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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended March 31, 2008

OR

For the transition period from              to             

Commission file number 001-33592

SILVER STATE BANCORP

(Exact name of registrant as specified in its charter)

(702) 433-8300

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all the reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨    Accelerated filer  ¨    Non-accelerated filer  x    Small Reporting Company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock Outstanding: 15,135,765 shares as of April 30, 2008

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PART I – FINANCIAL INFORMATION

Silver State Bancorp and Subsidiaries

Consolidated Balance Sheets

March 31, 2008 and December 31, 2007

(Dollars in thousands)

(UNAUDITED)

See Notes to Consolidated Financial Statements.

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Silver State Bancorp and Subsidiaries

Consolidated Statements of Operations

For the three months ended March 31, 2008 and 2007

(Dollars in thousands, except per share information)

(UNAUDITED)

See Notes to Consolidated Financial Statements.

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Silver State Bancorp and Subsidiaries

Consolidated Statements of Cash Flows

Three Months Ended March 31, 2008 and 2007

(Dollars in thousands)

(UNAUDITED)

See Notes to Consolidated Financial Statements.

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Silver State Bancorp and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share information)

Note 1. Nature of Banking Activities and Summary of Significant Accounting Policies

Nature of banking activities

Silver State Bancorp, or the Company, is a bank holding company headquartered in Henderson, Nevada. As of March 31, 2008, the Company had two wholly-owned consolidated subsidiaries, Silver State Bank and Choice Bank, or the Banks. Silver State Bank, a Nevada State chartered bank, provides a full range of commercial and consumer banking products through thirteen branches located in the Las Vegas, Nevada metropolitan area. On September 5, 2006, the Company acquired a second subsidiary, Choice Bank, which, as of March 31, 2008, had three full-service branches in the greater Phoenix/Scottsdale, Arizona area. Effective April 1, 2008, Choice Bank merged with and into Silver State Bank. The Company also operates loan production offices in Nevada, California, Washington, Oregon, Utah, Colorado and Florida. The Company’s business is concentrated in southern Nevada and central Arizona and is subject to the general economic conditions of these areas. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, or GAAP, and general industry practice.

Basis of financial statement presentation and accounting estimates

In preparing the accompanying consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses for the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the evaluation of goodwill for impairment.

Principles of consolidation

The accompanying consolidated financial statements include the accounts of Silver State Bancorp and its wholly-owned consolidated subsidiaries, Silver State Bank and Choice Bank as of March 31, 2008. Certain trust subsidiaries (see Note 12 of the audited financial statements for the fiscal year ended December 31, 2007) do not meet the criteria for consolidation pursuant to Financial Accounting Standards Board (FASB) Interpretation No. 46, Consolidation of Variable Interest Entities, as amended. All significant intercompany accounts and transactions have been eliminated in consolidation.

Interim Financial Information

The accompanying unaudited consolidated financial statements as of March 31, 2008 and 2007 have been prepared in condensed format, and therefore do not include all of the information and footnotes required by GAAP for complete financial statements.

The information furnished in these interim statements reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter or for the full year. The interim financial information should be read in conjunction with the Company’s audited financial statements for the fiscal year ended December 31, 2007.

Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC.

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Silver State Bancorp and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share information)

Note 1. Nature of Banking Activities and Summary of Significant Accounting Policies (continued)

Earnings (loss) per share

Basic earnings (loss) per share (EPS) represents income (loss) available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued as well as any adjustment to income that would result from assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding options and nonvested restricted shares, and are determined using the treasury stock method. Diluted loss per share for the quarter ended March 31, 2008 was based only on the weighted-average number of shares outstanding during the period, as the inclusion of any common stock equivalents would have been anti-dilutive.

Components used in computing EPS for the three months ended March 31, 2008 and 2007 are summarized as follows:

Repurchase Program

For the quarter ended March 31, 2008, the Company repurchased 146,600 shares of common stock on the open market with a weighted average price of $10.29 per share under an approved stock repurchase program authorizing the Company to initially repurchase up to 764,415 shares of its outstanding common stock. The Company has the authority to repurchase the remaining 482,415 shares.

Current accounting developments

In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities –Including an Amendment of FASB Statement No. 115. SFAS 159 permits an entity to choose to measure many financial instruments and certain other items at fair value. For financial instruments elected to be accounted for at fair value, an entity will report the unrealized gains and losses in earnings. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company adopted SFAS 159 effective January 1, 2008. Upon adoption, the Company did not elect the fair value option for eligible items that existed at January 1, 2008 and as such, the impact of adopting such standard is not material.

In September 2006, the Emerging Issues Task Force (EITF) reached a consensus on EITF Issue No. 06-4 (EITF 06-4), Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements, which requires the application of the provisions of SFAS 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions, to endorsement split-dollar life insurance arrangements. EITF 06-4 would require the Company to accrue a liability for the postretirement death benefits associated with split-dollar life insurance agreements. An endorsement-type arrangement generally exists when the Company owns and controls all incidents of ownership of the underlying policies. EITF 06-4 is effective for fiscal years beginning after December 15, 2007. The adoption of EITF 06-4 did not have a material impact on the financial statements. At January 1, 2008 a cumulative effect adjustment was recorded to retained earnings in the amount of $55. There was no impact to earnings (loss) per share.

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Silver State Bancorp and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share information)

Note 2. Loans

The composition of the Company’s net loans as of March 31, 2008 and December 31, 2007 is as follows:

Information about impaired and nonaccrual loans as of March 31, 2008 and December 31, 2007 is as follows:

The Company is currently committed to lend approximately $60,229 in additional funds on these impaired loans in accordance with the original terms of these loans; however, the Company is not legally obligated to, and will not, disburse additional funds on any loans while in nonaccrual status. Of the $60,229 in committed funds on impaired loans, $10,919 is applicable to nonaccrual loans. The Company will continue to monitor its portfolio on a regular basis and will lend additional funds as warranted on these impaired loans.

Approximately 62% of the impaired loans as of March 31, 2008 relates to residential construction and land loans. As of March 31, 2008, $205,378 of impaired loans do not have any specific valuation allowance under SFAS 114. Pursuant to SFAS 114, a loan is impaired when both the contractual interest payments and the contractual principal payments of a loan are not expected to be collected as scheduled in the loan agreement. The $205,378 of impaired loans without a specific valuation allowance as of March 31, 2008 are generally impaired due to delays or anticipated delays in receiving payments pursuant to the contractual terms of the loan agreements.

The Company experienced significant declines in the current valuations for real estate collateral supporting portions of its loan portfolio, specifically residential construction and residential land loans, late in the first quarter of 2008, and continuing through May 2008, as reflected in recently received appraisals. As a result, a qualitative adjustment was recorded to the allowance for loan losses as of March 31, 2008, in the amount of approximately $6,000 for impaired loans for which updated appraisals have not yet been received. Currently, $188.0 million, or approximately 71%, of impaired loans have recent appraisals. If real estate values continue to decline and as updated appraisals are received, the Company may have to increase its allowance for loan losses appropriately.

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Silver State Bancorp and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share information)

Note 2. Loans (continued)

Changes in the allowance for loan losses for the three months ended March 31, 2008 and 2007, are as follows:

Note 3. Deposits

At March 31, 2008, four customer balances, which were our four largest depositors, totaling $674,145 comprised approximately 43% of total deposits. At December 31, 2007, these same four customer balances, which were also our four largest depositors, totaling $500,243 comprised approximately 35% of total deposits. These customer balances constitute all our brokered deposits at March 31, 2008 and December 31, 2007. Of these deposits at March 31, 2008 and December 31, 2007, $260,401 and $242,821, respectively, are interest-bearing demand deposit accounts, $62,173 and $38,006, respectively, are time deposits, $100 and over, and $351,571 and $219,416, respectively are other time deposits.

As of March 31, 2008 and December 31, 2007 approximately $16,837 and $28,431, respectively, of the Company’s non-interest-bearing demand deposits consisted of demand accounts maintained by title insurance and qualified intermediary companies.

Note 4. Other Borrowed Funds

The Company has a line of credit available from the Federal Home Loan Bank of San Francisco (FHLB). Borrowing capacity is determined based on collateral pledged, generally consisting of loans and securities, at the time of the borrowing. The remaining borrowing capacity at March 31, 2008 with the FHLB was approximately $984. Advances at March 31 have maturity dates as follows:

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Silver State Bancorp and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share information)

Note 5. Commitments and Contingencies

Contingencies

Southwest Exchange, a former customer of Silver State Bank, is currently under investigation and reported to be a defendant in a number of lawsuits for the loss of funds belonging to Southwest Exchange’s customers, which loss has been estimated in newspaper articles to exceed $100.0 million. Southwest Exchange maintained certain deposit accounts with Silver State Bank. Although Southwest Exchange did not maintain custody or escrow accounts at Silver State Bank in the name of or for the benefit of customers of Southwest Exchange, Silver State Bank may become involved in protracted litigation as a result of the activities of Southwest Exchange.

We previously were named as a defendant in one such lawsuit and, by agreement of the plaintiff, were dismissed from the lawsuit without prejudice. We were also named in two other complaints (along with several other defendants) alleging conversion, breach of fiduciary duty, negligence, fraud and civil RICO claims. More than a year has elapsed since the filing of those complaints, and they have not been served on Silver State Bank.

Silver State Bank was also recently named, along with 41 other named defendants, as a defendant in a consolidated litigation pending before the Nevada District Court, Clark County (P&D Kelesis, LLC et al. v. Southwest Exchange, et al., Case No. A535439), claiming causes of action for conversion and negligence per se against the Bank. The plaintiffs purported to serve Silver State Bank with this complaint on February 7, 2008. The amount claimed in this consolidated lawsuit is approximately $12.7 million. On April 11, 2008, the plaintiffs served the Bank with an amended complaint, claiming causes of action for breach of fiduciary duty, conversation, negligence per se, unjust enrichment, and Breach of Uniform Fiduciaries Act. On May 2, 2008, some, but not all, additional claimants joined in the Amended Claims (the “Albrittons’ Claims”). The Albrittons’ Claims total $8.0 million, bringing total claims against Silver State Bank related to this matter to approximately $20.7 million. The Bank filed a motion to dismiss the complaint (or in the alternative, for summary judgment) which was denied by the court to allow the plaintiffs additional time for discovery. After the period for discovery, the plaintiffs may amend the complaint and we may file new motions for dismissal or summary judgment.

We believe the allegations against us in these lawsuits are without merit and we intend to vigorously defend these and any other future lawsuits pertaining to this matter. However, if we are not dismissed from these lawsuits or are included in other litigation regarding Southwest Exchange, our employees, officers and directors may be required to expend substantial amounts of time in connection with such litigations which will prevent them from concentrating on our normal business. In addition, we may be required to spend substantial sums on legal representation in connection with any such litigation until the claims are dismissed.

The Company is not involved in any other pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business. The Company believes that these routine legal proceedings, in the aggregate, are immaterial to our financial condition and results of operations.

Financial instruments with off-balance-sheet risk

A summary of the contract amount of the Company’s exposure to off-balance-sheet risk as of March 31 is as follows:

Concentrations

The Company’s loan portfolio has a high concentration in real estate loans, specifically construction and land loans. At March 31, 2008, approximately 11% of real estate loans were classified as residential construction loans, approximately 25% of real estate loans were classified as commercial construction loans, approximately 21% were classified as residential land loans, and approximately 19% were classified as commercial land loans. In addition, commercial real estate loans represent approximately 17% and single family residential loans represent approximately 7% of total real estate loans as of March 31, 2008. Approximately 64% of these commercial real estate loans are owner-occupied.

Note 6. Stock Options and Restricted Stock

The Company’s 2006 Omnibus Equity Plan is discussed in Note 14 of the audited financial statements for the fiscal year ended December 31, 2007.

In January 2008, the Company adopted a new Omnibus Equity Plan, which was approved at the Annual Meeting of Shareholders in April 2008. The 2008 Omnibus Plan allows for the granting of 750,000 stock-based awards.

During the three months ended March 31, 2008, the Company granted 151,500 incentive stock options and 6,000 shares of restricted stock to various employees and granted 47,000 incentive stock options to key officers. The options had a weighted average exercise price of $12.50. All of the incentive stock options vest at 25% per year. The restricted stock vests 100% after 4 years. The total expense to be recognized on these stock based awards granted during the three months ended March 31, 2008 is approximately $811, and will be recorded over the vesting period. During the three months ended March 31, 2008, 5,194 stock options were exercised, and 19,100 options and 250 shares of restricted stock were forfeited. These exercised and forfeited options had a weighted average exercise price of $6.07 and $21.78, respectively.

As of March 31, 2008, there was $2,383 of total unrecognized compensation cost related to nonvested share-based compensation arrangements. This compensation will be recognized over a weighted average period of approximately 2 years.

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Silver State Bancorp and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share information)

Note 7. Regulatory Capital Requirements

To be categorized as well-capitalized, the Company and the Banks must maintain Total Risk Based, Tier I Risk Based and Tier I Leverage ratios as set forth in the table below. As of March 31, 2008, the Company and the Banks meet the regulatory guidelines to be categorized as well-capitalized for all regulatory purposes.

The actual capital amounts and ratios for the Banks and the Company as of March 31, 2008 are presented in the following table:

Note 8. Fair Value Accounting

Effective January 1, 2008, the Company partially adopted SFAS 157, Fair Value Measurements, or SFAS 157, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 applies only to fair value measurements already required or permitted by other accounting standards and does not impose requirements for additional fair value measures. SFAS 157 was issued to increase consistency and comparability in reporting fair values. In February 2008, the Financial Accounting Standards Board issued Staff Position No. FAS 157-2, or FSP 157-2, which delays the effective date of SFAS 157 for certain nonfinancial assets and nonfinancial liabilities, to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The delay is intended to allow additional time to consider the effect of various implementation issues that have arisen, or that may arise, from the application of SFAS 157. The Company has elected to apply the deferral provisions in FSP 157-2 and therefore has only partially applied the provisions of SFAS 157. The Company’s adoption of SFAS 157 did not have a material impact on the Company’s financial condition or results of operations.

As defined in SFAS 157, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

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Silver State Bancorp and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share information)

Note 8. Fair Value Accounting (continued)

The Company has not adopted the provisions of SFAS 157 with respect to certain nonfinancial assets, such as other real estate owned. The Company will fully adopt SFAS 157 with respect to such items effective January 1, 2009. The Company does not believe that such adoption will have a material impact on the consolidated financial statements, but will result in additional disclosures related to the fair value of nonfinancial assets.

The Company has identified available-for-sale securities and impaired loans with allocated reserves under SFAS 114 as those items requiring disclosure under SFAS 157. Management has concluded that servicing rights are not material for further consideration in relation to SFAS 157 disclosures.

Fair Value on a Recurring Basis

The table below presents the balance of securities available-for-sale at March 31, 2008, which are measured at fair value on a recurring basis:

Securities available-for-sale consist mainly of AAA rated US Government agency securities, with the majority having maturity dates of five years or less. The Company measures securities available-for-sale at fair value on a recurring basis; thus, there was no transition adjustment upon adoption of SFAS 157. The fair value of the Company’s securities available-for-sale are determined using Level 1 and Level 2 inputs, which are derived from readily available pricing sources and third-party pricing services for identical or comparable instruments, respectively.

Fair Value on a Nonrecurring Basis

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table presents such assets carried on the balance sheet by caption and by level within the SFAS 157 hierarchy as of March 31, 2008.

The specific reserves for collateral dependent impaired loans are based on the fair value of the collateral less estimated costs to sell. The fair value of collateral was determined based on appraisals. In some cases, adjustments were made to the appraised values due to various factors including age of the appraisal, age of comparables included in the appraisal, and known changes in the market and in the collateral. When significant adjustments were based on unobservable inputs, the resulting fair value measurement has been categorized as a Level 3 measurement. Specific reserves were calculated for impaired loans with an aggregate carrying amount of $61,325 during the quarter ended March 31, 2008. The collateral underlying these loans had a fair value of $54,815, less estimated costs to sell of $5,148, resulting in a specific reserve in the allowance for loan losses of $11,658.

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Silver State Bancorp and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share information)

Note 9. Segment Reporting

The following is a summary of selected operating segment information as of and for the periods ended March 31, 2008 and 2007:

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Silver State Bancorp and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share information)

Note 9. Segment Reporting (continued)

Effective April 1, 2008, the Company completed the merger of Choice Bank into Silver State Bank. As a result, the Company will no longer prepare discrete financial information for Choice Bank. As such, the Company will report on only one operating segment in future periods (Silver State Bank).

Note 10. Goodwill

Goodwill represents the excess of the consideration over the fair value of the net assets of Choice Bank acquired in September 2006. Goodwill is not amortized, but instead tested for impairment at least annually. The Company reviewed goodwill for the Choice Bank reporting unit for impairment as of October 1, 2007 in accordance with SFAS 142, Goodwill and Other Intangible Assets. No impairment to goodwill was recognized at that time. In addition, the Company considered other events and circumstances through March 31, 2008 in accordance with SFAS 142 for the Choice Bank reporting unit and has determined that no impairment loss is necessary. As a result of Choice Bank being merged into Silver State Bank effective April 2008 (see Note 9), the Company’s reporting unit for goodwill impairment purposes will be Silver State Bank.

At March 31, 2008, the Company’s market capitalization (based on total shares outstanding, excluding unvested restricted stock) was less than our total stockholders’ equity by $11,019. Through May 14, 2008, our market capitalization continues to be less than total stockholders’ equity. Should this situation continue to exist at June 30, 2008, we will consider this and other factors including the Company’s results of operations and may prepare a valuation of the Silver State Bank reporting unit to determine whether goodwill is impaired. No assurance can be given that the Company will not record an impairment loss on goodwill in 2008. Because goodwill is not included in the calculation of regulatory capital, the Company’s and Silver State Bank’s regulatory capital ratios would not be affected by this potential non-cash expense.

Note 11. Subsequent Events

In April 2008, the Company opened a full-service branch in the Phoenix/Scottsdale, Arizona area. The Company currently operates 17 full service branches including four in the Phoenix/Scottsdale, Arizona area.

In May 2008, the Company’s capacity to purchase federal funds under agreements with other lending institutions was reduced to approximately $69,000 as compared to approximately $104,000 at March 31, 2008 and approximately $90,500 at December 31, 2007.

The Company is considering a variety of strategic alternatives to enhance its capital position and strengthen the balance sheet. To assist in evaluating these alternatives, in April 2008, the Board of Directors approved the engagement for the services of Keefe, Bruyette & Woods, Inc., a nationally recognized investment banking firm.

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This discussion and analysis reflects Silver State Bancorp’s financial statements and other relevant statistical data and is intended to enhance your understanding of our financial condition and results of operations. You should read the information in this section in conjunction with Silver State Bancorp’s Annual Report on Form 10-K (Commission File No. 001-33592), filed with the Securities and Exchange Commission on March 14, 2008 which includes the audited financial statements for the year ended December 31, 2007 and the other statistical data provided elsewhere in this Form 10-Q. Unless otherwise indicated, the financial information presented in this section reflects the consolidated financial condition and operations of Silver State Bancorp.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements may be identified by the use of the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar terms and phrases, including references to assumptions.

Forward-looking statements are based on various assumptions and analyses made by us in light of our management’s experience and its perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond our control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, without limitation, the following:

We have no obligation to update any forward-looking statements to reflect events or circumstances after the date of this document.

Available Information

Under the Securities Exchange Act of 1934 Sections 13 and 15(d), periodic and current reports must be filed with the Securities and Exchange Commission, or the SEC. We electronically file the following reports with the SEC: Form 10-K (Annual Report), Form 10-Q (Quarterly Report), Form 8-K (Current Report), and Form DEF 14A (Proxy Statement). We may file additional forms. The SEC maintains an Internet site, www.sec.gov, in which all forms filed electronically may be accessed. Additionally, all forms filed with the SEC and additional shareholder information is available free of charge on our website: www.silverstatebancorp.com. We post these reports to our website as soon as reasonably practicable after filing them with the SEC. None of the information on or hyperlinked from our website is incorporated into this Report.

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Executive Summary

We are a Nevada corporation formed on January 21, 1999 to acquire all of the issued and outstanding stock of Silver State Bank and to engage in the business of a bank holding company under the Bank Holding Company Act of 1956, as amended. Silver State Bank was formed in July 1996, as a commercial bank headquartered in Henderson, Nevada. On September 5, 2006 we acquired Choice Bank. As of March 31, 2008, Choice Bank was an Arizona state-chartered bank that was formed on January 28, 2002. With the acquisition of Choice Bank, we became a multi-bank holding company operating both Choice Bank and Silver State Bank as separate bank subsidiaries. Choice Bank was merged into Silver State Bank effective on April 1, 2008 with the combined bank operating as Silver State Bank.

Since commencing business, Silver State Bank has grown from one location in Henderson, Nevada to thirteen branches in the greater Las Vegas market area and four branches in the greater Phoenix/Scottsdale market area, including one new branch in the Las Vegas market that opened in February 2008 and one new branch in the Phoenix/Scottsdale area that opened in April 2008.

Our assets and liabilities are comprised primarily of loans and deposits, respectively. We provide a variety of loans to our customers, including construction and land loans, commercial real estate loans, commercial and industrial loans, Small Business Administration (SBA) loans and to a lesser extent, residential real estate and consumer loans. We fund our loans primarily with locally generated deposits and borrowings to the extent needed.

We experienced a net loss for the three months ended March 31, 2008 of $14.4 million, or ($0.95) per diluted share, compared to net income of $5.6 million, or $0.39 per diluted share, for the corresponding period in 2007. The net loss for the three months ended March 31, 2008 was due primarily to an increase of $29.7 million to the provision for loan losses for the three months ended March 31, 2008 compared to the corresponding period of 2007. The increase in the provision for loan losses is primarily attributable to our residential construction and residential land loan portfolio which continues to experience deterioration in estimated collateral values and repayment abilities of some of our customers. Other reasons for the increase are attributable to an overall increase in nonperforming assets, an increase in our potential problem loans and the continuing general weakening economic conditions in the markets served by the Company. Our non-interest income decreased $705,000 and our non-interest expenses increased $2.9 million for the three months ended March 31, 2008 compared to the corresponding period of 2007. Our net interest income increased $1.9 million for the three months ended March 31, 2008 compared to the corresponding period of 2007, and we had a difference of $11.4 million between our income tax benefit for the three months ended March 31, 2008 and our income tax expense for the corresponding period of 2007.

The second half of 2007 and the first quarter of 2008 have been highlighted by significant disruption and volatility in the financial and capital marketplaces. This instability has been attributable to a variety of factors, the most significant of which has been the fallout from the failures and defaults associated with the sub-prime mortgage market. Although we do not engage in sub-prime lending, our markets have been affected by these factors. During the first quarter of 2008, there has continued to be a decline in the national housing and real estate markets as well as the overall economy.

During the first quarter of 2008, we continued to experience significant competitive pressures and challenging market conditions in the markets in which we operate as the economies in the Las Vegas and Phoenix/Scottsdale areas, as well as the national economy, have shown signs of significant weakness. The Las Vegas economy has weakened recently as the loss of real estate and construction jobs from the declining residential market, as well as lost casino/hotel jobs due to the scheduled closing of old casino resorts to make way for new casino projects, has caused the local unemployment rate to rise to 5.7% as of March 2008 compared to 4.3% a year earlier and 5.6% at December 31, 2007. Population growth has also tapered off, rising 2.7% from 2006 to 2007. New home sales in the first quarter of 2008 were down 44% from the first quarter of 2007. In the Phoenix area, closings of new homes and resale homes in the first quarter of 2008 have decreased 46% and nearly 39%, respectively, compared to the first quarter of 2007. As a result, the residential housing markets in the Las Vegas and Phoenix areas have experienced a significant decline with growing inventories of newly constructed one-to-four family residential homes and declining property values. The weakness in the residential market has begun to expand into the commercial real estate market as builders and related industries downsize. The extent of the impact of the deterioration of the Nevada and Arizona economies and real estate markets on certain segments of our loan portfolio, namely our residential construction and residential land loans, began to be realized toward the end of the first quarter of 2008 as project delays mounted and updated appraisals showing significant lower valuations were received. With many real estate projects requiring an extended time to market, some of our borrowers have exhausted their liquidity which requires us to place the loan into nonaccrual status. These economic trends have begun to adversely affect our asset quality with nonaccrual loans increasing to $78.0 million as of March 31, 2008, compared to $13.1 million at December 31, 2007. Nonperforming loans as a percentage of gross loans were 4.79% as of March 31, 2008, compared to 0.84% at December 31, 2007. Nonperforming assets as a percentage of total assets were 4.14% as of March 31, 2008, compared to 0.75% as of December 31, 2007. In addition, our potential problem loans totaled approximately $274.5 million at March 31, 2008 compared to $84.5 million at December 31, 2007. For the three months ended March 31, 2008, net charge-offs as a percentage of average loans were 0.57% compared to less than 0.01% for the corresponding period in 2007. OREO was $1.2 million at March 31, 2008 compared to $110,000 at December 31, 2007. Continuation of these economic and real estate factors are likely to continue to affect our asset quality and overall performance.

We have taken actions to work through this economic environment of which the most obvious was a significant increase in our loan loss provision. In addition, we have modified our lending guidelines to reflect the current economic conditions. For example, we are requiring greater pre-sales of homes for construction projects from the borrowers that we approve and we are also requiring more cash from the borrower at closing to improve loan to cost and loan to value ratios. We created a new internal loan review department to work in conjunction with our external loan review protocols. This department will be the first to review whether each loan is progressing according to its original terms and conditions so as to identify potential problems sooner in the process. We have increased the number of professionals in our Special Assets Department to enhance our ability to further mitigate issues with problem loans. Finally, we have effected a range of expense reduction measures to help with profitability which we estimate could save up to $1.0 million per quarter.

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In addition, we continue to closely monitor the local and national real estate markets and other factors related to risks inherent in our loan portfolio. Due to the current economic conditions in the markets we operate and our current strategic focus, the Company expects to experience little or no loan and deposit growth for the remainder of 2008 as compared to previous years.

We are also considering a variety of strategic alternatives to enhance our capital position and strengthen our balance sheet. In April, 2008, to assist us in evaluating these alternatives, the Board approved the engagement for the services of Keefe, Bruyette & Woods, Inc., a nationally recognized investment banking firm.

Our asset growth during the first quarter of 2008 was driven by our loan originations and an increase in cash equivalents, with deposits and Federal Home Loan Bank (FHLB) advances serving as our primary funding sources. Net loans increased 3.1% to $1.59 billion as of March 31, 2008 from $1.54 billion as of December 31, 2007. Total cash equivalents increased 512.1% to $84.7 million as of March 31, 2008 from $13.8 million as of December 31, 2007. Total deposits increased 10.2% to $1.57 billion as of March 31, 2008 from $1.43 billion as of December 31, 2007. To further enhance our deposit growth, we have continued to expand our branch network, opening one new branch in the Las Vegas area during February 2008 and one new branch in the Phoenix/Scottsdale area in April 2008. We have plans to open one additional branch in the Las Vegas area and two additional branches in the Phoenix/Scottsdale area during the remainder of 2008. FHLB advances increased 29.8% to $117.6 million as of March 31, 2008 from $90.6 million as of December 31, 2007.

We have a high concentration in real estate loans in our loan portfolio, specifically construction and land loans. At March 31, 2008, approximately 91% of total gross loans were classified as real estate loans. At March 31, 2008, approximately 11% of real estate loans were classified as residential construction loans, approximately 25% of real estate loans were classified as commercial construction loans, approximately 21% were classified as residential land loans, and approximately 19% were classified as commercial land loans. In addition, commercial real estate loans represent approximately 17% and single family residential loans represent approximately 7% of total real estate loans as of March 31, 2008. Approximately 64% of commercial real estate loans are owner occupied.

Our 20 largest depositors accounted for approximately 51.7% of our total deposits and our five largest depositors accounted for approximately 44.3% of our total deposits at March 31, 2008. Our largest depositor as of March 31, 2008 accounted for 22.4% of our total deposits. The deposit terms offered to our 20 largest depositors are consistent with the terms offered to our other large depositors. Our four largest depositors accounted for $674.1 million, or 42.9% of total deposits at March 31, 2008. The deposit balances of these four largest customers are considered for regulatory purposes to be brokered deposits, and constitute all our brokered deposits at that date. Federal banking law and regulation places restrictions on depository institutions regarding brokered deposits because of the general concern that these deposits are at a greater risk of being withdrawn and placed on deposit at another institution offering a higher interest rate, thus posing liquidity risk for institutions that gather brokered deposits in significant amounts. We expect to gradually reduce the level of brokered deposits throughout the remainder of 2008, replacing them with other deposits or borrowings, as appropriate.

The Company is considered “well-capitalized” pursuant to regulatory capital definitions at March 31, 2008 with Tier 1 Risk Based, Total Risked-Based, and Tier 1 capital to average assets or leverage ratio of 9.1%, 11.4% and 9.3%, respectively. However, if we continue to experience losses and continued deterioration of its loan portfolio in future periods, we could be deemed “adequately capitalized” rather than “well-capitalized” which would increase premiums for deposit insurance and also require FDIC approval to gather brokered deposits.

The Company repurchased 146,600 shares of its common stock under an authorized stock repurchase program at a weighted average price per share of $10.29 during the quarter ended March 31, 2008. At March 31, 2008 the maximum number of shares remaining that may yet be purchased under this stock repurchase program was 482,415. The repurchased shares are held in treasury. The Company has no plans to repurchase any additional shares of common stock under this repurchase program during the second quarter of 2008.

Our results of operations are largely dependent on net interest income. Net interest income is the difference between interest income we earn on interest-earning assets, which are comprised primarily of construction and land loans, commercial real estate loans, and to a lesser extent commercial business, residential and consumer loans, and the interest we pay on our interest-bearing liabilities, which are primarily deposits and, to a lesser extent, other borrowings. Management strives to match the re-pricing characteristics of the interest-earning assets and interest-bearing liabilities to protect net interest income from changes in market interest rates and changes in the shape of the yield curve. The increase in net interest income for the three months ended March 31, 2008 compared to the corresponding period in 2007 is due primarily to an increase in our loan portfolio offset by a decrease in our net interest margin from 5.7% for the three months ended March 31, 2007 to 4.3% for the three months ended March 31, 2008. The decrease in net interest margin is primarily attributable to an overall decline in market interest rates and a continued increase in competitive pricing pressure in both loans and deposits. In addition, our net interest margin decreased by approximately 0.22% due to the reversal of interest income on loans being placed on nonaccrual status during the first quarter of 2008.

The instability in the mortgage and housing markets has continued to impact the global markets and domestic markets and has contributed to the significant credit and liquidity crisis which began during the third quarter of 2007. In response to the liquidity and credit crisis and potential impact on the overall economy, the Federal Open Market Committee (FOMC) reduced the Discount Rate by 225 basis points and the Federal Funds Rate by 200 basis points during the 2008 first quarter, and by an additional 25 basis points to both rates at its recent meeting in April 2008. Furthermore, since the beginning of the 2007 third quarter the FOMC has reduced the Discount Rate by 400 basis points and the Federal Funds Rate by 325 basis points. These decreases in short-tem interest rates have resulted in a more positively sloped yield curve. However, this interest rate environment may continue to have an adverse affect on our net interest margin in the near future as the majority of our interest-earning assets, including approximately 98% of our loan portfolio, are variable rate instruments that will reprice faster than our interest-bearing liabilities.

If the competition we experienced in the first quarter of 2008 in the form of higher deposit rates offered by local financial institutions, several of which are affiliated with significantly larger national and international financial institutions, continues for the balance of 2008, it could have the effect of increasing our cost of funds to a level higher than we have experienced historically. We continue to utilize FHLB advances and other wholesale funding sources to supplement our local sources of funds and as a means to lower our overall cost of funds.

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We also have experienced strong competition in making loans in the form of intense pricing pressure on the interest rates we offer. This strong competition coupled with decreasing interest rates on our variable rate loans has caused the average yield on our loan portfolio to decrease significantly compared to prior periods. Price competition for loans is expected to continue, and may intensify, as a result of additional de novo bank entrants into our marketplace and the pricing strategies of our larger competitors. Price competition for loans is expected to continue to have an adverse impact on the yields we can obtain on our loan portfolio. The competitive pressures we face in both lending and deposit gathering are expected to result in a continued narrowing of our net interest margin in future periods.

Non-interest income for the three months ended March 31, 2008 decreased 26.4% from the corresponding period in 2007, due primarily to a decrease in gain on sale of loans held for sale and loan servicing fees on our SBA loan products. Non-interest expense for the three months ended March 31, 2008 increased 30.6% from the corresponding period in 2007, due primarily to an increase in salary and benefits, occupancy costs, professional fees, depreciation and amortization expense, and insurance expense due to an increase in FDIC deposit insurance assessments, all reflecting our overall balance sheet and franchise growth.

Operating efficiency is measured in terms of how efficiently income before income taxes is generated as a percentage of revenue. Our efficiency ratio (non-interest expenses divided by the sum of net interest income and non-interest income) was 59.0% for the three months ended March 31, 2008, compared to 47.8% for the corresponding period in 2007.

The net loss for the three months ended March 31, 2008 combined with the decrease in equity resulted in a return on average equity, or ROE, of (36.2)% for the three months ended March 31, 2008 compared to 20.6% for the corresponding period in 2007. Our return on average assets, or ROA, for the three months ended March 31, 2008 decreased to (3.2)% compared to 1.8% for the corresponding period in 2007.

Outlook

Despite the net loss for the quarter, our core operations, including net interest income, remained positive, even with net interest margin compression. In addition to our core branch banking operations, we operate twelve loan production offices located in Nevada, Utah, Colorado, Washington, Oregon, California and Florida, which are established and staffed around personnel who are experienced SBA loan producers in their geographic market. According to recent lending statistics, Silver State Bank is the leading SBA lender in the state of Nevada as ranked by dollar volume. During 2007, Silver State Bank originated and closed $167.6 million in SBA loans, compared to $127.0 million in SBA loans in 2006. We will continue to focus on our core operations with the objective of increasing our net interest income and income from our SBA lending operation, while at the same time also focusing on expense reduction measures, which we have implemented in the second quarter of 2008, and which we estimate will save up to $1.0 million a quarter.

In addition, we remain optimistic about the long-term growth prospects of both Las Vegas, anchored by its international gaming industry, as well as the presence of five Fortune 500 companies headquartered in Las Vegas, and the Phoenix/Scottsdale area, which is the largest metropolitan area in the state of Arizona, with eight of Arizona’s top ten businesses by revenue being headquartered there. The fundamental strength of Arizona and Nevada as desirable places to live and work continue to point to our markets as long term growth areas.

We also believe that our new, more aggressive, risk management tactics will enhance our future asset quality. We ordered an independent third-party loan review of our construction and land portfolios. We also ordered updated appraisals of the real estate collateral underlying these portions of our loan portfolio and have received current appraisals on 71% of our impaired loans. The loan review has been completed with respect to our residential construction and residential land loan portfolios, which are generally considered to be the riskiest portions of our loan portfolio, and is now focused on our commercial construction and commercial land portion. We expect the third party loan review will be completed in the second quarter of 2008. The results of the third party loan review of the residential construction and residential land loan portfolio are reflected in our asset quality data for the first quarter of 2008. While at this time we expect a net loss for the second quarter of 2008, which, combined with our first quarter results, is likely to result in a net loss for 2008, once the loan review is completed and the bulk of remaining appraisals are received, we are confident that the weaknesses inherent in our portfolio will have been identified, providing us with the ability to move forward toward net earnings once again.

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Selected financial highlights are presented in the table below.

Silver State Bancorp and Subsidiaries

Summary Consolidated Financial and Other Data

(Dollars in thousands, except per share data and ratios)

(UNAUDITED)