Mother Lode Bank serving Sonora and the Mother Lode
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Shareholder News

The Prospector

November 16, 2011 

Dear Shareholder:

We at Mother Lode Bank continue to build franchise value through the acquisition of business and individual deposit accounts within our community.

In today’s competitive environment we are pleased to report businesses and individuals alike have chosen Mother Lode Bank as their community bank. Core deposit balances (transactional accounts) have increased by over $5 million dollars for the 12 month period ended September 30, 2011!

Loan growth continues to be elusive in our foothill communities and likely to remain so until our economy gains traction through consumer confidence. Therefore, as you may recall, we mailed a letter to all Shareholders on August 29, 2011 requesting assistance in identifying friends and neighbors that may need loans.
We continue to seek your assistance and look forward to deploying the liquidity we currently enjoy for new business and personal loans within our community.

While loan growth is sluggish our Net Interest Margin (interest earned less interest paid) continues to improve reflecting a 4.33% yield, well above other California banks of our size. Our improved Net Interest Margin is primarily realized from a 13.5% increase in core deposits.

We are particularly pleased with the results of our ongoing effort to manage our loan portfolio. Our year to date loan loss provision for the period ending September 30, 2011 is $272 thousand which represents a 25% improvement when compared to the same period last year.

Clearly, our trends remain favorable and we are working diligently to achieve profitability in 2012. Our Directors, officers and staff remain committed to continued improvement in asset quality, cost control, and loan growth.

As we approach the holidays we want to express our sincere appreciation for your continued confidence and loyalty. Our Directors, officers and staff extend to you and yours our best wishes for a happy and healthy Holiday Season.

Sincerely, Charles W. Milazzo - President & CEO


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