Northern Empire Bancshares Announces Record Earnings for Second Quarter 2004 SANTA ROSA, Calif., July 15 /PRNewswire-FirstCall/ -- Northern Empire Bancshares ("NREB"), the financial holding company of Sonoma National Bank ("Bank"), reported consolidated income of $3,649,000 for the second quarter of 2004 compared to $2,635,000 for the second quarter of last year, for an increase of 38.5%. Return on average assets equaled 1.6% and the return on average equity equaled 19.4% for the second quarter. Net income for the first six months of 2004 totaling $7,230,000 grew 39.3% when compared to the first six months of 2003 net income of $5,191,000. Increased earnings resulted from growth in earning assets, mainly loans. Loans grew 28.6% to $833,026,000 at June 30, 2004 compared to $647,606,000 at June 30, 2003. The allowance for loan losses was increased to $7,719,000 through provision of $325,000 during the second quarter of 2004 in recognition of the loan growth. Operating expenses of $3,740,000 increased from $3,437,000 in the second quarter of 2003. The majority of the increase in expenses for the second quarter can be attributed to growth of the Bank. Additional staffing throughout the Bank was required to process loan and deposit growth and for operations. The Bank also made a significant investment in its data processing systems to provide for further expansion and improve operational efficiencies. The Bank now has imaging capabilities and will be providing check images in customers' checking account statements this fall. The efficiency ratio equaled 36.3% for the second quarter for 2004, compared to 42.1% for the same period in 2003. During the second quarter the Loan Department and several administrative officers relocated to a larger building in the Fountaingrove Business Center in northern Santa Rosa. Expansion of the existing operations center located in the Northpoint area of Santa Rosa is recently completed. Both of these projects will provide for improved work flow and additional staffing. The Bank is pleased to announce the opening of our 8th branch. The San Rafael Branch is opening on July 28, 2004 and is our first branch in Marin County. Total assets at June 30, 2004 grew 26.8% to $959,771,000 from $756,885,000 on June 30, 2003. The majority of asset growth was funded through increased deposits which grew 17.2% to $720,884,000 at June 30, 2004 from $615,040,000 at June 30, 2003. Asset growth was also funded by advances from the San Francisco Federal Home Loan Bank. FHLB advances increased to $156,195,000 at June 30, 2004 compared to $79,227,000 on June 30, 2003. The Bank remained well capitalized with total capital to risk-weighted assets equaling 11.4% on June 30, 2004. Except for historical information contained herein, the statements contained in this press release are forward-looking statements within the meaning of the "safe harbor" provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from those set forth in or implied by forward-looking statements. These risks are described from time to time in Northern Empire Bancshares' Securities and Exchange Commission filings, including its annual reports on Form 10-K and quarterly reports on Form 10-Q. Northern Empire Bancshares disclaims any intent or obligation to update these forward-looking statements. Financial Information as of June 30, 2004 (unaudited) Assets: $959,771,000 Deposits: $720,884,000 Equity: $78,975,000 Book Value: $8.00 Return on Equity: 19.4% Return on Assets: 1.6 Efficiency Ratio: 36.3% Non-Performing Loans: 0.09% Financial Information as of June 30, 2003 (unaudited) Assets: $756,885,000 Deposits: $615,040,000 Equity: $59,016,000 Book Value: $6.39 Return on Equity: 18.1% Return on Assets: 1.5 Efficiency Ratio: 42.1% Non-Performing Loans: 0.23% Visit the NREB Website at: http://www.snbank.com/ DATASOURCE: Northern Empire Bancshares CONTACT: Lisa Gallo of Hoefer & Arnett, +1-800-346-5544, or Fred Ptucha of BrooksStreet Securities, +1-800-775-7517, or Stephen Eddy of First Security Van Kasper, 1-800-652-1747, or Douglas Brinker of SmithBarney, +1-707-571-5781, all for Northern Empire Bancshares Web site: http://snbank.com/

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