CYBA Canyon Bancorp (CE)

Canyon Bancorp (OTCBB:CYBA) today announced total assets at December 31, 2008 were $298.0 million and net loans receivable were $251.6 million. Canyon Bancorp incurred a loss of $3,377,000 or $1.32 per diluted share for the full year ended December 31, 2008 compared to income of $3,519,000 or $1.39 per diluted share for the year ended December 31, 2007. For the three months ended December 31, 2008, Canyon Bancorp incurred a loss of $2,239,000 or $0.80 per diluted share compared to earning $421,000 or $0.17 per diluted share for the same period in 2007.

Like many Southern California banks, the Company�s earnings were adversely affected by the deterioration in the real estate market. Classified loans and loan charge-offs have increased. As a result, the Company increased the provision for loan losses from $900,000 in the fourth quarter of 2007 to $3,350,000 in the fourth quarter of 2008.

Other financial highlights as of year-end 2008 compared to year-end 2007:

• Total assets increased $8.9 million or 3.1 percent to $298.0 million.
• Net loans receivable increased $3.1 million or 1.3 percent to $251.6 million.
• Total deposits increased $18.7 million or 8.1 percent to $249.3 million.
• Capital to assets ratio for the year ended December 31, 2008 was 9.81 percent compared to 9.88 percent for the same period in 2007.

President and CEO Stephen G. Hoffmann said, �Canyon Bancorp and Canyon National Bank maintain a 'Well-Capitalized' regulatory rating and are financially strong. To supplement our capital base, during the fourth quarter we are pleased with the successful private placement of $3.9 million of common stock in a private placement. We have responded aggressively to changes in the economy and real estate markets to mitigate risk.�

Canyon Bancorp is a bank holding company with one banking subsidiary, Canyon National Bank, a full-service commercial bank and member of the FDIC. Palm Springs branch locations are at 1711 East Palm Canyon Drive at the Smoke Tree Village Shopping Center and 901 East Tahquitz Canyon Way. Palm Desert branch locations are at 74-150 Country Club Drive and 77-933 Las Montanas Road across from Sun City Palm Desert. Shares of the Company�s common stock are traded on the Over the Counter Bulletin Board � stock symbol CYBA.

This release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements.

� CANYON BANCORP & SUBSIDIARY Consolidated Balance Sheets (Dollars in thousands, except per share amounts) � � � 12/31/2008 12/31/2007 (Unaudited) (Audited) Assets � Cash and cash equivalents $ 16,389 $ 13,562 Investment securities available for sale 11,846 12,196

Federal Home Loan Bank, Federal Reserve Bank and Pacific Coast Bankers' Bank restricted stock, at cost

1,887 1,890 Loans held for sale 190 123 Loans receivable, net 251,614 248,468 Furniture, fixtures and equipment 5,221 5,680 Income tax receivable 2,345 909 Deferred tax asset 2,571 1,430 Foreclosed assets 4,483 3,073 Other assets 1,448 � 1,825 � � Total Assets $ 297,994 � $ 289,156 � � Liabilities and Stockholders� Equity � Deposits: Demand deposits $ 61,046 $ 73,961 NOW accounts 10,581 14,223 Savings and money market 72,280 79,262 Time certificate of deposits 105,399 � 63,181 � � Total Deposits 249,306 � 230,627 � � Other borrowed funds 17,212 28,160 Other liabilities 2,245 � 1,795 � � Total Liabilities 268,763 � 260,582 � � Commitments and contingencies � � � � � Stockholders� Equity:

Serial Preferred Stock, $5.00 par value; authorized 10,000,000 shares; none issued or outstanding

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Common Stock; no par value; authorized 10,000,000 shares; 2,911,051 and 2,479,927 shares issued and outstanding as of December 31, 2008 and 2007, respectively

27,568 23,513 Accumulated other comprehensive income:

Unrealized loss on investment securities available-for-sale

(36 ) (15 ) Retained earnings 1,699 � 5,076 � Total Stockholders� Equity 29,231 28,574 � Total Liabilities and Stockholders� Equity $ 297,994 � $ 289,156 � � CANYON BANCORP & SUBSIDIARY Consolidated Statement of Operations (Unaudited) For the three and twelve months ended December 31, 2008 and 2007 (Dollars in thousands, except per share amounts) � � Three months ended � Twelve months ended December 31, December 31, 2008 � � 2007 2008 � � 2007 Interest income: Loans receivable $ 3,863 $ 5,145 $ 17,469 $ 20,034 Federal funds sold � 45 134 522 Interest bearing deposits in other financial institutions � 1 � 50 Investment securities available for sale 146 � 190 520 � 679 Total interest income 4,009 5,381 18,123 21,285 Interest expense Deposits 1,234 1,517 4,748 5,883 Other borrowed funds 189 � 249 844 � 319 Total interest expense 1,423 1,766 5,592 6,202 � Net interest income 2,586 3,615 12,531 15,083 � Provision for loan losses 3,350 � 900 8,615 � 1,310

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Net interest income after provision for loan losses

(764 ) 2,715 3,916 � 13,773 Noninterest income: Service charges and fees 276 199 925 712 Loan related fees 49 77 247 464 Lease administration fees 97 122 399 661 Automated teller machine fees 177 179 745 699 Net loss on sale of foreclosed assets (2 ) � (33 ) � Net gain on sale of investment securities � � � 33 � � Total noninterest income 597 � 577 2,316 � 2,536 Noninterest expenses: Salaries and employee benefits 1,364 1,311 5,415 5,282 Occupancy and equipment expense 384 403 1,570 1,510 Professional fees 80 96 262 373 Data processing 217 153 719 583 Marketing and advertising expense 54 109 349 436 Director and shareholder expense 110 127 481 516 Foreclosed asset expense, net 909 14 1,535 14 Other operating expense 500 � 377 1,784 � 1,680 Total noninterest expenses 3,618 � � 2,590 � 12,115 � � 10,394 �

Earnings/(loss) before income taxes

(3,785 ) 702 (5,883 ) 5,915 � Income tax expense/(benefit) (1,546 ) 281 (2,506 ) 2,396 � Net earnings/(loss) $ (2,239 ) $ 421 $ (3,377 ) $ 3,519 Earnings/(Loss) per share: Basic $ (0.80 ) $ 0.17 $ (1.32 ) $ 1.43 Diluted $ (0.80 ) $ 0.17 $ (1.32 ) $ 1.39 Weighted average shares outstanding: Basic 2,785,145 2,464,383 2,562,110 2,454,792 Diluted 2,785,145 2,534,926 2,562,110 2,538,636 � CANYON BANCORP & SUBSIDIARY Selected Ratios (Unaudited) � � Three Months Ended 1 � � � Twelve Months Ended 1 � 12/31/2008 � � � 12/31/2007 � 12/31/2008 � � 12/31/2007 � � Return on average equity -30.24 % 5.86 % -11.66 % 13.05 % Return on average assets -2.98 % 0.59 % -1.14 % 1.31 % Yield on interest-earning assets 5.93 % 8.15 % 6.75 % 8.52 % Cost of interest-bearing liabilities 2.81 % 3.94 % 2.90 % 3.86 % Net interest margin 3.83 % 5.47 % 4.67 % 6.04 % Non-interest income / average assets 0.79 % 0.79 % 0.78 % 0.94 % Non-interest expense / average assets 4.81 % 3.62 % 4.09 % 3.85 %

Net non-interest expense / average assets

4.02 % 2.83 % 3.31 % 2.91 % Net charge-offs/(recoveries) to average loans 3.39 % 2.10 % 2.82 % 0.74 % � as of: � � � 12/31/2008 � � 12/31/2007 � � Capital to assets ratio 9.81 % 9.88 %

Allowance for loan losses / gross loans

1.74 % 1.21 % Loan to deposit ratio 103.0 % 109.5 % Adversely classified loans to gross loans 7.6 % 0.9 % Non-accrual loans to gross loans 7.7 % 0.4 %

Demand deposit accounts / total deposit accounts

24.5 % 32.1 % Book value per share 2 $ 10.04 $ 11.52 � � � � � � 1 Interim periods annualized 2 Prior year restated for past stock dividends and splits