Certain matters discussed in this report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained herein that are not historical facts, such as statements regarding the Company's current business strategy and the Company's plans for future development and operations, are based upon current expectations. These statements are forward-looking in nature and involve a number of risks and uncertainties. Such risks and uncertainties include, but are not limited to
(1) significant increases in competitive pressure in the banking industry;
(2) the impact of changes in interest rates, a decline in economic conditions at the international, national or local level on the Company's results of operations, the Company's ability to continue its internal growth at historical rates, the Company's ability to maintain its net interest margin, and the quality of the Company's earning assets; (3) changes in the regulatory environment; (4) fluctuations in the real estate market; (5) changes in business conditions and inflation; (6) changes in securities markets; and (7) risks associated with acquisitions, relating to difficulty in integrating combined operations and related negative impact on earnings, and incurrence of substantial expenses. Therefore, the information set forth in such forward-looking statements should be carefully considered when evaluating the business prospects of the Company.

When the Company uses in this Quarterly Report on Form 10-Q the words "anticipate," "estimate," "expect," "project," "intend," "commit," "believe" and similar expressions, the Company intends to identify forward-looking statements. Such statements are not guarantees of performance and are subject to certain risks, uncertainties and assumptions, including those described in this Quarterly Report on Form 10-Q. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected, projected, intended, committed or believed. The future results and shareholder values of the Company may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results and values are beyond the Company's ability to control or predict. For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations (SFAS No. 141(R)). SFAS No. 141(R), among other things, establishes principles and requirements for how the acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquired business, (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and
(iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The Company adopted No. 141(R) There have been no other changes to the Company's critical accounting policies from those discussed in the Company's 2008 Annual Report to Shareholders on Form 10-K.

This discussion should be read in conjunction with our unaudited condensed consolidated financial statements, including the notes thereto, appearing elsewhere in this report.

OVERVIEW

First Three Months of 2009

On November 12, 2008, the Company completed its acquisition of Service 1st Bancorp with total assets of $224 million (the "Service 1st merger"). The Company paid cash of $5,972,000 inclusive of a $3,500,000 escrow amount related to litigation on one Service 1st loan and issued 1,628,397 new shares of common stock in conjunction with this acquisition, adding full-service branches in Stockton, Lodi and Tracy, $192 million in deposits and $123 million in loans. In connection with the transaction, Service 1st Bank was merged with and into Central Valley Community Bank. The results of operations for the quarter ended March 31, 2009 include the operating results of Service 1st for the full quarter.

For the three months ended March 31, 2009, our consolidated net income was $1,259,000 compared to net income of $1,305,000 for the same period in 2008. Diluted EPS was $0.16 for the first three months of 2009 compared to $0.21 for the first three months of 2008. The decrease in net income was primarily due to an increase in the provision for loan losses. The decrease in interest rates reflective of the 500 basis points decline in rates by the Federal Reserve Bank since September 2007was also a factor. Generally, our interest earning assets tend to reprice faster than our interest bearing liabilities and as a result the decline in the interest rates compressed our net interest margin. Net interest income increased $2,636,000. Non-interest income also increased $500,000, however the provision for credit losses increased $1,782,000 and non-interest expense increased $1,868,000 in the first three months of 2009 compared to 2008.

Annualized return on average equity (ROE) for the first three months of 2009 was 6.13%, compared to 9.55% for the same period in 2008. Annualized return on average assets (ROA) was 0.66% for the first three months of 2009, compared to 1.08% for the same period in 2008. Total average equity was $82,101,000 for the first three months of 2009 compared to $54,665,000 for the first three months 2008. Equity increased as a result of the Service 1st merger, issuance of preferred stock and common stock warrants to the US Treasury and our net income included in retained earnings.

In comparing the first three months of 2009 to the same period in 2008, our balance sheet increased as a result of the Service 1st merger. Average total assets increased $278,920,000 or 57.5%. Average total loans increased $146,155,000 or 42.9% and average total interest earning assets increased $233,034,000 or 52.5%. Average interest bearing liabilities increased $214,071,000 or 72.2% while total deposits increased $237,518,000 or 58.8%. Our net interest margin for the first three months of 2009 was 5.23% compared to 5.40% for the same period in 2008. The margin decreased principally due to the decrease in yield on loans which is the largest component of earning assets. For the quarter ended March 31, 2009, the effective yield on loans decreased 116 basis points reflecting the declining interest rates in 2008. The effective yield on interest earning assets decreased 66 basis points to 6.40% compared to 7.06% for the same period in 2008 and the cost of total interest-bearing liabilities decreased 91 basis points to 1.58% compared to 2.49% for the same period in 2008. Net interest income for the quarter ended March 31, 2009 was $8,485,000, compared to $5,849,000 for the same period in 2008, an increase of $2,636,000 or 45.1%. Net interest income increased as a result of the increased levels of earning assets offset by the increased levels of interest bearing liabilities. The increases were primarily from the Service 1st acquisition and also from our organic growth.

We participated in the U. S. Treasury Capital Purchase Program (CPP) under the Emergency Economic Stabilization Act. The Company issued preferred stock and warrants to issue common stock and received $7,000,000 in cash under this program. The Company agreed to restrict dividend payments on common stock to no more than historic levels while our preferred stock is owned by the U. S. Treasury. See Note 11 to the unaudited Financial Statements for a more detailed discussion.

Central Valley Community Bancorp (Company)

We are a central California-based bank holding company for a one-bank subsidiary, Central Valley Community Bank (Bank). We provide traditional commercial banking services to small and medium-sized businesses and individuals in the communities along the Highway 99 corridor in the Fresno, Madera and San Joaquin Counties of central California. Additionally, we have a private banking office in Sacramento County and a loan production office in Stanislaus County. As a bank holding company, the Company is subject to supervision, examination and regulation by the Federal Reserve Bank.

At March 31, 2009, we had total loans of $487,610,000, total assets of $766,961,000, total deposits of $639,076,000, and shareholders' equity of $82,047,000.

Central Valley Community Bank (Bank)

The Bank commenced operations in January 1980 as a state-chartered bank. As a state-chartered bank, the Bank is subject to primary supervision, examination and regulation by the Department of Financial Institutions. The Bank's deposits are insured by the Federal Deposit Insurance Corporation up to the applicable limits thereof, and the Bank is subject to supervision, examination and regulations of the FDIC.

The Bank operates 15 branches which serve the communities of Fresno, Clovis, Kerman, Prather, Oakhurst, Madera, Stockton, Tracy, Lodi, and Sacramento; and a loan production office which serves the Modesto community. Additionally the Bank operates Real Estate, Agribusiness and SBA departments that originate loans in California. According to the June 30, 2008 FDIC data, the Bank's branches in Fresno, Madera and San Joaquin Counties had a 2.40% combined deposit market share of all depositories including credit unions, thrifts, and savings banks.

As a publicly traded community bank holding company, we focus on several key factors including:

† Return to our stockholders;

† Return on average assets;

† Development of core revenue streams, including net interest income and non-interest income;

† Asset quality;

† Asset growth;

† Operating efficiency; and

† Liquidity

Return to Our Stockholders

Our return to our stockholders is measured in the form of return on average equity (ROE). Our annualized ROE was 6.13% for the three months ended March 31, 2009 compared to 9.55% for the three months ended March 31, 2008. Trailing 12 month ROE for the period ended March 31, 2009 was 7.82% compared to 8.82% for the year ended December 31, 2008 and 11.61% for the trailing 12 months ended March 31, 2008. The decrease in ROE is primarily due to the decrease in net income coupled with the overall increase in the level of capital due to net income and proceeds from the CPP program.

Our net income for the three months ended March 31, 2009 decreased $46,000 or 3.5% to $1,259,000 compared to $1,305,000 for the three months ended March 31, 2008. Net income decreased primarily due to increases in non-interest expenses and the provision for credit losses that were greater than the increases in net interest income and non-interest income. Net interest margin (NIM) decreased 17 basis points comparing the three month periods ended March 31, 2009 and 2008. Diluted earnings per common share was $0.16 for the three months ended March 31, 2009 compared to $0.21 for the same period in 2008. The decrease in NIM is attributed to the 500 basis points decline in Fed funds interest rates since September 2007 and mirrored by a 500 basis point decline in our Prime rate.

Return on Average Assets

Our return on average assets (ROA) is a measure we use to compare our performance with other banks and bank holding companies. Our annualized ROA for the three months ended March 31, 2009 was 0.66% compared to 1.08% for the three months ended March 31, 2008. Trailing 12 month ROA for the period ended March 31, 2009 was 0.83% compared to 0.95% for the year ended December 31, 2008 and 1.28% for the trailing 12 months ended March 31, 2008. The decrease in ROA compared to December 2008 is due to the decrease in net income relative to our increase in average assets. Average assets for the three months ended March 31, 2009 were $763,729,000 compared to $541,789,000 for the year ended December 31, 2008 and $484,809,000 for the three months ended March 31, 2008. ROA for our peer group was 0.28% for the twelve months ended December 31, 2008. Peer group data from SNL Financial includes certain bank holding companies in central California with assets from $400 million to $1 billion.

Development of Core Earnings

Over the past several years, we have focused on not only improving net income, but improving the consistency of our revenue streams in order to create more predictable future earnings and reduce the effect of changes in our operating environment on our net income. Specifically, we have focused on net interest income through a variety of processes, including increases in average interest earning assets as a result of loan generation and retention, and minimizing the effects of the recent interest rate decline on our net interest margin by focusing on core deposits and managing the cost of funds. The Company's annualized net interest margin for the first three months of 2009 (fully tax equivalent basis) was 5.23%, compared to 5.40% for the same period in 2008. The decrease is a reflection of the 500 basis points decline in rates by the Federal Reserve Bank (FRB) since September 2007 coupled with competition for deposits and liquidity that continue to challenge most financial institutions. The decline in rates put pressure on our net interest margin due to our asset sensitivity with loans re-pricing faster than interest bearing deposits. In comparing the two periods, the effective yield on total earning assets decreased 66 basis points. The cost of total interest bearing liabilities decreased 91 basis points. Net interest income for the first three months of 2009 was $8,485,000 compared to $5,849,000 for the same period in 2008 reflecting growth in interest earning assets and a drop in the cost of funds, partially offset by lower loan yields in the declining rate environment in 2008.

On a trailing 12-month basis, NIM was 5.11% for the period ended March 31, 2009, compared to 5.13% for the year ended December 31, 2008 and 5.68% for the trailing 12 months ended March 31, 2008. The decrease is principally due to the decline in rates by the FRB as mentioned above.

Our non-interest income is generally made up of service charges and fees on deposit accounts, fee income from loan placements, and appreciation in cash surrender value of bank owned life insurance and other income. Non-interest income for the first three months of 2009 increased $500,000 or 40.4% to $1,738,000 compared to $1,238,000 for the three months ended March 31, 2008 mainly due to an increase in net realized gains on sales and calls of investment securities. Further detail of non-interest income is provided below.

Asset Quality

For all banks and bank holding companies, asset quality has a significant impact on the overall financial condition and results of operations. Asset quality is measured in terms of percentage of total loans and total assets, and is a key element in estimating the future earnings of a company. The Company had non-performing loans totaling $14,086,000 as of March 31, 2009, $15,750,000 at December 31, 2008, and $109,000 as of March 31, 2008. Management maintains certain loans that have been brought current by the borrower (less than 30 days delinquent) on non-accrual status until such time as management has determined that the loans are likely to remain current in future periods. The Company had other real estate owned at March 31, 2009 of $2,550,000, and none as of December 31, 2008, or March 31, 2008.

Asset Growth

As revenues from both net interest income and non-interest income are a function of asset size, the continued growth in assets has a direct impact on increasing net income and therefore ROE and ROA. The majority of our assets are loans and investment securities, and the majority of our liabilities are deposits, and therefore the ability to generate deposits as a funding source for loans and investments is fundamental to our asset growth. Total assets increased 1.9% during the first three months of 2009 to $766,961,000 as of March 31, 2009 compared to $752,713,000 as of December 31, 2008. Total gross loans increased 0.7% to $487,610,000 as of March 31, 2009 compared to $484,238,000 as of December 31, 2008. Total deposits increased 0.6% to $639,076,000 as of March 31, 2009 compared to $635,058,000 as of December 31, 2008. Our loan to deposit ratio remained consistent at 76.3% at both March 31, 2009 and December 31, 2008. The loan to deposit ratio of our peers was 97.0% at December 31, 2008. Further discussion of loans and deposits is below.

Operating Efficiency

Operating efficiency is the measure of how efficiently earnings before taxes are generated as a percentage of revenue. The Company's efficiency ratio (operating expenses, excluding amortization of intangibles, divided by net interest income plus non-interest income, excluding gains from sales of securities) was 68.9% for the first three months of 2009 compared to 69.4% for the three months ended March 31, 2008. The slight improvement in the efficiency ratio is due to the increase in revenues exceeding the increase in operating expenses. The Company's net interest income before provision for credit losses plus non-interest income, excluding gains from sales of securities, increased 37.9% to $9,774,000 for the three months ended March 31, 2009 compared to $7,087,000 for the same period in 2008, while non-interest expenses less amortization of intangibles increased 37.0% to $6,736,000 from $4,918,000 for the same period in 2008.

Liquidity

Liquidity management involves our ability to meet cash flow requirements arising from fluctuations in deposit levels and demands of daily operations, which include funding of securities purchases, providing for customers' credit needs and ongoing repayment of borrowings. Our liquidity is actively managed on a daily basis and reviewed periodically by our management and Director's Asset/Liability Committees. This process is intended to ensure the maintenance of sufficient funds to meet our needs, including adequate cash flow for off-balance sheet commitments. Our primary sources of liquidity are derived from financing activities which include the acceptance of customer and, to a lesser extent, broker deposits, Federal funds facilities and advances from the Federal Home Loan Bank of San Francisco. These funding sources are augmented by payments of principal and interest on loans, the routine maturities and pay downs of securities from the securities portfolio, the stability of our core deposits and the ability to sell investment securities. Primary uses of funds include withdrawal of and interest payments on deposits, origination and purchases of loans, purchases of investment securities, and payment of operating expenses.

RESULTS OF OPERATIONS

Net Income for the First Three months of 2009 Compared to the Three months ended March 31, 2008:

Net income decreased to $1,259,000 for the three months ended March 31, 2009 compared to $1,305,000 for the three months ended March 31, 2008. Basic earnings per common share were $0.16 and $0.22 for the three months ended March 31, 2009 and 2008, respectively. Diluted earnings per common share were $0.16 and $0.21 for the three months ended March 31, 2009 and 2008, respectively. Annualized ROE was 6.13% for the three months ended March 31, 2009 compared to 9.55% for the three months ended March 31, 2008. Annualized ROA for the three months ended March 31, 2009 was 0.66% compared to 1.08% for the three months ended March 31, 2008.

Net income for the three months ended March 31, 2009 compared to the same period in the prior year decreased due mainly to the increases in the provision for credit losses and non-interest expenses, partially offset by increases in net interest income and non-interest income. Net interest income after provision for credit losses increased principally due to the increase in average interest earning assets offset partially by the compression of the net interest margin and an increase in the provision for credit losses. Non-interest expenses increased primarily due to salaries and benefits and other operating expenses. Our results of operations for the first quarter of 2009 reflect the Service 1st merger for the full quarter. Further discussion of non-interest expenses is below.

Interest Income and Expense

Net interest income is the most significant component of our income from operations. Net interest income (the "interest rate spread") is the difference between the gross interest and fees earned on the loan and investment portfolio and the interest paid on deposits and other borrowings. Net interest income depends on the volume of and interest rate earned on interest earning assets and the volume of and interest rate paid on interest bearing liabilities.

The following table sets forth a summary of average balances with corresponding interest income and interest expense as well as average interest rate information for the periods presented. Average balances are derived from daily balances, and non-accrual loans are not included as interest earning assets for purposes of this table.

                        CENTRAL VALLEY COMMUNITY BANCORP

           SCHEDULE OF AVERAGE BALANCES AND AVERAGE YIELDS AND RATES

                             (Dollars in thousands)



                                            FOR THE THREE MONTHS                            FOR THE THREE MONTHS
                                                   ENDED                                           ENDED
                                               MARCH 31, 2009                                  MARCH 31, 2008
                                               Interest                                         Interest
                                   Average      Income/        Average         Average          Income/             Average
                                   Balance      Expense     Interest Rate      Balance          Expense          Interest Rate
ASSETS
Interest-earning deposits in
other banks                       $       38   $       -                 -    $       -    $                -                -
Securities:
Taxable securities                   127,577       2,211              6.93 %     68,070                   904             5.31 %
Non-taxable securities (1)            58,411       1,071              7.34 %     24,733                   347             5.61 %
Total investment securities          185,988       3,282              7.06 %     92,803                 1,251             5.39 %
Federal funds sold                    15,500          11              0.28 %      8,509                    71             3.30 %
Total securities                     201,526       3,293              6.54 %    101,312                 1,322             5.22 %
Loans (2) (3)                        471,964       7,540              6.48 %    340,260                 6,485             7.64 %
Federal Home Loan Bank stock           3,140           -              0.00 %      2,024                    27             5.34 %
Total interest-earning assets        676,630   $  10,833              6.40 %    443,596    $            7,834             7.06 %
Allowance for credit losses           (7,325 )                                   (3,934 )
Non-accrual loans                     14,554                                        103
Cash and due from banks               20,902                                     15,697
Bank premises & equipment              6,830                                      5,805
Other non-earning assets              52,138                                     23,542
Total average assets              $  763,729                                  $ 484,809
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing liabilities:
Savings and NOW accounts          $  133,770   $     253              0.77 %  $  73,395    $               63             0.34 %
Money market accounts                132,600         376              1.15 %     90,838                   500             2.21 %
Time certificates of deposit,
under $100,000                        86,877         510              2.38 %     51,784                   516             4.00 %
Time certificates of deposit,
$100,000 and over                    128,273         643              2.03 %     59,987                   597             3.99 %
Total interest-bearing
deposits                             481,520       1,782              1.50 %    276,004                 1,676             2.44 %
Other borrowed funds                  29,083         202              2.82 %     20,528                   164             3.20 %
Total interest-bearing
liabilities                          510,603   $   1,984              1.58 %    296,532    $            1,840             2.49 %
Non-interest bearing demand
deposits                             160,272                                    128,270
Other liabilities                     10,753                                      5,342
Shareholders' equity                  82,101                                     54,665
Total average liabilities and
shareholders' equity              $  763,729                                  $ 484,809

Interest income and rate
earned on average earning
assets                                         $  10,833              6.40 %               $            7,834             7.06 %
Interest expense and interest
cost related to average
interest-bearing liabilities                       1,984              1.58 %                            1,840             2.49 %
Net interest income and net
interest margin (4)                            $   8,849              5.23 %               $            5,994             5.40 %

(2) Loan interest income includes loan fees of $147 in 2009 and $212 in 2008.

(3) Average loans do not include non-accrual loans.

(4) Net interest margin is computed by dividing net interest income by total average interest-earning assets.

Interest and fee income from loans increased 16.3% in the first three months of 2009 compared to the same period in 2008. The increase in 2009 is attributable to an increase in the average balance of loans, partially offset by a 116 basis point decrease in the yield on loans which was 6.48% for the first three months of 2009 compared to 7.64% in 2008. Average total loans for the first three months of 2009 increased 42.9% to $486,518,000 compared to $340,363,000 for the same period in 2008 primarily due to the Service 1st merger in November 2008. The decrease in yield reflects the 500 basis point declines in rates as . . .