SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12

NORTH VALLEY BANCORP
------------------------------------------------
(Name of Registrant as Specified In Its Charter)

------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
NA
(2) Aggregate number of securities to which transaction applies: NA
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined): NA
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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(4) Date Filed: NA

NORTH VALLEY BANCORP
300 Park Marina Circle
Redding, California 96001

Dear Shareholders:

The 2006 Annual Meeting of Shareholders of North Valley Bancorp will be
held at 5:30 p.m. on Thursday, May 25, 2006, in the Administrative Offices of
North Valley Bancorp, 300 Park Marina Circle, Redding, California. In connection
with the Annual Meeting, we are enclosing the following:

1. Notice of Annual Meeting of Shareholders

2 Proxy Statement

3. Proxy

4. Annual Report to Shareholders

We are very excited about the future of North Valley Bancorp and we
hope that you will attend the Annual Meeting.

We encourage you to read all of the enclosed materials carefully.

Whether or not you plan to attend the Annual Meeting in person, please
return the Proxy, properly completed and executed, as promptly as possible so
that your shares may be represented at the Annual Meeting.

As an added convenience, a shareholder can choose to vote by telephone
or by using the Internet as indicated on the Proxy. If you vote by telephone or
electronically through the Internet, you do not need to return the Proxy. Please
refer to the Proxy Statement for a more complete description of the procedures
for telephone and Internet voting.

We appreciate your support and look forward to seeing you at the Annual
Meeting on Thursday, May 25, 2006.

Cordially,

/s/ J. M. ("MIKE") WELLS, JR.
- -------------------------------------
J. M. ("Mike") Wells, Jr.
Chairman of the Board

/s/ MICHAEL J. CUSHMAN
- -------------------------------------
Michael J. Cushman
President and Chief Executive Officer

NORTH VALLEY BANCORP

Notice of Annual Meeting of Shareholders
Thursday, May 25, 2006
5:30 p.m.

TO THE SHAREHOLDERS:

The Annual Meeting of Shareholders of North Valley Bancorp, a
California corporation (the "Corporation"), will be held in the Administrative
Offices of North Valley Bancorp, 300 Park Marina Circle, Redding, California, on
Thursday, May 25, 2006, at 5:30 p.m., for the following purposes:

1. To elect the following nominees as directors for a term of one
year:

Michael J. Cushman
Dante W. Ghidinelli
Kevin D. Hartwick
Roger B. Kohlmeier

2. To ratify the appointment of Perry-Smith LLP as Independent
Auditor for 2006.

3. To consider such other business as may properly come before
the Annual Meeting and any adjournment or postponement
thereof.

Section 15 of the By-laws of the Corporation provides for the
nomination of Directors, as follows:

Nomination for election of members of the Board of Directors may be
made by the Board of Directors or by any shareholder of any outstanding class of
capital stock of the Corporation entitled to vote for the election of directors.
Notice of intention to make any nominations shall be made in writing and shall
be delivered or mailed to the President of the Corporation not less than 21 days
nor more than 60 days prior to any meeting of shareholders called for election
of directors; provided however, that if less than 21 days notice of the meeting
is given to shareholders, such notice of intention to nominate shall be mailed
or delivered to the President of the Corporation not later than the close of
business on the tenth day following the day on which the notice of meeting was
mailed; provided further, that if notice of such meeting is sent by third-class
mail as permitted by Section 6 of these By-laws, no notice of intention to make
nominations shall be required. Such notification shall contain the following
information to the extent known to the notifying shareholder: (a) the name and
address of each proposed nominee; (b) the principal occupation of each proposed
nominee; (c) the number of shares of capital stock of the corporation owned by
each proposed nominee; (d) the name and residence address of the notifying
shareholder; and (e) the number of shares of capital stock of the Corporation

owned by the notifying shareholder. Nominations not made in accordance herewith
may, in the discretion of the Chairman of the meeting, be disregarded and upon
the Chairman's instructions, the inspectors of election can disregard all votes
cast for each such nominee.

Only shareholders of record at the close of business on April 14, 2006
are entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.

By Order of the Board of Directors,

/s/ LEO J. GRAHAM
--------------------------------------------
Leo J. Graham
Corporate Secretary

Redding, California
April 25, 2006

WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE COMPLETE, SIGN, DATE AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. IF YOU VOTE BY TELEPHONE OR ELECTRONICALLY THROUGH THE INTERNET, AS
DESCRIBED IN THE PROXY STATEMENT ACCOMPANYING THIS NOTICE, YOU DO NOT NEED TO
RETURN THE PROXY.

NORTH VALLEY BANCORP
300 Park Marina Circle
Redding, California 96001
(530) 226-2900

PROXY STATEMENT

The enclosed proxy card (the "Proxy") is solicited on behalf of the
Board of Directors of North Valley Bancorp, a California corporation (the
"Corporation"), for use at the Annual Meeting of Shareholders to be held in the
Administrative Offices of North Valley Bancorp, 300 Park Marina Circle, Redding,
California, at 5:30 p.m., on Thursday, May 25, 2006 and any adjournment or
postponement thereof (the "Meeting"). Only shareholders of record at the close
of business on April 14, 2006 (the "Record Date") will be entitled to notice of
and to vote at the Meeting. At the close of business on the Record Date, the
Corporation had outstanding 7,539,654 shares of its common stock, no par value
(the "Common Stock"). These proxy materials are first being mailed to
shareholders on or about April 25, 2006.

On each matter submitted to a shareholder vote, each holder of Common
Stock will be entitled to one vote, in person or by proxy, for each share of
Common Stock outstanding in the holder's name on the books of the Corporation as
of the Record Date. At the 1998 Annual Meeting of Shareholders, the
Corporation's Articles of Incorporation were amended to provide that no holder
of any class of stock of the Corporation shall be entitled to cumulate votes in
connection with any election of Directors of the Corporation. Therefore, in the
election of Directors, each outstanding share of Common Stock is entitled to
cast one vote for as many separate nominees as there are Directors to be
elected. The nominees who receive the most votes for the number of positions to
be filled are elected Directors.

Shareholders may vote without attending the Meeting, whether their
shares of Common Stock are held in their names or through a broker, bank or
other nominee. Shareholders of record may vote by submitting a Proxy and the
instructions for voting by mail, by telephone or by using the Internet are set
forth on the Proxy. For shares held through a broker, bank or other nominee,
shareholders may vote by submitting their voting instructions to the broker,
bank or other nominee. Voting instructions may be given by telephone or by using
the Internet, if the broker, bank or other nominee makes those methods available
to the shareholder, in which case the procedures will be enclosed with the Proxy
Statement forwarded by the broker, bank or other nominee.

Any person submitting a Proxy in the form accompanying this Proxy
Statement has the power to revoke or suspend such Proxy prior to its exercise. A
Proxy is revocable prior to the Meeting by a written direction to the
Corporation, by a duly executed Proxy bearing a later date, delivered to the
Corporate Secretary of the Corporation, or by voting on a later date by
telephone or by using the Internet. A Proxy may also be revoked if the
shareholder is present and elects to vote in person at the Meeting.

Any shareholder may choose to vote shares of Common Stock by telephone
by calling the toll-free number (at no cost to the shareholder) indicated on the
Proxy. Telephone voting is available 24 hours per day. Easy to follow voice

prompts allow a shareholder to vote shares and to confirm that instructions have
been properly recorded. The Corporation's telephone voting procedures are
designed to authenticate the identity of shareholders by utilizing individual
control numbers. If a shareholder votes by telephone, there is no need to return
the Proxy.

Any shareholder may also choose to vote shares of Common Stock
electronically by using the Internet, as indicated on the Proxy. Internet voting
procedures are designed to authenticate the identity of a shareholder and to
confirm that instructions have been properly recorded. The Corporation believes
these procedures are consistent with the requirements of applicable law. If a
shareholder votes electronically by using the Internet, there is no need to
return the Proxy.

The Corporation will bear the entire cost of preparing, assembling,
printing and mailing proxy materials furnished by the Board of Directors to
shareholders. Copies of proxy materials will be furnished to brokerage houses,
fiduciaries and custodians to be forwarded to the beneficial owners of the
Common Stock. The Corporation will reimburse brokerage houses, fiduciaries,
custodians and others holding shares in their names or names of nominees or
otherwise for reasonable out-of-pocket expenses incurred in sending proxy
materials to the beneficial owners of such shares. In addition to the
solicitation of proxies by use of the mail, some of the officers, directors and
employees of the Corporation may (without additional compensation) solicit
proxies by telephone, Internet or personal interview, the costs of which the
Corporation will bear. The Corporation may, at its discretion, engage the
services of a proxy solicitation firm to assist in the solicitation of proxies.
The total expense of this solicitation will be borne by the Corporation and will
include reimbursement paid to brokerage firms and others for their expenses in
forwarding soliciting material and such expenses as may be paid to any proxy
solicitation firm engaged by the Corporation.

Shares of Common Stock will be voted as directed by the shareholder
submitting the Proxy, and, if no instructions are given on the Proxy, it will be
voted "FOR" the election of the nominees for Director recommended by the Board
of Directors, and "FOR" ratification of the appointment of Perry-Smith LLP as
Independent Auditor for the Corporation for the 2006 fiscal year, all as
described in the Proxy Statement; and, at the Proxy holders' discretion, on such
other matters, if any, which may properly come before the Meeting (including any
proposal to adjourn the Meeting). A majority of the shares entitled to vote,
represented either in person or by a properly executed Proxy, will constitute a
quorum at the Meeting. Abstentions and broker non-votes are each included in the
determination of the number of shares present and voting for purposes of
determining the presence of a quorum. Abstentions will be included in
tabulations of the votes cast on proposals presented to the shareholders and,
therefore, will have the effect of a negative vote. Broker non-votes will not be
counted for purposes of determining the number of votes cast for a proposal.

A copy of the Annual Report of the Corporation for the fiscal year
ended December 31, 2005, including audited financial statements (the "Annual
Report"), is enclosed with these proxy materials. Additional copies of the
Annual Report are available upon request to the Corporate Secretary. THE ANNUAL
REPORT INCLUDES A COPY OF THE CORPORATION'S ANNUAL REPORT FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2005, ON FORM 10-K, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE CORPORATE SECRETARY MAY BE CONTACTED AT NORTH VALLEY BANCORP,
300 PARK MARINA CIRCLE, REDDING, CALIFORNIA 96001.

PROPOSAL NO. 1
ELECTION OF DIRECTORS

The By-laws of the Corporation provide a procedure for nomination for
election of members of the Board of Directors, which procedure is printed in
full on the Notice of Annual Meeting of Shareholders accompanying this Proxy
Statement. Nominations not made in accordance therewith may, in the discretion
of the Chairman of the Meeting, be disregarded, and, upon his instruction, the
inspectors of election shall disregard all votes cast for such nominee(s).

Section 16 of the Bylaws of the Corporation provides as follows:

"The directors shall be elected annually by the shareholders at the
annual meeting of the shareholders; provided, that if for any reason, the annual
meeting or an adjournment thereof is not held or the directors are not elected
thereat, then the directors may be elected at any special meeting of the
shareholders called and held for that purpose. The term of office of the
directors shall, except as provided in Section 17, begin immediately after their
election and shall continue until their respective successors are elected and
qualified. Notwithstanding the rule stated herein that directors shall be
elected annually, each director continuing to serve as such at the time of an
annual or special meeting of the shareholders shall nevertheless continue as a
director until the expiration of the term to which he or she was previously
elected by the shareholders, or until his or her prior death, resignation or
removal."

At the 2005 Annual Meeting of Shareholders of North Valley Bancorp held
on May 26, 2005, the Shareholders of the Company approved the 2005 Proxy
Statement Proposal No. 3, which amended the Articles of Incorporation and the
Bylaws of the Corporation so as to declassify the Board of Directors as
described in the 2005 Proxy Statement. As a result of those Shareholder approved
changes to the Articles and Bylaws of the Corporation, the terms of office of
the following four (4) current incumbent members of the Board of Directors,
namely: Michael J. Cushman, Dante W. Ghidinelli, Kevin D. Hartwick, and Roger B.
Kohlmeier, will end on May 25, 2006. At the 2007 Annual Meeting of Shareholders,
the Directors who are elected for a one year term in 2006 will stand for
election as will current Directors William W. Cox and Dolores M. Vellutini. At
the 2008 Annual Meeting of Shareholders, all Directors of the Company will stand
for election for a one (1) year term. Thereafter, there will be no
classification of Directors and all Directors will stand for election each year.

Accordingly, four (4) Directors will be elected at the Meeting. All
Proxies will be voted for the election of the following nominees recommended by
the Board of Directors, unless authority to vote for the election of any
Director or all Directors is withheld. All of the nominees are incumbent
Directors.

Michael J. Cushman Kevin D. Hartwick
Dante W. Ghidinelli Roger B. Kohlmeier

If any of the nominees should unexpectedly decline or be unable to act
as a Director, the Proxies may be voted for a substitute nominee to be
designated by the Board of Directors. The Board of Directors has no reason to

believe that any nominee will become unavailable and has no present intention to
nominate persons in addition to or in lieu of those named above. The four (4)
candidates receiving the highest number of votes will be elected.

The Board of Directors recommends a vote "FOR" each of the four (4)
nominees listed above: Michael J. Cushman, Dante W. Ghidinelli, Kevin D.
Hartwick and Roger B. Kohlmeier.

Security Ownership of Certain Beneficial Owners and Management
- --------------------------------------------------------------

To the knowledge of the Corporation, as of the Record Date, no person
or entity was the beneficial owner of more than five percent (5%) of the
outstanding shares of the Corporation's Common Stock, except as described below
and in the following tables. For the purpose of this disclosure and the
disclosure of ownership of shares by management, shares are considered to be
"beneficially" owned if the person has or shares the power to vote or direct the
voting of the shares, the power to dispose of or direct the disposition of the
shares, or the right to acquire beneficial ownership (as so defined) within 60
days of the Record Date.

Amount and Nature
Name and Address of Beneficial Percent of
Title of Class of Beneficial Owner Ownership Class (1)
- -------------- ------------------- --------- ---------

Common Stock Wellington 570,500 7.57%
Management
Company LLP
75 State Street
Boston, MA 02109

(1) Percentage calculated based on 7,539,654 shares of Common Stock outstanding
as of the Record Date.

The following table sets forth certain information regarding ownership
of the Corporation's Common Stock with respect to each Director of the
Corporation, North Valley Bank, NVB Business Bank and Bank Processing, Inc.,
each person nominated for election as a Director and each executive officer
named in the Summary Compensation Table elsewhere herein, as well as for all
other Executive Officers of the Corporation, North Valley Bank, NVB Business
Bank and Bank Processing, Inc. and for all current Directors and Executive
Officers as a group. All of the shares of Common Stock of the Corporation shown
in the following table are owned both of record and beneficially, except as
indicated in the notes to the table, as of the Record Date. The table should be
read with the understanding that more than one person may be the beneficial
owner or possess certain attributes of beneficial ownership with respect to the
same securities. Therefore, careful attention should be given to the footnote
references set forth in the column "Percent of Class."

Beneficial Percent of
Beneficial Owner Position Ownership(1) Class(2)
- ---------------- -------- ------------ --------
Sharon L. Benson(5) Senior Vice
President and
Director of
Accounting
North Valley
Bancorp
North Valley Bank
NVB Business Bank
Bank Processing,
Inc. 65,396 *

William W. Cox(6) Director,
North Valley
Bancorp
North Valley Bank 60,518 *

Michael J. Cushman(5) President and
Chief Executive
Officer and
Director,
North Valley
Bancorp
North Valley Bank
NVB Business Bank
Bank Processing,
Inc. 163,870 2.17%

Royce L. Friesen (3) Director,
North Valley
Bancorp
North Valley Bank 269,953 3.58%

Dante W. Ghidinelli Director,
(3)(7) North Valley
Bancorp
North Valley Bank 316,051 4.19%

Leo J. Graham(5) General Counsel
and Secretary
North Valley
Bancorp
North Valley Bank
NVB Business Bank
Bank Processing,
Inc. 4,350 *

Kevin Haarberg Director,
NVB Business Bank 16,590 *

Kevin D. Hartwick(3)(8) Director,
North Valley
Bancorp
North Valley Bank 284,064 3.77%

Roger B. Kohlmeier (3) Director,
North Valley
Bancorp
NVB Business Bank 250,298 3.32%

Gary S. Litzsinger Executive Vice
President and
Chief Risk Officer
North Valley
Bancorp
North Valley Bank
NVB Business Bank 2,400 *

Beneficial Percent of
Beneficial Owner Position Ownership(1) Class(2)
- ---------------- -------- ------------ --------
Scott R. Louis Executive Vice
President and
Chief Operating
Officer
North Valley
Bancorp
North Valley Bank
NVB Business Bank 500 *

Timothy R. Magill Director, 34,841 *
NVB Business Bank

Martin A. Mariani Director,
North Valley
Bancorp
NVB Business Bank 14,358 *

Roger D. Nash Executive Vice
President and
Chief Lending
Officer
North Valley
Bancorp
North Valley Bank
NVB Business Bank 2,000 *

John Perry Director,
NVB Business Bank 18,960 *

Charles Santoni Director,
NVB Business Bank 26,443 *

Thomas Schwarzgruber Director,
NVB Business Bank 21,778 *

Thomas Scarlett Director,
NVB Business Bank 27,134 *

Dolores M. Vellutini Director,
(3)(9) North Valley
Bancorp
North Valley Bank 323,561 4.29%

Kevin R. Watson Executive Vice
President and
Chief Financial
Officer
North Valley
Bancorp
North Valley Bank
NVB Business Bank
Bank Processing,
Inc. -0-

Beneficial Percent of
Beneficial Owner Position Ownership(1) Class(2)
- ---------------- -------- ------------ --------

J.M.("Mike") Wells, Jr. Chairman,
(10) North Valley
Bancorp
North Valley Bank
Bank Processing,
Inc.
Director,
NVB Business Bank 167,322 2.22%

Eric J. Woodstrom(5) Executive Vice
President and
Chief Credit Risk
Officer
North Valley
Bancorp
North Valley Bank
NVB Business Bank 54,572 *
All Directors and
Executive Officers as
a group (22 persons)
(12)(13)(14) 1,032,669 13.70%

(1) Includes shares beneficially owned, directly and indirectly, together with
associates. Subject to applicable community property laws and shared voting
and investment power with a spouse, sole investment and voting power is
held by the beneficial owner of all shares unless noted otherwise. Includes
stock options granted pursuant to the North Valley Bancorp 1989 Director
Stock Option Plan, the North Valley Bancorp 1998 Employee Stock Incentive
Plan and the North Valley Bancorp 1999 Director Stock Option Plan with:
47,747 shares exercisable within 60 days of the Record Date by Ms. Benson;
49,200 shares exercisable within 60 days of the Record Date by Mr. Cox,
137,052 shares exercisable within 60 days of the Record Date by Mr.
Cushman; 36,000 shares exercisable with 60 days of the Record Date by Mr.
Friesen; 52,500 shares exercisable within 60 days of the Record Date by Mr.
Ghidinelli; 4,200 shares exercisable within 60 days of the Record Date by
Mr. Graham; 53,801 shares exercisable within 60 days of the Record Date by
Mr. Hartwick; 2,400 shares exercisable within 60 days of the Record Date by
Mr. Litzsinger; 500 shares exercisable within 60 days of the Record Date by
Mr. Louis; 2,000 shares exercisable within 60 days of the Record Date by
Mr. Nash; 53,801 shares exercisable within 60 days of the Record Date by
Ms. Vellutini; 51,000 shares exercisable within 60 days of the Record Date
by Mr. Wells; and 46,881 shares exercisable within 60 days of the Record
Date by Mr. Woodstrom. Includes shares allocated under the North Valley
Bancorp Employee Stock Ownership Plan through December 31, 2004, with:
2,161 shares allocated to Mr. Cushman; 12,498 shares allocated to Ms.
Benson; 941 shares allocated to Mr. Woodstrom. Final allocations for the
year ended December 31, 2005 were not completed prior to the Record Date.

(2) Includes stock options exercisable within 60 days of the Record Date. An
"*" indicates less than one percent.

(3) Includes 215,338 shares representing 2.86% of the total shares outstanding
as of the Record Date for each of Messrs. Friesen, Ghidinelli, Hartwick,
Kohlmeier and Ms. Vellutini relative to the North Valley Bancorp Employee
Stock Ownership Plan. Messrs. Friesen, Ghidinelli, Hartwick, Kohlmeier and

Ms. Vellutini constitute the ESOP Administrative Committee and have
authority to instruct the ESOP Trustee, Delaware Charter Guarantee & Trust
Company, conducting business as Principal Trust Company, with regard to
voting of these shares. Messrs. Friesen, Ghidinelli, Hartwick, Kohlmeier
and Ms. Vellutini, as members of the Administrative Committee, disclaim
beneficial ownership with respect to all of those shares. Mr. Cushman, Ms.
Benson, Mr. Graham, Mr. Litzsinger and Mr. Woodstrom are participants in
the ESOP.

(4) Intentionally omitted

(5) Michael J. Cushman is President and Chief Executive Officer of North Valley
Bancorp, North Valley Bank, Bank Processing, Inc. and NVB Business Bank,
subsidiaries of North Valley Bancorp; Sharon L. Benson is Senior Vice
President and Director of Accounting of North Valley Bancorp, North Valley
Bank, NVB Business Bank and Bank Processing, Inc.; Leo J. Graham is General
Counsel and Secretary of North Valley Bancorp, North Valley Bank, NVB
Business Bank and Bank Processing, Inc; Gary S. Litzsinger is Executive
Vice President and Chief Risk Officer of North Valley Bancorp, North Valley
Bank and NVB Business Bank; Scott R. Louis is Executive Vice President and
Chief Operating Officer of North Valley Bancorp, North Valley Bank and NVB
Business Bank; Roger D. Nash is Executive Vice President and Chief Lending
Officer of North Valley Bancorp, North Valley Bank and NVB Business Bank;
Kevin R. Watson is Executive Vice President and Chief Financial Officer of
North Valley Bancorp, North Valley Bank, NVB Business Bank and Bank
Processing, Inc.; Eric J. Woodstrom is Executive Vice President and Chief
Credit Risk Officer of North Valley Bancorp, North Valley Bank, NVB
Business Bank.

(6) Includes 915 shares held by Mr. Cox's spouse and as to which Mr. Cox
disclaims beneficial ownership.

(7) Includes 22,013 shares held by Mr. Ghidinelli as trustee for the Balma
Grandchildren Trust.

(8) Includes 420 shares held in custodian accounts for Mr. Hartwick's children.

(9) Includes 210 shares held by Ms. Vellutini's spouse and 1,350 shares held by
Ms. Vellutini's son to which Ms. Vellutini disclaims beneficial ownership.

(10) Includes 106,520 shares held by The Wells Family Trust, of which Mr. Wells
is trustee. Includes 1,750 shares held by Mr. Wells' spouse and as to which
Mr. Wells disclaims beneficial ownership. Includes 8,052 shares held by the
Estate of Jean M. Wells, of which Mr. Wells is the executor.

(11) Intentionally omitted.

(12) This group includes all current Executive Officers and Directors of the
Corporation and its subsidiaries, North Valley Bank, NVB Business Bank and
Bank Processing, Inc.

(13) See footnotes 5, 6, 8, 9 and 10. Excludes 215,338 shares representing 2.86%
of total shares outstanding relative to Messrs. Friesen, Ghidinelli,
Hartwick, Kohlmeier and Ms. Vellutini as the Administrative Committee of
the ESOP. Includes 17,700 shares subject to options exercisable within 60
days of the Record Date by the Directors under the 1989 Director Stock
Option Plan; 278,602 shares subject to options exercisable within 60 days
of the Record Date by the Directors under the 1999 Director Stock Option
Plan; and 240,780 shares subject to options exercisable within 60 days of

the Record Date by Ms. Benson and Messrs. Cushman, Graham, Litzsinger,
Louis, Nash, Watson and Woodstrom under the 1998 Employee Stock Incentive
Plan.

(14) In calculating the percentage of ownership, all shares which the identified
person has the right to acquire by the exercise of options are deemed to be
outstanding for the purpose of computing the percentage of class owned by
such person, but are not deemed to be outstanding for the purpose of
computing the percentage of the class owned by any other person.

Certain information with respect to the four (4) nominees for Director
of the Corporation is provided below:

Michael J. Cushman (age 51), a Director of the Corporation since
February 1999, is President and Chief Executive Officer of the Corporation and
its subsidiaries. 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 58), a Director of the Corporation since 1993,
has been a Certified Public Accountant and partner with Nystrom & Company LLP
since 1974.

Kevin D. Hartwick (age 44), a Director of the Corporation since October
2000, has been a Certified Public Accountant and managing partner with Cholwell
Benz & Hartwick in Crescent City, California, since 1989.

Roger B. Kohlmeier (age 66), a Director of the Corporation since August
2004, was 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 on 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.

Certain information with respect to the continuing Directors and the
current Executive Officers of the Corporation and its subsidiaries is provided
below:

William W. Cox, CRE, CCI, (age 58), a Director of the Corporation since
February 1997, has been owner and President of Cox Real Estate Consultants,
Inc., since April 1996. From October 1987 to August 1996, he was President and
50% owner of Haedrich & Cox, Inc., a real estate brokerage company.

Royce L. Friesen, RPh. (age 67), a Director of the Corporation since
May 1999, is Chairman of the Board of Owens Healthcare in Redding, California,
having previously served as President, Chief Executive Officer and owner since
1968. Owens Healthcare, a management company, was formed to provide support and
coordination among ten retail and home care pharmacies located throughout
Northern California.

Martin A. Mariani (age 49), a Director of the Corporation since August
2004, is a Director of NVB Business Bank and is partner in Mariani Nut Company
of Winters, California. He graduated from the University of California, Davis in
1978.

Dolores M. Vellutini (age 68), a Director of the Corporation since
October 2000, has been owner and President of Eureka Baking Company in Eureka,
California, since 1988. In addition, she is a developer and the owner of
Vellutini Properties in Eureka, California.

J. M. ("Mike") Wells, Jr. (age 65), Chairman and a founding member of
the Board of Directors of the Corporation since 1982, is an Attorney at Law and
"Of Counsel" with Wells, Small & Selke, a Law Corporation, located in Redding,
California. Mr. Wells has practiced law with that firm since 1972. See "Certain
Relationships and Related Transactions", below.

NVB Business Bank Directors
- ---------------------------

Roger Kohlmeier (age 66), Chairman of the Board, Private Investor,
former President and Chief Executive Officer of Bank of Woodland from 1981 to
1993. Former board member of Business & Professional Bank.

Kevin Haarberg (age 50), General Partner and investment representative
with Edward D. Jones & Co. (investments).

Timothy Magill (age 56), Market Planning & Development Manager with
Waste Management of Woodland. Former Director of Business & Professional Bank
from 1996 to 1997.

Martin A. Mariani (age 49), Partner at Mariani Nut Co. and M & L Fruit
Company, Winters, California. Graduate of University of Davis.

John Perry (age 59), President of Perry, Bunch & Battaglia, Inc.
(certified public accountants).

Charles Santoni (age 58), President of V. Santoni & Co. (beer and wine
wholesale).

Thomas Schwarzgruber (age 55), Treasurer of Schwarzgruber & Sons, Inc.
(sand and gravel mining and sales).

Thomas Scarlett (age 50), Vice President of Wraith, Scarlett & Randolph
Insurance Agency (insurance agents and brokers).

Executive Officers
- ------------------

Sharon L. Benson (age 53), has served as Senior Vice President and
Controller of the Corporation. In addition, for part of 2005 she was named
Interim Chief Financial Officer of the Corporation and its subsidiaries and
currently is serving as Senior Vice President and Director of Accounting for the
Corporation and its subsidiaries. Prior to 2005 she served as Senior Vice
President and Controller of the Corporation from January of 2001 to May of 2005.
Prior to that, she served as Senior Vice President and Chief Financial Officer
of the Corporation and its subsidiaries from July 1997. She has been an officer
of the Corporation since December of 1990.

Gary S. Litzsinger (age 50), has served as Executive Vice President and
Chief Risk Officer of the Corporation and its subsidiaries since October 2005.
Prior to that, he served as Senior Vice President and Chief Risk Officer since
joining the Corporation in July, 2004. Prior to joining the Corporation, 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.

Scott R. Louis (age 55), has served as Executive Vice President and
Chief Operations Officer of the Corporation and its subsidiaries since October
2005. Prior to that, he served as Senior Vice President and Chief Operating
Officer since joining the Corporation in April 2005. Prior to joining the
Corporation, Mr. Louis served as First Vice President for Farmers and Merchants
Bank in Lodi, California. Mr. Louis began his financial services career with
Bank of America in 1971.

Roger D. Nash (age 57), has served as Executive Vice President and
Chief Lending Officer of the Corporation and its subsidiaries since 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.

Kevin R. Watson (age 40), has served as the Corporation's Executive
Vice President and Chief Financial Officer 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.

Eric J. Woodstrom (age 47), has served since January 2003 as Executive
Vice President and Chief Credit Officer; and currently is the Chief Credit Risk
Officer. Prior to that, he served as Senior Vice President of the Corporation
and its subsidiaries since joining the Corporation in October 1999. Prior to
joining the Corporation, Mr. Woodstrom served in executive management roles in
Southern California community banks and was a manager in the Los Angeles office
of the Secura Group, a leading bank consulting company, where he provided risk
management consulting services to financial services companies throughout the

United States. He began his banking career with the Office of the Comptroller of
the Currency with almost eight years experience as a National Bank Examiner.

None of the Corporation's Directors is a director of any other company
that is subject to the periodic reporting requirements of the Securities
Exchange Act of 1934, as amended. There are no family relationships between any
of the Directors and Executive Officers of the Corporation.

GOVERNANCE OF THE CORPORATION

Code of Business Conduct and Ethics
- -----------------------------------

The Board of Directors of North Valley Bancorp believes the
cornerstones of our business are honesty, truthfulness, integrity and 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 Corporation and its subsidiaries. The North Valley
Bancorp Code of Business Conduct and Ethics is available through the
Shareholders Relations link on the Corporation's website at www.novb.com. 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.

Director Independence
- ---------------------

The Board of Directors of the Corporation has evaluated the
independence of each of the members of the Board of Directors in accordance with
applicable laws and regulations including the provisions of the Sarbanes-Oxley
Act of 2002 ("SOX"), the rules and regulations of the Securities and Exchange
Commission (the "SEC") and the corporate governance listing standards of the
Nasdaq National Market ("NASDAQ").

The Board of Directors has determined that a majority of the Board of
Directors is comprised of "Independent Directors" within the requirements of
SOX, SEC and NASDAQ regulations. The Board of Directors has further determined
that Director Michael J. Cushman, who is employed as the President and Chief
Executive Officer of the Corporation, is not independent.

The Board of Directors has further determined that Director J. M.
("Mike") Wells, Jr. who has served as an outside director and General Counsel of
the Corporation since its inception has received compensation for his services
in excess of $60,000 in the past three fiscal years, which results in his not
being "independent" under the provisions of SOX, SEC and NASDAQ. Mr. Wells
resigned as General Counsel of the Corporation effective April 30, 2004. Under
the applicable rules, Mr. Wells may qualify as "independent" following the
fiscal year 2006. (See "Certain Relationships and Related Transactions" below.)

Committees of the Board of Directors
- ------------------------------------

The Board of Directors of the Corporation has established the following
committees of the Board: Audit, Nominating, Compensation and Executive/Corporate
Governance.

On the date of this Proxy Statement, the members of the Board and the
Committees of the Board on which they serve, are as follows:

Executive/
Corporate
Audit Nominating Compensation Governance
Director Committee Committee Committee Committee
---------------------------------------------------------------------------

William W. Cox (1) * * *
---------------------------------------------------------------------------

Michael J. Cushman *
---------------------------------------------------------------------------

Royce L. Friesen * ** ** *
---------------------------------------------------------------------------

Dante W. Ghidinelli ** *
(2)
---------------------------------------------------------------------------

Kevin D. Hartwick * *
(2)
---------------------------------------------------------------------------

Roger B. Kohlmeier *
---------------------------------------------------------------------------

Martin A. Mariani * *
---------------------------------------------------------------------------

Dolores M. Vellutini *
---------------------------------------------------------------------------

J. M. ("Mike") Wells, **
Jr. (2)
---------------------------------------------------------------------------

* Member
** Chairman

(1) Mr. Cox is the Chairman of the Director's Loan Committee of North Valley
Bank.
(2) Mr. Ghidinelli, Mr. Hartwick and Mr. Wells also serve on the Director's
Loan Committee of North Valley Bank.

Audit Committee
- ---------------

The functions of the Audit Committee are more particularly described in
the Audit Committee Charter, which is attached to this Proxy Statement as
Appendix A. 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 SOX, the SEC regulations and the NASDAQ listing standards. The Audit
Committee met seven (7) times in 2005. For more information, see the "Audit
Committee Report" on page 37.

Nominating Committee
- --------------------

In 2004, the Board of Directors adopted a Nominating Committee Charter
and appointed the initial members of the Nominating Committee. All of the
members are "independent" within the requirements of SOX, SEC and NASDAQ. The
functions of the Nominating Committee are more particularly described in the
Nominating Committee Charter, which is attached to this Proxy Statement as
Appendix B.

The Nominating Committee Charter includes a policy for consideration of
candidates proposed by shareholders. Any recommendations by shareholders will be
evaluated by the Nominating Committee in the same manner as any other
recommendation and in each case in accordance with the Nominating 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 candidate that qualifies the candidate for
consideration as a potential director for evaluation by the Nominating
Committee. Shareholders who wish to nominate a candidate for election to the
Corporation's Board of Directors, as opposed to recommending a potential nominee
for consideration by the Nominating Committee, are required to comply with the
advance notice and any other requirements of the Corporation's Bylaws,
applicable laws and regulations.

Compensation Committee
- ----------------------

In 2004, the Board of Directors formed a Compensation Committee
comprised solely of independent directors. This Committee reviews, and
recommends to the Board of Directors, salaries, performance-based incentives,
both annual and long term, and other matters relating to Compensation of the
Executive Officers.

The Compensation Committee also reviews and approves various other
compensation policies and matters. The Compensation Committee held four (4)
meetings in 2005. For more information, see the "Report of the Compensation
Committee" on page 34.

Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------

During the fiscal year 2005, Mr. Michael J. Cushman participated in
deliberations of the Corporation's Board of Directors concerning executive
officer compensation for all Executive Officers excluding himself.

Executive/Corporate Governance Committee
- ----------------------------------------

The Corporation has an Executive/Corporate Governance Committee which
functions to review, evaluate and make decisions on actions that are required
between the regular meetings of the Board of 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 Committee further oversees the evaluation of
the Board of Directors and its effectiveness. The Committee met three (3) times
in 2005.

Meetings of the Board of Directors
- ----------------------------------

During 2005, the Board of Directors held four (4) regularly scheduled
meetings and three (3) special meetings. In 2005, each Director attended at
least 75% of the aggregate of the total number of meetings of the Board of
Directors (held during the period for which he or she was a Director) and the
total number of meetings of Committees of the Board of Directors on which such
Director served (during the periods that he or she served).

The Corporation encourages the members of its Board of Directors to
attend the Corporation's annual meeting of shareholders each year. All of the
Directors attended the Corporation's annual meeting of shareholders held in
2005.

Shareholder Communications with Directors
- -----------------------------------------

A shareholder who wishes to communicate directly with the Board of
Directors, a Committee of the Board or an individual Director should send it 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 addressee. 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 commercial
or frivolous nature or otherwise inappropriate for the Board's consideration.

Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Corporation's Directors and Executive Officers and
persons who own more than 10% of a registered class of the Corporation'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 Corporation. Officers, Directors and greater
than 10% shareholders are required by the SEC to furnish the Corporation with
copies of all Section 16(a) forms they file.

To the Corporation's knowledge, based solely on a review of such
reports furnished to the Corporation and written representations that no other
reports were required, during the fiscal year ended December 31, 2005, all
Section 16(a) filing requirements applicable to its officers, Directors and 10%
shareholders were complied with on a timely basis except Ms. Vellutini and Mr.
Ghidinelli who each failed to file one Form 4 on a timely basis.

EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth the compensation of
the President and Chief Executive Officer of the Corporation and the other most
highly compensated Executive Officers (whose total annual salary and bonus
exceeds $100,000) for services in all capacities to the Corporation and its
subsidiaries during 2005, 2004 and 2003, as applicable:

SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------
Long-Term
Compensation
Annual Compensation Awards
------------------------------------------ ------------
Other Annual Securities All Other
Name and Principal Compensation Underlying Compensation
Position Year Salary (1) Bonus (2) (3) Options(4) (5)(6)
- -----------------------------------------------------------------------------------------------------------

Michael J. Cushman 2005 $ 275,625 $ 124,000 $ 5,010 14,963 $ 8,228
President & 2004 $ 262,500 $ 124,687 $ 5,505 12,000 $ 7,678
Chief Executive Officer 2003 $ 245,000 $ 105,000 $ 2,200 18,900 $ 5,105
- -----------------------------------------------------------------------------------------------------------
Jack R. Richter 2005 $ 179,760 $ 45,000 $ 2,895 7,560 $ 7,442
Executive Vice 2004 $ 168,000 $ 60,480 $ 4,555 6,800 $ 7,527
President & Chief 2003 $ 152,500 $ 60,000 $ 1,450 11,250 $ 5,105
Administrative Officer
- -----------------------------------------------------------------------------------------------------------
Eric J. Woodstrom 2005 $ 148,720 $ 40,000 $ 9,200 6,078 $ 4,854
Executive Vice 2004 $ 143,000 $ 48,620 $ 9,155 6,500 $ 4,585
President & Chief 2003 $ 128,500 $ 36,000 $ 5,750 7,050 $ 4,179
Credit Risk Officer
- -----------------------------------------------------------------------------------------------------------
Roger D. Nash 2005 $ 140,000 -- $ 242 10,000 $ 0
Executive Vice
President and Chief
Lending Officer
- -----------------------------------------------------------------------------------------------------------
Sharon L. Benson 2005 $ 90,000 $ 20,000 -- 3,060 $ 4,335
Senior Vice President 2004 $ 90,000 $ 19,125 -- 3,060 $ 3,794
& Interim Chief 2003 $ 90,000 $ 22,500 -- 5,400 $ 2,617
Financial Officer
- -----------------------------------------------------------------------------------------------------------
Leo J. Graham 2005 $ 150,000 $ 40,000 $ 2,140 3,000 $ 0
General Counsel and 2004 $ 115,000 $ 20,000 -- -- $ 0
Corporate Secretary
- -----------------------------------------------------------------------------------------------------------

(1) Base salary includes 401(k) Plan and Executive Deferred Compensation Plan
("EDCP") contributions made by the officers.

(2) Includes bonus amounts paid in 2006 attributable to 2005 performance.

(3) No Executive Officer received perquisites or other personal benefits in
excess of the lesser of $50,000 or 10% of each such officer's total salary
and bonus during 2005, 2004 and 2003.

(4) Please see the Option Grants in the Last Fiscal Year table below for
detailed explanation.

(5) Represents matching contributions made by the Corporation under the
Corporation's 401(k) Plan.

(6) Includes an annual allocation of cash under the ESOP for 2004.

Option Grants in Last Fiscal Year
- ---------------------------------------------------------------------------------------------------------------
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants for Option Term (3)
----------------------------- ---------------------------
Percentage
of Total
Number of Options Exercise
Securities Granted to or Base
Underlying Employees Price
Option Granted in Fiscal ($Share) Expiration
Name (#)(1) Year (2) Date 5% 10%
- ---------------------------------------------------------------------------------------------------------------

Michael J. Cushman 14,963 20.29% $ 19.86 1/20/15 $ 186,888 $ 473,579
- ---------------------------------------------------------------------------------------------------------------
Jack R. Richter 7,560 10.25% $ 19.86 1/20/15 $ 94,424 $ 239,274
- ---------------------------------------------------------------------------------------------------------------
Eric J. Woodstrom 6,078 8.24% $ 19.86 1/20/15 $ 75,914 $ 192,369
- ---------------------------------------------------------------------------------------------------------------
Roger D. Nash 10,000 13.56% $ 17.00 10/20/15 $ 106,900 $ 270,900
- ---------------------------------------------------------------------------------------------------------------
Sharon L. Benson 3,060 4.15% $ 19.86 1/20/15 $ 38,219 $ 96,849
- ---------------------------------------------------------------------------------------------------------------
Leo J. Graham 3,000 4.07% $ 19.86 1/20/15 $ 37,470 $ 94,950
- ---------------------------------------------------------------------------------------------------------------

(1) Options granted under the 1998 Employee Stock Incentive Plan (the "1998
Plan") were either incentive options or non-statutory options and became
exercisable in accordance with a vesting schedule established at the time
of grant. Vesting cannot extend beyond ten years from the date of grant.
Upon a change in control of North Valley Bancorp, all outstanding options
under the 1998 Plan will become fully vested and exercisable. Options
granted under the 1998 Plan are adjusted to protect against dilution in the
event of certain changes in North Valley Bancorp's capitalization,
including stock splits and stock dividends. All options granted to the
named Executive Officers are incentive stock options and have an exercise
price equal to the fair market value of North Valley Bancorp common stock
on the date of grant.

(2) The exercise price was determined based upon the closing price of North
Valley Bancorp common stock as reported on the Nasdaq National Market on
the grant date.

(3) In accordance with Securities and Exchange Commission rules, these columns
show gains that might exist for the respective options, assuming that the
market price of the stock appreciates from the date of grant over the 10
year option term at the annualized rates of 5% and 10%, respectively.

The following table sets forth the number of shares of North Valley
Bancorp common stock acquired by each of the named Executive Officers upon the
exercise of stock options during fiscal year 2005, if any, the net value
realized upon exercise, the number of shares of common stock represented by
outstanding stock options held by each of the named Executive Officers as of
December 31, 2005, the value of such options based on the average of the high

and low prices of common stock, and certain information concerning unexercised
options under the 1998 Employee Stock Incentive Plan.

Aggregated Option Exercises In Last Fiscal Year And
FY-End Option Values

- --------------------------------------------------------------------------------
Value of
Number of Securities Unexercised
Underlying in-the-Money
Shares Unexercised Options
Acquired Options at at Fiscal
on Value Fiscal Year-End (#) Year-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable (1)
- --------------------------------------------------------------------------------
Michael J. Cushman -- -- 137,052 / 20,558 $981,985 / $50,813

- --------------------------------------------------------------------------------
Jack R. Richter -- -- 79,709 / 18,692 $585,760 / $61,685
- --------------------------------------------------------------------------------
Eric J. Woodstrom -- -- 46,881 / 10,657 $353,548 / $34,912
- --------------------------------------------------------------------------------
Roger D. Nash -- -- 2,000 / 8,000 $ 1,640 / $ 6,560
- --------------------------------------------------------------------------------
Sharon L. Benson -- -- 47,747 / 4,740 $389,503 / $12,259
- --------------------------------------------------------------------------------
Leo J. Graham -- -- 4,200 / 3,800 $ 6,300 / $ 4,200
- --------------------------------------------------------------------------------

(1) The aggregate value has been determined based upon the average of the high
and low prices for North Valley Bancorp common stock as reported on the
Nasdaq National Market at year-end, minus the exercise price.

During 2005, none of the officers named in the Summary Compensation Table above
exercised stock options.

Equity Compensation Plan Information
- ------------------------------------

The following table summarizes information about the options, warrants and
rights and other equity compensation under the Corporation's equity plans as of
December 31, 2005.

Number of Weighted-average Number of
securities to be exercise price of securities
issued upon outstanding remaining
exercise of options, warrants available for
outstanding and rights future issuance
options, warrants under equity
and rights compensation plans
(excluding
securities
reflected in
column (a))
Plan Category (a) (b) (c)
- --------------------------------------------------------------------------------
Equity compensation
plans approved by
security holders (1) 896,560 $9.51 912,832

Equity compensation
plans not approved
by security holders None N/A N/A

- --------------------------------------------------------------------------------
Total 896,560 $9.51 912,832
================================================================================

(1) Includes options to purchase shares of Company common stock under the
following shareholder-approved plans: North Valley Bancorp 1989 Director
Stock Option Plan, North Valley Bancorp 1998 Employee Stock Incentive Plan
and North Valley Bancorp 1999 Director Stock Option Plan.

Employment Agreements
- ---------------------

The Corporation entered into Employment Agreements with each of the
following "Executive Officers" during 2001: Michael J. Cushman, Eric J.
Woodstrom and Sharon L. Benson. The Corporation entered into Employment
Agreements with Gary S. Litzsinger, Scott R. Louis and Roger D. Nash during
2005.

The Employment Agreements entered into in 2001 had an initial term of
one year for Ms. Benson and two years for Mr. Woodstrom. Mr. Cushman's Agreement
had a term of three years. The Employment Agreements entered into in 2005 had an
initial term of one year. After the initial term, all Employment Agreements
provide that they will be extended for additional one-year periods unless either
the employee or the employer gives notice of non-renewal before the end of the
term or extended term. All of the above employment agreements have been extended
at their annual anniversary dates upon the same terms and conditions, except for
Mr. Cushman whose agreement was extended at the end of its three year
anniversary upon the same terms and conditions.

The Base Salary for each executive officer set forth in the Employment
Agreement is the Base Salary shown in column "Salary" on the Summary
Compensation Table herein.

Under the terms of the Employment Agreements, all Executive Officers
are eligible to participate in the Executive Deferred Compensation Plan and the
Salary Continuation Agreements (see discussion below) and other benefits
available to all other employees of the Corporation. In addition, all Executive
Officers are evaluated for annual cash and stock option bonus awards using
various factors including a formula-based guideline for Senior Management. Bonus
awards are discretionary as determined by the Board of Directors and the
President and Chief Executive Officer. Summary information regarding each such
program is set forth below in this Proxy Statement.

All Executive Officers are entitled to severance pay upon termination
by the Corporation without cause in an amount ranging from six month's to 24
month's current base salary and a pro rata share of the prior year's annual
incentive compensation, except Mr. Cushman who is entitled to twenty-four months
current base salary and a pro rata share of the prior year's annual incentive
compensation.

Change in Control Arrangements
- ------------------------------

In the event of a sale, dissolution or liquidation of the Corporation
or a merger or a consolidation in which the Corporation is not the surviving or
resulting corporation, a "change in control":

(1) All Executive Officers are, upon a change in control of the
Corporation, entitled under their Employment Agreements to receive the "change
in control" benefits described in their Salary Continuation Agreements (see
discussion below)

(2) All options outstanding under the 1989 Director Stock Option Plan,
the 1998 Employee Stock Incentive Plan and the 1999 Director Stock Option Plan
which at the time are not fully vested may, nonetheless, under the terms of the
relevant agreement of merger or consolidation or plan of sale, liquidation or
dissolution, be entitled to be exercised as if they were fully (100 percent)
vested. Summary information regarding each Corporation stock option plan is set
forth below in this Proxy Statement.

(3) The following agreements with all Executive Officers (North Valley
Bank Executive Deferred Compensation Agreement and North Valley Bank Executive
Salary Continuation Agreement) all provide for the acceleration of the payment
of benefits thereunder upon a change in control of the Corporation. Summary
information regarding each such agreement is set forth below in this Proxy
Statement.

Salary Continuation Agreements
- ------------------------------

The Salary Continuation Agreements provide for five general classes of
benefits for Executive Officers, which benefits vest over a period of ten (10)
years with credit for prior service or as determined by the Chief Executive
Officer and the Board of Directors:

(1) Normal Retirement Benefits. The normal retirement benefit is
calculated to provide a target benefit in the amount equal to sixty percent
(60%) of the executive's compensation at the time of retirement (age 65) or a
lesser amount as determined by the Chief Executive Officer and the Board of
Directors.

(2) Early Termination Benefit. The early termination benefit is the
vested portion of the target retirement benefit for the plan year immediately
preceding the early termination.

(3) Disability Benefit. The disability benefit is a Disability Lump Sum
Benefit specified in the agreement for the plan year immediately preceding the
disability, payable only upon total disability as defined in the agreement.

(4) Death Benefit. The death benefit is an amount determined by a
formula that takes into account the number of years of service and the
anticipated compensation level at the age of retirement.

(5) Change of Control Benefit. The change of control benefit is an
amount determined by the following formula: Executive's Present Value Vested
Benefit payable at age 65 for the current Plan Year plus two times the
Executive's current Plan Year Compensation. This benefit is payable only in the
event of a change in control as defined in the agreement and is limited by the
provisions of Internal Revenue Code section 280(g).

In consulting with Clark Consulting, the Corporation determined that it
would be more cost effective for the Corporation to acquire prepaid policies of
insurance to fund these anticipated future obligations than to pay annual
premiums. The Corporation, as a result of acquiring the prepaid policies, will
have cash values in the policies in excess of the amount paid for those
policies.

The Corporation and its subsidiaries intend to offer to the Executive
Officers, who have Salary Continuation Agreements, to enter into split dollar
life insurance agreements with those officers in connection with the life
insurance policies obtained by the Corporation and its subsidiaries on their
lives.

The following table illustrates the approximate annual retirement income
that may become payable to a key employee credited with the number of years of
service shown, assuming that benefits commence at age 65 and are payable in the
form of an annuity for the employee's life or for 20 years (whichever is
greater):

ANNUAL RETIREMENT INCOME
Years of Credited Service
Final Average
Compensation 1 2 3 4 5
- ------------- ------------ ------------ ------------ ------------ ------------

$100,000 $ 6,000 $ 12,000 $ 18,000 $ 24,000 $ 30,000
$120,000 7,200 14,400 21,600 28,800 36,000
$140,000 8,400 16,800 25,200 33,600 42,000
$160,000 9,600 19,200 28,800 38,400 48,000
$180,000 10,800 21,600 32,400 43,200 54,000
$200,000 12,000 24,000 36,000 48,000 60,000
$250,000 15,000 30,000 45,000 60,000 75,000
$300,000 18,000 36,000 54,000 72,000 90,000

Final Average
Compensation 6 7 8 9 10
- ------------- ------------ ------------ ------------ ------------ ------------

$100,000 $ 36,000 $ 42,000 $ 48,000 $ 54,000 $ 60,000
$120,000 43,200 50,400 57,600 64,800 72,000
$140,000 50,400 58,800 67,200 75,600 84,000
$160,000 57,600 67,200 76,800 86,400 96,000
$180,000 64,800 75,600 86,400 97,200 108,000
$200,000 72,000 84,000 96,000 109,000 121,000
$250,000 90,000 105,000 120,000 135,000 150,000
$300,000 108,000 126,000 144,000 162,000 180,000

Each of Messrs. Cushman, Woodstrom and Ms. Benson began accruing
retirement benefits under the Salary Continuation Agreements effective January
1, 2001, and are fully vested. Messrs. Graham, Litzsinger, Louis and Nash began
accruing retirement benefits under the Salary Continuation Agreement effective
as of their respective hire dates.

As of December 31, 2005, the Corporation's aggregate accrued
obligations under the Salary Continuation Agreements were $2,968,000 (includes
obligations to retirees under old plans).

Executive Deferred Compensation Plan
- ------------------------------------

The Executive Deferred Compensation Plan ("EDCP"), adopted by the
Directors of the Corporation and its subsidiaries effective January 1, 2001 and
restated effective January 1, 2005, is a non-qualified executive benefit plan in
which the eligible executive voluntarily elects to defer some or all of his or
her current compensation in exchange for the Corporation's promise to pay a
deferred benefit. The deferred compensation is credited with interest under the
plan and the accrued liability is paid to the executive at retirement. Unlike a
401(k) plan or a pension plan, an EDCP is a non-qualified plan. Accordingly,
this plan is selectively made available to certain highly compensated employees

and executives without regard to the nondiscrimination requirements of qualified
plans. The EDCP is also an unfunded plan, which means there are no specific
assets set aside to fund the plan. The Corporation has purchased life insurance
policies in order to provide for payment of its obligations under the Executive
Deferred Compensation Plan, but the executive has no rights under the plan
beyond those of a general creditor of the plan sponsor. The deferred amount is
not taxable income to the individual and is not a tax-deductible expense to the
plan sponsor.

The EDCP is embodied in a written agreement between the plan sponsor
and the executive selected to participate in the plan. The agreement includes
provisions that indicate the benefits to be provided at retirement or in the
event of death, disability, or termination of employment prior to retirement.
The agreement provides for full vesting of deferred amounts since the executive
is setting aside his or her current compensation. If the individual leaves the
plan sponsor, the account balance would be paid according to the terms specified
in the agreement. If the individual were to die prior to or during retirement,
the promised benefits would be paid to the individual's beneficiary or estate.

As of December 31, 2005, the Corporation's accrued obligations under
the executive deferred compensation plans were $258,000.

Director Deferred Fee Plan
- --------------------------

The Director Deferred Fee Plan ("DDFP"), adopted by the Directors of
the Corporation and its subsidiaries effective January 1, 2001 and restated
effective January 1, 2005, is a non-qualified director benefit plan in which the
eligible director voluntarily elects to defer some or all of his or her current
fees in exchange for the Corporation's promise to pay a deferred benefit. The
deferred fees are credited with interest under the plan and the accrued
liability is paid to the director at retirement. Unlike a 401(k) plan or a
pension plan, a DDFP is a non-qualified plan. Accordingly, this plan is only
made available to outside directors without regard to the nondiscrimination
requirements of qualified plans. The DDFP is also an unfunded plan, which means
there are no specific assets set aside to fund the plan. The Corporation has
purchased life insurance policies in order to provide for payment of its
obligations under the Director Deferred Fee Plan, but the director has no rights
under the plan beyond those of a general creditor of the plan sponsor. The
deferred amount is not taxable income to the individual and is not a
tax-deductible expense to the plan sponsor.

The Corporation and its subsidiaries have offered to the Directors, who
have DDFP Agreements, to enter into split dollar life insurance agreements with
those Directors in connection with the life insurance policies obtained by the
Corporation and its subsidiaries on their lives.

The DDFP is embodied in a written agreement between the plan sponsor
and the director selected to participate in the plan. The agreement includes
provisions that indicate the benefits to be provided at retirement or in the
event of death, disability, or termination of board membership prior to
retirement. The agreement provides for full vesting of deferred amounts since
the director is setting aside his or her current fees. If the individual leaves
the plan sponsor, the account balance would be paid according to the terms
specified in the agreement. If the individual were to die prior to or during
retirement, the promised benefits would be paid to the individual's beneficiary
or estate.

As of December 31, 2005, the Corporation's aggregate accrued
obligations under the Directors Deferred Fee Plan were $2,157,000.

Compensation of Directors
- -------------------------

During 2005, each Director (other than the Chairman) of North Valley
Bancorp was paid $1,500 per quarterly meeting of the Board of Directors and each
Director (other than the Chairman) of North Valley Bank was paid $500 per
monthly meeting of the Board of Directors. Payments per Loan Committee meeting
of North Valley Bank during 2005 were $250 per meeting. Payments per Audit
Committee meeting of the Corporation were $500 per meeting. Payments per
Compensation Committee meeting of the Corporation were $250 per meeting. Special
meetings of the Corporation and North Valley Bank were $250 per meeting. The
Chairman of the Board of Directors of the Corporation was paid $2,500 per
quarterly meeting and the Chairman of the Board of Directors of North Valley
Bank was paid $850 per Board of Directors meeting during 2005. The Chairman of
the Loan Committee was paid $350 per meeting during 2005. The Chairman of the
Audit Committee was paid $1,000 per meeting during 2005. The Chairman of the
Compensation Committee was paid $350 per meeting during 2005.

During 2005, each Director (other than the Chairman) of NVB Business
Bank was paid $250 per meeting and $200 for any special meetings. Retainer
payments per committee meeting were $3,000 retainer (85% attendance) and the
Chairman of the Board received $1,500 as an annual retainer and the Committee
Chairmen received a $750 annual retainer. At a meeting of the Compensation
Committee in July 2005, the Director fees paid by NVB Business Bank were revised
and the Holding Company approved revising the fee schedule to match the fees
paid to the North Valley Bank Directors and Chairman. Each Director of NVB
Business Bank is paid $500 per monthly meeting of the Board of Directors.
Payments per Loan Committee meeting of NVB Business Bank is paid $250 per
meeting. The fees for attending special meetings of the Board of Directors of
NVB Business Bank are $250 per meeting. The Chairman of the Board of Directors
of NVB Business Bank is paid $850 per Board meeting. The Chairman of the Loan
Committee is paid $350 per meeting.

Commencing in 1998, each non-employee Director of the Corporation
receives an award of 900 shares of Common Stock as part of his or her annual
retainer as a Director pursuant to the 1998 Employee Stock Incentive Plan. Each
award is fully vested when granted to the outside Director.

During 2005, cash compensation paid to Directors of the Corporation
totaled $60,063 and payment of additional Director compensation of $94,650 was
deferred under the DDFP. Directors electing coverage under the group health
insurance plan available to employees of the Corporation have been required to
pay 100% of their health insurance premiums since January 1989.

North Valley Bancorp 1989 Director Stock Option Plan
- ----------------------------------------------------

Under the North Valley Bancorp 1989 Director Stock Option Plan, as
amended (the "1989 Director Plan"), which was adopted by the Board of Directors
in December 1989 and by the shareholders of the Corporation at the 1990 Annual
Meeting, each member of the Board of Directors, including employees who are
Directors, automatically received every January a nonstatutory stock option to
purchase 1,000 shares of the Corporation's Common Stock. Effective upon adoption
of the North Valley Bancorp 1999 Director Stock Option Plan, no further grants
of options have been made or will be made under the 1989 Director Plan. Pursuant

to the 1989 Director Plan, as of April 14, 2006, there were outstanding options
to purchase 17,700 shares of Common Stock.

Options granted under the 1989 Director Plan vest immediately as to
20%, with an additional 20% vesting on each of the first four anniversary dates
following the date of grant. Such options are exercisable for a period of 10
years from the date of grant at a price which shall be 85% of the fair market
value of the Corporation's Common Stock on the date of grant. The exercise price
can be paid by cash, certified check, official bank check or the equivalent
thereof acceptable to the Corporation. Options granted pursuant to the 1989
Director Plan automatically expire three months after termination of service as
a Director for any reason other than cause, death or disability. In the case of
termination of service due to death or disability, such options terminate one
year from the date of such termination of service. In the event that service as
a Director is terminated for cause, the options granted pursuant to the Director
Plan expire 30 days after such termination.

The 1989 Director Plan is presently administered by the Board of
Directors, which has the authority to delegate some or all of its duties to a
committee of the Board of Directors appointed for this purpose, which committee
must be composed of not less than three members of the Board of Directors. This
committee is generally authorized to administer the 1989 Director Plan in all
respects, subject to the express terms of the 1989 Director Plan.

The 1989 Director Plan provides for adjustment of and changes in the
shares of Common Stock reserved for issuance in the event certain changes occur
or in the event of the sale, dissolution or liquidation of the Corporation or
any reorganization, merger or consolidation of the Corporation.

North Valley Bancorp 1998 Employee Stock Incentive Plan
- -------------------------------------------------------

The North Valley Bancorp 1998 Employee Stock Incentive Plan (the "Stock
Incentive Plan") was adopted by the Board of Directors in February 1998 and
approved by the shareholders of the Corporation at the 1998 Annual Meeting. The
Stock Incentive Plan provides for awards in the form of options (which may
constitute incentive stock options or non-statutory stock options to key
employees) and also provides for the award of shares of Common Stock to outside
directors. The shares of Common Stock authorized to be granted as options under
the Stock Incentive Plan consist of 600,000 shares increased in an amount equal
to 2% of shares outstanding each year, commencing January 1, 1999. The Stock
Incentive Plan defines "key employee" as a common-law employee of the
Corporation, its parent or any subsidiary of the Corporation, an "outside
director", or a consultant or advisor who provides services to the Corporation,
its parent or any subsidiary of the Corporation. For purposes of the Stock
Incentive Plan, an "outside director" is defined as a member of the Board who is
not a common-law employee of the Corporation, its parent or any subsidiary of
the Corporation.

Pursuant to the Stock Incentive Plan, as of April 14, 2006, there were
outstanding options to purchase 425,284 shares of Corporation Common Stock, with
670,434 shares remaining available for grant.

The award of 900 shares of Common Stock to each outside director as an
annual retainer under the Plan is fully taxable at the time of the grant. The
Corporation receives a compensation expense deduction in the same amount. If the
outside director disposes of the Common Stock prior to 12 months after the date
of grant, any gain (or loss) will be a short-term capital gain. If the shares
are held for longer than 12 months, any gain (or loss) will be taxed at
long-term capital gain rates.

The Stock Incentive Plan is administered by a committee of the Board of
Directors. As of April 14, 2006, the Committee members are Michael J. Cushman,
Royce L. Friesen, Dante W. Ghidinelli, Kevin D. Hartwick, Roger B. Kohlmeier and
Dolores M. Vellutini. The Committee must have a membership composition which
enables the Stock Incentive Plan to qualify under SEC Rule 16b-3 with regard to
the grant of options or other rights under the Stock Incentive Plan to persons
who are subject to Section 16 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Subject to the requirements of applicable law, the
Committee may designate persons other than members of the Committee to carry out
its responsibilities and may prescribe such conditions and limitations as it may
deem appropriate, except that the Committee may not delegate its authority with
regard to the selection for participation of or the granting of options or
determining awards or other rights under the Stock Incentive Plan to persons
subject to Section 16 of the Exchange Act.

In the event that the Corporation is a party to a merger or other
reorganization, outstanding options and stock awards shall be subject to the
agreement of merger or reorganization. Such agreement may provide, without
limitation, for the assumption of outstanding awards by the surviving
corporation or its parent, for their continuation by the Corporation (if the
Corporation is a surviving corporation), for accelerated vesting and accelerated
expiration, or for settlement in cash.

North Valley Bancorp 1999 Director Stock Option Plan
- ----------------------------------------------------

On April 1, 1999, the Board of Directors adopted the North Valley
Bancorp 1999 Director Stock Option Plan (the "1999 Director Stock Option Plan"),
pursuant to which all members of the Board of Directors are eligible for the
grant of non-statutory stock options to purchase shares of the Corporation's
Common Stock. Non-statutory stock options are options not intended to qualify as
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.

The 1999 Director Stock Option Plan replaced the existing North Valley
Bancorp 1989 Director Stock Option Plan, as amended (the "1989 Director Plan")
and was approved by the shareholders at the 1999 Annual Meeting.

The 1999 Director Stock Option Plan is administered by the Board of
Directors. All grants of options are at the discretion of the Board of
Directors. The Board of Directors has the authority to delegate some or all of
its duties in administering the 1999 Director Stock Option Plan to a committee
of the Board of Directors appointed for this purpose, composed of not less than
two members of the Board of Directors who qualify as non-employee directors. The
body administering the 1999 Director Stock Option Plan is generally authorized
to administer such Plan in all respects, subject to the express terms of such
Plan, including the full power to make all determinations necessary or advisable
for its administration.

All members of the Board of Directors of the Corporation and its
subsidiaries, including employees of the Corporation who are Directors, are
eligible to participate in the 1999 Director Stock Option Plan. As of April 14,
2006, there were nine Directors eligible to participate in the 1999 Director
Stock Option Plan.

Shares covered by options granted pursuant to the 1999 Director Stock
Option Plan are authorized but unissued shares of the Corporation's Common
Stock. The maximum aggregate number of shares of Common Stock which may be
optioned and sold under the 1999 Director Stock Option Plan is equal to 10
percent of the total shares of the Corporation's Common Stock issued and
outstanding from time to time. As of April 14, 2006, there were options
outstanding under the 1999 Director Stock Option Plan for the purchase of
376,457 shares of Common Stock. On the same date, there were 7,539,654 shares of
Common Stock issued and outstanding. Thus, as of April 14, 2006, a total of
242,398 shares of Common Stock were available for the grant of additional
options under the 1999 Director Stock Option Plan.

The 1999 Director Stock Option Plan includes provisions for adjustment
of and changes in the shares reserved for issuance in the event that the shares
of Common Stock of the Corporation are changed into or exchanged for a different
number of kind of shares of stock or other securities of the Corporation or
other corporation, whether by reason or reorganization, merger, consolidation,
recapitalization, reclassification, stock dividend, stock split or other
changes.

The 1999 Director Stock Option Plan also includes provisions regarding
the sale, dissolution or liquidation of the Corporation and any reorganization,
merger or consolidation in which the Corporation is not the surviving or
resulting corporation. If the Corporation is not the surviving or resulting
corporation, the Board of Directors shall have the power to terminate all
options under the 1999 Director Stock Option Plan, provided that each optionee
shall have the right prior to the effective date of such sale, dissolution,
liquidation, reorganization, merger or consolidation to exercise any outstanding
option in full, without regard to the option's vesting schedule.

Options granted under the 1999 Director Stock Option Plan may only be
non-statutory stock options. Each option will be 20 percent exercisable or
"vested" immediately upon the date of grant and will become further vested at
the rate of 20 percent on each of the first four anniversary dates thereafter.
Options are exercisable for a period of ten years after the date of grant. The
exercise price for the options will be 85 percent of the fair market value of
the shares on the date of grant, as determined by the Board of Directors. So
long as the Corporation's Common Stock is traded on the Nasdaq National Market,
such fair market value shall be equal to the last transaction price quoted for
such date on the Nasdaq National Market.

Each option granted under the 1999 Director Stock Option Plan has a
termination date of ten years after the date of grant. In addition, each option
automatically expires three months after termination of service as a Director
other than for cause, except that in the case of termination of service due to
mandatory retirement, death or disability, an option will remain in effect
unchanged. If a Director is removed from the Board of Directors for cause, the
option will expire 30 days after such termination of service.

The Board of Directors may amend, suspend or terminate the 1999
Director Stock Option Plan at any time and for any reason. Any amendment is
subject to the approval of the shareholders of the Corporation only to the
extent required by applicable laws or regulations. No amendment or termination
may adversely affect the rights of an optionee under a previously granted
option, without the optionee's consent.

No taxable income is recognized by an optionee upon the grant of a
non-statutory stock option under the 1999 Director Stock Option Plan. The
exercise of a non-statutory stock option granted under the 1999 Director Stock
Option Plan results in the realization of ordinary income to the optionee in an
amount equal to the difference between the exercise price and the fair market
value of the shares on the date of exercise. For federal income tax purposes,
the Corporation will be entitled to a compensation expense deduction in the same
amount. The 1999 Director Stock Option Plan allows an optionee to satisfy any
withholding tax requirement in connection with the exercise of an option by the
withholding of shares from the total number of shares issuable upon exercise of
the option or by the delivery to the Corporation of shares of Corporation Common
Stock that have been held by the optionee for at least six months. Any such
arrangement must be acceptable to the Corporation.

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee consists of the following members of the
Corporation's Board of Directors: Royce L. Friesen (Chairman), Dante W.
Ghidinelli, Martin A. Mariani, and Dolores M. Vellutini. All members of the
Committee are independent as defined under the SOX, the SEC regulations and the
NASDAQ listing standards.

The Compensation Committee reviews and recommends to the Board of
Directors, salaries, performance based incentives, both annual and long term,
and other matters relating to the compensation of the Chief Executive Officer
and the Chief Executive Officer's recommendations as to Executive Officers,
taking into consideration non-salary based benefits in the form of company paid
expenses for car allowances and club memberships. The Committee determines the
base salary for the Chief Executive Officer by: (1) examining the Corporation's
performance against its preset goals, (2) examining the Corporation's
performance within the banking industry, (3) evaluating the overall performance
of the Chief Executive Officer, and (4) comparing the base salary of the Chief
Executive Officer to that of other chief executive officers in the banking
industry in the Corporation's market area. In January 2006, the Committee
recommended, and the Board approved, the following executive salaries effective
February 1, 2006: Mr. Cushman's annual salary of $275,625; Mr. Woodstrom's
annual salary of $148,720; Mr. Louis' annual salary of $140,000; Mr. Nash's
annual salary of $140,000; Mr. Litzsinger's annual salary of $104,800, and Mr.
Graham's annual salary of $163,950.

In prior years, the Corporation engaged a consultant to advise the
Board of Directors and management concerning establishing a guideline for the
Compensation Committee of the Board of Directors and Executive Officers
concerning the awarding of incentive bonuses, both annual cash bonuses and long
term stock options grants. The Board of Directors studied and evaluated various
incentive compensation programs with the desire to adopt incentive compensation
guidelines that will assist the Compensation Committee and the Board of
Directors in determining these bonuses by evaluating the accomplishment of
specific goals and objectives to be achieved by each executive officer in his or
her area of responsibility and the overall goals and results accomplished by
management as a team. The committee reviewed the guidelines and concluded they
were still appropriate to be used as part of the determinations and
recommendations for 2005. The guidelines provide a range of percentages of the
Executive Officers salary for arriving at both the annual cash bonus award and
long-term stock option grants. Although the Compensation Committee and the Board
of Directors have approved these guidelines and have used them to assist in
making its determinations, the Board of Directors awards bonuses to its
Executive Officers at its discretion.

The Board of Directors, at its discretion, awarded bonuses to the
following Executive Officers for 2005: Messrs. Cushman, Richter, Woodstrom,
Nash, Louis, Litzsinger, Graham and Benson. (See Summary Compensation Table
above).

Submitted by:

Royce L. Friesen, Chairman
Dante W. Ghidinelli
Martin A. Mariani
Dolores M. Vellutini

STOCK PERFORMANCE CHART

NORTH VALLEY BANCORP

[GRAPHIC CHART OMITTED]

Total Return Performance

Index 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05
- ------------------------------------------------------------------------------------------------------------------

North Valley Bancorp 100.00 110.54 150.06 195.58 254.81 238.89
NASDAQ Composite 100.00 79.18 54.44 82.09 89.59 91.54
SNL $500M-$1B Bank Index 100.00 129.74 165.63 238.84 270.66 282.26
SNL Western Bank Index 100.00 87.45 95.68 129.61 147.29 153.35
- ------------------------------------------------------------------------------------------------------------------

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Through its banking subsidiaries, North Valley Bank and NVB Business
Bank, the Corporation has had and expects in the future to have banking
transactions, including loans and other extensions of credit, in the ordinary
course of its business with many of the Corporation's Directors, Executive
Officers, holders of five percent or more of the Corporation's Common Stock and
members of the immediate family of any of the foregoing persons, including
transactions with corporations or organizations of which such persons are
directors, officers or controlling shareholders, on substantially the same terms
(including interest rates and collateral) as those prevailing at the time for
comparable transactions with others. Management believes that in 2005 such loan
transactions did not involve more than the normal risk of collectibility or
present other unfavorable features.

J. M. ("Mike") Wells, Jr., the Chairman of the Corporation, is an
Attorney at Law and "Of Counsel" (not an equity owner) of the law firm of Wells
Small & Selke, a Law Corporation, which contracted to provide professional legal
services to the Corporation and its subsidiaries during 2005. Wells, Small &
Selke, a Law Corporation, received from the Corporation, North Valley Bank and
NVB Business Bank in 2005 a total of $16,875 in legal fees and costs reimbursed.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee consists of the following members of the
Corporation's Board of Directors: Dante W. Ghidinelli (Chairman), Royce L.
Friesen, Kevin D. Hartwick, Roger B. Kohlmeier and Dolores M. Vellutini. All
members of the Committee are independent as defined under SOX, the SEC
Regulations and NASDAQ listing standards. Both Chairman Dante W. Ghidinelli and
Mr. Kevin D. Hartwick have been, as a result of their accounting backgrounds
determined to be qualified as an Audit Committee Financial Expert as defined
under SOX, the SEC Regulations and NASDAQ listing standards. The Committee
operates under a written charter adopted by the Board of Directors, which is
included in this Proxy Statement as Appendix A. The Audit Committee, in addition
to its other functions, recommends to the Board of Directors, subject to
shareholder ratification, the selection of the Corporation's independent
accountants.

Management is responsible for the Corporation's internal controls and
the financial reporting process. The independent accountants are responsible for
performing an independent audit of the Corporation's consolidated financial
statements in accordance with generally accepted accounting principles and to
issue a report thereon. The Audit Committee's responsibility is to monitor and
oversee these processes.

The Committee assists the Board of Directors in fulfilling its
responsibility for oversight of the quality and integrity of the accounting,
auditing, internal control and financial reporting practices of the Corporation.
The Committee's primary responsibilities include the following: (1) serve as an
independent and objective party to monitor the Corporation's financial reporting
process and internal control system; (2) review and evaluate the audit efforts
of the Corporation's independent accountants and internal audit department; (3)
evaluate the Corporation's quarterly financial performance as well as its
compliance with laws and regulations; (4) oversee management's establishment and
enforcement of financial policies and business practices; and (5) facilitate
communication among the independent auditors, financial and senior management,
counsel, the internal audit department and the Board of Directors.

The Audit Committee has been updated quarterly on management's process
to assess the adequacy of the Corporation's system of internal control over
financial reporting, the framework used to make the assessment and management's
conclusions on the effectiveness of the Corporations internal control over
financial reporting. The Audit Committee has also discussed with the independent
auditor the Corporation's internal control assessment process, management's
assessment with respect thereto and the independent auditor's evaluation of the
Corporation's system of internal control over financial reporting.

It is not the duty or the responsibility of the Committee to conduct
auditing or accounting reviews. Therefore, the Committee has relied, without
further independent verification, on management's representation that the
financial statements have been prepared with integrity and objectivity and in
conformity with accounting principles generally accepted in the United States of
America and on the representations of the independent auditors included in their
report on the Corporation's financial statements. Furthermore, the Committee's
discussions with management and the independent auditors do not provide the
Committee with any other independent basis to determine or assure that the
Corporation's financial statements are presented in accordance with generally
accepted accounting principles, that the audit of the Corporation's financial

statements has been carried out in accordance with generally accepted auditing
standards or that the Corporation's independent auditors are in fact
"independent."

The Committee has reviewed and discussed the audited financial
statements of the Corporation for the fiscal year ended December 31, 2005 with
the Corporation's management. The Committee has discussed with Perry-Smith LLP,
the Corporation's Independent Auditor, the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
The Committee has also received the written disclosures and the letter from
Perry-Smith LLP required by Independence Standards Board Standard No. 1
(Independence Discussion with Audit Committees) and the Committee has discussed
the independence of Perry-Smith LLP with that firm and based upon such
information has determined that Perry-Smith LLP is independent.

The Committee has recommended to the Board of Directors that the
Corporation's audited financial statements be included in the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31, 2005 for
filing with the Securities and Exchange Commission and has recommended
ratification of Perry-Smith LLP as the Independent Auditor for the Corporation
for the fiscal year 2006.

Submitted by:

Dante W. Ghidinelli (Chairman)
Royce L. Friesen
Kevin D. Hartwick
Roger B. Kohlmeier
Dolores M. Vellutini

INDEPENDENT AUDITOR

The firm of Perry-Smith LLP, which served the Corporation as
independent auditors for the 2005 fiscal year, has been recommended by the Audit
Committee of the Board of Directors of the Corporation to serve as independent
auditors for the 2006 fiscal year, and the Board of Directors has approved the
Audit Committee recommendation. In Proposal No. 2, set forth below, the
shareholders of the Corporation are being asked to ratify the appointment of
Perry-Smith LLP as Independent Auditor of the Corporation, to serve for the 2006
fiscal year.

The Audit Committee of the Board of Directors of the Corporation
approved each professional service rendered by Perry-Smith LLP during the fiscal
year 2005.

Set forth below is a summary of the fees billed to the Corporation by
Perry-Smith LLP for professional services rendered as the Corporation's
independent auditors for the fiscal years ended December 31, 2004 and 2005:

Principal Accountant Fees and Services

During the period covering the fiscal years ended December 31, 2005 and
2004, Perry-Smith LLP performed the following professional services:

Description 2005 2004
- --------------------------------------------------------------------------------
Audit Fees (1) $ 208,000 $ 192,425
Audit-Related Fees (2) $ 21,100 $ 50,700
Tax Fees (3) $ 42,900 $ 34,000

(1) Audit fees consist of fees for professional services rendered for the audit
of the Corporation's consolidated financial statements, audit of internal
control over financial reporting, review of consolidated financial
statements included in the Corporation's quarterly reports and services
normally provided by the independent auditor in connection with statutory
and regulatory filings or engagements.

(2) Audit-related fees represent fees for the audit of the Corporation's
employee benefit plans, professional services provided in connection with
the filing of the Corporation's registration statements, and technical
accounting, consulting and research.

(3) Tax fees consist of compliance fees for the preparation of tax returns and
tax payment-planning services. Tax services also include fees relating to
other tax advice, tax consulting and planning other than for tax compliance
and preparation.

PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR

The firm of Perry-Smith LLP, which served the Corporation as
Independent Auditor for the 2005 fiscal year, has been recommended by the Audit
Committee of the Board of Directors of the Corporation as the Corporation's
Independent Auditor for the 2006 fiscal year. Perry-Smith LLP has no interest,
financial or otherwise, in the Corporation. All Proxies will be voted for the
ratification of the appointment of Perry-Smith LLP, unless authority to vote for
the ratification of such selection is withheld or an abstention is noted. If
Perry-Smith LLP should for any reason decline or be unable to act as Independent
Auditor, the Proxies will be voted for a substitute independent public
accounting firm to be designated by the Audit Committee.

The Audit Committee of the Board of Directors of the Corporation
approved each professional service rendered by Perry-Smith LLP during the 2005
fiscal year and considered whether the provision of non-audit services is
compatible with maintaining their independence.

Required Approval

The approval of the ratification of the appointment of Perry-Smith LLP
as the Corporation's Independent Auditor for the 2006 fiscal year requires the
affirmative vote of the holders of a majority of the shares present or
represented by Proxy and voting at the Meeting.

Recommendation of Management

The Board of Directors has approved the recommendation of the Audit
Committee of the Board of Directors that Perry-Smith LLP be appointed to serve
as the Corporation's Independent Auditor for the year 2006 and recommends a vote
"FOR" ratification of the appointment of Perry-Smith LLP.

A representative of Perry-Smith LLP is expected to attend the Meeting
and will have the opportunity to make a statement if he or she desires to do so
and will respond to appropriate questions from shareholders present at the
Meeting.

SHAREHOLDER PROPOSALS

The Corporation's 2007 Annual Meeting of Shareholders is scheduled for
May 24, 2007. Shareholder proposals must be received by the Corporation no later
than December 26, 2006, to be considered for inclusion in the Proxy Statement
and Proxy for the 2007 Annual Meeting of Shareholders. Management of the
Corporation will have discretionary authority to vote proxies obtained by it in
connection with any shareholder proposal not submitted on or before the December
26, 2006 deadline.

OTHER MATTERS

The Board of Directors knows of no other matters which will be brought
before the Meeting, but if such matters are properly presented to the Meeting,
Proxies solicited hereby will be voted in accordance with the judgment of the
persons holding such Proxies. All shares represented by duly executed Proxies
will be voted at the Meeting.

By Order of the Board of Directors,

/s/ LEO J. GRAHAM
-----------------------------------------
Leo J. Graham
Corporate Secretary

Redding, California
April 25, 2006

APPENDIX A
----------

AUDIT COMMITTEE CHARTER

1. General Purpose:

The Audit Committee of North Valley Bancorp ("Bancorp") is a committee
comprised of at least three independent directors of North Valley Bancorp and
will include an independent director from each of Bancorp's subsidiary banks.
The Audit Committee will represent the Bancorp and all of its subsidiary banks,
(the "Company"), for purpose of Audit Committee functions. The purpose of the
Audit Committee is to act on behalf of the Bancorp and Banks' Boards of
Directors in fulfilling the Boards' oversight responsibilities with respect to:

1) The integrity of the Company's financial statements, financial
reporting processes and systems of internal control regarding finance,
accounting, security, regulatory and legal compliance;

2) The independence, qualifications and performance of the
Company's independent auditors;

3) The performance of the Company's internal audit function and
internal auditor;

4) Communications among the independent auditors, management, the
internal auditing department, and the Boards of Directors;

5) Procedures for (a) the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls or auditing matters and (b) the confidential, anonymous submission by
the Company's employees of concerns regarding accounting or auditing matters;
and

6) Performance of Risk Management Program and of Chief Risk
Officer.

2. Statement of Policy:

The Audit Committee shall provide assistance to the directors of the
Boards in fulfilling their responsibilities to the shareholders, potential
shareholders, and investment community related to accounting, reporting
practices, and the quality and integrity of the financial reports of the
Company. While the Audit Committee will not attempt to correct problems
independently, they will function as an informed, vigilant and effective monitor
of the Company's reporting process and internal controls. In so doing, it is the
responsibility of the Audit Committee to maintain free and open means of
communication between the directors, the independent auditors, the internal
auditors, and the management of the Company. In addition, the Audit Committee
shall have the authority to engage independent counsel and other advisors, as it
determines necessary to carry out these duties, and the Company shall provide
appropriate funding, as determined by the Audit Committee, for payment of
compensation to such counsel or advisors. The Audit Committee representative
shall report regularly to the Bancorp and Banks' Boards of Directors so as to
keep the individual Bancorp and Banks' Boards up to date on the activities of
the Audit Committee in assisting the Boards' with their oversight
responsibilities.

3. Member Independence and Qualifications:

All members of the Audit Committee shall satisfy the independence and
experience requirements of the Securities and Exchange Commission (SEC) and the
Nasdaq National Market (NASDAQ) applicable to audit committee members as in
effect from time to time, when and as required by the SEC and NASDAQ. All
members of the Audit Committee shall be able to read and understand fundamental
financial statements, including a balance sheet, income statement and statement
of cash flows and shall not have participated in the preparation of the
financial statements of the Bancorp or any current subsidiary of the Bancorp at
any time during the prior three years. At least one member of the Audit
Committee shall have experience or background sufficient to meet the NASDAQ
financial sophistication requirements and would also meet the definition of an
audit committee financial expert under the Securities Exchange Act of 1934, as
amended.

4. Member Compensation:

The members of the committee may not, other than in his or her capacity
as a member of the audit committee, the board of directors, or any other board
committee (i) accept any consulting, advisory, or other compensatory fee from
Company or its affiliates or (ii) be an affiliated person of Company or its
subsidiaries. Compensation for committee membership will be as set by the North
Valley Bancorp Board of Directors.

5. Responsibilities Related to Registered Public Accounting Firms and Audit
Firms:

The Audit Committee shall be directly responsible for the appointment,
evaluation, termination, compensation, and oversight of the work of any
registered public accounting firm ("Independent Auditor"), or any audit firm
employed by the Company and each such firm shall report directly to the Audit
Committee. The Audit Committee's retention of any Independent Auditor firm shall
be subject to the applicable vote of shareholders.

The Audit Committee shall explicitly approve the engagement of the
Independent Auditor for all audit and permissible non-audit related services,
including compensation to be paid therefore or the engagement for such services
may be entered into pursuant to pre-approval policies and procedures established
by the Audit Committee, provided such policies are detailed as to the particular
service, the Audit Committee is informed of the particular service, and such
polices and procedures do not include delegation of the Audit Committee's
responsibilities under the Securities Exchange Act of 1934, as amended, to
management, provided that with respect to services other than audit, review or
attest services, no pre-approval is required if all of the following conditions
are met: (i) the aggregate amount of all such services accounts for no more than
5% of the total revenues paid to the Independent Auditor during the fiscal year
in which the services are provided; (ii) such services were not recognized by
the Company to be non-audit services at the time of engagement; and (iii) such
services are promptly brought to the attention of the Audit Committee and
approved prior to the completion of the audit by the Audit Committee (or one or
more members delegated pursuant to the following sentence). The Audit Committee
may delegate its authority to grant pre-approvals to one or more members of the
Audit Committee, provided that the decisions of any Audit Committee member to
whom authority is delegated to grant pre-approvals is presented to the full
Audit Committee at its next meeting.

The Audit Committee shall obtain and review, at least annually, a
formal written statement from the Independent Auditor delineating: (1) the
internal quality control procedures of the Independent Auditor; (2) material
issues raised by the Independent Auditor's most recent quality-control review;
(3) steps taken to deal with the material issues raised in the quality-control
review; and (4) all relationships between the Independent Auditor, and Bancorp
and/or its affiliates, consistent with the Financial Accounting Standards Board
Standard No. 1. The Audit Committee will consider and discuss with the
Independent Auditor any disclosed relationships or services that could affect
the Independent Auditor's objectivity and independence, and assess and otherwise
take appropriate action to oversee the independence of the Independent Auditor.

The Audit Committee shall ensure the rotation of the lead audit partner
and the "concurring or reviewing partner" every five years, and consider the
adoption of a policy of rotating the Independent Auditor on a regular basis.

The Audit Committee shall meet with the Independent Auditor prior to
the commencement of an audit to discuss the scope, planning and staffing of the
audit.

The Audit Committee shall consider and, if deemed appropriate, adopt a
policy regarding Audit Committee pre-approval of employment by the Company of
individuals formerly employed by the Independent Auditor.

The Audit Committee shall evaluate the cooperation received by the
Independent Auditor during their audit examination, including any significant
difficulties with the audit or any restrictions on the scope of their activities
or access to required records, data and information.

The Audit Committee shall discuss with the Independent Auditor and
management any conflicts or disagreements between management and the Independent
Auditor regarding financial reporting, accounting practices or policies and
shall be responsible for resolving any conflicts regarding financial reporting.

The Audit Committee shall confer with the Independent Auditor and with
senior management regarding the scope, adequacy and effectiveness of internal
auditing and financial reporting controls in effect, and any special steps taken
in the event of material control deficiencies.

6. Oversight of the Integrity of the Financial Statements:

Upon completion of the audit, the Audit Committee shall review and
discuss with the Independent Auditor and management the annual audited financial
statements and make related recommendations in connection with Bancorp's 10-K
filings.

The Audit Committee shall review and discuss with the Independent
Auditor and management the quarterly financial statements prior to Bancorp's
10-Q filings, and any other matters required to be communicated to the Audit
Committee by the Independent Auditor under Statement on Auditing Standards No.
61. The Chairperson or a member of the Audit Committee may represent the entire
Audit Committee for purposes of this discussion.

The Audit Committee shall discuss with management and the Independent
Auditor significant issues that arise regarding accounting principles and
financial statement presentation, including the adoption of new, or material
changes to existing, critical accounting policies or to the application of those
policies, the potential effect of alternative accounting polices available under
GAAP, the potential impact of regulatory and accounting initiatives and any
other significant reporting issues and judgments.

The Audit Committee shall discuss with the Independent Auditor and
management significant financial reporting issues and judgments made in
connection with the preparation of Bancorp's financial statements.

7. Oversight of Internal Audit Function and Internal Auditor / Risk Management
Program and Chief Risk Officer:

The Audit Committee shall review the appointment, performance, and
termination of the Chief Risk Officer and Internal Auditor, who shall meet with
the Audit Committee on a regular basis, attend meetings of the Audit Committee,
and report regularly on the activities of the Audit and Risk Management
function.

The Audit Committee shall approve the annual Audit and Risk Management
Plan to assure the comprehensive coverage of significant risk areas.

The Audit Committee shall discuss with management, and, as appropriate,
the Independent Auditor, the Company's major financial and other risk exposures
and the steps management has taken to monitor and control such exposures,
including the Company's risk assessment and risk management policies.

The Audit Committee shall review significant Audit and Risk Review
Reports ("Reports") and/or recommendations prepared by Audit and Risk Management
and review management's responses to the Reports and/or recommendations.

The Audit Committee shall discuss material legal matters with the
General Counsel of the holding company and subsidiary banks, including matters
reflected in the Quarterly Litigation Report.

The Audit Committee shall review and approve the quarterly allowances
for loan and lease losses and reports of Internal Auditors and communicate said
reports to Bancorp and Bank Boards of Directors.

The Audit Committee shall review with the Independent Auditor any
management or internal control letter issued or, to the extent practicable,
proposed to be issued by the Independent Auditor and management's response, if
any, to such letter.

The Audit Committee shall review the results of management's efforts to
monitor compliance with the programs and policies designed to ensure adherence
to applicable laws and regulations, as well as to its Code of Ethics, including
review and approval of insider and affiliated-party transactions.

The Audit Committee shall prepare the report required by the rules of
the Securities and Exchange Commission to be included in Bancorp's annual proxy
statement.

The Audit Committee shall review and assess the adequacy of this
charter annually and recommend any proposed changes to the Bancorp's Board for
approval.

8. Compliance Oversight Responsibilities:

Obtain from the Independent Auditor assurance that Section 10a(b) of
the Exchange Act has not been implicated.

The Audit Committee shall have oversight responsibility for the Banks'
compliance with the Community Reinvestment Act. The Audit Committee shall review
and approve the Banks' performance under this Act and recommend appointment by
the appropriate Bank Board of the Community Reinvestment Act Officer.

In the event that a Suspicious Activity Report ("SAR") must be filed,
in accordance with the Bank Secrecy Act and Bank policy, the SAR must be
reviewed at the next scheduled meeting of the Audit Committee. In the event that
the SAR involves an insider, or is of a significant dollar amount or impact to
any of the Banks, a recommendation by the Bank's legal counsel will be presented
to the Audit Committee, who will determine whether presentation to the full
Board is necessary.

The Audit Committee shall have the authority to appoint the Bank
Secrecy Act Officer and the Bank Security Officer.

9. Complaints:

The Audit Committee shall establish procedures for the receipt,
retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters, including the
confidential and anonymous submission by employees of concerns regarding
questionable accounting or auditing matters. Specifically, employees of the
Company will be instructed that they may submit confidential, anonymous concerns
regarding questionable accounting or auditing matters to the Chairperson of the
Audit Committee without fear of retaliation, as outlined in the Code of Ethics /
Code of Business Conduct and Ethics Policy.

10. Meetings:

Regular and special meetings of the Audit Committee will be held at the
time and place as the Audit Committee deems necessary and appropriate and at
least on a quarterly basis.

11. Minutes:

The Secretary of the Audit Committee will maintain minutes and other
relevant records of the meetings and activities of the Audit Committee. The
minutes will be available for review by the Board and any regulatory agency
having jurisdiction over the affairs of Bancorp or the Banks. In the event of
any meeting in Executive Session or otherwise where the Secretary is not
present, the Chair will designate an Acting Secretary of the Audit Committee for
the purpose of recording the minutes of actions taken at the meeting or
Executive Session thereof.

12. Voting:

Every act consented to by a majority of the Audit Committee members
present at a meeting (at which quorum is present) will be regarded as an act of
the Audit Committee, unless other consent is required pursuant to this Charter,
the Articles of Incorporation or By-Laws of Bancorp or Banks or applicable law.

13. Telephone Conference Meetings:

Members of the Audit Committee may participate in a meeting through use
of conference telephone or similar communication equipment, so long as all
members participating in the meetings can hear one another. Participation in a
meeting pursuant to this paragraph constitutes presence in person at the
meeting.

14. Amendments:

This Charter of the Audit Committee may be amended only by a resolution
of Bancorp's Board.

APPENDIX B
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NOMINATING COMMITTEE CHARTER

PURPOSE

The purpose of the Nominating Committee is to assist the Board of
Directors by (a) establishing criteria for candidates and identifying,
evaluating and recommending candidates, including candidates proposed by
shareholders, for election to the Board of Directors, and (b) periodically
reviewing and making recommendations on the composition of the Board of
Directors.

COMMITTEE MEMBERSHIP

The Nominating Committee shall be comprised of at least three
independent directors appointed annually by the independent members of the Board
of Directors, who shall appoint one member of the Committee to act as its
Chairman. The independent members of the Board of Directors may remove members
of the Committee, with or without cause. Director independence shall be
determined in accordance with applicable rules of the Securities and Exchange
Commission and the NASDAQ Marketplace Rules.

NOMINATION PROCESS

1. The Nominating Committee shall, as it deems appropriate, identify, evaluate
and interview individuals who may be qualified to be members of the Board
of Directors.

2. Each candidate evaluated by the Nominating Committee shall be required to
complete one or more questionnaires and provide such additional information
as the Nominating Committee shall deem necessary or appropriate. Such
information shall include a personal financial statement and background
information concerning the candidate. The Nominating Committee shall have
the authority to retain independent advisors (including legal and
accounting advisors) to assist the members of the committee in carrying out
their responsibilities and duties. The Committee shall have the sole
authority to approve the terms of any such engagement, including the
payment of fees.

3. Candidates shall be evaluated based on the criteria established by the
Nominating Committee which may include (a) satisfactory results of any
background investigation, (b) experience and expertise, (c) financial
resources, (d) time availability, (e) community involvement, and (f) such
other criteria as the Nominating Committee may determine to be relevant.
Candidates selected for consideration, as nominees must meet with the
Nominating Committee and thereafter with the Board of Directors.

4. Any candidate nominated for election to the Board of Directors must (a) be
recommended to the Board of Directors by the unanimous vote of approval of
the members of the Nominating Committee and (b) receive a majority of votes
in favor of nomination from the independent members of the Board of
Directors.

5. Each existing member of the Board of Directors whose term is ending must be
evaluated for nomination for re-election by the Nominating Committee. This
review will include review of attendance, participation, continuing
education, investment in shares, business development and community
involvement. In lieu of the information required to be provided by new
candidates for election to the Board of Directors described above in
paragraph 2, the Nominating Committee may rely upon the information
contained in the most recent annual Directors and Officers Questionnaire
completed by the existing member of the Board of Directors, subject to such
additional updated information as the Nominating Committee may deem
appropriate. Such existing member of the Board of Directors must receive a
majority of votes in favor of nomination from the independent members of
the Board of Directors (excluding such existing member).

MEETINGS

The Nominating Committee shall meet at least annually and such other
times as it may deem appropriate, to evaluate and recommend to the Board of
Directors nominees for election at the Annual Meeting of Shareholders prior to
distribution of the Corporation's proxy solicitation materials or to fill
vacancies in accordance with the Corporation's bylaws.

MINUTES

The Nominating Committee shall maintain written minutes of each meeting
of the committee and such minutes shall be distributed to each member of the
committee and shall be distributed to the other members of the Board of
Directors.

CONFLICTS

Any conflicts between the provisions of this Charter and the provisions
of the Corporation's bylaws shall be resolved in favor of the bylaw provisions
and nothing contained herein shall be construed as an amendment of the
Corporation's bylaws.