UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 1 to

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year endedDecember 31, 2013

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________________ to ______________.

Commission file number0-10652

NORTH VALLEY BANCORP

(Exact name of registrant as specified in its charter)

300 Park Marina Circle, Redding, California 96001

(Address of principal executive offices)       (Zip code)

Registrant’s telephone number, including area code(530) 226-2900

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yeso Nox

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yeso Nox

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yesx Noo

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o Nox

The aggregate market value of the voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold was $107,379,000 as of June 30, 2013.

The number of shares of common stock outstanding as of March 7,April 10, 2014, were 6,836,463.

DOCUMENTS INCORPORATED BY REFERENCEExplanatory Note

Portions of Registrant’s Definitive Proxy Statement forNorth Valley Bancorp (the “Company” or the 2014 Annual Meeting of Shareholders are incorporated by reference in Part III, Items 10, 11, 12, 13 and 14 of“Corporation”) is filing this Amendment No. 1 on Form 10-K.

Table of Contents

PART I

ITEM 1. BUSINESS

Certain matters discussed or incorporated by reference in this10-K/A to its Annual Report on Form 10-K including, but not limitedfor the year ended December 31, 2013 to matters described ininclude Item 7, “Management’s Discussion10, Item 11, Item 12, Item 13, and AnalysisItem 14 of Financial Condition and Results of Operations,” are “forward-looking statements” within the meaning of Section 21EPart III to Form 10-K.  No change is being made to Part I or Part II of the Securities Exchange Act of 1934,Form 10-K, as amended, and Section 27A of the Securities Act of 1933, as amended, and subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may contain words related to future projections including, but not limited to, words such as “believe,” “expect,” “anticipate,” “intend,” “may,” “will,” “should,” “could,” “would,” and variations of those words and similar words that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those projected. Factors that could cause or contribute to such differences include, but are not limited to, the following: (1) the duration of financial and economic volatility and actions taken by the United States Congress and governmental agencies, including the United States Department of the Treasury, to deal with challenges to the U.S. financial system; (2) variances in the actual versus projected growth in assets and return on assets; (3) loan losses; (4) expenses; (5) changes in the interest rate environment including interest rates charged on loans, earned on securities investments and paid on deposits and other borrowed funds; (6) competition effects; (7) fee and other noninterest income earned; (8) general economic conditions nationally, regionally, and in the operating market areas of the Company and its subsidiaries including State and local budget issues being addressed in California; (9) changes in the regulatory environment including government intervention in the U.S. financial system; (10) changes in business conditions and inflation; (11) changes in securities markets, public debt markets, and other capital markets; (12) data processing and other operational systems failures or fraud; (13) a further decline in real estate values in the Company’s operating market areas; (14) the effects of uncontrollable events such as terrorism, the threat of terrorism or the impact of the current military conflicts in Afghanistan and Iraq and the conduct of the war on terrorism by the United States and its allies, worsening financial and economic conditions, natural disasters, and disruption of power supplies and communications; and (15) changes in accounting standards, tax laws or regulations and interpretations of such standards, laws or regulations, as well as other factors. The factors set forth under Item 1A, “Risk Factors”, in this report and other cautionary statements and information set forth in this report should be carefully considered and understood as being applicable to all related forward-looking statements contained in this report when evaluating the business prospects of the Company and its subsidiaries.

Forward-looking statements are not guarantees of performance. By their nature, they involve risks, uncertainties and assumptions. Actual results and shareholder values in the future may differ significantly from those expressed in forward-looking statements. You are cautioned not to put undue reliance on any forward-looking statement. Any such statement speaks only as of the date of the report, and in the case of any documents that may be incorporated by reference, as of the date of those documents. We do not undertake any obligation to update or release any revisions to any forward-looking statements, or to report any new information, future event or other circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by law. However, your attention is directed to any further disclosures made on related subjects in our subsequent reports filed with the Securities and Exchange Commission on Forms 10-K, 10-Q and 8-K.

General

North Valley Bancorp (the “Company”) is a bank holding company registered with and subject to regulation and supervision by the Board of Governors of the Federal Reserve System (“FRB” or the “Board of Governors”). The Company was incorporated in 1980 in the State of California. The Company owns 100% of its principal subsidiaries, North Valley Bank (“NVB” or the “Bank”), North Valley Trading Company (“Trading Company”), which is inactive, North Valley Capital Trust II, North Valley Capital Trust III, and North Valley Capital Statutory Trust IV.The Company acquired Six Rivers National Bank (based in Eureka, California) in 2000, and Yolo Community Bank (based in Woodland, California) in 2004. Over time, the former branches and operations of Six Rivers National Bank and Yolo Community Bank were combined with the branches and operations of North Valley Bank and the information contained in this report reflects their combined results of operations.

At December 31, 2013 the Company had $917,764,000 in total assets, $509,244,000 in total loans and $787,849,000 in total deposits. The Company does not hold deposits of any one customer or group of customers where the loss of such deposits would have a material adverse effect on the Company. The Company’s business is not seasonal.

NVB was organized in September 1972, under the laws of the State of California, and commenced operations in February 1973. NVB is principally supervised and regulated by the Commissioner of the California Department of Business Oversight (the “Commissioner”) and conducts a commercial and retail banking business, which includes accepting demand, savings, and money market rate deposit accounts and time deposits, and making commercial, real estate and consumer loans. It also issues cashier’s checks and money orders, and provides safe deposit boxes and other customary banking services. As a state-chartered insured member bank, NVB is also subject to regulation by the Board of Governors of the Federal Reserve System (the “Board of Governors”) and its deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to the maximum amount which is $250,000 per separately insured depositor. FDIC-insured deposits are our primary source of funds. As part of our asset-liability management, we analyze the maturities and interest rates of our retail deposits in order to promote stability in our supply of funds, to the extent feasible under changing market conditions. For more deposit information, seeItem 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Balance Sheet Analysis – Deposits.”

NVB has signed agreements with Essex National Securities, Inc., a registered broker-dealer, (“ENSI”) whereby ENSI provides broker/dealer services and standardized investment advice to NVB customers. NVB shares in the fees and commissions paid to ENSI on a pre-determined schedule. Majority ownership of ENSI is held by Samson Investment Partners, Inc., a private investment firm headquartered in New York City, New York.

Recent Development – Proposed Merger with TriCo BancsharesMarch 12, 2014.

As announced by the Company on January 21, 2014 and reported inon the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 22, 2014 (the “Current Report”), the Company has entered into an Agreement and Plan of Merger and Reorganization dated January 21, 2014 (the “Merger Agreement”), pursuant to which the Company wouldwill merge with and into TriCo Bancshares, a California corporation (“TriCo”), with TriCo being the surviving corporation.  Immediately thereafter, the Company’s subsidiary bank, North Valley Bank, would be merged with and into TriCo’s subsidiary bank, Tri Counties Bank. Under the termsA copy of the Merger Agreement (together with certain other information regarding the Company shareholders would receive a fixed exchange ratio of 0.9433 shares of TriCo common stock for each share of Company common stock, providingproposed merger) is provided in the Company shareholders with aggregate ownership on a pro forma basis of approximately 28.6% of the common stock of the combined company. Holders of the Company’s outstanding in-the-money stock options would receive cash, net of applicable taxes withheld, for the value of their unexercised stock options.Current Report.  The mergertransaction is expected to qualify as a tax-free exchange for shareholders who receive shares of TriCo common stock. The transactions contemplated by the Merger Agreement are expected to close in the second or third quarter of 2014, pending approvals of the merger by the shareholders of the Company shareholders and the TriCo, shareholders, the receipt of all necessary regulatory approvals, and the satisfaction of other closing conditions which are customary for such transactions. For additional information, reference should be made to the text

As a result of the Merger Agreement, and Planthe Board of Merger and Reorganization, filed as an exhibitDirectors of the Company has decided to postpone its 2014 Annual Meeting of Shareholders. As described in the Current Report, TriCo will file its registration statement on Form S-4 with the SEC containing the joint proxy statement and to other information regarding TriCo andprospectus which the Company and TriCo intend to send to their respective businessesshareholders, seeking shareholder approvals to consummate the transaction.  Thus, rather than incorporating portions of the Company’s definitive proxy statement for the 2014 Annual Meeting of Shareholders in Part III of its Annual Report on Form 10-K for the year ended December 31, 2013, the Company is filing this Amendment No. 1 to Form 10-K to include Items 10, 11, 12, 13, and the status of their proposed merger, as reported from time to time in other filings with the Securities and Exchange Commission.14.

PART III

Markets We ServeITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Listed below are the Directors and Executive Officers of the Company.

Certain information with respect to the nine (9) Directors of the Company is provided below:

Michael J. Cushman (age 59), has been a Director of the Company since February 1999, and is President and Chief Executive Officer of the Company and its subsidiary, North Valley Bank. Mr. Cushman served as Senior Vice President and Chief Business Banking Officer of North Valley Bank from March 1998 to February 1999. From March 1995 through March 1998, he was a self-employed investor. From November of 1994 through March of 1995, Mr. Cushman served as Vice President of Tri-Counties Bank, which acquired Country National Bank in November of 1994 where Mr. Cushman had served as President and Chief Executive Officer since September of 1992.

Dante W. Ghidinelli (age 66), has been a Director of the Company since 1993. He is a Certified Public Accountant. Mr. Ghidinelli was a partner in Nystrom & Company since 1974. In 2012 Nystrom & Company, LLP merged with Matson & Isom. Mr. Ghidinelli retired as a partner from that firm in 2012.

Kevin D. Hartwick (age 52), was a Director of Six Rivers National Bank and became a Director of the Company in October 2000, when North Valley Bank acquired Six Rivers National Bank. Mr. Hartwick has been a Certified Public Accountant and managing partner with Cholwell Benz & Hartwick in Crescent City, California since 1989.

Patrick W. Kilkenny (age 67), has been a Director of the Company since 2011. Formerly, he was the Chairman, President and Chief Executive Officer of the National Bank of the Redwoods and President and Chief Executive Officer of Redwood Empire Bancorp, its holding company. He is currently self-employed as a business consultant in business finance, banking, and capital markets. Mr. Kilkenny received a Bachelor Science of Commerce – Finance from Santa Clara University in 1969, and a Juris Doctorate from Empire College School of Law.

Roger B. Kohlmeier (age 74), was a Director of Yolo Community Bank and became a Director of the Company in August 2004, when North Valley Bank acquired Yolo Community Bank. He was the founding President and Chief Executive Officer of Bank of Woodland which changed its name to Business & Professional Bank, at which time he retired but continued as Director until its sale to U.S. Bank of California in 1997. He is a graduate of California Polytechnic University of San Luis Obispo and is actively involved with the Economic Development Council and Woodland Health Care.

Timothy R. Magill (age 64), has been a Director of the Company since 2011. He was a founding Director of Yolo Community Bank with its main office in Woodland, California. In 2004, Yolo Community Bank was acquired and operated as a subsidiary of the Company and Mr. Magill continued as a Director of the subsidiary bank, which did business as Yolo Community Bank, and subsequently as North Valley Business Bank, and in 2006 was merged into North Valley Bank. Prior to that, Mr. Magill was a Director of Bank of Woodland. Mr. Magill holds an MBA degree from California State University at Sacramento. Since 1987, Mr. Magill has worked in various capacities, including General Manager, Division President, District Manager, and Marketing and Planning Development Manager for Waste Management, Inc. Mr. Magill retired from Waste Management, Inc. in 2012 and remains an outside consultant to that firm.

Martin A. Mariani (age 57), was a Director of Yolo Community Bank and became a Director of the Company in August 2004, when North Valley Bank acquired Yolo Community Bank. He is a partner in Mariani Nut Company of Winters, California. He graduated from the University of California, Davis in 1978.

Dolores M. Vellutini (age 76), was a Director of Six Rivers National Bank and became a Director of the Company in October 2000, when North Valley Bank acquired Six Rivers National Bank. She is a developer and the owner of Vellutini Properties in Eureka, California.

J. M. (“Mike”) Wells, Jr. (age 73), is Chairman and a founding member of the Board of Directors of the Company. Mr. Wells was formerly a member of the law firm of Wells, Small, Selke & Graham, a Law Corporation, located in Redding, California. Mr. Wells practiced law with that firm starting in 1972 and retired in 2004. Mr. Wells received a Bachelor of Arts in Economics from Stanford University and a Juris Doctorate from Hastings College of the Law.

Certain information with respect to the current Executive Officers of the Company and North Valley Bank (other than Michael J. Cushman, listed above as a Director) is provided below:

Kevin R. Watson (age 48), has served as Executive Vice President and Chief Financial Officer of the Company and its subsidiary since March 2006. Prior to that, he served as Chief Financial Officer at Calnet Business Bank in Sacramento from January 2004 to March 2006. Prior to Calnet Business Bank, his experience includes serving as the Chief Financial Officer of California Independent Bancorp and Feather River State Bank from April 2001 to January 2004.

Scott R. Louis (age 64), has served as Executive Vice President and Chief Operations Officer of the Company and its subsidiary since October 2005. Prior to that, he served as Senior Vice President and Chief Operating Officer since joining the Company in April 2005. Prior to joining the Company, Mr. Louis served as First Vice President at Farmers and Merchants Bank in Lodi, California. Mr. Louis began his financial services career with Bank of America in 1971.

Roger D. Nash (age 66), has served as Executive Vice President and Chief Credit Officer of the Company and its subsidiary since September 2006. Prior to that, he served as Chief Lending Officer of the Company and its subsidiary since joining the Company in October 2005. Prior to that, he served 35 years at Bank of America, most recently as Senior Vice President/Senior Client Manager in Visalia, California. While at Bank of America, he also served as Senior Vice President/Credit Risk Manager and as Senior Vice President in Business Lending.

Gary S. Litzsinger(age 58), has served as Executive Vice President and Chief Risk Officer of the Company and its subsidiary since October 2005. Prior to that, he served as Senior Vice President and Chief Risk Officer since joining the Company in July, 2004. Prior to joining the Company, Mr. Litzsinger served as Director of Audit and Risk Management for Humboldt Bancorp and Audit Manager for California Federal Savings Bank in Sacramento. He began his audit career in 1990 and obtained his California CPA license in 1994.

Leo J. Graham(age 63), has served as Corporate Secretary and General Counsel of the Company and its subsidiary since January 2004. Mr. Graham was formerly a member of the law firm of Wells, Small, Selke & Graham, a Law Corporation, located in Redding, California. Mr. Graham practiced law with that firm starting in 1978. Mr. Graham received a Bachelor of Arts in Political Science from the University of California, Berkeley and a Juris Doctor from the University of Santa Clara School of Law.

None of the directors were selected pursuant to any arrangement or understanding other than with the directors and executive officers of the Company acting within their capacities as such. There are no family relationships among any two or more of the Company’s executive officers or directors.

No director or officer of the Company currently serves, or within the last five years has served, as a director of any public company, including any company which has a class of securities registered under, or which 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 director or officer of the Company was subject to any legal, judicial or administrative proceedings involving or based on violations of federal or state securities, commodities, banking or insurance laws and regulations or settlements thereof, involvement in mail or wire fraud or fraud in connection with any business entity, any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization, convictions in a criminal proceeding (excluding traffic violations and minor offenses) or had a petition under bankruptcy laws filed against themselves or an affiliate, in each case within the last ten years.

GOVERNANCE OF THE COMPANY

Code of Business Conduct and Ethics

The Bank’s head office is located at 300 Park Marina Circle, Redding, California 96001. AsBoard of December 31, 2013,Directors of North Valley Bancorp believes the Bank had branch offices in Shasta County (ten branches), Trinity County (two branches), Humboldt County (five branches), Del Norte County (one branch), Yolo County (one branch), Sonoma County (one branch), Placer County (one branch)cornerstones of our business are honesty, truthfulness, integrity and Mendocino County (one branch). The Company views its service area as having four distinct markets:ethics.

In keeping with this belief, the Board of Directors has adopted a Code of Business Conduct and Ethics, which applies to the Board of Directors and the officers and employees of the Company and North Valley Bank. The North Valley Bancorp Code of Business Conduct and Ethics is available through the Shareholders Relations link on the Company’s website at http://www.novb.com/shareholderrelations.aspx. A copy of the Code of Business Conduct and Ethics may be obtained without charge by submitting a request to the Corporate Secretary, P.O. Box 994630, Redding, CA 96099-4630.

Risk Oversight

Risk management is the responsibility of management and risk oversight is the responsibility of the Board of Directors. The Board administers its risk oversight function principally through a division of responsibility within its committee structure, with each committee of the Board of Directors being responsible for overseeing risk within its area of responsibility. The responsibilities of the Board committees are discussed under each committee below. Some significant risk oversight matters are reported directly to the Board, including matters not falling within the area of the responsibility of any committee. Types of risks with the potential to adversely affect the Company include credit, interest rate, liquidity, and compliance risks, and risks relating to our operations and reputation. Management regularly provides the Board of Directors and its various committees with a significant amount of information regarding a wide variety of matters affecting the Company. Matters presented to the Board and Board committees generally include information with respect to risk, including input from Gary S. Litzsinger, Executive Vice President and Chief Risk Officer. The Board and its committees consider the risk aspects of such information and often request additional information with respect to issues that involve risks to the Company. The Board and its committees also raise risk issues on their own initiative.

Subordinated DebenturesReview of Risk Associated with Compensation Plans

The Company ownsdevelops and implements compensation plans that provide strategic direction to the common stockplan participants and engage them in the Company’s success, thereby contributing to shareholder value. The Board of three business trustsDirectors believes that have issued an aggregateits approach to goal setting, performance evaluation and discretion in the payout of $21.0 million in trust preferred securities fully and unconditionally guaranteed by the Company. The entire proceeds of each respective issuance of trust preferred securities were invested by the separate business trusts into junior subordinated debentures issued byincentives help to mitigate excessive risk-taking that could harm the Company or reward poor judgment by senior officers. The Company’s pay programs are designed to reward outstanding individual and team performance while mitigating risk-taking behavior that might affect financial results. The Compensation Committee met with identical maturity, repricingsenior officers, including the General Counsel and payment terms as the respective issuanceCorporate Secretary of trust preferred securities. The aggregate amount of junior subordinated debentures issued by the Company, is $21.7 million, withto review the maturity dates for2013 incentive compensation plans and concluded that, based on the respective debentures ranging from 2033 through 2036. Subjectcontrols described above and elsewhere in this Proxy Statement, that such plans do not present risks that are reasonably likely to regulatory approval,have a material adverse affect on the Company may redeem the respective junior subordinated debentures earlier than the maturity date, with certain of the debentures being redeemable beginning in April 2008, July 2009 and March 2011.Company.

On November 9, 2009,Committees of the Company elected to defer the paymentBoard of interest on these securities. The Company is allowed to defer the payment of interest for up to 20 consecutive quarterly periods without triggering an event of default. The obligation to pay interest is cumulative and continues to accrue. On May 29, 2012, the Company received approval from the Federal Reserve Bank of San Francisco and on May 9, 2012, the Company received approval from the California Department of Financial Institutions to pay all deferred interest on its junior subordinated notes underlying its trust preferred securities in the amount of $5,854,000 and to fully redeem its North Valley Capital Trust I notes in the amount of $10,310,000, bearing an interest rate of 10.25%. On July 23, 2012, the Company paid all deferred interest on its junior subordinated notes and on July 25, 2012, it redeemed, in full, the notes associated with North Valley Capital Trust I. Since then, the Company has continued to pay interest on the remaining notes when and as due. For more information about the trust preferred securities and the debentures and certain regulatory restrictions on the payment of interest, seeNotes 10 and16 to the Consolidated Financial Statements.

Supervision and RegulationDirectors

The common stockBoard of Directors of the Company is subject tohas established the registration requirementsfollowing committees of the SecuritiesBoard: Audit, Nominating, Compensation and Executive/Corporate Governance.

The current members of the Board and the Committees of the Board on which they serve are as follows:

* Member

** Chairman

Audit Committee

The functions of the Audit Committee are more particularly described in the Audit Committee Charter, which can be found at http://www.novb.com. The Board of Directors has determined that Chairman Dante W. Ghidinelli and Director Kevin D. Hartwick each qualify as a result of their accounting backgrounds as an Audit Committee Financial Expert as defined under the Sarbanes-Oxley Act of 1933, as amended, and the qualification requirements of the California Corporate Securities Law of 1968, as amended. The Company 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, the filing of annual, quarterly and current reports with the Securities and Exchange Commission.

NVB is licensed by the California Department of Business Oversight, and subject to the2002 (“SOX”), SEC rules and regulations and NASDAQ listing standards. The Audit Committee met seven (7) times in 2013. For more information, see the “Report of the Commissioner. NVB’s deposits are insured by the FDIC, and NVB is a member of the Federal Reserve System. Consequently, NVB is subject to the supervision of, and is regularly examined by, the Commissioner and the Board of Governors. Such supervision and regulation includes comprehensive reviews of all major aspects of the Bank’s business and condition, including its capital ratios, allowance for loan losses and other factors. However, no inference should be drawn that such authorities have approved any such factors. NVB is required to file reports with the Commissioner and the Board of Governors and provide such additional information as the Commissioner and the Board of Governors may require.Audit Committee”on page 28.

NVB was originally charteredNominating Committee

The Board of Directors has adopted a Nominating Committee Charter and appoints the members of the Nominating Committee. All of the members are “independent” within the requirements of SOX, SEC rules and regulations, and NASDAQ listing standards. The Nominating Committee held one (1) meeting in 2013. The functions of the Nominating Committee are more particularly described in the Nominating Committee Charter, which can be found at http://www.novb.com.

The Nominating Committee Charter includes a policy for consideration of candidates proposed by shareholders. Any recommendations by shareholders will be evaluated by the California Department of Financial Institutions. On July 3, 2012,Nominating Committee in the California Legislature approvedsame manner as any other recommendation and adopted a reorganization plan proposed by Governor Jerry Brown to restructure the California governmentin each case in accordance with the goal of achieving a more efficient, streamlined and cost-effective state government. As partNominating Committee Charter. Shareholders that desire to recommend candidates for consideration by the Nominating Committee should mail or deliver written recommendations to the Nominating Committee addressed as follows: North Valley Bancorp Nominating Committee, P.O. Box 994630, Redding, CA 96099-4630. Each recommendation should include the experience of the reorganization plan,candidate that qualifies the Departmentcandidate for consideration as a potential director for evaluation by the Nominating Committee. Shareholders who wish to nominate a candidate for election to the Company’s Board of Financial Institutions (“DFI”)Directors, as opposed to recommending a potential nominee for consideration by the Nominating Committee, are required to comply with the advance notice and the Department of Corporations (“DOC”) were merged into a newly created California Department of Business Oversight (“DBO”) with a single commissioner in chargeany other requirements of the DBO. Effective July 1, 2013,Company’s Bylaws, applicable laws and regulations.

Compensation Committee

The Board of Directors has formed a Compensation Committee and appoints the former DFImembers of the Compensation Committee, comprised solely of independent Directors. This Committee reviews and DOC becamerecommends to the DivisionBoard of Financial InstitutionsDirectors the salaries, performance-based incentives, both annual and long term, and other matters relating to compensation of the DivisionExecutive Officers.

The Compensation Committee also reviews and approves various other compensation policies and matters. The Compensation Committee held two (2) meetings in 2013. For more information, see the “Report of Corporations, respectively, under the DBO. It is uncertain what effect this reorganization may have uponCompensation Committee” onpage 18. The functions of the regulation of NVBCompensation Committee are more particularly described in the future.Compensation Committee Charter, which can be found at http://www.novb.com.

Executive/Corporate Governance Committee

The Company is a bank holding company withinhas an Executive/Corporate Governance Committee which functions to review, evaluate and make decisions on actions that are required between 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 supervisionregular meetings of the Board of Governors.Directors. In addition, this Committee functions to review and recommend to the Board of Directors principles, policies and procedures affecting the Board of Directors and its operation and effectiveness. The Company is required to obtainCommittee further oversees the approvalevaluation of the Board of Governors before it may acquire all or substantially allDirectors and its effectiveness. The Committee did not meet in 2013.

Meetings of the assetsBoard of any bank, or ownership or controlDirectors

During 2013, the Board of Directors held four (4) regularly scheduled meetings and 14 special meetings and each Director attended at least 75% of the voting shares of any bank if, after giving effect to such acquisition of shares, the Company would own or control more than 5%aggregate of the voting sharestotal number of such bank. The Bank Holding Company Act prohibits the Company from acquiring any voting shares of, or interest in, all or substantially allmeetings of the assetsBoard of Directors (held during the period for which he or she was a bank located outsideDirector) and the Statetotal number of California unless such an acquisition is specifically authorized by the lawsmeetings of Committees of the state inBoard of Directors on which such bank is located. Any such interstate acquisition is also subject toDirector served (during the provisions of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994.periods that he or she served).

The Company andencourages the members of its subsidiary, NVB, are deemedBoard of Directors to be “affiliates” withinattend the meaningCompany’s annual meeting of that term as definedshareholders each year. All of the Directors, except one, attended the Company’s Annual Meeting of Shareholders held in the Federal Reserve Act. This means, for example, that there are limitations (a) on loans between affiliates, and (b) on investments by NVB in affiliates’ stock as collateral for loans to any borrower. The Company and its subsidiaries are also subject to certain restrictions with respect to engaging in the underwriting, public sale and distribution of securities.2013.

Capital Adequacy. The Board of Governors and the FDIC have adopted risk-based capital guidelines for evaluating the capital adequacy of bank holding companies and banks. The guidelines are designedShareholder Communications with Directors

A shareholder who wishes 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, the Company and its banking subsidiaries are required to maintain capital equal to at least 8% of its assets and commitments to extend credit, weighted by risk, of which at least 4% 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. The Company and NVB are subject to regulations issued bycommunicate directly with the Board of GovernorsDirectors, a Committee of the Board or an individual Director should send correspondence to:

Board of Directors (or Committee Name or Director’s Name)

c/o Corporate Secretary

North Valley Bancorp

P.O. Box 994630

Redding, California 96099-4630

The Corporate Secretary has been instructed to forward such correspondence to the Board Committee or individual as addressed as soon as practicable. If it is marked “Personal and Confidential”, it will only be forwarded to the FDIC, which require maintenanceaddressee. The Board has instructed the Corporate Secretary, prior to forwarding any correspondence, to review such correspondence and, in his discretion, not to forward certain items if they are deemed of a certain level of capital. These regulations impose two capital standards: a risk-based capital standard and a leverage capital standard.

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 such loans, while commercial loans are placed in a 100% risk category and therefore require maintenance of capital equal to 8% of such loans.

Under the Board of Governors’ 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 stockholders’ equity and noncumulative perpetual preferred stock) and Tier 2 capital which includes, among other items, limited life (and in case of banks, cumulative) preferred stock, mandatory convertible securities, subordinated debt and a limited amount of reserve for loan 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 allfrivolous nature 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 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 risk-based capital ratio (including Tier 1 and Tier 2 capital) of 8%, of which at least half must be Tier 1 capital.

Under the Board of Governors’ 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 intangibles 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 FDIC have 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)otherwise inappropriate 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.Board’s consideration.

AtSection 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the Company’s Directors and Executive Officers and persons who own more than 10% of a registered class of the Company’s equity securities to file with the Securities and Exchange Commission (the “SEC”) initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, Directors and greater than 10% shareholders are required by the SEC to furnish the Company with copies of all Section 16(a) forms they file.

To the Company’s knowledge, based solely on a review of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended December 31, 2013, the Companyall Section 16(a) filing requirements applicable to its Officers, Directors and the Bank10% shareholders were in compliancecomplied with the risk-based capital and leverage ratios described above. SeeItem 8, “Financial Statements and Supplementary Data”, and Note 16 to the Consolidated Financial Statements incorporated by reference therein, foron a listing of the Company’s and the Bank’s risk-based capital ratios at December 31, 2013 and 2012.timely basis.

ITEM 11. EXECUTIVE COMPENSATION

FDICIA. The Board of Governors, the Comptroller of the Currency (“OCC”) and the FDIC have adopted regulations implementing a system of prompt corrective action for insured financial institutions pursuant to Section 38 of the Federal Deposit Insurance Act and Section 131 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”). These 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 any written agreement, order, capital directive, or prompt corrective action directive to meet and maintain a specific capital level for any capital measure; (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%; 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%. NVB is considered “well capitalized” under the framework for prompt corrective action.COMPENSATION DISCUSSION AND ANALYSIS

Introduction

The regulations established procedures for classificationBoard of financial institutions withinDirectors of North Valley Bancorp strives to ensure that its compensation programs are consistent with the capital categories, filingstrategic goals 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 oneobjectives of the three “undercapitalized” categories,Company and maintains the standards of good corporate governance.

Philosophy

All elements of the Company’s compensation program are designed to attract and retain key employees, motivating them to achieve and rewarding them for superior performance. Different programs are geared to short and longer-term performance with the goal of increasing shareholder value over the long term. Executive compensation programs impact all employees by setting general levels of compensation and helping to create an environment of goals, rewards and expectations. North Valley Bancorp believes the performance of every employee is important to its success and recognizes the importance of executive compensation and incentive programs to achieve improved performance.

North Valley Bancorp believes that the compensation of its executives should reflect their success as a management team, rather than individuals, in attaining key operating objectives, such as declarationgrowth of dividendsdeposits, loans, maintaining credit quality, growth of operating earnings and earnings per share and growth or other capital distributions or paymentmaintenance of management fees, if followingmarket share and long-term competitive advantage, and ultimately, in attaining an increased market price for its stock. North Valley Bancorp believes that the distribution or payment the institution would be classified within oneperformance of the “undercapitalized” categories. In addition, institutions which are classifiedexecutives in onemanaging the Company, considered in light of general economic and specific company, industry and competitive conditions, should be the basis for determining their overall compensation. North Valley Bancorp also believes that their compensation should not be based on the short-term performance of the three “undercapitalized” categories are subject to certain mandatory and discretionary supervisory actions. Mandatory supervisory actions include (1) increased monitoring and review byCompany stock, whether favorable or unfavorable, but rather that the appropriate federal banking agency; (2) implementation of a capital restoration plan; (3) total asset growth restrictions; and (4) limitation upon acquisitions, branch expansion, and new business activities without prior approvalprice of the appropriate federal banking agency. Discretionary supervisory actions may include (1) requirements to augment capital; (2) restrictions upon affiliate transactions; (3) restrictions upon deposit gathering activitiesCompany stock will, in the long-term, reflect its operating performance, and interest rates paid; (4) replacement of senior executive officers and directors; (5) restrictions upon activitiesultimately, the management of the institution andCompany by its affiliates; (6) requiring divestiture or saleexecutives. North Valley Bancorp seeks to have the long-term performance of the institution;Company stock reflected in executive compensation through stock option awards.

Compensation Committee Interlocks and (7) any other supervisory action thatInsider Participation

During the appropriate federal banking agency determines is necessary to further the purposesfiscal year 2013, Michael J. Cushman participated in deliberations of the regulations. Further, the federal banking agencies may not acceptCompany’s Board of Directors concerning Executive Officer compensation for all Executive Officers, excluding himself.

Overview of Compensation and Process

Elements of compensation for corporate executives include: salary, bonus, stock option awards, deferred compensation plans, salary continuation plan, health, disability and life insurance, and perquisites. Base salaries for Executive Officers are reviewed and considered for adjustment at 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 liabilitymeeting 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.” 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 depositsCompensation Committee usually held in the particular institution’s normal market areas or infirst quarter of each year. At this meeting, 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 isCompensation Committee also determined that some other course of action would better servereviews and recommends the purposes ofmanagement incentive plan for the regulations. Critically undercapitalized institutions are also prohibited from making (but not accruing) any payment of principal or interest on subordinated debt withoutfiscal year (the “Executive Discretionary Incentive Plan”) and recommends stock option awards for the prior approval of the FDICCompany’s Executive Officers and the FDIC must prohibit a critically undercapitalized institution from taking certain other actions without its 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.eligible employees.

Under FDICIA,At the federal financial institution agencies have adopted regulations which require institutionsstart of each fiscal year, it has been the practice of the Compensation Committee to establishmeet and maintain comprehensive written real estate lending policies which address certain lending considerations, including loan-to-value limits, loan administrative policies, portfolio diversification standards,review the history of all the elements of each Executive Officer’s total compensation over previous years and documentation, approvalcompare the compensation of the Executive Officers with that of the executive officers in an appropriate market place and reporting requirements. FDICIAindustry comparison group. Typically, the Chief Executive Officer makes compensation recommendations to the Compensation Committee with respect to the Executive Officers who report to him. Such Executive Officers are not present at the time of these deliberations. The Chairman of the Board then makes compensation recommendations to the Compensation Committee with respect to the Chief Executive Officer, who is absent from that meeting. The Compensation Committee may accept or adjust such recommendations.

The Compensation Committee has the authority to directly engage outside consultants and in the fall of 2012, the Committee engaged EW Partners, Inc. to assist in evaluating the Company’s compensation practices and to provide advice concerning Director and Executive compensation. Specifically, the Compensation Committee asked EW Partners, Inc. to conduct a compensation review of the Independent Directors of the Company and the Bank and of the six named Executive Officers. As further generally prohibits an insured state bank from engagingdiscussed below, EW Partners, Inc.’s review consisted of a market data assessment and competitive review and analysis of base salary, incentive plans, and benefits/perquisites. EW Partners, Inc. reported directly to the Chairman of the Compensation Committee and, in the performance of its duties, EW Partners, Inc. interacted with the Chief Executive Officer, Chief Financial Officer, and Executive Officers as it deemed appropriate in order to gather information necessary for its evaluation. EW Partners, Inc. is not affiliated with North Valley Bancorp nor did it provide any other services for the Company in 2013.

North Valley Bancorp chooses to pay each element of compensation as a principal in any activity thatmeans to attract and retain the necessary executive talent, reward annual performance and provide incentive for their balanced focus on long-term strategic goals as well as short-term performance. The amount of each element of compensation is impermissibledetermined by or under the direction of the Compensation Committee, which uses the following factors to determine the amount of salary and other benefits to pay each Executive Officer:

These elements fit into our overall compensation objectives by helping to secure the future potential of our operations, facilitating our strategic plan, providing proper compliance and regulatory compliance, and helping to create a cohesive team. Actual performance measures for a national bank, absentthe Executive Officers are set by the Compensation Committee. During 2013, an FDIC determination thatoutside benefits attorney was engaged by the activity would not pose a significant riskCompany to review non-qualified deferred compensation plans and to recommend changes to those plans to make them conform with IRS regulations and regulatory requirements and, further, to advise with regard to best practices concerning the structure and implementation of those plans.

At the Company’s annual meeting of shareholders held on May 31, 2013, the shareholders approved, on an advisory basis, the compensation paid to the Deposit Insurance Fund,Company’s executive officers. The favorable outcome of that “Say on Pay” proposal was taken into account by the Board of Directors and that the bank is,Compensation Committee in determining the Company’s annual compensation policies and will continue to be, within applicable capital standards. Similar restrictions apply to subsidiaries of insured state banks. The Company does not currently intend to engage in any activities which would be restricted or prohibited under FDICIA.

Effective January 1, 2015, the risk-based capital regulations and prompt corrective regulations, described above under “Capital Adequacy” and “FDICIA,” respectively, have been amended to the extent described below under “Basel III Capital.”decisions.

Basel III Capital. In July 2013, the federal bank regulatory agencies issued interim final rules that revise and replace the current risk-based capital requirements. These rules implement the “Basel III” regulatory capital reforms released by the Basel Committee on Banking Supervision and changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Basel III reforms reflected in the final rules include an increase in the risk-based capital requirements and certain changes to capital components and the calculation of risk-weighted assets.EXECUTIVE COMPENSATION

Effective January 1, 2015, banking organizations likeAt the meeting held in December 2013, the Compensation Committee evaluated the performance of the Chief Executive Officer and the other members of the Executive Team. The Compensation Committee determined the Executive Team succeeded in meeting the strategic goals set for the Company during 2013. The Compensation Committee did a thorough review of the data prepared by outside consultants with regard to peer bank information. This market study conducted by the independent consultants, along with a study done by the California Bankers Association, which provided peer bank information as to both director compensation and executive compensation, was used by the Compensation Committee to determine whether the Executive Team’s base salary and total compensation was consistent with its peer group and current market factors. This information was used to award the Executive Officers incentives under the Executive Incentive Plan. Based on a review of the information provided to the Compensation Committee and because of the over-all improvement of the financial condition of the Company and NVB must comply with new minimum capital ratio requirementsthe Bank, the Compensation Committee recommended to the Board of Directors that incentive bonus payments be phasedawarded to the Executive Team in between January 1, 2015December 2013, as set forth in the “Summary Compensation Table” on page 10 and January 1, 2019, which would consistthe “Report of the following: (i) a new common equity Tier 1 capital to total risk weighted assets ratio of 4.5%; (ii) a Tier 1 capital to total risk weighted assets ratio of 6% (increased from 4%); (iii) a total capital to total risk weighted assets ratio of 8% (unchanged from current rules); and (iv) a Tier 1 capital to adjusted average total assets (“leverage”) ratio of 4%.Compensation Committee” on page 18.

In addition, a “capital conservation buffer,” is established which when fully phased-in will require maintenanceAlso at the meeting held in December 2013, due to ongoing strategic planning discussions (which ultimately resulted in the Merger Agreement signed with TriCo on January 21, 2014), the Compensation Committee determined, after discussions with the Chief Executive Officer, the General Counsel, outside legal counsel and other consultants, to postpone indefinitely any adjustments to the base salaries of the executive officers and the grant of any stock options, pending the announcement of a minimumpossible business combination transaction and the impact, if any, the terms and conditions of 2.5% of common equity Tier 1 capital to total risk weighted assets in excess of the regulatory minimum capital ratio requirements described above. The 2.5% buffer would increase the minimum capital ratios to (i)such a common equity Tier 1 capital ratio of 7.0%, (ii) a Tier 1 capital ratio of 8.5%,transaction might have on future director and (iii) a total capital ratio of 10.5%. The new buffer requirement would be phased in between January 2016 and January 2019. An institution would be subject to limitations or prohibition from paying dividends, engaging in share repurchases, discretionary payments under Tier 1 instruments, and paying discretionary bonuses if its capital ratio level fell below the buffer amount.

The federal bank regulatory agencies have also proposed changes to the prompt corrective action framework (described above under “FDICIA”) which is designed to place restrictions on insured depository institutions if their capital ratios begin to show signs of weakness. These changes will take effect January 1, 2015 and will require insured depository institutions to meet the following increased capital ratio requirements in order to qualify as “well capitalized:” (i) a new common equity Tier 1 capital ratio of 6.5%; (ii) a Tier 1 capital ratio of 8% (increased from 6%); (iii) a total capital ratio of 10% (unchanged from current rules); and (iv) a Tier 1 leverage ratio of 5% (increased from 4%).

Assuming the Basel III interim final rules were in effect at December 31, 2013, and based upon the Company’s capital position at December 31, 2013, management believes that the Company and NVB would be in compliance with the minimum capital requirements,executive officer compensation decisions, including the fully phased-in capital conservation buffer requirement,award of the interim final rules.

Rating System. The Federal Financial Institution Examination Counsel (“FFIEC”) on December 13, 1996, approved an updated Uniform Financial Institutions Rating System (“UFIRS”). In addition to the five components traditionally included in the so-called “CAMEL” rating system which has been used by bank examiners for a number of years to classify and evaluate the soundness of financial institutions (including capital adequacy, asset quality, management, earnings and liquidity), UFIRS includes for all bank regulatory examinations conducted on or after January 1, 1997, a new rating for a sixth category identified as sensitivity to market risk. Ratings in this category are intended to reflect the degree to which changes in interest rates, foreign exchange rates, commodity prices or equity prices may adversely affect an institution’s earnings and capital. The revised rating system is identified as the “CAMELS” system.stock options.

CRA Compliance. 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.Base Salary

Regulatory Compliance.NVBIt is subjectthe goal of the Company’s Compensation Committee to periodic regulatory examinations inestablish salary compensation for its Executive Officers based on the ordinary course of business which are conducted byCompany’s operating performance relative to comparable peer companies over a three-year to five-year period. The Compensation Committee believes this provides an opportunity to attract and retain talented managerial employees, both at the Federal Reserve Bank of San Franciscosenior executive level and below. In January, 2013, the California Department of Business Oversight (“DBO”). A supervisory agreement signed in 2010 by and among North Valley Bancorp, NVB and the Federal Reserve Bank of San Francisco to address certain examination issues was terminated effective as of April 16, 2012. Resolutions adopted by the NVB Board of Directors, atacting upon the requestrecommendation of the DBO (formerlyCompensation Committee, approved base salary adjustments for the California DFI) for similar reasons were also terminatedExecutive Officers in 2012. Duringrecognition of the quarter ended September 30, 2013, in accordance withoverall improved performance of the terms of an agreement reached with the Federal ReserveCompany and Bank of San Francisco, NVB disbursed a total of $1,260,000 to certain affected parties, as agreed, to resolve criticisms raised in connection with a compliance examination conducted in 2010, and NVB remains in compliance with that agreement.

Dividends. The Company’s ability to pay cash dividends is subject to restrictions set forth in the California General Corporation Law. Funds“Report of the Compensation Committee” on page 18. As noted above, those base salaries remained in effect for paymentthe remainder of any cash dividends by the Company would be obtained from its investments as well as dividends from NVB. The ability of NVB2013 and will continue to pay cash dividends is subject to restrictions set forthremain unchanged and in the California Financial Code as well as restrictions established by the FDIC and the FRB. SeeItems 1A, “Risk Factors” and5, “Marketeffect for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities,” below for further information regarding the payment of cash dividends by the Company and NVB.2014.

Bonus

The Executive Discretionary Incentive Plan set annually by the Compensation Committee is designed to reward the Company’s Executives for the achievement of short-term financial goals, including increases in performance against peer banks, the achievement of short-term and long-term strategic goals, and overall financial performance of the Company. It is the Company’s general philosophy that management be rewarded for their performance as a team in the attainment of these goals, rather than individually. North Valley Bancorp believes that this is important to aligning our Executive Officers and promoting teamwork among them. Bonus percentages for Executive Officers were initially suggested by a compensation consultant based on an analysis of peer banks and industry sector considerations. Those basic percentages, which are discretionary with the Compensation Committee, have generally been followed in recent years. Those percentages are as follows: for Executive Officers other than the Chief Executive Officer, the range is 10% - 40% of base salary; and for the Chief Executive Officer, the range is 10% - 50% of base salary. Similarly, Executive Officers are eligible for discretionary incentive stock option awards based on the following percentages: for Executive Officers other than the Chief Executive Officer, the range is 0% - 5% of base salary as the number of options considered for award; and for the Chief Executive Officer, the range is 0% - 6% of base salary as the number of options considered for award.

Although each Executive Officer is eligible to receive a bonus award at the discretion of the Compensation Committee, the granting of the award as to any individual, officer or as a group, is first at the discretion of the Chief Executive Officer and then, based on his recommendation, at the discretion of the Compensation Committee and the entire Board of DirectorsDirectors. The Compensation Committee may choose whether to award a bonus and decides on the actual level of the Company decides whether to declare and pay dividendsaward in light of all relevant factors after considerationcompletion of the Company’s earnings, financial condition, future capital needs, regulatory requirements and other factors asapplicable fiscal year. At the meeting of the Board of Directors may deem relevant. The Company suspended indefinitely the payment of quarterly cash dividends on its common stock beginning in 2009. This Board decision was made to strengthen and preserve the Company’s capital base in these challenging economic times. The payment of cash dividends remains suspended at present and the payment of dividends in the future will be determined byDecember 2013, the Board of Directors after considerationawarded the Chief Executive Officer and the Executive Officers bonuses for the 2013 fiscal year effective immediately. The bonuses to the Chief Executive Officer and the Executive Officers for the 2013 fiscal year were awarded on the basis of the Company’soverall improved financial performance of the Company and the Bank, the meeting of strategic goals, including reduction in non-performing assets, overall improvement in credit quality, and improvements in quarter after quarter earnings financial condition, future capital funds, regulatory requirementsof the Company and other factors as the Board of Directors may deem relevant.Bank.

The Company relies upon distributions from NVB infollowing Summary Compensation Table sets forth the form of cash dividends in order to pay dividends to its shareholders. The Board of Governorscompensation of the Federal Reserve System generally prohibits a bank holding company from declaring or paying a cash dividend which would impose undue pressure onPresident and Chief Executive Officer (Principal Executive Officer) and the capital of a subsidiary bank 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 policy is that a bank holding company should not pay cash dividends on its common stock unless its net income is sufficient to fully fund each dividendExecutive Vice President and its prospective rate of earnings retention appears consistent with its capital needs, asset quality and overall financial condition.

The Patriot Act

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 SecretaryChief Financial Officer (Principal Financial Officer) of the Treasury. Title IIICompany and all of the Patriot Act entitled, “International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001” includes amendmentsother Executive Officers for services in all capacities provided 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 launderingCompany 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 North Valley Bank 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,during 2013, 2012, and Section 319(b) requires financial institutions to 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.2011:

SUMMARY COMPENSATION TABLE