Redwood Capital Bank Reports Robust Growth but Increases Reserves in First Quarter...

Redwood Capital Bank Reports Robust Growth but Increases Reserves in First Quarter of 2008

EUREKA, Calif.--(Business Wire)--
On May 1, 2008, REDWOOD CAPITAL BANCORP (OTCBB:RWCB), the only
locally owned and operated community bank holding company in Humboldt
County (the "Company") announced unaudited financial results for the
three month periods ended March 31, 2007 and 2008 respectively. The
Company reported strong growth in both deposits and loans but
dramatically increased loan loss reserves due to continuing economic
uncertainty.

"Our operating results for the first quarter of 2008 reflect the
overall economic changes within our Humboldt County marketplace and
throughout the country," stated John Dalby, President and CEO. "There
has been a significant slowdown in commercial and residential activity
within our market. Substantially all financial institutions have
suffered as a result of the national fallout from the sub-prime
mortgage debacle. While Redwood Capital Bancorp did not directly
participate in the sub-prime mortgage industry, the region's economy
and some of our customer have been impacted. Our decision to increase
loan loss reserves reflects our continued proactive and conservative
perspective on the marketplace. Of particular concern is declining
values of real estate held as collateral. Though to date we have not
experienced any loan losses, we must recognize and address the
increased risk of declining collateral values within our loan
portfolio. Redwood Capital Bancorp remains fully committed to serving
our market, and we look forward to 2008 as an opportunity to continue
building mutually beneficial relationships with both new and existing
customers while simultaneously building value for our shareholders."

The Company again posted robust double-digit growth in the major
balance sheet categories of assets, loans and deposits. Total assets
as of March 31, 2008 were $139.1 million, an increase of 31% from the
same period last year. Total loans as of March 31, 2008, net of
unearned income, increased to $108.9 million, an increase of 28% over
the quarter ended March 31, 2007. Likewise, total deposits grew
sharply to $126.5 million as of March 31, 2008, an increase of 31%
over the March 31, 2007 figures.

Net interest income for the quarter ended March 31, 2008 totaled
$1,371,000, up 15% from the $1,189,000 for the three months ended
March 31, 2007. Net income before loan loss provisions for the quarter
ended March 31, 2008 was $165,000, down from the $208,000 reported for
the three month ended March 31, 2007. The decrease was attributable to
a decline in residential mortgage lending and costs associated with
the new Fortuna Branch.

During the first quarter of 2008, the Company continued its
practice of comprehensive monitoring of borrowing relationships. As a
result of this process, several credits were identified that required
the Company to take a conservative position and increase loan loss
reserves. Accordingly, the Company reported a net loss for the quarter
ended March 31, 2008 of $354,000, down $475,000 from the reported net
income of $121,000 for the three months ended March 31, 2007. To date,
the Company has had no loan losses from its loan portfolio and
continues to exceed regulatory guidelines for "well-capitalized"
institutions.

For more information regarding Redwood Capital Bancorp, please
visit our website at www.redwoodcapitalbank.com, contact Fred Moore,
CFO, at (707) 444-9840, or stop by our headquarters and main office at
402 "G" Street, Eureka, California 95501.

This press release may contain forward-looking statements that are
subject to risks and uncertainties. Such risks and uncertainties may
include but are not necessarily limited to fluctuations in interest
rates, inflation, government regulations and general economic
conditions, and competition within the business areas in which the
bank is conducting its operations, including the real estate market in
California and other factors beyond the bank's control. Such risks and
uncertainties could cause results for subsequent interim periods or
for the entire year to differ materially from those indicated. Readers
should not place undue reliance on the forward-looking statements,
which reflect management's view only as of the date hereof. The bank
undertakes no obligation to publicly revise these forward-looking
statements to reflect subsequent events or circumstances.

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Redwood Capital Bancorp
Selected Financial Results - Unaudited
(In Thousands)

Period Ended %
3/31/2008 3/31/2007 Change
-----------------------------

Balance Sheet Data (at period end)
Total assets $ 139,081 $ 106,521 31%
Total deposits 126,530 96,855 31%
Total loans (net) 108,865 85,085 28%

Summary of Operations (Year to Date)
Interest income 2,184 1,852 18%
Interest expense 813 663 23%
Net Interest Income 1,371 1,189 15%
Non-interest income 205 247 -17%
Non-interest expense 1,411 1,228 15%
Net Income (Loss) before provision 165 208 -21%
Provision for loan losses 519 87 497%
Income before taxes (354) 121 -392%
*T

Redwood Capital Bancorp
Fred Moore, CFO, 707-444-9840

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