
         as of the balance sheet date or the date that the purchasers have
         committed to purchase the loans. At the time the loan is sold, the
         related right to service the loan is either retained, with the Company
         earning future servicing income, or released in exchange for a one-time
         servicing-released premium. A portion of this premium may be required
         to be refunded if the borrower defaults or the loan prepays within
         ninety days of the settlement date. There were no sales of loans
         subject to these recourse provisions at December 31, 2003, 2002 and
         2001. Loans subsequently transferred to the loan portfolio are
         transferred at the lower of cost or market value at the date of
         transfer. Any difference between the carrying amount of the loan and
         its outstanding principal balance is recognized as an adjustment to
         yield by the interest method. There were no loans held for sale at
         December 31, 2003 and 2002.

         SBA and Farmer Mac loans with unpaid balances of $2,619,000 and
         $3,970,000 were being serviced for others as of December 31, 2003 and
         2002, respectively. The Company also serviced loans that are
         participated with other financial institutions totaling $7,355,000 and
         $8,102,000 as of December 31, 2003 and 2002, respectively.

         Servicing rights acquired through 1) a purchase or 2) the origination
         of loans which are sold or securitized with servicing rights retained
         are recognized as separate assets or liabilities. Servicing assets or
         liabilities are recorded at the difference between the contractual
         servicing fees and adequate compensation for performing the servicing,
         and are subsequently amortized in proportion to and over the period of
         the related net servicing income or expense. Servicing assets are
         periodically evaluated for impairment. Servicing assets were not
         considered material for disclosure purposes.

         Allowance for Loan and Lease Losses
         -----------------------------------

         The allowance for loan and lease losses is maintained to provide for
         possible losses related to impaired loans and leases and other losses
         on loans and leases identified by management as doubtful, substandard
         and special mention, as well as losses that can be expected to occur in
         the normal course of business related to currently performing loans and
         leases. The determination of the allowance is based on estimates made
         by management, to include consideration of the character of the loan
         and lease portfolio including concentrations, types of lending,
         specifically identified problem loans and leases, inherent risk of loss
         in the portfolio taken as a whole and economic conditions in the
         Company's service areas.

         Commercial and real estate loans and leases determined to be impaired
         or classified are individually evaluated by management for specific
         risk of loss. In addition, reserve factors are assigned to currently
         performing loans and leases based on management's assessment of the
         following for each identified loan and lease type: (1) inherent credit
         risk, (2) historical losses and, (3) where the Company has not
         experienced losses, the loss experience of peer banks. Management also
         computes specific and expected loss reserves for loan and lease
         commitments. Finally, a residual component is maintained to cover the
         margin of imprecision inherent in the assumptions used to estimate
         losses. These estimates are particularly susceptible to changes in the
         economic environment and market conditions.

         The Company's Loan Committee reviews the adequacy of the allowance for
         loan and lease losses at least quarterly, to include consideration of
         the relative risks in the portfolio and current economic conditions.
         The allowance is adjusted based on that review if, in the judgment of
         the Loan Committee and management, changes are warranted.

                                      F-18


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Allowance for Loan and Lease Losses (Continued)
         -----------------------------------------------

         The allowance is established through a provision for loan and lease
         losses which is charged to expense. Additions to the allowance are
         expected to maintain the adequacy of the total allowance after credit
         losses and loan growth. The allowance for loan and lease losses at
         December 31, 2003 and 2002, respectively, reflect management's estimate
         of possible losses in the portfolio.

         Other Real Estate
         -----------------

         Other real estate includes real estate acquired in full or partial
         settlement of loan obligations. When property is acquired, any excess
         of the recorded investment in the loan balance and accrued interest
         income over the estimated fair market value of the property is charged
         against the allowance for loan and lease losses. A valuation allowance
         for losses on other real estate is maintained to provide for temporary
         declines in value. The allowance is established through a provision for
         losses on other real estate which is included in other expenses.
         Subsequent gains or losses on sales or writedowns resulting from
         permanent impairments are recorded in other income or expense as
         incurred. There was no other real estate held by the Company at
         December 31, 2003 and 2002.

         Premises and Equipment
         ----------------------

         Premises and equipment are carried at cost. Depreciation is determined
         using the straight-line method over the estimated useful lives of the
         related assets. The useful life of the building and improvements is
         forty years. The useful lives of furniture, fixtures and equipment are
         estimated to be three to ten years. Leasehold improvements are
         amortized over the life of the asset or the term of the related lease,
         whichever is shorter. When assets are sold or otherwise disposed of,
         the cost and related accumulated depreciation or amortization are
         removed from the accounts, and any resulting gain or loss is recognized
         in income for the period. The cost of maintenance and repairs is
         charged to expense as incurred.

         Income Taxes
         ------------

         The Company files its income taxes on a consolidated basis with its
         subsidiaries. The allocation of income tax expense (benefit) represents
         each entity's proportionate share of the consolidated provision for
         income taxes.

         The Company accounts for income taxes using the balance sheet method,
         under which deferred tax assets and liabilities are recognized for the
         tax consequences of temporary differences between the reported amounts
         of assets and liabilities and their tax bases. Deferred tax assets and
         liabilities are adjusted for the effects of changes in tax laws and
         rates on the date of enactment. On the consolidated balance sheet, net
         deferred tax assets are included in accrued interest receivable and
         other assets.

         Comprehensive Income
         --------------------

         Comprehensive income is reported in addition to net income for all
         periods presented. Comprehensive income is a more inclusive financial
         reporting methodology that includes disclosure of other comprehensive
         (loss) income that historically has not been recognized in the
         calculation of net income. Unrealized gains and losses on the Company's
         available-for-sale investment securities are included in other
         comprehensive (loss) income, adjusted for realized gains or losses
         included in net income. Total comprehensive income and the components
         of accumulated other comprehensive (loss) income are presented in the
         consolidated statement of changes in shareholders' equity.

                                      F-19


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Earnings Per Share
         ------------------

         Basic earnings per share (EPS), which excludes dilution, is computed by
         dividing income available to common shareholders by the
         weighted-average number of common shares outstanding for the period.
         Diluted EPS reflects the potential dilution that could occur if
         securities or other contracts to issue common stock, such as stock
         options, result in the issuance of common stock which shares in the
         earnings of the Company. The treasury stock method has been applied to
         determine the dilutive effect of stock options in computing diluted
         EPS. EPS is retroactively adjusted for stock splits and stock dividends
         for all periods presented.

         Stock-Based Compensation
         ------------------------

         At December 31, 2003, the Company has two stock-based compensation
         plans, which are described more fully in Note 12. The Company accounts
         for these plans under the recognition and measurement principles of APB
         Opinion No. 25, Accounting for Stock Issued to Employees, and related
         Interpretations. Generally, stock-based compensation cost is not
         reflected in net income, as all options granted under these plans had
         an exercise price equal to the market value of the underlying common
         stock on the date of grant.

         Pro forma adjustments to the Company's consolidated net earnings and
         earnings per share are disclosed during the years in which the options
         become vested. The following table illustrates the effect on net income
         and earnings per share if the Company had applied the fair value
         recognition provisions of FASB Statement No. 123, Accounting for
         Stock-Based Compensation, to stock-based compensation.



                                                                       Year Ended December 31,
                                                              --------------------------------------
                                                                 2003          2002          2001
                                                              ----------    ----------    ----------
                                                                  (Dollars in thousands, except
                                                                         per share data)
                                                                                        
         Net income, as reported                              $    4,741    $    4,459    $    4,037
         Add: Stock-based compensation expense included in
           reported net income, net of tax effect                     20
         Deduct: Total stock-based compensation expense
           determined under the fair value based method for
           all awards, net of related tax effects                   (150)         (174)         (126)
                                                              ----------    ----------    ----------

         Pro forma net income                                 $    4,611    $    4,285    $    3,911
                                                              ==========    ==========    ==========

         Basic earnings per share - as reported               $     1.19    $     1.13    $     1.01
         Basic earnings per share - pro forma                 $     1.16    $     1.08    $      .98

         Diluted earnings per share - as reported             $     1.10    $     1.05    $      .95
         Diluted earnings per share - pro forma               $     1.07    $     1.02    $      .92

         Weighted average fair value of options granted
           during the year                                    $     5.25


                                      F-20


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Stock-Based Compensation (Continued)
         ------------------------

         The fair value of each option is estimated on the date of grant using
         an option-pricing model. No options were granted for the years ended
         December 31, 2002 and 2001.

                                                                       2003
                                                                  --------------

         Dividend yield                                           1.74% to 1.88%
         Expected volatility                                      19.4% to 19.6%
         Risk-free interest rate                                  2.91% to 3.52%
         Expected option life                                            7 years

         Impact of New Financial Accounting Standards
         --------------------------------------------

         In April 2003, the Financial Accounting Standards Board (FASB) issued
         SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and
         Hedging Activities. This Statement amends and clarifies the accounting
         for derivative instruments by providing guidance related to
         circumstances under which a contract with a net investment meets the
         characteristics of a derivative as discussed in SFAS No. 133. The
         Statement also clarifies when a derivative contains a financing
         component. The Statement is intended to result in more consistent
         reporting for derivative contracts and must be applied prospectively
         for contracts entered into or modified after June 30, 2003, except for
         hedging relationships designated after June 30, 2003. The Company
         adopted the provisions of this Statement on July 1, 2003 and, in
         management's opinion, adoption of this Statement did not have a
         material impact on the Company's consolidated financial position or
         results of operations.

         In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
         Financial Instruments with Characteristics of both Liabilities and
         Equity. This Statement establishes standards for how an issuer
         classifies and measures certain financial instruments with
         characteristics of both liabilities and equity. It requires that an
         issuer classify a financial instrument that is within its scope as a
         liability (or an asset in some circumstances). This Statement is
         effective for financial instruments entered into or modified after May
         31, 2003, and otherwise is effective at the beginning of the first
         interim period beginning after June 15, 2003, except for mandatorily
         redeemable financial instruments of nonpublic entities. For mandatorily
         redeemable financial instruments of a nonpublic entity, this Statement
         shall be effective for existing or new contracts for fiscal periods
         beginning after December 15, 2004. The Company adopted the provisions
         of this Statement on July 1, 2003 and, in management's opinion,
         adoption of this Statement did not have a material impact on the
         Company's consolidated financial position or results of operations.

         In December 2003, the FASB revised FASB Interpretation No. 46,
         Consolidation of Variable Interest Entities (FIN 46). This
         interpretation of Accounting Research Bulletin No. 51, Consolidated
         Financial Statements, addresses consolidation by business enterprises
         of variable interest entities that possess certain characteristics. FIN
         46 requires that if a business enterprise has a controlling financial
         interest in a variable interest entity, the assets, liabilities, and
         results of the activities of the variable interest entity must be
         included in the consolidated financial statements with those of the
         business enterprise. The Company adopted FIN 46 on December 31, 2003.
         In management's opinion, the adoption of this interpretation did not
         have a material impact on the Company's consolidated financial position
         or results of operations.

                                      F-21


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Impact of New Financial Accounting Standards (Continued)
         --------------------------------------------

         In December 2003, the Accounting Standards Executive Committee of the
         American Institute of Certified Public Accountants issued Statement of
         Position 03-03, Accounting for Certain Loans or Debt Securities
         Acquired in a Transfer (SOP). This SOP addresses accounting for
         differences between contractual cash flows and cash flows expected to
         be collected from an investor's initial investment in loans or debt
         securities (loans) acquired in a transfer if those differences are
         attributable, at least in part, to credit quality. It includes such
         loans acquired in purchase business combinations and applies to all
         nongovernmental entities, including not-for-profit organizations. This
         SOP does not apply to loans originated by the entity. This SOP limits
         the yield that may be accreted (accretable yield) to the excess of the
         investor's estimate of undiscounted expected principal, interest, and
         other cash flows (cash flows expected at acquisition to be collected)
         over the investor's initial investment in the loan. This SOP requires
         that the excess of contractual cash flows over cash flows expected to
         be collected (nonaccretable difference) not be recognized as an
         adjustment of yield, loss accrual, or valuation allowance. This SOP
         prohibits investors from displaying accretable yield and nonaccretable
         difference in the balance sheet. Subsequent increases in cash flows
         expected to be collected generally should be recognized prospectively
         through adjustment of the loan's yield over its remaining life.
         Decreases in cash flows expected to be collected should be recognized
         as impairment, thereby retaining the accretable yield on the loan as
         adjusted.

         This SOP prohibits "carrying over" or creation of valuation allowances
         in the initial accounting for all loans acquired in a transfer that are
         within the scope of this SOP. The prohibition of the valuation
         allowance carryover applies to the purchase of an individual loan, a
         pool of loans, a group of loans, and loans acquired in a purchase
         business combination.

         This SOP is effective for loans acquired in fiscal years beginning
         after December 15, 2004. Management has not completed its evaluation of
         the impact this pronouncement may have on the Company's financial
         position or results of operations.

3.       INVESTMENT SECURITIES

         The amortized cost and estimated market value of investment securities
         at December 31, 2003 and 2002 consisted of the following (dollars in
         thousands):

         Available-for-Sale:
         ------------------



                                                                 2003
                                      -----------------------------------------------------------
                                                        Gross           Gross         Estimated
                                       Amortized     Unrealized       Unrealized        Market
                                          Cost          Gains           Losses          Value
                                      ------------   ------------    ------------    ------------
                                                                                  
         U.S. Government agencies     $     20,929   $        535    $        (14)   $     21,450
         Mortgage-backed securities         26,746            117            (106)         26,757
         Obligations of states and
           political subdivisions           11,223            838                          12,061
         Commercial paper                    1,000                                          1,000
         Corporate debt securities             772             15                             787
         Corporate stock and other             586             50              (5)            631
                                      ------------   ------------    ------------    ------------

                                      $     61,256   $      1,555    $       (125)   $     62,686
                                      ============   ============    ============    ============


                                      F-22

                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


3.       INVESTMENT SECURITIES (Continued)

         Available-for-Sale: (Continued)
         ------------------



                                                                 2002
                                      -----------------------------------------------------------
                                                        Gross           Gross         Estimated
                                       Amortized     Unrealized       Unrealized        Market
                                          Cost          Gains           Losses          Value
                                      ------------   ------------    ------------    ------------
                                                                                  
         U.S. Government agencies     $     19,735   $        832                    $     20,567
         Mortgage-backed securities         28,792            490    $         (2)         29,280
         Obligations of states and
           political subdivisions            9,822            786                          10,608
         Corporate debt securities           1,045             25                           1,070
         Corporate stock                       333             19              (1)            351
                                      ------------   ------------    ------------    ------------

                                      $     59,727   $      2,152    $         (3)   $     61,876
                                      ============   ============    ============    ============


         Net unrealized gains on available-for-sale investment securities
         totaling $1,430,000 were recorded, net of $566,000 in tax liabilities,
         as accumulated other comprehensive income within shareholders' equity
         at December 31, 2003. Proceeds and gross realized gains from the sale
         of available-for-sale investment securities for the year ended December
         31, 2003 totaled $6,274,000 and $33,000, respectively. There were no
         transfers of available-for-sale investment securities during the year
         ended December 31, 2003.

         Net unrealized gains on available-for-sale investment securities
         totaling $2,149,000 were recorded, net of $845,000 in tax liabilities,
         as accumulated other comprehensive income within shareholders' equity
         at December 31, 2002. Proceeds from the sale of available-for-sale
         investment securities for the years ended December 31, 2002 and 2001
         totaled $252,000 and $1,979,000, respectively. No gains or losses were
         recognized. There were no transfers of available-for-sale investment
         securities during the years ended December 31, 2002 and 2001.

         Held-to-Maturity:
         ----------------


                                                                 2003
                                      -----------------------------------------------------------
                                                        Gross           Gross         Estimated
                                       Amortized     Unrealized       Unrealized        Market
                                          Cost          Gains           Losses          Value
                                      ------------   ------------    ------------    ------------
                                                                                  
         Obligations of states and
           political subdivisions     $        200   $          4                    $        204
         Mortgage-backed securities         26,960            135    $        (83)         27,012
                                      ------------   ------------    ------------    ------------

                                      $     27,160   $        139             (83)   $     27,216
                                      ============   ============    ============    ============


                                      F-23


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


3.       INVESTMENT SECURITIES (Continued)

         Held-to-Maturity: (Continued)
         ----------------


                                                                 2002
                                      -----------------------------------------------------------
                                                        Gross           Gross         Estimated
                                       Amortized     Unrealized       Unrealized        Market
                                          Cost          Gains           Losses          Value
                                      ------------   ------------    ------------    ------------
                                                                                  
         Obligations of states and
           political subdivisions     $      1,333   $         37                    $      1,370
         Mortgage-backed securities         10,852            170    $         (6)         11,016
                                      ------------   ------------    ------------    ------------

                                      $     12,185   $        207    $         (6)   $     12,386
                                      ============   ============    ============    ============


         On January 1, 2001, all corporate debt securities were transferred from
         the held-to-maturity category to the available-for-sale category upon
         the adoption of SFAS No. 133, Accounting for Derivative Instruments and
         Hedging Activities, issued by the Financial Accounting Standards Board.
         The amortized cost and market value of the transferred securities on
         the date of the transfer were $3,089,000 and $3,100,000, respectively.
         Accordingly, unrealized gains of $11,000 were recorded, net of $4,000
         in tax liabilities, as accumulated other comprehensive income within
         shareholders' equity. There were no sales or other transfers of
         held-to-maturity investment securities for the years ended December 31,
         2003, 2002 and 2001.

         The amortized cost and estimated market value of investment securities
         at December 31, 2003 by contractual maturity are shown below (dollars
         in thousands). Expected maturities will differ from contractual
         maturities because the issuers of the securities may have the right to
         call or prepay obligations with or without call or prepayment
         penalties.



                                                   Available-for-Sale             Held-to-Maturity
                                              ---------------------------   ---------------------------
                                                              Estimated                     Estimated
                                               Amortized        Market       Amortized        Market
                                                  Cost          Value           Cost          Value
                                              ------------   ------------   ------------   ------------
                                                                                        
         Within one year                      $      5,805   $      5,914   $        200   $        204
         After one year through five years          18,503         18,996
         After five years through ten years          5,472          5,934
         After ten years                             4,144          4,454
                                              ------------   ------------   ------------   ------------

                                                    33,924         35,298            200            204

         Investment securities not due at
           a single maturity date:
              Mortgage-backed securities            26,746         26,757         26,960         27,012
              Corporate stock                          586            631
                                              ------------   ------------   ------------   ------------

                                              $     61,256   $     62,686   $     27,160   $     27,216
                                              ============   ============   ============   ============


         Investment securities with amortized costs totaling $36,484,000 and
         $35,005,000 and market value totaling $36,811,000 and $35,277,000 were
         pledged to secure treasury tax and loan accounts, State Treasury funds
         on deposit and short-term borrowing arrangements (see Note 8) at
         December 31, 2003 and 2002, respectively.

                                      F-24


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


3.       INVESTMENT SECURITIES (Continued)

         Investment securities with unrealized losses at December 31, 2003 are
         summarized and classified according to the duration of the loss period
         as follows (dollars in thousands):

                                                      Less than 12 Months
                                                 ----------------------------
                                                    Fair          Unrealized
                                                    Value           Losses
                                                 ------------    ------------

         Available-for-Sale
         ------------------

         U.S. Treasury securities and agencies   $      7,017    $        (14)
         Mortgage-backed securities                     7,239            (106)
         Corporate stock                                  247              (5)
                                                 ------------    ------------

                                                 $     14,503    $       (125)
                                                 ============    ============

         Held-to-Maturity
         ----------------

         Mortgage-backed securities              $      8,579    $        (83)
                                                 ============    ============

         Management periodically evaluates each investment security relying
         primarily on industry analyst reports, observation of market conditions
         and interest rate fluctuations. Management believes it will be able to
         collect all amounts due according to the contractual terms of the
         underlying investment securities and that the noted decline in fair
         value is due only to interest rate fluctuations.

4.       LOANS AND LEASES

         Outstanding loans and leases are summarized as follows (dollars in
         thousands):

                                                             December 31,
                                                       ------------------------
                                                          2003          2002
                                                       ----------    ----------

         Real estate - commercial                      $  142,249    $  119,977
         Real estate - construction                        37,434        32,385
         Real estate - multi-family                         5,301         7,573
         Real estate - residential                          1,508         1,661
         Commercial                                        57,346        49,231
         Lease financing receivable                         9,276         6,766
         Agriculture                                        8,027         8,824
         Consumer                                           5,950         6,371
                                                       ----------    ----------

                                                          267,091       232,788

         Deferred loan and lease origination fees, net       (678)         (583)
         Allowance for loan and lease losses               (3,949)       (3,197)
                                                       ----------    ----------

                                                       $  262,464    $  229,008
                                                       ==========    ==========

         Certain loans have been pledged to secure borrowing arrangements (see
         Notes 8 and 9).

                                      F-25


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


4.       LOANS AND LEASES (Continued)

         The components of the Company's leases receivable as of December 31 are
         summarized below (dollars in thousands):

                                                          2003          2002
                                                       ----------    ----------

         Future minimum lease payments                 $    9,828    $    7,226
         Residual interests                                   218           115
         Unearned income                                     (770)         (575)
                                                       ----------    ----------

                                                       $    9,276    $    6,766
                                                       ==========    ==========

         Future minimum lease payments are as follows (dollars in thousands):

                         Year Ending
                         December 31,
                        --------------

                             2004                               $    3,564
                             2005                                    3,107
                             2006                                    1,928
                             2007                                      927
                             2008                                      289
                          Thereafter                                    13
                                                                ----------

                                                                $    9,828
                                                                ==========

         Changes in the allowance for loan and lease losses were as follows
         (dollars in thousands):

                                                  Year Ended December 31,
                                           ------------------------------------

                                              2003         2002         2001
                                           ----------   ----------   ----------

         Balance, beginning of year        $    3,197   $    2,614   $    2,454
         Provision charged to operations          946          644          791
         Losses charged to allowance             (354)        (151)        (711)
         Recoveries                               160           90           80
                                           ----------   ----------   ----------

                   Balance, end of year    $    3,949   $    3,197   $    2,614
                                           ==========   ==========   ==========

         At December 31, 2003 and 2002, nonaccrual loans and leases totaled
         $179,000 and $206,000, respectively. Interest foregone on nonaccrual
         loans for the years ended December 31, 2003, 2002 and 2001 was not
         material.

         The recorded investment in loans and leases that were considered to be
         impaired totaled $181,000 and $206,000 at December 31, 2003 and 2002,
         respectively. The related allowance for loan and lease losses for these
         loans and leases as determined under loan impairment standards at
         December 31, 2003 and 2002 was $59,000 and $51,000, respectively. The
         average recorded investment in impaired loans and leases for the years
         ended December 31, 2003, 2002 and 2001 was $148,000, $472,000 and
         $733,000, respectively. Interest income recognized on impaired loans
         and leases using a cash-basis method for the years ended December 31,
         2003, 2002 and 2001 was not material.

         Salaries and employee benefits totaling $570,000, $543,000 and $483,000
         have been deferred as loan and lease origination costs for the years
         ended December 31, 2003, 2002 and 2001, respectively.

                                      F-26


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


5.       PREMISES AND EQUIPMENT

         Premises and equipment consisted of the following (dollars in
         thousands):

                                                             December 31,
                                                      ------------------------

                                                         2003          2002
                                                      ----------    ----------

         Land                                         $      149    $      149
         Building and improvements                           219           213
         Furniture, fixtures and equipment                 4,346         4,053
         Leasehold improvements                              802           783
                                                      ----------    ----------

                                                           5,516         5,198
                Less accumulated depreciation
                   and amortization                       (4,011)       (3,533)
                                                      ----------    ----------

                                                      $    1,505    $    1,665
                                                      ==========    ==========

         Depreciation and amortization included in occupancy and furniture and
         equipment expenses totaled $480,000, $464,000 and $439,000 for the
         years ended December 31, 2003, 2002 and 2001, respectively.

6.       ACCOUNTS RECEIVABLE SERVICING RECEIVABLES

         The Company purchases existing accounts receivable on a discounted
         basis from selected borrowers and assumes the related billing and
         collection responsibilities. Accounts receivable servicing fees
         included in other income totaled $247,000, $294,000 and $459,000 for
         the years ended December 31, 2003, 2002 and 2001, respectively (see
         Note 14). The valuation allowance for these receivables is not
         significant.

7.       INTEREST-BEARING DEPOSITS

         Interest-bearing deposits consisted of the following (dollars in
         thousands):

                                                             December 31,
                                                      ------------------------

                                                         2003          2002
                                                      ----------    ----------

         Savings                                      $   17,594    $   15,562
         Money market                                    102,578        82,362
         NOW accounts                                     28,406        23,511
         Time, $100,000 or more                           49,083        46,363
         Other time                                       22,538        26,024
                                                      ----------    ----------

                                                      $  220,199    $  193,822
                                                      ==========    ==========

                                      F-27


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


7.       INTEREST-BEARING DEPOSITS (Continued)

         Aggregate annual maturities of time deposits are as follows (dollars in
         thousands):

                          Year Ending
                          December 31,
                         --------------

                             2004                          $      58,630
                             2005                                  5,622
                             2006                                  1,577
                             2007                                  2,415
                             2008                                  3,333
                          Thereafter                                  44
                                                           -------------

                                                           $      71,621
                                                           =============

         Interest expense recognized on interest-bearing deposits consisted of
         the following (dollars in thousands):

                                                  Year Ended December 31,
                                          ------------------------------------
                                             2003         2002         2001
                                          ----------   ----------   ----------

         Savings                          $       35   $       51   $      166
         Money market                            884          901        1,849
         NOW accounts                             28           38          115
         Time, $100,000 or more                  743        1,022        1,917
         Other time                              700        1,156        1,995
                                          ----------   ----------   ----------

                                          $    2,390   $    3,168   $    6,042
                                          ==========   ==========   ==========

8.       SHORT-TERM BORROWING ARRANGEMENTS

         The Company has a total of $31,000,000 in unsecured short-term
         borrowing arrangements to purchase Federal funds with four of its
         correspondent banks. An advance totaling $9,600,000 was outstanding
         from one of its correspondent banks at December 31, 2003, bearing an
         interest rate of 1.44% and maturing on January 1, 2004. An advance
         totaling $6,550,000 was outstanding from one of its correspondent banks
         at December 31, 2002, bearing an interest rate of 1.75% and maturing
         January 1, 2003.

         In addition, the Company has a line of credit available with the
         Federal Home Loan Bank which is secured by pledged mortgage loans (see
         Note 9) and investment securities (see Note 3). Borrowings may include
         overnight advances as well as loans with a term of up to thirty years.
         Advances totaling $25,000,000 were outstanding from the Federal Home
         Loan Bank at December 31, 2003, bearing interest rates ranging from
         1.03% to 1.45% and maturing between January 2, 2004 and November 1,
         2004. Advances totaling $24,000,000 were outstanding from the Federal
         Home Loan Bank at December 31, 2002, bearing interest rates ranging
         from 1.57% to 1.87% and maturing between January 28, 2003 and October
         30, 2003.

         The Company has also been issued $667,000 in letters of credit by the
         Federal Home Loan Bank which have been pledged to secure Local Agency
         Deposits. The letters of credit act as a guarantee of payment to
         certain third parties in accordance with specified terms and
         conditions. The letters of credit were not drawn upon in 2003 and
         management does not expect to draw upon these lines in the future.

                                      F-28


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


9.       LONG-TERM DEBT

         The Company can borrow up to $14,595,000 from the Federal Home Loan
         Bank on either a short-term or long-term basis, secured by qualifying
         mortgage loans with unpaid balances of $26,367,000 at December 31,
         2003. Long-term debt consisted of an advance from the Federal Home Loan
         Bank totaling $1,942,000 and $1,992,000 at December 31, 2003 and 2002,
         respectively, bearing a fixed interest rate of 6.13%, due in monthly
         installments of approximately $14,000, including principal and
         interest, with the final principal payment of $1,771,000 due December
         21, 2007.

         Future minimum principal payments on long-term debt are as follows
         (dollars in thousands):

                       Year Ending
                       December 31,
                      --------------

                           2004                                   $         54
                           2005                                             57
                           2006                                             60
                           2007                                          1,771
                                                                  ------------

                                                                  $      1,942
                                                                  ============

10.      INCOME TAXES

         The provision for income taxes for the years ended December 31, 2003,
         2002 and 2001 consisted of the following (dollars in thousands):

                                          Federal        State          Total
                                         ----------    ----------    ----------
         2003
         ----

         Current                         $    2,566    $      968    $    3,534
         Deferred                              (332)         (142)         (474)
                                         ----------    ----------    ----------

                  Income tax expense     $    2,234    $      826    $    3,060
                                         ==========    ==========    ==========

         2002
         ----

         Current                         $    2,388    $      820    $    3,208
         Deferred                              (229)          (75)         (304)
                                         ----------    ----------    ----------

                  Income tax expense     $    2,159    $      745    $    2,904
                                         ==========    ==========    ==========

         2001
         ----

         Current                         $    2,000    $      791    $    2,791
         Deferred                              (145)          (34)         (179)
                                         ----------    ----------    ----------

                  Income tax expense     $    1,855    $      757    $    2,612
                                         ==========    ==========    ==========

                                      F-29


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


10.      INCOME TAXES (Continued)

         Deferred tax assets (liabilities) consisted of the following (dollars
         in thousands):



                                                                       December 31,
                                                                 ------------------------

                                                                    2003          2002
                                                                 ----------    ----------
                                                                                
         Deferred tax assets:
              Allowance for loan and lease losses                $    1,561    $    1,207
              Future benefit of State tax deduction                     292           280
              Deferred compensation                                     390           175
              Other                                                      12            27
                                                                 ----------    ----------

                      Total deferred tax assets                       2,255         1,689
                                                                 ----------    ----------

         Deferred tax liabilities:
              Discount on purchased loans                               (10)          (21)
              Future liability of State deferred tax assets            (158)         (110)
              Unrealized gain on available-for-sale investment
                  securities                                           (566)         (845)
              Federal Home Loan Bank stock dividends                    (63)          (36)
              Other                                                     (28)
                                                                 ----------    ----------

                      Total deferred tax liabilities                   (825)       (1,012)
                                                                 ----------    ----------

                      Net deferred tax assets                    $    1,430    $      677
                                                                 ==========    ==========


         The provision for income taxes differs from amounts computed by
         applying the statutory Federal income tax rate of 34% to income before
         income taxes. The significant items comprising these differences
         consisted of the following:



                                                                               Year Ended December 31,
                                                                   --------------------------------------------

                                                                       2003            2002            2001
                                                                   ------------    ------------    ------------
                                                                                                     
         Federal income tax statutory rate                                 34.0 %          34.0 %          34.0 %
         State franchise tax, net of Federal tax effect                     6.9 %           6.8 %           7.0 %
         Tax benefit of interest on obligations of
           states and political subdivisions                               (2.1)%          (2.1)%          (2.2)%
         Other                                                               .4 %            .7 %            .5 %
                                                                   ------------    ------------    ------------

                Total income tax expense                                   39.2 %          39.4 %          39.3 %
                                                                   ============    ============    ============


11.      COMMITMENTS AND CONTINGENCIES

         Leases
         ------

         The Company leases branch facilities, administrative offices and
         various equipment under noncancelable operating leases which expire on
         various dates through the year 2014. Certain of the leases have five
         year renewal options. Two of the branch facilities are leased from
         current or former members of the Company's Board of Directors (see Note
         16).

                                      F-30


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


11.      COMMITMENTS AND CONTINGENCIES (Continued)

         Leases (Continued)
         ------

         Future minimum lease payments are as follows (dollars in thousands):

                       Year Ending
                       December 31,
                      --------------

                           2004                                   $        673
                           2005                                            736
                           2006                                            674
                           2007                                            518
                           2008                                            552
                        Thereafter                                       1,118
                                                                  ------------

                                                                  $      4,271
                                                                  ============

         Rental expense included in occupancy, furniture and equipment expense
         totaled $600,000, $616,000 and $631,000 for the years ended December
         31, 2003, 2002 and 2001, respectively.

         Financial Instruments With Off-Balance-Sheet Risk
         -------------------------------------------------

         The Company is a party to financial instruments with off-balance-sheet
         risk in the normal course of business in order to meet the financing
         needs of its customers and to reduce its exposure to fluctuations in
         interest rates. These financial instruments consist of commitments to
         extend credit and letters of credit. These instruments involve, to
         varying degrees, elements of credit and interest rate risk in excess of
         the amount recognized on the balance sheet.

         The Company's exposure to credit loss in the event of nonperformance by
         the other party for commitments to extend credit and letters of credit
         is represented by the contractual amount of those instruments. The
         Company uses the same credit policies in making commitments and letters
         of credit as it does for loans included on the consolidated balance
         sheet.

         The following financial instruments represent off-balance-sheet credit
         risk (dollars in thousands):



                                                                             December 31,
                                                                       -----------------------

                                                                          2003         2002
                                                                       ----------   ----------
                                                                                     
         Commitments to extend credit:
              Revolving lines of credit secured by
                  1-4 family residences                                $    3,017   $    2,431
              Commercial real estate, construction and land
                  development commitments:
                      Secured by real estate                               20,269       18,281
                      Not secured by real estate                            1,800        1,821
              Credit card arrangements                                        483          460
              Other unused commitments, principally commercial loans       46,289       38,721
                                                                       ----------   ----------

                                                                       $   71,858   $   61,714
                                                                       ==========   ==========

         Letters of credit                                             $      741   $    3,668
                                                                       ==========   ==========


                                      F-31


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


11.      COMMITMENTS AND CONTINGENCIES (Continued)

         Financial Instruments With Off-Balance-Sheet Risk (Continued)
         -------------------------------------------------

         Real estate commitments are generally secured by property with a
         loan-to-value ratio of 65% to 80%. In addition, the majority of the
         Company's commitments have variable interest rates.

         Commitments to extend credit are agreements to lend to a customer as
         long as there is no violation of any conditions established in the
         contract. Commitments generally have fixed expiration dates or other
         termination clauses and may require payment of a fee. Since some of the
         commitments are expected to expire without being drawn upon, the total
         commitment amounts do not necessarily represent future cash
         requirements. Each client's creditworthiness is evaluated on a
         case-by-case basis. The amount of collateral obtained, if deemed
         necessary upon extension of credit, is based on management's credit
         evaluation of the borrower. Collateral held varies, but may include
         accounts receivable, inventory, equipment and deeds of trust on
         residential real estate and income-producing commercial properties.

         Letters of credit are conditional commitments issued to guarantee the
         performance or financial obligation of a client to a third party. The
         credit risk involved in issuing letters of credit is essentially the
         same as that involved in extending loans to clients.

         Significant Concentrations of Credit Risk
         -----------------------------------------

         The Company grants real estate mortgage, real estate construction,
         commercial, agricultural and consumer loans to clients throughout
         Sacramento, Placer, Yolo, El Dorado, Sonoma, Napa, Marin and Mendocino
         counties.

         In management's judgment, a concentration exists in real estate-related
         loans which represented approximately 69.8% and 69.4%% of the Company's
         loan portfolio at December 31, 2003 and 2002, respectively. Although
         management believes such concentrations to have no more than the normal
         risk of collectibility, a substantial decline in the economy in
         general, or a decline in real estate values in the Company's primary
         market areas in particular, could have an adverse impact on
         collectibility of these loans. However, personal and business income
         represent the primary source of repayment for a majority of these
         loans.

         Correspondent Banking Agreements
         --------------------------------

         The Company maintains funds on deposit with other federally insured
         financial institutions under correspondent banking agreements.
         Uninsured deposits totaled $3,552,000 at December 31, 2003.

         Federal Reserve Requirements
         ----------------------------

         Banks are required to maintain reserves with the Federal Reserve Bank
         equal to a percentage of their reservable deposits. Reserve balances
         held with the Federal Reserve Bank totaled $0 and $533,000 at December
         31, 2003 and 2002, respectively.

         Contingencies
         -------------

         The Company is subject to legal proceedings and claims which arise in
         the ordinary course of business. In the opinion of management, the
         amount of ultimate liability with respect to such actions will not
         materially affect the financial position or results of operations of
         the Company.

                                      F-32


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


12.      SHAREHOLDERS' EQUITY

         Earnings Per Share
         ------------------

         A reconciliation of the numerators and denominators of the basic and
         diluted earnings per share computations is as follows (dollars and
         shares in thousands, except per share data):



                                                             Weighted
                                                             Average
                                                            Number of
                                                Net          Shares         Per-Share
                  For the Year Ended           Income      Outstanding       Amount
         --------------------------------   ------------  -------------   ------------
                                                                          
         December 31, 2003
         -----------------

         Basic earnings per share           $      4,741          3,989   $       1.19
                                                                          ============

         Effect of dilutive stock options                           329
                                            ------------   ------------

         Diluted earnings per share         $      4,741          4,318   $       1.10
                                            ============   ============   ============

         December 31, 2002
         -----------------

         Basic earnings per share           $      4,459          3,951   $       1.13
                                                                          ============

         Effect of dilutive stock options                           298
                                            ------------   ------------

         Diluted earnings per share         $      4,459          4,249   $       1.05
                                            ============   ============   ============

         December 31, 2001
         -----------------

         Basic earnings per share           $      4,037          3,993   $       1.01
                                                                          ============

         Effect of dilutive stock options                           254
                                            ------------   ------------

         Diluted earnings per share         $      4,037          4,247   $        .95
                                            ============   ============   ============


         Stock Option Plans
         ------------------

         In 2000 and 1995, the Board of Directors adopted stock option plans
         under which options may be granted to employees and directors under
         incentive and nonstatutory agreements. At December 31, 2003, grants
         outstanding combined with shares available for future grants totaled
         960,592 shares under these plans. The plans require that the option
         price may not be less than the fair market value of the stock at the
         date the option is granted. The purchase price of exercised options is
         payable in full in cash or shares of the Company's common stock owned
         by the optionee at the time the option is exercised. The options expire
         on dates determined by the Board of Directors, but not later than ten
         years from the date of grant. Options vest ratably over a five year
         period. Outstanding options under the 1995 plan are exercisable until
         their expiration; however, no new options will be granted under this
         plan.

                                      F-33


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


12.      SHAREHOLDERS' EQUITY (Continued)

         Stock Option Plans (Continued)
         ------------------

         A summary of the combined activity within the plans follows:



                                            2003                           2002                           2001
                                ----------------------------   ----------------------------   ----------------------------

                                                  Weighted                       Weighted                       Weighted
                                                  Average                        Average                        Average
                                                  Exercise                       Exercise                       Exercise
                                   Shares          Price          Shares          Price          Shares          Price
                                ------------    ------------   ------------    ------------   ------------    ------------
                                                                                                     
         Options outstanding,
           beginning of year         624,667    $       4.98        664,797    $       5.00        732,816    $       5.03

           Options granted            62,068    $      14.91
           Options exercised        (135,704)   $       4.37        (40,130)   $       4.58        (41,841)   $       4.48
           Options canceled           (1,682)   $       5.23                                       (26,178)   $      10.23
                                ------------                   ------------                   ------------

         Options outstanding,
           end of year               549,349    $       6.39        624,667    $       4.98        664,797    $       5.00
                                ============                   ============                   ============

         Options exercisable,
           end of year               483,807    $       5.25        587,274    $       4.81        561,006    $       4.61
                                ============                   ============                   ============


         A summary of options outstanding at December 31, 2003 follows:



                                                Number of            Weighted             Number of
                                                 Options              Average              Options
                                               Outstanding           Remaining           Exercisable
                                              December 31,          Contractual         December 31,
         Range of Exercise Prices                 2003                 Life                 2003
         ------------------------          ------------------   ------------------   ------------------
                                                                                           
         $     3.34                                    41,863            2.8 years               41,863
         $     3.48                                   216,035            1.6 years              216,035
         $     3.71                                     6,273             .2 years                6,273
         $     4.57                                     6,129            2.6 years                6,129
         $     5.23                                    50,238            6.0 years               50,238
         $     5.53                                    44,850            4.7 years               44,850
         $     6.14                                    30,211            3.4 years               30,211
         $     8.85                                    17,364            5.9 years               13,891
         $     9.05                                    13,674            5.0 years               13,674
         $     9.75                                    60,643            4.7 years               60,643
         $    14.89                                    61,342            9.4 years
         $    16.14                                       727            9.5 years
                                           ------------------                        ------------------

                                                      549,349                                   483,807
                                           ==================                        ==================


         Common Stock Repurchase Program
         -------------------------------

         During 1997, the Board of Directors authorized the annual repurchase of
         up to five percent of the Company's common stock in conjunction with
         recurring annual distributions of a five percent common stock dividend.
         Repurchases are generally made in the open market at market prices.

                                      F-34


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


12.      SHAREHOLDERS' EQUITY (Continued)

         Stock Split
         -----------

         On September 17, 2003, the Board of Directors declared a three-for-two
         stock split, payable on October 31, 2003 to shareholders of record on
         October 17, 2003. All per share, shares outstanding and stock option
         data in the consolidated financial statements have been retroactively
         restated to reflect the stock split.

13.      REGULATORY MATTERS

         Dividends
         ---------

         Upon declaration by the Board of Directors of the Company, all
         shareholders of record will be entitled to receive dividends. The
         California Financial Code restricts the total dividend payment of any
         state banking association in any calendar year to the lesser of (1) the
         bank's retained earnings or (2) the bank's net income for its last
         three fiscal years, less distributions made to shareholders during the
         same three-year period. In addition, under applicable laws, the Office
         of the Comptroller of the Currency (the "OCC") restricts the total
         dividend payment of any national banking association in any calendar
         year to the net income of the year, as defined, combined with the net
         income for the two preceding years, less distributions made to
         shareholders during the same three-year period. At December 31, 2003,
         the subsidiaries had $10,649,000 in retained earnings available for
         dividend payments to the Company.

         Regulatory Capital
         ------------------

         The Company and its banking subsidiaries are subject to certain
         regulatory capital requirements administered by the Board of Governors
         of the Federal Reserve System, the FDIC and OCC. Failure to meet these
         minimum capital requirements can initiate certain mandatory, and
         possibly additional discretionary, actions by regulators that, if
         undertaken, could have a direct material effect on the Company's
         consolidated financial statements. Under capital adequacy guidelines
         and the regulatory framework for prompt corrective action, the banking
         subsidiaries must meet specific capital guidelines that involve
         quantitative measures of their assets, liabilities and certain
         off-balance-sheet items as calculated under regulatory accounting
         practices. The Company's and its banking subsidiaries' capital amounts
         and classification are also subject to qualitative judgments by the
         regulators about components, risk weightings and other factors.

         Quantitative measures established by regulation to ensure capital
         adequacy require the Company and its banking subsidiaries to maintain
         minimum amounts and ratios of total and Tier 1 capital to risk-weighted
         assets and of Tier 1 capital to average assets. Each of these
         components is defined in the regulations. Management believes that the
         Company and its banking subsidiaries met all their capital adequacy
         requirements as of December 31, 2003 and 2002.

                                      F-35


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


13.      REGULATORY MATTERS (Continued)

         Regulatory Capital (Continued)
         ------------------

         In addition, the most recent notifications from the FDIC and OCC
         categorized each of the banking subsidiaries as well capitalized under
         the regulatory framework for prompt corrective action. To be
         categorized as well capitalized, the banking subsidiaries must maintain
         minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios
         as set forth below. There are no conditions or events since those
         notifications that management believes have changed the categories.



                                                                                 December 31,
                                                                  ------------------------------------------
                                                                         2003                   2002
                                                                  -------------------    -------------------

                                                                   Amount     Ratio       Amount     Ratio
                                                                  --------   --------    --------   --------
                                                                             (dollars in thousands)
                                                                                              
         Leverage Ratio
         --------------

         American River Bankshares and Subsidiaries               $ 34,529        9.0%   $ 30,350        8.9%
         Minimum regulatory requirement                           $ 15,419        4.0%   $ 12,328        4.0%

         American River Bank                                      $ 28,955        9.5%   $ 24,986       10.0%
         Minimum requirement for "Well-Capitalized" institution   $ 15,251        5.0%   $ 12,521        5.0%
         Minimum regulatory requirement                           $ 12,201        4.0%   $ 10,017        4.0%

         North Coast Bank                                         $  5,663        7.1%   $  5,168        9.0%
         Minimum requirement for "Well-Capitalized" institution   $  4,008        5.0%   $  2,861        5.0%
         Minimum regulatory requirement                           $  3,206        4.0%   $  2,289        4.0%

         Tier 1 Risk-Based Capital Ratio
         -------------------------------

         American River Bankshares and Subsidiaries               $ 34,529       11.6%   $ 30,350       11.8%
         Minimum regulatory requirement                           $ 11,877        4.0%   $ 10,284        4.0%

         American River Bank                                      $ 28,955       12.2%   $ 24,986       11.8%
         Minimum requirement for "Well-Capitalized" institution   $ 14,267        6.0%   $ 12,701        6.0%
         Minimum regulatory requirement                           $  9,511        4.0%   $  8,467        4.0%

         North Coast Bank                                         $  5,663        9.7%   $  5,168       11.2%
         Minimum requirement for "Well-Capitalized" institution   $  3,505        6.0%   $  2,773        6.0%
         Minimum regulatory requirement                           $  2,336        4.0%   $  1,849        4.0%

         Total Risk-Based Capital Ratio
         ------------------------------

         American River Bankshares and Subsidiaries               $ 38,244       12.9%   $ 33,547       13.0%
         Minimum regulatory requirement                           $ 23,773        8.0%   $ 20,568        8.0%

         American River Bank                                      $ 31,928       13.4%   $ 27,555       13.0%
         Minimum requirement for "Well-Capitalized" institution   $ 23,785       10.0%   $ 21,169       10.0%
         Minimum regulatory requirement                           $ 19,028        8.0%   $ 16,935        8.0%

         North Coast Bank                                         $  6,395       10.9%   $  5,746       12.4%
         Minimum requirement for "Well-Capitalized" institution   $  5,858       10.0%   $  4,627       10.0%
         Minimum regulatory requirement                           $  4,687        8.0%   $  3,702        8.0%


                                      F-36


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


14.      OTHER NONINTEREST INCOME AND EXPENSE

         Other noninterest income consisted of the following (dollars in
         thousands):



                                                              Year Ended December 31,
                                                       ------------------------------------

                                                          2003         2002         2001
                                                       ----------   ----------   ----------
                                                                               
         Accounts receivable servicing fees (Note 6)   $      247   $      294   $      459
         Merchant fee income                                  357          344          277
         Income from residential lending division             366          278          274
         Fees from lease brokerage services                   381          459          264
         Financial services income                             69           71           90
         Other                                                266          314          439
                                                       ----------   ----------   ----------

                                                       $    1,686   $    1,760   $    1,803
                                                       ==========   ==========   ==========


         Noninterest expense consisted of the following (dollars in thousands):

                                                              Year Ended December 31,
                                                       ------------------------------------

                                                          2003         2002         2001
                                                       ----------   ----------   ----------

         Professional fees                             $      335   $      262   $      411
         Outsourced item processing                           361          359          385
         Telephone and postage                                275          278          313
         Advertising and promotion                            198          200          275
         Stationery and supplies                              175          212          203
         Directors' compensation                              353          248          209
         Other operating expenses                             972          775          998
                                                       ----------   ----------   ----------

                                                       $    2,669   $    2,334   $    2,794
                                                       ==========   ==========   ==========


15.      EMPLOYEE BENEFIT PLANS

         American River Bankshares 401(k) Plan
         -------------------------------------

         The American River Bankshares 401(k) Plan commenced January 1, 1993 and
         is available to all employees. Under the plan, the Company will match
         50% of each participants' contribution up to a maximum of 6% of their
         annual compensation. Employer contributions vest at a rate of 20% per
         year over a five year period and totaled $116,000, $109,000 and
         $111,000 for the years ended December 31, 2003, 2002 and 2001,
         respectively.

         Employee Stock Purchase Plan
         ----------------------------

         The Company is the administrator of an Employee Stock Purchase Plan
         which allows employees to purchase the Company's stock at fair market
         value as of the date of purchase. The Company bears all costs of
         administering the Plan, including broker's fees, commissions, postage
         and other costs actually incurred.

                                      F-37


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


15.      EMPLOYEE BENEFIT PLANS (Continued)

         American River Bankshares Deferred Compensation Plan
         ----------------------------------------------------

         The Company has established a Deferred Compensation Plan for certain
         members of the management team and a Deferred Fee Agreement for
         Non-Employee Directors for the purpose of providing the opportunity for
         participants to defer compensation. Participants of the management
         team, who are selected by a Committee designated by the Board of
         Directors, may elect to defer annually a minimum of $5,000 or a maximum
         of eighty percent of their base salary and all of their cash bonus.
         Directors may also elect to defer up to one hundred percent of their
         monthly fees. The Company bears all administration costs and funds the
         interest earned on participant deferrals at a rate based on U.S.
         Government Treasury rates. Deferred compensation, including interest
         earned, totaled $615,000, $437,000 and $351,000 at December 31, 2003,
         2002 and 2001, respectively.

         Salary Continuation Plan
         ------------------------

         In 2003, the Company entered into agreements to provide certain current
         executives, or their designated beneficiaries, with annual benefits for
         up to 15 years after retirement or death. These benefits are
         substantially equivalent to those available under life insurance
         policies purchased by the Company on the lives of the executives. The
         Company accrues for these future benefits from the effective date of
         the agreements until the executives' expected final payment dates in a
         systematic and rational manner. At the balance sheet date, the amount
         of accrued benefits approximates the then present value of the benefits
         expected to be provided at retirement. The expense recognized under
         this plan totaled $42,000 for the year ended December 31, 2003.

16.      RELATED PARTY TRANSACTIONS

         During the normal course of business, the Company enters into
         transactions with related parties, including Directors and affiliates.
         These transactions include borrowings from the Company with
         substantially the same terms, including rates and collateral, as loans
         to unrelated parties. The following is a summary of the aggregate
         activity involving related party borrowers during 2003 (dollars in
         thousands):

         Balance, January 1, 2003                                   $     4,092

              Disbursements                                               4,988
              Amounts repaid                                                542
                                                                    -----------

         Balance, December 31, 2003                                 $     8,538
                                                                    ===========

         Undisbursed commitments to related parties,
              December 31, 2003                                     $       563
                                                                    ===========

         The Company also leases two branch facilities from current and former
         members of the Company's Board of Directors. Rental payments to the
         Directors totaled $109,000, $106,000 and $105,000 for the years ended
         December 31, 2003, 2002 and 2001, respectively.

                                      F-38


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


17.      OTHER COMPREHENSIVE (LOSS) INCOME

         At December 31, 2003, 2002 and 2001, the Company had other
         comprehensive loss or income as follows (dollars in thousands):



                                                                             Tax
                                                              Before        Benefit        After
                                                               Tax         (Expense)        Tax
                                                           -----------    -----------    -----------
                                                                                         
         For the Year Ended December 31, 2003
         ------------------------------------

         Other comprehensive loss:
           Unrealized holding losses                       $      (686)   $       266    $      (420)
           Less reclassification adjustment for realized
              gains included in net income                          33            (13)            20
                                                           -----------    -----------    -----------

                                                           $      (719)   $       279    $      (440)
                                                           ===========    ===========    ===========

         For the Year Ended December 31, 2002
         ------------------------------------

         Other comprehensive income:
           Unrealized holding gains                        $     1,353    $      (534)   $       819
                                                           ===========    ===========    ===========

         For the Year Ended December 31, 2001
         ------------------------------------

         Other comprehensive income:
           Unrealized holding gains                        $       446    $      (178)   $       268
                                                           ===========    ===========    ===========


18.      DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

         Estimated fair values are disclosed for financial instruments for which
         it is practicable to estimate fair value. These estimates are made at a
         specific point in time based on relevant market data and information
         about the financial instruments. These estimates do not reflect any
         premium or discount that could result from offering the Company's
         entire holdings of a particular financial instrument for sale at one
         time, nor do they attempt to estimate the value of anticipated future
         business related to the instruments. In addition, the tax ramifications
         related to the realization of unrealized gains and losses can have a
         significant effect on fair value estimates and have not been considered
         in any of these estimates.

         Because no market exists for a significant portion of the Company's
         financial instruments, fair value estimates are based on judgments
         regarding current economic conditions, risk characteristics of various
         financial instruments and other factors. These estimates are subjective
         in nature and involve uncertainties and matters of significant judgment
         and therefore cannot be determined with precision. Changes in
         assumptions could significantly affect the fair values presented.

         The following methods and assumptions were used by the Company to
         estimate the fair value of its financial instruments at December 31,
         2003 and 2002:

         Cash and cash equivalents and short-term borrowings: For cash and cash
         equivalents and short-term borrowings, the carrying amount is estimated
         to be fair value.

         Interest-bearing deposits in banks: The fair values of interest-bearing
         deposits in banks are estimated by discounting their future cash flows
         using rates at each reporting date for instruments with similar
         remaining maturities offered by comparable financial institutions.

                                      F-39


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


18.      DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

         Investment securities: For investment securities, fair values are based
         on quoted market prices, where available. If quoted market prices are
         not available, fair values are estimated using quoted market prices for
         similar securities and indications of value provided by brokers.

         Loans and leases: For variable-rate loans and leases that reprice
         frequently with no significant change in credit risk, fair values are
         based on carrying values. The fair values for other loans and leases
         are estimated using discounted cash flow analyses, using interest rates
         being offered at each reporting date for loans and leases with similar
         terms to borrowers of comparable creditworthiness. The carrying amount
         of accrued interest receivable approximates its fair value.

         FHLB and FRB stock: The carrying amount of FHLB and FRB stock
         approximates their fair value. These investments are carried at cost
         and are redeemable at par with certain restrictions.

         Accounts receivable servicing receivables: The carrying amount of
         accounts receivable servicing receivables approximates their fair value
         because of the relatively short period of time between the origination
         of the receivables and their expected collection.

         Cash surrender value of life insurance policies: The fair value of life
         insurance policies are based on cash surrender values at each reporting
         date as provided by insurers.

         Deposits: The fair values for demand deposits are, by definition, equal
         to the amount payable on demand at the reporting date represented by
         their carrying amount. Fair values for fixed-rate certificates of
         deposit are estimated using a discounted cash flow analysis using
         interest rates offered at each reporting date for certificates with
         similar remaining maturities. The carrying amount of accrued interest
         payable approximates its fair value.

         Long-term debt: The fair value of long-term debt is estimated using a
         discounted cash flow analysis using interest rates currently available
         for similar debt instruments.

         Commitments to extend credit: Commitments to extend credit are
         primarily for variable rate loans. For these commitments, there is no
         difference between the committed amounts and their fair values.
         Commitments to fund fixed rate loans and letters of credit are at rates
         which approximate fair value at each reporting date.

         The carrying amounts and estimated fair values of the Company's
         financial instruments are as follows (dollars in thousands):



                                                    December 31, 2003           December 31, 2002
                                                -------------------------   -------------------------
                                                               Estimated                   Estimated
                                                 Carrying        Fair        Carrying        Fair
                                                  Amount         Value        Amount         Value
                                                -----------   -----------   -----------   -----------
                                                                                      
         Financial assets:
           Cash and due from banks              $    29,797   $    29,797   $    25,899   $    25,899
           Interest-bearing deposits in banks         4,650         4,656         5,938         5,988
           Investment securities                     89,846        89,902        74,061        74,262
           Loans and leases                         262,464       262,360       229,008       229,904
           FHLB and FRB stock                         1,546         1,546         1,562         1,562
           Accounts receivable servicing
              receivables                             1,778         1,778         1,396         1,396
           Accrued interest receivable                1,557         1,557         1,486         1,486
           Cash surrender value of life
              insurance policies                      1,641         1,641


                                      F-40


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


18.      DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)



                                                    December 31, 2003           December 31, 2002
                                                -------------------------   -------------------------
                                                               Estimated                   Estimated
                                                 Carrying        Fair        Carrying        Fair
                                                  Amount         Value        Amount         Value
                                                -----------   -----------   -----------   -----------
                                                                                      
         Financial liabilities:
           Deposits                             $   322,507   $   322,792   $   275,796   $   276,238
           Short-term borrowings                     34,600        34,600        30,550        30,550
           Long-term debt                             1,942         2,174         1,992         2,089
           Accrued interest payable                     225           225           303           303


                                      F-41


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


19.      PARENT ONLY CONDENSED FINANCIAL STATEMENTS

                                  BALANCE SHEET

                           December 31, 2003 and 2002
                             (Dollars in thousands)


                                                       2003         2002
                                                    ----------   ----------

                          ASSETS

         Cash and due from banks                    $      402   $      342
         Investment in subsidiaries                     35,731       31,684
         Dividends receivable from subsidiaries            350          851
         Other assets                                      674          126
                                                    ----------   ----------

                                                    $   37,157   $   33,003
                                                    ==========   ==========

                     LIABILITIES AND
                  SHAREHOLDERS' EQUITY

         Liabilities:
           Dividends payable to shareholders        $      608   $      551
           Other liabilities                             1,092          726
                                                    ----------   ----------

                Total liabilities                        1,700        1,277
                                                    ----------   ----------

         Shareholders' equity:
           Common stock                                 16,693       16,064
           Retained earnings                            17,900       14,358
           Accumulated other comprehensive income          864        1,304
                                                    ----------   ----------

                Total shareholders' equity              35,457       31,726
                                                    ----------   ----------

                                                    $   37,157   $   33,003
                                                    ==========   ==========

                                      F-42


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


19.      PARENT ONLY CONDENSED FINANCIAL STATEMENTS (Continued)

                               STATEMENT OF INCOME

              For the Years Ended December 31, 2003, 2002 and 2001
                             (Dollars in thousands)



                                                                  2003          2002         2001
                                                               ----------    ----------   ----------
                                                                                        
         Income:
           Dividends declared by subsidiaries -
              eliminated in consolidation                      $      950    $    1,815   $    1,282
           Management fee from subsidiaries - eliminated
              in consolidation                                      1,781         1,242        1,199
           Other income                                                10
                                                               ----------    ----------   ----------

                Total income                                        2,741         3,057        2,481
                                                               ----------    ----------   ----------

         Expenses:
           Salaries and employee benefits                           2,104         1,437        1,228
           Professional fees                                           93            72          100
           Directors' compensation                                    274           176          144
           Other expenses                                             454           393          315
                                                               ----------    ----------   ----------

                Total expenses                                      2,925         2,078        1,787
                                                               ----------    ----------   ----------

                (Loss) income before equity in undistributed
                  income of subsidiaries                             (184)          979          694

         Equity in undistributed income of subsidiaries             4,487         3,169        3,115
                                                               ----------    ----------   ----------

                Income before income taxes                          4,303         4,148        3,809

         Income tax benefit                                           438           311          228
                                                               ----------    ----------   ----------

                Net income                                     $    4,741    $    4,459   $    4,037
                                                               ==========    ==========   ==========


                                      F-43


                   AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


19.      PARENT ONLY CONDENSED FINANCIAL STATEMENTS (Continued)

                             STATEMENT OF CASH FLOWS

              For the Years Ended December 31, 2003, 2002 and 2001
                             (Dollars in thousands)



                                                                 2003          2002          2001
                                                              ----------    ----------    ----------
                                                                                        
         Cash flows from operating activities:
           Net income                                         $    4,741    $    4,459    $    4,037
           Adjustments to reconcile net income to net
              cash provided by operating activities:
                Undistributed earnings of subsidiaries            (4,487)       (3,169)       (3,115)
                Increase in other assets                             (47)         (532)         (240)
                Increase in other liabilities                        366           410           186
                                                              ----------    ----------    ----------

                  Net cash provided by operating activities          573         1,168           868
                                                              ----------    ----------    ----------

         Cash flows from financing activities:
           Cash dividends paid                                    (1,135)         (716)         (640)
           Exercise of stock options                                 653           236           265
           Cash paid to repurchase common stock                      (24)         (808)         (353)
           Cash paid for fractional shares in connection
              with stock dividends and stock splits                   (7)           (8)           (7)
                                                              ----------    ----------    ----------

                  Net cash used in financing activities             (513)       (1,296)         (735)
                                                              ----------    ----------    ----------

                  Net increase (decrease) in cash and cash
                    equivalents                                       60          (128)          133

         Cash and cash equivalents at beginning of year              342           470           337
                                                              ----------    ----------    ----------

         Cash and cash equivalents at end of year             $      402    $      342    $      470
                                                              ==========    ==========    ==========


                                      F-44


                                 BANK OF AMADOR
                              FINANCIAL STATEMENTS





                         UNAUDITED FINANCIAL STATEMENTS
                       FOR THE PERIOD ENDED JUNE 30, 2004

                                       AND

                      CONSOLIDATED FINANCIAL STATEMENTS AND
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                               FOR THE YEARS ENDED
                        DECEMBER 31, 2003, 2002 AND 2001





                                          BANK OF AMADOR
                                           BALANCE SHEET
--------------------------------------------------------------------------------------------------
                                                              June 30, 2004      December 31, 2003
                                                               (Unaudited)
--------------------------------------------------------------------------------------------------
                                                                                         
Assets
     Cash and due from banks                                $       5,409,071    $       4,235,029
     Federal funds sold                                            15,227,000           23,906,000
--------------------------------------------------------------------------------------------------
         Total cash and equivalents                                20,636,071           28,141,029
     Available-for-sale investment securities (Note 3)             23,912,000           15,470,000
     Loans:
         Commercial                                                 5,273,837            6,874,100
         Real estate - construction                                50,503,552           47,643,663
         Real estate - other                                       23,835,349           20,656,983
         Installment                                                  869,120              802,376
--------------------------------------------------------------------------------------------------
         Total loans                                               80,481,858           75,977,122
         Allowance for loan losses (Note 4)                          (835,275)            (807,621)
         Deferred loan fees, net                                     (279,862)            (270,031)
--------------------------------------------------------------------------------------------------
              Net loans                                            79,366,721           74,899,470
--------------------------------------------------------------------------------------------------
     Premises and equipment, net                                      302,631              351,107
     Accrued interest receivable and other assets                   4,790,831            3,916,988
--------------------------------------------------------------------------------------------------
              Total assets                                  $     129,008,254    $     122,778,594
==================================================================================================
Liabilities and Shareholders' Equity
     Deposits
         Demand, non-interest bearing                       $      23,601,184    $      22,063,840
         Demand, interest bearing                                  11,470,121           10,506,857
         Savings                                                   38,770,296           37,042,549
         Time                                                      39,167,546           37,620,085
--------------------------------------------------------------------------------------------------
              Total deposits                                      113,009,147          107,233,331
     Accrued interest payable and other liabilities                   922,598              572,104
--------------------------------------------------------------------------------------------------
              Total liabilities                                   113,931,745          107,805,435
--------------------------------------------------------------------------------------------------
Commitments and contingencies (Note 6)

Shareholders' equity:
     Serial preferred stock - no par value; authorized
         500,000 shares; issued and outstanding - none
     Common stock - no par value; 10,000,000 shares
         authorized; issued and outstanding - 1,566,281
         shares in 2004 and 1,547,699 shares in 2003                7,157,667            7,008,855
     Retained earnings                                              7,729,425            7,472,683
--------------------------------------------------------------------------------------------------
     Accumulated other comprehensive income, net of taxes             189,417              491,621
--------------------------------------------------------------------------------------------------
              Total shareholders' equity                           15,076,509           14,973,159
--------------------------------------------------------------------------------------------------
              Total liabilities and shareholders' equity    $     129,008,254    $     122,778,594
==================================================================================================
See notes to unaudited condensed financial statements


                                      F-45


                                      BANK OF AMADOR
                                    STATEMENT OF INCOME
                                        (unaudited)



                                            Three Months Ended        Six Months Ended
                                                 June 30,                  June 30,
                                            2004         2003         2004         2003
------------------------------------------------------------------------------------------
                                                                           
Interest income
     Interest and fees on loans          $1,457,722   $1,415,908   $2,919,796   $2,709,404
     Interest on investment securities      193,713      230,654      358,681      489,712
     Interest on Federal funds sold          30,484       27,712       67,422       52,414
------------------------------------------------------------------------------------------
         Total interest income            1,681,919    1,674,274    3,345,899    3,251,530

Interest expense on deposits                335,802      304,304      661,828      587,742

         Net interest income              1,346,117    1,369,970    2,684,071    2,663,788

Provision for loan losses (Note 4)           15,000       24,000       35,000       54,000
------------------------------------------------------------------------------------------

         Net interest income after
            provision for loan losses     1,331,117    1,345,970    2,649,071    2,609,788

Other income                                178,523      103,157      313,848      244,516
------------------------------------------------------------------------------------------

Other expenses:
     Salaries and benefits                  225,971      322,783      571,720      614,591
     Occupancy                               98,486       95,655      199,096      183,958
     Other                                  387,673      233,243      652,908      427,117
------------------------------------------------------------------------------------------
         Total other expenses               712,130      651,681    1,423,724    1,225,666
------------------------------------------------------------------------------------------

         Income before income taxes         797,510      797,446    1,539,195    1,628,638

Income taxes                                295,900      288,800      565,300      595,300
------------------------------------------------------------------------------------------

         Net income                      $  501,610   $  508,646   $  973,895   $1,033,338
==========================================================================================

Basic earnings per share (Note 7)        $      .32   $      .34   $      .63   $      .68

Diluted earnings per share (Note 7)      $      .31   $      .32   $      .60   $      .65
==========================================================================================
See notes to unaudited condensed financial statements


                                      F-46


                                 BANK OF AMADOR
                  STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                   (unaudited)



                                                                                         Accumulated
                                                   Common Stock                            Other
                                            ---------------------------     Retained    Comprehensive   Shareholders'  Comprehensive
                                               Shares        Amount         Earnings       Income          Equity         Income
                                            ------------   ------------   ------------   ------------   ------------   ------------
                                                                                                              
Balance, January 1, 2003                       1,434,257   $  4,617,882   $  8,501,862   $    524,379   $ 13,644,123

Comprehensive income
   Net income                                                                2,064,191                     2,064,191   $  2,064,191
   Other comprehensive loss,
      net of tax:
           Unrealized gains on
             available-for-sale
             investment securities                                                            (32,758)       (32,758)       (32,758)
                                                                                                                       ------------

                 Total comprehensive
                   income                                                                                              $  2,031,433
                                                                                                                       ============

Issuance of common stock dividend                 73,540      1,764,980     (1,764,980)
Fractional shares redeemed                          (387)        (9,278)                                      (9,278)
Cash dividend - $.23 per share                                                (330,246)                     (330,246)
Cash dividend - $.23 per share                                                (330,279)                     (330,279)
Cash dividend - $.23 per share                                                (330,297)                     (330,297)
Cash dividend - $.23 per share                                                (335,568)                     (335,568)
Exercise of stock options and
   related tax benefit                            40,289        635,271                                      635,271
-----------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2003                     1,547,699      7,008,855      7,472,683        491,621     14,973,159

Comprehensive income:
   Net income                                                                  973,895                       973,895   $    973,895
   Other comprehensive income,
      net of tax:
           Unrealized gains on
             available-for-sale
             investment securities                                                           (302,204)      (302,204)      (302,204)
                                                                                                                       ------------

                      Total comprehensive
                        income                                                                                         $    671,691
                                                                                                                       ============

Cash dividend, $.23 per share                                                 (357,015)                     (357,015)
Cash dividend, $.23 per share                                                 (360,138)                     (360,138)
Exercise of stock options and
   related tax benefit                            30,787        434,865                                      434,865
Retirement of Common Stock                       (12,205)      (286,053)                                    (286,053)
-----------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2004                         1,566,281   $  7,157,667   $  7,729,425   $    189,417   $ 15,076,509
===================================================================================================================================

See notes to unaudited condensed financial statements

                                      F-47


                                             BANK OF AMADOR
                                         STATEMENT OF CASH FLOWS
                                               (unaudited)



--------------------------------------------------------------------------------------------------------
Six months ended June 30,                                                        2004            2003
--------------------------------------------------------------------------------------------------------
                                                                                               
Cash flows from operating activities:
     Net income                                                             $    973,895    $  1,033,338
     Adjustments to reconcile net income to net cash
         provided by operating activities:
         Provision for loan losses                                                35,000          54,000
         Decrease in deferred loan origination
                     fees and costs, net                                           9,831         (18,701)
         Depreciation and amortization                                            55,175          41,265
         Amortization of investment security premiums                             15,634          40,775
         Accretion of investment security discounts                                 (550)           (833)
         (Increase) decrease in accrued interest receivable and
              other assets                                                      (218,205)         46,934
         Increase in accrued interest payable and
                  other liabilities                                              362,091         189,600
--------------------------------------------------------------------------------------------------------
              Net cash provided by operating activities                        1,232,871       1,386,378
--------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
     Proceeds from matured or called available-for-sale
         investment securities                                                 3,500,000       5,730,000
     Purchase of available-for-sale investment securities                    (12,414,926)       (385,046)
     Net increase in loans                                                    (4,512,082)     (8,569,736)
     Additions to premises and equipment                                          (6,699)       (177,565)
--------------------------------------------------------------------------------------------------------
       Proceeds on sale of premises and equipment                                                 18,250
     Deposit on single premium cash surrender value life insurance policy       (500,000)
              Net cash used in investing activities                          (13,933,707)     (3,384,097)
--------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
     Net increase in demand, interest-bearing,
         and savings deposits                                                  4,228,355       2,275,731
     Net increase in time deposits                                             1,547,461       3,999,654
     Proceeds from exercise of stock options                                     423,268         132,921
     Shares repurchased and retired                                             (286,053)
     Cash dividends paid                                                        (717,153)       (660,525)
--------------------------------------------------------------------------------------------------------
              Net cash provided by financing activities                        5,195,878       5,747,781
--------------------------------------------------------------------------------------------------------

         (Decrease) increase in cash and cash equivalents                     (7,504,958)      3,750,062

Cash and cash equivalents, beginning of year                                  28,141,029      15,599,806
--------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                    $ 20,636,071    $ 19,349,868
========================================================================================================
Supplemental disclosure of cash flow information:

Cash paid during the year for:
     Interest expense                                                       $    656,091    $    537,276
     Income taxes                                                           $    229,597    $    537,496
========================================================================================================

See notes to unaudited condensed financial statements

                                      F-48


                                 BANK OF AMADOR
                          NOTES TO FINANCIAL STATEMENTS

1. FINANCIAL STATEMENTS

The accompanying unaudited financial statements should be read in conjunction
with the financial statements and related notes contained in Bank of Amador's
(the "Bank") 2003 Annual Report on Form 10-K. Certain information and footnote
disclosures normally presented in financial statements prepared in accordance
with generally accepted accounting principles have been omitted. In the opinion
of Management, the financial statements contain all adjustments (consisting only
of normal recurring accruals) necessary to present fairly the Bank's financial
position at June 30, 2004 and December 31, 2003, and the results of operations
for the three and six-month periods ended June 30, 2004 and 2003, and cash flows
for the six-month periods ended June 30, 2004 and 2003. The results of
operations for the six months ended June 30, 2004 are not necessarily indicative
of results to be achieved for the entire year.

In preparing such financial statements, Management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of
the date of the balance sheet, and revenues and expenses for the period. Actual
results could differ significantly from those estimates. Material estimates that
are particularly susceptible to significant changes in the near term relate to
carrying value of real estate owned and the determination of the allowance for
loan losses. (See also forward-looking statements and related risks described in
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations.)

2. STOCK BASED COMPENSATION

No stock-based compensation cost is reflected in net income because the Bank
accounts for its plans under the recognition and measurement principles of APB
Option No. 25 and all options granted under the Bank's stock option plans had an
exercise price equal to the market value of the underlying common stock on the
date of grant.

Proforma adjustments to the Bank's net earnings and earnings per share are
disclosed during the years in which options become vested. The following table
illustrates the effect on net income and earnings per share if the Bank had
applied the fair value recognition provisions of FASB Statement No. 123,
Accounting for Stock-Based Compensation, to stock-based employee compensation.
Earnings per share have been retroactively adjusted for a 5% stock dividend
distributed in December 2003.



                                                            For the three months ended
                                                           ----------------------------
                                                             June 30,        June 30,
                                                               2004            2003
                                                           ------------    ------------
                                                                              
Net income, as reported                                    $    501,610    $    508,646
                                                           ------------    ------------
Deduct:  Total stock-based employee compensation expense
    determined under the fair value based method for all
    awards, net of related tax effects                           (7,368)        (27,310)
                                                           ------------    ------------

Pro forma net income                                       $    494,242    $    481,336
                                                           ------------    ------------

Basic earnings per share - as reported                     $        .32    $        .34
                                                           ------------    ------------
Basic earnings per share - pro forma                       $        .32    $        .32
                                                           ------------    ------------

Diluted earnings per share - as reported                   $        .31    $        .32
                                                           ------------    ------------
Diluted earnings per share - pro forma                     $        .30    $        .30
                                                           ------------    ------------


                                      F-49




                                                             For the six months ended
                                                           ----------------------------
                                                             June 30,        June 30,
                                                               2004            2003
                                                           ------------    ------------
                                                                              
Net income, as reported                                    $    973,895    $  1,033,338
                                                           ------------    ------------
Deduct:  Total stock-based employee compensation expense
    determined under the fair value based method for all
    awards, net of related tax effects                          (14,735)        (54,620)
                                                           ------------    ------------

Pro forma net income                                       $    959,159    $    978,718
                                                           ------------    ------------

Basic earnings per share - as reported                     $        .63    $        .68
                                                           ------------    ------------
Basic earnings per share - pro forma                       $        .62    $        .65
                                                           ------------    ------------

Diluted earnings per share - as reported                   $        .60    $        .65
                                                           ------------    ------------
Diluted earnings per share - pro forma                     $        .59    $        .62
                                                           ------------    ------------


3. INVESTMENT SECURITIES

Investments are classified into the following categories:

     o    Available-for-sale securities, reported at fair value, with unrealized
          gains and losses excluded from earnings and reported, net of taxes, as
          a separate component of shareholders' equity.

     o    Held-to-maturity securities, which management has the positive intent
          and ability to hold, reported at amortized cost, adjusted for the
          accretion of discounts and amortization of premiums.

Management determines the appropriate classification of its investments at the
time of purchase and may only change the classification in certain limited
circumstances. In addition, any transfers of securities between categories are
accounted for at fair value.

Gains or losses on the sale of securities are computed on the specific
identification method. Interest earned on investment securities is reported in
interest income, net of applicable adjustments for accretion of discounts and
amortization of premiums. In addition, unrealized losses that are other than
temporary are recognized in earnings for all investments.

The carrying value and approximate market value of securities at June 30, 2004
and December 31, 2003 are as follows:


---------------------------------------------------------------------------------------------------
                                                                                         Estimated
           Available-for-sale              Amortized     Unrealized      Unrealized        Market
                                              Cost          Gain           Losses          Value
---------------------------------------------------------------------------------------------------
                                                                                    
June 30, 2004
-------------
U.S. Government agencies                 $ 11,907,448                  $   (151,748)   $ 11,755,700
Obligations of states and political
     subdivisions                          10,716,853   $    426,747                     11,143,600
Corporate debt securities                   1,000,706         11,994                      1,012,700
                                         ------------   ------------   ------------    ------------
      Total investment securities        $ 23,625,007   $    438,741   $   (151,748)   $ 23,912,000
                                         ============   ============   ============    ============
December 31, 2003
-----------------
U.S.  Government Agencies                $  2,500,000   $        127   $     (3,327)   $  2,496,800
Obligations of states and political
     subdivisions                          10,723,235        715,065                     11,438,300
Corporate debt securities                   1,501,898         33,002                      1,534,900
                                         ------------   ------------   ------------    ------------
     Total investment securities         $ 14,725,133   $    748,194   $     (3,327)   $ 15,470,000
===================================================================================================


At June 30, 2004 investment securities with estimated market values totaling
$11,755,700 were in a loss position for less than twelve months. No investment
securities were in a loss position for twelve months or more. Management
periodically evaluates each investment security relying primarily on industry
analyst reports, observation of market conditions and interest rate

                                      F-50


fluctuations. Management believes it will be able to collect all amounts due
according to the contractual terms of the underlying investment securities and
that the noted decline in fair value is due only to interest rate fluctuations.

4. LOANS AND ALLOWANCE FOR LOAN LOSSES

The activity in the allowance for loan losses is summarized as follows:


--------------------------------------------------------------------------------------
                                      Three months ended          Six months ended
(in thousands)                             June 30,                   June 30,
--------------------------------------------------------------------------------------
                                      2004          2003         2004          2003
--------------------------------------------------------------------------------------
                                                                       
Beginning balance                  $      814    $      734   $      808    $      705
Provision charged to expense               15            24           35            54
Loans charged off                         (24)           --          (38)           (1)
Recoveries                                 30            --           30            --
--------------------------------------------------------------------------------------
Ending Balance                     $      835    $      758   $      835    $      758
======================================================================================


The allowance for loan losses reflects Management's judgment as to the level
that is considered adequate to absorb potential losses inherent in the loan
portfolio. This allowance is increased by provisions charged to expense and
reduced by loan charge-offs net of recoveries. In accordance with generally
accepted accounting principles, the allocation for potential credit losses on
off-balance sheet items such as unfunded Letters of Credit and undisbursed loans
commitments which total $70,000 and $60,000 at June 30, 2004 and 2003
respectively, is carried in accrued interest and other liabilities.

In determining the overall allowance to be maintained, Management evaluates many
factors including prevailing and forecasted economic conditions, regular reviews
of the quality of loans, industry experience, historical loss experience,
composition, and geographic concentrations of the loan portfolio, the borrowers'
ability to repay, and repayment performance and estimated collateral values.

Management believes that the allowance for loan losses at June 30, 2004 is
prudent and warranted, based on information currently available. However, no
prediction of the ultimate level of loans charged off in future years can be
made with any certainty.

Nonperforming assets are comprised of loans delinquent 90 days or more with
respect to interest or principal, loans for which the accrual of interest has
been discontinued, and other real estate that has been acquired through
foreclosure and is awaiting disposition.

Management generally places loans on nonaccrual status when they become 90 days
past due, unless the loan is well secured and in the process of collection. When
a loan is placed on nonaccrual status, the accrued and unpaid interest
receivable is reversed and the loan is accounted for on the cash or cost
recovery method thereafter, until qualifying for return to accrual status.
Generally, a loan may be returned to accrual status when all delinquent interest
and principal become current in accordance with the terms of the loan agreement
and remaining principal is considered collectible or when the loan is both well
secured and in process of collection.

Real estate and other assets acquired in satisfaction of indebtedness are
recorded at the estimated fair market value ("FMV") of the property. Any
difference between the FMV of the property and the recorded loan balance is
charged against the allowance for credit losses (or a recovery in the rare
instance it exceeds the recorded loan balance). A valuation allowance for losses
on acquired property is maintained to provide for temporary declines in value.
Costs of maintaining the acquired property and gains or losses on the subsequent
sale are reflected in current earnings.

                                      F-51


Nonperforming loans and other real estate (foreclosed properties) are summarized
below:

--------------------------------------------------------------------------------
 (in thousands)                              June 30, 2004     December 31, 2003
--------------------------------------------------------------------------------
Nonaccrual:
--------------------------------------------------------------------------------
    Real estate                            $             515   $             450
    Commercial                                            90                  13
    Installment
--------------------------------------------------------------------------------
Total nonaccrual loans                     $             605   $             463
================================================================================
Other real estate
================================================================================

As of June 30, 2004, there were no loans past due 90 days or more and still
accruing interest. At June 30, 2004 and December 31, 2003, there were no other
loans that were considered impaired, troubled debt restructurings, or loan
concentrations in excess of 10% of total loans not otherwise disclosed.

In Management's judgment, a concentration exists in real estate construction
loans, which represents approximately 63% of the loan portfolio at June 30, 2004
and December 31, 2003. Approximately 92% of the real estate construction loans
were for planned owner-occupied single-family residences at June 30, 2004 and
December 31, 2003.

Although Management believes the concentration to have no more than normal risk
of collectibility, a substantial decline in the economy in general, or a decline
in real estate values in the Bank's primary market areas in particular, could
have an adverse impact on collectibility of these loans.

5. BANK OWNED LIFE INSURANCE

Salary Continuance Plan
-----------------------

In March 2004, the Bank implemented a Salary Continuation Plan to provide
retirement benefits for executive officers and other Bank employees. The plan
provides annual retirement benefits in amounts from $12,000 per year to $36,000
per year for periods of 5 years to 10 years. Under the plan, such retirement
benefits will also be accelerated and paid upon change of control of the bank.
In connection with the implementation of this plan, the Bank has invested
$500,000 in single premium life insurance policies on the lives of some of these
employees. Although the employees are the named insured, the Bank is the owner
and beneficiary under the policies. The expense recognized under these
arrangements totaled $21,907 for the six month period ended June 30, 2004.

6. COMMITMENTS AND CONTINGENCIES

In the normal course of business, there are various outstanding commitments to
extend credit that are not reflected in the financial statements, including loan
commitments of approximately $39,250,000 and letters of credit of $1,265,000 at
June 30, 2004. All such commitments, however, will not necessarily culminate in
actual extensions of credit by the Bank during 2004.

Approximately $36,105,000 of loan commitments outstanding at June 30, 2004
relate to real estate construction loans. The remainder relates primarily to
revolving lines of credit or other commercial loans, and some of these
commitments are expected to expire without being drawn upon. Therefore, the
total commitments do not necessarily represent future cash requirements.

Letters of credit are commitments written by the Bank to guarantee the
performance of a customer to a third party. These guarantees are typically
short-term in nature. The credit risks are similar to that involved in extending
loan commitments to customers. Accordingly, the Bank uses evaluation and
collateral requirements similar to those for loan commitments.

7. EARNINGS PER SHARE COMPUTATION

Basic ("EPS"), which excludes dilution, is computed by dividing income available
to common shareholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock, such as
stock options, result in the issuance of common stock that shares in the
earnings of the Bank. The treasury stock method has been applied to determine
the dilutive effect of stock options in computing diluted EPS. Earnings per
share have been retroactively adjusted for a 5% stock dividend distributed in
December 2003.

                                      F-52


A reconciliation of the numerators and denominators of the basic and diluted
earnings per share computations is as follows:

                                                      Weighted
                                                       Average
                                                      Number of
                                          Net           Shares        Per-Share
For the three-month periods ended:       Income      Outstanding       Amount
----------------------------------    ------------   ------------   ------------

June 30, 2004
-------------

Basic and diluted earnings per share  $    501,610      1,556,528   $        .32
                                                                    ============
Effect of dilutive stock options                           59,925
                                                     ------------
Diluted earnings per share            $    501,610      1,616,453   $        .31
                                      ============   ============   ============

June 30, 2003
-------------

Basic earnings per share              $    508,646      1,511,493   $        .34
                                                                    ============
Effect of dilutive stock options                           90,203
                                                     ------------
Diluted earnings per share            $    508,646      1,601,696   $        .32
                                      ============   ============   ============


                                                      Weighted
                                                       Average
                                                      Number of
                                          Net           Shares        Per-Share
For the six-month periods ended:         Income      Outstanding       Amount
--------------------------------      ------------   ------------   ------------

June 30, 2004
-------------

Basic and diluted earnings per share  $    973,895      1,556,582   $        .63
                                                                    ============
Effect of Dilutive stock options                           72,174
                                                     ------------
Diluted earnings per share            $    973,895      1,628,756   $        .60
                                      ============   ============   ============

June 30, 2003
-------------

Basic earnings per share              $  1,033,338      1,509,654   $        .68
                                                                    ============
Effect of dilutive stock options                           78,307
                                                     ------------
Diluted earnings per share            $  1,033,338      1,587,961   $        .65
                                      ============   ============   ============

8. COMPREHENSIVE INCOME

Total comprehensive income is comprised of net income and net unrealized gains
and losses on available-for-sale securities. Total comprehensive income for the
three month periods ended June 30, 2004 and 2003 was $136,631 and $723,082,
respectively. For the six-month periods ended June 30, 2004 and 2003, total
comprehensive income was $671,691 and $1,184,582, respectively.

9. SUBSEQUENT EVENT

On July 8, 2004, the Bank signed a definitive merger agreement with American
River Bankshares whereby the Bank of Amador will merge with and into American
River Bank, a wholly-owned subsidiary of American River Bankshares. Under the
terms of the merger agreement, Bank of Amador shareholders will receive $6.825
per share in cash and $12.675 per share in stock in exchange for each Bank of
Amador share provided that the 20-day average closing price of a share of
American River Bankshares remains between $18.50 and $23.50. The stock
consideration portion of the purchase price is subject to adjustment if the
20-day average for a share of American River Bankshares is equal to or less than
or greater than the $18.50 to $23.50 range. Based on the price for a share of
American River Bankshares as of the signing date, the transaction was valued at
$19.50 per share, or approximately $30.5 million for Bank of Amador. The merger
agreement also contains a "Cash Consideration Holdback" of $1,326,000 in

                                      F-53


connection with a certain construction loan outstanding at the date of the
merger agreement. Finally, under the terms of the merger agreement, the Bank is
subject to customary covenants and restrictions regarding its operations such as
declaring or paying dividends or other distributions in respect to its common
stock except for the quarterly cash dividend of $ .23 per share payable August
9, 2004. The transaction is subject to regulatory approvals and the approval by
the shareholders of American River Bankshares and Bank of Amador. The
transaction is expected to close in the fourth quarter of 2004.

On July 14, 2004 the Board of Directors declared a cash dividend of $.23 per
share. The dividend is payable on August 9, 2004, to shareholders of record on
July 27, 2004

                                      F-54


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------




The Board of Directors
   and Shareholders
Bank of Amador

         We have audited the accompanying balance sheet of Bank of Amador as of
December 31, 2003 and 2002 and the related statements of income, changes in
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 2003. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

         We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Bank of Amador as of
December 31, 2003 and 2002, and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 2003, in
conformity with accounting principles generally accepted in the United States of
America.



                                             /s/ Perry-Smith LLP




Sacramento, California
January 16, 2004


                                      F-55


                                 BANK OF AMADOR

                                  BALANCE SHEET

                           December 31, 2003 and 2002


                                                          2003          2002
                                                      ------------  ------------

                    ASSETS

Cash and due from banks                               $  4,235,029  $  5,559,806
Federal funds sold                                      23,906,000    10,040,000
Available-for-sale investment securities (Note 2)       15,470,000    23,575,700
Loans, less allowance for loan losses of $807,621
   in 2003 and $704,960 in 2002 (Notes 3, 7 and 11)     74,899,470    64,154,165
Bank premises and equipment, net (Note 4)                  351,107       270,615
Accrued interest receivable and other assets
   (Notes 10 and 12)                                     3,916,988  $    722,468
                                                      ------------  ------------

                                                      $122,778,594  $104,322,754
                                                      ============  ============

             LIABILITIES AND
             SHAREHOLDERS' EQUITY

Deposits:
   Non-interest bearing                               $ 22,063,840  $ 18,126,462
   Interest bearing (Note 5)                            85,169,491    72,074,877
                                                      ------------  ------------

       Total deposits                                  107,233,331    90,201,339

Accrued interest payable and other liabilities             572,104       477,292
                                                      ------------  ------------

       Total liabilities                               107,805,435    90,678,631
                                                      ------------  ------------

Commitments and contingencies (Note 7)

Shareholders' equity (Note 8):
   Serial preferred stock - no par value; authorized
     500,000 shares, issued and outstanding - none              --            --
   Common stock - no par value; 10,000,000 shares
     authorized; issued and outstanding - 1,547,699
     shares in 2003 and 1,434,257 shares in 2002         7,008,855     4,617,882
   Retained earnings                                     7,472,683     8,501,862
   Accumulated other comprehensive income, net of
     taxes (Notes 2 and 13)                                491,621       524,379
                                                      ------------  ------------

       Total shareholders' equity                       14,973,159    13,644,123
                                                      ------------  ------------

                                                      $122,778,594  $104,322,754
                                                      ============  ============


                     The accompanying notes are an integral
                       part of these financial statements

                                      F-56


                                 BANK OF AMADOR

                               STATEMENT OF INCOME

              For the Years Ended December 31, 2003, 2002 and 2001



                                             2003           2002           2001
                                         ------------   ------------   ------------
                                                                       
Interest income:
   Interest and fees on loans            $  5,672,477   $  4,699,531   $  5,691,633
   Interest on Federal funds sold             117,847        171,826        522,717
   Interest on investment securities:
     Taxable                                  340,080        772,100        523,247
     Exempt from Federal income
       taxes                                  498,224        509,654        420,293
                                         ------------   ------------   ------------

       Total interest income                6,628,628      6,153,111      7,157,890

Interest expense on deposits (Note 5)       1,213,179      1,269,425      2,650,957
                                         ------------   ------------   ------------

       Net interest income                  5,415,449      4,883,686      4,506,933

Provision for loan losses (Note 3)            104,000        102,000         65,000
                                         ------------   ------------   ------------

       Net interest income after
         provision for loan losses          5,311,449      4,781,686      4,441,933
                                         ------------   ------------   ------------

Non-interest income:
   Service charges and fees                   222,276        202,727        204,355
   Gain on sale and packaging of loans        148,768         73,704         61,459
   Other                                      151,279         78,012         82,956
                                         ------------   ------------   ------------

       Total non-interest income              522,323        354,443        348,770
                                         ------------   ------------   ------------

Non-interest expense:
   Salaries and employee benefits
     (Notes 3 and 12)                       1,224,302      1,245,980      1,417,896
   Occupancy and equipment (Notes 4
     and 7)                                   387,222        358,096        344,464
   Outside services (Note 9)                  308,281        255,540        253,517
   Other (Note 9)                             654,776        479,830        533,100
                                         ------------   ------------   ------------

       Total non-interest expense           2,574,581      2,339,446      2,548,977
                                         ------------   ------------   ------------

       Income before income taxes           3,259,191      2,796,683      2,241,726

Income taxes (Note 10)                      1,195,000      1,000,000        806,000
                                         ------------   ------------   ------------

       Net income                        $  2,064,191   $  1,796,683   $  1,435,726
                                         ============   ============   ============

Basic earnings per share (Note 8)        $       1.36   $       1.21   $        .97
                                         ============   ============   ============

Diluted earnings per share (Note 8)      $       1.28   $       1.16   $        .95
                                         ============   ============   ============


   The accompanying notes are an integral part of these financial statements.

                                      F-57


                                 BANK OF AMADOR

                  STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

              For the Years Ended December 31, 2003, 2002 and 2001



                                                                                         Accumulated
                                               Common Stock                                Other
                                        ----------------------------      Retained      Comprehensive  Shareholders    Comprehensive
                                           Shares          Amount         Earnings         Income         Equity          Income
                                        ------------    ------------    ------------    ------------   ------------    ------------
                                                                                                              
Balance, January 1, 2001                   1,423,506    $  4,475,230    $  7,730,887    $    101,417   $ 12,307,534

Comprehensive income (Note 13):
   Net income                                                              1,435,726                      1,435,726    $  1,435,726
   Other comprehensive income,
     net of tax:
       Unrealized gains on
         available-for-sale
         investment securities                                                               122,763        122,763         122,763
                                                                                                                       ------------

           Total comprehensive income                                                                                  $  1,558,489
                                                                                                                       ============

Cash dividend - $.21 per share                                              (298,831)                      (298,831)
Cash dividend - $.21 per share                                              (296,705)                      (296,705)
Cash dividend - $.22 per share                                              (310,064)                      (310,064)
Cash dividend - $.22 per share                                              (309,824)                      (309,824)
Exercise of stock options                      2,403          28,836                                         28,836
Retirement of common stock (Note 8)          (22,123)       (344,817)                                      (344,817)
                                        ------------    ------------    ------------    ------------   ------------

Balance, December 31, 2001                 1,403,786       4,159,249       7,951,189         224,180     12,334,618
                                        ------------    ------------    ------------    ------------   ------------

Comprehensive income (Note 13):
   Net income                                                              1,796,683                      1,796,683    $  1,796,683
   Other comprehensive income,
     net of tax:
       Unrealized gains on
         available-for-sale
         investment securities                                                               300,199        300,199         300,199
                                                                                                                       ------------

           Total comprehensive income                                                                                  $  2,096,882
                                                                                                                       ============

Cash dividend - $.22 per share                                              (309,360)                      (309,360)
Cash dividend - $.22 per share                                              (311,645)                      (311,645)
Cash dividend - $.22 per share                                              (311,668)                      (311,668)
Cash dividend - $.22 per share                                              (313,337)                      (313,337)
Exercise of stock options and
   related tax benefit (Note 8)               30,471         458,633                                        458,633
                                        ------------    ------------    ------------    ------------   ------------

Balance, December 31, 2002                 1,434,257       4,617,882       8,501,862         524,379     13,644,123
                                        ------------    ------------    ------------    ------------   ------------


                                   (Continued)

                                      F-58


                                 BANK OF AMADOR

                  STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

              For the Years Ended December 31, 2003, 2002 and 2001



                                                                                       Accumulated
                                             Common Stock                                Other
                                      ----------------------------      Retained      Comprehensive   Shareholders   Comprehensive
                                         Shares          Amount         Earnings         Income          Equity         Income
                                      ------------    ------------    ------------    ------------    ------------   ------------
                                                                                                            
Balance, December 31, 2002               1,434,257    $  4,617,882    $  8,501,862    $    524,379    $ 13,644,123

Comprehensive income (Note 13):
   Net income                                                            2,064,191                       2,064,191    $  2,064,191
   Other comprehensive income,
     net of tax:
       Unrealized gains on
         available-for-sale
         investment securities                                                             (32,758)        (32,758)        (32,758)
                                                                                                                      ------------

            Total comprehensive income                                                                                $  2,031,433
                                                                                                                      ============

Issuance of common stock dividend           73,540       1,764,980      (1,764,980)
Fractional shares redeemed                    (387)         (9,278)                                         (9,278)
Cash dividend - $.23 per share                                            (330,246)                       (330,246)
Cash dividend - $.23 per share                                            (330,279)                       (330,279)
Cash dividend - $.23 per share                                            (332,297)                       (332,297)
Cash dividend - $.23 per share                                            (335,568)                       (335,568)
Exercise of stock options and
   related tax benefit (Note 8)             40,289         635,271                                         635,271
                                      ------------    ------------    ------------    ------------    ------------

Balance, December 31, 2003               1,547,699    $  7,008,855    $  7,472,683    $    491,621    $ 14,973,159
                                      ============    ============    ============    ============    ============


                     The accompanying notes are an integral
                       part of these financial statements.

                                      F-59


                                 BANK OF AMADOR

                             STATEMENT OF CASH FLOWS

              For the Years Ended December 31, 2003, 2002 and 2001



                                              2003            2002            2001
                                          ------------    ------------    ------------
                                                                          
Cash flows from operating activities:
   Net income                             $  2,064,191    $  1,796,683    $  1,435,726
   Adjustments to reconcile net
     income to net cash provided by
     operating activities:
     Provision for loan losses                 104,000         102,000          65,000
     Increase (decrease) in deferred
       loan origination fees, net               28,905          74,360         (50,272)
     Depreciation and amortization              97,797          84,797         107,705
     Amortization of investment
       security premiums                        62,485         103,848          55,570
     Accretion of investment security
       discounts                                (1,388)         (2,916)         (3,874)
     Loss on sale of other real estate                                          43,873
     Gain on sale of premises and
       equipment                               (18,250)
     Net increase in cash surrender
       value of life insurance policies        (63,988)
     Decrease (increase) in accrued
       interest receivable and other
       assets                                   88,007         242,988         (80,377)
     Increase (decrease) in accrued
       interest payable and other
       liabilities                             174,739        (148,400)         48,110
     Deferred taxes                            (35,000)        (88,000)         92,000
                                          ------------    ------------    ------------

         Net cash provided by
           operating activities              2,501,498       2,165,360       1,713,461
                                          ------------    ------------    ------------

Cash flows from investing activities:
   Proceeds from matured or called
     available-for-sale investment
     securities                             10,880,000      10,368,094       5,630,000
   Purchase of available-for-sale
     investment securities                  (2,885,046)     (4,089,989)    (20,691,177)
   Purchase of other real estate                                              (313,986)
   Proceeds from sale of other real
     estate                                                                    443,537
   Net (increase) decrease in loans        (10,878,210)    (12,411,393)      9,409,161
   Additions to premises and equipment        (178,289)         (7,540)        (20,502)
   Proceeds from sale of premises and
     equipment                                  18,250
   Deposit on single premium life
     insurance policies                     (3,166,648)
                                          ------------    ------------    ------------

         Net cash used in investing
           activities                       (6,209,943)     (6,140,828)     (5,542,967)
                                          ------------    ------------    ------------


                                   (Continued)

                                      F-60


                                 BANK OF AMADOR

                             STATEMENT OF CASH FLOWS
                                   (Continued)
              For the Years Ended December 31, 2003, 2002 and 2001



                                                  2003            2002            2001
                                              ------------    ------------    ------------
                                                                              
Cash flows from financing activities:
   Net increase in demand, interest-
     bearing and savings deposits             $ 10,178,170    $  8,039,478    $  6,983,116
   Net increase (decrease) in time
     deposits                                    6,853,822      (5,833,923)      5,010,467
   Proceeds from exercise of stock
     options                                       555,344         416,073          28,836
   Share repurchase and retirement                                                (344,817)
   Fractional shares redeemed                       (9,278)
   Cash dividends paid                          (1,328,390)     (1,246,010)     (1,215,424)
                                              ------------    ------------    ------------

         Net cash provided by financing
           activities                           16,249,668       1,375,618      10,462,178
                                              ------------    ------------    ------------

         Increase (decrease) in cash
           and cash equivalents                 12,541,223      (2,599,850)      6,632,672

Cash and cash equivalents at
   beginning of year                            15,599,806      18,199,656      11,566,984
                                              ------------    ------------    ------------

Cash and cash equivalents at
   end of year                                $ 28,141,029    $ 15,599,806    $ 18,199,656
                                              ============    ============    ============


Supplemental disclosure of cash
   flow information:

   Cash paid during the year for:
     Interest expense                         $  1,134,712    $  1,443,484    $  2,659,808
     Income taxes                             $  1,290,190    $  1,085,236    $    913,513

Non-cash investing activities:
   Real estate acquired through
     foreclosure                                                              $    165,130
   Change in unrealized (loss) gain
     on available-for-sale investment
     securities                               $    (49,649)   $    454,737    $    186,119

Non-cash financing activities:
   Tax benefit from stock options exercised   $     79,927    $     42,560


                     The accompanying notes are an integral
                       part of these financial statements.

                                      F-61


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         General
         -------

         Bank of Amador (the "Bank") was founded in November 1983 and operates
         three branches in Amador County. The Banks primary source of revenue is
         providing loans to customers who are predominately small and
         middle-market businesses and individuals.

         The accounting and reporting policies of the Bank conform with
         accounting principles generally accepted in the United States of
         America and prevailing practices within the banking industry.

         Use of Estimates
         ----------------

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions. These estimates and assumptions affect the reported
         amounts of assets and liabilities at the date of the financial
         statements and the reported amounts of revenues and expenses during the
         reporting period. Actual results could differ from these estimates.

         Reclassifications
         -----------------

         Certain reclassifications have been made to prior years balances to
         conform to classifications used in 2003.

         Cash and Cash Equivalents
         -------------------------

         For the purpose of the statement of cash flows, cash and due from banks
         and Federal funds sold are considered to be cash equivalents.
         Generally, Federal funds are sold for one day periods.

         Investment Securities
         ---------------------

         Investments are classified into the following categories:

                  o        Available-for-sale securities, reported at fair
                           value, with unrealized gains and losses excluded from
                           earnings and reported, net of taxes, as accumulated
                           other comprehensive income (loss) within
                           shareholders' equity.

                  o        Held-to-maturity securities, which management has the
                           positive intent and ability to hold, reported at
                           amortized cost, adjusted for the accretion of
                           discounts and amortization of premiums.

         Management determines the appropriate classification of its investments
         at the time of purchase and may only change the classification in
         certain limited circumstances. All transfers between categories are
         accounted for at fair value.

                                      F-62


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Investment Securities (Continued)
         ---------------------

         Gains or losses on the sale of securities are computed on the specific
         identification method. Interest earned on investment securities is
         reported in interest income, net of applicable adjustments for
         accretion of discounts and amortization of premiums. In addition,
         unrealized losses that are other than temporary are recognized in
         earnings for all investments.

         Loans
         -----

         Loans are stated at principal balances outstanding and interest is
         accrued daily based upon outstanding loan balances. However, when in
         the opinion of management, loans are considered to be impaired and the
         future collectibility of interest and principal is in serious doubt,
         loans are placed on nonaccrual status and the accrual of interest
         income is suspended. Any interest accrued but unpaid is charged against
         income. Payments received are applied to reduce principal to the extent
         necessary to ensure collection. Subsequent payments on these loans, or
         payments received on nonaccrual loans for which the ultimate
         collectibility of principal is not in doubt, are applied first to
         earned but unpaid interest and then to principal.

         An impaired loan is measured based on the present value of expected
         future cash flows discounted at the loan's effective interest rate or,
         as a practical matter, at the loan's observable market price or the
         fair value of collateral if the loan is collateral dependent. A loan is
         considered impaired when, based on current information and events, it
         is probable that the Bank will be unable to collect all amounts due
         (including both principal and interest) in accordance with the
         contractual terms of the loan agreement.

         Substantially all loan origination fees, commitment fees, direct loan
         origination costs and purchase premiums and discounts on loans are
         deferred and recognized as an adjustment of yield, to be amortized to
         interest income over the contractual term of the loan. The unamortized
         balance of deferred fees and costs is reported as a component of net
         loans.

         Transfers and Servicing of Loans
         --------------------------------

         Sales and participations of loans are recognized when the transferred
         loans are put beyond the reach of the Bank and its creditors, even in
         receivership. In addition, servicing rights acquired through 1) a
         purchase or 2) the origination of loans which are sold or securitized
         with servicing rights retained are recognized as separate assets or
         liabilities. Servicing assets or liabilities are recorded at the
         difference between the contractual servicing fees and adequate
         compensation for performing the servicing, subsequently amortized in
         proportion to and over the period of the related net servicing income
         or expense. Servicing assets and liabilities are periodically evaluated
         for impairment. Servicing assets and liabilities were not material for
         the years ended December 31, 2003 and 2002.

         Loans with unpaid balances of approximately $1,711,000 and $2,143,000
         were being serviced for others at December 31, 2003 and 2002,
         respectively.

                                      F-63


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Allowance for Loan Losses
         -------------------------

         The allowance for loan losses is maintained to provide for losses
         related to impaired loans and other losses that can be expected to
         occur in the normal course of business. The determination of the
         allowance is based on estimates made by management, to include
         consideration of the character of the loan portfolio, specifically
         identified problem loans, potential losses inherent in the portfolio
         taken as a whole and economic conditions in the Bank's service area.

         Loans determined to be impaired or classified are individually
         evaluated by management for specific risk of loss. In addition, a
         reserve factor is assigned to currently performing loans based on
         industry standards and the Bank's historical loss experience.
         Management also computes specific and expected loss reserves for loan
         commitments. These estimates are particularly susceptible to changes in
         the economic environment and market conditions.

         The Bank's Loan Committee reviews the adequacy of the allowance for
         loan losses quarterly, to include consideration of the relative risks
         in the portfolio and current economic conditions. The allowance is
         adjusted based on that review if, in the judgment of the Loan Committee
         and management, changes are warranted.

         This allowance is established through a provision for loan losses which
         is charged to expense. Additions to the allowance are expected to
         maintain the adequacy of the total allowance after loan losses and loan
         growth. The allowance for loan losses at December 31, 2003 and 2002,
         respectively, reflects management's estimate of possible losses in the
         portfolio.

         The Bank maintains a separate reserve for losses related to undisbursed
         loan commitments. The reserve is determined in conjunction with the
         determination of the allowance for loan losses described above. The
         reserve totaled $70,000 and $54,000 for the years ended December 31,
         2003 and 2002, respectively, and is included in accrued interest
         payable and other liabilities on the balance sheet.

         Bank Premises and Equipment
         ---------------------------

         Bank premises and equipment are carried at cost. Depreciation is
         determined using the straight-line method over the estimated useful
         lives of the related assets. The useful life of Bank premises is
         estimated to be twenty years. The useful lives of furniture, fixtures
         and equipment are estimated to be three to ten years. Leasehold
         improvements are amortized over the life of the asset or the life of
         the related lease, whichever is shorter. When assets are sold or
         otherwise disposed of, the cost and related accumulated depreciation or
         amortization are removed from the accounts, and any resulting gain or
         loss is recognized in income for the period. The cost of maintenance
         and repairs is charged to expense as incurred.

                                      F-64


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Income Taxes
         ------------

         Deferred tax assets and liabilities are recognized for the tax
         consequences of temporary differences between the reported amounts of
         assets and liabilities and their tax bases. Deferred tax assets and
         liabilities are adjusted for the effects of changes in tax laws and
         rates on the date of enactment. On the balance sheet, net deferred tax
         assets are included in accrued interest receivable and other assets.

         Earnings Per Share
         ------------------

         Basic earnings per share (EPS), which excludes dilution, is computed by
         dividing income available to common shareholders by the
         weighted-average number of common shares outstanding for the period.
         Diluted EPS reflects the potential dilution that could occur if
         securities or other contracts to issue common stock, such as stock
         options, result in the issuance of common stock which shares in the
         earnings of the Bank. The treasury stock method has been applied to
         determine the dilutive effect of stock options in computing diluted
         EPS. Earnings per share have been retroactively adjusted for a 5% stock
         dividend distributed in December 2003.

         Stock-Based Compensation
         ------------------------

         At December 31, 2003, the Bank has one stock-based employee
         compensation plan, the Bank of Amador 1998 Stock Option Plan, which is
         described more fully in Note 8. The Bank accounts for this plan under
         the recognition and measurement principles of APB Opinion No. 25,
         Accounting for Stock Issued to Employees, and related Interpretations.
         No stock-based employee compensation cost is reflected in net income,
         as all options granted under this plan had an exercise price equal to
         the market value of the underlying common stock on the date of grant.

         Pro forma adjustments to the Bank's net earnings and earnings per share
         are disclosed during the years in which options become vested. The
         following table illustrates the effect on net income and earnings per
         share if the Bank had applied the fair value recognition provisions of
         FASB Statement No. 123, Accounting for Stock-Based Compensation, to
         stock-based employee compensation.



                                                   2003         2002         2001
                                                ----------   ----------   ----------
                                                                        
         Net income, as reported                $2,064,191   $1,796,683   $1,435,726
         Deduct: Total stock-based employee
           compensation expense determined
           under the fair value based method
           for all awards, net of related tax
           effects                                 109,000      109,000      109,000
                                                ----------   ----------   ----------

         Pro forma net income                   $1,955,191   $1,687,683   $1,326,726
                                                ==========   ==========   ==========


                                      F-65


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Stock-Based Compensation (Continued)
         ------------------------



                                                           2003            2002             2001
                                                        -----------     -----------      ----------
                                                                                       
         Basic earnings per share - as reported         $      1.36     $      1.21      $      .97
         Basic earnings per share - pro forma           $      1.29     $      1.13      $      .89

         Diluted earnings per share - as reported       $      1.28     $      1.16      $      .95
         Diluted earnings per share - pro forma         $      1.22     $      1.10      $      .89


         Impact of New Financial Accounting Standards
         --------------------------------------------

         On April 30, 2003, the Financial Accounting Standards Board (FASB)
         issued SFAS No. 149, Amendment of Statement 133 on Derivative
         Instruments and Hedging Activities. This Statement amends and clarifies
         the accounting for derivative instruments by providing guidance related
         to circumstances under which a contract with a net investment meets the
         characteristics of a derivative as discussed in SFAS No. 133. The
         Statement also clarifies when a derivative contains a financing
         component. The Statement is intended to result in more consistent
         reporting for derivative contracts and must be applied prospectively
         for contracts entered into or modified after June 30, 2003, except for
         hedging relationships designated after June 30, 2003. In management's
         opinion, adoption of this Statement is not expected to have a material
         impact on the Bank's financial position or results of operations.

         In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
         Financial Instruments with Characteristics of both Liabilities and
         Equity. This Statement establishes standards for how an issuer
         classifies and measures certain financial instruments with
         characteristics of both liabilities and equity. It requires that an
         issuer classify a financial instrument that is within its scope as a
         liability (or an asset in some circumstances). This Statement is
         effective for financial instruments entered into or modified after May
         31, 2003, and otherwise is effective at the beginning of the first
         interim period beginning after June 15, 2003, except for mandatorily
         redeemable financial instruments of nonpublic entities. For mandatorily
         redeemable financial instruments of a nonpublic entity, this Statement
         shall be effective for existing or new contracts for fiscal periods
         beginning after December 15, 2004. In management's opinion, adoption of
         this Statement did not have a material effect on the Bank's financial
         position or results of operations.

                                      F-66


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


2.       AVAILABLE-FOR-SALE INVESTMENT SECURITIES

         The amortized cost and estimated market value of available-for-sale
         investment securities at December 31, 2003 and 2002 consisted of the
         following:



                                                              2003
                                  -----------------------------------------------------------
                                                    Gross           Gross         Estimated
                                   Amortized      Unrealized      Unrealized        Market
                                     Cost           Gains           Losses          Value
                                  ------------   ------------    ------------    ------------
                                                                              
         U.S. Government
             agencies             $  2,500,000   $        127    $     (3,327)   $  2,496,800
         Obligations of states
             and political sub-
             divisions              10,723,235        715,065                      11,438,300
         Corporate debt
             securities              1,501,898         33,002                       1,534,900
                                  ------------   ------------    ------------    ------------

                                  $ 14,725,133   $    748,194    $     (3,327)   $ 15,470,000
                                  ============   ============    ============    ============


         At December 31, 2003, investment securities with estimated market
         values totaling $1,996,723 were in a loss position for less than twelve
         months. No investment securities were in a loss position for twelve
         months or more. Management periodically evaluates each investment
         security relying primarily on industry analyst reports, observation of
         market conditions and interest rate fluctuations. Management believes
         it will be able to collect all amounts due according to the contractual
         terms of the underlying investment securities and that the noted
         decline in fair value is due only to interest rate fluctuations.

         Net unrealized gains on available-for-sale investment securities
         totaling $744,867 were recorded net of $253,246 in tax liabilities as
         accumulated other comprehensive income within shareholders' equity at
         December 31, 2003. There were no sales of available-for-sale investment
         securities during the year ended December 31, 2003.



                                                              2002
                                  -----------------------------------------------------------
                                                    Gross           Gross         Estimated
                                   Amortized      Unrealized      Unrealized        Market
                                     Cost           Gains           Losses          Value
                                  ------------   ------------    ------------    ------------
                                                                              
         U.S. Government
             agencies             $  4,999,964   $     73,136                    $  5,073,100
         Obligations of states
             and political sub-
             divisions              11,237,637        618,563                      11,856,200
         Corporate debt
             securities              6,543,583        102,817                       6,646,400
                                  ------------   ------------    ------------    ------------

                                  $ 22,781,184   $    794,516    $         --    $ 23,575,700
                                  ============   ============    ============    ============


                                      F-67


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


2.       AVAILABLE-FOR-SALE INVESTMENT SECURITIES (Continued)

         Net unrealized gains on available-for-sale investment securities
         totaling $794,516 were recorded net of $270,137 in tax liabilities as
         accumulated other comprehensive income within shareholders equity at
         December 31, 2002. There were no sales of available-for-sale investment
         securities during the year ended December 31, 2002 and 2001.

         The amortized cost and estimated market value of available-for-sale
         investment securities at December 31, 2003 by contractual maturity are
         shown below. Expected maturities may differ from contractual maturities
         because the issuers of the securities may have the right to call or
         prepay obligations with or without call or prepayment penalties.

                                                                     Estimated
                                                     Amortized         Market
                                                       Cost            Value
                                                    ------------   ------------

         Within one year                            $  1,500,829   $  1,530,500
         After one year through five years             7,325,628      7,598,900
         After five years through ten years            5,898,676      6,340,600
                                                    ------------   ------------

                                                    $ 14,725,133   $ 15,470,000
                                                    ============   ============

         Investment securities with amortized costs totaling $2,001,000 and
         $1,500,000 and market values totaling $2,011,000 and $1,529,000 were
         pledged to secure treasury tax and loan accounts and public deposits at
         December 31, 2003 and 2002, respectively.

3.       LOANS

         Outstanding loans are summarized as follows:

                                                           December 31,
                                                   ----------------------------

                                                       2003            2002
                                                   ------------    ------------

         Commercial                                $  6,874,100    $  6,617,517
         Real estate - mortgage                      20,656,983      18,383,479
         Real estate - construction                  47,643,663      39,149,302
         Installment                                    802,376         949,953
                                                   ------------    ------------

                                                     75,977,122      65,100,251

         Deferred loan fees, net                       (270,031)       (241,126)
         Allowance for loan losses                     (807,621)       (704,960)
                                                   ------------    ------------

                                                   $ 74,899,470    $ 64,154,165
                                                   ============    ============

                                      F-68


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


3.       LOANS (Continued)

         Changes in the allowance for loan losses were as follows:



                                                      Year Ended December 31,
                                           --------------------------------------------

                                               2003            2002            2001
                                           ------------    ------------    ------------
                                                                           
         Balance, beginning of year        $    704,960    $    594,804    $    732,008
         Provision charged to operations        104,000         102,000          65,000
         Losses charged to allowance             (1,409)        (16,884)       (278,166)
         Recoveries                                  70          25,040          75,962
                                           ------------    ------------    ------------

                Balance, end of year       $    807,621    $    704,960    $    594,804
                                           ============    ============    ============


         Nonaccrual loans consisted of the following:

                                                           December 31,
                                                    ---------------------------

                                                        2003           2002
                                                    ------------   ------------

         Commercial                                 $     13,455
         Real estate                                     450,000   $    103,433
                                                    ------------   ------------

                                                    $    463,455   $    103,433
                                                    ============   ============

         Interest foregone on nonaccrual loans totaled $6,500, $3,700 and $800
         for the years ended December 31, 2003, 2002 and 2001, respectively.

         The Bank had no significant loans that were considered to be impaired
         during the years ended December 31, 2003, 2002 and 2001.

         Salaries and employee benefits totaling $847,434, $745,187 and $632,344
         have been deferred as loan origination costs for the years ended
         December 31, 2003, 2002 and 2001, respectively.

                                      F-69


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


4.       BANK PREMISES AND EQUIPMENT

         Bank premises and equipment consisted of the following:

                                                           December 31,
                                                    --------------------------

                                                       2003           2002
                                                    -----------    -----------

         Land                                       $    56,950    $    56,950
         Building                                       257,201        257,201
         Leasehold improvements                         202,043        202,043
         Furniture, fixtures and equipment              811,008        739,024
                                                    -----------    -----------

                                                      1,327,202      1,255,218
                Less accumulated depreciation
                   and amortization                    (976,095)      (984,603)
                                                    -----------    -----------

                                                    $   351,107    $   270,615
                                                    ===========    ===========

         Depreciation and amortization included in occupancy and equipment
         expense totaled $97,797, $84,797 and $96,455 for the years ended
         December 31, 2003, 2002 and 2001, respectively.

5.       INTEREST-BEARING DEPOSITS

         Interest-bearing deposits consisted of the following:

                                                            December 31,
                                                    ---------------------------

                                                        2003           2002
                                                    ------------   ------------

         Savings                                    $ 15,833,163   $ 15,615,391
         Money market                                 21,209,386     16,200,725
         NOW accounts                                 10,506,857      9,492,498
         Time, $100,000 or more                        9,144,009      6,308,963
         Other time                                   28,476,076     24,457,300
                                                    ------------   ------------

                                                    $ 85,169,491   $ 72,074,877
                                                    ============   ============

         Aggregate annual maturities of time deposits are as follows:

                        Year Ending
                        December 31,
                       --------------

                            2004                    $ 18,862,268
                            2005                       6,473,876
                            2006                      12,283,941
                                                    ------------

                                                    $ 37,620,085
                                                    ============

                                      F-70


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


5.       INTEREST-BEARING DEPOSITS (Continued)

         Interest expense recognized on interest-bearing deposits consisted of
         the following:

                                            Year Ended December 31,
                                  ------------------------------------------

                                      2003           2002           2001
                                  ------------   ------------   ------------

         Savings                  $     93,816   $    107,172   $    261,067
         Money market                  200,800        190,083        238,282
         NOW accounts                   28,622         31,939        154,338
         Time, $100,000 or more        212,326        188,299        342,762
         Other time                    677,615        751,932      1,654,508
                                  ------------   ------------   ------------

                                  $  1,213,179   $  1,269,425   $  2,650,957
                                  ============   ============   ============

6.       SHORT-TERM BORROWING ARRANGEMENT

         The Bank has a $3,000,000 unsecured Federal funds borrowing facility
         with one of its correspondent banks. There were no outstanding
         borrowings under this arrangement at December 31, 2003 and 2002.

7.       COMMITMENTS AND CONTINGENCIES

         Leases
         ------

         The Bank leases two of its branch offices and its central services
         center under noncancellable operating leases. There are no renewal
         options and future minimum lease payments are as follows:

                        Year Ending
                        December 31,
                       --------------

                            2004                    $     97,800
                            2005                          97,800
                            2006                          42,200
                            2007                           3,000
                                                    ------------

                                                    $    240,800
                                                    ============

         Rental expense included in occupancy and equipment expense totaled
         $125,607, $124,982 and $121,536 for the years ended December 31, 2003,
         2002 and 2001, respectively.

         Federal Reserve Requirements
         ----------------------------

         Banks are required to maintain reserves with the Federal Reserve Bank
         equal to a percentage of their reservable deposits. The reserve
         balances held with the Federal Reserve Bank totaled $856,000 and
         $710,000 at December 31, 2003 and 2002, respectively.

                                      F-71


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


7.       COMMITMENTS AND CONTINGENCIES (Continued)

         Financial Instruments With Off-Balance-Sheet Risk
         -------------------------------------------------

         The Bank is a party to financial instruments with off-balance-sheet
         risk in the normal course of business in order to meet the financing
         needs of its customers and to reduce its own exposure to fluctuations
         in interest rates. These financial instruments include commitments to
         extend credit and letters of credit. These instruments involve, to
         varying degrees, elements of credit and interest rate risk in excess of
         the amount recognized on the balance sheet.

         The Bank's exposure to credit loss in the event of nonperformance by
         the other party for commitments to extend credit and letters of credit
         is represented by the contractual amount of those instruments. The Bank
         uses the same credit policies in making commitments and letters of
         credit as it does for loans included on the balance sheet.

         The following financial instruments represent off-balance-sheet credit
         risk:

                                                           December 31,
                                                    ---------------------------

                                                        2003           2002
                                                    ------------   ------------

         Commitments to extend credit               $ 35,697,000   $ 29,500,000
         Letters of credit                          $  1,273,000   $  1,625,000

         Commitments to extend credit are agreements to lend to a customer as
         long as there is no violation of any condition established in the
         contract. Commitments generally have fixed expiration dates or other
         termination clauses and may require payment of a fee. Because some of
         the commitments are expected to expire without being drawn upon, the
         total commitment amounts do not necessarily represent future cash
         requirements. The Bank evaluates each customer's creditworthiness on a
         case-by-case basis. The amount of collateral obtained, if deemed
         necessary by the Bank upon extension of credit, is based on
         management's credit evaluation of the borrower. Collateral held varies,
         but may include deposits, accounts receivable, inventory, equipment,
         income-producing commercial properties and residential real estate.

         Letters of credit are conditional commitments issued by the Bank to
         guarantee the performance of a customer to a third party. The credit
         risk involved in issuing letters of credit is essentially the same as
         that involved in extending loans to customers.

         At December 31, 2003, commercial loan commitments represent
         approximately 6% of total commitments and are generally unsecured and
         have variable interest rates. Real estate commitments represent
         approximately 94% of total commitments and are generally secured by
         property with a loan-to-value ratio not to exceed 80%. The majority of
         real estate commitments are short term and have fixed interest rates.

                                      F-72


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


7.       COMMITMENTS AND CONTINGENCIES (Continued)

         Significant Concentrations of Credit Risk
         -----------------------------------------

         In management's judgment, a concentration exists in real estate
         construction loans which represented approximately 63% and 60% of the
         loan portfolio at December 31, 2003 and 2002, respectively.
         Approximately 92% and 93% of these real estate construction loans were
         for owner-occupied single family residences at December 31, 2003 and
         2002, respectively.

         Although management believes this concentration to have no more than
         normal risk of collectibility, a substantial decline in the economy in
         general, or a decline in real estate values in the Bank's primary
         market areas in particular, could have an adverse impact on the
         collectibility of these loans.

         Correspondent Banking Agreements
         --------------------------------

         The Bank maintains funds on deposit with other federally insured
         financial institutions under correspondent banking agreements.
         Uninsured deposits totaled $1,001,000 at December 31, 2003.

8.       SHAREHOLDERS' EQUITY

         Share Repurchase Plan
         ---------------------

         The Bank repurchased its common stock under stock repurchase programs
         approved by the applicable regulatory agencies. During the year ended
         December 31, 2001, the Bank repurchased a total of 22,123 shares at a
         total cost of $344,817. No shares were repurchased in 2003 or 2002 and
         the repurchase program expires on November 5, 2004.

         Dividends
         ---------

         Upon declaration by the Board of Directors, all shareholders of record
         will be entitled to receive dividends. The California Financial Code
         restricts the total dividend payment of any bank in any calendar year
         to the lesser of (1) the bank's retained earnings or (2) the bank's net
         income for its last three fiscal years, less distributions made to
         shareholders during the same three-year period. At December 31, 2003,
         retained earnings of $1,152,681 were free of such restrictions.

                                      F-73


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


8.       SHAREHOLDERS' EQUITY (Continued)

         Earnings Per Share
         ------------------

         A reconciliation of the numerators and denominators of the basic and
         diluted earnings per share computations for the years ended December
         31, 2003, 2002 and 2001 is shown below. Earnings per share for all
         years presented have been retroactively adjusted for a 5% dividend
         distributed in December 2003.



                                                           Weighted
                                                            Average
                                                           Number of
                                               Net           Shares        Per Share
               For the Year Ended             Income       Outstanding       Amount
         --------------------------------   ------------   ------------   ------------
                                                                          
         December 31, 2003
         -----------------

         Basic earnings per share           $  2,064,191      1,519,886   $       1.36
                                                                          ============

         Effect of dilutive stock options                        93,178
                                            ------------   ------------

         Diluted earnings per share         $  2,064,191      1,613,064   $       1.28
                                            ============   ============   ============

         December 31, 2002
         -----------------

         Basic earnings per share           $  1,796,683      1,489,067   $       1.21
                                                                          ============

         Effect of dilutive stock options                        55,489
                                            ------------   ------------

         Diluted earnings per share         $  1,796,683      1,544,556   $       1.16
                                            ============   ============   ============

         December 31, 2001
         -----------------

         Basic earnings per share           $  1,435,726      1,483,460   $        .97
                                                                          ============

         Effect of dilutive stock options                        30,802
                                            ------------   ------------

         Diluted earnings per share         $  1,435,726      1,514,262   $        .95
                                            ============   ============   ============


         Stock Options
         -------------

         The Board of Directors established a stock option plan in 1998 for
         which 336,236 shares of common stock are reserved for issuance to
         employees and directors under incentive and non-statutory agreements.
         The plan requires that the option price may not be less than the fair
         market value of the stock at the date the option is granted and the
         options expire on dates determined by the Board of Directors, but not
         later than ten years from the date of grant. Options vest ratably over
         a five year period beginning one year from the date of grant.

                                      F-74


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


8.       SHAREHOLDERS' EQUITY (Continued)

         Stock Options (Continued)
         -------------

         A summary of the combined activity within the plan follows:



                                            2003                       2002                       2001
                                  ------------------------   ------------------------   ------------------------
                                                 Weighted                   Weighted                   Weighted
                                                 Average                    Average                    Average
                                                 Exercise                   Exercise                   Exercise
                                    Shares        Price        Shares        Price        Shares        Price
                                  ----------    ----------   ----------    ----------   ----------    ----------
                                                                                           
         Options outstanding,
              beginning of year      330,083    $    13.58      383,655    $    13.55      393,763    $    13.54

              Options exercised      (41,630)   $    13.28      (31,995)   $    13.00       (2,523)   $    11.43
              Options cancelled       (1,686)   $    11.65      (21,577)   $    13.85       (7,585)   $    13.95
                                  ----------                 ----------                 ----------

         Options outstanding,
              end of year            286,767    $    13.65      330,083    $    13.58      383,655    $    13.55
                                  ==========                 ==========                 ==========

         Options exercisable,
              end of year            269,052    $    13.80      227,802    $    13.89      201,063    $    13.86
                                  ==========                 ==========                 ==========


         A summary of options outstanding at December 31, 2003 follows:

                                 Number of         Weighted          Number of
                                  Options           Average           Options
                                Outstanding        Remaining        Exercisable
                                December 31,      Contractual       December 31,
         Exercise Price             2003             Life               2003
         --------------         ------------      -----------       ------------

         $   11.42                    43,553       6.6 years              15,007
         $   14.04                   243,214       4.7 years             243,214
                                ------------                        ------------

                                     286,767                             258,221
                                ============                        ============

         Regulatory Capital
         ------------------

         The Bank is subject to certain regulatory capital requirements
         administered by the Federal Deposit Insurance Corporation (FDIC).
         Failure to meet these minimum capital requirements can initiate certain
         mandatory, and possibly additional discretionary, actions by regulators
         that, if undertaken, could have a direct material effect on the Bank's
         financial statements. Under capital adequacy guidelines and the
         regulatory framework for prompt corrective action, the Bank must meet
         specific capital guidelines that involve quantitative measures of the
         Bank's assets, liabilities and certain off-balance-sheet items as
         calculated under regulatory accounting practices. The Bank's capital
         amounts and classification are also subject to qualitative judgments by
         the regulators about components, risk weightings and other factors.

                                      F-75


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


8.       SHAREHOLDERS' EQUITY (Continued)

         Regulatory Capital (Continued)
         ------------------

         Quantitative measures established by regulation to ensure capital
         adequacy require the Bank to maintain minimum amounts and ratios of
         total and Tier 1 capital to risk-weighted assets and Tier 1 capital to
         average assets. Each of these components is defined in the regulations.
         Management believes that the Bank met all its capital adequacy
         requirements as of December 31, 2003 and 2002.

         In addition, the most recent notification from the FDIC categorized the
         Bank as well capitalized under the regulatory framework for prompt
         corrective action. To be categorized as well capitalized, the Bank must
         maintain minimum total risk-based, Tier 1 risk-based and Tier 1
         leverage ratios as set forth below. There are no conditions or events
         since that notification that management believes have changed the
         Bank's category.



                                                           2003                           2002
                                               ---------------------------    ---------------------------

                                                  Amount         Ratio           Amount         Ratio
                                               ------------   ------------    ------------   ------------
                                                                                           
         Leverage Ratio
         --------------

         Bank of Amador                        $ 14,481,538           12.0%   $ 13,119,744           12.7%

         Minimum requirement for "Well-
           Capitalized" institution            $  5,999,706            5.0%   $  5,152,831            5.0%
         Minimum regulatory requirement        $  4,799,765            4.0%   $  4,122,265            4.0%

         Tier 1 Risk-Based Capital Ratio
         -------------------------------

         Bank of Amador                        $ 14,481,538           16.6%   $ 13,119,744           17.3%

         Minimum requirement for "Well-
           Capitalized" institution            $  5,223,702            6.0%   $  4,557,510            6.0%
         Minimum regulatory requirement        $  3,482,468            4.0%   $  3,038,340            4.0%

         Total Risk-Based Capital Ratio
         ------------------------------

         Bank of Amador                        $ 15,359,159           17.6%   $ 13,878,705           18.3%

         Minimum requirement for "Well-
           Capitalized" institution            $  8,706,170           10.0%   $  7,595,850           10.0%
         Minimum regulatory requirement        $  6,964,936            8.0%   $  6,076,680            8.0%


                                      F-76


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


9.       OUTSIDE SERVICES AND OTHER EXPENSE

         Outside services consisted of the following:

                                                Year Ended December 31,
                                      ------------------------------------------

                                          2003           2002           2001
                                      ------------   ------------   ------------

         Professional fees            $    120,000   $    120,000   $    115,000
         Other                             188,281        135,540        138,517
                                      ------------   ------------   ------------

                                      $    308,281   $    255,540   $    253,517
                                      ============   ============   ============

         Other expenses consisted of the following:

                                                Year Ended December 31,
                                      ------------------------------------------

                                          2003           2002           2001
                                      ------------   ------------   ------------

         Director compensation and
             retirement               $    203,837   $    129,600   $    129,600
         Advertising                        23,772         28,426         23,361
         Other operating expenses          427,167        321,804        380,139
                                      ------------   ------------   ------------

                                      $    654,776   $    479,830   $    533,100
                                      ============   ============   ============

10.      INCOME TAXES

         The provision for income taxes for the years ended December 31, 2003,
         2002 and 2001 consisted of the following:

                                       Federal         State           Total
                                     ------------   ------------   ------------

         2003
         ----

         Current                     $    875,000   $    355,000   $  1,230,000
         Deferred                         (18,000)       (17,000)       (35,000)
                                     ------------   ------------   ------------

             Income tax expense      $    857,000   $    338,000   $  1,195,000
                                     ============   ============   ============

         2002
         ----

         Current                     $    751,000   $    337,000   $  1,088,000
         Deferred                         (72,000)       (16,000)       (88,000)
                                     ------------   ------------   ------------

             Income tax expense      $    679,000   $    321,000   $  1,000,000
                                     ============   ============   ============

                                      F-77


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


10.      INCOME TAXES (Continued)

                                       Federal         State           Total
                                     ------------   ------------   ------------

         2001
         ----

         Current                     $    489,500   $    224,500   $    714,000
         Deferred                          63,000         29,000         92,000
                                     ------------   ------------   ------------

             Income tax expense      $    552,500   $    253,500   $    806,000
                                     ============   ============   ============

         Deferred tax assets (liabilities) are comprised of the following at
         December 31, 2003 and 2002:



                                                                 2003            2002
                                                             ------------    ------------
                                                                                
         Deferred tax assets:
             Allowance for loan losses                       $    309,000    $    267,000
             Bank premises and equipment                                           42,000
             Future benefit of State income tax                   116,000         103,000
             Deferred compensation                                 27,000
             Allowance for loan commitment losses                  32,000          24,000
             Other                                                 15,000          17,000
                                                             ------------    ------------

                      Total deferred tax assets                   499,000         453,000
                                                             ------------    ------------

         Deferred tax liabilities:
             Future liability of State deferred tax assets        (34,000)        (29,000)
             Bank premises and equipment                           (6,000)
             Unrealized gain on available-for-sale
                investment securities                            (253,000)       (270,000)
                                                             ------------    ------------

                      Total deferred tax liabilities             (293,000)       (299,000)
                                                             ------------    ------------

                      Net deferred tax assets                $    206,000    $    154,000
                                                             ============    ============


                                      F-78


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


10.      INCOME TAXES (Continued)

         The provision for income taxes differs from amounts computed by
         applying the statutory Federal income tax rates to operating income
         before income taxes. The significant items comprising these differences
         for the years ended December 31, 2003, 2002 and 2001 consisted of the
         following:



                                                       2003                        2002                        2001
                                            -------------------------   -------------------------   -------------------------

                                               Amount        Rate %        Amount        Rate %        Amount        Rate %
                                            ------------   ----------   ------------   ----------   ------------   ----------
                                                                                                        
         Federal income tax expense,
         at statutory rate                  $  1,108,125         34.0   $    950,872         34.0   $    762,187         34.0
         State franchise tax, net of
         Federal tax effect                      229,317          7.0        200,424          7.2        160,672          7.2
         Interest on obligations of
         states and political
         subdivisions                           (161,419)        (5.0)      (170,285)        (6.1)      (126,043)        (5.6)
         Other                                    18,977           .7         18,989           .7          9,184           .4
                                            ------------   ----------   ------------   ----------   ------------   ----------

         Total income tax expense           $  1,195,000         36.7   $  1,000,000         35.8   $    806,000         36.0
                                            ============   ==========   ============   ==========   ============   ==========


11.      RELATED PARTY TRANSACTIONS

         During the normal course of business, the Bank enters into transactions
         with related parties, including executive officers and Directors. These
         transactions include borrowings from the Bank with substantially the
         same terms, including rates and collateral, as loans to unrelated
         parties. The following is a summary of the aggregate activity involving
         related party borrowers during 2003:

         Balance, January 1, 2003                                $      935,984

             Disbursements                                            1,052,500
             Amounts repaid                                          (1,012,028)
                                                                 --------------

         Balance, December 31, 2003                              $      976,456
                                                                 ==============

         Undisbursed commitments to related
             parties, December 31, 2003                          $      128,294
                                                                 ==============

                                      F-79


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


12.      BENEFIT PLANS

         Savings Plan
         ------------

         The Bank of Amador 401(k) Savings Plan commenced January 1, 1989 and is
         available to employees meeting certain service requirements. Under the
         plan, employees may defer a selected percentage of their annual
         compensation. The Bank's contribution to the plan is discretionary and
         is allocated as follows:

               o    A basic contribution that shall be allocated in the same
                    ratio as each participant's compensation bears to total
                    compensation.

               o    A matching contribution, to be determined by the Board of
                    Directors each plan year, under which the Bank will match a
                    percentage of each participant's contribution.

         The Bank's contribution to the plan totaled $72,566, $70,627 and
         $68,900 for the years ended December 31, 2003, 2002 and 2001,
         respectively.

         Director Retirement and Consulting Agreements
         ---------------------------------------------

         In July 2003, the Board of Directors adopted Director retirement and
         consulting agreements. The agreements provide annual retirement
         benefits or service compensation in the amount of $18,000 per year for
         each current member of the Board of Directors for ten years after the
         Director's retirement from the Board. Under the agreements, such
         benefits will also be accelerated and be paid upon a change of control
         of the Bank. The estimated value of retirement benefits will accrue
         from August 2003 through each Director's expected retirement date. In
         the event a Director dies or is disabled, the plan provides for the
         payment of benefits corresponding to specified amounts accrued for the
         retirement benefits described above. The expense recognized under these
         arrangements totaled $61,037 for the year ended December 31, 2003.

         In connection with the implementation of these agreements, the Bank
         invested in single premium life insurance policies with cash surrender
         values totaling $1,839,000 at December 31, 2003. On the balance sheet,
         the cash surrender values are included in other assets. Income earned
         on these policies, net of expenses, totaled $37,168 for the year ended
         December 31, 2003.

         Employee Survivor Benefit Plan
         ------------------------------

         In July 2003, the Bank implemented an Employee Survivor Benefit Plan to
         provide death benefits ranging from $20,000 to $60,000 to the
         beneficiaries of certain Bank employees. In connection with the
         implementation of the plan, the Bank invested in single premium life
         insurance policies on the lives of these employees with cash surrender
         values totaling $1,327,000. Although the employees are named as
         insureds, the Bank is the owner and beneficiary under these policies.
         On the balance sheet, the cash surrender values are included in other
         assets. Income earned on these policies, net of expenses, totaled
         $26,820 for the year ended December 31, 2003 and is included on the
         balance sheet in other assets.

                                      F-80


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


13.      COMPREHENSIVE INCOME

         Comprehensive income is reported in addition to net income for all
         periods presented. Comprehensive income is a more inclusive financial
         reporting methodology that includes disclosure of other comprehensive
         income that historically has not been recognized in the calculation of
         net income. The unrealized gains on the Bank's available-for-sale
         investment securities are included in other comprehensive income. Total
         comprehensive income and the components of accumulated other
         comprehensive income are presented in the Statement of Changes in
         Shareholders' Equity.

         At December 31, 2003, 2002 and 2001, the Bank held securities
         classified as available-for-sale which had unrealized (losses) gains as
         follows:



                                                                  Tax
                                                  Before         Benefit          After
                For the Year Ended                 Tax          (Expense)          Tax
         --------------------------------      ------------    ------------    ------------
                                                                                
         December 31, 2003
         -----------------

         Other comprehensive loss:
              Unrealized holding losses        $    (49,649)   $     16,891    $    (32,758)
                                               ============    ============    ============

         December 31, 2002
         -----------------

         Other comprehensive income:
              Unrealized holding gains         $    454,737    $   (154,538)   $    300,199
                                               ============    ============    ============

         December 31, 2001
         -----------------

         Other comprehensive income:
              Unrealized holding gains         $    186,119    $    (63,356)   $    122,763
                                               ============    ============    ============


14.      DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

         Estimated fair values are disclosed for financial instruments for which
         it is practicable to estimate fair value. These estimates are made at a
         specific point in time based on relevant market data and information
         about the financial instruments. These estimates do not reflect any
         premium or discount that could result from offering the Bank's entire
         holdings of a particular financial instrument for sale at one time, nor
         do they attempt to estimate the value of anticipated future business
         related to the instruments. In addition, the tax ramifications related
         to the realization of unrealized gains and losses can have a
         significant effect on fair value estimates and have not been considered
         in any of these estimates.

         Because no market exists for a significant portion of the Bank's
         financial instruments, fair value estimates are based on judgments
         regarding current economic conditions, risk characteristics of various
         financial instruments and other factors. These estimates are subjective
         in nature and involve uncertainties and matters of significant judgment
         and therefore cannot be determined with precision. Changes in
         assumptions could significantly affect the fair values presented.

                                      F-81


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


14.      DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

         The following methods and assumptions were used by the Bank to estimate
         the fair value of its financial instruments at December 31, 2003 and
         2002:

         Cash and cash equivalents: For cash and cash equivalents, the carrying
         amount is estimated to be fair value.

         Available-for-sale investment securities: For available-for-sale
         investment securities, fair values are based on quoted market prices,
         where available. If quoted market prices are not available, fair values
         are estimated using quoted market prices for similar securities and
         indications of value provided by brokers.

         Loans: For variable-rate loans that reprice frequently with no
         significant change in credit risk, fair values are based on carrying
         values. The fair values for other loans are estimated using discounted
         cash flow analyses, using interest rates being offered at each
         reporting date for loans with similar terms to borrowers of comparable
         creditworthiness. The carrying amount of accrued interest receivable
         approximates its fair value.

         Cash surrender value of life insurance policies: The fair value of life
         insurance policies are based on cash surrender values at each reporting
         date as provided by the insurers.

         Deposits: The fair values for demand deposits are, by definition, equal
         to the amount payable on demand at the reporting date represented by
         their carrying amount. Fair values for fixed-rate certificates of
         deposit are estimated using discounted cash flow analyses using
         interest rates being offered at each reporting date by the Bank for
         certificates with similar remaining maturities. The carrying amount of
         accrued interest payable approximates its fair value.

         Commitments to extend credit and letters of credit: Commitments to
         extend credit and letters of credit are primarily for variable rate
         loans. For these commitments, there is no difference between the
         committed amounts and their fair values. Commitments to fund fixed rate
         loans are at rates which approximate fair value at each reporting date.

                                      F-82


                                 BANK OF AMADOR

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


14.      DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

         The estimated fair value of the Bank's financial instruments are as
         follows:



                                                December 31, 2003             December 31, 2002
                                           ---------------------------   ---------------------------
                                             Carrying        Fair          Carrying        Fair
                                              Amount         Value          Amount         Value
                                           ------------   ------------   ------------   ------------
                                                                                     
         Financial assets:
           Cash and due from banks         $  4,235,029   $  4,235,029   $  5,559,806   $  5,559,806
           Federal funds sold                23,906,000     23,906,000     10,040,000     10,040,000
           Available-for-sale investment
              securities                     15,470,000     15,470,000     23,575,700     23,575,700
           Loans                             74,899,470     77,756,000     64,154,165     67,052,000
           Cash surrender value of life
              insurance policies              3,230,636      3,230,636
           Accrued interest receivable          448,596        448,596        527,329        527,329

         Financial liabilities:
           Deposits                        $107,233,331   $107,686,000   $ 90,201,339   $ 90,543,000
           Accrued interest payable             215,124        215,124        136,657        136,657

         Off-balance-sheet financial
           instruments:
           Commitments to extend credit    $ 35,697,000   $ 35,697,000   $ 29,500,000   $ 29,500,000
           Letters of credit                  1,273,000      1,273,000      1,625,000      1,625,000


                                      F-83

                                     ANNEX A

                 AGREEMENT AND PLAN OF REORGANIZATION AND MERGER



                                    AGREEMENT
                                    ---------
                                       AND
                                       ---
                        PLAN OF REORGANIZATION AND MERGER
                        ---------------------------------



         THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER, dated as of July
8, 2004 ("Agreement"), is made and entered into by and among American River
Bankshares, a California corporation ("AMRBK"), American River Bank, a
California banking corporation and a wholly-owned subsidiary of AMRBK ("AMRB"),
and Bank of Amador, a California banking corporation ("BNKA").

                                    Recitals:
                                    ---------

         A.       The Boards of Directors of AMRBK, AMRB and BNKA deem it
advisable and in the best interests of AMRBK, AMRB and BNKA, and their
respective shareholders, that AMRBK, AMRB and BNKA enter into a business
combination upon the terms and conditions set forth herein and in accordance
with the California General Corporation Law (the "CGCL") whereby AMRBK will
acquire BNKA.

         B.       This Agreement provides for the completion of the acquisition
of BNKA by AMRBK through the merger ("Merger") of BNKA with and into AMRB under
the applicable laws of the State of California and in accordance with the
separate agreement of merger (the "Agreement of Merger") to be entered into by
and between BNKA and AMRB substantially in the form attached hereto as Exhibit
A.

         C.       The Merger is intended to qualify as a tax-free reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended (the "IRC").

         D.       Pursuant to the Merger, each BNKA shareholder will receive, in
exchange for each share of BNKA common stock ("BNKA Share" or "BNKA Shares"), an
amount in cash and the number of shares of AMRBK common stock ("AMRBK Share" or
"AMRBK Shares") determined in accordance with Section 2.1 of this Agreement and
in the Agreement of Merger (the "Merger Consideration").

         E.       The Boards of Directors of AMRBK, AMRB and BNKA have
determined that the Merger and the other transactions contemplated by this
Agreement are consistent with, and will contribute to the furtherance of, their
respective business strategies and goals.

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and in the Agreement of Merger, the parties hereto
agree as follows:

1.       THE MERGER.
         ----------

         1.1      Merger. The Merger shall become effective on the date (the
"Effective Date") and time ("Effective Time of the Merger") that the Agreement
of Merger is filed with the Commissioner of the California Department of
Financial Institutions (the "Commissioner"), after having been filed

                                      A-1


with the California Secretary of State and previously approved by the
Commissioner (as provided in Section 1.3 hereof). At the Effective Time of the
Merger, and pursuant to the terms of this Agreement and the Agreement of Merger,
the following transactions will be deemed to have occurred simultaneously:

                  1.1.a.   Merger of BNKA and AMRB. BNKA and AMRB will merge,
and the separate corporate existence of BNKA shall cease. AMRB, as the
corporation surviving the Merger, is sometimes referred to herein as the
"Resulting Corporation" or as the "Merged Bank." AMRB, as the Resulting
Corporation in the Merger, shall retain and shall continue its banking
operations under the corporate name "American River Bank." American River Bank
will also conduct operations at the former offices of BNKA following the Merger
under the name "Bank of Amador, a division of American River Bank."

                  1.1.b.   Effect on AMRB Shares. Each share of the common stock
of AMRB (the "AMRB Shares") issued and outstanding immediately prior to the
Effective Time of the Merger, shall, on and after the Effective Time of the
Merger, pursuant to the Agreement of Merger, remain issued and outstanding.

                  1.1.c.   Effect on BNKA Shares. Each BNKA Share issued and
outstanding immediately prior to the Effective Time of the Merger, except for
BNKA Shares that qualify as BNKA Dissenting Shares (as defined in Section 2.7
hereof), on and after the Effective Time of the Merger, pursuant to the
Agreement of Merger and without any further action on the part of BNKA or the
holders of BNKA Shares, shall be canceled automatically and cease to be an
issued and outstanding share of BNKA Shares, and shall be converted into the
right to receive a combination of cash and newly issued AMRBK Shares, as
provided in Section 2.1 below. Certificates formerly evidencing shares of BNKA
Shares shall be surrendered for payment and exchange to U.S. Stock Transfer
Corporation or such other agent as AMRBK shall designate (the "Exchange Agent"),
in accordance with Section 2.3 below.

                  1.1.d.   Effect on AMRBK Shares. Each share of AMRBK common
stock issued and outstanding immediately prior to the Effective Time of the
Merger shall, on and after the Effective Time of the Merger, remain issued and
outstanding and shall automatically and for all purposes be deemed to represent
one share of common stock of AMRBK.

                  1.1.e.   Alternative Method. Anything herein to the contrary
notwithstanding, upon written notice to and written acceptance by BNKA, AMRBK
may at any time prior to the Effective Time of the Merger change the method of
effecting the acquisition of BNKA (including, without limitation, the provisions
of this Section 1) if and to the extent it deems such change to be necessary,
appropriate or desirable; provided, however, that no such change shall: (i)
alter or change the amount or kind of consideration to be issued to holders of
BNKA Shares as provided for in this Agreement; (ii) cause the transaction to be
treated as anything other than a tax-free reorganization to AMRBK, BNKA and,
except to the extent cash is received, the holders of BNKA Shares; or (iii)
materially impede or delay the receipt of any approvals referred to in Sections
7.i and 8.i below or the consummation of the transactions contemplated by this
Agreement.

         1.2      Effect of the Merger. By virtue of the Merger and at the
Effective Time of the Merger, all of the rights, privileges, powers and
franchises and all property and assets of every kind

                                      A-2


and description of AMRB and BNKA shall be vested in and be held and enjoyed by
the Merged Bank, without further act or deed, and all the estates and interests
of every kind of AMRB and BNKA, including all debts due to either of them, shall
be as effectively the property of the Merged Bank as they were the property of
AMRB and BNKA, and the title to any real estate vested by deed or otherwise in
either AMRB or BNKA shall not revert or be in any way impaired by reason of the
Merger; and all rights of creditors and liens upon any property of AMRB and BNKA
shall be preserved unimpaired, and all debts, liabilities and duties of AMRB and
BNKA shall be debts, liabilities and duties of the Merged Bank and may be
enforced against it to the same extent as if such debts, liabilities and duties
had been incurred or contracted by it, and none of such debts, liabilities or
duties shall be expanded, increased, broadened or enlarged by reason of the
Merger.

         1.3      Execution of Agreement of Merger. Prior to the Closing Date
(as defined in Section 9.a. hereof), and as soon as practicable after the
approval of this Agreement and the transactions contemplated hereby by the
shareholders of AMRBK and AMRB, and by the shareholders of BNKA, and the
satisfaction of the conditions precedent to the consummation of the Merger, the
Agreement of Merger in the form attached as Exhibit "A" (as amended, if
necessary, to conform to the requirements of law or a governmental authority or
agency having authority over the Merger, which requirements are not materially
in contravention of any of the substantive terms hereof) shall be executed by
BNKA, AMRBK and AMRB. As soon as possible thereafter, the Agreement of Merger,
along with the requisite Officers' Certificates, shall be submitted to the
Commissioner for approval and endorsement pursuant to Section 4887(a) of the
California Financial Code and, thereafter, shall be filed with the California
Secretary of State. Prior to the close of business on the Closing Date, an
executed copy of the Agreement of Merger with the approval of the Commissioner
endorsed therein and certified by the California Secretary of State shall be
filed with the Commissioner as provided in Section 4887(b) of the California
Financial Code, effective as of the close of business on the Closing Date. The
Merger shall become effective in accordance with the provisions of Section 1.1
of this Agreement.

         1.4      Cooperation; Best Efforts. Each of AMRBK, AMRB and BNKA,
consistent with the fiduciary duties of their directors, respectively, will use
their best efforts to consummate the transactions contemplated by this Agreement
and cooperate in any action necessary or advisable to facilitate such
consummation including, without limitation, making all filings required in order
to obtain any necessary consents or to comply with any law and providing any
information required in connection therewith.

2.       CONVERSION AND SURRENDER OF BNKA SHARES.
         ---------------------------------------

         2.1.     Conversion of BNKA Shares.

                  2.1.a.   Subject to the other provisions of this Section 2,
each share of BNKA common stock issued and outstanding immediately prior to the
Effective Time of the Merger (other than BNKA Dissenting Shares as defined in
Section 2.7) shall, by virtue of the Merger, be converted into the right to
receive (i) cash in the amount of $6.825 (the "Cash Consideration"), and (ii) a
number of shares of AMRBK common stock (the "Stock Consideration") determined as
follows:

                           A.  0.6851 shares of AMRBK common stock, if the AMRBK
Measuring Price is $18.50 or lower;

                                      A-3


                           B.  0.5394 shares of AMRBK common stock, if the AMRBK
Measuring Price is $23.50 or higher;

                           C.  the number of shares of AMRBK common stock equal
to 12.675 divided by the AMRBK Measuring Price, if the AMRBK Measuring Price is
between $18.50 and $23.50.

         "AMRBK Measuring Price" means the average closing price of AMRBK common
stock as traded on the Nasdaq National Market over the twenty (20) consecutive
trading day period ending on the second business day prior to the Closing Date.

         The Cash Consideration and the Stock Consideration are collectively
referred to herein as the "Per Share Consideration."

                  2.1.b.   Payment. As promptly as practicable after the
Effective Time of the Merger, AMRBK shall cause the Exchange Agent to effect the
payment to the holders of BNKA common stock of the Per Share Consideration in
the Merger, determined in accordance with Section 2.1.a. above, subject to the
holdback of Cash Consideration set forth in Section 2.8 below.

          2.2     Fractional Shares. Notwithstanding any other provision hereof,
no fractional shares of AMRBK Shares shall be issued to holders of BNKA Shares.
In lieu thereof, each such holder entitled to a fraction of a AMRBK Share shall
receive, at the Effective Time of the Merger or upon surrender of the
certificate or certificates representing such holder's BNKA Shares, whichever is
later, an amount in cash equal to the AMRBK Measuring Price, as defined in
Paragraph 2.1.a., multiplied by the fraction of an AMRBK Share to which such
holder otherwise would be entitled. No such holder shall be entitled to
dividends, voting rights, interest on the value of, or any other rights in
respect of a fractional share.

         2.3      Surrender of BNKA Shares.

                  2.3.a.   No dividends or other distributions of any kind which
are declared payable to shareholders of record of the AMRBK Shares after the
Effective Date will be paid to persons entitled to receive such certificates for
AMRBK Shares until such persons surrender their certificates representing BNKA
Shares (or customary affidavits regarding the loss or destruction of such
certificates have been delivered) to the Exchange Agent. Upon surrender of such
certificates representing BNKA Shares, the holder thereof shall be paid, without
interest, any dividends or other distributions with respect to the AMRBK Shares
as to which the record date and payment date occurred on or after the Effective
Date and on or before the date of surrender.

                  2.3.b.   If any certificate for AMRBK Shares is to be issued
in a name other than that in which the certificate for BNKA Shares surrendered
in exchange therefor is registered, any transfer costs or expenses (except
taxes) required by reason of the issuance of certificates for such AMRBK Shares
in a name other than the registered holder of the certificate surrendered shall
be paid by the person requesting such change.

                  2.3.c.   All dividends or distributions, and any cash to be
paid pursuant to Sections 2.1 and 2.2, if held by the Exchange Agent for payment
or delivery to the holders of unsurrendered certificates representing BNKA
Shares and unclaimed at the end of one year from the Effective Date, shall
(together with any interest earned thereon) at such time be paid or redelivered
by the

                                      A-4


Exchange Agent to AMRBK, and after such time any holder of a certificate
representing BNKA Shares who has not surrendered such certificate to the
Exchange Agent shall, subject to applicable law, look, as a general creditor,
only to AMRBK for payment or delivery of such dividends or distributions or
cash, as the case may be.

         2.4      Further Transfers of BNKA Shares. At the Effective Time of the
Merger, the stock transfer books of BNKA shall be closed and no transfer of BNKA
Shares theretofore outstanding shall thereafter be made.

         2.5      Adjustments. If, between the date of this Agreement and the
Effective Date, the outstanding shares of AMRBK Shares or BNKA Shares shall have
been changed into a different number of shares or a different class by reason of
any reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or a stock dividend thereon shall be declared with a
record date within such period, the number of AMRBK Shares to be issued and
delivered in the Merger in exchange for each outstanding BNKA Share shall be
correspondingly adjusted.

         2.6      Treatment of Stock Options.

                  2.6.a.   Each person holding one or more options to purchase
BNKA Shares ("BNKA Option" or "BNKA Options") pursuant to the Bank of Amador
1998 Stock Option Plan, as amended to date ("BNKA Stock Option Plan"), shall
have the right, in his or her discretion, to either:

                           (i)      exercise any vested portion of the BNKA
Option to acquire BNKA Shares prior to the Effective Date; or

                           (ii)     surrender to BNKA, prior to the Effective
Time of the Merger, the agreement evidencing the BNKA Option, in which event
BNKA shall purchase the BNKA Option at a price equal to (A) the difference
between (1) the Per Share Consideration and (2) the per share exercise price
applicable to such BNKA Option; (B) multiplied by the total number of BNKA
Shares subject to such BNKA Option. BNKA shall pay the holders of BNKA Options
pursuant to this sub-paragraph (ii) immediately prior to the Effective Time of
the Merger.

                  Any BNKA Option not exercised prior to the Effective Date, and
not surrendered by the holder for purchase by BNKA immediately prior to the
Effective Time of the Merger, shall expire as of the Effective Time of the
Merger.

         2.7      BNKA Dissenting Shares . Any BNKA Shares held by a "dissenting
shareholder" within the meaning of Chapter 13 of the CGCL ("BNKA Dissenting
Shares"), which have not been withdrawn or caused to lose their status as "BNKA
Dissenting Shares," shall not be converted in accordance with Section 2.1 but
shall, after the Effective Time of the Merger, be entitled only to such rights
as are provided to a dissenting shareholder under Chapter 13 of the CGCL
(Section 1300 et seq. of the California Corporations Code) and shall have no
other rights under this Agreement or as a shareholder of AMRBK.

         2.8      Cash Consideration Holdback. Notwithstanding any other
provision of this Agreement, the parties agree that One Million Three Hundred
Sixty-Two Thousand Dollars ($1,362,000) (the "Holdback Amount") will be withheld
from payment of the Cash Consideration

                                      A-5


until the earlier of (i) the payment in full of the balance due in accordance
with the terms of the loan agreements, including any security agreements or
other instruments, related to a certain BNKA Merced County construction loan
outstanding at the date of this Agreement, or (ii) the final determination, to
the reasonable satisfaction of AMRBK and BNKA, of the amount of loss, if any,
related to such loan. As promptly as practicable after the earlier to occur of
the foregoing events, AMRBK shall cause the Exchange Agent to effect the
payment, pro rata, to the holders of BNKA common stock of the Holdback Amount
minus the amount of any loss incurred in relation to the loan, in accordance
with Section 2.1.a. above.

3.       COVENANTS OF THE PARTIES.
         ------------------------

         3.1.     Covenants of AMRBK. During the period from the date of this
Agreement and continuing until the Effective Time of the Merger, except as
expressly contemplated or permitted by this Agreement or to the extent that BNKA
shall otherwise consent in writing, which consent will not be unreasonably
withheld or delayed more than three (3) business days after the request for
consent is delivered:

                  3.1.a.   Approval by AMRBK Shareholders. AMRBK shall cause the
principal terms of the Merger to be submitted promptly for the approval of its
shareholders at a meeting to be called and held in accordance with applicable
law. Subject to continuing fiduciary duties to its shareholders, the Board of
Directors of AMRBK, in authorizing the execution and delivery of this Agreement,
unanimously recommends that the principal terms of the Merger be approved by
AMRBK shareholders. In connection with the call of such meeting, AMRBK shall
cause the Joint Proxy Statement/Prospectus described in Section 6 of this
Agreement to be mailed to its shareholders. Subject to its continuing fiduciary
duty to the shareholders of AMRBK, the Board of Directors of AMRBK shall, at all
times prior to and during such meeting of its shareholders, recommend that this
Agreement and the principal terms of the Merger be approved and, subject to such
duty, use its best efforts to cause such approval to be obtained.

                  3.1.b.   Articles and Bylaws of Merged Bank. The Articles of
Incorporation and Bylaws of AMRB in effect immediately prior to the Effective
Time of the Merger shall be the Articles of Incorporation and Bylaws of the
Merged Bank at the Effective Time of the Merger.

                  3.1.c.   Appointment of AMRB Directors and Executive
Management Committee Member. Promptly after the Effective Time of the Merger,
two (2) of the existing directors of BNKA (Larry D. Standing and one other
director of BNKA selected by mutual agreement of BNKA and AMRBK) shall be
appointed to the AMRB Board of Directors and Mr. Standing shall be appointed as
a member of the Executive Management Committee of AMRBK.

                  3.1.d.   Reservation, Issuance and Qualification of AMRBK
Shares. AMRBK shall reserve for issuance in connection with the Merger and in
accordance with the terms of this Agreement (i) a number of AMRBK Shares
sufficient to complete the exchange of AMRBK Shares for the outstanding BNKA
Shares pursuant to the provisions of Section 2.1 above. AMRBK shall cause the
issuance of such AMRBK Shares to be registered under the Securities Act of 1933,
as amended, as provided in Section 6 below.

                                      A-6


                  3.1.e.   Nasdaq Stock Market Listing. AMRBK shall take all
necessary action to list AMRBK's Shares issued pursuant to this Agreement with
the Nasdaq Stock Market for trading on the Nasdaq National Market, to be
effective as soon as practicable following the Effective Time of the Merger.

                  3.1.f.   Director and Officer Liability Insurance. AMRBK, from
and after the Effective Date, will directly or indirectly cause the persons who
served as directors or officers of BNKA on or before the Effective Date to be
covered by AMRBK's existing directors' and officers' liability insurance policy
(provided that AMRBK may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are not less
advantageous than such policy) or so-called tail coverage obtained in connection
with BNKA's directors' and officers' liability insurance policies in effect as
of the Effective Date; provided that AMRBK shall not be obligated to make annual
premium payments for such insurance to the extent such premiums in the aggregate
exceed 150% of the most recent annual premium paid by BNKA for such insurance.
Subject to the preceding sentence, such insurance coverage shall commence on the
Effective Date and will be provided for a period of no less than three (3) years
after the Effective Date. From the date hereof through the Effective Date and
subject to the foregoing, BNKA shall use its best efforts to arrange for tail
coverage related to its then current policies of directors' and officers'
liability insurance and, following the Effective Date, AMRBK shall exercise
those rights which it may have to in order to commence such coverage. In
connection with any active, pending claim under an existing BNKA directors' and
officers' liability insurance policy, AMRBK will take no action that would have
the effect of waiving any such claim and will not omit to take any action that
is necessary to preserve such a claim.

                  3.1.g.   Execute Agreement of Merger. As soon as practicable
after receipt of (i) approval by the BNKA shareholders, (ii) approval by the
AMRBK shareholders, and (iii) all Government Approvals (as defined in Section
3.3.d. hereof), AMRBK shall execute and deliver and shall cause AMRB to execute
and deliver the Agreement of Merger.

         3.2.     Covenants of BNKA. During the period from the date of this
Agreement and continuing until the Effective Time of the Merger, except as
expressly contemplated or permitted by this Agreement or to the extent that
AMRBK shall otherwise consent in writing, which consent will not be unreasonably
withheld or delayed more than three (3) business days after the request for
consent is delivered:

                  3.2.a.   Approval by BNKA Shareholders. BNKA shall cause the
principal terms of the Merger to be submitted promptly for the approval of its
shareholders at a meeting to be called and held in accordance with applicable
law. Subject to continuing fiduciary duties to its shareholders, the Board of
Directors of BNKA, in authorizing the execution and delivery of this Agreement,
unanimously recommends that the principal terms of the Merger be approved by the
BNKA shareholders. In connection with the call of such meeting, BNKA shall cause
the Joint Proxy Statement/Prospectus described in Section 6 of this Agreement to
be mailed to its shareholders. Subject to its continuing fiduciary duty to the
shareholders of BNKA, the Board of Directors of BNKA shall, at all times prior
to and during such meeting of its shareholders, recommend that this Agreement
and the principal terms of the Merger be approved and, subject to such duty, use
its best efforts to cause such approval to be obtained.

                  3.2.b.   Termination of BNKA Stock Option Plan. BNKA shall
take all necessary

                                      A-7


action to cause the termination of the BNKA Stock Option Plan at the Effective
Time of the Merger and the exercise or termination of BNKA Options outstanding
thereunder.

                  3.2.c.   Termination or Merger of BNKA Benefit Plans. Unless
requested by AMRBK to refrain from such action, BNKA shall take all necessary
action to cause the termination or merger of BNKA Employee Plans (as defined in
Section 4.n. hereof) prior to the Effective Date.

                  3.2.d.   Capital Commitments and Expenditures. After the
execution of this Agreement, no new capital commitments shall be entered into,
and no capital expenditures shall be made by BNKA in excess of Fifty Thousand
Dollars ($50,000) in the aggregate, including but not limited to, creation of
any new branches and acquisitions or leases of real property, except commitments
or expenditures within existing operating and capital budgets heretofore
furnished to and approved in writing by AMRBK.

                  3.2.e.   Compensation. BNKA shall not make or approve any
increase in the compensation payable or to become payable by it to any of its
directors, officers, employees or agents with annual salaries in excess of
Seventy-Five Thousand Dollars ($75,000) (including, but not limited to,
compensation through any profit sharing, pension, retirement, severance,
incentive or other employee benefit program or arrangement), nor shall any bonus
payment or any agreement or commitment to make a bonus payment be made, nor
shall any stock option, warrant or other right to acquire capital stock be
granted, or employment agreement (other than any such employment agreement that
may arise by operation of law upon the hiring of any new employee) or consulting
agreement be entered into by BNKA with any such directors, officers, employees
or agents unless AMRBK has given its prior written consent. Nothing herein shall
prevent the payment to officers and employees of BNKA of regular salary
increases, consistent with past practices in connection with regular salary
reviews or bonuses consistent with past practices, as heretofore disclosed by
BNKA to AMRBK.

                  3.2.f.   Loans. BNKA shall not, without first having obtained
the written consent of AMRBK (which shall be deemed to have been given if no
response is provided following written request therefor within three (3)
business days of receipt of such request), cause, allow, or suffer its officers
or agents to commit to any loan or renewal which does not comply in all material
respects with its credit policies in effect and as disclosed and provided to
AMRBK prior to the date of this Agreement; provided, however, that all new and
renewed stand-alone extensions of credit over Two Hundred Fifty Thousand Dollars
($250,000) including secured or unsecured loans, and real estate secured loans
in excess of Five Hundred Thousand Dollars ($500,000) for real estate secured
loans, except for conforming FHLMC and FNMA loans, shall be subject to such
prior written consent. The prior written consent of AMRBK shall be deemed waived
for any new stand-alone extension of credit which is less than Two Hundred Fifty
Thousand Dollars ($250,000) and where such new stand-alone extension of credit
is either in compliance with BNKA credit policy and the approving officer has
the requisite lending authority or has (have) been approved by the BNKA loan
committee or equivalent committee of the BNKA Board of Directors performing such
function. BNKA shall promptly provide to AMRBK for its review and comment
relevant information concerning any proposed new stand-alone extension of credit
in excess of Two Hundred Fifty Thousand Dollars ($250,000). Notwithstanding the
foregoing, all loans and extensions of credit, and any renewals, extensions or
modifications thereof by BNKA to BNKA directors, officers, employees or their
family members, related interests, or affiliates, shall be subject to the prior
written consent of AMRBK.

                                      A-8


                  3.2.g.   Certain Notices. BNKA shall notify AMRBK within five
(5) business days in writing upon the occurrence of any of the following:

                           (i)      the classification of any loan as
"Non-Accrual," "Watch," "Other Assets Specially Mentioned," "Substandard,"
"Doubtful" or "Loss"; or the filing of any notice of default on any real
property in which BNKA holds an interest; or the filing of any bankruptcy or
insolvency by a borrower, guarantor, or pledgor to any BNKA loan or other
obligation; or if any interest of BNKA in any loan document, security instrument
or collateral is alienated, transferred, hypothecated, alienated or otherwise
impaired.

                           (ii)     the filing or commencement of any legal
action or other proceeding or investigation against BNKA.

                  3.2.h.   Loan Review. Until the Effective Date, BNKA will
submit to AMRBK upon request (but not less often than monthly) a list of loans
that may reasonably be described as or are included in any of the following
categories or specifications: (i) any new stand-alone extension of credit over
Two Hundred Fifty Thousand Dollars ($250,000), (ii) any restructured loan as
defined under SFAS 15, regardless of amount, (iii) any renewal or upgrade or
other change in status of an existing loan over One Hundred Thousand Dollars
($100,000), and (iv) any renewal of an existing loan previously classified by
management or internal policy or procedure of BNKA, or by any outside review
examiner, accountant or any bank regulatory authority as "Non-Accrual," "Watch,"
"Other Assets Specially Mentioned," "Substandard," "Doubtful," or "Loss," or
classified using categories or words with similar import, in a commitment amount
over One Hundred Thousand Dollars ($100,000) or where the aggregate debt of the
borrower and its affiliates and/or related interests will exceed One Hundred
Thousand Dollars ($100,000). BNKA will provide to AMRBK a copy of the loan
approval/credit write-up and supporting information on any loan described in
subsections (i), (ii), (iii) or (iv) above at the time of delivery of such list
of loans. Copies of such supporting information shall be returned to BNKA within
seven (7) days of receipt.

                  3.2.i.   Loan Provision. BNKA shall maintain adequate reserves
for loan losses. Without limiting the generality of the foregoing, each month
following the date of this Agreement through the Effective Date, BNKA shall
expense as a provision to its allowance for loan losses, such amount as may be
required by the written loan loss policy and procedures adopted by the Board of
Directors of BNKA and provided to AMRBK prior to the date of this Agreement.

                  3.2.j.   Merger or Solicitation.

                           (i)      Subject to the continuing fiduciary duty of
the Board of Directors of BNKA to its shareholders, prior to the Effective Time
of the Merger, BNKA shall not effect or agree to effect or enter into a
transaction or series of transactions with one or more third persons, groups or
entities providing for the acquisition of all or a substantial part of BNKA or
its subsidiaries, whether by way of merger, exchange of stock, sale of assets,
or otherwise ("Business Combination"), acquire or agree to acquire any of its
own capital stock or the capital stock or asset (except in a fiduciary capacity
or in the Ordinary Course of Business) of any other entity, or commence any
proceedings for winding up and dissolution affecting either of them.

                                      A-9


                           (ii)     Subject to the continuing fiduciary duty of
the Board of Directors of BNKA to its shareholders, prior to the Effective Time
of the Merger, neither BNKA nor any of its officers, directors or affiliates,
nor any investment banker, attorney, accountant or other agent, advisor or
representative retained by BNKA shall (a) solicit or encourage, directly or
indirectly, any inquiries, discussions or proposals for, continue, propose or
enter into discussions or negotiations looking toward, or enter into any
agreement or understanding providing for, any Business Combination with any
third party; or (b) disclose, directly or indirectly, any nonpublic information
to any corporation, partnership, person or other entity or group concerning
BNKA's business and properties or afford any such other party access to its
properties, books or records or otherwise assist or encourage any such other
party in connection with the foregoing, or (c) furnish or cause to be furnished
any information concerning its business, financial condition, operations,
properties or prospects to another person, having any actual or prospective role
with respect to any such Business Combination.

                           (iii)    BNKA shall notify AMRBK immediately of the
details of any indication of interest of any person, corporation, firm,
association or group to acquire by any means a controlling interest in BNKA or
engage in any Business Combination with BNKA.

                           (iv)     Notwithstanding anything to the contrary
contained in this Agreement, in the event the Board of Directors of BNKA
receives a bona fide unsolicited offer for a Business Combination of BNKA with
another entity, and reasonably determines, upon advice of counsel, that as a
result of such offer, any duty to act or to refrain from doing any act pursuant
to this Agreement is inconsistent with the continuing fiduciary duties of the
Board of Directors to its shareholders, subject to the provisions of this
Agreement including, without limitation, Section 12.e.(ii) and the rights
accorded AMRBK thereunder which shall remain in effect, such duty to act or to
refrain from doing any act shall be excused and such failure to act or refrain
from doing any act shall not (a) constitute the failure of any condition, breach
of any covenant or otherwise constitute any breach of this Agreement, or (b)
create any claim or cause of action asserting any liability against any member
of the Board of Directors of BNKA.

                  3.2.k.   Expense Items. BNKA shall expense and record in its
financial records not later than the Effective Date, the amount of Three Million
One Hundred Forty-Eight Thousand One Hundred Six Dollars ($3,148,106). Such
amount shall be used to (i) pay optionholders in accordance with Section 2.6
hereof, (ii) pay the cost of accelerated retirement benefits for directors and
officers who resign their positions as of the Effective Date, (iii) reserve an
amount agreed upon by AMRBKA and BNKA for a pending data processing contract
dispute between BNKA and a third party vendor, and (iv) reserve an amount agreed
upon by AMRBKA and BNKA for severance payments.

                  3.2.l.   Execute Agreement of Merger. As soon as practicable
after receipt of (i) approval by the BNKA shareholders, (ii) approval by the
AMRBK shareholders, and (iii) all Government Approvals, BNKA shall execute and
deliver the Agreement of Merger.

         3.3.     Mutual Covenants of AMRBK and BNKA.

                                      A-10


                  3.3.a.   Appointment of Division President . At the Effective
Time of the Merger, Larry D. Standing shall be appointed as the President of the
division of AMRB referenced in Section 1.1.a. hereof.

                  3.3.b.   Directors of Resulting Corporation. The directors of
AMRB immediately prior to the Effective Time of the Merger shall be the
directors of the Resulting Corporation until their successors have been chosen
and qualified in accordance with the Articles of Incorporation and the Bylaws of
the Resulting Corporation; provided, however, that prior to the Effective Time
of the Merger, the directors of AMRB shall (i) fix the exact number of directors
of the Resulting Corporation at eleven (11), and (ii) appoint Larry D. Standing
and another director of BNKA (to be mutually agreed upon by BNKA and AMRBK) to
serve on the board of directors of AMRB along with the nine (9) incumbent
directors of AMRB, until their successors are duly elected and qualified.

                  3.3.c.   Shareholder Lists and Other Information. After
execution hereof, each of AMRBK and BNKA shall from time to time make available
to the other party, upon request, a list of its shareholders and their addresses
and such other information as the other party shall reasonably request regarding
the ownership of the common stock of AMRBK and BNKA, respectively.

                  3.3.d.   Government Approvals. Each party will use its best
efforts in good faith to take or cause to be taken as promptly as practicable
all such steps as shall be necessary to obtain (i) the prior approval of the
Merger and the transactions contemplated pursuant to this Agreement and the
Agreement of Merger by the Federal Deposit Insurance Corporation (the "FDIC")
under the Bank Merger Act, the Board of Governors of the Federal Reserve System
(the "FRB") under the Bank Holding Company Act of 1956, as amended, the
California Department of Financial Institutions (the "DFI"), and (ii) all other
such consents or approvals of government agencies and regulatory authorities as
shall be required by law or otherwise desirable, and shall do any and all acts
and things necessary or appropriate in order to cause the Merger to be
consummated on the terms provided in the Agreement of Merger and this Agreement
as promptly as practicable. All approvals referred to in this Section 3.3.d. are
hereinafter referred to as the "Government Approvals."

                  3.3.e.   Notification of Breach of Representations, Warranties
and Covenants. Each party shall promptly give written notice to the each other
party upon becoming aware of the occurrence or impending or threatened
occurrence of any event which would cause or constitute a breach of any of the
representations, warranties or covenants of that party contained or referred to
in the Agreement of Merger or this Agreement and shall use its best efforts to
prevent the same or to remedy the same promptly.

                                      A-11


                  3.3.f.   Financial Statements.

                           (i)      AMRBK and BNKA have delivered or shall
deliver to each other prior to the date hereof true and correct copies of
(consolidated, as applicable) statements of income, changes in shareholders'
equity and, as applicable, statements of cash flows, for the three (3) months
ended March 31, 2004, and for the fiscal years ended December 31, 2003, 2002,
2001, 2000 and 1999, and balance sheets as of the three (3) month period ended
March 31, 2004, and as of December 31, 2003, 2002, 2001, 2000 and 1999. Such
financial statements at December 31, 2003, 2002 and 2001 have been audited by
Perry Smith LLP, as independent public accountants for AMRBK during the relevant
periods, and Perry Smith LLP, as independent public accountants for BNKA during
the relevant periods, and include or shall include an opinion of such accounting
firm to the effect that such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods covered by such financial statements and present fairly,
in all material respects, the (consolidated, as applicable) financial position,
results of operations and cash flows of each party at the dates indicated and
for the periods then ending. The opinions of such accounting firm do not and
shall not contain any qualifications.

                           (ii)     AMRBK and BNKA shall provide to each other,
at or prior to the Effective Date, copies of all financial statements and proxy
statements issued or to be issued to its shareholders and filed with the
Securities and Exchange Commission or FDIC between the date of this Agreement
and the Effective Date. As of their respective filing dates, each of the
documents described in the preceding sentence complied or shall comply in all
material respects with all legal and regulatory requirements applicable thereto.

                  3.3.g.   Conduct of Business in the Ordinary Course. Prior to
the Effective Time of the Merger:

                           (i)      AMRBK and BNKA shall conduct their
businesses (including the businesses of their subsidiaries) in the ordinary
course as heretofore conducted. For purposes of this Agreement, the "Ordinary
Course of Business" of each party shall consist of the banking and related
businesses as presently conducted by it and its subsidiaries in compliance with
customary safe and sound banking practices and applicable laws and regulations.
Unless a party has given its previous written consent (which shall not be
unreasonably withheld and shall be deemed to have been given if no response is
provided following written request therefor within three (3) business days of
receipt of such request) to any act or omission to the contrary, each party
shall, and shall cause its subsidiaries to, until the Effective Date:

                                    (A)      preserve its business and business
organizations intact;

                                    (B)      preserve the goodwill of customers
and others having business relations with it and take no action that would
impair the benefit to each party of the goodwill of it or the other benefits of
the Merger;

                                      A-12


                                    (C)      consult with each party as to the
making of any decisions or the taking of any actions in matters other than in
the Ordinary Course of Business;

                                    (D)      maintain its properties in
customary repair, working order and condition (reasonable wear and tear
excepted);

                                    (E)      comply with all laws, regulations
and decrees applicable to the conduct of its business;

                                    (F)      use its best efforts to keep in
force at not less than its present limits all policies of insurance (including
deposit insurance of the FDIC) to the extent reasonably practicable in light of
the prevailing market conditions in the insurance industry;

                                    (G)      use its reasonable best commercial
efforts to keep available the services of its present officers and employees (it
being understood that each party shall have the right to terminate the
employment of any of its officers or employees in accordance with its
established employment procedures);

                                    (H)      comply with all orders of and
agreements or memoranda of understanding with respect to it made by or with, the
FDIC, FRB, DFI, or any other government agency or regulatory authority of
competent jurisdiction, and promptly forward to each party all communications
received from any such agency or authority that are not prohibited by such
agency or authority from being so disclosed and inform each party of any
material restrictions imposed by any government agency or regulatory authority
on its business;

                                    (I)      file in a timely manner (taking
into account any extensions duly obtained) all reports, tax returns and other
documents required to be filed with federal, state, local and other authorities;

                                    (J)      conduct an environmental audit
prior to foreclosure on any property concerning which it has knowledge, or
should have knowledge, that asbestos or asbestos-containing material, PCB's or
PCB-contaminated materials, any petroleum product, or hazardous substance or
waste (as defined under any applicable environmental laws) was or is present,
manufactured, recycled, reclaimed, released, stored, treated, or disposed of,
and provide the results of such audit to and consult with each party regarding
the significance of the audit prior to the foreclosure on any such property;

                                    (K)      not sell, lease, pledge, assign,
encumber or otherwise dispose of any of its assets except in the Ordinary Course
of Business, for adequate value, without recourse and consistent with its
customary practice;

                                    (L)      not take any action with respect to
its investments or risk management arrangements which are inconsistent with the
policies established by its Board of Directors;

                                      A-13


                                    (M)      not take any action to create,
relocate or terminate the operations of any banking office or branch or to form
any new subsidiary or affiliated entity;

                                    (N)      not take any action to initiate or
file, answer or respond to, or settle or compromise, any matter which
constitutes or is related to litigation, arbitration, administrative or other
comparable judicial or non-judicial proceedings involving an amount in excess of
Fifty Thousand Dollars ($50,000).

                  3.3.h.   Press Releases. No party shall issue any press
release or written statement for general circulation relating to the Merger,
this Agreement or the Agreement of Merger unless previously provided to each
party for review and approval (which approval will not be unreasonably withheld
or delayed) and each party shall cooperate with each other party in the
development and distribution of all news releases and other public information
disclosures with respect to the Merger, this Agreement or the Agreement of
Merger; provided that a party may, without the consent of each other party, make
any disclosure with regard to the Merger, this Agreement or the Agreement of
Merger that it determines with advice of counsel is required under any
applicable law or regulation.

                  3.3.i.   Employee Benefit Plans. The parties agree that the
employee benefit plans of BNKA may be terminated, frozen, modified or merged
into the employee benefit plans of AMRBK as of the Effective Date or thereafter
(the "Benefits Termination Date") in accordance with applicable laws and
regulations and the provisions of the IRC, as determined by AMRBK. After the
Benefits Termination Date, BNKA employees that are then current employees of
AMRBK or AMRB will commence participation in AMRBK's employee benefit plans in
accordance with the terms and conditions provided under such plans; provided,
however, that each employee of BNKA who is a then current employee of AMRBK or
AMRB ("Transferred Employee") shall receive credit for his or her years of
service with BNKA for purposes of eligibility benefit levels and vesting under
AMRBK's employee benefit plans; provided, further, that each Transferred
Employee who elects coverage under AMRBK's health plan within thirty (30) days
after coverage is extended to him or her shall not be subject to any
pre-existing condition limitation under such health plan.

                  3.3.j.   Changes in Capital Stock; Dividends. On or after the
date hereof and at or prior to the Effective Time of the Merger, except with the
prior written consent of each other party or as otherwise provided in this
Agreement and the Agreement of Merger:

                           (i)      Except as provided in this Agreement, no
party shall amend its Articles of Incorporation or Bylaws or the Articles of
Incorporation or Bylaws of its subsidiary; make any change in their respective
authorized, issued or outstanding capital stock or any other equity security;
issue, grant, sell, pledge, assign or otherwise encumber or dispose of, or
purchase, redeem, retire or otherwise acquire (other than in a fiduciary
capacity), shares of or securities convertible into, capital stock or other
equity securities of their respective companies, or enter into any agreement,
call or commitment of any character so to do; grant or issue any stock option
relating to or right to acquire shares of their capital stock or other equity
security; or agree to do any of the foregoing, except as expressly provided
herein. Nothing contained herein or in this Agreement shall prohibit the
issuance of shares upon exercise of options granted under the AMRBK 1995 and

                                      A-14


2000 Stock Option Plans or the BNKA Stock Option Plan and outstanding at the
time this Agreement is executed, or the repurchase of shares of AMRBK common
stock from time to time in accordance with applicable securities laws; and

                           (ii)     Neither AMRBK nor BNKA shall declare, set
aside or pay any dividend or other distribution in respect of its common stock
(including, without limitation, any stock dividend or distribution) other than
regular quarterly cash dividends issued by AMRBK on its common stock in amounts
substantially equivalent to cash dividends paid prior to the date hereof (it
being understood that declaration of a quarterly cash dividend equal to the most
recent previous quarterly dividend will be deemed to meet this standard).
Notwithstanding anything to the contrary contained in this Agreement, AMRBK and
BNKA agree that BNKA shall pay a cash dividend to its shareholders for the third
quarter of 2004 in the amount Twenty-Three Cents ($0.23) per outstanding share
of BNKA common stock on the record date thereof.

                  3.3.k.   Access to Properties, Books and Records;
Confidentiality. Prior to the Effective Time of the Merger, each party shall
give each other party and its counsel, independent accountants and agents, full
access during normal business hours and upon reasonable request, to all of its
properties, books, contracts, commitments and records including, but not limited
to, the corporate, financial and operational records, papers, reports,
instructions, procedures, tax returns and filings tax settlement letters,
material contracts or commitments, regulatory examinations and correspondences
(but excluding any documents or materials subject to the attorney-client
privilege or related to consideration of the Merger), and shall allow each other
party to make copies of such materials (excluding regulatory examinations and
correspondence to the extent prohibited by applicable law or regulation) and
shall furnish each other party with all such information concerning its affairs
as each other party may reasonably request. Each party shall also use its best
efforts to cause its independent accountants to make available to each other
party, its accountants, counsel and other agents, to the extent reasonably
requested in connection with such review, such independent accountants' work
papers and documentation relating to its work papers and its audits of the books
and records of each party. The availability or actual delivery of such
information about a party shall not affect the covenants, representations and
warranties of any party contained in this Agreement and in the Agreement of
Merger. Each party shall use its best efforts to cause its officers, directors,
employees, auditors, independent accountants and attorneys to cooperate with
each other party in its reasonable requests for information. Each party shall
treat as confidential all such information in the same manner as each party
treats similar confidential information of its own, and if this Agreement is
terminated, each party shall continue to treat all such information as
confidential and to cause its employees to keep all such information
confidential and shall return such documents theretofore delivered by each other
party as each other party shall request, and shall use such information, or
cause it to be used, solely for the purposes of evaluating and completing the
transactions contemplated hereby; provided that each party may disclose any such
information to the extent required by federal or state securities laws or
otherwise required by any government agency or regulatory authority, or by
generally accepted accounting principles. The foregoing confidentiality
obligations shall not apply in respect of any information publicly available or
to any information previously known to the party in question, the use of which
is not otherwise restricted. Notwithstanding the foregoing, the parties agree to
comply with the terms and provisions of that certain Confidentiality Agreement
entered into between the parties dated June 9, 2004, and any inconsistency
between the terms and provisions of that Confidentiality Agreement and the
foregoing provisions shall be resolved in favor of the terms and provisions
contained in the Confidentiality Agreement.

                                      A-15


                  3.3.l.   Loan Performance. From and after the date of this
Agreement until the Effective Date, each party will provide to the other reports
and information as determined by the Chief Credit Officers of AMRBK and BNKA for
such month to provide adequate status reports on all loans classified or other
assets specially mentioned as substandard, doubtful or loss, past due reports,
non-accrual reports, loss reports, restructured loan reports, and quarterly call
reports submitted to regulators, if any, for review and monitoring by their
respective Chief Credit Officers of each bank.

4.       REPRESENTATIONS AND WARRANTIES OF BNKA.
         --------------------------------------

         BNKA represents and warrants to AMRBK that, except as set forth on a
schedule (the "BNKA Disclosure Schedule") to be delivered to AMRBK concurrently
with this Agreement and attached hereto as Exhibit B, corresponding in number
with the applicable section of this Agreement:

                  4.a.     Corporate Status and Power to Enter Into Agreements.
(i) BNKA is a banking corporation, organized and existing under the laws of the
State of California, (ii) subject to obtaining the Government Approvals and
approval of the principal terms of the Merger by the BNKA shareholders, BNKA has
all necessary corporate power to enter into this Agreement and the Agreement of
Merger and to carry out all of the terms and provisions hereof and thereof to be
carried out by it, (iii) BNKA holds a currently valid license, issued by the
California Commissioner of Financial Institutions to engage in the commercial
banking business with offices in the State of California at the locations at
which it is licensed and currently conducts business, and (iv) BNKA is not
subject to any directive, resolution, memorandum of understanding or order of
the FDIC, DFI or any other regulatory authority having jurisdiction over its
business or any of its assets or properties. Neither the scope of the business
of BNKA nor the location of its properties requires it to be licensed to do
business in any jurisdiction other than the State of California. BNKA's deposits
are insured by the FDIC to the maximum extent permitted by applicable law and
regulation.

                  4.b.     Articles, Bylaws, Books and Records. The copies of
the Articles of Incorporation and Bylaws of BNKA heretofore delivered to AMRBK
are complete and accurate copies thereof as in effect on the date hereof. The
minute books of BNKA made available to AMRBK contain a complete and accurate
record of all meetings of BNKA's Board of Directors (and committees thereof) and
shareholders. The corporate books and records (including financial statements)
of BNKA fairly reflect the material transactions to which BNKA is a party or by
which its properties are subject or bound, and such books and records have been
properly kept and maintained.

                  4.c.     Compliance With Laws, Regulations and Decrees. BNKA
(i) has the corporate power to own or lease its properties and to conduct its
business as currently conducted, (ii) to its knowledge, has complied in all
material respects with, and is not in material default of any laws, regulations,
ordinances, orders or decrees applicable to the conduct of its business and the
ownership of its properties, including but not limited to all federal and state
laws (including but not limited to the Bank Secrecy Act and the U.S.A. Patriot

                                      A-16


Act), rules and regulations relating to the offer, sale or issuance of
securities, and the operation of a commercial bank, other than where such
noncompliance or default is not likely to result in a material limitation on the
conduct of the business of BNKA or is not likely to otherwise have a material
adverse effect on BNKA, (iii) has not failed to file with the proper federal,
state, local or other authorities any material report or other document required
to be filed, and (iv) has all approvals, authorizations, consents, licenses,
clearances and orders of, and has currently effective all registrations with,
all government and regulatory authorities which are necessary to the business
and operations of BNKA as now being conducted.

                  4.d.     Capitalization. As of the date of this Agreement, the
authorized capital stock of BNKA consists of 10,000,000 shares of BNKA common
stock, of which 1,566,281 shares are duly authorized, validly issued, fully paid
and non-assessable and currently outstanding and 500,000 shares of BNKA
preferred stock, of which no shares are outstanding. Said capital stock has been
offered, sold and issued in compliance with all applicable securities laws. As
of the date of this Agreement, there are outstanding options to purchase 253,668
shares of BNKA common stock, at a weighted average exercise price of $13.65 per
share, issued pursuant to the BNKA Stock Option Plan. Said options were issued
and, upon issuance in accordance with the terms of the outstanding options, said
shares shall be issued, in compliance with all applicable securities laws.
Otherwise, there are no outstanding (i) options, agreements, calls or
commitments of any character which would obligate BNKA to issue, sell, pledge,
assign or otherwise encumber or dispose of, or to purchase, redeem or otherwise
acquire, any BNKA common stock or any other equity security of BNKA, or (ii)
warrants or options relating to, rights to acquire, or debt or equity securities
convertible into, shares of BNKA common stock or any other equity security of
BNKA.

                  4.e.     Trademarks and Trade Names. To the best of its
knowledge, BNKA (i) owns and has the exclusive right to use all trademarks,
trade names, patents, copyrights, service marks, trade secrets, or other
intellectual property rights (collectively, "Intellectual Property Rights") used
in or necessary for the conduct of its business as now or heretofore conducted;
and (ii) its not infringing upon the Intellectual Property Rights of any other
person or entity. No claim is pending or threatened by any person or entity
against or otherwise affecting the use by BNKA of any Intellectual Property
Rights and, to the best of its knowledge, there is no valid basis for any such
claim.

                  4.f.     Financial Statements, Regulatory Reports. No
financial statement or other document provided or to be provided to AMRBK as
required by Section 3.3.f. hereof, as of the date of such document, contained,
or as to documents to be delivered after the date hereof, will contain, any
untrue statement of a material fact, or, at the date thereof, omitted or will
omit to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which such statements
were or will be made, not misleading; provided, however, that information as of
a later date shall be deemed to modify contrary information as of any earlier
date. BNKA has filed all material documents and reports required to be filed by
them with the DFI and FDIC and any other government agency or regulatory
authority having jurisdiction over its business, assets or properties. All such
reports conform in all material respects with the requirements promulgated by
such government agencies and regulatory authorities. All compliance or
corrective action relating to BNKA required by government agencies and
regulatory authorities having jurisdiction over BNKA has been taken. Except as

                                      A-17


disclosed in such statements, reports or documents, BNKA has not received any
notification, formally or informally, from any agency or department of any
federal, state or local government or any regulatory authority or the staff
thereof (i) asserting that it is not in compliance with any of the statutes,
regulations or ordinances which such government or regulatory authority
enforces, or (ii) threatening to revoke any license, franchise, permit or
government authorization. BNKA has paid all assessments made or imposed by any
government agency. BNKA has delivered to AMRBK copies of all annual management
letters and opinions, and has made available to AMRBK for inspection all
reviews, correspondence and other documents in the files of BNKA prepared by
certified public accountants engaged by BNKA and delivered to BNKA since 2001.
The financial records of BNKA have been, and are being and shall be, maintained
in all material respects in accordance with all applicable legal and accounting
requirements sufficient to insure that all transactions reflected therein are,
in all material respects, executed in accordance with management's general or
specific authorization and recorded in conformity with generally accepted
accounting principles at the time in effect. To the knowledge of BNKA's
management, the data processing equipment, data transmission equipment, related
peripheral equipment and software used by BNKA in the operation of its business
to generate and retrieve its financial records are adequate for the current
needs of BNKA.

                  4.g.     Tax Returns.

                           (i)      BNKA has timely filed all federal, state,
county, local and foreign tax returns required to be filed by it, including,
without limitation, estimated tax, use tax, excise tax, real property and
personal property tax reports and returns, employer's withholding tax returns,
other withholding tax returns and Federal Unemployment Tax Returns, and all
other reports or other information required or requested to be filed by BNKA,
and each such return, report or other information was, when filed, complete and
accurate in all material respects. BNKA has paid all taxes, fees and other
government charges, including any interest and penalties thereon, when they have
become due, except those that are being contested in good faith, which contested
matters have been disclosed to AMRBK. BNKA has not been requested to give nor
has it given any currently effective waivers extending the statutory period of
limitation applicable to any tax return required to be filed by it for any
period. There are no claims pending against BNKA for any alleged deficiency in
the payment of any taxes, and BNKA does not know of any pending or threatened
audits, investigations or claims for unpaid taxes or relating to any liability
in respect of any taxes. There have been no events, including a change in
ownership, that would result in a reappraisal and establishment of a new
base-year full value for purposes of applicable provisions of the California
Constitution, of any real property owned in whole or in part by BNKA or to the
best of BNKA's knowledge, of any real property leased by BNKA.

                           (ii)     BNKA has made available to AMRBK for review
copies of all its tax returns with respect to taxes payable to the United States
of America and the State of California for the fiscal years ended 1999, 2000,
2001, 2002, and 2003.

                           (iii)    No consent has been filed relating to BNKA
pursuant to Section 341(f) of the IRC.

                  4.h.     Material Adverse Change. Except as heretofore
disclosed in writing by BNKA to AMRBK, since March 31, 2004, here has been (i)
no material adverse change in the business, assets, licenses, permits,
franchises, results of operations or financial condition of BNKA (whether or not
in the Ordinary Course of Business), (ii) no change in any of the assets,

                                      A-18


licenses, permits or franchises of BNKA that has had or can reasonably be
expected to have a material adverse effect on any of the items listed in clause
4.h.(i) above, (iii) no damage, destruction, or other casualty loss (whether or
not covered by insurance) that has had or can reasonably be expected to have a
material adverse effect on any of the items listed in clause 4.h.(i) above, (iv)
no amendment, modification, or termination of any existing, or entering into of
any new, contract, agreement, plan, lease, license, permit or franchise that is
material to the business, financial condition, assets, liabilities or operations
of BNKA, except in the Ordinary Course of Business; and (v) no disposition by
BNKA of one or more assets that, individually or in the aggregate, are material
to BNKA, except sales of assets in the Ordinary Course of Business.

                  4.i.     No Undisclosed Liabilities. Except for items for
which reserves have been established in the unaudited balance sheets of BNKA as
of March 31, 2004, BNKA has not incurred or discharged, and is not legally
obligated with respect to, any indebtedness, liability (including, without
limitation, a liability arising out of an indemnification, guarantee, hold
harmless or similar arrangement) or obligation (accrued or contingent, whether
due or to become due, and whether or not subordinated to the claims of its
general creditors), other than as a result of operations in the Ordinary Course
of Business after such date. No cash, stock or other dividend or any other
distribution with respect to the BNKA Shares has been declared, set aside or
paid, nor have any of the BNKA Shares been purchased, redeemed or otherwise
acquired, directly or indirectly, by BNKA since March 31, 2004.

                  4.j.     Properties and Leases.

                           (i)      BNKA has good and marketable title, free and
clear of all liens and encumbrances and the right of possession, subject to
existing leaseholds, to all real properties and good title, free and clear of
all liens and encumbrances, to all other property and assets, tangible and
intangible, reflected in the BNKA balance sheet as of March 31, 2004, (except
property held as lessee under leases disclosed in the BNKA Disclosure Schedule
and except personal property sold or otherwise disposed of since March 31, 2004,
in the Ordinary Course of Business), except for (a) liens for taxes or
assessments not delinquent, (b) such other liens and encumbrances and
imperfections of title as do not materially affect the value of such property as
reflected in the BNKA balance sheet as of March 31, 2004, or as currently shown
on the books and records of BNKA and which do not interfere with or impair its
present and continued use, or (c) exceptions disclosed in title reports and
preliminary title reports, copies of which have been provided to AMRBK. To the
knowledge of BNKA, all tangible properties of BNKA conform in all material
respects with all applicable ordinances, regulations and zoning laws. All
tangible properties of BNKA are in a good state of maintenance and repair and
are adequate for the current business of BNKA. No properties of BNKA, and, to
the best of BNKA's knowledge, no properties in which BNKA holds a collateral or
contingent interest or purchase option, are the subject of any pending or
threatened investigation, claim or proceeding relating to the use, storage or
disposal on such property of or contamination of such property by any toxic or
hazardous waste material or substance. To the best of its knowledge, BNKA does
not own, possess or have a collateral or contingent interest or purchase option
in any properties or other assets which contain or have located within or
thereon any hazardous or toxic waste material or substance unless the location
of such hazardous or toxic waste material or other substance or its use thereon
conforms in all material respects with all federal, state and local laws, rules,
regulations or other provisions regulating the discharge of materials into the

                                      A-19


environment. As to any real property not owned or leased by BNKA and held as
security for a loan or in which BNKA otherwise has an interest, BNKA has not
controlled, directed or participated in the operation or management of any such
real property or any facilities or enterprise conducted thereon, such that it
has become an owner or operator of such real property under applicable
environmental laws.

                           (ii)     All properties held by BNKA under leases are
held under valid, binding and enforceable leases, with such exceptions as are
not material and do not interfere with the conduct of the business of BNKA, and
BNKA enjoys quiet and peaceful possession of such leased property. BNKA is not
in material default in any respect under any material lease, agreement or
obligation regarding its properties to which it is a party or by which it is
bound.

                           (iii)    Except as disclosed to AMRBK in the BNKA
Disclosure Schecule, all of BNKA's rights and obligations under the leases
referred to in Section 4.j.(ii) above do not require the consent of any other
party to the transaction contemplated by this Agreement and the Agreement of
Merger. Where required, BNKA shall obtain, prior to the Effective Date, the
consent of such parties to such transaction.

                  4.k.     Material Contracts. Except as disclosed in the BNKA
Disclosure Schedule and excluding loans, lines of credit, loan commitments or
letters of credit to which BNKA is a party, BNKA is not a party to or bound by
any contract or other agreement made in the Ordinary Course of Business which
involves aggregate future payments by or to BNKA of more than Fifty Thousand
Dollars ($50,000) and which is made for a fixed period expiring more than one
year from the date hereof, and BNKA is not a party to or bound by any agreement
not made in the Ordinary Course of Business which is to be performed at or after
the date hereof. Each of the contracts and agreements disclosed to AMRBK
pursuant to this Section 4.k. is a legal and binding obligation (subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of general
applicability), and no breach or default (and no condition which, with notice or
passage of time, or both, could become a breach or default) exists with respect
thereto.

                  4.l.     Classified Loans. Except as disclosed in the BNKA
Disclosure Schedule, there are no loans presently owned by BNKA that have been
classified by BNKA management or BNKA internal policy or procedure, any outside
review examiner, accountant or any bank regulatory authority as "Non-Accrual,"
"Watch," "Other Assets Specially Mentioned," "Substandard," "Doubtful," or
"Loss" or classified using categories or words with similar import and all loans
or portions thereof so classified shall have been reserved to the extent
required. BNKA regularly reviews and appropriately classifies their loans in
accordance with all applicable legal and regulatory requirements and generally
accepted banking practices. All loans and investments of BNKA are legal, valid
and binding obligations enforceable in accordance with their respective terms
and are not subject to any setoffs, counterclaims or disputes (subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of general
applicability), except as disclosed in the BNKA Disclosure Schedule or reserved
for in the unaudited balance sheet of BNKA as of March 31, 2004, and were duly
authorized under and made in compliance with applicable federal and state laws
and regulations. BNKA does not have any extensions of credit, investments,
guarantees, indemnification agreements or commitments for the same (including
without limitation commitments to issue letters of credit, to create
acceptances, or to repurchase securities, federal funds or other assets) other
than those documented on the books and records of BNKA.

                                      A-20


                  4.m.     No Restrictions on Investments. Except for pledges to
secure public and trust deposits and repurchase agreements in the Ordinary
Course of Business and securities classified as "held-to-maturity" as defined
under SFAS No. 115, none of the investments reflected in the BNKA balance sheet
as of March 31, 2004, and none of the investments made by BNKA since March 31,
2004, is subject to any restriction, whether contractual or statutory, which
materially impairs the ability of BNKA to freely dispose of such investment at
any time.

                  4.n.     Employment Benefit Plans/ERISA.

                           (i)      BNKA has provided to AMRBK an accurate list
setting forth all bonus, incentive compensation, profit-sharing, pension,
retirement, stock purchase, stock option, deferred compensation, severance,
hospitalization, medical, dental, vision, group insurance, death benefit,
disability and other fringe benefit plans, trust agreements, arrangements and
commitments of BNKA (including but not limited to any such plans, agreements,
arrangements and commitments applicable to former employees or retired
employees, or for which such persons are eligible) (collectively, "Employee
Plans"), if any, together with copies of all such Employee Plans that are
documented and any and all contracts of employment, and has made available to
AMRBK any Board of Directors' minutes (or committee minutes) authorizing,
approving or guaranteeing such Employee Plans and contracts; and

                           (ii)     All contributions, premiums or other
payments due from BNKA to (or under) any Employee Plans have been fully paid or
adequately provided for on BNKA's audited financial statements for the year
ended December 31, 2003, or unaudited financial statements for the three (3)
months ended March 31, 2004. All accruals thereon (including, where appropriate,
proportional accruals for partial periods) have been made in accordance with
generally accepted accounting principles consistently applied on a reasonable
basis; and

                           (iii)    BNKA has disclosed in writing to AMRBK the
names of each director, officer and employee of BNKA; and

                           (iv)     The Employee Plans have been administered
where required in substantial compliance with ERISA, the IRC and the terms of
such Employee Plans, and there is no pending or threatened litigation relating
to any such Employee Plan; and

                           (v)      BNKA has not offered in the past health
benefits for retired employees and has no intention to offer any additional
health or other benefits for retired employees; and

                           (vi)     Each Employee Plan is in full force and
effect, and neither BNKA nor any other party thereto is in material default
under any of them, and there have been no claims of default and there are no
facts or conditions which if continued, or on notice, will result in a material
default under any Employee Plans; and

                                      A-21


                           (vii)    BNKA has provided to AMRBK a list of all
agreements or other understandings pursuant to which the consummation of the
transactions contemplated hereby will (a) entitle any current or former employee
or officer of BNKA to severance pay, unemployment compensation or any other
payment, or (b) accelerate the time of payment or vesting or increase the amount
of compensation due any such employee or officer.

                  4.o.     Collective Bargaining and Employment Agreements.
Except as provided in this Agreement or as previously disclosed to AMRBK in
writing, BNKA does not have any union or collective bargaining or written
employment agreements, contracts or other agreements with any labor organization
or with any member of management, or any management or consultation agreement
not terminable at will by BNKA without liability and no such contract or
agreement has been requested by, or is under discussion by management with, any
group of employees, any member of management or any other person. There are no
material controversies pending between BNKA and any current or former employees,
and to the best of BNKA's knowledge, there are no efforts presently being made
by any labor union seeking to organize any of such employees.

                  4.p.     Compensation of Officers and Employees. Except as
disclosed in the BNKA Disclosure Schedule, no officer or employee of BNKA is
receiving aggregate direct remuneration at a rate exceeding Fifty Thousand
Dollars ($50,000) per annum.

                  4.q.     Legal Actions and Proceedings. Except as disclosed in
the BNKA Disclosure Schedule, BNKA is not a party to, or so far as known to it,
threatened with, and to BNKA's knowledge, there is no reasonable basis for, any
legal action or other proceeding or investigation before any court, any
arbitrator of any kind or any government agency, and BNKA is not subject to any
potential adverse claim, the outcome of which could involve the payment or
receipt by BNKA of any amount in excess of Twenty-Five Thousand Dollars
($25,000), unless an insurer has agreed to defend against and pay the amount of
any resulting liability without reservation, or, if any such legal action,
proceeding, investigation or claim will not involve the payment by BNKA of a
monetary amount, which could have a material adverse effect on BNKA or its
business or property or the transactions contemplated hereby. BNKA has no
knowledge of any pending or threatened claims or charges under the Community
Reinvestment Act, before the Equal Employment Opportunity Commission, the
California Department of Fair Housing & Economic Development, the California
Unemployment Appeals Board, or any federal or state human relations commission
or agency. There is no labor dispute, strike, slow-down or stoppage pending or,
to the best of the knowledge of BNKA, threatened against BNKA.

                  4.r.     Execution and Delivery of the Agreement.

                           (i)      The execution and delivery of this Agreement
and the Agreement of Merger have been duly authorized by the Board of Directors
of BNKA and, when the principal terms of the Merger, this Agreement and the
Agreement of Merger have been duly approved by the affirmative vote of the
holders of the majority of the outstanding BNKA Shares either at a meeting of
shareholders duly called and held or by action taken without a meeting pursuant
to the BNKA Articles, Bylaws and California law, the Merger, this Agreement and
the Agreement of Merger will be duly and validly authorized by all necessary
corporate action on the part of BNKA.

                                      A-22


                           (ii)     This Agreement has been duly executed and
delivered by BNKA and (assuming due execution and delivery by AMRBK and AMRB)
constitutes, and the Agreement of Merger, upon its execution and delivery by
BNKA (after obtaining all applicable Government Approvals and assuming due
execution and delivery by AMRB) will constitute, a legal and binding obligation
of BNKA in accordance with its terms.

                           (iii)    The execution and delivery by BNKA of this
Agreement and the Agreement of Merger and the consummation of the transactions
herein and therein contemplated (a) do not violate any provision of the Articles
of Incorporation or Bylaws of BNKA, or violate in any material respect any
provision of federal or state law or any government rule or regulation (assuming
(1) receipt of the Government Approvals, (2) receipt of the requisite BNKA
shareholder approval referred to in Section 4(r)(i) hereof, and (3) receipt of
appropriate permits or approvals under state securities or "blue sky" laws, and
a registration statement on the appropriate form is declared effective by the
Securities and Exchange Commission), and (b) do not require any consent of any
person under, conflict in any material respect with or result in a material
breach of, or accelerate the performance required by any of the terms of, any
material debt instrument, lease, license, covenant, agreement or understanding
to which BNKA is a party or by which it is bound or any order, ruling, decree,
judgment, arbitration award or stipulation to which BNKA is subject, or
constitute a material default thereunder or result in the creation of any lien,
claim, security interest, encumbrance, charge, restriction or right of any third
party of any kind whatsoever upon any of the properties or assets of BNKA.

                  4.s.     Retention of Broker or Consultant. No broker, agent,
finder, consultant or other party (other than legal, compliance, loan reviewers
and accounting advisors) has been retained by BNKA or is entitled to be paid
based upon any agreements, arrangements or understandings made by BNKA in
connection with any of the transactions contemplated by this Agreement or the
Agreement of Merger, except that BNKA has engaged the firm of Hoefer & Arnett,
Inc. to provide consulting services to BNKA, including an opinion regarding the
fairness of the consideration to be received by BNKA shareholders in the Merger.
BNKA has provided AMRBK with a true and accurate copy of its agreement(s) with
Hoefer & Arnett, Inc.

                  4.t.     Insurance. BNKA is and continuously since its
inception has been, insured with reputable insurers against all risks normally
insured against by banks, and all of the insurance policies and bonds maintained
by BNKA are in full force and effect, BNKA is not in default thereunder and all
material claims thereunder have been filed in due and timely fashion. In the
best judgment of the management of BNKA, such insurance coverage is adequate for
BNKA. Since March 31, 2004, there has not been any damage to, destruction of, or
loss of any assets of BNKA not covered by insurance that could have a material
adverse effect on the business, financial condition, properties, assets or
results of operations of BNKA.

                  4.u.     Loan Loss Reserves. The BNKA loan loss reserve shall
be adequate to cover the risk identified in the loan portfolio based on the
Company's policy and methodology, which has been previously provided.

                                      A-23


                  4.v.     Transactions With Affiliates. Except in the Ordinary
Course of Business, BNKA has not extended credit, committed itself to extend
credit, or transferred any asset to or assumed or guaranteed any liability of
the employees or directors of BNKA, or to any spouse or child of any of them, or
to any of their "affiliates" or "associates" as such terms are defined in Rule
405 under the Securities Act of 1933, as amended (the "1933 Act"). BNKA has not
entered into any other transactions with the employees or directors of BNKA or
any spouse or child of any of them, or any of their affiliates or associates,
except as disclosed in writing to AMRBK. Any such transactions have been on
terms no less favorable to BNKA than those which would prevail in an arms-length
transaction with an independent third party. BNKA has not violated any
applicable regulation of any government agency or regulatory authority having
jurisdiction over BNKA in connection with any such transactions described in
this subsection.

                  4.w.     Risk Management Instruments. All interest rate swaps,
caps, floors, option agreements, futures and forward contracts and other similar
risk management arrangements, whether entered into for BNKA's own account (all
of which are listed on the BNKA Disclosure Schedule), if any, were entered into
in accordance with prudent business practices and all applicable laws, rules,
regulations and regulatory policies and with counterparties believed to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of BNKA, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and are in full force and effect. Neither BNKA, nor to BNKA's
knowledge, any other party thereto, is in breach of any of its obligations under
any such agreement or arrangement.

                  4.x.     Information in Joint Proxy Statement/Prospectus. The
information pertaining to BNKA which has been or will be furnished to AMRBK for
or on behalf of BNKA for inclusion in the Joint Proxy Statement/Prospectus to be
provided to the shareholders of AMRBK and BNKA, or in the applications to be
filed to obtain the Government Approvals (the "Applications"), does not and will
not contain any untrue statement of any material fact or omit or will omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading; provided, however, that information of a later date shall be deemed
to modify contrary information as of an earlier date. All financial statements
of AMRBK and BNKA included in or accompanying the Joint Proxy
Statement/Prospectus to be provided to the shareholders of AMRBK and BNKA, or
the Applications, will present fairly the financial condition and results of
operations of BNKA at the dates and for the periods covered by such statements
in accordance with generally accepted accounting principles consistently applied
throughout the periods covered by such statements. BNKA shall promptly advise
AMRBK in writing if, at any time prior to the Effective Time of the Merger, BNKA
shall obtain knowledge of any facts that would make it necessary to amend or
supplement the Joint Proxy Statement/Prospectus provided to the shareholders of
AMRBK and BNKA or any Application, in order to make the statements therein not
misleading or to comply with applicable laws and regulations.

                  4.y.     Community Reinvestment Act Compliance. BNKA is in
substantial compliance with the applicable provisions of the Community
Reinvestment Act of 1977 and the regulations promulgated thereunder
(collectively, the "CRA") and has received a CRA rating of "satisfactory" from
the DFI in its most recent examination, and BNKA has no knowledge of the
existence of any fact or circumstance or set of facts or circumstances which

                                      A-24


could be reasonably expected to result in BNKA failing to be in substantial
compliance with such provisions or having its current rating lowered.

                  4.z.     Accuracy and Effective Date of Representations and
Warranties, Covenants and Agreements. Each representation, warranty, covenant
and agreement of BNKA set forth in this Agreement shall be deemed to be made on
and as of the date hereof (except to the extent that a representation or
warranty is qualified as set forth in the BNKA Disclosure Schedule corresponding
in number with the applicable section of such representation or warranty), the
Closing Date and the Effective Time of the Merger. No representation or warranty
by BNKA, and no statement by BNKA in any certificate, agreement, schedule or
other document furnished or to be furnished in connection with the transactions
contemplated by this Agreement or the Agreement of Merger, was or will be
inaccurate, incomplete or incorrect in any material respect as of the date
furnished or contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make such
representation, warranty or statement not misleading to AMRBK.

5.       REPRESENTATIONS AND WARRANTIES OF AMRBK.
         ---------------------------------------

         In the following representations and warranties, all references to
assets, liabilities, properties, rights, obligations, financial condition,
operations, knowledge, information and other characteristics of AMRBK shall be
deemed to include reference to those characteristics of AMRBK on a consolidated
basis, except as the context otherwise indicates or requires. AMRBK represents
and warrants to BNKA that, except as set forth on a schedule (the "AMRBK
Disclosure Schedule") to be delivered to BNKA concurrently with the execution
and delivery of this Agreement and attached hereto as Exhibit C, corresponding
in number with the applicable section of this Agreement:

                  5.a.     Corporate Status and Power to Enter Into Agreements.
(i) AMRBK is a corporation duly incorporated, validly existing and in good
standing under California law and is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended, (ii) subject to obtaining the
Government Approvals and approval of the principal terms of the Merger by the
AMRBK shareholders, AMRBK has all necessary corporate power to enter into this
Agreement and the Agreement of Merger and to carry out all of the terms and
provisions hereof and thereof to be carried out by it, (iii) AMRB holds a
currently valid license issued by the California Commissioner of Financial
Institutions to engage in the commercial banking business in the State of
California at the locations at which it is licensed and currently conducts
business, and (iv) neither AMRBK nor AMRB is subject to any directive,
resolution, memorandum of understanding or order of the FDIC, FRB, California
Commissioner of Financial Institutions or any other regulatory authority having
jurisdiction over its business or any of its assets or properties. Neither the
scope of the business of AMRBK nor the location of its properties requires AMRBK
or AMRB to be licensed to do business in any jurisdiction other than the State
of California. AMRB's deposits are insured by the FDIC to the maximum extent
permitted by applicable law and regulation.

                  5.b.     Articles, Bylaws, Books and Records. The copies of
the Articles of Incorporation and Bylaws of AMRBK heretofore delivered to BNKA
are complete and accurate copies thereof as in effect on the date hereof. The
minute books of AMRBK made available to BNKA contain a complete and accurate
record of all meetings of AMRBK's Board of Directors (and committees thereof)
and shareholders. The corporate books and records (including financial

                                      A-25


statements) of AMRBK fairly reflect the material transactions to which AMRBK is
a party or by which its properties are subject or bound, and such books and
records have been properly kept and maintained.

                  5.c.     Compliance With Laws, Regulations and Decrees. AMRBK
(i) has the corporate power to own or lease its properties and to conduct its
business as currently conducted, (ii) to its knowledge, has complied in all
material respects with, and is not in material default of any laws, regulations,
ordinances, orders or decrees applicable to the conduct of its business and the
ownership of its properties, including but not limited to all federal and state
laws (including but not limited to the Bank Secrecy Act and U.S.A Patriot Act),
rules and regulations relating to the offer, sale or issuance of securities, and
the operation of a commercial bank, other than where such noncompliance or
default is not likely to result in a material limitation on the conduct of the
business of AMRBK or is not likely to otherwise have a material adverse effect
on AMRBK and AMRB taken as a whole, (iii) have not failed to file with the
proper federal, state, local or other authorities any material report or other
document required to be filed, and (iv) have all approvals, authorizations,
consents, licenses, clearances and orders of, and have currently effective all
registrations with, all government agencies and regulatory authorities which are
necessary to the business and operations of AMRBK and AMRB as now being
conducted.

                  5.d.     Capitalization. As of the date of this Agreement, the
authorized capital stock of AMRBK consists of 20,000,000 shares of AMRBK common
stock, no par value, of which 4,209,881 shares are duly authorized, validly
issued, fully paid and nonassessable and currently outstanding. Said capital
stock has been offered, sold and issued in compliance with all applicable
securities laws. As of the date of this Agreement, there are currently
outstanding options to purchase 415,102 shares of AMRBK common stock, at a
weighted average exercise price of $9.215 per share, issued pursuant to the
AMRBK 1995 and 2000 Stock Option Plans. Said options were issued and, upon
issuance in accordance with the terms of the outstanding options said shares
shall be issued, in compliance with all applicable securities laws. Otherwise,
there are no outstanding (i) options, agreements, calls or commitments of any
character which would obligate AMRBK to issue, sell, pledge, assign or otherwise
encumber or dispose of, or to purchase, redeem or otherwise acquire, any AMRBK
common stock or any other equity security of AMRBK, or (ii) warrants or options
relating to, rights to acquire, or debt or equity securities convertible into,
shares of AMRBK common stock or any other equity security of AMRBK. AMRBK owns
all of the outstanding equity securities of AMRB. Except (i) as collateral for
outstanding loans held in their loan portfolios, (ii) for certain financial
institution equity securities owned by AMRB, (iii) for ownership of the equity
securities of inactive subsidiaries, American River Financial, American River
Mortgage and ARBCO, and (iv) as summarized in the AMRBK Disclosure Schedule,
neither AMRBK nor AMRB owns, directly or indirectly, any other equity interests
in any bank (other than AMRBK's ownership of AMRB), corporation or other entity.

                  5.e.     Trademarks and Trade Names. To the best of AMRBK's
knowledge, AMRBK and AMRB (i) own and have the exclusive right to use all
Intellectual Property Rights used in or necessary for the conduct of their
businesses as now or heretofore conducted; and (ii) are not infringing upon the
Intellectual Property Rights of any other person or entity. No claim is pending
or threatened by any person or entity against or otherwise affecting the use by
AMRBK or AMRB of any Intellectual Property Rights and, to the best of its
knowledge, there is no valid basis for any such claim.

                                      A-26


                  5.f.     Financial Statements, Regulatory Reports. No
financial statement or other document provided or to be provided to BNKA as
required by Section 3.3.f. hereof, as of the date of such document, contained,
or as to documents to be delivered after the date hereof, will contain, any
untrue statement of a material fact, or, at the date thereof, omitted or will
omit to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which such statements
were or will be made, not misleading; provided, however, that information as of
a later date shall be deemed to modify contrary information as of any earlier
date. AMRBK has filed all material documents and reports required to be filed by
it with the Securities and Exchange Commission, FDIC, FRB, the DFI and any other
government agency or regulatory authority having jurisdiction over their
business, assets or properties. All such reports conform in all material
respects with the requirements promulgated by such government agencies and
regulatory authorities. All compliance or corrective action relating to AMRBK
and AMRB required by government agencies and regulatory authorities having
jurisdiction over AMRBK or AMRB has been taken. Except as disclosed in such
statements, reports or documents, neither AMRBK nor AMRB has received any
notification, formally or informally, from any agency or department of any
federal, state or local government or any regulatory authority or the staff
thereof (a) asserting that it is not in compliance with any of the statutes,
regulations or ordinances which such government or regulatory authority
enforces, or (b) threatening to revoke any license, franchise, permit or
government authorization. AMRBK and AMRB have paid all assessments made or
imposed by any government agency. AMRBK has delivered to BNKA copies of all
annual management letters and opinions, and has made available to BNKA for
inspection all reviews, correspondence and other documents in the files of AMRBK
prepared by certified public accountants engaged by AMRBK and delivered to AMRBK
since March 31, 2004. The financial records of AMRBK have been, and are being
and shall be, maintained in all material respects in accordance with all
applicable legal and accounting requirements sufficient to insure that all
transactions reflected therein are, in all material respects, executed in
accordance with management's general or specific authorization and recorded in
conformity with generally accepted accounting principles at the time in effect.
The data processing equipment, data transmission equipment, related peripheral
equipment and software used by AMRBK in the operation of its business to
generate and retrieve its financial records are adequate for the current needs
of AMRBK.

                  5.g.     Tax Returns.

                           (i)      AMRBK has timely filed all federal, state,
county, local and foreign tax returns required to be filed by it, including,
without limitation, estimated tax, use tax, excise tax, real property and
personal property tax reports and returns, employer's withholding tax returns,
other withholding tax returns and Federal Unemployment Tax Returns, and all
other reports or other information required or requested to be filed by AMRBK,
and each such return, report or other information was, when filed, complete and
accurate in all material respects. AMRBK has paid all taxes, fees and other
government charges, including any interest and penalties thereon, when they have
become due, except those that are being contested in good faith, which contested
matters have been disclosed to BNKA. AMRBK has not been requested to give nor
has it given any currently effective waivers extending the statutory period of
limitation applicable to any tax return required to be filed by it for any

                                      A-27


period. There are no claims pending against AMRBK for any alleged deficiency in
the payment of any taxes, and AMRBK does not know of any pending or threatened
audits, investigations or claims for unpaid taxes or relating to any liability
in respect of any taxes. There have been no events, including a change in
ownership, that would result in a reappraisal and establishment of a new
base-year full value for purposes of applicable provisions of the California
Constitution, of any real property owned in whole or in part by AMRBK or to the
best of AMRBK's knowledge, of any real property leased by AMRBK.

                           (ii)     AMRBK has made available to BNKA for review
copies of all its tax returns with respect to taxes payable to the United States
of America and the State of California for the fiscal years ended 1999, 2000,
2001, 2002 and 2003.

                           (iii)    No consent has been filed relating to AMRBK
pursuant to Section 341(f) of the IRC.

                  5.h.     Material Adverse Change. Except as heretofore
disclosed in writing by AMRBK to BNKA, since March 31, 2004, there has been (i)
no material adverse change in the business, assets, licenses, permits,
franchises, results of operations or financial condition of AMRBK (whether or
not in the Ordinary Course of Business), (ii) no change in any of the assets,
licenses, permits or franchises of AMRBK that has had or can reasonably be
expected to have a material adverse effect on any of the items listed above,
(iii) no damage, destruction, or other casualty loss (whether or not covered by
insurance) that has had or can reasonably be expected to have a material adverse
effect on any of the items listed above, (iv) no amendment, modification, or
termination of any existing, or entering into of any new, contract, agreement,
plan, lease, license, permit or franchise that is material to the business,
financial condition, assets, liabilities or operations of AMRBK, except in the
Ordinary Course of Business, and (v) no disposition by AMRBK of one or more
assets that, individually or in the aggregate, are material to AMRBK, except
sales of assets in the Ordinary Course of Business.

                  5.i.     No Undisclosed Liabilities. Except for items for
which reserves have been established in the unaudited balance sheets of AMRBK as
of March 31, 2004, AMRBK has not incurred or discharged, and is not legally
obligated with respect to, any indebtedness, liability (including, without
limitation, a liability arising out of an indemnification, guarantee, hold
harmless or similar arrangement) or obligation (accrued or contingent, whether
due or to become due, and whether or not subordinated to the claims of its
general creditors), other than as a result of operations in the Ordinary Course
of Business after such date. No agreement pursuant to which any loans or other
assets have been or will be sold by AMRBK entitles the buyer of such loans or
other assets, unless there is a material breach of a representation or covenant
by AMRBK to cause AMRBK repurchase such loan or other asset or to pursue any
other form of recourse against AMRBK. AMRBK has not knowingly made or shall make
any representation or covenant in any such agreement that contained or shall
contain any untrue statement of a material fact or omitted or shall omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which such representations and/or
covenants were made or shall be made, not misleading.

                                      A-28


                  5.j.     Properties and Leases.

                           (i)      AMRBK and/or AMRB has good and marketable
title, free and clear of all liens and encumbrances and the right of possession,
subject to existing leaseholds, to all real properties and good title, free and
clear of all liens and encumbrances, to all other property and assets, tangible
and intangible, reflected in the AMRBK balance sheet as of March 31, 2004,
(except property held as lessee under leases disclosed in writing prior to the
date hereof and except personal property sold or otherwise disposed of since
March 31, 2004, in the Ordinary Course of Business), except for (a) liens for
taxes or assessments not delinquent, (b) such other liens and encumbrances and
imperfections of title as do not materially affect the value of such property as
reflected in the AMRBK balance sheet as of March 31, 2004, or as currently shown
on the books and records of AMRBK and which do not interfere with or impair its
present and continued use, or (c) exceptions disclosed in title reports and
preliminary title reports, copies of which have been provided to BNKA. All
tangible properties of AMRBK and/or AMRB conform in all material respects with
all applicable ordinances, regulations and zoning laws. To the knowledge of
AMRBK, all tangible properties of AMRBK and/or AMRB are in a good state of
maintenance and repair and are adequate for the current business of AMRBK. No
properties of AMRBK and/or AMRB, and, to the best of AMRBK's knowledge, no
properties in which AMRBK and/or AMRB holds a collateral or contingent interest
or purchase option, are the subject of any pending or threatened investigation,
claim or proceeding relating to the use, storage or disposal on such property of
or contamination of such property by any toxic or hazardous waste material or
substance. To the best of AMRBK's knowledge, AMRBK and/or AMRB does not own,
possess or have a collateral or contingent interest or purchase option in any
properties or other assets which contain or have located within or thereon any
hazardous or toxic waste material or substance unless the location of such
hazardous or toxic waste material or other substance or its use thereon conforms
in all material respects with all federal, state and local laws, rules,
regulations or other provisions regulating the discharge of materials into the
environment. As to any real property not owned or leased by AMRBK and/or AMRB
and held as security for a loan or in which AMRBK otherwise has an interest,
AMRBK and/or AMRB has not controlled, directed or participated in the operation
or management of any such real property or any facilities or enterprise
conducted thereon, such that it has become an owner or operator of such real
property under applicable environmental laws.

                           (ii)     All properties held by AMRBK and/or AMRB
under leases are held under valid, binding and enforceable leases, with such
exceptions as are not material and do not interfere with the conduct of the
business of AMRBK, and AMRBK and/or AMRB enjoy quiet and peaceful possession of
such leased property. AMRBK and/or AMRB is not in material default in any
respect under any material lease, agreement or obligation regarding its
properties to which it is a party or by which it is bound.

                           (iii)    Except as disclosed to BNKA in writing, all
of AMRBK's or AMRB's rights and obligations under the leases referred to in
Section 5.j.(ii) above do not require the consent of any other party to the
transaction contemplated by this Agreement and the Agreement of Merger. Where
required, AMRBK shall obtain, prior to the Effective Date, the consent of such
parties to such transactions.

                                      A-29


                  5.k.     Material Contracts. Except as previously disclosed to
BNKA in writing and excluding loans, lines of credit, loan commitments or
letters of credit to which AMRBK is a party, AMRBK is not a party to or bound by
any contract or other agreement made in the Ordinary Course of Business which
involves aggregate future payments by or to AMRBK of more than Fifty Thousand
Dollars ($50,000) and which is made for a fixed period expiring more than one
year from the date hereof, and AMRBK is not a party to or bound by any agreement
not made in the Ordinary Course of Business which is to be performed at or after
the date hereof. Each of the contracts and agreements disclosed to BNKA pursuant
to this Section 5.k. is a legal and binding obligation (subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to equitable principles of general
applicability), and no breach or default (and no condition which, with notice or
passage of time, or both, could become a breach or default) exists with respect
thereto.

                  5.l.     Classified Loans. Except as previously disclosed to
BNKA in writing, there are no loans presently owned by AMRB that have been
classified by AMRB's management or AMRB internal policy or procedure, any
outside review examiner, accountant or any bank regulatory authority as
"Non-Accrual," "Watch," "Other Assets Specially Mentioned," "Substandard,"
"Doubtful," or "Loss" or classified using categories or words with similar
import and all loans or portions thereof so classified have been reserved to the
extent required. AMRB regularly reviews and appropriately classifies its loans
in accordance with all applicable legal and regulatory requirements and
generally accepted banking practices. All loans and investments of AMRB are
legal, valid and binding obligations enforceable in accordance with their
respective terms and are not subject to any setoffs, counterclaims or disputes
(subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and subject, as to enforceability, to equitable
principles of general applicability), except as disclosed to BNKA in writing or
reserved for in the unaudited balance sheet of AMRB as of March 31, 2004, and
were duly authorized under and made in compliance with applicable federal and
state laws and regulations. AMRB has no extensions of credit, investments,
guarantees, indemnification agreements or commitments for the same (including
without limitation commitments to issue letters of credit, to create
acceptances, or to repurchase securities, federal funds or other assets) other
than those documented on the books and records of AMRB.

                  5.m.     No Restrictions on Investments. Except for pledges to
secure public and trust deposits and repurchase agreements in the Ordinary
Course of Business and securities classified as "held-to-maturity" as defined
under SFAS No. 115, none of the investments reflected in the AMRBK balance sheet
as of March 31, 2004, and none of the investments made by AMRBK since March 31,
2004, is subject to any restriction, whether contractual or statutory, which
materially impairs the ability of AMRBK to freely dispose of such investment at
any time.

                  5.n.     Employment Benefit Plans/ERISA.

                           (i)      AMRBK has provided to BNKA an accurate list
setting forth all bonus, incentive compensation, profit-sharing, pension,
retirement, stock purchase, stock option, deferred compensation, severance,
hospitalization, medical, dental, vision, group insurance, death benefit,
disability and other fringe benefit plans, trust agreements, arrangements and
commitments of AMRBK (including but not limited to any such plans, agreements,
arrangements and commitments applicable to former employees or retired
employees, or for which such persons are eligible) (collectively, "Employee
Plans"), if any, together with copies of all such Employee Plans that are

                                      A-30


documented and any and all contracts of employment, and has made available to
BNKA any Board of Directors' minutes (or committee minutes) authorizing,
approving or guaranteeing such Employee Plans and contracts; and

                           (ii)     All contributions, premiums or other
payments due from AMRBK to (or under) any Employee Plans have been fully paid or
adequately provided for on AMRBK's audited financial statements for the year
ended 2003, or unaudited financial statements for the three (3) months ended
March 31, 2004. All accruals thereon (including, where appropriate, proportional
accruals for partial periods) have been made in accordance with generally
accepted accounting principles consistently applied on a reasonable basis; and

                           (iii)    AMRBK has disclosed in writing to BNKA the
names of each director, officer and employee of AMRBK and AMRB; and

                           (iv)     The Employee Plans have been administered
where required in substantial compliance with ERISA, the IRC and the terms of
such Employee Plans, and there is no pending or threatened litigation relating
to any such Employee Plan; and

                           (v)      Except as disclosed in the AMRBK Disclosure
Schedule, AMRBK and AMRB have not offered in the past health benefits for
retired employees and have no intention to offer any additional health or other
benefits for retired employees; and

                           (vi)     Each Employee Plan is in full force and
effect, and neither AMRBK, AMRB, nor any other party thereto is in material
default under any of them, and there have been no claims of default and there
are no facts or conditions which if continued, or on notice, will result in a
material default under any Employee Plans; and

                           (vii)    AMRBK has provided to BNKA a list of all
agreements or other understandings pursuant to which the consummation of the
transactions contemplated hereby will (a) entitle any current or former employee
or officer of AMRBK or AMRB to severance pay, unemployment compensation or any
other payment, or (b) accelerate the time of payment or vesting or increase the
amount of compensation due any such employee or officer.

                  5.o.     Collective Bargaining and Employment Agreements.
Except as disclosed in the AMRBK Disclosure Schedule, AMRBK and AMRB has no
union or collective bargaining or written employment agreements, contracts or
other agreements with any labor organization or with any member of management,
or any management or consultation agreement not terminable at will by AMRBK
without liability and no such contract or agreement has been requested by, or is
under discussion by management with, any group of employees, any member of
management or any other person. There are no material controversies pending
between AMRBK and any current or former employees, and to the best of AMRBK's
knowledge, there are no efforts presently being made by any labor union seeking
to organize any of such employees.

                  5.p.     Compensation of Officers and Employees. Except as
disclosed in the AMRBK Disclosure Schedule, (i) no officer or employee of AMRBK
or AMRB is receiving aggregate direct remuneration at a rate exceeding One
Hundred Thousand Dollars ($100,000) per annum, and (ii) the consummation of the
transactions contemplated by this Agreement and the Agreement of Merger will not

                                      A-31


(either alone or upon the occurrence of any additional or further acts or
events) result in any payment (whether of severance pay or otherwise) becoming
due from AMRBK to any employee of AMRBK.

                  5.q.     Legal Actions and Proceedings. Except as disclosed in
the AMRBK Disclosure Schedule, AMRBK is not a party to, or so far as known to
it, threatened with, and to AMRBK's knowledge, there is no reasonable basis for,
any legal action or other proceeding or investigation before any court, any
arbitrator of any kind or any government agency, and AMRBK is not subject to any
potential adverse claim, the outcome of which could involve the payment or
receipt by AMRBK of any amount in excess of One Hundred Thousand Dollars
($100,000), unless an insurer has agreed to defend against and pay the amount of
any resulting liability without reservation, or, if any such legal action,
proceeding, investigation or claim will not involve the payment by AMRBK of a
monetary amount, which could reasonably be expected to have a material adverse
effect on AMRBK or its business or property or the transactions contemplated
hereby. AMRBK has no knowledge of any pending or threatened claims or charges
under the Community Reinvestment Act, before the Equal Employment Opportunity
Commission, the California Department of Fair Housing and Economic Development,
the California Unemployment Appeals Board, or any federal or state human
relations commission or agency. There is no labor dispute, strike, slow-down or
stoppage pending or, to the best of the knowledge of AMRBK, threatened against
AMRBK.

                  5.r.     Execution and Delivery of the Agreement.

                           (i)      The execution and delivery of this Agreement
and the Agreement of Merger have been duly authorized by the Boards of Directors
of AMRBK and AMRB and, when the principal terms of the Merger, this Agreement
and the Agreement of Merger have been duly approved by the affirmative vote of
the holders of the majority of the outstanding AMRBK Shares either at a meeting
of shareholders duly called and held or by action taken without a meeting
pursuant to the AMRBK Articles, Bylaws and California law, the Merger, this
Agreement and the Agreement of Merger will be duly and validly authorized by all
necessary corporate action on the part of AMRBK and AMRB.

                           (ii)     This Agreement has been duly executed and
delivered by AMRBK and AMRB and (assuming due execution and delivery by BNKA)
constitutes a legal and binding obligation of AMRBK and AMRB in accordance with
its terms, and the Agreement of Merger, upon its execution and delivery by AMRB
(after obtaining all applicable Government Approvals and assuming due execution
and delivery by BNKA) will constitute, a legal and binding obligation of AMRB in
accordance with its terms.

                           (iii)    The execution and delivery by AMRBK of this
Agreement and the consummation of the transactions contemplated herein and in
the Agreement of Merger (a) do not violate any provision of the Articles of
Incorporation or Bylaws of AMRBK or AMRB, respectively, or violate in any
material respect any provision of federal or state law or any government rule or
regulation (assuming (1) receipt of the Government Approvals, (2) receipt of the
requisite AMRBK shareholder approval referred to in Section 5(r)(i) hereof, and
(3) receipt of appropriate permits or approvals under state securities or "blue

                                      A-32


sky" laws, and a registration statement on the appropriate form is declared
effective by the Securities and Exchange Commission), and (b) do not require any
consent of any person under, conflict in any material respect with or result in
a material breach of, or accelerate the performance required by any of the terms
of, any material debt instrument, lease, license, covenant, agreement or
understanding to which AMRBK is a party or by which it is bound or any order,
ruling, decree, judgment, arbitration award or stipulation to which AMRBK is
subject, or constitute a material default thereunder or result in the creation
of any lien, claim, security interest, encumbrance, charge, restriction or right
of any third party of any kind whatsoever upon any of the properties or assets
of AMRBK.

                  5.s.     Retention of Broker or Consultant. No broker, agent,
finder, consultant or other party (other than legal, compliance, loan reviewers
and accounting advisors) has been retained by AMRBK or is entitled to be paid
based upon any agreements, arrangements or understandings made by AMRBK in
connection with any of the transactions contemplated by this Agreement or the
Agreement of Merger, except that AMRBK has engaged the firm of Sandler O'Neill &
Partners, LP to act as its financial advisor and to render an opinion regarding
the fairness of the Merger Consideration in the Merger, from a financial point
of view, to AMRBK. AMRBK has provided BNKA with a true and accurate copy of its
agreement(s) with Sandler O'Neill & Partners, LP.

                  5.t.     Insurance. AMRBK is and continuously since its
inception has been, insured with reputable insurers against all risks normally
insured against by bank holding companies and banks, and all of the insurance
policies and bonds maintained by AMRBK are in full force and effect, AMRBK is
not in default thereunder and all material claims thereunder have been filed in
due and timely fashion. In the best judgment of the management of AMRBK, such
insurance coverage is adequate for AMRBK. Since March 31, 2004, there has not
been any damage to, destruction of, or loss of any assets of AMRBK not covered
by insurance that could reasonably be expected to have a material adverse effect
on the business, financial condition, properties, assets or results of
operations of AMRBK.

                  5.u.     Loan Loss Reserves. The AMRB loan loss reserve shall
be adequate to cover the risk identified in the loan portfolio based on the
AMRB's policy and methodology, which has been previously provided.

                  5.v.     Transactions With Affiliates. Except in the Ordinary
Course of Business, AMRBK has not extended credit, committed itself to extend
credit, or transferred any asset to or assumed or guaranteed any liability of
the employees or directors of AMRBK, or to any spouse or child of any of them,
or to any of their "affiliates" or "associates" as such terms are defined in
Rule 405 under the 1933 Act. AMRBK has not entered into any other transactions
with the employees or directors of AMRBK or any spouse or child of any of them,
or any of their affiliates or associates, except as disclosed in writing to
BNKA. Any such transactions have been on terms no less favorable to AMRBK than
those which would prevail in an arms-length transaction with an independent
third party. AMRBK has not violated any applicable regulation of any government
agency or regulatory authority having jurisdiction over AMRBK in connection with
any such transactions described in this subsection.

                                      A-33


                  5.w.     Risk Management Instruments. All interest rate swaps,
caps, floors, option agreements, futures and forward contracts and other similar
risk management arrangements, whether entered into for AMRBK's own account, or
for the account of one or more of AMRBK's subsidiaries or their customers (all
of which are listed on the AMRBK Disclosure Schedule), if any, were entered into
in accordance with prudent business practices and all applicable laws, rules,
regulations and regulatory policies and with counterparties believed to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of AMRBK or one of its subsidiaries, enforceable in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and are in full force and effect. Neither
AMRBK nor its subsidiaries, nor to AMRBK's knowledge, any other party thereto,
is in breach of any of its obligations under any such agreement or arrangement.

                  5.x.     Information in Joint Proxy Statement/Prospectus. The
information pertaining to AMRBK which has been or will be furnished to BNKA for
or on behalf of AMRBK for inclusion in the Joint Proxy Statement/Prospectus to
be provided to the shareholders of BNKA and AMRBK, or in the applications to be
filed to obtain the Government Approvals (the "Applications"), does not and will
not contain any untrue statement of any material fact or omit or will omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading; provided, however, that information of a later date shall be deemed
to modify contrary information as of an earlier date. All financial statements
of AMRBK and BNKA included in or accompanying the Joint Proxy
Statement/Prospectus to be provided to the shareholders of BNKA and AMRBK, or
the Applications, will present fairly the financial condition and results of
operations of AMRBK at the dates and for the periods covered by such statements
in accordance with generally accepted accounting principles consistently applied
throughout the periods covered by such statements. AMRBK shall promptly advise
BNKA in writing if, at any time prior to the Effective Time of the Merger, AMRBK
shall obtain knowledge of any facts that would make it necessary to amend or
supplement the Joint Proxy Statement/Prospectus provided to the shareholders of
BNKA and AMRBK or any Application, in order to make the statements therein not
misleading or to comply with applicable laws and regulations.

                  5.y.     Community Reinvestment Act Compliance. AMRBK is in
substantial compliance with the applicable provisions of the Community
Reinvestment Act of 1977 and the regulations promulgated thereunder
(collectively, the "CRA") and has received a CRA rating of "satisfactory" from
the FDIC in its most recent examination, and neither AMRBK nor AMRB has
knowledge of the existence of any fact or circumstance or set of facts or
circumstances which could be reasonably expected to result in AMRBK failing to
be in substantial compliance with such provisions or having its current rating
lowered.

                  5.z.     Accuracy and Effective Date of Representations and
Warranties, Covenants and Agreements. Each representation, warranty, covenant
and agreement of AMRBK set forth in this Agreement shall be deemed to be made on
and as of the date hereof (except to the extent that a representation or
warranty is qualified as set forth in the AMRBK Disclosure Schedule in a section
corresponding in number with the applicable section of such representation or
warranty), the Closing Date and the Effective Time of the Merger. No

                                      A-34


representation or warranty by AMRBK, and no statement by AMRBK in any
certificate, agreement, schedule or other document furnished or to be furnished
in connection with the transactions contemplated by this Agreement or the
Agreement of Merger, was or will be inaccurate, incomplete or incorrect in any
material respect as of the date furnished or contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make such representation, warranty or statement not misleading to
BNKA.

6.       SECURITIES ACT OF 1933; SECURITIES EXCHANGE ACT OF 1934.
         -------------------------------------------------------

                  6.a.     Preparation and Filing of Registration Statement.
AMRBK shall promptly prepare and file with the Securities and Exchange
Commission (i) a registration statement on the appropriate form (the "AMRBK
Registration Statement") under and pursuant to the provisions of the 1933 Act
for the purpose of registering a sufficient number of AMRBK Shares to complete
the exchange of AMRBK Shares for the outstanding BNKA Shares pursuant to the
provisions of Section 2.1 hereof. AMRBK shall promptly prepare a Joint Proxy
Statement/Prospectus for the purpose of submitting the principal terms of the
Merger, this Agreement and the Agreement of Merger to the shareholders of AMRBK
for approval. BNKA shall cooperate in all reasonable respects with regard to the
preparation of the Joint Proxy Statement/Prospectus and will promptly prepare
and file with the FDIC its proxy materials, incorporating the Joint Proxy
Statement/Prospectus, for the purpose of submitting the principal terms of the
Merger, this Agreement and the Agreement of Merger to the shareholders of BNKA
for approval. The Joint Proxy Statement/Prospectus in definitive form is
expected to serve as the prospectus to be included in the AMRBK Registration
Statement and shall comply in all material respects with the requirements of
Regulation 14A pursuant to the Securities and Exchange Act of 1934, as amended.
AMRBK and BNKA shall each provide promptly to the other such information
concerning its business and financial condition and affairs as may be required
or appropriate for inclusion in the AMRBK Registration Statement or the Joint
Proxy Statement/Prospectus or the BNKA proxy materials, and shall cause its
counsel and auditors to cooperate with the other's counsel and auditors in the
preparation of the AMRBK Registration Statement and the Joint Proxy
Statement/Prospectus and the BNKA proxy materials.

                  6.b.     Effectiveness of Registration Statement. AMRBK and
BNKA shall use their best efforts to have the AMRBK Registration Statement and
any amendments or supplements thereto declared effective under the 1933 Act as
soon as practicable, and thereafter AMRBK and BNKA shall distribute the Joint
Proxy Statement/Prospectus to holders of their respective common stock in
accordance with applicable laws and the Articles of Incorporation and Bylaws of
each.

                  6.c.     Sales and Resales of Common Stock. AMRBK shall not be
required to maintain the effectiveness of the AMRBK Registration Statement for
the purpose of sale or resale of the AMRBK Shares by any person.

                  6.d.     Rule 145. Securities representing AMRBK Shares issued
to affiliates of BNKA (as determined by counsel to AMRBK and BNKA) under Rule
145 of the 1933 Act pursuant to the Agreement of Merger may be subject to stop
transfer orders and a restrictive legend which confirm and state that such
securities representing AMRBK Shares have been issued or transferred to the
registered holder as the result of a transaction to which Rule 145 under the
1933 Act applies, and that such securities may not be sold, hypothecated,

                                      A-35


transferred or assigned, and the issuer or its transfer agent shall not be
required to give effect to any attempted sale, hypothecation, transfer or
assignment, except (i) pursuant to a then current effective registration
statement under the 1933 Act, (ii) in a transaction permitted by Rule 145 as to
which the issuer has, in the opinion of its counsel, received reasonably
satisfactory evidence of compliance with the provisions of Rule 145, or (iii) in
a transaction which, in the opinion of counsel satisfactory to the issuer or as
described in a "no action" or interpretive letter from the staff of the
Securities and Exchange Commission, is not required to be registered under the
1933 Act.

7.       CONDITIONS TO THE OBLIGATIONS OF AMRBK.
         --------------------------------------

         The obligations of AMRBK under this Agreement are, at its option,
subject to fulfillment at or prior to the Effective Time of the Merger of each
of the following conditions; provided, however, that any one or more of such
conditions may be waived by the Board of Directors of AMRBK at any time at or
prior to the Effective Time of the Merger:

                  7.a.     Representations and Warranties. The representations
and warranties of BNKA in Section 4 hereof shall be true and correct in all
material respects on and as of the date of this Agreement (except to the extent
that a representation or warranty is qualified as set forth in the BNKA
Disclosure Schedule corresponding in number with the applicable section of such
representation or warranty), the Closing Date and the Effective Time of the
Merger, with the same effect as though such representations and warranties had
been made on and as of each such date or time except as to any representation or
warranty which specifically relates to an earlier date or time.

                  7.b.     Compliance and Performance Under Agreement. BNKA
shall have performed and complied in all material respects with all terms,
agreements, covenants and conditions of this Agreement and the Agreement of
Merger required to be performed or complied with by it at or prior to the
Effective Time of the Merger.

                  7.c.     Material Adverse Change. No material adverse change
shall have occurred since March 31, 2004, in the business, financial condition,
results of operations or assets of BNKA. Other than as set forth in the BNKA
Disclosure Schedule, BNKA shall not be a party to or threatened with, and to the
best of BNKA's knowledge there is no reasonable basis for, any legal action or
other proceeding before any court, any arbitrator of any kind or any government
agency. No material adverse change shall have occurred as a result of any
subsequent legal actions or proceedings, or any subsequent developments in the
legal actions or proceedings as set forth in the BNKA Disclosure Schedule, which
in the reasonable judgment of AMRBK, would have a material adverse effect on the
business, financial condition, results of operations or assets of BNKA.

                  7.d.     Approval of Agreement. The principal terms of the
Merger, this Agreement, and the Agreement of Merger shall have been duly
approved by (i) the affirmative vote or consent of a majority of the outstanding
BNKA Shares, and (ii) the affirmative vote or consent of a majority of the
outstanding AMRBK Shares.

                  7.e.     Officer's Certificate. AMRBK shall have received a
certificate, dated the Effective Date, signed on behalf of BNKA by its President
and Chief Executive Officer and its Chief Financial Officer, in substantially
the form delivered to AMRBK with the BNKA Disclosure Schedule.

                                      A-36


                  7.f.     Opinion of Counsel. Bartel, Eng & Schroder, counsel
to BNKA, shall have delivered to AMRBK its opinion dated the Effective Date in
form and substance acceptable to AMRBK and its counsel.

                  7.g.     Absence of Proceedings. No legal, administrative,
arbitration, investigatory or other proceeding by any government agency or
regulatory authority shall have been instituted or threatened to restrain or
prohibit the Merger or the transactions contemplated by this Agreement.

                  7.h.     Effectiveness of Registration Statement. The AMRBK
Registration Statement and any amendments or supplements thereto shall have
become effective under the 1933 Act, no stop order suspending the effectiveness
of such Registration Statement shall be in effect and no proceedings for such
purpose shall have been initiated or threatened by or before the Securities and
Exchange Commission, and the AMRBK Shares registered thereby shall have received
all state securities and "Blue Sky" permits or approvals required to consummate
the transactions contemplated by this Agreement and the Agreement of Merger.

                  7.i.     Government Approvals. All Government Approvals shall
be in effect, and all conditions or requirements prescribed by law or by any
such Approvals shall have been satisfied; provided, however, that no Government
Approval shall be deemed to have been received if it shall require the
divestiture or cessation of any of the present businesses or operations
conducted by any of the parties hereto or shall impose any other condition or
requirement, which condition or requirement AMRBK in its reasonable judgment
shall deem to be materially burdensome, in which case AMRBK shall promptly
notify BNKA. For purposes of this agreement no condition or requirement shall be
deemed to be "materially burdensome" if such condition or requirement does not
materially differ from conditions or requirements regularly imposed in orders
approving transactions of the type contemplated by this Agreement and compliance
with such condition or requirement would not:

                           (i)      require the taking of any action materially
inconsistent with the manner in which AMRBK, AMRB or BNKA has conducted its
business previously;

                           (ii)     have a material adverse effect on the
business, financial condition or results of operations of AMRBK, AMRB or BNKA;
or

                           (iii)    preclude satisfaction of any of the
conditions to consummation of the transactions contemplated by this Agreement.

                  7.j.     Tax Opinion. Receipt by the parties of the opinion of
Perry-Smith, LLP to the effect that:

                           (i)      The Merger constitutes a "reorganization"
within the meaning of IRC Section 368(a)(1)(A) by reason of the application of
IRC Section 368(a)(2)(D);

                           (ii)     AMRBK, BNKA and AMRB are each a "party" to a
reorganization within the meaning of IRC Section 368(b);

                                      A-37


                           (iii)    None of AMRBK, AMRB or BNKA will recognize
federal taxable gain or loss as a result of the Merger, except to the extent of
cash received by AMRB related to its ownership of shares of BNKA common stock;

                           (iv)     The federal income tax basis and holding
periods of the assets exchanged between the parties to the Merger will be the
same as the federal income tax basis and holding periods of those assets prior
to the Merger;

                           (v)      To the extent that BNKA shareholders
exchange BNKA Shares in the Merger solely for AMRBK Shares, (i) no gain or loss
will be recognized on the exchange, (ii) the federal income tax basis of the
shares of AMRBK Shares received by former holders of BNKA Shares will equal the
federal income tax basis of such stockholders' shares of BNKA Shares (reduced by
any amount allocable to fractional share interests for which cash is received)
exchanged, and (iii) the holding period for the shares of AMRBK Shares received
will include the holding period for the shares of BNKA Shares exchanged,
provided that the BNKA Shares exchanged was held as a "capital asset" as such
term is defined in IRC Section 1221;

                           (vi)     To the extent that holders of BNKA Shares
exchange BNKA Shares in the Merger solely for cash, (i) gain or loss will be
recognized equal to the difference between the amount of cash received and the
federal income tax basis in their shares of BNKA Shares exchanged, and (ii) the
nature of the gain or loss recognized will be capital gain or loss if the shares
of BNKA Shares exchanged were held as a capital asset;

                           (vii)    To the extent that holders of BNKA Shares
receive a combination of cash and AMRBK Shares (other than cash in lieu of
fractional shares), (i) loss, if any, will not be recognized, (ii) gain, if any,
will be recognized in an amount equal to the lesser of (1) the difference
between the fair market value of all consideration received in the exchange
(AMRBK Shares plus cash) and the basis in the BNKA Shares surrendered or (2) the
amount of cash received in the exchange; (iii) the federal income tax basis of
the AMRBK Shares received by holders of BNKA Shares in the Merger will be equal
to the total federal income tax basis of the BNKA Shares exchanged, decreased by
the amount of cash (other than cash received in lieu of fractional share
interests) received in the exchange, and increased by the amount of gain
recognized in the exchange, if any, and (iv) the holding period of the AMRBK
Shares received in the Merger will include the holding period for which holders
of BNKA Shares held their BNKA Shares provided, that such BNKA Shares was held
as a capital asset; and

                           (viii)   To the extent that cash is received by
holders of BNKA Shares in lieu of fractional share interests in AMRBK Shares,
the cash will be treated as being received by the holders of BNKA Shares as a
distribution in redemption of such stockholders' fractional share interests,
subject to the provisions and limitations of IRC Section 302.

                  7.k.     Accountant's Letters. On or prior to the date of
effectiveness of the AMRBK Registration Statement, AMRBK shall have received, in
form and substance satisfactory to AMRBK, a letter addressed to AMRBK from
Perry-Smith LLP, independent public accountants for BNKA, as to such matters, as

                                      A-38


of the end of the most recent fiscal quarter, as AMRBK may reasonably request.
Further, as of a specified date not more than five (5) business days prior to
the Effective Date, AMRBK shall have received from Perry-Smith LLP a letter
dated the Effective Date, in form and substance satisfactory to AMRBK, as to
such matters, as AMRBK may reasonably request.

                  7.l.     Affiliate Agreements. AMRBK shall have received at
the date of this Agreement, signed affiliate agreements in substantially the
form attached as Exhibit D, from each person who, in the opinion of counsel to
AMRBK and BNKA, might be deemed to be an "affiliate" of BNKA within the meaning
of Rules 144 and 145 of the 1933 Act.

                  7.m.     Dissenting Shares. Holders of not more than ten
percent (10%) of the outstanding BNKA Shares and AMRBK Shares shall have voted
against approval of, or given notice in writing to BNKA at or prior to the BNKA
meeting of shareholders and to AMRBK at or prior to the AMRBK meeting of
shareholders that they dissent from the Merger and the transactions contemplated
by this Agreement and the Agreement of Merger and have otherwise complied with
the requirements under Chapter 13 of the California General Corporation Law.

                  7.n.     Unaudited Financials. Not later than five (5)
business days prior to the Effective Date, BNKA shall have furnished AMRBK a
copy of its most recently prepared unaudited month-end consolidated financial
statements, including a balance sheet and statement of income of BNKA, for the
month ending at least ten (10) business days prior to the Effective Date.

                  7.o.     Closing Documents. AMRBK shall have received such
certificates and other closing documents as counsel for AMRBK shall reasonably
request.

                  7.p.     Consents. BNKA shall have received, or AMRBK shall
have satisfied itself that BNKA will receive, all consents of third parties as
may be required including consents of other parties to and required by material
mortgages, notes, leases, franchises, agreements, licenses and permits
applicable to BNKA, in each case in form and substance reasonably satisfactory
to AMRBK and its counsel, and no such consent or license or permit shall have
been withdrawn or suspended.

                  7.q.     Shareholder Agreements. AMRBK shall have received at
the date of this Agreement, signed shareholder agreements in substantially the
form attached hereto as Exhibit E, from all of the members of the BNKA Board of
Directors and those persons deemed by AMRBK to be executive or key officers of
BNKA, pursuant to which each such person in his or her capacity as a shareholder
commits to vote all of his or her BNKA Shares in favor of the Merger and the
transactions contemplated by this Agreement and the Agreement of Merger, and in
the case of members of the BNKA Board of Directors, to recommend to all other
BNKA shareholders, subject to the exercise of fiduciary duties, a vote in favor
of the Merger and the transactions contemplated by this Agreement and the
Agreement of Merger. The shareholder agreements shall also include non-compete
provisions which restrict such persons from engaging in activities deemed to
constitute competition with AMRBK, AMRB or BNKA.

                  7.r.     Employment Agreement. As of the Closing Date, BNKA
shall have entered an employment agreement with Larry D. Standing, in
substantially the form attached hereto as Exhibit F.

                                      A-39


                  7.s.     Fairness Opinion. The Board of Directors of AMRBK
shall have received an opinion of Sandler O'Neill & Partners, LP, dated the date
of this Agreement and the date of mailing or a date reasonably proximate to the
date of mailing the Joint Proxy Statement/Prospectus to the shareholders of
AMRBK and BNKA, to the effect that the Merger Consideration in the Merger is
fair, from a financial point of view, to AMRBK, and such opinion shall not have
been withdrawn by the Effective Time of the Merger.

                  7.t.     Equity Test. As of the Closing Date, BNKA shall have
a minimum of Twelve Million Eight Hundred Thousand Dollars ($12,800,000) in
combined BNKA common stock and retained earnings.

                  7.u.     Severance and Retirement Benefits. As of the Closing
Date, BNKA shall have paid the severance and retirement benefits from amounts
reserved and expensed in accordance with Section 3.2.k. hereof, pursuant to
agreements with each BNKA director, officer and employee receiving any such
payment dated as of the Effective Date and in form and substance reasonably
satisfactory to AMRBK.

                  7.v.     Optionholder Consents. As of the Closing Date, BNKA
shall have obtained the written consent, in form and substance reasonably
satisfactory to AMRBK, of each person holding an outstanding and exercisable
BNKA Option, which (i) waives the optionholder's right to exercise the BNKA
Option under any agreement evidencing the BNKA Option, and (ii) consents to
receive payment in lieu of exercise in accordance with Section 2.6.a.(ii).hereof
from the amounts reserved and expensed in accordance with Section 3.2.k.hereof.

                  7.w.     Waiver of Change of Control Provisions. As of the
Closing Date, BNKA shall have obtained written waiver agreements, in form and
substance reasonably satisfactory to AMRBK, from Larry D. Standing and such
other BNKA directors, officers and employees who have salary continuation
agreements that include change of control provisions accelerating the payment of
benefits thereunder. Such waiver agreements shall waive the application of the
change of control provisions solely as such provisions may apply to or be
triggered by the transactions contemplated by the Merger, the Agreement of
Merger and this Agreement, but otherwise remain in full force and effect as to
any future event that would constitute a change in control thereunder.

8.       CONDITIONS TO THE OBLIGATIONS OF BNKA.
         -------------------------------------

         The obligations of BNKA under this Agreement are, at its option,
subject to the fulfillment at or prior to the Effective Time of the Merger of
each of the following conditions provided, however, that any one or more of such
conditions may be waived by the Board of Directors of BNKA at any time at or
prior to the Effective Time of the Merger:

                  8.a.     Representations and Warranties. The representations
and warranties of AMRBK in Section 5 hereof shall be true and correct in all
material respects on and as of the date of this Agreement (except to the extent
that a representation or warranty is qualified as set forth in the AMRBK
Disclosure Schedule corresponding in number with the applicable section of such

                                      A-40


representation or warranty), the Closing Date and the Effective Time of the
Merger, with the same effect as though such representations and warranties had
been made on and as of each such date or time except as to any representation or
warranty which specifically relates to an earlier date or time.

                  8.b.     Compliance and Performance Under Agreement. AMRBK
shall have performed and complied in all material respects with all terms,
agreements, covenants and conditions of this Agreement and the Agreement of
Merger required to be performed or complied with by AMRBK at or prior to the
Effective Time of the Merger.

                  8.c.     Material Adverse Change. No material adverse change
shall have occurred since March 31, 2004, in the business, financial condition,
results of operations or assets of AMRBK and AMRB taken as a whole, and AMRBK
shall not be a party to or threatened with, and to the best of AMRBK's knowledge
there is no reasonable basis for, any legal action or other proceeding before
any court, any arbitrator of any kind or any government agency, which legal
action or proceeding, in the reasonable judgment of BNKA, could have a material
adverse effect on the business, financial condition, results of operations or
assets of AMRBK and AMRB taken as a whole.

                  8.d.     Approval of Agreement. The principal terms of the
Merger, this Agreement, and the Agreement of Merger shall have been duly
approved by (i) the affirmative vote or consent of a majority of the outstanding
AMRBK Shares, and (ii) the affirmative vote or consent of a majority of the
outstanding BNKA Shares.

                  8.e.     Officer's Certificate. BNKA shall have received a
certificate, dated the Effective Date, signed on behalf of AMRBK by its
President and its Chief Financial Officer, in substantially the form delivered
to BNKA with the AMRBK Disclosure Schedule.

                  8.f.     Opinion of Counsel. DoddoMasonoGeorge LLP, AMRBK's
counsel, shall have delivered to BNKA its opinion dated the Effective Date in
form and substance acceptable to BNKA and its counsel.

                  8.g.     Absence of Proceedings. No legal, administrative,
arbitration, investigatory or other proceeding by any government agency or
regulatory authority shall have been instituted or threatened to restrain or
prohibit the Merger or the transactions contemplated by this Agreement.

                  8.h.     Effectiveness of Registration Statement. The AMRBK
Registration Statement and any amendments or supplements thereto shall have
become effective under the 1933 Act, no stop order suspending the effectiveness
of such Registration Statement shall be in effect and no proceedings for such
purpose shall have been initiated or threatened by or before the Securities and
Exchange Commission, and the AMRBK Shares registered thereby shall have received
all state securities and "Blue Sky" permits or approvals required to consummate
the transactions contemplated by this Agreement and the Agreement of Merger.

                  8.i.     Government Approvals. All Government Approvals shall
be in effect, and all conditions or requirements prescribed by law or by any
such Approvals shall have been satisfied; provided, however, that no Government
Approval shall be deemed to have been received if it shall require the
divestiture or cessation of any of the present businesses or operations
conducted by any of the parties hereto or shall impose any other condition or

                                      A-41


requirement, which condition or requirement BNKA in its reasonable judgment
shall deem to be materially burdensome, in which case BNKA shall promptly notify
AMRBK. For purposes of this agreement no condition or requirement shall be
deemed to be "materially burdensome" if such condition or requirement does not
materially differ from conditions or requirements regularly imposed in orders
approving transactions of the type contemplated by this Agreement and compliance
with such condition or requirement would not:

                           (i)      require the taking of any action materially
inconsistent with the manner in which BNKA, AMRBK or AMRB has conducted its
business previously;

                           (ii)     result in a material adverse change on the
business, financial condition or results of operations of BNKA, AMRBK or AMRB;
or

                           (iii)    preclude satisfaction of any of the
conditions to consummation of the transactions contemplated by this Agreement.

                  8.j.     Tax Opinion. Receipt by the parties of the opinion of
Perry-Smith, LLP to the effect that:

                           (i)      The Merger constitutes a "reorganization"
within the meaning of IRC Section 368(a)(1)(A) by reason of the application of
IRC Section 368(a)(2)(D);

                           (ii)     AMRBK, BNKA and AMRB are each a "party" to a
reorganization within the meaning of IRC Section 368(b);

                           (iii)    None of AMRBK, AMRB or BNKA will recognize
federal taxable gain or loss as a result of the Merger;

                           (iv)     The federal income tax basis and holding
periods of the assets exchanged between the parties to the Merger will be the
same as the federal income tax basis and holding periods of those assets prior
to the Merger;

                           (v)      To the extent that BNKA shareholders
exchange BNKA Shares in the Merger solely for AMRBK Shares, (i) no gain or loss
will be recognized on the exchange, (ii) the federal income tax basis of the
shares of AMRBK Shares received by former holders of BNKA Shares will equal the
federal income tax basis of such stockholders' shares of BNKA Shares (reduced by
any amount allocable to fractional share interests for which cash is received)
exchanged, and (iii) the holding period for the shares of AMRBK Shares received
will include the holding period for the shares of BNKA Shares exchanged,
provided that the BNKA Shares exchanged was held as a "capital asset" as such
term is defined in IRC Section 1221;

                           (vi)     To the extent that holders of BNKA Shares
exchange BNKA Shares in the Merger solely for cash, (i) gain or loss will be
recognized equal to the difference between the amount of cash received and the
federal income tax basis in their shares of BNKA Shares exchanged, and (ii) the
nature of the gain or loss recognized will be capital gain or loss if the shares
of BNKA Shares exchanged were held as a capital asset;

                                      A-42


                           (vii)    To the extent that holders of BNKA Shares
receive a combination of cash and AMRBK Shares (other than cash in lieu of
fractional shares), (i) loss, if any, will not be recognized, (ii) gain, if any,
will be recognized in an amount equal to the lesser of (1) the difference
between the fair market value of all consideration received in the exchange
(AMRBK Shares plus cash) and the basis in the BNKA Shares surrendered or (2) the
amount of cash received in the exchange; (iii) the federal income tax basis of
the AMRBK Shares received by holders of BNKA Shares in the Merger will be equal
to the total federal income tax basis of the BNKA Shares exchanged, decreased by
the amount of cash (other than cash received in lieu of fractional share
interests) received in the exchange, and increased by the amount of gain
recognized in the exchange, if any, and (iv) the holding period of the AMRBK
Shares received in the Merger will include the holding period for which holders
of BNKA Shares held their BNKA Shares provided, that such BNKA Shares was held
as a capital asset; and

                           (viii)   To the extent that cash is received by
holders of BNKA Shares in lieu of fractional share interests in AMRBK Shares,
the cash will be treated as being received by the holders of BNKA Shares as a
distribution in redemption of such stockholders' fractional share interests,
subject to the provisions and limitations of IRC Section 302.

                  8.k.     Accountant's Letters. On or prior to the
effectiveness of the AMRBK Registration Statement, BNKA shall have received, in
form and substance satisfactory to BNKA, a letter addressed to BNKA from
Perry-Smith LLP, independent public accountants for AMRBK, as to such matters,
as of the end of the most recent fiscal quarter, as BNKA may reasonably request.
Further, as of a specified date not more than five (5) business days prior to
the Effective Date, BNKA shall have received from Perry-Smith LLP a letter dated
the Effective Date, in form and substance satisfactory to BNKA, as to such
matters, as BNKA may reasonably request.

                  8.l.     Unaudited Financials. Not later than five (5)
business days prior to the Effective Date, AMRBK shall have furnished BNKA a
copy of its most recently prepared unaudited month-end consolidated financial
statements, including a balance sheet and statement of income of AMRBK, for the
month ending at least ten (10) business days prior to the Effective Date.

                  8.m.     Closing Documents. BNKA shall have received such
certificates and other closing documents as counsel for BNKA shall reasonably
request.

                  8.n.     Consents. AMRBK shall have received, or BNKA shall
have satisfied itself that AMRBK will receive, all consents of third parties as
may be required including consents of other parties to and required by material
mortgages, notes, leases, franchises, agreements, licenses and permits
applicable to AMRBK, in each case in form and substance reasonably satisfactory
to BNKA, and no such consent or license or permit shall have been withdrawn or
suspended.

                  8.o.     Fairness Opinion. The Board of Directors of BNKA
shall have received an opinion of Hoefer & Arnett, Inc., dated the date of this
Agreement and the date of mailing or a date reasonably proximate to the date of
mailing the Joint Proxy Statement/Prospectus to the shareholders of BNKA and
AMRBK, to the effect that the Merger Consideration in the Merger is fair, from a
financial point of view, to BNKA and its shareholders, and such opinion shall
not have been withdrawn by the Effective Time of the Merger.

                                      A-43


                  8.p.     Shareholder Agreements. BNKA shall have received at
the date of this Agreement, signed shareholder agreements in substantially the
form attached hereto as Exhibit G, from all of the members of the AMRBK Board of
Directors and those persons deemed by AMRBK to be executive officers of AMRBK,
pursuant to which each such person in his or her capacity as a shareholder
commits to vote all of his or her AMRBK Shares in favor of the Merger and the
transactions contemplated by this Agreement and the Agreement of Merger, and in
the case of members of the AMRBK Board of Directors, to recommend to all other
AMRBK shareholders, subject to the exercise of fiduciary duties, a vote in favor
of the Merger and the transactions contemplated by this Agreement and the
Agreement of Merger.

9.       CLOSING.
         -------

                  9.a.     Closing Date. On the third business day following
receipt of all required Government Approvals (not including any applicable
waiting periods), the parties shall select a proposed date for the consummation
of the Merger (the "Proposed Closing Date") which the parties shall use their
reasonable best efforts to cause to be the Closing Date. The closing (the
"Closing") shall, unless another date, time or place is agreed to in writing by
AMRBK and BNKA, be held at the offices of AMRBK, 1545 River Park Drive,
Sacramento, California 95815, at a time mutually agreed upon between the parties
and on a date as soon as practicable but not less than fifteen (15) days
following the last to occur of (i) the expiration of any waiting periods under
applicable law or regulation, and (ii) the date on which all conditions to the
obligations of the parties to consummate the Merger have been satisfied (the
"Closing Date").

                  9.b.     Delivery of Documents. At the Closing, the parties
shall use their respective best efforts to deliver or cause to be delivered the
opinions, certificates and other documents required to be delivered by this
Agreement.

                  9.c.     Filings. At the Closing, AMRBK and BNKA shall
instruct their respective representatives to make or confirm such filings as
shall be required in the opinion of counsel to AMRBK and BNKA to give effect to
the Merger.

10.      POST-CLOSING MATTERS.
         --------------------

         AMRBK will prepare and file with the Securities and Exchange Commission
on the appropriate form as soon as practicable the results of combined
operations of AMRBK, AMRB and the Resulting Corporation for the first full
calendar quarter after the Effective Date.

11.      EXPENSES.
         --------

         AMRBK and BNKA agree that AMRBK and BNKA shall each bear their own
expenses incurred in connection with the negotiation, preparation, and
performance of this Agreement, including legal and accounting fees, printing
costs, filing fees, and other necessary expenses regardless of whether the
merger or any other transactions contemplated under this Agreement are
consummated.

                                      A-44


12.      AMENDMENT; TERMINATION.
         ----------------------

                  12.a.    Amendment. This Agreement and the Agreement of Merger
may be amended by mutual written agreement of AMRBK, AMRB and BNKA at any time
prior to the Effective Time of the Merger without the approval of the
shareholders of AMRBK and the shareholders of BNKA with respect to any of their
terms except the terms relating to the Merger Consideration or the form or
amount of consideration to be delivered to the BNKA shareholders in the Merger
or otherwise as required by applicable law.

                  12.b.    Termination. This Agreement and the Agreement of
Merger may be terminated as follows:

                           (i)      By the mutual consent of the Boards of
Directors of AMRBK, AMRB and BNKA at any time prior to the Effective Time of the
Merger.

                           (ii)     By the Boards of Directors of AMRBK or BNKA
upon the failure of the shareholders of AMRBK or BNKA to give the requisite
approval of this Agreement and the transactions contemplated hereby.

                           (iii)    By the Boards of Directors of AMRBK or BNKA
upon the expiration of thirty (30) days after any government agency or
regulatory authority denies or refuses to grant any approval, consent or
qualification required to be obtained in order to consummate the transactions
contemplated by this Agreement unless, within said thirty (30) day period after
such denial or refusal, the parties agree to appeal such denial or refusal or
agree to amend and re-submit the application to the government agency or
regulatory authority that has denied or refused to grant the approval, consent
or qualification requested.

                           (iv)     By the Board of Directors of AMRBK on or
after the Termination Date, if any of the conditions in Section 7 to which the
obligations of AMRBK are subject have not been fulfilled.

                           (v)      By the Board of Directors of AMRBK if there
shall have been a material breach of any of the representations or warranties of
BNKA set forth in this Agreement, which breach, in the reasonable opinion of
BNKA, by its nature cannot be cured or is not cured prior to the Closing Date
and which breach would, in the reasonable opinion of AMRBK, individually or in
the aggregate, have, or be reasonably likely to have, a Material Adverse Effect
on AMRBK, taken as a whole, or upon the consummation of the transactions
contemplated hereby.

                           (vi)     By the Board of Directors of AMRBK if a
material adverse change shall have occurred since March 31, 2004, in the
business, financial condition, results of operations or assets of BNKA.

                           (vii)    By the Board of Directors of AMRBK in the
event BNKA or its affiliates enter into a Business Combination prior to the
Closing Date.

                                      A-45


                           (viii)   By the Board of Directors of AMRBK upon the
expiration of forty-five (45) days from delivery of written notice by AMRBK to
BNKA of BNKA's breach of or failure to satisfy any covenant, condition to
closing, or agreement contained in this Agreement resulting in a material
impairment of the benefit reasonably expected to be derived by AMRBK and AMRB
from the performance or satisfaction of such covenant, condition to closing, or
agreement (provided that such breach has not been waived by AMRBK or cured by
BNKA prior to expiration of such forty-five (45) day period).

                           (ix)     By the Board of Directors of BNKA on or
after the Termination Date, if any of the conditions contained in Section 8 to
which the obligations of BNKA are subject have not been fulfilled.

                           (x)      By BNKA if there shall have been a material
breach of any of the representations or warranties of AMRBK set forth in this
Agreement, which breach, in the reasonable opinion of AMRBK, by its nature
cannot be cured or is not cured prior to the Closing and which breach would, in
the reasonable opinion of BNKA, individually or in the aggregate, have, or be
reasonably likely to have, a Material Adverse Effect on BNKA's shareholders, or
upon the consummation of the transactions contemplated hereby.

                           (xi)     By the Board of Directors of BNKA if a
material adverse change shall have occurred since March 31, 2004, in the
business, financial condition, results of operations or assets of AMRBK and AMRB
taken as a whole.

                           (xii)    By the Board of Directors of BNKA upon the
expiration of forty-five (45) days from delivery of written notice by BNKA to
AMRBK of AMRBK's breach of or failure to satisfy any covenant, condition to
closing, or agreement contained in this Agreement resulting in a material
impairment of the benefit reasonably expected to be derived by BNKA from the
performance or satisfaction of such covenant, condition to closing, or agreement
(provided that such breach has not been waived by BNKA or cured by AMRBK prior
to expiration of such forty-five (45) day period).

                           (xiii)   By the Board of Directors of AMRBK in the
event that BNKA shall fail to deliver or cause to be delivered to AMRBK the
following signed documents, in form and substance reasonably acceptable to AMRBK
and its counsel: (a) the BNKA affiliate agreements to be delivered pursuant to
Section 7.l. hereof; (b) the BNKA shareholder agreements to be delivered
pursuant to Section 7.q. hereof; (c) the employment agreement with Larry D.
Standing to be delivered pursuant to Section 7.r. hereof; (d) the severance and
retirement benefits agreements to be delivered pursuant to Section 7.u. hereof;
(e) the optionholder consents to be delivered pursuant to Section 7.v. hereof;
(f) the waiver agreements to be delivered pursuant to Section 7.w. hereof; (g)
the officer's certificate to be delivered pursuant to Section 7.e. hereof; and
(h) the opinion of counsel to BNKA to be delivered pursuant to Section 7.f.
hereof.

                                      A-46


                           (xiv)    By the Board of Directors of BNKA in the
event that AMRBK shall fail to deliver or cause to be delivered to BNKA the
following signed documents, in form and substance reasonably acceptable to BNKA
and its counsel: (a) the officer's certificate to be delivered pursuant to
Section 8.e. hereof; (b) the opinion of counsel to AMRBK to be delivered
pursuant to Section 8.f. hereof; and (c) the AMRBK shareholder agreements to be
delivered pursuant to Section 8.p. hereof.

                  12.c.    Termination Date. This Agreement shall be terminated
if the Closing shall not have occurred on or before March 31, 2005, or such
other date approved by the Boards of Directors of AMRBK, BNKA and AMRB;
provided, however, that if the only conditions to the Closing which remain
unsatisfied at March 31, 2005, are the receipt of the Government Approvals or
the expiration of any waiting periods under applicable law or regulation, the
Closing Date shall be automatically extended to June 30, 2005, or such other
date as the parties may mutually agree upon (the "Termination Date"), for the
purpose of obtaining such Government Approvals or the expiration of such waiting
periods.

                  12.d.    Notice. The power of termination hereunder may be
exercised by AMRBK or BNKA, as the case may be, only by giving written notice of
termination to AMRBK or BNKA, as applicable, signed on behalf of each such party
by its Chairman of the Board or President.

                  12.e.    Effect of Termination; Liquidated Damages.

                           (i)      If this Agreement is terminated for any
reason, the Agreement of Merger shall automatically terminate. Termination of
this Agreement shall not terminate or affect the obligations of the parties to
pay expenses as provided in Section 11, to maintain the confidentiality of the
each party's information obtained pursuant to this Agreement and the
Confidentiality Agreement between the parties dated June 9, 2004, or the
provisions of this Section 12(e) or the applicable provisions of Section 14.

                           (ii)     If AMRBK terminates this Agreement pursuant
to Section 12.b.(vii), or pursuant to Section 12.b.(viii) or Section 12.b.(xiii)
as a result of BNKA's willful or deliberate failure to comply with Section
12.b.(viii) or Section 12.b.(xiii), which compliance was not beyond the
reasonable control of BNKA, BNKA shall pay to AMRBK, on demand, the sum of One
Million Two Hundred Thousand Dollars ($1,200,000). In each such case, the amount
indicated shall be deemed liquidated damages for expenses incurred and the lost
opportunity cost for time devoted to the transactions contemplated by this
Agreement and shall be AMRBK's sole remedy for such actions.

                           (iii)    If BNKA terminates this Agreement pursuant
to Section 12.b.(xii) or Section 12.b.(xiv) as a result of AMRBK's willful or
deliberate failure to comply with Section 12.b.(xii) or Section 12.b.(xiv),
which compliance was not beyond the reasonable control of AMRBK, then AMRBK
shall pay to BNKA, on demand, the sum of Four Hundred Thousand Dollars
($400,000). In each such case, the amount indicated shall be deemed liquidated
damages for expenses incurred and the lost opportunity cost for time devoted to
the transactions contemplated by this Agreement and shall be BNKA's sole remedy
for such actions.

                                      A-47


13.      INDEMNIFICATION.
         ---------------

         13.1.    By AMRBK. AMRBK agrees to defend, indemnify and hold harmless
BNKA, its respective officers and directors, attorneys, accountants, and each
person who controls BNKA (within the meaning of the 1933 Act) from and against
any costs, damages, liabilities and expenses of any nature, insofar as such
costs, damages, liabilities and expenses arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Joint Proxy Statement/Prospectus or any amendments or supplements thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that AMRBK shall be liable
in any such case only to the extent that any such cost, damage, liability or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in the Joint Proxy
Statement/Prospectus or amendments or supplements thereto, in reliance upon and
in conformity with information provided by and with respect to AMRBK for use in
preparing the Joint Proxy Statement/Prospectus. If and to the extent such
agreement to indemnify may be unenforceable for any reason, AMRBK shall make the
maximum contribution to the payment and satisfaction of each of the indemnified
liabilities which may be permitted under applicable law.

         13.2.    By BNKA. BNKA agrees to defend, indemnify and hold harmless
AMRBK, its officers and directors, attorneys, accountants, and each person who
controls AMRBK (within the meaning of the 1933 Act) from and against any costs,
damages, liabilities and expenses of any nature, insofar as such costs, damages,
liabilities and expenses arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Joint Proxy
Statement/Prospectus or any amendments or supplements thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that BNKA shall be liable in any such case
only to the extent that any such cost, damage, liability or expense arises out
of or is based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in the Joint Proxy Statement/Prospectus or amendments
or supplements thereto, in reliance upon and in conformity with information
provided by and with respect to BNKA for use in preparing the Joint Proxy
Statement/Prospectus. If and to the extent such agreement to indemnify may be
unenforceable for any reason, BNKA shall make the maximum contribution to the
payment and satisfaction of each of the indemnified liabilities which may be
permitted under applicable law.

         13.3.    Notification. Promptly after receipt by any party to be
indemnified pursuant to this sub-article (the "Indemnified Party") of notice of
(i) any claim or (ii) the commencement of any action or proceeding, the
Indemnified Party will give the other party (the "Indemnifying Party") written
notice of such claim or the commencement of such action or proceeding. The
Indemnifying Party shall have the right, at its option, to compromise or defend,
by its own counsel, any such matter involving the Indemnified Party's asserted
liability. In the event that the Indemnifying Party shall undertake to
compromise or defend any such asserted liability, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party agrees to
cooperate fully with the Indemnifying Party and its legal counsel in the
compromise of, or defense against, any such asserted liability. In any event,
the Indemnifying Party shall have the right to participate in the defense of
such asserted liability.

                                      A-48


14.      MISCELLANEOUS.
         -------------

                   14.a.   Notices. Any notice or other communication required
or permitted under this Agreement shall be effective only if it is in writing
and delivered personally, or by Federal Express or similar overnight courier, or
by facsimile or sent by first class United States mail, postage prepaid,
registered or certified mail, addressed as follows:

       To AMRBK or AMRB:                     To BNKA:

       American River Bankshares             Bank of Amador
       Attn:  David T. Taber, President      Attn:  Larry D. Standing, President
       1545 River Park Drive, Suite 107      422 Sutter Street
       Sacramento, California 95815          Jackson, California 95642
       Telephone: (916) 565-6100             Telephone:  (209) 223-2320
       Fax: (916) 641-1262                   Fax:  (209) 223-0934

       With a copy to:                       With a copy to:

       DoddoMasonoGeorge LLP                 Bartel, Eng & Schroder
       Attn:  Glenn T. Dodd, Esq.            Attn:  Daniel B. Eng, Esq.
       100 Century Center Court, Suite 605   1331 Garden Hwy, Suite 300
       San Jose, California 95112-4536       Sacramento, California 95833
       Telephone: (408) 452-1476             Telephone: (916) 442-0400
       Fax: (408) 452-1487                   Fax: (916) 442-3442

or to such other address as either party may designate by notice to the other,
and shall be deemed to have been given upon receipt.

                  14.b.    Knowledge. Whenever the term "knowledge" or "to the
best knowledge" or words of similar import are used in this Agreement in
connection with a party's representations and warranties, it shall mean the
actual knowledge of a party after due inquiry of a party's directors and
executive officers.

                  14.c.    Binding Agreement. This Agreement is binding upon and
is for the benefit of AMRBK and BNKA and their respective successors and
permitted assigns. This Agreement is not made for the benefit of any person,
firm, corporation or association not a party hereto, and no other person, firm,
corporation or association shall acquire or have any right under or by virtue of
this Agreement. No party may assign this Agreement or any of its rights,
privileges, duties or obligations hereunder without the prior written consent of
the other party to this Agreement.

                  14.d.    Material Adverse Effect. As used in this Agreement,
any reference to any event, change or effect being "material" with respect to
any entity means an event, change or effect which is material in relation to the
condition (financial or otherwise), properties, assets, liabilities, businesses,
results of operations of such entity and its subsidiaries taken as a whole, and

                                      A-49


the term "material adverse effect" means, with respect to any entity, a material
adverse effect (whether or not required to be accrued or disclosed under
Statement of Financial Accounting Standards No. 5 ("SFAS No. 5")) (i) on the
condition (financial or otherwise), properties, assets, liabilities, businesses,
results of operations of such entity and its subsidiaries taken as a whole (but
does not include any such effect resulting from or attributable to any action or
omission by AMRBK or BNKA or any subsidiary of either of them taken with the
prior written consent of the other parties hereto, in contemplation of the
transactions contemplated hereby), or (ii) on the ability of such entity to
perform its obligations hereunder on a timely basis.

                  14.e.    Survival of Representations and Warranties. No
investigation by AMRBK or BNKA made before or after the date of this Agreement
shall affect the representations and warranties which are contained in this
Agreement and such representations and warranties shall survive such
investigation, provided that, except with respect to covenants, agreements and
indemnification to be performed in whole or in part subsequent to the Effective
Time of the Merger (as to which the related representations and warranties shall
survive until their performance) which covenants, agreements and indemnification
shall survive the Effective Time of the Merger, the representations, warranties,
covenants and agreements of AMRBK and BNKA contained in this Agreement shall
terminate upon the Effective Time of the Merger.

                  14.f.    Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California without
regard to conflicts of laws principles.

                  14.g.    Attorneys' Fees. In any action at law or suit in
equity in relation to this Agreement, the prevailing party in such action or
suit shall be entitled to receive a reasonable sum for its attorneys' fees and
all other reasonable costs and expenses incurred in such action or suit.

                  14.h.    Entire Agreement; Severability. This Agreement and
the documents, certificates, agreements, letters, schedules and exhibits
attached or required to be delivered pursuant hereto set forth the entire
agreement and understandings of the parties in respect of the transactions
contemplated hereby, and supersede all prior agreements, arrangements and
understanding relating to the subject matter hereof, excluding that certain
Confidentiality Agreement between the parties dated June 9, 2004. Each provision
of this Agreement shall be interpreted in a manner to be effective and valid
under applicable law, but if any provision hereof shall be prohibited or ruled
invalid under applicable law, the validity, legality and enforceability of the
remaining provisions shall not, except as otherwise required by law, be affected
or impaired as a result of such prohibition or ruling.

                  14.i.    Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

                                      A-50


         IN WITNESS WHEREOF, AMRBK, AMRB and BNKA have caused this Agreement and
Plan of Reorganization and Merger to be signed by their duly authorized officers
as of the day and year first above written.



                                           
AMERICAN RIVER BANKSHARES                     BANK OF AMADOR


By: /s/ CHARLES D. FITE                       By: /s/ RICHARD P. VINSON
    -------------------------------------         -------------------------------------
    Charles D. Fite                               Richard P. Vinson
    Chairman of the Board                         Chairman of the Board


By: /s/ DAVID T. TABER                        By: /s/ LARRY D. STANDING
    -------------------------------------         -------------------------------------
    David T. Taber                                Larry D. Standing
    President and Chief Executive Officer         President and Chief Executive Officer


By: /s/ STEPHEN H. WAKS                       By: /s/ GARETH ABEL
    -------------------------------------         -------------------------------------
    Stephen H. Waks                               Gareth Abel
    Secretary                                     Secretary


AMERICAN RIVER BANK


By: /s/ CHARLES D. FITE
    -------------------------------------
    Charles D. Fite
    Chairman of the Board


By: /s/ DAVID T. TABER
    -------------------------------------
    David T. Taber
    Chief Executive Officer


By: /s/ STEPHEN H. WAKS
    -------------------------------------
    Stephen H. Waks
    Secretary


                                      A-51


                               EXHIBITS TO ANNEX A

EXHIBIT

   A            AGREEMENT OF MERGER

   D            FORM OF BANK OF AMADOR AFFILIATE AGREEMENT

   E            FORM OF BANK OF AMADOR SHAREHOLDER AGREEMENT

   F            FORM OF LARRY D. STANDING EMPLOYMENT AGREEMENT

   G            FORM OF AMERICAN RIVER BANKSHARES SHAREHOLDER AGREEMENT



                                    EXHIBIT A



                               AGREEMENT OF MERGER


         This Agreement of Merger (this "Agreement") is made this ___ day of
___________, 2004, by and among American River Bank, a California banking
corporation located at 1545 River Park Drive, Suite 107, Sacramento, California
95815 (hereinafter referred to as "AMRB"), Bank of Amador, a California banking
corporation located at 422 Sutter Street, Jackson, California 95642 (hereinafter
referred to as "BNKA"), and American River Bankshares, a California corporation
located at 1545 River Park Drive, Suite 107, California 95815 (hereinafter
referred to as ("AMRBK"), with reference to the following:

                                    RECITALS
                                    --------


         WHEREAS, AMRBK is a California corporation duly organized, validly
existing and in good standing under the laws of the State of California with an
authorized capitalization of 20,000,000 shares of common stock, no par value per
share, of which __________ shares are issued and outstanding;


         WHEREAS, AMRB is a California banking corporation duly organized,
validly existing and in good standing under the laws of the State of California
with an authorized capitalization of 1,000 shares of common stock, no par value
per share, of which 100 shares are issued and outstanding;


         WHEREAS, BNKA is a California banking corporation duly organized,
validly existing and in good standing under the laws of the State of California
with an authorized capitalization of 10,000,000 shares of common stock, no par
value per share, of which __________ shares are issued and outstanding, and
500,000 shares of preferred stock, of which no shares are outstanding;


         WHEREAS, AMRBK and BNKA have entered into that certain Agreement and
Plan of Reorganization and Merger dated July 8, 2004 (the "Plan of
Reorganization") providing for the acquisition of BNKA by AMRBK (the
"Acquisition") through the Merger of BNKA with and into AMRB (the "Merger");

         WHEREAS, both AMRB and BNKA wish to complete the Acquisition by
consummating the Merger; and

         WHEREAS, the Boards of Directors of each of AMRBK, AMRB and BNKA have
approved this Agreement and have authorized its execution and delivery, and
AMRBK, as the sole shareholder of AMRB, and the shareholders of AMRBK and BNKA,
have approved this Agreement and the transactions contemplated hereby;

                                       1


         NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements set forth herein, the parties hereto hereby agree as follows:

                                    AGREEMENT
                                    ---------

         Section 1.   Effective Time of the Merger. The Merger shall become
effective on the date ("Effective Date") and time ("Effective Time of the
Merger") as prescribed by law including Section 4887 of the California Financial
Code.

         Section 2.   Merged Bank. At the Effective Time of the Merger, AMRB and
BNKA shall be merged under the Articles of Incorporation and Bylaws of AMRB (the
"Merged Bank").

         Section 3.   Closing. The closing of the transactions contemplated
hereby (the "Closing"), unless another place is agreed in writing by the parties
hereto, shall take place at the main office of AMRBK in Sacramento, California,
at the time and on the date fixed therefor pursuant to the Plan of
Reorganization.

         Section 4.   Business; Offices. The business of the Merged Bank shall
be that of a California banking corporation. This business shall be conducted by
the Merged Bank at its main office located at 1545 River Park Drive, Suite 107,
Sacramento, California 95815 and at its branch and division offices, including
at the former main office of BNKA located at 422 Sutter Street, Jackson,
California 95642 and at its former branch offices, in each location under the
name "Bank of Amador, a division of American River Bank."

         Section 6.   Capital. The capital accounts of the Merged Bank at the
Effective Time of the Merger shall be equal to the combined capital accounts of
BNKA and AMRB, adjusted, however, for normal earnings, expenses and purchase
accounting adjustments up to the Effective Time of the Merger. The authorized
capitalization of the Merged Bank shall be 1,000 shares of common stock, no par
value per share.

         Section 7.   Assets; Liabilities. All assets of each of BNKA and AMRB,
as they exist immediately prior to the Effective Time of the Merger, shall pass
to and vest in the Merged Bank without any conveyance or other transfer. The
Merged Bank shall be responsible for all of the liabilities of every kind and
description of each of BNKA and AMRB existing as of the Effective Time of the
Merger.

         Section 8.   Outstanding Stock. Each share of the common stock of AMRB
shall be automatically converted into one share of the common stock of the
Merged Bank. Each share of the common stock of BNKA ("BNKA Share") issued and
outstanding immediately prior to the Effective Time of the Merger, on and after
the Effective Time of the Merger, without any further action on the part of BNKA
or the holders of BNKA Shares, automatically shall be cancelled and cease to be
an issued and outstanding BNKA Share, and shall be converted into the right to
receive newly issued shares of the common

                                       2


stock of AMRBK ("AMRBK Share") and cash, subject to all terms and conditions set
forth in the Plan of Reorganization, as follows:

         Each share of BNKA common stock issued and outstanding immediately
prior to the Effective Time of the Merger (other than BNKA dissenting shares)
shall, by virtue of the Merger, be converted into the right to receive (i) cash
in the amount of $6.825 (the "Cash Consideration"), and (ii) a number of shares
of AMRBK common stock multiplied by the AMRBK Measuring Price (the "Stock
Consideration") determined as follows:

         A. 0.6851 shares of AMRBK common stock, if the AMRBK Measuring Price is
$18.50 or lower;
         B. 0.5394 shares of AMRBK common stock, if the AMRBK Measuring Price is
$23.50 or higher;
         C. the number of shares of AMRBK common stock equal to 12.675 divided
by the AMRBK Measuring Price, if the AMRBK Measuring Price is between $18.50 and
$23.50.

         "AMRBK Measuring Price" means the average closing price of AMRBK common
stock as traded on the Nasdaq National Market over the ten (10) consecutive
trading day period ending on the second business day prior to the Closing Date.

         Section 9.   Dividends. Neither AMRB nor BNKA shall declare or pay any
dividend to its shareholders between the date of this Agreement and the
Effective Time of the Merger, or dispose of any of their assets in any other
manner except in the normal course of business and for adequate value, except as
otherwise provided in the Plan of Reorganization.

         Section 10.  Board of Directors; Officers. The directors of AMRB at the
Effective Time of the Merger shall be the directors of the Merged Bank until
their successors have been chosen and qualified in accordance with the Articles
of Incorporation and the Bylaws of the Merged Bank. The officers of AMRB at the
Effective Time of the Merger shall be the officers of the Merged Bank until
their successors have been chosen and qualified in accordance with the Articles
of Incorporation and the Bylaws of the Merged Bank. Notwithstanding the
foregoing, two directors of BNKA shall be appointed as directors of the Merged
Bank effective as of the Effective Time of the Merger or as soon thereafter as
is practicable.

         Section 11.  Charter, Articles of Incorporation and Bylaws of Merged
Bank. The Charter, Articles of Incorporation and Bylaws of AMRB as in effect
immediately prior to the Effective Time of the Merger shall be the Charter,
Articles of Incorporation and Bylaws of the Merged Bank.

         Section 12.  Conditions. The obligations of the parties to proceed with
the Closing and consummation of the Merger are subject to the satisfaction or
waiver at or prior to the Closing of all of the conditions to the Merger set
forth herein and in the Plan of Reorganization.

                                       3


         Section 13.  Termination.  This Agreement may be terminated at any time
prior to the Closing:

                  (a)      by the written agreement of AMRBK, AMRB and BNKA;

                  (b)      by AMRBK or BNKA if the Closing shall not have been
consummated on or before March 31, 2005, provided, however, that if the only
conditions to the Closing which remain unsatisfied at March 31, 2005, are the
receipt of the government approvals or the expiration of any waiting periods
under applicable law or regulation, the Closing Date shall be automatically
extended to June 30, 2005, or such other date as the parties may mutually agree
upon; or

                  (c)      by AMRBK or BNKA in the event the Plan of
Reorganization is terminated in accordance with its terms.

         Section 14.  Board and Shareholder Approvals. This Agreement has been
approved and/or ratified and confirmed by the affirmative vote of the holders of
more than 50 percent of AMRBK and BNKA Shares outstanding, respectively, and, by
AMRBK, as the sole shareholder of AMRB, by unanimous written consent or at a
meeting held on the call of the Board of Directors.

         Section 15.  Miscellaneous.

                  (a)      Notices. Any notice or other communication required
or permitted under this Agreement shall be effective only if it is in writing
and delivered personally, or by Federal Express or similar overnight courier, or
by facsimile or sent by first class United States mail, postage prepaid,
registered or certified mail, addressed as follows:

         To AMRBK or AMRB:                   To BNKA:

         American River Bankshares           Bank of Amador
         Attn: David T. Taber, President     Attn:  Larry D. Standing, President
         1545 River Park Drive, Suite 107    422 Sutter Street
         Sacramento, California 95815        Jackson, California 95642
         Telephone: (916) 565-6100           Telephone:  (209) 223-2320
         Fax: (916) 641-1262                 Fax:  (209) 223-0934

                  (b)      Agreement and Plan of Reorganization Unaffected.
AMRB, AMRBK and BNKA agree that nothing in this Agreement shall be deemed to
change or modify in any manner the provisions of the Plan of Reorganization.

                  (c)      Succession. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns; provided, however, that neither this Agreement nor any right hereunder
may be assigned by any party without the consent of the other party hereto.

                                       4


                  (d)      Entire Agreement; Amendments; Etc. This Agreement and
the Plan of Reorganization embody the entire agreement of the parties hereto
with respect to the subject matter hereof and supersede all prior agreements
with respect thereto. This Agreement may be amended, and any provision hereof
waived, but only in writing signed by the party against whom such amendment or
waiver is sought to be enforced. Except as otherwise expressly provided herein,
no person other than the parties hereto shall have any right hereunder or be
entitled to the benefit of any provision hereof.

                  (e)      Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall together constitute one and the same
instrument when one or more counterparts hereof have been signed by BNKA and
delivered to AMRBK, and one or more counterparts hereof have been signed by AMRB
and AMRBK and delivered to BNKA.

                  (f)      Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California without
regard to conflicts of laws principles.

                                       5


         IN WITNESS WHEREOF, AMRBK, AMRB and BNKA have caused this Agreement and
Plan of Reorganization and Merger to be signed by their duly authorized officers
as of the day and year first above written.



                                           
AMERICAN RIVER BANKSHARES                     BANK OF AMADOR


By:                                           By:
    -------------------------------------         -------------------------------------
    David T. Taber                                Larry D. Standing
    President and Chief Executive Officer         President and Chief Executive Officer


By:                                           By:
    -------------------------------------         -------------------------------------
    Stephen H. Waks                               Gareth Abel
    Secretary                                     Secretary


AMERICAN RIVER BANK


By:
    -------------------------------------
    David T. Taber
    Chief Executive Officer


By:
    -------------------------------------
    Stephen H. Waks
    Secretary


                                       6


                                    EXHIBIT D


                            BNKA AFFILIATE AGREEMENT


         I, the undersigned, have been advised that as of the date hereof I may
be deemed to be an "affiliate" of Bank of Amador, a California banking
corporation ("BNKA"), for purposes of Rule 144 under the Securities Act of 1933,
as amended (the "Act"). I have also been advised that as a result of the merger
of BNKA with and into American River Bank, a California banking corporation
("AMRB"), pursuant to that certain Agreement and Plan of Reorganization and
Merger dated July 8, 2004 ("Plan of Reorganization") and related Agreement of
Merger, by and among American River Bankshares, a California corporation
("AMRBK"), AMRB and BNKA, I may be deemed to be an "affiliate" for purposes of
Rule 145 under the Act and subject to resale restrictions thereunder. In the
Merger, I may acquire shares of AMRBK common stock ("AMRBK Shares") in exchange
for my shares of the common stock of BNKA ("BNKA Shares").

         To the extent that I do acquire AMRBK Shares in connection with the
Merger, I hereby represent and agree as follows:

         1.       I have carefully read this Affiliate Agreement and, to the
extent I felt necessary, I have discussed it with legal counsel.

         2.       The AMRBK Shares are being acquired by me in good faith for
investment, for my own account, and not with a view to distributing the AMRBK
Shares to others or otherwise reselling the AMRBK Shares.

         3.       I will not offer, agree, or otherwise engage in any act or
transaction, to sell, purchase, transfer, or otherwise acquire or dispose of,
any of the AMRBK Shares, whether publicly or privately, from the date of this
Affiliate Agreement until release and publication to the general public of
financial results covering at least thirty (30) days of post-merger combined
operations of AMRBK and BNKA, or otherwise commit any act related to the AMRBK
Shares in violation of the Act or related rules and regulations.

         4.       I understand that the offer and sale of the AMRBK Shares to me
has been or will be registered with the Securities and Exchange Commission in a
registration statement on Form S-4, but that such registration does not apply to
resales of stock by persons who are "affiliates" at the time of the resale.
Accordingly, the AMRBK Shares must be held by me for at least one year unless:
(i) the AMRBK Shares have been registered under the Act for sale by me; (ii) a
sale of the AMRBK Shares is made in conformity with the volume and other
applicable limitations of Rule 145; or (iii) in the written opinion of counsel
another exemption from registration is available under the Act.

                                       1


         5.       I understand that AMRBK is under no obligation to register the
resale or other disposition of the AMRBK Shares by me or on my behalf or to take
any other action to qualify the sale of the AMRBK Shares for any exemption from
registration.

         6.       I also understand that stop transfer instructions will be
given to AMRBK's transfer agent with respect to the AMRBK Shares and that there
will be placed on the certificates for the AMRBK Shares a legend stating in
substance:

                       THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
                       BEEN ISSUED IN A TRANSACTION TO WHICH RULE 145
                       PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
                       AMENDED, APPLIES AND MAY ONLY BE SOLD OR OTHERWISE
                       TRANSFERRED IN COMPLIANCE WITH THE REQUIREMENTS OF
                       RULE 145 OR PURSUANT TO A REGISTRATION STATEMENT
                       UNDER THAT ACT OR AN EXEMPTION FROM SUCH
                       REGISTRATION.

         7.       I know of no plan (written or oral) pursuant to which holders
of shares of the outstanding BNKA Shares intend to sell or otherwise dispose of
more than 50%, in the aggregate, of their interest in such shares, either by a
sale or other disposition of BNKA Shares before the Merger, by the exercise of
dissenters' rights in the Merger, or by a sale or other disposition of the AMRBK
Shares to be received by them as a result of the Merger.

         8.       I understand and agree that AMRBK will rely upon the foregoing
representations and warranties in issuing the AMRBK Shares to me and I hereby
agree to indemnify AMRBK and hold it and its officers, directors, employees,
agents and representatives harmless from and against all liabilities, costs, or
expenses (including reasonable attorneys' fees) arising as a result of a sale or
disposition by me of any of the AMRBK Shares in violation of paragraph 3 above.

         9.       I understand that so long as I am an "affiliate" of AMRBK
within the meaning of the Act, any shares of AMRBK common stock I may acquire in
the future, separate and apart from the AMRBK Shares described above, whether or
not such shares have been previously registered with the Securities and Exchange
Commission, will be subject to the restrictions on resale set forth in Rule 144
of the Act. I understand that under various circumstances, including the case
where I acquire shares of AMRBK's common stock that may be deemed "restricted
securities" within the meaning of Rule 144 of the Act, I will be required to
hold such shares for a minimum of one year before I can sell the shares in the
trading market unless otherwise allowed by law, rule or regulation. I also
understand that legends reflecting the restrictions on AMRBK common stock which
I may acquire will be placed on all certificates representing such shares, and
that stop

                                       2


transfer orders will be placed with AMRBK's transfer agent prohibiting transfers
by me in violation of such restrictions.

         10.      It is understood and agreed that this Affiliate Agreement
shall terminate and be of no further force and effect and the legend set forth
in paragraph 6 above shall be removed by delivery of substitute certificates
without such legend, and the related stop transfer of restrictions shall be
lifted forthwith, if (i) any such AMRBK Shares shall have been registered under
the Act for sale, transfer or other disposition by me or on my behalf and are
sold, transferred or otherwise disposed of, or (ii) any such AMRBK Shares are
sold in accordance with the provisions of paragraphs (c), (e), (f) and (g) of
Rule 144 promulgated under the Act, or (iii) I am not at the time an affiliate
of AMRBK or BNKA and have been the beneficial owner of the AMRBK Shares for at
least one year (or such other period as may be prescribed by the Act and the
rules and regulations thereunder, and AMRBK has filed with the SEC all of the
reports it is required to file under the Securities Exchange Act of 1934, as
amended, during the preceding 12 months, or (iv) I am not and have not been for
at least three months an affiliate of AMRBK and have been the beneficial owner
of the AMRBK Shares for at least two years (or such other period as may be
prescribed by the Act and the rules and regulations thereunder), or (v) AMRBK
shall have received a letter from the staff of the Securities and Exchange
Commission, or a written opinion of counsel, which opinion and counsel shall be
reasonably acceptable to AMRBK, to the effect that the stock transfer
restrictions and the legend are not required.





Dated:  July 8, 2004                           ---------------------------------
                                               Signature


                                               ---------------------------------
                                               Type or Print Name

                                       3


                                    EXHIBIT E

                           BNKA SHAREHOLDER AGREEMENT


         This Shareholder Agreement (this "Agreement"), is made as of July 8,
2004, by and between American River Bankshares, a California corporation
("AMRBK"), and each director, executive officer and certain other key officers
of Bank of Amador, a California banking corporation ("BNKA"), who beneficially
own shares of BNKA common stock ("BNKA Shares") and/or have been granted stock
options to acquire BNKA Shares under the BNKA Stock Option Plan, and whose name
is set forth on the signature page hereof. Each such person shall hereinafter be
referred to individually as a "Shareholder" and collectively as the
"Shareholders." This Agreement and such other agreements shall be referred to
collectively as the "Shareholder Agreements." This Agreement is made with
reference to the following:


                                    RECITALS
                                    --------

         WHEREAS, that certain Agreement and Plan of Reorganization and Merger
(the "Plan of Reorganization"), dated as of July 8, 2004, entered into by and
between AMRBK, American River Bank, a California banking corporation and
wholly-owned subsidiary of AMRBK ("AMRB") and BNKA, provides for the acquisition
by AMRBK of one hundred percent (100%) of the BNKA Shares, through the merger
(the "Merger") of BNKA with and into AMRB; and

         WHEREAS, as a condition precedent to the obligations of AMRBK under
Section 7.q. and BNKA under Section 8.p. of the Plan of Reorganization, the
Shareholders shall each have entered into Shareholder Agreements concurrent with
the execution of the Plan of Reorganization in accordance with the terms,
conditions, and provisions thereof;

         NOW, THEREFORE, in order to effectuate the transactions set forth above
and in consideration of the mutual covenants, conditions, agreements,
representations and warranties contained herein and in the Plan of
Reorganization, and intending to be legally bound, the parties hereto agree as
follows:


                                    AGREEMENT
                                    ---------

                                    ARTICLE I

                            COVENANTS OF SHAREHOLDER

         1.1      Vote of Shareholders. At the meeting of shareholders of BNKA
referred to in Section 3.2.a. of the Plan of Reorganization (the "Meeting"), the
Shareholder shall vote or cause to be voted the BNKA Shares indicated as owned
or controlled by such Shareholder in Schedule I attached hereto, and any other
BNKA Shares now owned or hereafter acquired or controlled by such Shareholder,
in favor of, and to approve the principal terms of, the Merger, and any other
matter contemplated by the Plan of Reorganization which requires the approval of
the shareholders of BNKA.

                                       1


         1.2      Other Contracts. From and after the date of this Agreement,
the Shareholder shall not enter into or become subject to any agreement or
commitment which would restrict or in any way impair the obligation of the
Shareholder to comply with all the terms of this Agreement, including, without
limitation, any other agreement to sell, transfer or otherwise dispose of the
Shareholder's BNKA Shares, except with prior written consent of AMRBK.

         1.3      Updating Information. In the event that the Shareholder shall
discover that any representation or warranty made herein by such Shareholder was
false or misleading in any material respect when made or that any event has
occurred such that any representation or warranty of the Shareholder made herein
would, if made at and as of the time of the occurrence of such event, or
thereafter, be incorrect in any material respect, the Shareholder shall deliver
to AMRBK a statement specifying that it is delivered pursuant to this Section
1.3 and stating in reasonable detail the facts with respect thereto. Delivery of
any such statement shall not limit any rights which AMRBK may otherwise have
under this Agreement.

         1.4      Agreement to Recommend. The Shareholder agrees that, upon the
execution of this Agreement, the Shareholder shall at all times use his or her
best efforts in order to obtain the approval of the shareholders of BNKA of the
principal terms of the Merger, and any other matters contemplated by the Plan of
Reorganization which requires approval of the shareholders of BNKA and shall
recommend the approval of such matters by the shareholders of BNKA at the
Meeting; provided, however, that the terms of this Section 1.4 shall not apply
in the event the Board of Directors of BNKA receives a bona fide unsolicited
offer for a Business Combination of BNKA with another entity, and reasonably
determines, upon advice of counsel, that as a result of such offer, any duty to
act or to refrain from doing any act pursuant to this Agreement is inconsistent
with the continuing fiduciary duties of the Board of Directors to its
shareholders and the Plan of Reorganization is terminated in connection
therewith and in accordance with its terms.

         1.5      BNKA Stock Options. The Shareholder agrees: (i) not to
exercise any outstanding BNKA Stock Options granted to and held by the
Shareholder (the "Shareholder's Options") as of the date hereof and as set forth
in Schedule II attached hereto; and (ii) to surrender and exchange the
Shareholder's Options to BNKA in accordance with the terms and conditions of
Section 2.6 of the Plan of Reorganization. The Shareholder further agrees that
any of the Shareholder's Stock Options not surrendered and exchanged pursuant to
Section 2.6 of the Plan of Reorganization prior to the Effective Time of the
Merger shall expire at the Effective Time of the Merger.

         1.6      Non-Competition. The Shareholder agrees that for a period of
two (2) years from the Effective Time of the Merger, without the prior written
consent of AMRBK, he or she shall not directly or indirectly acquire, hold, or
retain any ownership interest in (except for passive investment interests of
five percent (5%) or less in a publicly held financial institution or bank
holding company), or serve in any capacity as a shareholder, officer, employee,
agent or consultant whether on a full or part-time basis or from time to time
of, any financial institution, including its parent holding company or other
affiliated companies, or any other business, which competes with or is similar
in nature to the business of AMRBK, AMRB, or BNKA, that conducts business or
operations in the same market areas in which AMRBK, AMRB or BNKA conduct
business or operations including the market areas within the California Counties
of Amador, Placer, Sacramento and Sonoma.

                                       2


                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES
                                 OF SHAREHOLDER

         2.1      Representations and Warranties of Shareholder. The Shareholder
represents and warrants to, and agrees with, AMRBK as follows:

                  (a)      Capacity. The Shareholder has all requisite capacity
to enter into and to perform the Shareholder's obligations under this Agreement.

                  (b)      Agreement. The Shareholder has received a copy of the
Plan of Reorganization and has had the opportunity to review and to consider the
terms and conditions contained in this Agreement and in the Plan of
Reorganization and to confer with his or her counsel concerning said terms and
conditions.

                  (c)      Binding Agreement. This Agreement has been duly
executed and delivered by such Shareholder and constitutes a valid and legally
binding agreement of such Shareholder.

                  (d)      Ownership of Shares. Schedule I hereto correctly sets
forth the number of BNKA Shares beneficially owned or controlled by the
Shareholder or with respect to which such Shareholder has sole or shared voting
power (subject to applicable community property laws), and the Shareholder has
good and marketable title to all such BNKA Shares free and clear of any liens,
security interests, charges or other encumbrances of any kind of nature, except
as set forth on Schedule I.

                  (e)      Relationship with BNKA. The Shareholder is a director
or officer and shareholder of BNKA.

                  (f)      Non-Contravention. The execution and delivery of this
Agreement by the Shareholder does not, and the performance by the Shareholder of
the Shareholder's obligations hereunder and the consummation by the Shareholder
of the transactions contemplated hereby will not, in any material respect,
violate or conflict with, or constitute a material default under any agreement,
instrument, contract or other obligation or any order, arbitration award,
judgment or decree to which the Shareholder is a party or by which the
Shareholder is bound, or to the Shareholder's knowledge any statute, rule or
regulation to which the Shareholder or any of the Shareholder's property is
subject.

                                       3


                                   ARTICLE III

                                   TERMINATION

         3.1      Automatic Termination. This Agreement shall automatically
terminate and be of no further force or effect if the Plan of Reorganization is
terminated in accordance with the terms thereof, except as to any breach
occurring prior to the date of such termination.

                                   ARTICLE IV

                                  MISCELLANEOUS

         4.1      Expenses. Each party hereto shall pay its own costs and
expenses in connection with this Agreement and the transactions covered and
contemplated hereby; provided, however, that nothing contained herein shall
preclude the payment of the Shareholder's expenses in connection with the
negotiation and documentation of this Agreement by BNKA.

         4.2      Notices, Etc. Any notice or other communication required or
permitted under this Agreement shall be effective only if it is in writing and
delivered personally, or by Federal Express or similar overnight courier, or by
facsimile or sent by first class United States mail, postage prepaid, registered
or certified mail, addressed as follows:

                  (a)      If to the Shareholder, to the address set forth in
                           Schedule I attached hereto.
                           With a copy to:
                           Bank of Amador
                           Attn: Larry D. Standing, President
                           422 Sutter Street
                           Jackson, California 95642
                           Telephone:  (209) 223-2320
                           Fax: (209) 223-0934

                           With an additional copy to:
                           Bartel, Eng & Schroder
                           Attn:  Daniel B. Eng, Esq.
                           1331 Garden Hwy, Suite 300
                           Sacramento, California 95833
                           Telephone:  (916) 442-0400
                           Fax: (916) 442-3442

                  (b)      If to AMRBK or AMRB to:
                           American River Bankshares
                           Attn: David T. Taber, President
                           1545 River Park Drive, Suite 107
                           Sacramento, California 95815
                           Telephone: (916) 565-6100
                           Fax: (916) 641-1262

                                       4


                           With a copy to:
                           Dodd o Mason o George LLP
                           Attn:  Glenn T. Dodd, Esq.
                           100 Century Center Court, Suite 605
                           San Jose, California 95112-4536
                           Telephone:  (408) 452-1476
                           Fax: (408) 452-1487

or such other address as any party may have furnished in writing to the other
parties.

         4.3      Entire and Sole Agreement. The making, execution and delivery
of this Agreement by the parties hereto have not been induced by any
representations, statements, warranties or agreements other than those expressed
herein and in the Plan of Reorganization. This Agreement embodies the entire
understanding of the parties, and there are no further or other agreements or
understandings, whether written or oral, in effect among the parties relating to
the subject matter hereof, unless expressly referred to by reference herein.

         4.4      Successors and Assigns. Except as otherwise provided in this
Agreement, all covenants and agreements of the parties contained in this
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto.

         4.5      Governing Law. This Agreement shall construed and enforced in
accordance with and governed by the laws of the State of California without
regard to conflicts of laws principles.

         4.6      Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

         4.7      Amendment, Supplement and Waiver. This Agreement may be
amended or supplemented, and compliance with the provisions hereof may be waived
only by an instrument in writing signed by the party against which enforcement
of such amendment, supplement or waiver of compliance is sought.

         4.8      Headings. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.

         4.9      Specific Performance. It is recognized and agreed that
monetary damages will not compensate the parties hereto for nonperformance by
any party. Accordingly, each party agrees that his, her or its obligation shall
be enforceable by a court order requiring specific performance.

         4.10     Several Obligations. All duties and obligations of the
Shareholder executing this Agreement shall be several and not joint with the
duties and obligations of other Shareholders executing Shareholder Agreements
with AMRBK.

                                       5


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

SHAREHOLDER                                 AMERICAN RIVER BANKSHARES


                                            By:
----------------------------------              --------------------------------
             (Name)                             David T. Taber,
                                                President
---------------------------------
          (Signature)

                                       6


                                   SCHEDULE I



NAME OF SHAREHOLDER:

ADDRESS OF SHAREHOLDER:


NUMBER OF SHARES                    REGISTERED OWNER(S)
--------------------------------------------------------------------------------





DESCRIBE ANY LIENS, SECURITY INTERESTS, CHARGES OR OTHER ENCUMBRANCES:
---------------------------------------------------------------------



                                   SCHEDULE II



NAME OF SHAREHOLDER:

ADDRESS OF SHAREHOLDER:


NUMBER OF BNKA STOCK OPTIONS                              EXERCISE PRICE
--------------------------------------------------------------------------------



                                    EXHIBIT F

                              EMPLOYMENT AGREEMENT

        This Agreement is made and entered into on __________, 2004 by and
between American River Bank, a California state chartered banking corporation
(the "Employer") and Larry D. Standing (the "Employee") for the purposes set
forth hereinafter (the "Agreement").

                                    RECITALS
                                    --------

        WHEREAS, it is the intention of the parties to enter into an employment
agreement for the purposes of assuring the continued services of the Employee as
the President of a division of the Employer to be known as "Bank of Amador, a
division of American River Bank" from and after the Effective Time of the Merger
pursuant to that certain Agreement and Plan of Reorganization and Merger (the
"Plan of Reorganization"), dated as of June __, 2004, entered into by and
between American River Bankshares, a California corporation, American River
Bank, a California banking corporation and Bank of Amador, a California banking
corporation, which provides for the acquisition by American River Bankshares of
one hundred percent (100%) of the common stock of Bank of Amador, through the
merger of Bank of Amador with and into American River Bank (the "Merger");

        NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the Employer and Employee agree as follows:

                                    AGREEMENT
                                    ---------

        1.      Term of Employment; Termination of Prior Employment Agreement
and Waiver of Rights and Benefits and Release of Obligations Thereunder.
Pursuant to this Agreement, the Employer employs the Employee and the Employee
hereby accepts employment with the Employer, upon the terms and conditions
hereinafter set forth. The term of this Agreement shall be a period of (2) years
from the date hereof. Upon the occurrence of the second annual anniversary of
the date of this Agreement, and on each anniversary date thereafter, the term of
this Agreement shall be deemed automatically extended for an additional one (1)
year term, subject to the termination provisions of paragraph 16.

        2.      Duties and Obligations of Employee. Employee shall serve as the
President of the division of the Employer known as "Bank of Amador, a division
of American River Bank" pursuant to this Agreement and shall perform the
customary duties of each such office in the commercial banking industry as may
from time to time be reasonably requested of him by the Chief Executive Officer
or Board of Directors of the Employer including the following:

                (a)     Providing leadership in planning and implementing the
conduct of the business and affairs of the Employer, subject to the direction of
the Chief Executive Officer and



Board of Directors of the Employer, and carrying out responsibilities of the
position as outlined in any job description approved by the Board of Directors
of the Employer;

                (b)     Participating in community affairs which are beneficial
to the Employer;

                (c)     Maintaining a good relationship with the Board of
Directors of the Employer, its management officers and shareholders;

                (d)     Maintaining a good relationship with regulatory agencies
and governmental authorities having jurisdiction over the Employer and its
parent holding company; and

                (e)     Acting as a member of the Board of Directors of the
Employer and all committees thereof to which the Employee may be appointed or
elected.

        3.      Devotion to Employer's Business.

                (a)     The Employee shall devote his full business time,
ability, and attention to the business of the Employer during the term of this
Agreement and shall not during the term of this Agreement engage in any other
business activities, duties, or pursuits whatsoever, or directly or indirectly
render any services of a business, commercial, or professional nature to any
other person or organization, whether for compensation or otherwise, without the
prior written consent of the Board of Directors of the Employer. However, the
expenditure of reasonable amounts of time for educational, charitable, or
professional activities shall not be deemed a breach of this Agreement if those
activities do not materially interfere with the services required of the
Employee under this Agreement. Nothing in this Agreement shall be interpreted to
prohibit the Employee from making passive personal investments. However, the
Employee shall not directly or indirectly acquire, hold, or retain any interest
in any business competing with or similar in nature to the business of Employer,
except passive shareholder investments in other financial institutions and their
respective affiliates which do not exceed five percent (5%) of the outstanding
voting securities in the aggregate in any single financial institution and its
affiliates on a consolidated basis.

                (b)     The Employee agrees to conduct himself at all times with
due regard to public conventions and morals. The Employee further agrees not to
do or commit any act that will reasonably tend to shock or offend the community,
or to prejudice the Employer or the banking industry in general.

                (c)     The Employee hereby represents and agrees that the
services to be performed under the terms of this Agreement are of a special,
unique, unusual, extraordinary, and intellectual character that gives them a
peculiar value, the loss of which cannot be reasonably or adequately compensated
in damages in an action at law. The Employee therefore expressly agrees that the
Employer, in addition to any other rights or remedies that the Employer may
possess, shall be entitled to injunctive and other equitable relief to prevent
or remedy a breach of this Agreement by the Employee.

                                       2


        4.      Noncompetition by the Employee. The Employee shall not, during
the term of this Agreement, directly or indirectly, either as an employee,
employer, consultant, agent, principal, stockholder, officer, director, or in
any other individual or representative capacity, engage or participate in any
competitive banking or financial services business without the prior written
consent of the Employer.

        5.      Indemnification.

                (a)     The Employee shall indemnify and hold the Employer
harmless from all liability for loss, damage, or injury to persons or property
resulting from the gross negligence or intentional misconduct of the Employee.

                (b)     To the extent permitted by law, the Employer shall
indemnify the Employee if he was or is a party or is threatened to be made a
party in any action brought by a third party against the Employee (whether or
not the Employer is joined as a party defendant) against expenses, judgments,
fines, settlements and other amounts actually and reasonably incurred in
connection with said action if the Employee acted in good faith and in a manner
the Employee reasonably believed to be in the best interest of the Employer (and
with respect to a criminal proceeding if the Employee had no reasonable cause to
believe his conduct was unlawful), provided that the alleged conduct of the
Employee arose out of and was within the course and scope of his employment as
an officer or employee of the Employer.

        6.      Disclosure of Information. The Employee shall not, either before
or after termination of this Agreement, without the prior written consent of the
Board of Directors of Employer or except as required by law to comply with legal
process including, without limitation, by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process, disclose to anyone any financial information, trade or business
secrets, customer lists, computer software or other information not otherwise
publicly available concerning the business or operations of the Employer, its
parent holding company or any subsidiary thereof. The Employee further
recognizes and acknowledges that any financial information concerning any
customers of the Employer, its parent holding company and any subsidiary thereof
as it may exist from time to time, is strictly confidential and is a valuable,
special and unique asset of Employer's and its parent holding company's
business. The Employee shall not, either before or after termination of this
Agreement, without such consent or except as required by law, disclose to anyone
said financial information or any part thereof, for any reason or purpose
whatsoever. In the event the Employee is required by law to disclose such
information described in this paragraph 6, the Employee will provide the
Employer and its counsel with immediate notice of such request so that they may
consider seeking a protective order. If, in the absence of a protective order or
the receipt of a waiver hereunder, the Employee is nonetheless, in the written
opinion of knowledgeable counsel, compelled to disclose any of such information
to any tribunal or any other party or else stand liable for contempt or suffer
other material censure or material penalty, then the Employee may disclose (on
an "as needed" basis only) such information to such tribunal or other party
without liability hereunder. The Employee agrees to execute such form of
confidentiality agreement from time to time during

                                       3


the term of this Agreement as the Board of Directors of the Employer may require
to be executed by officers of the Employer. Any conflict between this paragraph
6 and such confidentiality agreement shall be resolved in favor of the
provisions of the confidentiality agreement.

        7.      Written, Printed or Electronic Material. All written, printed or
electronic material, notebooks and records including, without limitation,
computer disks used by the Employee in performing duties for the Employer, other
than the Employee's personal notes and diaries, are and shall remain the sole
property of the Employer. Upon termination of employment, the Employee shall
promptly return all such material (including all copies, extracts and summaries
thereof) to the Employer.

        8.      Surety Bond. The Employee agrees that he will furnish all
information and take any other steps necessary from time to time to enable the
Employer to obtain or maintain a fidelity or similar financial institution bond
which includes the Employee within the coverages provided conditional on the
rendering of a true account by the Employee of all monies, goods, or other
property which may come into the custody, charge, or possession of the Employee
during the term of his employment. The surety company issuing the bond and the
amount of the bond must be acceptable to the Employer. All premiums on the bond
shall be paid by the Employer. The Employer, or its successor, shall have no
obligation to pay or provide severance payments or severance benefits to the
Employee in accordance with paragraph 16 (d) or 16 (e), as applicable, of this
Agreement in the event that the Employee's employment is terminated in
connection with the Employee's failure to qualify for a surety bond at any time
during the term of this Agreement and such failure to qualify results from an
occurrence described in paragraph 16 (a) (5), (6), (7), (8), (9), (10) or (11,
to the extent of an Employee breach).

        9.      Base Salary. In consideration for the services to be performed
hereunder, the Employee shall receive a salary at the rate of One Hundred Fifty
Thousand Dollars ($150,000) per annum, payable in installments during the term
of this Agreement of approximately Six Thousand Two Hundred Fifty Dollars
($6,250) on the first and fifteenth days of each month, subject to applicable
adjustments for withholding taxes, prorations for any partial employment period
and such other applicable payroll procedures of the Employer. The Employee shall
receive such annual adjustments in salary, if any, as may be determined by the
Employer's Board of Directors, in its sole discretion, resulting from the Board
of Directors annual review of the Employee's compensation each year during the
term of this Agreement.

        10.     Salary Continuation During Disability. If the Employee for any
reason (except as expressly provided below) becomes temporarily or permanently
disabled so that he is unable to perform the duties under this Agreement, the
Employer agrees to pay the Employee the base salary otherwise payable to
Employee pursuant to paragraph 9 of this Agreement, reduced by the amounts
received by the Employee from state disability insurance, or worker's
compensation or other similar insurance benefits through policies provided by
the Employer, for a period of six (6) months from the date of disability.

        For purposes of this paragraph 10, "disability" shall be defined as
provided in the Employer's disability insurance program. Notwithstanding
anything herein to the contrary, the

                                       4


Employer shall have no obligation to make payments for a disability resulting
from the deliberate, intentional actions of the Employee, such as, but not
limited to, attempted suicide or chemical dependence of the Employee.

        11.     Incentive Compensation. The Employee shall be entitled to
participate in the Incentive Compensation Plan (the "Plan") sponsored by the
Employer's parent holding company, and receive incentive compensation in
accordance with the Plan, subject to the right of the Board of Directors in its
sole discretion to modify the terms and provisions of the Plan each year during
the term of this Agreement in connection with its review of the Employee's
performance and the Employer's results of operations. Under no circumstance
shall a right to receive incentive compensation exist in favor of or accrue to
or for the benefit of the Employee prior to actual receipt of a distribution, if
any, under the Plan.

        12.     Stock Options/Employment Rights. The Employee may be granted
stock options in the future in the discretion of the Board of Directors of the
Employer's parent holding company. Any such stock option grant shall be
evidenced by a stock option agreement in the form required by the applicable
stock option plan. Notwithstanding any provision of such stock option plan or
any such stock option agreement to the contrary, no rights of employment shall
be conferred upon the Employee or result from any such stock option plan or any
such stock option agreement. Any employment rights and corresponding duties of
the Employee pursuant to his employment by the Employer shall be limited to and
interpreted solely in accordance with the terms and provisions of this
Agreement.

        13.     Other Benefits. The Employee shall be entitled to those employee
benefits adopted by the Employer for all employees of the Employer, subject to
applicable qualification requirements and regulatory approval requirements, if
any. The Employee shall be further entitled to the following additional benefits
which shall supplement or replace, to the extent duplicative of any part or all
of the general employee benefits, the benefits otherwise provided to the
Employee:

                (a)     Vacation. The Employee shall be entitled to four (4)
weeks of annual vacation leave and six (6) days of personal absence at his then
existing rate of base salary each year during the term of this Agreement. The
Employee may be absent from his employment for vacation and personal absence as
long as such leave is reasonable and does not jeopardize his responsibilities
and duties specified in this Agreement. The length of vacation should not exceed
two (2) weeks without the approval of the Employer's Board of Directors. The
Employee shall take at least two (2) consecutive weeks of vacation each year
during the term of this Agreement. Vacation time will accrue in accordance with
the Employer's personnel policies.

                (b)     Automobile Allowance and Insurance. The Employer shall
acquire or otherwise make available to the Employee for his business and
incidental personal use an automobile, suitable to his position, and (i)
maintain it in good condition and repair; and (ii) provide public liability
insurance and property damage insurance policies with insurer(s) acceptable to
the Employer and with coverages in such amounts as may be acceptable to the
Employer from time to time.

                                       5


                (c)     Insurance. The Employer shall provide during the term of
this Agreement at the Employer's sole cost, group life, health (including
medical, dental and hospitalization), accident and disability insurance coverage
for the Employee and his dependents through a policy or policies provided by
insurer(s) selected by the Employer in its sole discretion.

        14.     Annual Physical Examination. The Employer shall provide
insurance coverage for or pay or reimburse the Employee for the cost of an
annual physical examination conducted by a California licensed physician
selected by the Employee and reasonably acceptable to the Employer.

        15.     Business Expenses. The Employee shall be reimbursed for all
ordinary and necessary expenses incurred by the Employee in connection with his
employment. The Employee shall also be reimbursed for reasonable expenses
incurred in activities associated with promoting the business of the Employer,
including expenses for entertainment, travel, conventions, educational programs,
and similar items, and with the prior approval of the Employer's Executive
Committee, expenses for club memberships. The Employer will pay for or will
reimburse the Employee for such expenses upon presentation by the Employee from
time to time of receipts or other appropriate evidence of such expenditures.

        16.     Termination of Agreement.

                (a)     Automatic Termination. This Agreement shall terminate
automatically without further act of the parties and immediately upon the
occurrence of any one of the following events, subject to either party's right,
without any obligation whatsoever, to waive an event reasonably susceptible of
waiver, and the obligation of the Employer to pay the amounts which would
otherwise be payable to the Employee under this Agreement through the end of the
month in which the event occurs, except that only in the event of termination
based upon subparagraphs (1), (4) or (11, to the extent of Employer's breach)
below shall the Employee be entitled to receive severance payments and severance
benefits based upon automatic termination pursuant to paragraph 16 (d) of this
Agreement:

                        (1)     The occurrence of circumstances that make it
                                impossible or impractical for the Employer to
                                conduct or continue its business.

                        (2)     The death of the Employee.

                        (3)     The loss by the Employee of legal capacity.

                        (4)     The loss by the Employer of legal capacity to
                                contract.

                        (5)     The willful, intentional and material breach of
                                duty by the Employee in the course of his
                                employment.

                                       6


                        (6)     The habitual and continued neglect by the
                                Employee of his employment duties and
                                obligations under this Agreement.

                        (7)     The Employee's willful and intentional violation
                                of any State of California or federal banking or
                                securities laws, or of the Bylaws, rules,
                                policies or resolutions of the Employer or its
                                parent holding company and their respective
                                subsidiaries, or the rules or regulations of the
                                Board of Governors of the Federal Reserve
                                System, California Department of Financial
                                Institutions, or the Federal Deposit Insurance
                                Corporation, or other regulatory agency or
                                governmental authority having jurisdiction over
                                the Employer, or its parent holding company.

                        (8)     The determination by a state or federal banking
                                agency or governmental authority having
                                jurisdiction over the Employer or its parent
                                holding company that the Employee is not
                                suitable to act in the capacity for which he is
                                employed by the Employer.

                        (9)     The Employee is convicted of any felony or a
                                crime involving moral turpitude or commits a
                                fraudulent or dishonest act.

                        (10)    The Employee discloses without authority any
                                secret or confidential information concerning
                                the Employer, its parent holding company or
                                their respective subsidiaries or takes any
                                action which the Employer's Board of Directors
                                determines, in its sole discretion and subject
                                to good faith, fair dealing and reasonableness,
                                constitutes unfair competition with or induces
                                any customer to breach any contract with the
                                Employer, its parent holding company or their
                                respective subsidiaries.

                        (11)    Either party materially breaches the terms or
                                provisions of this Agreement.

                (b)     Termination by Employer. The Employer may, at its
election and in its sole discretion, terminate this Agreement for any reason, or
for no reason, by giving not less than thirty (30) days' prior written notice of
termination to the Employee, without prejudice to any other remedy to which the
Employer may be entitled either at law, in equity or under this Agreement. Upon
such termination, unless otherwise agreed in writing between the Employer and
the Employee, the Employee shall immediately cease performing and discharging
the duties and responsibilities of his position and remove himself and his
personal belongings from the Employer's premises. All rights and obligations
accruing to the Employee under this Agreement shall cease at such termination,
except that such termination shall not prejudice the Employee's rights regarding
employment benefits which shall have accrued prior to such termination,
including the right to receive the severance pay specified in paragraph 16 (d)
below, and any

                                       7


other remedy which the Employee may have at law, in equity or under this
Agreement, which remedy accrued prior to such termination.

                (c)     Termination by Employee. This Agreement may be
terminated by the Employee for any reason, or no reason, by giving not less than
thirty (30) days' prior written notice of termination to the Employer. Upon such
termination, all rights and obligations accruing to the Employee under this
Agreement shall cease, except that such termination shall not prejudice the
Employee's rights regarding employment benefits which shall have accrued prior
to such termination and any other remedy which the Employee may have at law, in
equity or under this Agreement, which remedy accrued prior to such termination.

                (d)     Severance Pay - Termination by Employer. In the event of
termination by the Employer pursuant to paragraph 16 (b) or automatic
termination based upon paragraph 16 (a) (1), (4) or (11, to the extent of the
Employer's breach) of this Agreement, the Employee shall be entitled to receive
severance pay at the Employee's rate of base salary immediately preceding such
termination in an amount equal to six (6) months of the Employee's annual base
salary, less applicable withholding deductions (in addition to salary, incentive
compensation, or other payments, if any, due the Employee). Such severance pay
shall be paid to the Employee in lump sum within thirty (30) days following such
termination.

                Notwithstanding the foregoing, in the event of a "change in
control" as defined in subparagraph (e) below, the Employee shall not be
entitled to the severance pay pursuant to this paragraph 16 (d) and any rights
of the Employee to severance pay shall be limited to such rights as are
specified in paragraph 16 (e) below.

                The Employee acknowledges and agrees that severance pay pursuant
to this paragraph 16 (d) is in lieu of all damages, payments and liabilities on
account of the early termination of this Agreement and the sole and exclusive
remedy for the Employee terminated at the will of the Employer pursuant to
paragraph 16 (b) or pursuant to certain provisions of paragraph 16 (a) described
herein.

                (e)     Severance Pay - Change in Control. In the event of a
"change in control" as defined herein during the active service of the Employee
with the Employer and within a period of two (2) years following consummation of
such a change in control (i) the Employee's employment is terminated; or (ii)
without the Employee's consent there occurs (A) any adverse change in the nature
and scope of the Employee's salary or benefits, or (B) any event which
reasonably constitutes a constructive termination (by resignation or otherwise)
of the Employee's employment, then the Employee shall be entitled to receive
severance pay at the Employee's rate of base salary immediately preceding such
termination in an amount equal to eighteen (18) months of the Employee's annual
base salary, less applicable withholding deductions (in addition to salary,
incentive compensation, or other payments, if any, due the Employee). Such
severance pay shall be paid to the Employee in lump sum within thirty (30) days
following such termination.

                                       8


                The Employee acknowledges and agrees that severance pay pursuant
to this paragraph 16 (e) is in lieu of all damages, payments and liabilities on
account of the events described above for which such severance pay may be due
the Employee under paragraph 16 (e) of this Agreement. This paragraph 16 (e)
shall be binding upon and inure to the benefit of the Employee and the Employer,
and any successors or assigns thereof or any "person" as defined herein.

                Notwithstanding the foregoing, the Employee shall not be
entitled to receive severance payments pursuant to this paragraph 16 (e) in the
event of an occurrence described in paragraph 16 (a), subparagraphs (5), (6),
(7), (8), (9), (10) or (11, to the extent of an Employee breach), or in the
event the Employee terminates employment in accordance with paragraph 16 (c) and
the termination is not a result of or based upon the occurrence of any event
described in paragraph 16 (e) (ii) above.

                If all or any portion of the amounts payable to the Employee
under this Agreement, either alone or together with other payments which the
Employee has the right to receive hereunder, constitute "excess parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), that are subject to the excise tax imposed by
Section 4999 of the Code (or similar tax and/or assessment), such amounts
payable hereunder shall be reduced to the extent necessary, after first applying
any similar reduction in payments to be received from any other plan or program
sponsored by the Employer from which the Employee has a right to receive
payments subject to Sections 280G and 4999 of the Code including, without
limitation, any Salary Continuation Agreement made between the Employer and the
Employee, so as to cause a reduction of any excise tax pursuant to Section 4999
of the Code to equal zero.

                A "change in control" for purposes of this Agreement and
paragraph 16 (e) shall mean the occurrence of any of the following events with
respect to the Employer: (i) a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or in response to any other form or report to the regulatory
agencies or governmental authorities having jurisdiction over the Employer or
its parent holding company, or any stock exchange on which the shares of the
Employer's parent holding company are listed which requires the reporting of a
change in control; (ii) any merger, consolidation or reorganization of the
Employer or its parent holding company in which the Employer or its parent
holding company does not survive; (iii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one transaction or a series of
transactions) of any assets of the Employer or its parent holding company having
an aggregate fair market value of fifty percent (50%) of the total value of the
assets of the Employer or its parent holding company, reflected in the most
recent balance sheet of the Employer or its parent holding company; (iv) a
transaction whereby any "person" (as such term is used in the Exchange Act) or
any individual, corporation, partnership, trust or any other entity is or
becomes the beneficial owner, directly or indirectly, of securities of the
Employer representing twenty-five percent (25%) or more of the combined voting
power of the Employer's or its parent holding company's then outstanding
securities; (v) a situation where, in any one-year period, individuals who at
the beginning of such period

                                       9


constitute the Board of Directors of the Employer or its parent holding company
cease for any reason to constitute at least a majority thereof, except in the
cases of retirement, disability or death and unless the election, or the
nomination for election by the Employer's or its parent holding company's
shareholder(s), of each new director is approved by a vote of at least
three-quarters (3/4) of the directors then still in office who were directors at
the beginning of the period; or (vi) the shareholder(s) of the Employer or its
parent holding company approve the sale or transfer of substantially all of the
Employer's or its parent holding company's assets to parties that are not within
a "controlled group of corporations" (as that term is defined in section 1563 of
the Code) in which the Employer or its parent holding company is a member.
Notwithstanding the foregoing or anything else contained herein to the contrary,
there shall not be a change in control for purposes of this Agreement if the
event which would otherwise come within the meaning of the term "change in
control" involves (i) an Employee Stock Ownership Plan sponsored by the parent
holding company of the Employer which Plan is the party that acquires "control"
or is the principal participant in the transaction constituting a "change in
control," as described above, or (ii) a reorganization in which the Employer is
merged with and into another bank subsidiary of such parent bank holding company
to consolidate operations under the charter of such other bank subsidiary, or
(iii) if the individuals who constitute the directors of the Employer or its
parent holding company at the time a specific transaction described in
subparagraphs (ii) or (vi) above is first presented to the Board of Directors of
the Employer or its parent holding company will, according to the terms of the
definitive agreements for the transaction, constitute a majority of the members
of the board of directors of the resulting corporation or acquiring person
immediately after the transaction, then, before an event that would otherwise
constitute a change in control shall be deemed to have occurred, such Board of
Directors of the Employer or its parent holding company may determine by
majority vote that the specific transaction does not constitute a change in
control under such subparagraphs (ii) or (vi) above, or (iv) the Merger
contemplated pursuant to the Plan of Reorganization.

        17.     Notices. Any notices to be given hereunder shall be in writing
and may be transmitted by personal delivery or by U.S. mail, registered or
certified, postage prepaid with return receipt requested. Mailed notices shall
be addressed to the Employee at the address listed in the Employee's personnel
file and to the Employer at its principal business office. A party may change
the address for receipt of notices by written notice in accordance with this
paragraph 17. Notices delivered personally shall be deemed communicated as of
the date of actual receipt; mailed notices shall be deemed communicated as of
three (3) days after the date of mailing.

        18.     Arbitration. All claims, disputes and other matters in question
arising out of or relating to this Agreement or the breach or interpretation
thereof, other than those matters which are to be determined by the Employer in
its sole and absolute discretion, shall be resolved by binding arbitration
before a representative member, selected by the mutual agreement of the parties,
of the Judicial Arbitration and Mediation Services, Inc. ("JAMS"), in accordance
with the rules and procedures of JAMS then in effect. In the event JAMS is
unable or unwilling to conduct such arbitration, or has discontinued its
business, the parties agree that a representative member, selected by the mutual
agreement of the parties, of the American Arbitration Association ("AAA"), shall
conduct such binding arbitration in accordance with the rules and procedures of
the AAA then in effect. Notice of the demand for arbitration shall be filed in

                                       10


writing with the other party to this Agreement and with JAMS (or AAA, if
necessary). In no event shall the demand for arbitration be made after the date
when institution of legal or equitable proceedings based on such claim, dispute
or other matter in question would be barred by the applicable statute of
limitations. Any award rendered by JAMS or AAA shall be final and binding upon
the parties, and as applicable, their respective heirs, beneficiaries, legal
representatives, agents, successors and assigns, and may be entered in any court
having jurisdiction thereof. The obligation of the parties to arbitrate pursuant
to this clause shall be specifically enforceable in accordance with, and shall
be conducted consistently with, the provisions of Title 9 of Part 3 of the
California Code of Civil Procedure. Any arbitration hereunder shall be conducted
in Sacramento, California, unless otherwise agreed to by the parties.

        19.     Attorneys' Fees and Costs. In the event of litigation,
arbitration or any other action or proceeding between the parties to interpret
or enforce this Agreement or any part thereof or otherwise arising out of or
relating to this Agreement, the prevailing party shall be entitled to recover
its costs related to any such action or proceeding and its reasonable fees of
attorneys, accountants and expert witnesses incurred by such party in connection
with any such action or proceeding. The prevailing party shall be deemed to be
the party which obtains substantially the relief sought by final resolution,
compromise or settlement, or as may otherwise be determined by order of a court
of competent jurisdiction in the event of litigation, an award or decision of
one or more arbitrators in the event of arbitration, or a decision of a
comparable official in the event of any other action or proceeding. Every
obligation to indemnify under this Agreement includes the obligation to pay
reasonable fees of attorneys, accountants and expert witnesses incurred by the
indemnified party in connection with matters subject to indemnification.

        20.     Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties with respect to the
employment of the Employee by the Employer and contains all of the covenants and
agreements between the parties with respect to the employment of the Employee by
the Employer. Each party to this Agreement acknowledges that no other
representations, inducements, promises, or agreements, oral or otherwise, have
been made by any party, or anyone acting on behalf of any party, which are not
set forth herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding on either party.

        21.     Modifications. Any modification of this Agreement will be
effective only if it is in writing and signed by a party or its authorized
representative.

        22.     Waiver. The failure of either party to insist on strict
compliance with any of the terms, provisions, covenants, or conditions of this
Agreement by the other party shall not be deemed a waiver of any term,
provision, covenant, or condition, individually or in the aggregate, unless such
waiver is in writing, nor shall any waiver or relinquishment of any right or
power at any one time or times be deemed a waiver or relinquishment of that
right or power for all or any other times.

                                       11


        23.     Partial Invalidity. If any provision in this Agreement is held
by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect
without being impaired or invalidated in any way.

        24.     Interpretation. This Agreement shall be construed without regard
to the party responsible for the preparation of the Agreement and shall be
deemed to have been prepared jointly by the parties. Any ambiguity or
uncertainty existing in this Agreement shall not be interpreted against either
party, but according to the application of other rules of contract
interpretation, if an ambiguity or uncertainty exists.

        25.     Governing Law and Venue. The laws of the State of California,
other than those laws denominated choice of law rules, shall govern the
validity, construction and effect of this Agreement. Any action which in any way
involves the rights, duties and obligations of the parties hereunder which is
not otherwise resolved by arbitration pursuant to paragraph 18 hereof, shall be
brought in the courts of the State of California and venue for any action or
proceeding shall be in Sacramento County or in the United States District Court
for the Eastern District of California, and the parties hereby submit to the
personal jurisdiction of said courts.

        26.     Payments Due Deceased Employee. If the Employee dies prior to
the expiration of the term of his employment, any payments that may be due the
Employee from the Employer under this Agreement as of the date of death shall be
paid to the Employee's heirs, beneficiaries, successors, permitted assigns or
transferees, executors, administrators, trustees, or any other legal or personal
representatives.

        27.     Assignment/Binding Effect. Except as specifically set forth in
this Agreement, the Employee may not assign, delegate or otherwise transfer any
of the Employee's rights, benefits, duties or obligations under this Agreement
without the prior written consent of the Employer. This Agreement shall inure to
the benefit of and be binding upon the Employer and its successors and assigns,
and the Employee and the Employee's heirs, beneficiaries, successors, permitted
assigns or transferees, executors, administrators, trustees, and any other legal
or personal representatives.

        28.     Effect of Termination on Certain Provisions. Upon the
termination of this Agreement, the obligations of the Employer and the Employee
hereunder shall cease except to the extent of the Employer's obligation to make
payments, if any, to or for the benefit of the Employee following termination,
and provided that paragraphs 1 (to the extent of waivers and releases therein),
5, 6, 7, 17, 18, 19, 20, 23, 24, 25, 26, and 27 shall remain in full force and
effect.

        29.     Advice of Counsel and Advisors. The Employee acknowledges and
agrees that he has read and understands the terms and provisions of this
Agreement and prior to signing this Agreement, he has read and had the advice of
counsel and/or such other advisors as he deemed appropriate in connection with
his review and analysis of such terms and provisions of this Agreement.

                                       12


        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written in the City of Sacramento, County of Sacramento, State
of California.


EMPLOYER:                                  EMPLOYEE:

AMERICAN RIVER BANK


By:                                        By:
    ---------------------------------          ---------------------------------
    Charles D. Fite                            Larry D. Standing
    Chairman of the Board

                                       13


                                    EXHIBIT A


                           INCENTIVE COMPENSATION PLAN


                                    EXHIBIT G

                           AMRBK SHAREHOLDER AGREEMENT


        This Shareholder Agreement (this "Agreement"), is made as of July 8,
2004, by and between American River Bankshares, a California corporation
("AMRBK"), and each director and executive officer of AMRBK who beneficially own
shares of AMRBK common stock ("AMRBK Shares") and whose name is set forth on the
signature page hereof. Each such person shall hereinafter be referred to
individually as a "Shareholder" and collectively as the "Shareholders." This
Agreement and such other agreements shall be referred to collectively as the
"Shareholder Agreements." This Agreement is made with reference to the
following:


                                    RECITALS
                                    --------

        WHEREAS, that certain Agreement and Plan of Reorganization and Merger
(the "Plan of Reorganization"), dated as of July 8, 2004, entered into by and
between AMRBK, American River Bank, a California banking corporation and
wholly-owned subsidiary of AMRBK ("AMRB") and Bank of Amador ("BNKA"), provides
for the acquisition by AMRBK of one hundred percent (100%) of the AMRBK Shares,
through the merger (the "Merger") of BNKA with and into AMRB; and

        WHEREAS, as a condition precedent to the obligations of AMRBK under
Section 7.q. and BNKA under Section 8.p. of the Plan of Reorganization, the
Shareholders shall each have entered into Shareholder Agreements concurrent with
the execution of the Plan of Reorganization in accordance with the terms,
conditions, and provisions thereof.

        NOW, THEREFORE, in order to effectuate the transactions set forth above
and in consideration of the mutual covenants, conditions, agreements,
representations and warranties contained herein and in the Plan of
Reorganization, and intending to be legally bound, the parties hereto agree as
follows:


                                    AGREEMENT
                                    ---------

                                    ARTICLE I

                            COVENANTS OF SHAREHOLDER

        1.1     Vote of Shareholders. At the meeting of shareholders of AMRBK
referred to in Section 3.1.a. of the Plan of Reorganization (the "Meeting"), the
Shareholder shall vote or cause to be voted the AMRBK Shares indicated as owned
or controlled by such Shareholder in Schedule I attached hereto, and any other
AMRBK Shares now owned or hereafter acquired or controlled by such Shareholder,
in favor of, and to approve the principal terms of, the Merger, and any other
matter contemplated by the Plan of Reorganization which requires the approval of
the shareholders of AMRBK.

                                       1


        1.2     Other Contracts. From and after the date of this Agreement, the
Shareholder shall not enter into or become subject to any agreement or
commitment which would restrict or in any way impair the obligation of the
Shareholder to comply with all the terms of this Agreement, including, without
limitation, any other agreement to sell, transfer or otherwise dispose of the
Shareholder's AMRBK Shares, except with prior written consent of AMRBK.

        1.3     Updating Information. In the event that the Shareholder shall
discover that any representation or warranty made herein by such Shareholder was
false or misleading in any material respect when made or that any event has
occurred such that any representation or warranty of the Shareholder made herein
would, if made at and as of the time of the occurrence of such event, or
thereafter, be incorrect in any material respect, the Shareholder shall deliver
to AMRBK a statement specifying that it is delivered pursuant to this Section
1.3 and stating in reasonable detail the facts with respect thereto. Delivery of
any such statement shall not limit any rights which AMRBK may otherwise have
under this Agreement.

        1.4     Agreement to Recommend. The Shareholder agrees that, upon the
execution of this Agreement, the Shareholder shall at all times use his or her
best efforts in order to obtain the approval of the shareholders of AMRBK of the
principal terms of the Merger, and any other matters contemplated by the Plan of
Reorganization which requires approval of the shareholders of AMRBK and, if the
Shareholder is a director, he or she shall recommend the approval of such
matters by the shareholders of AMRBK at the Meeting; provided, however, that the
terms of this Section 1.4 shall not apply in the event any duty to act or to
refrain from doing any act pursuant to this Agreement is inconsistent with the
continuing fiduciary duties of the Board of Directors to its shareholders and
the Plan of Reorganization is terminated in connection therewith and in
accordance with its terms.

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES
                                 OF SHAREHOLDER

        2.1     Representations and Warranties of Shareholder. The Shareholder
represents and warrants to, and agrees with, AMRBK as follows:

                (a)     Capacity. The Shareholder has all requisite capacity to
enter into and to perform the Shareholder's obligations under this Agreement.

                (b)     Agreement. The Shareholder has received a copy of the
Plan of Reorganization and has had the opportunity to review and to consider the
terms and conditions contained in this Agreement and in the Plan of
Reorganization and to confer with his or her counsel concerning said terms and
conditions.

                (c)     Binding Agreement. This Agreement has been duly executed
and delivered by such Shareholder and constitutes a valid and legally binding
agreement of such Shareholder.

                (d)     Ownership of Shares. Schedule I hereto correctly sets
forth the number of AMRBK Shares beneficially owned or controlled by the
Shareholder or with respect to which such Shareholder has sole or shared voting
power (subject to applicable community property

                                       2


laws), and the Shareholder has good and marketable title to all such AMRBK
Shares free and clear of any liens, security interests, charges or other
encumbrances of any kind of nature, except as set forth on Schedule I.

                (e)     Relationship with AMRBK. The Shareholder is a director
or officer and shareholder of AMRBK.

                (f)     Non-Contravention. The execution and delivery of this
Agreement by the Shareholder does not, and the performance by the Shareholder of
the Shareholder's obligations hereunder and the consummation by the Shareholder
of the transactions contemplated hereby will not, in any material respect,
violate or conflict with, or constitute a material default under any agreement,
instrument, contract or other obligation or any order, arbitration award,
judgment or decree to which the Shareholder is a party or by which the
Shareholder is bound, or to the Shareholder's knowledge any statute, rule or
regulation to which the Shareholder or any of the Shareholder's property is
subject.

                                   ARTICLE III

                                   TERMINATION

        3.1     Automatic Termination. This Agreement shall automatically
terminate and be of no further force or effect if the Plan of Reorganization is
terminated in accordance with the terms thereof, except as to any breach
occurring prior to the date of such termination.

                                   ARTICLE IV

                                  MISCELLANEOUS

        4.1     Expenses. Each party hereto shall pay its own costs and expenses
in connection with this Agreement and the transactions covered and contemplated
hereby; provided, however, that nothing contained herein shall preclude the
payment of the Shareholder's expenses in connection with the negotiation and
documentation of this Agreement by AMRBK.

        4.2     Notices, Etc. Any notice or other communication required or
permitted under this Agreement shall be effective only if it is in writing and
delivered personally, or by Federal Express or similar overnight courier, or by
facsimile or sent by first class United States mail, postage prepaid, registered
or certified mail, addressed as follows:

                (a)     If to the Shareholder, to the address set forth in
Schedule I attached hereto.

                        With a copy to:
                        American River Bankshares
                        Attn:  David T. Taber, President
                        1545 River Park Drive, Suite 107
                        Sacramento, California 95815
                        Telephone:  (916) 565-6100
                        Fax: (916) 641-1262


                        With an additional copy to:

                                       3


                        Dodd o Mason o George LLP
                        Attn:  Glenn T. Dodd, Esq.
                        100 Century Center Court, Suite 605
                        San Jose, California 95112-4536
                        Telephone:  (408 452-1476
                        Fax: (408) 452-1487

                (b)     If to BNKA: Bank of Amador
                        Attn:  Larry D. Standing, President
                        422 Sutter Street
                        Jackson, California 95642
                        Telephone:  (209) 223-2320
                        Fax: (209) 223-0934

                        With an additional copy to:
                        Bartel, Eng & Schroder
                        Attn:  Daniel B. Eng, Esq.
                        1331 Garden Hwy, Suite 300
                        Sacramento, California 95833
                        Telephone:  (916) 442-0400
                        Fax: (916) 442-3442

or such other address as any party may have furnished in writing to the other
parties.

        4.3     Entire and Sole Agreement. The making, execution and delivery of
this Agreement by the parties hereto have not been induced by any
representations, statements, warranties or agreements other than those expressed
herein and in the Plan of Reorganization. This Agreement embodies the entire
understanding of the parties, and there are no further or other agreements or
understandings, whether written or oral, in effect among the parties relating to
the subject matter hereof, unless expressly referred to by reference herein.

        4.4     Successors and Assigns. Except as otherwise provided in this
Agreement, all covenants and agreements of the parties contained in this
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto.

        4.5     Governing Law. This Agreement shall construed and enforced in
accordance with and governed by the laws of the State of California without
regard to conflicts of laws principles.

        4.6     Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

        4.7     Amendment, Supplement and Waiver. This Agreement may be amended
or supplemented, and compliance with the provisions hereof may be waived only by
an instrument in writing signed by the party against which enforcement of such
amendment, supplement or waiver of compliance is sought.

                                       4


        4.8     Headings. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.

        4.9     Specific Performance. It is recognized and agreed that monetary
damages will not compensate the parties hereto for nonperformance by any party.
Accordingly, each party agrees that his, her or its obligation shall be
enforceable by a court order requiring specific performance.

        4.10    Several Obligations. All duties and obligations of the
Shareholder executing this Agreement shall be several and not joint with the
duties and obligations of other Shareholders executing Shareholder Agreements
with AMRBK.

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

SHAREHOLDER                                 AMERICAN RIVER BANKSHARES


                                            By:
-----------------------------                   --------------------------------
           (Name)                               David T. Taber,
                                                President


-----------------------------
         (Signature)

                                        5


                                   SCHEDULE I



NAME OF SHAREHOLDER:

ADDRESS OF SHAREHOLDER:


NUMBER OF SHARES                            REGISTERED OWNER(S)
--------------------------------------------------------------------------------





DESCRIBE ANY LIENS, SECURITY INTERESTS, CHARGES OR OTHER ENCUMBRANCES:
---------------------------------------------------------------------



                                     ANNEX B


                   OPINION OF SANDLER O'NEILL & PARTNERS, L.P.



October 12, 2004


Board of Directors
American River Bankshares
1545 River Park Drive
Suite 107
Sacramento, CA 95815


Ladies and Gentlemen:

        American River Bankshares ("American River"), American River Bank
(American River Bank), a wholly owned subsidiary of American River, and Bank of
Amador ("Amador") have entered into an Agreement and Plan of Reorganization and
Merger, dated as of July 8, 2004 (the "Agreement"), pursuant to which Amador
will be merged with and into American River Bank (the "Merger"). Under the terms
of the Agreement, upon consummation of the Merger, each share of Amador common
stock issued and outstanding as of the date of the Agreement (the "Amador
Shares"), other than certain shares specified in the Agreement, will be
converted into the right to receive (a) cash in the amount of $6.825, minus the
amount of the Holdback Amount (as defined below) allocated to each Amador Share,
if any (as adjusted for the Holdback Amount, the "Cash Consideration") and (b)
(i) 0.6851 shares of common stock of American River if the American River
Measuring Price is $18.50 or lower, (ii) 0.5394 shares of American River common
stock if the American River Measuring Price is $23.50 or higher or (iii) a
number of shares of common stock of American River equal to 12.675 divided by
the American River Measuring Price if the American River Measuring Price is
between $18.50 and $23.50 (such number of shares of American River being
hereinafter referred to as the "Share Consideration" and together with the Cash
Consideration, the "Merger Consideration"). Pursuant to the Agreement, the
American River Measuring Price will be equal to the average closing price of the
American River common stock as traded on the Nasdaq National Market over the
twenty consecutive trading day period ending on the second business day prior to
the closing of the Merger. Pursuant to the Agreement, $1,362,000 in cash (the
"Holdback Amount") will be held back until (i) payment in full of the loan
agreements, including any security agreements or other instruments, related to
an Amador Merced County construction loan outstanding at the date of the
Agreement is received or (ii) the amount of any loss related to such loan is
finally determined to the reasonable satisfaction of American River and Amador.
The Holdback Amount, minus the amount of any loss, if applicable, will be paid
to holders of shares of Amador common stock on the earlier to occur of the
events mentioned in the preceding sentence. The terms and conditions of the
Merger are more fully set forth in the Agreement. You have requested our opinion
as to the fairness, from a financial point of view, of the Merger Consideration
to American River.

        Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement; (ii) certain publicly available financial statements
and other historical financial information of American River that we deemed
relevant; (iii) certain publicly available financial statements and other
historical financial information of Amador that we deemed relevant; (iv) certain
internal operating budget information, including earnings estimates, for
American River for the year ending December 31, 2004 prepared by and reviewed
with senior management of American River and

                                       B-1


estimates of earnings per share growth for subsequent years furnished by and
discussed with senior management of American River; (v) an internal operating
budget, including earnings estimates, for Amador for the year ending December
31, 2004 prepared by and reviewed with senior management of Amador and estimates
of earnings per share growth for subsequent years furnished by and discussed
with senior management of Amador and American River; (vi) the pro forma
financial impact of the Merger on American River, based on assumptions relating
to transaction expenses, purchase accounting adjustments and cost savings
determined by the senior managements of American River and Amador; (vii) the
publicly reported historical price and trading activity for American River's and
Amador's common stock, including a comparison of certain financial and stock
market information for American River and Amador with similar publicly available
information for certain other companies the securities of which are publicly
traded; (viii) the financial terms of certain recent business combinations in
the commercial banking industry, to the extent publicly available; (ix) the
current market environment generally and the banking environment in particular;
and (x) such other information, financial studies, analyses and investigations
and financial, economic and market criteria as we considered relevant. We also
discussed with certain members of senior management of American River the
business, financial condition, results of operations and prospects of American
River and held similar discussions with certain members of senior management of
Amador regarding the business, financial condition, results of operations and
prospects of Amador.

        In performing our review, we have relied upon the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by American River or Amador or
their respective representatives or that was otherwise reviewed by us and have
assumed such accuracy and completeness for purposes of rendering this opinion.
We have further relied on the assurances of management of American River and
Amador that they are not aware of any facts or circumstances that would make any
of such information inaccurate or misleading. We have not been asked to and have
not undertaken an independent verification of any of such information and we do
not assume any responsibility or liability for the accuracy or completeness
thereof. We did not make an independent evaluation or appraisal of the specific
assets, the collateral securing assets or the liabilities (contingent or
otherwise) of American River or Amador or any of their respective subsidiaries,
or the collectibility of any such assets, nor have we been furnished with any
such evaluations or appraisals. We did not make an independent evaluation of the
adequacy of the allowance for loan losses of American River or Amador nor have
we reviewed any individual credit files relating to American River or Amador. We
have assumed, with your consent, that the respective allowances for loan losses
for both American River and Amador are adequate to cover such losses.

        With respect to the earnings estimates for American River and Amador and
all projections of transaction costs, purchase accounting adjustments and
expected cost savings prepared by and/or reviewed with the managements of
American River and Amador and used by Sandler O'Neill in its analyses, Sandler
O'Neill assumed that they reflected the best currently available estimates and
judgments of the respective managements of the respective future financial
performances of American River and Amador and that such performances would be
achieved. We express no opinion as to such estimates or projections or the
assumptions on which they are based. We have also assumed that there has been no
material change in American River's or Amador's assets, financial condition,
results of operations, business or prospects since the date of the most recent
financial statements made available to us. We have assumed in all respects
material to our analysis that American River and Amador will remain as going
concerns for all periods relevant to our analyses, that all of the
representations and warranties contained in the Agreement and all related
agreements are true and correct, that each party to the agreements will perform
all of the covenants required to be performed by such party under the
agreements, that the conditions precedent in the agreements are not waived and
that the Merger

                                       B-2


will qualify as a tax-free reorganization for federal income tax purposes.
Finally, with your consent, we have relied upon the advice American River has
received from its legal, accounting and tax advisors as to all legal, accounting
and tax matters relating to the Merger and the other transactions contemplated
by the Agreement.

        Our opinion is necessarily based on financial, economic, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. Events occurring after the date hereof could materially
affect this opinion. We have not undertaken to update, revise, reaffirm or
withdraw this opinion or otherwise comment upon events occurring after the date
hereof. We are expressing no opinion herein as to what the value of American
River's common stock will be when issued to Amador's shareholders pursuant to
the Agreement or the prices at which American River's or Amador's common stock
may trade at any time.

        We have acted as American River's financial advisor in connection with
the Merger and have received a fee for our services and for rendering our
opinion. American River has also agreed to indemnify us against certain
liabilities arising out of our engagement.

        In the ordinary course of our business as a broker-dealer, we may
purchase securities from and sell securities to American River and Amador and
their respective affiliates. We may also actively trade the equity or debt
securities of American River and Amador or their respective affiliates for our
own account and for the accounts of our customers and, accordingly, may at any
time hold a long or short position in such securities.


        Our opinion is directed to the board of directors of American River in
connection with its consideration of the Merger. Our opinion is directed only to
the fairness, from a financial point of view, of the Merger Consideration to
American River and does not address the underlying business decision of American
River to engage in the Merger, the relative merits of the Merger as compared to
any other alternative business strategies that might exist for American River or
the effect of any other transaction in which American River might engage. Our
opinion is not to be quoted or referred to, in whole or in part, in a
registration statement, prospectus, proxy statement or in any other document,
nor shall this opinion be used for any other purposes, without Sandler O'Neill's
prior written consent; provided, however, that we hereby consent to the
inclusion of this opinion as an annex to the Joint Proxy Statement/Prospectus of
American River and Amador relating to the Merger dated the date hereof and to
the references to this opinion therein.


        Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the Merger Consideration is fair to American River from a
financial point of view.

                                Very truly yours,



                                /s/ SANDLER O'NEILL & PARTNERS, L.P.

                                       B-3


                                     ANNEX C


                     OPINION OF HOEFER & ARNETT INCORPORATED




October 12, 2004

Members of the Board of Directors
Bank of Amador
422 Sutter Street
Jackson, California 95642

Members of the Board:


You have requested our opinion as investment bankers as to the fairness, from a
financial point of view, to the shareholders of Bank of Amador, Jackson,
California ("BNKA") of the consideration to be paid in connection with the
proposed merger of BNKA with and into American River Bank, a subsidiary of
American River Bankshares, Sacramento, California ("AMRBK") in accordance with
the terms and conditions of the Agreement and Plan of Reorganization and Merger,
dated as of July 8, 2004, (the "Agreement"). Pursuant to the Agreement and
subject to the terms and conditions therein, each share of BNKA common stock
issued and outstanding immediately prior to the Effective Time of the Merger
(other than BNKA Dissenting Shares as defined in Section 2.7) shall, by virtue
of the Merger, be converted into the right to receive (i) cash in the amount of
$6.825 (the "Cash Consideration"), and (ii) a number of shares of AMRBK common
stock (the "Stock Consideration") determined as follows:


               A.  0.6851 shares of AMRBK common stock, if the AMRBK Measuring
        Price is $18.50 or lower;

               B.  0.5394 shares of AMRBK common stock, if the AMRBK Measuring
        Price is $23.50 or higher;

               C.  the number of shares of AMRBK common stock equal to 12.675
        divided by the AMRBK Measuring Price, if the AMRBK Measuring Price is
        between $18.50 and $23.50.

"AMRBK Measuring Price" means the average closing price of AMRBK common stock as
traded on the Nasdaq National Market over the twenty (20) consecutive trading
day period ending on the second business day prior to the Closing Date.

The Cash Consideration and the Stock Consideration are collectively referred to
herein as the "Per Share Consideration."

Based on 1,566,281 shares of BNKA common stock outstanding and a market price of
$19.90 per share for AMRBK common stock, the transaction value for BNKA
shareholders equals $19.50 per common share or $30,542,479 in aggregate. A
transaction value of $19.50 per share represents a price to book value at March
31, 2004 of 2.01x, a price to tangible book value at March 31, 2004 of 2.01x, a
price to estimated 2004 earnings multiple of 15.85x, a price to March 31, 2004
assets of 24.31% and a tangible premium on core deposits of 15.53%.

As part of its investment banking business, Hoefer & Arnett Incorporated is
regularly engaged in the valuation of bank, bank holding company and thrift
securities in connection with mergers, acquisitions, underwritings, sales and
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.

                                       C-1



Hoefer & Arnett has not previously provided investment banking and financial
advisory services to BNKA. Hoefer & Arnett provided investment banking and
financial advisory services to AMRBK in 2000 for which it received compensation.
Hoefer & Arnett provides a full range of financial advisory and securities
services and, in the course of its normal trading activities, may effect
transactions and hold securities of BNKA and AMRBK for its own account and for
the accounts of customers.

In connection with this assignment, we have reviewed and analyzed, among other
things, the following: (i) the Agreement and Plan of Reorganization and Merger
dated July 8, 2004; (ii) Annual Reports to Shareholders and Annual Reports on
Form 10-K of BNKA for December 31, 2003, December 31, 2002 and December 31,
2001; Quarterly Reports on Form 10-Q of BNKA for the quarters ended March 31,
2004, September 30, 2003, June 30, 2003 and March 31, 2003; (iii) Annual Reports
to Shareholders and Annual Reports on Form 10-K of AMRBK for December 31, 2003,
December 31, 2002 and December 31, 2001; Quarterly Reports on Form 10-Q of AMRBK
for the quarters ended March 31, 2004, September 30, 2003, June 30, 2003 and
March 31, 2003; (iv) certain other publicly available financial and other
information concerning BNKA and AMRBK; (v) publicly reported historical prices
and trading activity for BNKA and AMRBK common stock; and (vi) the nature and
terms of certain other merger and acquisition transactions we believe relevant
to our inquiry. We have held discussions with senior management of BNKA and
AMRBK concerning their past and current operations, financial condition and
prospects, as well as the results of regulatory examinations. We have conducted
such other financial studies, analyses and investigations, as we deemed
appropriate for purposes of this opinion.

In conducting our review and in arriving at our opinion, we have relied upon and
assumed the accuracy and completeness of the financial and other information
provided to us or publicly available, and we have not assumed any responsibility
for independent verification of the same. We have relied upon the managements of
BNKA and AMRBK as to the reasonableness of the financial and operating forecasts
and projections (and the assumptions and bases therefor) provided to us, and we
have assumed that such forecasts and projections reflect the best currently
available estimates and judgments of BNKA and AMRBK management.


We did not make or obtain any evaluations or appraisals of the assets or
liabilities of BNKA or AMRBK. We are not experts in the valuation of allowances
for loan losses and we did not make an independent evaluation of the adequacy of
the allowance for loan losses of either BNKA or AMRBK, nor did we review any
individual loan credit files. We assumed that the aggregate allowance for loan
losses set forth in the financial statements of BNKA and AMRBK is adequate to
cover such losses. For purposes of its opinion, we assumed that the
reorganization would have the tax, accounting and legal effects described in the
merger agreement. Hoefer & Arnett's opinion as expressed herein is limited to
the fairness, from a financial point of view, to the shareholders of BNKA with
respect to the terms of the proposed merger of BNKA with and into American River
Bank and does not address the underlying business decision to proceed with the
transaction.


We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including among others the following: (i)
the historical and current financial position and results of operations of BNKA
and AMRBK, including interest income, interest expense, net interest income, net
interest margin, provision for loan losses, non-interest income, non-interest
expense, earnings, dividends, internal capital generation, book value,
intangible assets, return on assets, return on shareholders' equity,
capitalization, the amount and type of non-performing assets, loan losses and
the reserve for loan losses, all as set forth in the financial statements for
BNKA and AMRBK; (ii) the assets and liabilities of BNKA and AMRBK, including the
loan, investment and mortgage portfolios, deposits,

                                       C-2



other liabilities, historical and current liability sources and costs and
liquidity; and (iii) the nature and terms of certain other merger and
acquisition transactions involving banks and bank holding companies. We have
also taken into account our assessment of general economic, market and financial
conditions and our experience in other transactions, as well as our experience
in securities valuation and our knowledge of the banking industry generally. Our
opinion is necessarily based upon conditions as they exist and can be evaluated
on the date hereof and the information made available to us through the date
hereof.


Based upon and subject to the foregoing, we are of the opinion as investment
bankers that, as of the date hereof, the terms of the proposed merger of BNKA
with and into American River Bank are fair, from a financial point of view, to
the shareholders of BNKA.


Our opinion is directed to the board of directors of BNKA for its information
and assistance in connection with its consideration of the financial terms of
the transaction contemplated by the Agreement and does not constitute a
recommendation to any shareholder of BNKA as to how such shareholder should vote
on the proposed transaction. We hereby consent to the reference to our firm in
the proxy statement-prospectus related to the transaction and to the inclusion
of our opinion as an exhibit to the proxy statement-prospectus related to the
transaction.

Respectfully Submitted,



/s/ HOEFER & ARNETT INCORPORATED

                                       C-3


                                     ANNEX D

                          CHAPTER 13 DISSENTERS' RIGHTS



                         CHAPTER 13. DISSENTERS' RIGHTS.

        Section 1300. Reorganization or short-form merger; dissenting shares;
corporate purchase at fair market value; definitions--

        (a)     If the approval of the outstanding shares (Section 152) of a
corporation is required for a reorganization under subdivisions (a) and (b) or
subdivision (e) or (f) of Section 1201, each shareholder of the corporation
entitled to vote on the transaction and each shareholder of a subsidiary
corporation in a short-form merger may, by complying with this chapter, require
the corporation in which the shareholder holds shares to purchase for cash at
their fair market value the shares owned by the shareholder which are dissenting
shares as defined in subdivision (b). The fair market value shall be determined
as of the day before the first announcement of the terms of the proposed
reorganization or short-form merger, excluding any appreciation or depreciation
in consequence of the proposed action, but adjusted for any stock split, reverse
stock split, or share dividend which becomes effective thereafter.

        (b)     As used in this chapter, "dissenting shares" means shares which
come within all of the following descriptions:

                (1)     Which were not immediately prior to the reorganization
or short-form merger either (A) listed on any national securities exchange
certified by the Commissioner of Corporations under subdivision (o) of Section
25100 or (B) listed on the National Market System of the NASDAQ Stock Market,
and the notice of meeting of shareholders to act upon the reorganization
summarizes this Section and Sections 1301, 1302, 1303 and 1304; provided,
however, that this provision does not apply to any shares with respect to which
there exists any restriction on transfer imposed by the corporation or by any
law or regulation; and provided, further, that this provision does not apply to
any class of shares described in subparagraph (A) or (B) if demands for payment
are filed with respect to 5 percent or more of the outstanding shares of that
class.

                (2)     Which were outstanding on the date for the determination
of shareholders entitled to vote on the reorganization and (A) were not voted in
favor of the reorganization or, (B) if described in subparagraph (A) or (B) of
paragraph (1) (without regard to the provisos in that paragraph), were voted
against the reorganization, or which were held of record on the effective date
of a short-form merger; provided, however, that subparagraph (A) rather than
subparagraph (B) of this paragraph applies in any case where the approval
required by Section 1201 is sought by written consent rather than at a meeting.

                (3)     Which the dissenting shareholder has demanded that the
corporation purchase at their fair market value, in accordance with Section
1301.

                (4)     Which the dissenting shareholder has submitted for
endorsement, in accordance with Section 1302.

        (c)     As used in this chapter, "dissenting shareholder" means the
recordholder of dissenting shares and includes a transferee of record.

                                       D-1



        Section 1301. Notice to holders of dissenting shares in reorganizations;
demand for purchase; time; contents--

        (a)     If, in the case of a reorganization, any shareholders of a
corporation have a right under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, to require the corporation to
purchase their shares for cash, such corporation shall mail to each such
shareholder a notice of the approval of the reorganization by its outstanding
shares (Section 152) within 10 days after the date of such approval, accompanied
by a copy of Sections 1300, 1302, 1303, 1304 and this Section, a statement of
the price determined by the corporation to represent the fair market value of
the dissenting shares, and a brief description of the procedure to be followed
if the shareholder desires to exercise the shareholder's right under such
Sections. The statement of price constitutes an offer by the corporation to
purchase at the price stated any dissenting shares as defined in subdivision (b)
of Section 1300, unless they lose their status as dissenting shares under
Section 1309.

        (b)     Any shareholder who has a right to require the corporation to
purchase the shareholder's shares for cash under Section 1300, subject to
compliance with paragraphs (3) and (4) of subdivision (b) thereof, and who
desires the corporation to purchase such shares shall make written demand upon
the corporation for the purchase of such shares and payment to the shareholder
in cash of their fair market value. The demand is not effective for any purpose
unless it is received by the corporation or any transfer agent thereof (1) in
the case of shares described in clause (i) or (ii) of paragraph (1) of
subdivision (b) of Section 1300 (without regard to the provisos in that
paragraph), not later than the date of the shareholders' meeting to vote upon
the reorganization, or (2) in any other case within 30 days after the date on
which the notice of the approval by the outstanding shares pursuant to
subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder.

        (c)     The demand shall state the number and class of the shares held
of record by the shareholder which the shareholder demands that the corporation
purchase and shall contain a statement of what such shareholder claims to be the
fair market value of those shares as of the day before the announcement of the
proposed reorganization or short-form merger. The statement of fair market value
constitutes an offer by the shareholder to sell the shares at such price.

        Section 1302. Submission of share certificates for endorsement;
uncertificated securities--

        Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder, the shareholder shall submit to the corporation at
its principal office or at the office of any transfer agent thereof, (a) if the
shares are certificated securities, the shareholder's certificates representing
any shares which the shareholder demands that the corporation purchase, to be
stamped or endorsed with a statement that the shares are dissenting shares or to
be exchanged for certificates of appropriate denomination so stamped or endorsed
or (b) if the shares are uncertificated securities, written notice of the number
of shares which the shareholder demands that the corporation purchase. Upon
subsequent transfers of the dissenting shares on the books of the corporation,
the new certificates, initial transaction statement, and other written
statements issued therefor shall bear a like statement, together with the name
of the original dissenting holder of the shares.

                                       D-2



        Section 1303. Payment of agreed price with interest; agreement fixing
fair market value; filing; time of payment--

        (a)     If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the legal
rate on judgments from the date of the agreement. Any agreements fixing the fair
market value of any dissenting shares as between the corporation and the holders
thereof shall be filed with the secretary of the corporation.

        (b)     Subject to of Section 1306, payment of the fair market value of
dissenting shares shall be made within 30 days after the amount thereof has been
agreed or within 30 days after any statutory or contractual conditions to the
reorganization are satisfied, whichever is later, and in the case of
certificated securities, subject to surrender of the certificates therefor,
unless provided otherwise by agreement.

        Section 1304. Action to determine whether shares are dissenting shares
or fair market value; limitation; joinder; consolidation; determination of
issues; appointment of appraisers--

        (a)     If the corporation denies that the shares are dissenting shares,
or the corporation and the shareholder fail to agree upon the fair market value
of the shares, then the shareholder demanding purchase of such shares as
dissenting shares or any interested corporation, within six months after the
date on which notice of the approval by the outstanding shares (Section 152) or
notice pursuant to subdivision (i) of Section 1110 was mailed to the
shareholder, but not thereafter, may file a complaint in the superior court of
the proper county praying the court to determine whether the shares are
dissenting shares or the fair market value of the dissenting shares or both or
may intervene in any action pending on such a complaint.

        (b)     Two or more dissenting shareholders may join as plaintiffs or be
joined as defendants in any such action and two or more such actions may be
consolidated.

        (c)     On the trial of the action, the court shall determine the
issues. If the status of the shares as dissenting shares is in issue, the court
shall first determine that issue. If the fair market value of the dissenting
shares is in issue, the court shall determine, or shall appoint one or more
impartial appraisers to determine, the fair market value of the shares.

        Section 1305. Report of appraisers; confirmation; determination by
court; judgment; payment; appeal; costs--

        (a)     If the court appoints an appraiser or appraisers, they shall
proceed forthwith to determine the fair market value per share. Within the time
fixed by the court, the appraisers, or a majority of them, shall make and file a
report in the office of the clerk of the court. Thereupon, on the motion of any
party, the report shall be submitted to the court and considered on such
evidence as the court considers relevant. If the court finds the report
reasonable, the court may confirm it.

        (b)     If a majority of the appraisers appointed fail to make and file
a report within 10 days from the date of their appointment or within such
further time as may be allowed by the court or the report is not confirmed by
the court, the court shall determine the fair market value of the dissenting
shares.

                                       D-3



        (c)     Subject to the provisions of Section 1306, judgment shall be
rendered against the corporation for payment of an amount equal to the fair
market value of each dissenting share multiplied by the number of dissenting
shares which any dissenting shareholder who is a party, or who has intervened,
is entitled to require the corporation to purchase, with interest thereon at the
legal rate from the date on which judgment was entered.

        (d)     Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for the
shares described in the judgment. Any party may appeal from the judgment.

        (e)     The costs of the action, including reasonable compensation to
the appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including in the
discretion of the court attorneys' fees, fees of expert witnesses and interest
at the legal rate on judgments from the date of compliance with Sections 1300,
1301 and 1302 if the value awarded by the court for the shares is more than 125
percent of the price offered by the corporation under subdivision (a) of Section
1301).

        Section 1306. Prevention of immediate payment; status as creditors;
interest--

        To the extent that the provisions of Chapter 5 prevent the payment to
any holders of dissenting shares of their fair market value, they shall become
creditors of the corporation for the amount thereof together with interest at
the legal rate on judgments until the date of payment, but subordinate to all
other creditors in any liquidation proceeding, such debt to be payable when
permissible under the provisions of Chapter 5.

        Section 1307. Dividends on dissenting shares--

        Cash dividends declared and paid by the corporation upon the dissenting
shares after the date of approval of the reorganization by the outstanding
shares (Section 152) and prior to payment for the shares by the corporation
shall be credited against the total amount to be paid by the corporation
therefor.

        Section 1308. Rights of dissenting shareholders pending valuation;
withdrawal of demand for payment--

        Except as expressly limited in this chapter, holders of dissenting
shares continue to have all the rights and privileges incident to their shares,
until the fair market value of their shares is agreed upon or determined. A
dissenting shareholder may not withdraw a demand for payment unless the
corporation consents thereto.

        Section 1309. Termination of dissenting share and shareholder status--

        Dissenting shares lose their status as dissenting shares and the holders
thereof cease to be dissenting shareholders and cease to be entitled to require
the corporation to purchase their shares upon the happening of any of the
following:

                                       D-4


        (a)     The corporation abandons the reorganization. Upon abandonment of
the reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter all
necessary expenses incurred in such proceedings and reasonable attorneys' fees.

        (b)     The shares are transferred prior to their submission for
endorsement in accordance with Section 1302 or are surrendered for conversion
into shares of another class in accordance with the articles.

        (c)     The dissenting shareholder and the corporation do not agree upon
the status of the shares as dissenting shares or upon the purchase price of the
shares, and neither files a complaint or intervenes in a pending action as
provided in Section 1304, within six months after the date on which notice of
the approval by the outstanding shares or notice pursuant to subdivision (i) of
Section 1110 was mailed to the shareholder.

        (d)     The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.

        Section 1310. Suspension of right to compensation or valuation
proceedings; litigation of shareholders' approval--

        If litigation is instituted to test the sufficiency or regularity of the
votes of the shareholders in authorizing a reorganization, any proceedings under
Sections 1304 and 1305 shall be suspended until final determination of such
litigation.

        Section 1311. Exempt shares--

        This chapter, except Section 1312, does not apply to classes of shares
whose terms and provisions specifically set forth the amount to be paid in
respect to such shares in the event of a reorganization or merger.

        Section 1312. Right of dissenting shareholder to attack, set aside or
rescind merger or reorganization; restraining order or injunction; conditions--

        (a)     No shareholder of a corporation who has a right under this
chapter to demand payment of cash for the shares held by the shareholder shall
have any right at law or in equity to attack the validity of the reorganization
or short-form merger, or to have the reorganization or short-form merger set
aside or rescinded, except in an action to test whether the number of shares
required to authorize or approve the reorganization have been legally voted in
favor thereof; but any holder of shares of a class whose terms and provisions
specifically set forth the amount to be paid in respect to them in the event of
a reorganization or short-form merger is entitled to payment in accordance with
those terms and provisions or, if the principal terms of the reorganization are
approved pursuant to subdivision (b) of Section 1202, is entitled to payment in
accordance with the terms and provisions of the approved reorganization.

        (b)     If one of the parties to a reorganization or short-form merger
is directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, subdivision (a) shall not
apply to any shareholder of such party who has not demanded payment of cash for
such shareholder's shares pursuant to this chapter; but if the shareholder
institutes any action to attack

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the validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, the shareholder
shall not thereafter have any right to demand payment of cash for the
shareholder's shares pursuant to this chapter. The court in any action attacking
the validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded shall not restrain or
enjoin the consummation of the transaction except upon 10 days' prior notice to
the corporation and upon a determination by the court that clearly no other
remedy will adequately protect the complaining shareholder or the class of
shareholders of which such shareholder is a member.

        (c)     If one of the parties to a reorganization or short-form merger
is directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, in any action to attack the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, (1) a party to a
reorganization or short-form merger which controls another party to the
reorganization or short-form merger shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and reasonable as
to the shareholders of any party so controlled.

        Section 1313. Conversions deemed to constitute a reorganization;
application of chapter

        A conversion pursuant to Chapter 11.5 (commencing with Section 1150)
shall be deemed to constitute a reorganization for purposes of applying the
provisions of this chapter, in accordance with and to the extent provided in
Section 1159.

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