Mailed to Shareholders
on or about April 24, 1998



                         PROXY STATEMENT

             INFORMATION CONCERNING THE SOLICITATION



     This Proxy Statement is being furnished to the shareholders of Saratoga
 Bancorp, a California corporation (the "Corporation"), in connection with the
 solicitation of proxies by the Board of Directors for use at the Annual
Meeting of Shareholders to be held at 12000 Saratoga-Sunnyvale Rd., Saratoga, CA
 on May 21, 1998 (the "Meeting"). Only shareholders of record on April 10, 1998
 (the "Record Date") will be entitled to notice of the Meeting and to vote at
 the Meeting. At the close of business on the Record Date, the Corporation had
 outstanding and entitled to be voted 1,095,275 shares of its no par value
 Common Stock (the "Common Stock").  

     Shareholders are entitled to one vote for each share held, except that
 for the election of directors each shareholder has cumulative voting rights
 and is entitled to as many votes as shall equal the number of shares held by
such shareholder multiplied by the number of directors to be elected. Each
 shareholder may cast all his or her votes for a single candidate or
 distribute such votes among any or all of the candidates as he or she
 chooses. However, no shareholder shall be entitled to cumulate votes
 (in other words, cast for any candidate a number of votes greater than
the number of shares of stock held by such shareholder) unless such
 candidate's name has been placed in nomination prior to the voting and the
 shareholder has given notice at the Meeting prior to the voting of the
 shareholder's intention to cumulate his or her votes. If any shareholder
 has given such notice, all shareholders may cumulate their votes for
candidates in nomination. Prior to voting, an opportunity will be given for
 shareholders or their proxies at the Meeting to announce their intention to
 cumulate their votes. The proxy holders are given, under the terms of the
 proxy, discretionary authority to cumulate votes on shares for which they
 hold a proxy. 

     Any person giving a proxy in the form accompanying this Proxy Statement
 has the power to revoke that proxy prior to its exercise. The proxy may be
 revoked prior to the Meeting by delivering to the Secretary of the
Corporation either a written instrument revoking the proxy or a duly executed
 proxy bearing a later date. The proxy may also be revoked by the shareholder
 by attending and voting at the Meeting.

     Votes cast by proxy or in person at the Meeting will be counted by the
Inspectors of Election for the Meeting.  The Inspectors will treat abstentions
and "broker non-votes" (shares held by  brokers or nominees as to which 
instructions have not been received from the beneficial owners or persons 
entitled to vote and the broker or nominee does not have discretionary voting 
power under applicable rules of the stock exchange or other self regulatory 
organization of which the broker or  nominee is a member) as shares that are 
present and entitled to vote for purposes of determining the presence of a 
quorum.  Abstentions and "broker non-votes"  will not be counted as shares voted
for purposes of determining the outcome of any matter as may properly come 
before the Meeting.

     Unless otherwise instructed, each valid proxy returned which is not
 revoked will be voted in the election of directors "FOR" the nominees of
 the Board of Directors and "FOR" Proposal No. 2, as described in this Proxy
Statement, and, at the proxy holders' discretion, on such other matters, if
 any, which may come before the Meeting (including any proposal to postpone
 or adjourn the Meeting).

     The Corporation will bear the entire cost of preparing, assembling,
 printing and mailing proxy materials furnished by the Board of Directors to
 shareholders. Copies of proxy materials will be furnished to brokerage houses,
fiduciaries and custodians to be forwarded to the beneficial owners of the
Common Stock. In addition to the solicitation of proxies by use of the mail, 
some of the officers, directors and regular employees of the Corporation
and the Corporation's subsidiary, Saratoga National Bank (the "Bank") may
(without additional compensation) solicit proxies by telephone or personal 
interview, the costs of which will be borne by the Corporation.

<PAGE> 6

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


Security Ownership of Certain Beneficial Owners
       
     As of April 10, 1998, no individual known to the Corporation owned more 
than five percent (5%) of the outstanding shares of its Common Stock except
as described below.

                Name and Address of  Amount and Nature of   Percent
Title of Class  Beneficial Owner     Beneficial Ownership   of Class(1)

Common Stock,      Richard L. Mount (2)         110,690 (3)      9.79%
No Par Value

Common Stock,      V. Ronald Mancuso (4)        70,448 (5)       6.34%
No Par Value


    (1)   Including stock options exercisable within 60 days of the Record Date.
    (2)   The address for Mr. Mount, who is Chairman of the Board, President and
          Chief Executive Officer of the Corporation, is the address of the
          Corporation, 12000 Saratoga-Sunnyvale Road, Saratoga, CA  95070.
    (3)   Includes 275 shares of Common Stock owned by Branda Mount, a minor
          daughter, under the Uniform Transfer to Minors Act (UTMA), Richard 
          L. Mount, custodian and 35,250 stock options exercisable within 60
          days of the Record Date.
    (4)   The address for Dr. Mancuso, a member of the Corporation's Board of
          Directors, is the address of the Corporation, 12000 Saratoga-
          Sunnyvale Road, Saratoga, CA 95070.
    (5)   Includes 1,377 shares of Common Stock owned by Laura Mancuso, his 
          daughter, under the UTMA, V. Ronald or Rosanne Mancuso, Custodians; 
          1,377 shares of Common Stock owned by Jerome D. Mancuso, his son, 
          under the UTMA, V. Ronald or Rosanne Mancuso, Custodians; 1,377 shares
          of Common Stock owned by Victor R. Mancuso, Jr., his son, under the
          UTMA, V. Ronald or Rosanne Mancuso, Custodians and 15,250 stock 
          options exercisable within 60 days of the Record Date.
<PAGE> 7
Security Ownership of Management

     The following table sets forth information as of April 10, 1998 
concerning the equity ownership of directors, nominees, executive officers 
named in the Summary Compensation Table and directors and executive officers 
of the Corporation and the Bank as a group.  Unless otherwise indicated, each
director and executive officer listed below possesses sole voting power and
sole investment power.  All of the shares shown in the following table are 
owned both of record and beneficially except as indicated in the notes to the
table.  The Corporation has only one class of shares outstanding, Common
Stock.  The address for beneficial owners, all of whom are incumbent 
directors and officers of the Corporation and the Bank, is the address of the
Corporation, 12000 Saratoga-Sunnyvale Road, Saratoga, CA 95070.  There are no
current arrangements known to the Corporation, that may result in a change in
control of the Corporation.
<TABLE>
<CAPTION>
<S>               <C>                 <C>                    <C>
                   Name and Address of Amount and Nature of    Percent
Title of Class     Beneficial Owner    Beneficial Ownership    of Class(1)

Common Stock,
No Par Value       Victor E. Aboukhater         32,328 (2)       2.91%

Common Stock,
No Par Value       Robert G. Egan               31,698 (4)       2.85%

Common Stock,
No Par Value       William D. Kron              26,680 (5)       2.40%

Common Stock,
No Par Value       Earl L. Lanna                20,683 (6)       1.85%

Common Stock,
No Par Value       John F. Lynch, III           29,473 (7)       2.65%

Common Stock,
No Par Value       V. Ronald Mancuso            70,448 (8)       6.34%

Common Stock,
No Par Value       Richard L. Mount            110,690 (9)       9.79%

Common Stock,
No Par Value       Mary Page Rourke             22,883 (10)      2.05%


All directors and executive 
officers of the Corporation
as a group (9 persons)                         344,883 (11)     27.63%

</TABLE>
     (1)  Includes stock options exercisable within 60 days of the Record Date.
     (2)  Includes 15,250 stock options exercisable within 60 days of the 
          Record Date.
     (3)  Includes 15,250 stock options exercisable within 60 days of the 
          Record Date.
     (4)  Includes 15,250 stock options exercisable within 60 days of the 
          Record Date.
     (5)  Includes 20,678 stock options exercisable within 60 days of the 
          Record Date.
     (6)  Includes 551 shares of Common Stock owned by Joan Lynch, his wife, 
          and 15,250 stock options exercisable within 60 days of the Record 
          Date.
     (8)  Includes 1,377 shares of Common Stock owned by Laura Mancuso, his 
          daughter, under the UTMA, V. Ronald or Rosanne Mancuso, Custodians; 
          1,377 shares of Common Stock owned by Jerome D. Mancuso, his son,  
          under the UTMA, V. Ronald or Rosanne Mancuso, Custodians; 1,377 shares
          of Common Stock owned by Victor R. Mancuso, Jr., his son, under the 
          UTMA, V. Ronald or Rosanne Mancuso, Custodians and 15,250 stock 
          options exercisable within 60 days of the Record Date.
     (9)  Includes 275 shares of Common Stock owned by Branda Mount, a minor 
          daughter, under the UTMA, Richard L. Mount, Custodian and 35,250
          stock options exercisable within 60 days of the Record Date.
     (10) Includes 20,678 stock options exercisable within 60 days of the 
          Record Date.
     (11) Includes 152,856 stock options exercisable within 60 days of the 
          Record Date.
<PAGE> 9
                             PROPOSAL NO. 1


             ELECTION OF DIRECTORS OF THE CORPORATION

     The number of directors authorized for election at this meeting is seven
(7).  Management has nominated the seven (7) incumbent directors to serve as 
the Corporation's directors.  Each director will hold office until the next
Annual Meeting of Shareholders and until his successor is elected and qualified.

     All proxies will be voted for the election of the seven (7) nominees listed
below (all of whom are incumbent directors) recommended by the Board of 
Directors unless authority to vote for the election of any directors is 
withheld.  The nominees receiving the highest number of affirmative votes of 
the shares entitled to be voted for them shall be elected as directors.  
Abstentions and votes cast against nominees have no effect on the election of 
directors.  If any of the nominees should unexpectedly decline or be unable 
to act as a director, their proxies may be voted for a substitute nominee to 
be designated by the Board of Directors. The Board of Directors has no reason 
to believe that any nominee will be become unavailable and has no present 
intention to nominate persons in addition to or in lieu of those named below.

     The following table sets forth certain information as of the Record Date, 
April 10, 1998, with respect to those persons nominated by the Board of 
Directors for election as directors, as well as all executive officers.  The
Corporation knows of no arrangements, including any pledge by any person of 
securities of the Corporation, the operation of which may, at a subsequent 
date, result in a change in control of the Corporation. There are no
arrangements or understandings by which any of the executive officers or 
directors of either the Corporation or the Bank were selected. There is no 
family relationship between any of the directors or executive officers. 
<TABLE>
<S>                  <C>          <C>                      <C>
Name                  Age          Position                 Since
Victor E. Aboukhater  55           Director                 1981
Robert G. Egan        57           Director                 1981
William D. Kron       54           Director                 1981
Earl L. Lanna         46           Sr. Vice President and 
                                   Sr. Credit Officer       1987
                                   (Bank only)
John F. Lynch, III    56           Director                 1981
V. Ronald Mancuso     59           Director                 1982
Richard L. Mount      53           Chairman of the Board 
                                   and President            1982
Mary Page Rourke      41           Treasurer; Sr. Vice
                                   President/Chief 
                                   Financial Officer
                                  (Bank only)               1987
</TABLE>
The following is a brief account of the business experience during the past 
five years of each director/nominee and each executive officer listed above.

     Victor E. Aboukhater from 1978 to 1986 was President of Victor Investment 
Company, Saratoga, California. Since 1986, he has devoted all of his time to 
the management of his personal investment portfolio of real estate and 
securities. From 1965 to 1973, Mr. Aboukhater was employed by the Government 
of Ras Al Khaima, United Arab Emirates. Mr. Aboukhater and his family moved to 
Saratoga from London, England (where he owned his own export company), in 
<PAGE> 10
October 1978.  Mr. Aboukhater is an American Citizen and a member of the 
Knights of Malta, and in 1970 was awarded the Medal of Chivalry by the President
of Lebanon.
 
     Robert G. Egan is Managing Broker with Coldwell Banker Real Estate. Until 
1985, Mr. Egan owned retail clothing stores. He is the 1984 Citizen of the 
Year for the City of Saratoga, current Fire Commissioner, President
of Saratoga Rotary and is active in many other community organizations and 
affairs. Mr. Egan has been a resident of Saratoga for over 24 years and is a 
past President of the Saratoga Chamber of Commerce. Mr. Egan is a graduate
of the University of San Francisco, has completed his educational 
requirements for a Master's Degree in Education and holds a Community College
Supervisor and Instructor credential.

     William D. Kron is the founder and Chairman of Saratoga National Bank.  He
is a principal at IBM/JBA, an international developer and implementer of 
financial software.  He was formerly with IBM Sales & Marketing.  A fourth 
generation Californian, Mr. Kron is a member of the San Jose Rotary Club and
a graduate of the University of California at Berkeley.

     Earl L. Lanna is Senior Vice President and Senior Credit Officer of 
Saratoga National Bank. Prior to joining the Bank, he was employed by Bank 
of the West in San Jose, CA as Assistant Vice President from June 1979 to 
April 1987.  Mr.  Lanna is past President of the West San Jose Kiwanis.  He 
holds a Bachelor of Science degree in Business Administration from the 
University of Phoenix.

     John F. Lynch, III (Jack) is Vice President-Operations of Impact Systems, 
Inc., a manufacturer of industrial computer control systems. 
Prior to December, 1982 he was Vice President for Measurex Systems Inc.  He 
has been a resident of Saratoga for 20 years. Mr. Lynch has a degree in Chemical
Engineering from the University of Mississippi and an MBA from the Harvard 
Business School.

     Dr. V. Ronald Mancuso has been in private dental practice in Saratoga since
August 1967 and a resident since October 1966. He attended St. Johns 
University in New York and received his DDS degree from Seton Hall
College of Medicine and Dentistry in 1963. Past President of the Saratoga 
Kiwanis Club, he also served as Director of the Saratoga Chamber of Commerce,
 the Santa Clara County Dental Society and the Academy of General
Dentistry. He is presently a member of the American Dental Association, the 
Academy of General Dentistry, the California Dental Association, Santa Clara 
County Dental Society, and the Western Society of Periodontology.

     Richard L. Mount is Chairman of the Board, President and Chief Executive 
Officer of the Corporation as well as President, Chief Executive Officer and 
Director of Saratoga National Bank. Previously, Mr. Mount was Chairman of the
Board and President of Foothills National Bank in Fort Collins, Colorado, from 
October 1980 to February 1982. From January to May 1980, Mr. Mount was 
Executive Vice President of Central Trust Company of Newark, Ohio. He formerly
served on the Board of Directors of the Federal Reserve Bank of San 
Francisco and is past president of the Independent Bankers Association of 
America.  He was also a member of the Securities and Exchange Commission's
Market Oversight and Financial Services Advisory Committee.  He is currently
Chairman of the Independent Bankers Association Bankard.  He has previously 
served as President of the Saratoga Chamber of Commerce and as Chairman of the
Saratoga Rotary Art Show and Celebrate! Saratoga.  He currently serves as 
Director for Good Samaritan Hospital and Our Lady of Fatima.  Mr. Mount
received his Bachelor of Science degree from Ohio State University in 1967. He 
is a graduate of the Ohio School of Banking (1971) and the Graduate School of
Banking at the University of Wisconsin (1974).

     Mary Page Rourke is Treasurer of the Corporation, and Senior Vice President
and Chief Financial Officer of Saratoga National Bank.  Before joining the 
Bank, Ms. Rourke was Vice President and Cashier of Bank of Los Gatos, N.A. 
from May 1984 to July 1987.  Ms. Rourke received her Bachelor of Science degree
in Development and Resource Economics from the University of California, Davis 
in 1980.  She is a member of the Legislative Task Force of the California 
Thoroughbred Breeder's Association. 

<PAGE> 10
     None of the Corporation's or Bank's Directors is a director of any other 
company with a class of securities registered pursuant to Section 12 of the 
Securities Exchange Act of 1934, as amended, or subject to the requirements
of Section 15(d) of such Act or any company registered as an investment company
under the Investment Company Act of 1940, whose common stock is registered 
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. 
<PAGE> 11

DIRECTORS


Committees of the Board of Directors

     The Audit Committee, with the guidance of Deloitte & Touche, conducts the 
Annual Directors audit. Robert G. Egan, William D. Kron and John F. Lynch, III 
serve on this committee, which met three times in 1997. The purpose of this 
committee is to review the internal controls and financial reporting for the 
Corporation and the Bank, to examine the findings and reports of the outside
auditors and bank examiners and to monitor the Bank's overall compliance with
the various laws and regulations which govern the banking industry.

     The Compensation Committee, which sets and reviews the compensation of the 
Bank's Chief Executive Officer and reviews the overall compensation of the 
Bank's employees, is composed of three non-employee directors. 
Victor Aboukhater, Robert G. Egan and William D. Kron, V. Ronald Mancuso serve 
on this committee which met once in 1997.

     The Strategic Planning Committee evaluates various opportunities for 
corporate growth and share appreciation. The members of this committee are 
Victor E. Aboukhater, William D. Kron, V. Ronald Mancuso and Richard L. 
Mount.  During 1997, the Committee met ten times.
 
     The Board of Directors has not established a nominating committee.  The 
entire Board of Directors performs the functions of the nominating committee 
with responsibility for considering appropriate candidates for election as
directors of the Corporation.

     During the last full fiscal year all directors attended at least seventy-
five percent (75%) of the aggregate of the total number of meetings of the 
Board of Directors and the number of meetings of the committees on which they
served.
<PAGE> 12
EXECUTIVE COMPENSATION


Summary Compensation Table

     Set forth below is the summary compensation paid or accrued during the 
fiscal years ended December 31, 1995, 1996 and 1997 to Richard L. Mount, 
Earl L. Lanna and Mary Page Rourke, the only executive officers of the
Corporation and the Bank.
<TABLE>
<CAPTION>
                   Summary Compensation Table
                                
                                
                                
                Annual Compensation          Long-Term Compensation
<S>     <C>  <C>       <C>      <C>     <C>        <C>      <C>      <C>   
                                             AWARDS           PAYOUTS    
                                 Other              Securities
Name and                         Annual  Restricted Underlying         All other
Principal                        Compen-    Stock   Options/   LTIP    Compen-
Position Year Salary($) Bonus($) sation($) Award(s) SARS (#) Payouts($)sation($)
                1/        2/       3/        ($)      4/                  5/
                                
Richard L.1997 $135,000 $ 6,846    -          -        -        -      $19,859
Mount     1996 $135,000 $29,045    -          -        -        -      $23,234 
President 1995 $135,000 $24,307    -          -        -        -      $25,978  
& CEO
                                
Earl L.   1997  $72,454 $16,000    -          -        -        -         $500
Lanna     1996  $71,378 $12,000    -          -        -        -         $500
Sr. Vice  1995  $70,572 $11,000    -          -        -        -         $500
President
& Sr.
Credit
Officer
                                
Mary Page 1997  $61,800 $15,000    -          -        -        -         $500
Rourke    1996  $60,000 $12,000    -          -        -        -         $500
Sr. Vice  1995  $58,768 $11,000    -          -        -        -         $500
President
& Chief
Financial
Officer
</TABLE>
1/  Amounts shown include cash and non-cash compensation earned and received by 
executive officers as well as amounts earned but deferred at the election of 
those officers under the 401(k) Plan. Amounts deferred during 1995 under the 
401(k) Plan were $9,240 for Richard L. Mount, $4,923 for Earl L. Lanna and 
$3,520 for Mary Page Rourke.  Amounts deferred during 1996 under the 401(k) 
Plan were $9,450 for Richard L. Mount, $4,234 for Earl L. Lanna and $3,600
for Mary Page Rourke.   Amounts deferred during 1997 under the 401(k) Plan 
were $9,450 for Richard L. Mount, $4,347 for Earl L. Lanna and $3,696 for 
Mary Page Rourke. 

2/  Amounts indicated as bonus payments were earned for performance during 
1995, 1996 and 1997, but paid in the first quarters of 1996, 1997 and 1998, 
respectively.
3/  No executive officer received perquisites or other personal benefits in 
excess of the lesser of $50,000 or 10% of each such officer's total annual
salary and bonus during 1995, 1996 or 1997.
4/  The Corporation's 1982 Amended Stock Option Plan (the "1982 Plan") expired 
by its terms on October 26, 1992.  Therefore, no options were granted by the 
Corporation during 1993, 1994 or 1995 under the 1982 Plan.  Prior to 
expiration of the 1982 Plan, options were granted to key, full-time salaried 
officers and employees of the Corporation and its subsidiary.  Options granted 
under the 1982 Plan were either incentive options or non-statutory options. 
Options granted under the 1982 Plan become exercisable in accordance with a 
vesting schedule established at the time of grant.  Vesting may not extend 
beyond ten years from the date of grant.  Upon a change in control of the 
Corporation, all outstanding options under the 1982 Plan will become fully 
vested and exercisable.  Options granted under the 1982 Plan are adjusted to 
protect against dilution in the event of certain changes in the Corporation's
capitalization, including stock splits and stock dividends.  The 
Corporation's 1994 Stock Option Plan (the "1994 Plan") is substantially 
similar to the 1982 Plan regarding provisions related to option grants, 
vesting and dilution.  Upon a change in control, options do not become fully 
vested and exercisable, but may be assumed or equivalent options may be 
substituted by a successor corporation.  All options granted in 1994 under 
the 1994 Plan to the named executive officers were incentive stock options 
and have an exercise price equal to the fair market value of the 
Corporation's Common Stock on the date of grant.  There were no options 
granted in 1995, 1996 or 1997 to any of the named executive officers.
<PAGE> 13

5/  Amounts shown for Richard L. Mount include $12,000 in director fees,
$13,478 in term life insurance premiums and $500 in matching 401(k)
contributions in 1995, $18,000 in director fees, $4,734 in term life insurance
premiums and $500 in 401(k) matching contributions in 1996 and $18,000 in 
director fees, $1,359 in term life insurance premiums and $500 in 401(k) 
matching contributions in 1997.  Amounts shown in 1995, 1996 and 1997 for all
other executive officers are 401(k) matching contributions.
<PAGE>

Option/SAR Exercises and Year-End Value Table
     
The following table sets forth certain information concerning unexercised 
options under the Plan as of December 31, 1997.

Aggregated Option/SAR Exercises in Last Fiscal Year, and Fiscal Year-End 
Option/SAR Values
                                               Number of      Value of
                                               Securities     Unexercised
                                               Underlying     In-the-Money
                                               Unexercised
                                               Options/SARS   Options/SARS
                                               at Fiscal      at Fiscal
                                               Year-End (#)   Year-End ($)
<TABLE>
<S>              <C>            <C>          <C>           <C>         
           Shares Acquired on                  Exercisable/   Exercisable/
Name            Exercise     Value Realized($) Unexercisable  Unexercisable 1/
      
Richard L. Mount 41,343        $535,598            35,250/0  $408,250/$0

Earl L. Lanna     2,205          28,083            20,678/0  $243,828/$0    

Mary Page Rourke    -                -             22,883/0  $275,558/$0
</TABLE>

1/ At December 31, 1997, the high and low bid prices of the Corporation's
common stock were each $18.25.  The aggregate value has been determined 
based upon the bid price of $18.25,  minus the exercise price. 


         Set forth below are the Long-Term Incentive Plan Awards accrued during 
the fiscal year ended December 31, 1997 to Richard L. Mount, the only 
executive officer of the Corporation and the Bank who received awards under
a Long-Term Incentive Plan.

     Long-Term Incentive Plans - Awards in Last Fiscal Year



                                                    Estimated Future Payouts
                                              under Non-Stock Price-Based Plans

                                 Performance or
               Number of Shares, Other Period Until
               Units or Other    Maturation or
Name           Rights            Payout       Threshold     Target    Maximum

Richard L. Mount    6,846        Vesting - 5      1/         $0.00      2/
                                    Years

1/  Threshold payout amounts are not readily determinable due to the yearly 
adjustment to reflect Return on Assets (ROA) on the Plan awards prior
to the payout beginning in 2000, but could result in no payouts.

2/  Maximum payout amounts are not specifically limited or readily 
determinable due to the yearly adjustment to reflect Return on Assets (ROA)
on the Plan awards prior to the payout beginning in 2000.
<PAGE> 12
Compensation of Directors

         Each member of the Board of Directors was paid a monthly retainer fee 
of $1,500.00 in 1997. Dr. V. Ronald Mancuso received an additional $500.00 per 
month for his services as Secretary in 1997.  In 1998, each member will continue
to received a monthly retainer fee of $2,000.00.  Dr. V. Ronald Mancuso will
continue to receive an additional $500.00 per month for his services as 
Secretary in 1998.


Employment Contracts and Termination of Employment and Change in Control 
Arrangements

         The Bank and Richard L. Mount, President and Chief Executive Officer of
the Bank, entered into an Employment Agreement dated August 30, 1995, 
effective as of January 1, 1995, which was subsequently amended and restated 
as of February 22, 1996, for a term of one year from the effective date, 
subject to annual renewal in the discretion of the Board if Directors, 
pursuant to which Mr. Mount  received during 1995 and will receive during the
term of the agreement (i) base salary in the amount of $135,000, subject to 
annual increase in the discretion of the Board of Directors; (ii) incentive 
compensation based upon factors including the increase in the Bank's average 
assets in excess of the median percentage change in assets among certain 
other California banks of comparable asset size and return on average assets 
("ROA") less the median ROA among the same California bank peer group, with
payment divided into current incentive award payments following an annual audit 
of the Bank's financial results and a deferred payment award component; 
(iii) reimbursement for all ordinary and necessary expenses incurred in
connection with Bank business, including club memberships, entertainment, 
travel and attendance at seminars and conventions; (iv) an automobile for 
personal and Bank business use and related insurance coverages during the term
of the Agreement; (v) a term life insurance policy in the face amount of 
$500,000 and group insurance coverages for health (including medical, dental
and hospitalization), accident and disability; (vi) customary vacation and 
disability benefits; (vii) severance equal to six months base salary in the 
event of termination without cause by the Bank; and (viii) severance payments
upon a change in control of the Corporation or the Bank pursuant to a 
Management Continuity Agreement as described below.

         The Bank and Mr. Mount also entered into a Management Continuity 
Agreement dated July 9, 1990 with an initial term of three years subject to 
renewal in the discretion of the Board of Directors of the Bank, which provided
for severance benefits to be paid to Mr. Mount in the event of a change in 
control of the Corporation or the Bank which shall be deemed to have occurred
 in the event of a change in control of a nature required to be reported in
response to Regulation 14A promulgated under the Securities Exchange Act of 
1934, as amended (the "Exchange Act"), or in response to any other form or 
report to the Securities and Exchange Commission or any stock exchange in 
which the Corporation shares are listed which requires the reporting of a change
in control; or in the event any "person" (as such term is used in the 
Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the Corporation or the Bank representing 25% or more of the 
combined voting power of the Corporation's or the Bank's then outstanding 
securities; or in any one year, individuals who at the beginning of such
period constitute the Board of Directors of the Corporation cease for any reason
 to constitute a majority of the Board of Directors of the Corporation, 
unless the election, or the nomination for election by the Corporation's 
shareholders of each new director is approved by a vote of at least three-
quarters of the directors then still in office who were directors at the 
beginning of the period; or a majority of the members of the Board of Directors
in office prior to the happening of any event determines in its sole 
discretion that as a result of such event there has been a change in
control.  Severance benefits pursuant to the Agreement are payable in the event 
of actual or constructive termination of Mr. Mount other than for cause 
within a period of one and one-half years following a change in control of the
Corporation or the Bank calculated at the rate of 1.5 times Mr. Mount's 
average annual compensation based upon aggregate compensation paid by the
bank to Mr. Mount includable in gross income for Federal income tax purposes
for the five tax years ending immediately prior to any change in control.  
Such severance payments are subject to reduction for each month and portion 
of a month of Mr. Mount's continued employment with the Bank or any
successor entity following a change in control up to the expiration of one and 
one-half years thereafter.  In the event Mr. Mount's employment with the Bank or
 any successor entity continues for the entire one and one-half year period
following a change in control, no severance benefit shall be payable pursuant
 to the Agreement.  Mr. Mount may elect to have the severance benefit paid in
 annual installments over a period not exceeding five years following the 
date of termination.  All severance benefits under the Agreement are in 
addition to any other accrued or vested benefits Mr. Mount may be entitled 
to under his employment agreement with the Bank.
<PAGE> 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


Transactions with Management and Others

         There have been no transactions, or series of similar transactions, 
during 1995, or any currently proposed transaction, or series of similar 
transactions, to which the Corporation or the Bank was or is to be a party, 
in which the amount involved exceeded or will exceed $60,000 and in which any
 director (or nominee for director) of the Corporation or the Bank, executive
officer of the Corporation or the Bank, any shareholder owning of record or
beneficially 5% or more of the Corporation's Common Stock, or any member of 
the immediate family of any of the foregoing persons, had, or will have, a 
direct or indirect material interest.

Indebtedness of Management

         The Corporation, through the Bank, has had, and expects in the future 
to have banking transactions in the ordinary course of its business with many
of the Corporation's directors and officers and their associates, including
transactions with corporations of which such persons are directors, officers or
controlling shareholders, on substantially the same terms (including interest 
rates and collateral) as those prevailing for comparable transactions
with others.  Management believes that in 1997 such transactions comprising 
loans did not involve more than the normal risk of collectibility or present 
other unfavorable features. Loans to executive officers of the Corporation and
the Bank are subject to limitations as to amount and purposes prescribed in 
part by the Federal Reserve Act, as amended, and the regulations of the 
Comptroller of the Currency.

                               
                         PROPOSAL NO. 2

General

     Shareholders are being asked to approve an amendment of the Saratoga
Bancorp 1994 Stock Option Plan (the "1994 Plan") to increase the number of
shares available for options.  The 1994 Plan was approved by the shareholders of
the Corporationat the 1994 Annual Meting of Shareholders, at which time the
maximum number of shares of the Corporation's Common Stock available for 
issuancepursuant to exercise of options under the 1994 Plan was set at 164,580 
shares.  This number was calculated in compliance with a regulation of the
California Commissioner of Corporations ("the Commissioner") which limits
the total number of shares under all stock option plans of the Corporation
to a number equal to thirty percent(30%) of the Corporation's outstanding 
shares.  The Corporation has a 1982 Stock Option Plan ("the 1982 Plan")
which was terminated prior to adoption of the 1994 Plan, but under which 
options were and are still outstanding.

     The following calculations demonstrate the application of this rule of 
the Commissioner to the 1994 Plan at the time when the Commissioner first 
granted a permit to the Commissionto grant options and sell shares of its
common stock pursuant to the 1994 Plan.  The number of shares qualified by 
the Commissioner (143,908) is less than the number of shares approved by the 
shareholders (164,580) because of repurchases of shares of its common stock
by the Corporation which occurred prior to the tim application was made to
the Commissioner:

         Number of shares outstanding (1,067,612) x 30%         =     320,284

         Less shares reserved for 1982 Plan options (176,376)   =     143,908

There were as of the Record Date (and as adjusted for the 1.5 for 1 stock
split of the Corporations outstanding shares which was effective April 15, 1998)
outstanding and unexercised options for 220,388 shares under the 1994 Plan, and
86,724 shares remained available for the grant of future options.

Since the original approval and adoption of the 1994 Plan, the number of shares
required to be reserved for issuance upon exercise of options under the 1982
Plan has been reduced substantially, and the intent of the proposed amendment
is to provide for a corresponding increase in the number of shares available
under the 1994 Plan and to provide further for additional increases to the 
extent that options presently outstanding under the 1982 Plan expire without
being exercised.  The following calculations demonstrate the effect of the 
proposed amendment (all numbers have been adjusted for the 1.5 for 1 stock
split):

Number of shares outstanding (1,642,912) x 30%                 =   492,873
Less shares reserved for 1982 Plan Options (152,682)           =   340,191
Total shares resrved under 1994 Plan is all options 
  outstanding under 1982 Plan expire unexercised               =   492,873 

If the proposed amendments of the 1994 Plan is approved, the number of shares 
available for the grant of future options would be increased to a maximum of 
119,803 shares ( is all outstanding options under the 1982 Plan are exercised).

SUMMARY OF 1994 PLAN

Since its adoption and approval in 1994, the 1994 Plan has been amended by the
Board of Directors in order to conform it to certian changes made by the
Securities and Exchange Commission ("SEC") in Rule 16b-3 of the SEC, which 
applies to the 1994 Plan to the extent that it provides for the granting of
options to individuals who, as "affiliates" of the Corporation are subject to
the provisions of Section 16 of the Securities Exchange Act of 1934 (the
"Exchange Act").  Under the terms of the 1994 Plan, these amendments (the
"16b-3 Amendments") did not require shareholder approval.  The following 
discussion summarizes the material features of the 1994 plan as modified
by the 16b-3 Amendments.

PURPOSE  The 1994 Plan was adopted by the Board in order to attract and retain
the best available personnel for positions of substantial responsibility, to
attract and retain qualified individuals to serve as non-employee directors and
consultants of the corporation and its affiliates, by encouraging them to 
acquire a proprietary interest in the Corporation, and in general, to promote 
the success of the Corporation's business.

ADMINISTRATION  The Plan is administered by the Board of Directors, which may 
delegate administrative authority to a committee (the "Committee") composed of
not less than two "non-employee directors" as such term is defined in Rule 
16b-3.  The term "Committee" is used in the following discussion to refer to
the Board of Directors or suchCommittee, as appropriate.

The Commitee has full authority, subject to the provisions of the Plan, to
determine the eligible individuals who are to receive options under the Plan, 
the number of shares to be covered by each granted option, the date or dates 
upon which the option is to become exercisable and the maximum term for which
the option is to remain outstanding.  The Committee also has the authority to 
determine whether the granted option is to be a nonstatutory option or incentive
stock option under the federal tax laws, to establish the rules and regulations
for proper plan administration, and (with the consent of the optionee) to 
cancel outstanding options granted under the 1994 Plan and to issue 
replacement options therefor.  
                    
<PAGE> page 19

ELIGIBILITY  When first adopted and approved by the shareholders of the 
Company, the 1994 Plan (in accordance with requirements of Rule 16b-3 which
have since been repealed by the SEC) provided that each non-employee director
elected at the Corporation's 1994 annual meeting of shareholders and
thereafter each new non-employee director elected or appointed to the Board
of Directors should receive a nonstatutory option to purchase 10,000 shares of
the Corporation's common stock.  Such "formula" options are currently 
outstanding to members of the corporation's board of directors.  In
accordance with Rule 16b-3 as revised by the SEC, however, the Baord amended
the 1994 Plan to deleteincluding options granted to non-employee directors, will
be granted in the discretion of the Committee, or be approved or ratified by the
shareholders of the Corporation.

The Committee in its discretion may grant options under the Plan to employees (
including employees who are also directors of the Corporation), consultants
and directors of the Corporation of its affilites.  As of the date of this
Proxy Statement, there were approximately 30 persons who were employees of the 
Corporation and its affilites and five (5) persons who were non-wmployee
directors.  No participant under the Plan may recieve options during the term of
the Plan to purchase an aggregate of more than 100,000 shares.

Since the granting options under the 1994 Plan is within the complete discretion
of the Committee, the number and value of options which could be granted to 
any eligible individual or class of persons is not presently determinable. 
However, if the proposed amendment is approved by the shareholders, it is the
intention of the Board of directors to grant the following options:

     Individual or Group        Dollar Value             Number of Shares

         Each Director      Fair Market Value Per Share       10,000

EXERCISE PRICE AND EXERCISABILITY  The Committee has the authority to determine
the term of each option granted under the 1994 Plan; provided, however, that 
the maximum period during which any option may remain exercisable may not exceed
ten years.  However, an incentive option granted to a participant who owns stock
possessing more than 10% of the voting power of the Corporation's common stock
may not have a term longer than five years from the date of grant.  Options
issued under the 1994 Plan may either be immediately exercisable for the full
number of shares purchasable thereunder or may become exercisable in cumulative
increments over a period of months or years as determined by the Committee; 
provided, however, that no option may vest at a rate less than 20% of the shares
subkect to the option during the five year period from the date of grant.

The exercise price of all options granted under the 1994 Plan may not be less
than 100% of the fair market value of the Corporation's common stock on the date
of grant; provided, however that the exercise priceof an option granted to a 
participant who owns stock possessing more than 10% of the voting power of the
Corporation's common stock may not be less than 110% of the fair market value
of the stock on the date of grant.  The exercise price may be paid in cash or in
shares of common stock valued at fair market value on the exercise date.  
Options may also be exercised through a same-day sale programn pursuant to which
a designatedbrokerage firm would effect an immediate sale of the shares
purchased under the option and pay over to the Corporation, out of the sales
proceeds available on the settlement date, sufficient funds to cover the
exercise price for the purchased shares plus applicable withholding taxes.  For
purposesof establishing exercise price and for all other caluation purposes 
under the 1994 Plan, the fair market per share of common stock on any
revelant date signifies, where there is a public market for the Corporation's
common stock, the means of the bid and asked prices (or the closing price if
listed on a stock exchange or the NASDAQ National Market) of the Corporation's
common stock for the date of grant, as reported in the Wall Street Journal
(or, if not so reported, as otherwise reported by Nasdaq of the National
Quotation Bureau)>  If such information is not available for the date of grant
then such information for the last preceding date for which such information is 
available will be considered as the fair market value.  On April 10, 1998, the
mean of the bid and asked prices of the
<PAGE> 20
Corporation's common stock as quoted by the National Quotation Bureau was $25.50
per share.

Formula options automatically granted to non-employee directors under previous
terms of the 1994 Plan have a ten year term and were fully exercisable 
immediately.

In order to satisfy applicable withholding taxes that arise upon exercise of a 
nonstatutory option, optionees may elect to deliver to the Corporation, or have
the Corporation wothhold from the shares otherwise due, a sufficient number of
shares having an aggregate fair market value to the tax due, in compliance with
rules and procedures established by the Committee.

SHAREHOLDER RIGHTS AND TRANSFERABILITY OF OPTIONS.  No optionee has any rights
as a shareholder with respect to his or her option shares until such optionee
has exercised the optin, paid the exercise price and been issued a stock
certificate for the purchased shares. Options are not assignable or 
transferrable other than by will or by the laws of inheritance, and may be
exercised, during the optionee's lifetime, only by the optionee or the
optionee's representative.

TERMINATION OF EMPLOYMENT OR STATUE AS A DIRECTOR OR CONSULTANT.  In the event 
an optionee's employment is terminated, or status as a consultant or tenure as
a director ceases, due to the optionee's disability or death, the optionee, or
the optionee's estate, as applicable, may, within twelve months following the
date of termination of employment or cessation of status or tenure (or such
longer period of time as the Committee may determine)< exercise the option to 
the extent to option was exercisable at the date of such termination of 
employment or cessation of status or tenure; provided that the date of
exercise may in no event by after the expiration of the term of the option.  If
the option is not exercised within such time period, the option will
terminate. 

If an optionee ceases to be employed by the Corporation or any of its affiliates
(or if a director, including non-employee directors, ceases to be a director of 
the Corporation) for any reason other than disability or death, or "cause" as
defined below), the optionee may , within three months after the date of 
termination of employment (or with respect to employees or consultants only,
such longer period of time as the Committee may determine), exercise the option
to the extent the optionee was entitled to exercise the option at the date of 
such termination; provided that the date of exercise may in no event be after
the expiration of the term of the option.  If the option is not exercised 
within such time period, the option will terminate.

If an optionee ceases to be employed by the Corporation or any of its affliates
(or if a director, including non-employee directors, ceases to be a director
of the corporation, or if a consultant ceases to be a consultant of the 
Corporation) for any reason other than disability or death, or "cause" as 
defined below), the optionee may, witin three months after the date of 
termination of employment (or with respect to employees or consultants ony, such
longer period of time as the Committee may determine), exercise the option to
the extent the optionee was entitled to exercise the option at the date of such
termination; provided that the date of exercise may in no event be after the
expiration of the term of the option.  To the extent that the option is not
exercised witin such time period, the option will terminate.  "Cause" is defined
by the 1994 Plan to include a determination by the Board that the optionee (i)
has committed an act of embezzlement, fraud, dishonesty, or breach of fiduciary
duty to the Corporation, (ii) has deliberately disregarded the rules of the
Corporation with resultant loss, damage or injury to the Corporation, or (iii)
hainformation of the corporation, (iv) has induced any client or customer of the
Corporation to break any contract with the Corporation, (v) has induced any
principal for whom the Corporation acts as agent to terminate such agency
relations, (vi) has engaged in any conduct which constitutes unfair competition
with the Corporation, or (vii) has been removed from any office of the 
Corporation by any bank regulatory agency.

ADJUSTMENT UPON CHANGES IN CAPITALIZATION OR OTHER CORPORATE EVENT  Subject to 
any required action by the shareholders of the Corporation, the number of shares
of common stock covered by each outstanding option, and the number of shares
of common stock which have been authorized for issuance under the 1994 Plan but 
as to which no options have yet been granted, as well as the price per share of 
common stock covered by each such outstanding option, will be proportionately
adjusted for any increase or decrease in the number of issued shares of common
stock resulting from a stock split, reverse stock split, stock dividend, 
recapitalization, combination or reclassification of the common stock, or any 
other increase or decrease in the number of issued shares of common stock 
effected withug receipt of consideration by the Bank; provided, however, that
conversion of any convertible securities of the Corporation will not be deemed
to have been "effected without receipt of consideration."  Such adjustment will 
be made by the Committee, whose determination in that respect will be final
binding and conclusive.  Upon the dissolution or liquidation of the 
Corporation, optionsthen outstanding under the 1994 Plan shall terminate.  Upon
sale of the Corporation, or a merger or consolidation in which the
Corporation is not the surviving entity, outstanding options will terminate
shortly before consummation of the transaction, unless the successor has agreed
to assume outstanding options or to substitute equivalent options to purchase
its shares of stock.

AMENDMENT AND TERMINATION OF THE 1994 PLAN.   The 1994 Plan became effective
upon its adoption by the Board of Directors and will continue in effect until 
March 18, 2004 unless sooner terminated by the Committee.  the Committee may
amend or terminate the 1994 Plan from time to time as the Committee deems
advisable, except that no such amendment or termination will affect outstanding
options without the consent of the affected optionees.  The Committee may not
without the approval of the Corporation's shareholders, amend the 1994 Plan in 
a manner which would require shareholder approval for continues compliance with
the terms of Rule 16b-3, Section 422 of the Internal Revenue Code, or any 
sucessor rules or other regulatory authority.

FEDERAL TAX CONSEQUENCES.  Options granted under the 1994 Plan may be either 
incentive options which satisfy the requirements of Section 422 of the Internal
Revenue Code of nonstatuttory options which do not meet such requirement.  The
federal income tax treatment for the two types of options differs as follows:
<PAGE> 
INCENTIVE OPTIONS.  No taxable income is recognized by an optionee at the time 
of the option grant, and no taxable income is generally recognized at the time
the option is exercised.  However, the excess of the fair market value of the
common stock received upon the exercise of an incentive  option over the 
exercise price is includable in the employee's alternative minimum taxable
income and may be subject to the alternative minimum tac ("AMT").  For AMT 
purposes only, the basis of the common stock received upon exercise os an 
incentive option is increased by the amount of such excess.

An optionee will recognize taxable income in the year in which the purchased
shares acquired upon exercise of an incentive option are sold or otherwise
disposed of.  For fderal tax purposes, dispositions are divided into two
categories: (1)qualifying and (ii)disqualifying.  An optionee will make a 
qualifying disposition of the purchased shares if the sale or disposition is
made more than two years after the grant date of the option and more than one
year after the exercise date.  If an optionee fails to satify either of these
two holding periods prior to the sale or disposition, then a disqualifying
dispostion of the purchased shares will result.

Upon a qualifying disposition, an optionee will recognize long-term capital 
gain or loss in an amount equal to the difference between the amount realized 
upon the saleor other dispostion of the purchased shares and the exercise price
paid for the shares except that for AMT purposes, the gain or loss would be
the difference between the exercise price paid for the shares and the employees
basis as described above.  If there is a disqualifying disposition of the shares
then the optionee will generally recognize ordinary income to the extent of the
lesser of the diffenerce between the exercise price and (I) the fair market
value of the stock on the date of exercise, or (ii) the amount realized on such
disqualifying disposition.  Any additional gain recognized upon the disposition 
will be capital gain.  If the amount realized is less than the exercise price, 
the optionee will, in general, recognize a capital loss.  If the optionee makes
a disqualifying disposition of the purchased shares, then the Corporation will
be entitled to an income tax deduction, for the taxable year in which such
disposition occurs, th the extent the optionee recognizes ordinary income.  In
no other instance will the Corporation be allowed a deduction with respect to 
the optionee's disposition of the purchased shares.

NONSTATUTORY SHARES.  No taxable income is recognized by the optionee upon the
grant of a nonstatutory option.  The optionee will in general recognize ordinary
income, in the year in which the option is exercised, equal to the excess of the
fair market value of the purchased shares on the date of exercise over the 
exercise price paid for such shares, and the optionee will be required to 
satify the tax withholding requirements applicable to such income.  Upon a 
subsequent sale of the purchased shares, the optionee will generally recognize 
either a capital gain or a capital loss depending on whether the amount realized
is more or less than the exercise price plus the difference between the exercise
price and fair market value of the stock on the date of exercise.

The Corporation will be entitled to a business expense deduction equal to the 
amount of ordinary income recognized by the optionee with respect to an 
exercised nonstatutory option.  The deduction will in general be allowed for the
taxable year of the Corporation in which ordinary income is recognized by the
optionee in connection with the acquisition of the option shares.

ACCOUNTING TREATMENT AND REGISTRATION OF ADDDITIONAL SHARES
  
Under present accounting rules, neither the grant nor the exercise of options 
issued at fair market value under the 1994 Plan will result in any charge to 
the Corporation's earnings.  However, the number of outstanding options under 
both the 1982 and1994 Plans is a factor in determining earnings per share on a
fully diluted basis.  State of Financial Accounting Standards ("SFAS") No. 128
which was adopted by the Company during 1997, requires financial statement
presentation of both basic and diluted earnings per share ("EPS") and
restatment of all prior period EPS presented.  Basic EPS is computed by
dividing  net income by the weighted average shares outstanding during the 
period; diluted EPS reflects the potential dilution if outstanding options are 
exercised for shares of common stock.  In addition, although the Corporation 
accounts for stock option awares using the "intrinsic value" method and 
therefore recognized no compensation expense in its finacial statement for 
such awards, SFAS No. 123 requires the disclosure of proforma net income and EPS
had the Corporation adopted the so-called "fair value" method of accounting for 
such awards as of Janaury 1, 1995.  Such value is calculated through the use of 
option ptradable, fully transferrable options without vesting restrictions.  
These  models, in the opinion of the Corporation, differ significantly from 
stock option awards under the 1994 Plan, and require subjective assumptions
that greatly affect the calculated values.  The effect of SFAS No. 124 is not 
material with respect to the Corporation.

If the proposed amendment of the 1994 Plan is approved by the shareholders, 
the Corporation intends as soon as practicable thereafter to register the 
additional shares with the SEC under the Securities Act of 1933 and to qualify
such shares with the Commissioner under the California securities laws.  No 
options will be granted for any such additional shares until such registration
is effective and such qualification has been obtained.

VOTE REQUIRED

Amendment of the 1994 Plan to increase the number of shares available for 
options as described above is subject to approval by the Corporation's 
shareholders.  The affirmative vote of the holders of a majority of the shares 
of common stock present in person or represented by proxy and entitled to vote
at the Annual Meeting is required to approve the amendment of the 1994 Plan, 
provided that the number of affirmative votes equals at least a mojority of the 
shares constituting the required quorum.  Abstentions will be counted for 
purposes of determining the number of shares entitled to vote on the proposal 
and will have the effect of a vote against the proposal.  Although broker 
non-votes with respect to Proposal No. 2 will be counted to determine the 
presence or absence of a quorum, borker non-votes with respect to Proposal No.
2 will be counted to determine the presence or absence of a quorum, broker 
non-votes with respect to this proposal, if any, will not be counted in
determining the number of shares entitled to vote on this proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 2
   

                        PROPOSAL NO. 3
            
                RATIFICATION AND APPOINTMENT OF
                                
                 INDEPENDENT PUBLIC ACCOUNTANTS
                                
     The firm of Deloitte & Touche LLP served the Corporation as independent 
public accountants for the 1997 fiscal year. Deloitte & Touche LLP has no 
interest, financial or otherwise, in the Corporation. The services rendered
by Deloitte & Touche LLP during the 1997 fiscal year were audit services, 
consultation in connection with various accounting matters and preparation 
of corporation income tax returns. The Board of Directors of the Corporation
approved each professional service rendered by Deloitte & Touche LLP during the 
1997 fiscal year, and the possible effect of each such service on the 
independence of that firm was considered by the Board of Directors before such
service was rendered.

     Representatives of Deloitte & Touche LLP are expected to be present at the 
Meeting and will have an opportunity to make a statement if they so desire and
respond to appropriate questions.

     The Board of Directors of the Corporation has selected Deloitte & Touche 
LLP to serve as the independent public accountants for the 1998 fiscal year 
and recommend that the shareholders vote "FOR" approval to ratify the
selection of Deloitte & Touche LLP as the Corporation's independent public 
accountants for the 1998 fiscal year.


                          ANNUAL REPORT
                                 
     The Annual Report of the Corporation containing audited financial 
statements for the fiscal year ended December 31, 1997 is included in this 
mailing to shareholders. 
<PAGE>
                            FORM 10-K

     A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED, IS AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST
TO NEAL A. CABRINHA, SECRETARY, SARATOGA BANCORP, 12000 SARATOGA-SUNNYVALE
ROAD, SARATOGA, CALIFORNIA 95070.


                     SHAREHOLDER'S PROPOSALS
     Next year's Annual Meeting of Shareholders will be held on May 20, 1999.  
The deadline for shareholders to submit proposals for inclusion in the Proxy 
Statement and form of Proxy for the 1997 Annual Meeting of Shareholders is 
December 24, 1998.  All proposals should be submitted by Certified Mail - 
Return Receipt Requested, to V. Ronald Mancuso, Secretary, Saratoga Bancorp, 
12000 Saratoga-Sunnyvale Road, Saratoga, California 95070.


                          OTHER MATTERS
                                 
     The Board of Directors knows of no other matters which will be brought 
before the Meeting, but if such matters are properly presented to the 
Meeting, proxies solicited hereby will be voted in accordance with the 
judgment of the persons holding such proxies.  All shares represented by 
duly executed proxies will be voted at the Meeting in accordance with the 
terms of such proxies.