Capital Corp of the West (NASDAQ:CCOW), parent company of County Bank, today announced that a second quarter pre-tax loan loss provision of $13.9 million contributed to a second quarter of 2008 net loss of $12.0 million. The Company continued to show improvement in net interest income and net interest margin, which contributed to an increase in second quarter revenue that was off-set by loan loss provisions and related expenses.

“County Bank is an established financial institution with over 30 years of history in the Central Valley and remains committed to its customers and their success, whether they are the business banking customers who support our local economies or the personal banking customers who make up the fabric of our communities,” said Richard S. Cupp.

On July 29, 2008, the Company’s Board of Directors appointed Mr. Cupp Chief Executive Officer and President of Capital Corp of the West and Chief Executive Officer of County Bank, subject to approval of the Federal Reserve Bank.

"I am pleased to be working with KBW (Keefe, Bruyette & Woods, Inc.) as they actively explore options for our Company, including raising capital. We are implementing plans by which we should achieve well capitalized standing by the end of the third quarter at both the Bank and holding company level.

“All banks continue to face unprecedented and challenging market conditions, and County Bank is no exception; however, our Company is taking the necessary steps to ensure our future success and growth. We will get through this and we will continue to serve our communities, our customers and our friends,” said Mr. Cupp.

During the second quarter, the Bank increased net deposit accounts by 3,549, nearly half of those being new low-cost DDAs. Despite approximately $122 million in non-accrual loans, the Bank increased net interest income by $2.4 million, or 14.43%, over second quarter 2007 results and increased net interest margin 0.23% to 4.28% for the six months ended June 30, 2008 over the same period in 2007.

The Company’s second quarter 2008 results include a significant loan loss provision of $13.9 million due to continuing property value deterioration in the Central Valley. New real estate appraisals received during the second quarter necessitated these additional provisions and charges; however, some of these affected borrowers remain current and paying customers.

“We have now reviewed 80% of the aggregate balance at 2007 year-end of our commercial and real estate loan portfolios and have found that some impaired loans are still performing and that certain borrowers have granted the Company additional collateral,” said Mr. Cupp. “The additional property appraisals and the independent loan portfolio review were costly and necessary expenses, but this is what you do when faced with a challenging credit environment. The Bank is stronger for having taken these necessary and painful steps. As the Central Valley’s economy stabilizes, the Bank will be positioned to move forward with business as usual.”

The Company’s professional fees increased 132%, or $1.1 million, in the second quarter, primarily due to increased audit fees related to the 2007 year-end audit and utilization of independent credit specialists to assist in evaluating the loan loss reserve.