Community Valley Bancorp Annual Report 2004

1,979

%9

1,979

%Gain in Stock Price 1990-2004

1,979

%1,9

79%

Records are meant to be broken. Community Valley Bancorp Annual Report 2004

Community Valley Bancorp Annual Report 2004

To Our Shareholders

Coin Spinning

The longest time a coin has

been spun until coming to

a complete rest is 19.37

seconds. It was accomplished

by Britain’s Scott Day at Earl’s

Court, London, UK, as part

of BBC TV’s Tomorrow’s

World roadshow.

Annual R

eport 2004

To Our Shareholders

Letter to Shareholders ..................................................... 2

Profile ......................................................................... 3

Financial Growth ............................................................ 6

Discussion & Analysis .....................................................10

Condensed Statements ...................................................16

Board of Directors .........................................................18

Management ...............................................................19

Bank Locations ............................................................ 20

Corporate Information ....................................................21

Community ................................................................ 22

Our Newest Directors .................................................... 24

Our People ................................................................. 25

Table of Contents

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munity Valley Bancorp

To Our ShareholdersTo Our Shareholders

CORPORATE TIMELINE

Dear Shareholder:

2004 was a very busy year for Community Valley Bancorp. We continued our North Valley expansion with new branches in the communities of Red Bluff, Marysville and Colusa. We also founded CVB Insurance Agency, a full-service insurance agency that provides fi rst class insurance products and services to our rapidly growing family of customers.

In spite of this branch expansion and innovative product development, we did not lose sight of our profi t goals. Our total assets grew 16.25%, total deposits grew 16.5% and total loan growth was 26%. Our net profi t of $5.6 million is an increase of 6.5% over 2003 results. Once again, all 2004 year-end fi gures represent new highs for your bank. This continued superior level of performance resulted in an appreciation of 33.75% in our share price for the year.

So far in 2005 we have already opened a new branch in Corning and will soon begin the construction of our fi rst full-service branch in Redding. Extensive renovation of our Central Chico branch has been completed and our South Paradise location will undergo a similar transformation later this year. We also have plans to move our Marysville branch to a higherprofi le location at Ellis Lake. This relocation will incorporate a CVB Insurance Agency offi ce to serve the Yuba-Sutter area.

Once again, we have been named a Super Premier Performing Bank by the bank consulting fi rm The Findley Reports. This is our thirteenth consecutive year with this designation and Butte Community Bank is the only institution to have received this honor continuously from its fi rst year of operation.

With all this activity, we enter 2005 with great anticipation and excitement. We fully expect to see continued expansion in branches, communities and performance to show results this year and in the future.

Keith RobbinsPresidentChief Executive Offi cer

Donald LeforceChairman of the Board

1990Assets: $5 millionAugust: Butte Community Bank founded by a group of distinguished citizens from Paradise and Oroville. December: Butte Community Bank opens in Paradise and Oroville with 17 employees.

To Our Shareholders

3Annual R

eport 2004

To Our Shareholders Profile

HonorsButte Community Bank is proud to announce that it has received the designation of Super Premier Performing Bank from The Findley Reports for the year 2004. This is the highest designation available and the bank has received this award for 13 years in a row. That’s every year since the bank’s ratings began in 1992. For a bank to receive this honor every year since its inception is a rare achievement in the 30-year history of The Findley Reports.

Butte Community Bank opened for business on December 14, 1990 and starting in 1992 has been a Super Premier Performer every year with a return on beginning equity in excess of 17%. Butte Community Bank has not been involved in any acquisitions and has done it the old fashioned way – Growing on the talents of its management, board and those employees who truly believe in what is being accomplished.

Since 1967, The Findley Reports has been the foundation of the Findley Companies, providing comprehensive financial information to help management meet the challenges and complexities of bank operations. These reports provide the banking industry with performance ratings through the following annual designations: Super Premier Performing, Premier Perform-ing, Commendable, and Not Rated. These ratings have become highly regarded and recipients are recognized throughout the California banking industry as institutions achieving exceptional financial performance.

Butte Community Bank, a subsidiary of Community Valley Bancorp, is a progressive

Northern California bank that combines traditional deposit and lending services with innovative banking solutions.

Founded in 1990, Butte Community Bank is state-chartered with 12 branches in 9 cities including Chico, Magalia, Oroville, Paradise, Yuba City, Red Bluff, Marysville, Colusa and Corn-ing. It also operates loan production offices in Citrus Heights and Redding. With the summer 2005 opening of their first full-service branch in Redding, Butte Community Bank will have a total of 13 branches in Northern California.

From Community Workshops to complex construction loans, Butte Community Bank’s mix of traditional and progressive financial services is second to none in the markets we serve. Our status as a Small Business Administration (SBA) Preferred Lender coupled with our position as a top-ranked USDA Business & Industry Lender makes us the #1 choice for business and commercial financing. Butte CommunityBank also operates a progressive merchant services depart-ment, a real estate loan division and an investment center.

CVB Insurance Agency, LLC, the newest subsidiary of Community

Valley Bancorp, is a full-service insurance agency offering all lines of coverage from auto and health to commercial and farm packages.

Together with our partners at Financial Keyosk, CVB Insur-ance is a one-stop insurance source. We ensure you get the greatest insurance value for your money. Plus, by staying with CVB Insurance, you save time and money because you can compare plans again anytime in the future.

Now you can insure your business with a wide variety of products from top-name companies such as Zurich, Hartford, Kemper Insurance, Blue Cross, Blue Shield, United Healthcare and The Travelers.

Butte Community Bank and CVB Insurance are subsidiaries of Community Valley Bancorp, a financial holding company. Community Valley Bancorp was founded in 2002 to provide a wider range of financial services to the communities it serves. It has headquarters in Chico, California.

LARGEST SINGLE BEQUESTThe largest bequest was the $1 billion

art collection of the American publisher, Walter Annenberg, who, on March 12,

1991, announced his intention to leave the collection to the Metropolitan Museum of

Art in New York City.

1991Assets: $25 million

Largest Piggy Bank Collection

Since 1957, Ove Nordström,

of Spånga, Sweden, has collected 5,750

different piggy banks from over

40 different countries.

$449,675,462

As of December 31, 2004, total assets were

$449,675,462, or a 16% increase over the

$386,722,664 at year end 2003.

FINANCIAL GROWTH

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2000 2001 2002 2003

INCOME 3,046,467 3,811,374 4,849,575 5,269,192 5,609,648ASSETS 214,905,861 272,463,441 337,483,286 386,723,416 449,675,462DEPOSITS 194,124,872 246,419,904 297,980,814 342,511,120 399,059,100LOANS 172,411,610 206,253,417 237,610,940 272,510,104 339,173,900

Financial Growth


1993Assets: $45 millionJune: Bank opens its third location in the community of Magalia to an overwhelming response.

7Annual R

eport 2004

20042004 2000 2001 2002 2003

MOST VALUABLE TEDDY BEAR A Steiff bear named “Teddy Girl” was sold for $170,830 – more than 18 times the guide price – at Christie’s, London, UK, on

December 5, 1994.

INCOME 3,046,467 3,811,374 4,849,575 5,269,192 5,609,648ASSETS 214,905,861 272,463,441 337,483,286 386,723,416 449,675,462DEPOSITS 194,124,872 246,419,904 297,980,814 342,511,120 399,059,100LOANS 172,411,610 206,253,417 237,610,940 272,510,104 339,173,900

The Longest-Standing Math Problem (Ever) 1630-1995

Andrew Wiles of the UK, currently at Princeton

University, USA, proved Fermat’s Last Theorem in 1995.

He showed that xn+yn=zn has no solutions in integers

for n being equal to or greater than 3.

DISCUSSION & ANALYSISNet income was $5,609,648 for 2004 compared

to 2003 earnings of $5,269,200.

$5,609

,648

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Discussion & Analysis

Management’s Discussion and Analysis of Financial Condition and Results of Operations for the years ended December 31, 2004 and 2003.

This condensed discussion and analysis of the Company’s fi nancial position and results of operations should be read in connection with the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

OverviewNet income was $5,609,600 ($1.58 basic earning per share) for 2004 compared to 2003 earnings of $5,269,200 ($1.50 basic earnings per share). Return on beginning shareholders’ equity was 17.2% in 2004 and 19.07% in 2003. Return on average assets in 2004 and 2003 was 1.34% and 1.44%, respectively.

As of December 31, 2004, total assets were $450 million, or a 16% increase over the $387 million at year end 2003. The Company had portfolio loans totaling $339 million at December 31, 2004, for an increase of $69 million, or a 26% increase over the $270 million at December 31, 2003. Deposits also increased 17% to $399 million from the previous year end total of $343 million. The Company’s continued growth in its branch banking system along with the introduction of new and varied banking products were principal factors in the increased totals.

Net Interest IncomeNet interest income is the difference between total interest income and total interest expense. It is ex-pressed as a percentage of average earning assets and is referred to as net interest margin. It is used to measure the difference between the average rate of interest earned on assets and the average rate of interest that must be paid on liabilities used to fund those assets. The Company’s net interest margin for 2004 was 5.70%, up from 5.32% in the year 2003. During 2004, the Company’s net inter-est margin improved primarily as a result of the change in the mix of investment that contributed to an overall increase in yields and the decrease in the rates paid on interest bearing deposits.

On an average basis, the rates on loans decreased by 40 basis points resulting in a decrease in interest income of $1.3 million. This decrease in rates was more than offset by the increase in the average volume of loans of $59 million that generated an additional $4.8 million in loan related interest income. During 2004 overall interest income on earning assets increased by $3.5 million. Due to the favorable changes in the Company’s mix of depos-its from the growth in average balances of NOW, savings and money market accounts, the Company was able to increase the overall level of deposits while decreasing interest expense by $340,000 which contributed to the increase of $3.8 million in net interest income.


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eport 2004

Non-Interest IncomeNon-interest income of $6 million increased $69,000 over the 2003 total. The primary tra-ditional sources of non-interest income for the Company are service charges on deposit accounts, gains on the sale of loans, loan servicing income, alternative investment fees earned on the sales of non-deposit investment products and merchant credit card fees.

Non-Interest ExpenseThe Company’s total non-interest expense in-creased to $16.7 million in 2004, as compared to $13.8 million in 2003. Refer to the Income State-ment in the accompanying Consolidated Financial Statements for a detailed description on non-interest income.

Salaries and BenefitsSalaries and employee benefits increased in 2004 by $1.8 million, or 22.4% from 2003. This increase resulted from normal cost of living raises, salaries paid to employees at the three new branch offices in Red Bluff, Marysville and Colusa, commissions paid to Butte Community Bank’s Real Estate Loan Agents and staffing additions made during the year as the Company continued to grow.

Other ExpensesOccupancy and other expenses increased by $1.1 million or 19%, to $6.8 million in 2004 from $5.7 million in 2003. This increase was primarily due to the opening of the three new branch offices mentioned above. There were no other material changes in the areas of data processing, account-ing, legal or other professional services that make up the majority of this category.

Provision for TaxesThe effective tax rate for 2004 was 40.4% com-pared to 38.7% for 2003. The provision for current taxes results from applying the current tax rate to taxable income, and is in essence the actual current income tax liability. Some items of income and expense are recognized in different years for tax purposes than when applying accounting prin-ciples generally accepted in the United States of America, however, leading to differences between the Company’s actual tax liability and the amount accrued for this liability based on book income.

MOST VALUABLE TYPEWRITER Ian Fleming’s gold-plated typewriter, which

was commissioned by the writer in 1952, was sold for $89,229 at Christie’s in London, on May 5, 1995. Fleming is best known as

the creator of James Bond, the suave spy-hero of his best-selling novels.

1995Assets: $72 millionJanuary: Bank opens a loan production office in Chico.

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Discussion & Analysis

LoansA comparative schedule of outstanding loan bal-ances is presented in Note 3 to the Consolidated Financial Statements. Loan balances net of the allowance for loan losses at December 31, 2004 were $339.2 million, an increase of 26% from the $270.2 million at year-end 2003. This increase, primarily in the real estate lending area, is due to the Company’s decision to continue to concentrate on short-term secured loans.

Risk ElementsThe majority of the Company’s loan activity is with customers located within the service area of its branches or lending offi ces. Approximately 90% of the total loan portfolio is located within the Company’s service area. Signifi cant concentrations of credit risk may exist if a number of loan custom-ers are engaged in similar activities and have similar economic characteristics. The Company believes that it has policies and procedures in place to monitor, mitigate and identify any concentration of credit risk in the portfolio.

Non-Performing AssetsManagement classifi es all loans as non-accrual when they become more than 90 days past due, or earlier when the timely collection of interest or principal becomes questionable. A loan remains in non-accrual status until principal and interest are current for a suffi cient period of time and also meets the Company’s cash fl ow and collateral requirements. When this criterion is not met, the loan is charged-off against the allowance for loan losses, or in the case of real estate loans, is transferred to other real estate. The Company’s non-performing assets as a percent of net loans totaled 0.03% at December 31, 2004 and 0.02% at December 31, 2003.

Allowances for Loan LossesThe provision for loan losses charged to operations is based on the Company’s monthly evaluation of the loan portfolio and the adequacy of the allow-ance in relation to total loans outstanding. The provision for loan losses amounted to $790,000 in 2004 and $655,000 in 2003. This change in the provision is a refl ection of the growth in total loans and management’s evaluation and assessment of the loan portfolio.

The allowance for loan losses is maintained at a level considered adequate to provide for losses that can reasonably be anticipated. The allowance and relevant changes are shown in Note 3 to the Consolidated Financial Statements. At December 31, 2004 the allowance for loan losses was $4.4 million or 1.27% of total loans, compared to $3.6 million or 1.31% in 2003. The Company recorded

1996Assets: $89 millionSeptember: Bank opens a full-service branch at 2041 Forest Avenue in Chico.

13Annual R

eport 2004

net recoveries of $4,000 in 2004 compared to net charge-offs of $75,000 in 2003. The continued low level of charge-offs compared to industry standards reflects the Company’s sound underwriting policies and collection procedures.

Capital The Company and the Bank are subject to certain regulatory capital requirements administered by the FDIC. The FDIC has adopted risk-based capital guidelines which establish a risk-adjusted ratio relating capital to various categories of assets and off balance sheet exposures. The table showing the FDIC required ratios and the Company’s and the Bank’s actual ratios are shown in the Consolidated Financial Statements in Note 11. At December 31, 2004, the Company’s total risk-based capital ratio was 12.5%, the Tier 1 risk-based capital was 11.3% and the leverage capital ratio was 9.5%. All ratios exceed the minimum guidelines of 8%, 4% and 4% respectively. The ratios at December 31, 2003 were 13.3%, 12.2% and 9.9%, respectively.

Liquidity ManagementThe Bank’s liquidity is determined by the level of liquid assets (such as cash, federal funds sold and securities classified as available for sale) that are convertible to cash to meet customer withdrawal and borrowing needs. The Company’s asset and liability policy is used to monitor and determine liquidity needs. At December 31, 2004, the Company’s liquidity ratio (cash, fed funds, and securities) as a percentage of total liabilities was 17.5% as compared to 20% at December 31, 2003.

Asset and Liability ManagementThe objective of asset and liability management is to manage the sensitivity of net interest rate spreads to changes in interest rates. Management also attempts to balance risk with profitability. Interest rate sensitivity measures the difference in both the timing and amount at which certain assets and liabilities are re-priced. The Company historically maintains the majority of its assets and liabilities with relatively short maturities to protect its net interest income from major shifts in rates.

1997Assets: $118 millionOctober: Yuba City branch opened in Sutter County.

LARGEST GOLD RESERVESThe United States Treasury had

approximately 262 million fine troy ounces (8,149,000 kg) of gold during 1996, equivalent to $100 billion at the June 1996

price of $382 per fine ounce.

Smallest Calculator – James Gimzewski, at the IBM laboratory, Zurich, Switzerland, created a calculator with a diameter of

less than one millionth of a millimeter. The molecular abacus consists of 10 molecules of carbon 60 that can be moved along a

microscopic groove. The molecules that make up the counters are molecules of carbon 60 or “buckyballs”.

These consist of 60 atoms of carbon, which bond together to form a ball with the same structure as the surface of a soccer ball.

The “finger”, which pushes the buckyballs around, is the tip of a scanning tunneling microscope, just one atom wide at its tip. If the

buckyballs were scaled up to the size of an actual soccer ball, the end of the microscope would be taller than the Eiffel Tower!

CONDENSED STATEMENTSDeposits increased 17% to $399,059,100 from

the previous year end total of $342,511,120.

The Company had portfolio loans totaling

$339,173,900 at December 31, 2004, an increase

of 26% over 2003.

$399

,059

,100

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CondensedStatements

Condensed Consolidated Balance Sheets (in thousands) Year Ended December 31, 2004 2003Assets: Cash and cash equivalents ...............................................$68,218 .............................. $76,810 Securities ............................................................................ 6,961 .................................. 4,325 Net loans, including loans held for sale ............................340,664 .............................. 272,510 Other assets ..................................................................... 33,832 ................................ 33,078 Total assets ...................................................................$449,675 ............................ $386,723 Liabilities and shareholders’ equity: Deposits ....................................................................... $399,059 ............................ $342,511 Borrowings ............................................................................ 833 ................................... 832 Other liabilities ................................................................. 15,252 ................................ 13,431 Total liabilities ................................................................415,144 .............................. 356,774 Shareholders’ equity ......................................................... 34,531 ............................... 29,949 Total liabilities and shareholders’ equity .......................$449,675 ............................ $386,723

Condensed Consolidated Statements of Income(in thousands, except per share data) Year Ended December 31, 2004 2003 2002Interest income .....................................................................$24,980 ......... $21,516 ....... $18,977Interest expense .......................................................................4,056 ............. 4,396 ........... 4,775Net interest income ................................................................20,924 ........... 17,120 ......... 14,202

Provision for loan losses ...............................................................790 ............... 655 ............. 603 Noninterest income ..................................................................6,019 ............. 5,950 ........... 6,164Operating expense .................................................................16,740 ........... 13,817 ......... 12,538

Income before provision for income taxes .................................9,413 ............. 8,598 ........... 7,225Provision for income taxes ........................................................3,803 ............. 3,329 ........... 2,375

Net income .............................................................................$5,610 ........... $5,269 ......... $4,850

Net income per share, basic ......................................................$1.58 ............ $1.50 .......... $1.40 Net income per share, diluted ...................................................$1.48 ............ $1.42 .......... $1.33 Shares used to compute net income per share, basic .................3,556 ............. 3,513 ........... 3,461Shares used to compute net income per share, diluted ..............3,801 ............. 3,715 ........... 3,640Dividends paid per share ...........................................................$0.30 ............ $0.30 .......... $0.25

These are unaudited condensed fi nancial statements that have been derived from the audited fi nancial information and should be read in conjunction with the full consolidated fi nancial statements of the Company in its Annual Report on Form 10-K

1998Assets: $145 millionCentral Services and Real Estate Loan Center is completed in Chico.

LARGEST EMPLOYERThe world’s largest commercial or utility employer is Indian Railways,

with 1,583,614 regular employees in March, 1997.

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eport 2004

Condensed Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2004 2003 2002 Cash flows from operating activities: Net income ........................................................................$5,610 ........... $5,269 ......... $4,850 Adjustments to reconcile net income to net cash provided by operations ......................................5,788 ............. 5,717 .........(4,070) Net cash provided by operating activities .........................11,398 ........... 10,986 .............. 780 Cash flows from investing activities: (Purchases) and sales or maturities of securities, net ......... (3,446) ...........(4,853) .........(3,754) Net increase in loans made to customers ........................ (69,722) .........(41,383) .......(32,590) Other, net ....................................................................... (1,908) ...........(4,469) ............(235) Net cash used in investing activities ............................. (75,076) .........(50,705) .......(36,579) Cash flows from financing activities:Net increase in deposits 56,547 44,531 51,561 ESOP note, net ................................................................... (149) ............. (221) ........... (119) Dividends paid ................................................................. (1,095) ...........(1,079) ............(818) Proceeds from exercise of stock options ................................ 285 ............... 267 .............. 287 Repurchase of common stock ............................................. (502) Proceeds from junior subordinated debentures ................................................................ 8,248 Net cash provided by financing activities ..........................55,086 .......... 43,498 ......... 59,159

Decrease in cash and cash equivalents .............................. (8,592) ............. 3,779 ......... 23,360 Cash and cash equivalents at beginning of year .................76,810 .......... 73,031 ......... 49,671

Cash and cash equivalents at end of year ...................... $68,218 ........ $76,810 ..... $73,031

Condensed Consolidated Statements of Changes in Shareholders’ Equity(in thousands) Year Ended December 31, 2004 2003 2002Beginning balance ................................................................$29,949 ......... $25,380 ....... $20,820

Exercise of stock options ..............................................................532 ................ 462 .............. 426 Cash dividends ...................................................................... (1,097) ...........(1,081) ............(888)Earned ESOP shares .....................................................................180 ................ 252 ............. 158 Shares acquired by ESOP .......................................................... (150) ..............(321) .................... Changes in unrealized gain on securities available for sale ...............9 ............... (12) ................ 14 Repurchase and retirement of common stock ........................... (502)Net income ...............................................................................5,610 ............. 5,269 ........... 4,850

Ending balance .....................................................................$34,531 ......... $29,949 ....... $25,380

1999Assets: $158 millionMarch: New telecommunications network, centralized cash management department and call center.June: Bank opens sixth full-service branch at the Albertson’s Shopping Center in North Chico.

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Gary B. Strauss, MD Vice Chairman, Retired.

Eugene B. Even Retired

John Coger Executive Vice President, Chief Financial Offi cer and Chief Operating Offi cer of Butte Community Bank

Hubert Townshend Semi-retired. Involved in gen-eral engineering, contracting and equipment rental. Past partner of S&T Logging Company, Inc.

Donald W. Leforce Chairman of the Board. President and former Secretary/Treasurer of Compass Equipment, Inc., a mining and heavy equipment manufacturing corporation.

M. Robert Ching, MD Orthopedic Surgeon

Ellis L. Matthews Retired Certifi ed Public Accountant and former senior partner of Matthews, Hutton & Warren, an accountancy fi rm.

Jack B. Schmelke Director Emeritus

Keith Robbins President and Chief Executive Offi cer of Butte Community Bank

John D. Lanam Retired

Luther McLaughlin, CPA Managing Director and President of Matson & Isom Certifi ed Public Accountants for more than ten years.

James S. Rickards Secretary. Real Estate Broker associated with Realty World/Country Estates since 2000. Prior to that time, Broker and Owner of Northern California Properties.

Charles Mathews Owner of Mathews Farms since 1965 and partner in Mathews Rice Dryer since 1980.

Robert L. Morgan, MD Retired

Board of Directors

2000Assets: $214 millionFebruary: Loan production offi ce opened in Roseville.

LARGEST ANNUAL SHARE TRADING VOLUME

The largest annual trading volume was achieved in 1999,

when 203,914,173,000 shares were traded at the

New York Stock Exchange.

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eport 2004

Executive Group

Keith RobbinsPresident/Chief Executive Officer

John CogerExecutive Vice President/Chief Financial Officer and Chief Operating Officer

Steve JohnsonSenior Vice PresidentRE Development and Risk Management

Craig LarsonSenior Vice President/Chief Lending Officer

Russ WittmeierSenior Vice PresidentProduct Development Executive

Debbie MileyAdministrative Vice PresidentOperations and HR Administrator

Brad RudkinAdministrative Vice President/Branch Administrator

Administrative Management

Bruce BarnettSenior Vice President/Chief Information Officer

Gayle LeeSenior Vice President/Controller

Beverly BrinkerAdministrative Vice PresidentAudit Compliance Manager

Kash GillAdministrative Vice President/Regional Manager

Michelle BeichVice President/Note Department Manager

Lee BrownVice PresidentSpecial Assets Manager and Security Officer

Phil PapemanVice President/Marketing Director

Carla GeyerAssistant Vice PresidentSenior Administrative Assistant

Branch Management

Laurie BeibersVice PresidentBranch Manager - Senior Commercial Lender

Cindy BrownVice President/Branch Manager

Diane ModesVice President/Branch Manager

Janet OlsenVice President/Branch Manager

Katy ThomaVice President/Branch Manager

Andrea WhiteVice President/Branch Manager

Cheryl AlmeidaAssistant Vice President/Regional Manager

Margaret CoronaAssistant Vice President/Branch Manager

Manny PhaguraAssistant Vice President/Branch Manager

Brenda WelchAssistant Vice President/Branch Manager

Investments

Jadee CarterVice President/Investment Manager

CVB Insurance Agency, LLC

Frank HillVice President/Agency Manager

Lending

Glenn RilingerAdministrative Vice PresidentSBA and Commercial Loans

Doug WeigandAdministrative Vice PresidentCommercial Lender

Kevin KaiserCorporate Vice PresidentSenior Commercial Lender

Marcy SutcliffeCorporate Vice PresidentSenior Commercial Lender

Joel ArnoldVice President/Senior Commercial Lender

Erika BenderVice President/Senior Commercial Lender

Ruth GildeaVice President/Commercial Loan Officer

Tim JamesVice President/Senior Construction Lender

Steve MontandonVice President/Senior Commercial Lender

Jeremy StoneVice President/Loan Officer

Management


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Oroville2227 Myers StreetOroville, CA 95966 (530) 532-0800

Yuba City1600 Butte House RoadYuba City, CA 95993 (530) 751-2700

Red Bluff84 Belle Mill RoadRed Bluff, CA 96080(530) 528-3060

Marysville812 “B” StreetMarysville, CA 95901(530) 741-0210

Colusa1017 Bridge Street(inside Holiday Quality Foods)Colusa, CA 95932(530) 458-5430

Corning 908 Highway 99W, Suite DCorning, CA 96021(530) 824-3966

Citrus Heights LPO5959 Greenback Lane #450Citrus Heights, CA 95621(916) 728-1600

Redding LPO100 East Cypress Avenue, Ste 150Redding, CA 96002(530) 722-0295

Bank Locations

Chico South2041 Forest AvenueChico, CA 95928 (530) 891-3494

Chico Central900 Mangrove AvenueChico, CA 95926(530) 891-9000

Chico North237 West East AvenueChico, CA 95926 (530) 899-2347

Paradise South672 Pearson RoadParadise, CA 95969 (530) 877-0857

Paradise North6653 Clark RoadParadise, CA 95969 (530) 877-2506

Magalia14001 Lakeridge Circle(inside Holiday Quality Foods) Magalia, CA 95954 (530) 873-6854

2002Assets: $337 millionFebruary: Third Chico branch opened on Mangrove Avenue.April: Yuba City branch relocated to Feather Down Shopping Center. June: Community Valley Bancorp formed. Butte Community Bank is its principal asset.

GREATEST ANNUAL LOSSThe greatest annual net loss by a company

is $98.7 billion reported by AOL Time Warner on January 30, 2003. AOL Time

Warner’s 2002 loss is approximately the same size as the gross domestic product of Israel.

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eport 2004

Shareholder RelationsGayle Lee Senior Vice President/ControllerCommunity Valley Bancorp6653 Clark RdParadise, CA 95969(530) 877-2506 [email protected]

HeadquartersCommunity Valley Bancorp2041 Forest AveChico, CA 95928(530) 899-2344

Stock ListingSymbol: CVLLMarket: OTC Bulletin Board

Transfer AgentU.S. Stock Transfer Corporation1745 Gardena Ave Ste 200Glendale, CA 91204-2991(818) 502-1404www.usstock.com

Independent AccountantsPerry-Smith LLP400 Capitol Mall, Suite 1200Sacramento, CA 95814(916) 441-1000www.perry-smith.com

InternetCommunity Valley Bancorpwww.communityvalleybancorp.com

Butte Community Bankwww.buttecommunity.com

CVB Insurance Agency, LLCwww.cvbinsurance.com

Market MakersMarket Makers in Community Valley Bancorp stock are:

Dave BonaccorsoHoefer & Arnett555 Market St 18th FloorSan Francisco, CA 941051-800-346-5544www.hoeferarnett.com

Troy Norlander & Michael NatzicThe Seidler Companies, IncPO Box 1688Big Bear Lake, CA 923151-800-288-2811www.seidlercos.com

Ken MeyersWachovia First Union Securities360 Sierra College Dr, Suite 200Grass Valley, CA 959451-888-383-3112

Joey WarmenhovenWedbush Morgan Securities4949 SW Meadows Rd Ste 100Lake Oswego, OR 970351-800-357-3680

Corporate Information

2003Assets: $387 millionMay: Redding Loan Production Office opened.June: Magalia branch relocated to inside Holiday Quality Foods – Our first in-store branch.June: Second Paradise branch opened at Clark and Wagstaff.

July: Roseville loan production office relocated to Citrus Heights.September: Mangrove Center opened in Chico.November: North Chico branch relocated.

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American Cancer Society2004 Relay for Life

The ARC of Butte County 2004

Big Brothers Big Sisters of Butte CountyBowl for Kids’ Sake 2004

Big Brothers Big Sisters of Butte CountyThe Big Event 2004

Bob Busch All Star Baseball Classic

Boys & Girls Club of ChicoLinks Across Time Golf Tournament

Brews, Blues & BBQYuba City Early Riser Kiwanis Club

Butte College Athletic DepartmentAnnual Holiday Bowl

Butte College Small Business Development Center 6th Annual Women in Business Conference

Butte Community College Foundation Spring Gala

Butte County 4-H Council

Center for Economic Development at CSUC2005 Tri County Economic Forecast Conference

Challenge Charter High SchoolYearbook Club

Chico Economic Planning Corporation (CEPCO)Corporate Sponsor Annual Dinner 2003

Chico High School Pep Squad

Chico High School Ski & Snowboarding Dinner

Chico FFA Parent Booster Club

Chico Merchants Senior Softball

Chico Rooks Pro Soccer Foundation

Chico Starz Fastpitch Junior Olympic Softball

Child Abuse Prevention Center8th Annual Golf Fore Kids Sake

CSUC Scour and Devour Community Clean-Up

CSUC Wildcat Century Club 3rd Annual Golf Tournament

Enloe FoundationEnloe Partners for Healthcare

Fremont-Rideout FoundationFairway to Health Golf Tournament 2004

Friends of Chico Community Ballet

Glenn County Fair Buyers’ Group

Innovative Preschool, Inc

Jesus Center Chico

JP’s Paint & Body Works Knoxville Bound Benefi t

KALF St. Jude Children’s Hospital Radiothon

Las Plumas FFA

Las Plumas High SchoolFootball Program

Las Plumas High SchoolGirls Basketball Program

LPGA Longs Drugs Challenge 2004

Nor Cal Think Pink Breast Cancer Awareness

North Valley Animal Disaster Group

North Valley Community Foundation

Omega Nu Alpha Beta Chapter“Swing into Spring” Table Mountain Classic

Oro Dam CruisersGold Rush Car Show

Oroville Bowling Association

Butte Community Bank is committed to the Northern California cities that we serve. Following are just some of the fi ne organizations and local events that we helped in 2004.Community

2004Assets: $450 millionMay: First Red Bluff branch opened.July: First Marysville branch opened.December: CVB Insurance Agency opens at Mangrove Center, Chico. First Colusa branch opened.

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eport 2004

Oroville Chamber of CommerceCity of Gold Triathlon

Oroville Chamber of Commerce17th Annual Table Mountain Scramble Golf Tournament

Oroville Concert Association

Oroville Downtown Business Association (ODBA)

Oroville Eagles Football Association

Oroville High SchoolBasketball Tournament

Oroville High SchoolOroville High School Baseball

Oroville Olives Baseball Club

Oroville Sunrise RotarySpring Wine Tasting and Arts & Crafts Sale & Show

Oroville Sunrise Rotary Golf Event

Palermo Community Council

Paradise Blues & BrewsThe Exchange Club of Paradise

Paradise Bowling AssociationChampionship Bowling Tournament 2004

Paradise Dash and DineBenefit for Youth For Change

Paradise High School Graduation Night 2004

Paradise North Little League

Pink OctoberAnnual Survivor Fashion Show & Dinner

Pleasant Valley High School Grad Night

Punjabi Women’s Cultural Organization

Red Bluff Junior Round-Up

Red Bluff Round-Up

Red Bluff - State Theatre for the Arts

Red Bluff - Tehama County Chamber of Commerce2004 California High School Rodeo Finals

Rotary Club of Oroville

St. Thomas More SchoolEvening in New York Benefit Auction

St. Thomas the Apostle Catholic School

Salvation ArmySubstance Abuse Program

Silver Dollar Fair Junior Livestock AuctionThe Cartel

Snow Goose Festival

Soroptimist of Marysville/Yuba CityA New York Night 2004

Soroptimist International of Downtown Redding3rd Annual Redding Oscar Night Celebration

Stover Celebrity Golf TournamentGirl Scouts of Sierra Cascade

Sunshine Kids Club

Sutter North Medical FoundationSutter North Golf Classic

Tehama County Education FoundationSERRF After School Program

Tehama District Fair 2004

Tri County Economic Forecast Conference 2004

Youth For Change

Yuba-Sutter Gold Sox Baseball

Wyandotte Avenue School Oroville

MOST VALUABLE GUITAREric Clapton’s “Blackie” Fender Stratocaster

guitar sold for $959,500 to US chain The Guitar Centre at Christie’s in New York

on June 24, 2004.

24Com


John Coger Joins Community Valley Bancorp Board of Directors

On September 21, 2004, the Board of Directors unanimously elected John Coger to serve on the board of both Butte Commu-nity Bank and its holding company, Community Valley Bancorp. A native of the West Coast, Coger grew up in Southern Califor-nia and has spent over 30 years in banking. He currently serves as the Chief Financial Offi cer and Chief Operating Offi cer of Butte Community Bank and its holding company, Community Valley Bancorp. Both organizations have headquarters in Chico, California. Coger has been married to his wife Colleen for 27 years and together they have raised their two children Megan and Matthew. He has been active in coaching youth sports and has served on the board of the Boys and Girls Club of the North Valley. John and his family reside in Paradise, California.

“It is with great pleasure that I announce the election of John Coger to serve on the Board of Directors of Community Valley Bancorp and Butte Community Bank. I know every one of us agrees that this appointment is well deserved and we congratulate John on his achievement.” Keith Robbins, CEO and President of Community Valley Bancorp

…

Our NewestDirectors

2005 March: First Corning branch opened.Summer: First full-service branch in Redding.

“I’m honored to announce the election of Luther McLaughlin to serve on the Board of Directors of Community Valley Bancorp and Butte Community Bank. As we continue to grow in the North Valley, Luther’s experience, expertise and leadership will be invaluable. We’re extremely fortunate that he has decided to accept our invitation.”Keith Robbins, CEO and President of Community Valley Bancorp

Luther McLaughlin Joins Community Valley Bancorp Board of Directors

On March 10, 2005, the Board of Directors unanimously elected Luther McLaughlin to serve on the board of both Butte Community Bank and its holding company, Community Valley Bancorp. McLaughlin has a 34-year career in public accounting which began when he served four years with Arthur Ander-sen & Co. prior to joining Matson and Isom Certifi ed Public Accountants of Chico, California in 1975. He has served almost continually as a member of its Board of Directors for over 20 years and has been the Managing Director and President of Matson and Isom for more than ten years. Luther received a Bachelor of Science degree in accounting from Brigham Young University. He has been a member of the Chico Rotary Club since 1987 and has served with distinction on the Chico Interfaith Council. Luther and his wife Kathryn reside in Chico, California.

OLDEST MAN - LIVINGEmiliano Mercado Del Toro (Puerto Rico), born in Cabo Rojo on August 21, 1891,

became the oldest fully authenticated man residing in the world on January 17, 2005 at

the age of 113 years and 149 days.

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eport 2004

Abdulmasih, RitaAllison, DarrenAllison, DoreenAlmeida, CherylAlves, CindyAndrade, JanetArnold, JoelAspromonte, ShellieBaker, TylerBales, TeresaBarbo, TerryBarnett, BruceBarranti, Jill Barrett, RyanBass, TanikaBaumann, AmandaBecraft, TaraBeibers, LaurieBeich, MichelleBelben, LeahBender, ErikaBenson, BarrettBerge, ChrisBerry, PeggyBondza, SuzanaBowman, BreaBrannen, KarolBravo, JoseBrinker, BeverlyBrinker, SheridanBrockman, WendyBrown, CindyBrown, LeeBrown, TinaByland, MariaCarter, JadeeCarter, RachelCartoscelli, AngelaCerrato, JeriChiotti, DanielleCiancio, NicoleClausen, KristinaCoffelt, JakeCoffelt, JoshCoger, JohnCoger, MeganCole, BoConard, MargoConner, JillCornell, ShannonCorona, MargaretCrouse, AlyssaCrouse, BarbaraDavis, LindaDillard, CindyDodge, KelleyDolan, JennyDorgali, SuzyDowns, SarahDwyer, KathleenEldredge, TammyErnenwein, JustinEvans, JoiFarwell, BeckyFawns, Denise

Fellner, AndreasFilmer, ReanetteFlores, DebbieFlores, MikeFranco, EvaFranco, GinaGates, LindaGaussoin, EmeraldGayheart, DavidGeyer, CarlaGhiorso, NikiGildea, RuthGill, KashmirGlassgow, NicoleGonzalez, IreneGrider, EileenGustafson, DamonHamblin, DeboraghHamblin, KariHard, BeckyHardesty, BrendaHarger, DiannHarnish, JulieHarris, EliHayes, MarilynHeindell, CatherineHelberg, DixieHellon, AmberHendel, JessicaHenderson, ChristineHenshaw, ReneeHernandez, AbelHernandez, DanielleHernandez-Reeson, PattiHerndon, JeannetteHill, FrankHill, WindyHoffie, AudreyHolland, KathyHollingsworth, KellyHollstrom, KristaHoofard, DawnaHoofard, FrancineHoover, RachelHopper, ChristinaHowder, LiliaHughes, JohnnieHumlick, CindyHunt, EllenHunter, AndreaJames, TimJimenez, DonnaJohnson, SteveJones, LynsieJuanarena, SusanKaiser, KevinKeller, JaneKemp, AshleyKemp, StacyKhamphasong, RichKirk, JerryKugelman, KristyLaizure, TammyLandis, LarryLarson, Craig

Larson, HeidiLee, GayleLee, LizetteLeen, DonaldLindquist, KyleLobo, WesMacNeill, ChristinaMartin, ShilohMartin, TarynMatulich, VickyMcCain, SandyMcCarthy, RhondaMcClure, MelanieMcKillop, DeannaMedina, GabrielMendonca, NancyMercer, AnnetteMerck, PhyllisMichael, EllenMilco, KathyMiles, DeeMiley, DebbieMiley, JeffModes, DianeMoffitt, SandiMontandon, StephenMoody, SteveMorris, StaceyMussmann, MichelleNichols, DanaNovo, CariOakley, BrandonO’Brien, AmyOlsen, JanetO’Neill, LanaeeOsterlund, DavidPaniagua, LettyPapeman, PhilipParker, PatPatterson, AmandaPearman, JonathanPegany, KirenjitPeters, PattyPeterson, MikePhagura, MannyPine, AmandaPreecs, CarolePresley, LizPrice, BenPritchett, WilliamPruitt, NicoleReeson, KellyReinbold, DavidRenlund, KateReyes, ChristyRichardson, LajinaRidley, BettyRilinger, GlennRilinger, MandyRobbins, KeithRobbins, MichaelRobertson, CalumRohleder, AshleyRudkin, BradRyan, Alaina

Ryan, LisaSalcido, KatieSchneider, TrineSchooler, AndiSchreckengost, KimSellers, BarbaraShields, RobinShores, LindaSiler, AdamSilver, CoriSimmons, JanSimon, JulieannaSkelly, HeatherSlocum, PattySmith, BrianSmith, DianaSmith, KristinaSpearing, AshleySpencer, JimSpencer, LorindaStangeland, SaraStanton, GaryStone, JeremySutcliffe, MarcyTaylor, BruceTaylor, YolindaThoma, KatyThompson, BeverlyThunen, LisaTimm, PattiTraynor, RhondaTurner, DavidValdez, MaryVega, MonaVersola, MarquesaWagner, PamWalsh, MikeWebb, ShirleyWebster, KellyWeigand, DougWelch, BrendaWest, MelanieWhite, AndreaWhite, BrandyWhittaker-Belben, AbigailWilkerson, TeresaWilliams, JeremyWilliams, JudyWillis, AmandaWilson, BeckyWilson, JoanneWilson, JuliaWilson, LindaWittmeier, RussWolter, HeatherWright, LoriYergenson, Brad

Our People

252 employees as of March 28, 2005

Community Valley Bancorp Annual Report 2004

Source of all records: Guinness World RecordsTM. 10 March 2005 http://www.guinnessworldrecords.com Pg.#’s: IV, 3, 4, 7, 8, 11, 13, 14, 16, 18, 20, 23, 24

2041 Forest Avenue, C

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Documents

Community Valley Bancorp Annual Report 2004