FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


[ x ]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934  [FEE REQUIRED]

                   For the fiscal year ended December 31, 1996

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                         Commission file number 2-79261

                             DELTA NATIONAL BANCORP
             (Exact name of registrant as specified in its charter)


             California                                     94-2839814
(State of incorporation or organization)       (IRS Employer Identification No.)

     611 North Main Street, Manteca, California            95336-3740
      (Address of principal executive offices)             (Zip code)

                                 (209) 824-4050
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:
                                                  Name of each exchange
         Title of each class                       on which registered
               None                                       None

           Securities registered pursuant to Section 12(g) of the Act:
                                      None

Indicate by check mark whether the registrant (1) has filed all 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 [ ]

State the aggregate market value of the voting stock held by non-affiliates of
the registrant:

                                                     Aggregate Market Value of
Date                          Market Value       Non-Affiliate Stock Holdings
December 31,1996              $26.00/Share                 $ 9,796,332

Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of December 31, 1996: Common Stock, no par value - 376,782
shares.

<PAGE>



FORM 10-K CROSS REFERENCE INDEX

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Part I                                                                 Page
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Item 1.           Business
                           Financial Review                            8-20
                           Selected Statistical Information            4, 9-23
                           Description of Business                     5-7
Item 2.           Properties                                           21
Item 3.           Legal Proceedings                                    21
Item 4.           Submission of Matters to a vote of security holders  22

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Part II                                                                Page
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Item 5.           Market for Registrant's Common
                    Equity and Related Stockholder Matters             4, 22
Item 6.           Selected Financial Data                              4, 21-22
Item 7.           Management Discussion and Analysis of Financial
                    Condition and Results of Operations                8-20
Item 8.           Financial Statements and Supplementary Data
                           Delta National Bancorp and Subsidiaries -
                             Consolidated Financial Statements         23-27
                           Notes to Consolidated Financial Statements  28-43
                           Independent Auditors' Report                44
                           Selected Statistical Information            4, 9-22
Item 9.           Changes in and Disagreements with Accountants on
                    Accounting and Financial Disclosure                45

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Part III                                                               Page
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Item 10.          Directors and Executive Officers of the Registrant   45-46
Item 11.          Executive Compensation                               47-48
Item 12.          Security Ownership of Certain Beneficial Owners
                    and Management                                     48
Item 13.          Certain Relationships and Related Transactions       49

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Part IV                                                                Page
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Item 14.          Exhibits, Financial Statement Schedules, and Reports
                    on Form 8-K                                        50
                  (a) (1)  Financial Statements (See Item 8 for a listing of all
                                financial statements
                       (2)  Financial Statement Schedules
                                All schedules normally required by Form 10-K are
                                omitted since they either are not  applicable or
                                the  required   information   is  shown  in  the
                                financial statements and notes thereto.
                       (3)  Exhibits

                  (b)       No reports on Form 8-K have been filed during the
                                fourth quarter of the last year.
                                                                   
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                   FIVE YEAR SUMMARY OF SELECTED FINANCIAL INFORMATION
--------------------------------------------------------------------------------------------------------------------------
                                                                       Year Ended December 31:
--------------------------------------------------------------------------------------------------------------------------
(Amounts in thousands)                                            1996        1995        1994        1993        1992
--------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>         <C>         <C>         <C>         <C>  
Summary of Operations
    Interest income .........................................   $  8,022    $  7,865    $  6,612    $  6,560    $  7,385
    Interest expense ........................................      2,738       3,019       2,310       2,280       2,892
--------------------------------------------------------------------------------------------------------------------------
     Net interest income ....................................      5,284       4,846       4,302       4,280       4,493
    Provision for loan losses ...............................        185         624         192         642         465
--------------------------------------------------------------------------------------------------------------------------
        Net interest income after provision for loan losses..      5,099       4,223       4,110       3,638       4,028
    Non-interest income .....................................      1,300         675         692         906       1,142
    Non-interest expense ....................................      4,506       3,485       3,442       3,239       3,328
--------------------------------------------------------------------------------------------------------------------------
    Income before income taxes ..............................      1,893       1,412       1,360       1,305       1,842
        Income taxes ........................................        765         552         539         514         720
    Net Earnings ............................................   $  1,128    $    860    $    821    $    791    $  1,122
--------------------------------------------------------------------------------------------------------------------------
Earnings per share
        Net income per share ................................   $   2.99    $   2.28    $   2.18    $   2.10    $   2.98
        Cash dividends per share ............................        .70         .70         .70         .70         .70
--------------------------------------------------------------------------------------------------------------------------
At Year End
    Cash and due from banks .................................   $  5,728    $  4,381    $  3,349    $  5,987    $  4,496
    Investment securities ...................................     25,778      33,278      33,028      29,425      28,833
    Federal funds sold ......................................      7,600       7,600       2,800       4,300        3900
    Loans, net ..............................................     49,394      46,520      47,044      42,598      47,057
    Other assets ............................................      3,525       3,145       2,968       3,252       2,626
--------------------------------------------------------------------------------------------------------------------------
    Total assets ............................................   $ 92,025    $ 94,924    $ 89,189    $ 85,562    $ 86,912
--------------------------------------------------------------------------------------------------------------------------
    Demand deposits .........................................   $ 29,612    $ 29,893    $ 28,329    $ 30,866    $ 31,114
    Time and savings deposits ...............................     51,441      54,946      51,892      45,962      47,223
    Other liabilities .......................................        365         314         221         135         530
    Stockholders' equity ....................................     10,607       9,771       8,747       8,599       8,045
--------------------------------------------------------------------------------------------------------------------------
    Total liabilities & stockholders' Equity ................   $ 92,025    $ 94,924    $ 89,189    $ 85,562    $ 86,912
--------------------------------------------------------------------------------------------------------------------------
Selected Ratios (1)
    Return on equity ........................................      10.28%       8.73%       9.18%       9.43%      15.44%
    Return on assets ........................................       1.21%        .93%        .94%        .93%       1.34%
    Equity-to-assets ........................................      11.76%      10.69%      10.19%       9.86%       8.68%
Capital Ratios
    Leverage ratio ..........................................      11.23%      10.02%       9.92%       9.65%       8.90%
    Risk based capital
        Tier I ratio ........................................      18.50%      16.88%      14.49%      13.43%      11.70%
        Total capital ratio .................................      19.76%      18.14%      15.47%      14.22%      13.13%
Average Balances
    Total assets ............................................   $ 93,269    $ 92,197    $ 87,812    $ 85,075    $ 83,739
    Earning assets ..........................................     86,129      85,566      80,977      77,315      76,774
    Loans ...................................................     49,664      47,806      45,480      46,798      46,952
    Total deposits ..........................................     81,559      81,579      78,305      76,132      75,881
    Stockholders' equity ....................................     10,971       9,852       8,945       8,385       7,266
Common Share and Stockholder Data
    Market price, end of year ...............................   $  26.00    $  21.00    $  16.75    $  16.00    $  15.00
    Book value, end of year .................................      28.15       25.93       23.22       22.82       21.34
    Common dividends ........................................    263,747     263,747     263,747     263,747     263,747
    Dividend payout ratio ...................................      23.39%      30.67%      32.11%      33.32%      23.51%
    Average common shares outstanding .......................    376,782     376,782     376,782     376,782     376,782
--------------------------------------------------------------------------------------------------------------------------
(1)      Ratios are based on average balances

</TABLE>
<PAGE>
                             DESCRIPTION OF BUSINESS
BUSINESS

Delta  National  Bancorp  (the  "Company")  is a single  bank  holding  company,
registered  under  the  Bank  Holding  Company  Act of  1956.  The  Company  was
incorporated under the laws of the State of California on December 21, 1981. The
Company's  principal  office  is  located  at  611  N.  Main  Street,   Manteca,
California.  The Company owns all of the capital stock of its subsidiary,  Delta
National Bank (the "Bank").

The Company was  organized at the  direction  of the Board of Directors  for the
purpose of becoming a bank holding company pursuant to a Plan of  Reorganization
and  Agreement of a Merger  which was  consummated  on June 27, 1983,  following
receipt of the required regulatory and shareholder  approval.  On that date, (1)
Delta  National Bank was merged into the New Delta  National Bank, (an "interim"
California  Banking  Corporation  organized as a wholly-owned  subsidiary of the
Company for the purpose of facilitating  the formation of the Company),  (2) the
name of the New Delta  National Bank was changed to "Delta  National Bank" , and
(3) the  stockholders of the Bank (with the exception of those  stockholders who
perfected  their rights as deserting  stockholders)  became  stockholders of the
Company.

The Bank was organized in 1973 as a national banking  association under the name
First National Bank of Riverbank;  its present name was adopted in 1975 when the
Bank moved its  headquarters  location  from  Riverbank,  California to Manteca,
California.  At the present time,  the Bank  operates four branches  serving the
communities of Manteca, Riverbank,  Denair and Modesto,  California. The service
area of the Bank is located in the heart of  California's  Central  Valley.  The
entire region  consists of rich, flat farmland that benefits from a long growing
season.  The Bank has grown over the years,  which is a direct  result  from the
growth in the valley,  both in employment and new  construction,  which has come
from a prosperous agriculture industry.

Through  its  branches,  the Bank  provides a wide range of  commercial  banking
services to individuals and small and medium-sized businesses.  Services include
those  traditionally  offered by commercial  banks, such as checking and savings
accounts,  commercial,  real estate, personal, home improvement,  automobile and
other installment and term loans,  travelers' checks, safe deposit boxes, escrow
services,  collection services,  computer payroll and accounting services, night
depository  facilities,  and  wire  transfers.  The  Bank  does not have a trust
department;  however,  the Bank will make  arrangements  with its  correspondent
institution  to provide trust  services,  investment and  international  banking
services.

Competition: The banking business in California,  especially in the market areas
served  by the Bank,  is highly  competitive.  The Bank  competes  for loans and
deposits with other commercial  banks,  savings and loan  associations,  finance
companies,  money market funds, and credit unions for deposit and loan business.
Further,  large  commercial  banks have greater lending limits than the Bank and
perform certain other functions,  including trust services,  which the Bank does
not offer directly.  In competing for banking business,  including  deposits and
other  related  activities,   the  Bank  employs  personal  contact,   localized
advertising,  interest rate competition and availability of specialized services
in order to meet the needs of various types of customers.

The Bank's loan  portfolio  consists of both secured and unsecured  loans with a
significant portion either real estate secured or real estate related.

The latest available  information indicates there were approximately 128 banking
offices including the Bank's four offices  operating  throughout San Joaquin and
Stanislaus  county.  The banking  offices  held  approximately  five  billion in
deposits of which  approximately  81 million  were held by the Bank.  The Bank's
deposit market share varies within the communities served by its offices ranging
from 2% in Modesto, 15% in Manteca, 100% in Riverbank, and 100% in Denair.
<PAGE>
Supervision,  Regulation and Government Policies: The Bank as a National Banking
Association,  is subject to primary  supervision,  examination and regulation by
the  Comptroller  of the  Currency.  It is also a member of the Federal  Reserve
System and as such, is subject to applicable  provisions of the Federal  Reserve
Act and regulations issued  thereunder.  The deposits of the Bank are insured by
the Federal Deposit Insurance Corporation to the maximum extent provided by law.
The Bank is also subject to applicable provisions of California laws, insofar as
they do not conflict with or are not preempted by Federal banking law.

Various  requirements and  restrictions  under the laws of the United States and
the State of California affect the operations of the Bank.  Federal statutes and
regulations relate to many aspects of the Bank's operations,  including reserves
against  deposits,  interest  rates payable on loans,  investments,  mergers and
acquisitions,  borrowings,  dividends,  location of branch offices,  and capital
levels.

In addition,  from time to time, legislation is proposed which has the effect of
increasing  the cost of  doing  business,  limiting  permissible  activities  or
affecting  the   competitive   balance   between   banks  and  other   financial
institutions.  Changes  in rates by the FDIC for  deposit  insurance  will  also
effect the cost of business.

Risk-adjusted  capital  guidelines  were issued by bank  regulatory  authorities
early in 1989. These guidelines  assign risk weighting to assets and off-balance
sheet  items and place  increased  emphasis  on common  equity.  The  guidelines
currently  require a minimum Tier I (core)  capital ratio of 4% and a total risk
weighted  capital  ratio of 8% in order for an  institution  to be classified as
adequately  capitalized.  Institutions  which  maintain a Tier I ratio of 6% and
total  capital ratio of 10% are defined as well  capitalized.  The Bank's Tier I
and total  risk-weighted  ratios at  December  31,  1996 were 18.50% and 19.76%,
respectively.

In addition to the risk weighted ratios, the highest rated banks are required to
maintain  a minimum  leverage  ratio of 3%.  All other  banks  are  expected  to
maintain higher leverage ratios,  to be determined on an individual  basis. This
ratio is defined as Tier I capital to average  total  assets for the most recent
quarter. The Bank's leverage ratio at December 31, 1996 was 11.23%.

In September, 1995, FDICIA 305 was implemented and requires the banking agencies
to revise their risk based capital standards to ensure that those standards take
adequate  account of interest rate risk. This rule amends the capital  standards
to specify  that the  banking  agencies  will  include in their  evaluations  of
capital adequacy an assessment of the exposure to declines in the economic value
of the bank's  capital due to changes in interest  rates. A bank may be required
to hold  additional  capital  for  interest  rate  risk if it has a  significant
exposure or a weak interest rate risk  management  process.  To date,  the final
rule does not codify a measurement framework for assessing the level of a bank's
interest rate risk exposure nor does it specify a level of exposure  above which
a bank will be required to hold more capital.  The Bank is currently exempt from
certain  reporting of interest rate risk but is prudently  managing its interest
rate risk through risk management practices which include risk measurement, risk
management and risk control.

In 1993,  federal bank regulatory  agencies issued a statement  imposing certain
limitations  in the  inclusion  of net  deferred  tax  assets  calculated  under
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes" ("FAS 109") in regulatory capital. Deferred tax assets that are dependent
on future taxable income or the institution's  tax planning  strategies may only
be counted as a component of Tier I capital to the extent they do not exceed the
lesser of: (1) 10% of Tier 1 capital,  or (2) the amount of such benefits  which
may be realized based on one year's projected earnings.  The Company adopted FAS
109 on  January  1, 1993 at which  time this  regulation  became  applicable  in
determination  of its capital ratios.  The effect of this new standard on income
tax expense for the year ended December 31, 1993 was not material.
<PAGE>
The Federal Deposit  Insurance  Corporation Act of 1991  ("FDICIA"),  enacted on
December 19, 1991 in connection with the recapitalization of the Banks Insurance
Fund ("BIF"),  required the FDIC to set semi-annual  assessment  rates at levels
sufficient to increase the BIF's  reserve  ratio to a designated  level within a
prescribed period of time. In August,  1995, the FDIC announced that,  effective
June 1, 1995, it had significantly  reduced the deposit insurance  premiums paid
by most banks. Under the new rate structure, the best-rated institutions insured
by the BIF pay 4 cents per $100 of domestic  deposits,  down from the prior rate
of 23 cents per $100. The weakest institutions continue to pay 31 cents per $100
of  domestic  deposits  depending  on  their  risk  classification.   This  risk
classification  is based  on an  institution's  capital  group  and  supervisory
subgroup  assignments.  The  FDIC has  assigned  the  Bank  the  lowest  premium
possible.

In January,  1996, the FDIC further reduced the deposit insurance  premiums paid
by most banks.  Under the new rate structure for the BIF,  assessment rates were
lowered  by four  cents  per $100 of  domestic  deposits.  Given  the four  cent
reduction, the highest-rated  institutions will pay the statutory annual minimum
of $2,000 for FDIC insurance.  Rates for all other  institutions were reduced by
four  cents per $100 as well,  leaving a premium  range of 3-27  cents per $100,
instead of the previous 4-31 cents per $100.

Effective  December 31, 1993,  the Bank  adopted SFAS No. 115,  "Accounting  for
Certain  Investments  in Debt  and  Equity  Securities".  These  securities  are
classified into one of three categories: held-to-maturity, available-for-sale or
trading.   Held-to-maturity  securities  are  measured  at  amortized  cost  and
available-for-sale  securities  are measured at fair value.  Unrealized  holding
gains and losses for  available-for-sale  securities  are excluded from earnings
and  reported as a net amount in a separate  component of  stockholders'  equity
until  realized.  Risk-based  and leverage  capital  ratios will not reflect the
impact  of  unrealized  gains or losses on  securities  available-for-sale  as a
result  of  the  regulatory  and  industry  concerns  about  the  potential  for
volatility in regulatory capital ratios.

In May 1993,  the Financial  Accounting  Standards  Board (FASB) issued SFAS No.
114,  "Accounting  by  Creditors  for  Impairment  of a Loan" and SFAS No.  118,
"Accounting  by Creditors  for  Impairment  of a Loan - Income  Recognition  and
Disclosures".  These statements,  which were effective January 1, 1995, requires
that  impaired  loans,  as defined,  be measured  based on the present  value of
expected future cash flows discounted at the loan's effective  interest rate or,
as a practical  expedient,  at the loan's  observable  market  price or the fair
value of the  collateral if the loan is collateral  dependent.  The Bank adopted
and implemented SFAS No. 114 and SFAS No.
118, as of January 1, 1995.

Employees:  The number of persons employed by the registrant is 63, as of 
December 31, 1996.

Economic  Conditions and Governmental  Monetary Policies:  The Bank continues to
service  the two  counties  in which all of the  branches  are  located  and has
slightly extended into one or more adjacent  counties.  The economic  conditions
within the service  area of the Bank has  improved  significantly  over the past
year or more. Unemployment has been reduced and many companies have relocated to
the central valley spurring peripheral business activity.  The Bank continues to
participate in the affordable housing market as well as agricultural lending.

The State of California, in general, has shown economic growth having adapted to
the  military  cutbacks  and  provided  solutions  to the  exodus of many  large
companies.  State revenues  appear to be adequate to sustain the upcoming budget
process.

The national economy appears to be stable with some growth anticipated. Interest
rates are  expected to be  manageable  with only slight  adjustments  during the
year. The Bank has successfully positioned itself to minimize interest rate risk
by basing the majority of its assets and liabilities on a variable rate program.
Given the  volatility  of all segments of the economy,  the bank has developed a
strategic plan that responds quickly to unforeseen events.

<PAGE>
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS

FINANCIAL REVIEW

PERFORMANCE SUMMARY

The following  discussion is intended to provide  information  to facilitate the
understanding  and  assessment of  significant  changes in trends related to the
financial condition of Delta National Bancorp ("the Company") and its results of
operations.  It  should  be read  in  conjunction  with  the  audited  financial
statements and footnotes appearing elsewhere in this report.

At December 31, 1996,  the Company's  total assets were  $92,025,115,  net loans
amounted to $49,394,123,  stockholders' equity was $10,607,355 and the allowance
for loan losses was  $1,082,278.  This compares to total assets of  $94,924,333,
net loans of $46,519,819,  stockholders'  equity of $9,771,029 and allowance for
loan losses of $1,219,304  at December 31, 1995.  Total assets  decreased  3.05%
which was  primarily  due to a decrease in the  securities  portfolio of 22.54%.
Although net loans increased 6.18%, total deposits decreased 4.46%, particularly
in the regular savings category.

Net income for 1996 amounted to $1,127,600 or $2.99 per share,  as compared with
$859,877 or $2.28 per share earned in 1995. This represents a 3l.14% increase in
1996 over 1995. A  significant  portion of the increase in net income was due to
increased  interest  income  earned on  commercial  and real estate  loans and a
decrease in interest expense. Non-interest income also increased in 1996 and was
primarily  due to an  increase in income  from other real  estate  owned,  other
repossessed assets and mortgage department fees.

Earnings as measured by return on assets increased to 1.21% in 1996, compared to
 .93% in the prior year. Return on equity  approximated  10.28% in 1996, compared
to 8.73% in 1995.  The  increase in the return on equity is  primarily  due to a
substantial  increase in the net income for 1996. The increase in net income was
attributed to a significant increase in non-interest income of 92.73% over 1995.
In addition, the provision to loan losses for 1996 decreased 70.27% over 1995.

Non-accrual  loans at year end amounted to  $329,609,  down from  $1,694,556  at
December 31, 1995. One loan makes up the major portion of the non-accrual  loans
in 1996. Two loans made up the major portion of the  non-accrual  loans in 1995,
one of which  was  transferred  to other  repossessed  assets  and the other was
transferred  to OREO in 1996.  At December  31,  1996,  other real estate  owned
("OREO") (net of the valuation  allowance) totaled $500,000,  compared with OREO
of $560,600 at December 31, 1995.  Restructured  loans,  loans outstanding whose
original  terms have been  modified,  totaled  $1,131,184  at December 31, 1996,
which consisted of one real estate loan.  Restructured  loans were $1,146,080 at
December 31, 1995 and consisted of the same loan as in 1996.

Although there was a decrease in the provision for loan losses,  net charge-offs
increased  in 1996.  The  provision  for loan  losses  was  $185,540,  down from
$624,014  for 1995.  Net loans  charged-off  amounted to $322,566 in 1996 versus
$4,132 in 1995. The increase in net loans  charged-off for 1996 is primarily due
to two loans,  one which was partially  charged-off at the time of  repossession
and transferred to other repossessed assets and another loan which was partially
charged-off at foreclosure and transferred to OREO.

Net interest  income and net interest  margin in 1996 were $5,284,428 and 6.13%,
respectively,  compared to $4,846,567  and 5.66%,  respectively,  for 1995.  Net
interest income  increased  approximately 9% in 1996. The increase was primarily
due to  increased  interest  income on  commercial  and real estate  loans and a
decrease in interest expense on deposits.  Interest expense  decreased 9.29% due
to lower rates on deposits and decreased interest bearing balances.

Non-interest  income  amounted to  $1,300,295  in 1996,  compared to $674,677 in
1995. Income related to service charges on deposits  increased  $24,080.  Income
related to foreclosed  assets which consists of otherreal estate owned and other
repossessed  assets  increased  $491,520.  Other income which included  mortgage
department fee income increased  $110,018.  Total non-interest  income increased
92.73% over the same period in 1995.

Operating  expenses  amounted to $4,506,583  in 1996,  compared to $3,485,353 in
1995. This represents a 29.30% increase.  FDIC assessments  decreased $88,446 in
1996 while  salaries,  wages,  and  employee  benefits  increased  due to normal
operating expenditures and a contribution in 1996 to the employee profit sharing
plan.  Other  increases in operating  expenses were due to additions made to the
valuation  allowance  for  other  real  estate  owned  and  expenses  for  other
repossessed assets that were not made in 1995.
<PAGE>
EARNINGS PERFORMANCE

Distribution of Average Assets, Liabilities,  and Stockholders' Equity; Interest
Rates and Interest  Differential:  The following  table sets forth  consolidated
average daily balances of each  principal  category of assets,  liabilities  and
stockholders'  equity,  interest on interest  earning  assets,  and  interest on
interest  bearing  liabilities,  and the  average  yields  earned or rates  paid
thereon for the years ended  December  31, 1996,  1995 and 1994.  The table also
shows the net  interest  earnings and the net yield on average  earning  assets.
Averages were computed based upon daily balances.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                 1996                             1995                            1994
-----------------------------------------------------------------------------------------------------------------------------------
                                                 Interest  Average                Interest  Average               Interest  Average
                                      Average    Income/   Yield/      Average    Income/   Yield/     Average    Income/   Yield/
(In Thousands)                        Balance    Expense    Rate       Balance    Expense    Rate      Balance    Expense    Rate
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>       <C>         <C>        <C>       <C>        <C>        <C>        <C>  
Earning Assets:
    Deposits with other inst          
    institutions ..................   $   268    $   13       --       $     1    $   --       --      $    --    $    --      --
    Investment Securities: (5)
        U. S. treasury ............        37        --       --         1,638        68     4.15%       2,797        119    4.25%
        U. S. government agency ...    29,186     1,798     6.16%       25,612     1,676     6.54%      18,170        944    5.20%
        Obligations of states and
        political subdivisions (2).     1,047        59     5.64%        2,536       118     4.65%       4,082        176    4.31%
        Corporate bonds ...........       337        16     4.75%        2,919       135     4.62%       4,730        238    5.03%
        Other .....................        94         3     3.19%           55         3     5.45%          55          2    3.64%
    Federal funds sold ............     5,496       301     5.48%        4,999       301     6.02%       5,663        243    4.29%
    Loans-interest & fees (1)(4)...    49,664     5,832    11.74%       47,806     5,564    11.64%      45,480      4,890   10.75%
-----------------------------------------------------------------------------------------------------------------------------------
        Total Earning Assets ......   $86,129    $8,022     9.31%      $85,566    $7,865     9.19%     $80,977    $ 6,612    8.17%
-----------------------------------------------------------------------------------------------------------------------------------
Cash and due from banks ...........     3,770                            3,972                           4,400
Premises and equipment ............     1,227                              695                             513
Other Assets ......................     2,143                            1,964                           1,922
                                      -------                          -------                         -------
    Total Assets ..................   $93,269                          $92,197                         $87,812
                                      -------                          -------                         -------
Deposits:
    Non-interest bearing ..........   $13,987    $   --       --       $12,786    $   --       --      $12,072    $    --      --
    Interest bearing ..............    67,572     2,738     4.05%       68,793     3,019     4.39%      66,233      2,310    3.49%
-----------------------------------------------------------------------------------------------------------------------------------
    Total Deposits ................   $81,559    $2,738     3.36%      $81,579    $3,019     3.70%     $78,305    $ 2,310    2.95%
-----------------------------------------------------------------------------------------------------------------------------------
Other liabilities .................       739                              766                             562
Stockholders' equity ..............    10,971                            9,852                           8,945
                                      -------                          -------                         -------
    Total liabilities and
    stockholders' equity ..........   $93,269                          $92,197                         $87,812
                                      -------                          -------                         -------
As a percentage of earning assets:
Interest and fee income ...........              $8,022     9.31%                 $7,865     9.19%                $ 6,612    8.17%
Interest expense ..................               2,738     3.18%                  3,019     3.53%                  2,310    2.85%
                                                 ------    ------                 ------    ------                -------   ------
Net interest income/net
interest margin (3) ...............              $5,284     6.13%                 $4,846     5.66%                $ 4,302    5.32%
                                                 ------    ------                 ------    ------                -------   ------
-----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Loan interest includes loan fees of $627,619, $431,406, and $472,036 in 1996, 1995, and 1994, respectively.
(2) Tax exempt interest income includes $24,000, $48,000, and $65,000 in 1996, 1995, and 1994, respectively to adjust to
    a fully taxable equivalent basis using the Federal statutory rate of 34%.
(3) Net interest margin is computed by dividing net interest income by total average earning assets.
(4) Non-accruing loans not yet charged off are included in the loan balance.
(5) Average available-for-sale securities totaled $11,850,000, $17,650,000,and $17,422,000 in 1996, 1995 and 1994,respectively.
    Average held-to-maturity securities totaled $18,757,000, $15,055,000, and $12,357,000 in 1996, 1995, and 1994, respectively.
</FN>
</TABLE>
<PAGE>
Net Interest  Income:  The Company's  operating  results depend primarily on net
interest  income. A primary factor affecting the level of net interest income is
the Company's interest rate margin between the yield earned on  interest-earning
assets  and  the  rate  paid  on  interest-bearing  liabilities  as  well as the
difference between the relative amounts of average  interest-earning  assets and
interest-bearing liabilities. Net interest income increased 9% to $5,284,428 for
the year ended December 31, 1996,  compared to $4,846,567 in 1995 and $4,301,578
in 1994.  Net interest  income  increased  primarily due to increased  income on
commercial and real estate loans and a decrease in interest expense on deposits.
Interest  expense  decreased  9.29% over 1995 which was  primarily  due to lower
interest rates and falling interest bearing deposit balances.

Net interest  margin  increased to 6.13% for 1996 from 5.66% for 1995, and 5.32%
in 1994.  The  increase  in income is a result of sound  lending  and  investing
practices, cost control methods and prudent management decisions.

Changes in the Company's  net interest  income are a function of both changes in
rates and  changes in volumes of  interest-earning  assets and  interest-bearing
liabilities.  The following table  summarizes the changes in net interest income
for  the  major  categories  of  interest-earning  assets  and  interest-bearing
liabilities  for 1996 and 1995.  The total change is  segmented  into the change
attributable to variations in volume (changes in volume  multiplied by old rate)
and the change  attributable  to variations in interest  rates (changes in rates
multiplied  by old volume).  Changes not solely  attributable  to volume or rate
have been allocated to volume. Non-accrual loans are included in average loans 
used to compute this table.

--------------------------------------------------------------------------------
                                        1996 Over 1995        1995 Over 1994

(In Thousands)                      Volume   Rate  Total   Volume  Rate   Total
--------------------------------------------------------------------------------
Increase/(Decrease) in:
    Loans, net of unearned income
      and deferred loan fees.....   $ 177   $  90  $ 267   $ 225   $ 450 $  675
    Interest-bearing deposits
    placed with banks............      65     (52)    13      --      --     --
    Taxable securities...........     (46)    (30)   (76)    200     354    554
    Tax-exempt securities (1)....     (61)     14    (47)    (45)     12    (33)
    Federal funds sold ..........      30     (30)     0     (29)     86     57
--------------------------------------------------------------------------------
        Total interest income ...   $ 165   $  (8) $ 157   $ 351   $ 902 $1,253
--------------------------------------------------------------------------------
    Total interest bearing
    deposits ....................   $ (54)  $(227) $(281)  $  89   $ 619 $  708
 -------------------------------------------------------------------------------
        Total interest expense ..   $ (54)  $(227) $(281)  $  89   $ 619 $  708
--------------------------------------------------------------------------------
    Changes in net interest
    income ......................   $ 219   $ 219  $ 438   $ 262   $ 283 $  545
--------------------------------------------------------------------------------
(1)   Interest income is reflected on a fully tax equivalent basis.

Provision for Loan Losses:  The provision for loan losses  totaled  $185,540 for
1996, compared to $624,014 for 1995 and $191,750 in 1994. The provision for loan
losses  reflects  management's  on-going  evaluation of the risk inherent in the
loan  portfolio,  which  includes  consideration  of numerous  factors,  such as
economic conditions,  relative risks in the loan portfolio, loan loss experience
and review and monitoring of individual loans for  identification and resolution
of potential problems.

Non-Interest  Income:  Non-interest  income  amounted to $1,300,295 for 1996, up
92.73% from $674,677 for 1995 and $692,648 in 1994.  Service charges on deposits
increased  approximately  4.95% in 1996. Total non-interest income increased due
to increased income on other real estate owned and other  repossessed  assets as
well as an increase in mortgage  department fee income.  Included in 1995 income
is a pre-tax gain on the sale of one OREO property.
<PAGE>
The following  represents a breakdown of non-interest  income for 1996, 1995 and
1994:
--------------------------------------------------------------------------------
(In Thousands)                                   1996        1995        1994
--------------------------------------------------------------------------------
Service charges on deposit accounts .......  $  510,753  $  486,673  $  516,347
Income OREO ...............................      61,262      26,655        --
Income on other repo assets ...............     456,913        --          --
Mortgage department fee income ............     107,090      25,252      28,774
Gain on sale of OREO ......................       5,674      26,128        --
Gain on sale of fixed assets ..............       8,960        --         2,912
Other income ..............................     149,643     109,969     144,615
--------------------------------------------------------------------------------
    Total .................................  $1,300,295  $  674,677  $  692,648
--------------------------------------------------------------------------------

Non-Interest  Expense:  Non-interest  expense  amounted to  $4,506,583  in 1996,
compared  to  $3,485,353  in 1995  and  $3,442,079  in  1994.  FDIC  assessments
decreased  68.50% in 1996 due to  reduced  BIF  assessments.  Professional  fees
decreased  12.61%.   Salaries  and  wages  increased  due  to  normal  operating
expenditures.  Employee  benefits  expense  increased in 1996 over 1995 due to a
contribution  of $150,000 that was made to the employee  profit  sharing plan. A
$100,000  contribution  was made to the plan in 1995.  Total operating  expenses
increased  29.30% over the same period in 1995.  Other  increases  in  operating
expenses were due to additions  made to the  valuation  allowance for other real
estate owned and  expenses  relating to other  repossessed  assets that were not
made in 1995.

--------------------------------------------------------------------------------
(In Thousands)                                  1996        1995         1994
--------------------------------------------------------------------------------
Salaries and wages ......................   $1,839,069   $1,589,306   $1,502,791
Employee benefits .......................      378,472      307,076      222,797
Occupancy and equipment .................      749,379      673,222      586,905
Stationary and supplies .................       87,595       84,328       91,022
Professional fees .......................      135,567      155,132      137,757
FDIC assessments ........................       40,671      129,117      207,213
Other operating .........................      575,985      447,284      392,452
Writedown of OREO .......................      112,560       37,923      261,544
OREO expenses ...........................       23,589       29,184       39,598
Other repo assets expense ...............      550,274         --           --
Loss on sale of fixed assets ............         --         15,781         --
Loss on sale of other repo assets .......       13,422         --           --
Loss on sale of OREO ....................         --           --           --
Loss on sale of available-for-sale
security ................................         --         17,000         --
--------------------------------------------------------------------------------
    Total ...............................   $4,506,583   $3,485,353   $3,442,079
--------------------------------------------------------------------------------
<PAGE>
INCOME TAXES

For the year ended December 31, 1996,  the Company filed a consolidated  Federal
income tax return and State  return.  At December  31,  1996,  the Company had a
$397,000 net deferred tax asset.  Income tax expense  reflects rates on earnings
before  income  taxes of 40.42% and 39.1% for the two years ended  December  31,
1996 and 1995, respectively.

ASSET LIABILITY MANAGEMENT

Liquidity:  For the  Company,  as with  most  commercial  banking  institutions,
liquidity  is  the  ability  to  roll  over  substantial   amounts  of  maturing
liabilities   and  to  acquire  new   liabilities  at  levels   consistent  with
management's financial targets. During 1996, the Company continued to maintain a
high level of  liquidity.  Highly liquid  assets  consisting  of cash,  deposits
placed with banks, federal funds sold and securities available-for-sale averaged
approximately  $21,384,000  or 22.93% of average  total assets as compared  with
approximately  $26,622,000  or 28.9% of average  total assets for 1995.  At year
end, the Bank had a liquidity ratio of 20.44%.

Interest  Rate  Sensitivity  Management:  The  primary  objectives  of the asset
liability  management  process  are to  provide a stable  net  interest  margin,
generate net  interest  income to meet the  Company's  earnings  objectives  and
manage balance sheet risks. These risks include liquidity risk, capital adequacy
and overall interest rate risk inherent in the Company's balance sheet. In order
to manage its interest rate sensitivity,  the Company has adopted policies which
attempt to limit the change in pre-tax  net  interest  income  assuming  various
interest  rate  scenarios.  This is  accomplished  by  adjusting  the  repricing
characteristics  of the  Company's  assets and  liabilities  as  interest  rates
change.   The  Company's  Asset  Liability   Committee  chooses   strategies  in
conformance  with its  policies  to achieve  an  appropriate  trade off  between
interest rate  sensitivity and the volatility of pre-tax net interest income and
net interest margin.

The following table sets out the maturity and rate  sensitivity of the Company's
interest-earning  assets and  interest-bearing  liabilities  as of December  31,
1996. The cumulative interest  sensitivity gap ("gap") as reflected in the table
represents the difference between  interest-earning  assets and interest-bearing
liabilities  maturing or  repricing,  whichever is earlier,  at a given point in
time and is not necessarily indicative of the position on other dates.
<TABLE>
<CAPTION>
<PAGE>
----------------------------------------------------------------------------------------------------------------
                                     0 - 30     31 - 90     3 - 6        6 - 12     1 - 5       5
(In Thousands)                        Days       Days       Months       Months     Years     Years     Total
----------------------------------------------------------------------------------------------------------------
<S>                                  <C>        <C>         <C>          <C>        <C>       <C>       <C> 
Earning Assets:
    Fed funds sold ................  $ 7,600    $    --     $    --      $    --    $   --    $    --   $ 7,600
    Deposit accounts with       
    other banks ...................      676         --          --           --        --         --       676
    Securities: (3) (6)
        U. S. government 
        agencies ..................       --     14,857      10,275           --        --         22    25,154
        Municipals ................       --         --          --           --        --        390       390
    Loans: (1)
        Commercial - fixed ........       49      1,043       1,500        1,807     2,333        330     7,062
        Commercial - variable (2)..   14,318         --          --           --        --         --    14,318
        Real estate - fixed .......      198        120         390          640       549         50     1,947
        Real estate - variable ....   25,618         --          --           --        --         --    25,618
        Installment (4) ...........       42         18          62           94     1,029         --     1,245
----------------------------------------------------------------------------------------------------------------
    Total loans ...................  $40,225    $ 1,181     $ 1,952      $ 2,541   $ 3,911    $   380   $50,190
----------------------------------------------------------------------------------------------------------------
    Total assets ..................  $48,501    $16,038     $12,227      $ 2,541   $ 3,911    $   792   $84,010
----------------------------------------------------------------------------------------------------------------
Source of Funds:  Deposits
        Interest-bearing
        demand deposits ...........  $12,909         --          --           --        --         --   $12,909
        Time deposits greater than
        $ 100,000..................    3,507      3,490       4,967        5,974     3,969         --    21,907
        Time deposits less than
        $ 100,000..................    1,716      1,923       6,437        2,228       959         --    13,263
        Passbook time deposits
        - variable ................    5,423         --          --           --        --         --     5,423
        Savings (5) ...............       --      9,091          --           --        --         --     9,091
----------------------------------------------------------------------------------------------------------------
    Total deposits ................  $23,555    $14,504     $11,404      $ 8,202   $ 4,928    $    --   $62,593 
----------------------------------------------------------------------------------------------------------------
    Total liabilities .............  $23,555    $14,504     $11,404      $ 8,202   $ 4,928    $    --   $62,593
----------------------------------------------------------------------------------------------------------------
    Gap ...........................  $24,946    $ 1,534     $   823      $(5,661)  $(1,017)   $   792   $21,417
----------------------------------------------------------------------------------------------------------------
    Cumulative interest
    sensitivity gap ...............  $24,946    $26,480     $27,303      $21,642   $20,625    $21,417   $21,417
----------------------------------------------------------------------------------------------------------------
<FN>
(1)  Non-accruing loans not yet charged off are included in the loan balance.
(2)  Overdrafts are not included in the loan balance.
(3)  Securities are stated at amortized cost.
(4)  Credit Cards are not included in the loan balance.
(5)  IRA's and Christmas Club accounts are not included in the balance.
(6)  FRB and other stock is not included in the balance.
</FN>
</TABLE>

The gap is considered positive when the amount of interest rate sensitive assets
which  reprice  over a given time period  exceeds  the amount of  interest  rate
sensitive  liabilities which reprice over the same time period and is considered
negative when the reverse is true.  During a period of rising  interest rates, a
positive gap tends to result in increased  net interest  income while a negative
gap would have an adverse affect on net interest  income.  As illustrated by the
table, the Company  maintained a positive gap at December 31, 1996. The Company,
therefore,  was asset  sensitive and was  positioned  for increased net interest
income given a rise in interest rates in 1996. The degree of positive gap is not
so large that a  significant  detrimental  impact  would  result  from stable or
declining interest rates.
<PAGE>
BALANCE SHEET ANALYSIS

Cash and Due from  Banks:  Average  cash and due from  banks for the year  ended
December  31,  1996 was  $3,770,428,  down 5.1% from the prior  year  average of
$3,972,362 due to increased loan activity and lower cash balance requirements.

Securities: The fair value of available-for-sale  securities totaled $10,349,542
at  December  31,  1996,  as compared to  $12,926,352  at the end of 1995,  with
balances averaging approximately $11,850,000 and $17,650,000,  respectively. The
decrease in available-for-sale  securities was primarily due to investments that
matured  during the year.  All but one of the new  securities  purchased in 1996
were placed in the  held-to-maturity  category  due to the Banks  intent to hold
these  funds until they  mature.  As of December  31,  1996,  available-for-sale
securities  made up 40% of the  securities  portfolio.  The  majority  of  these
securities are variable rate at 98% of the securities portfolio and 2% are fixed
rate.  One  available-for-sale  security was sold in 1995 resulting in a loss of
$17,000.

The Company's short-term investments, consisting of securities
available-for-sale and federal funds sold averaged approximately $17,346,000 for
1996, compared to approximately $22,649,000 for 1995. These investments amounted
to $17,949,542 at year-end 1996,  compared to $20,526,352 for 1995. In 1996, the
securities  portfolio  consisted primarily of U.S. government agency securities.
In 1996,  federal  funds sold averaged  approximately  $5,496,000 as compared to
approximately  $4,999,000  in  1995.  The  amortized  cost  of  held-to-maturity
securities totaled $15,428,286 in 1996, compared to $20,351,537 in 1995.

The  following  table shows the  amortized  cost (book  value) of the  Company's
portfolio of available-for-sale and held-to-maturity  securities for the periods
ending 1996 and 1995:

--------------------------------------------------------------------------------
At December 31,  (In Thousands)                            1996         1995
--------------------------------------------------------------------------------
Available-for-sale:
    U. S. government agencies ......................   $ 9,725,856   $12,188,734
    States & political subdivisions ................       389,776       605,656
    Corporate bonds and other ......................       204,350        55,350
--------------------------------------------------------------------------------
        Total ......................................   $10,319,982   $12,849,740
--------------------------------------------------------------------------------
Held-to-maturity:
    U. S. government agencies ......................   $15,428,286   $18,252,276
    States & political subdivisions ................          --         695,578
    Corporate bonds and other ......................          --       1,403,683
--------------------------------------------------------------------------------
        Total ......................................   $15,428,286   $20,351,537
--------------------------------------------------------------------------------
<PAGE>

The  following  tables show the  amortized  cost (book value) and  maturities of
securities at December 31, 1996 and the weighted average yields (1).
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                   Securities/Maturities - December 31, 1996
                        ---------------------------------------------------------------------------------------
                                                    After 1 but           After 5 but
                           Within 1 year          Within 5 Years        Within 10 Years       After 10 Years
                        ---------------------------------------------------------------------------------------
                           Amount      Yield     Amount      Yield     Amount      Yield     Amount      Yield
---------------------------------------------------------------------------------------------------------------
<S>                       <C>           <C>     <C>           <C>     <C>           <C>     <C>         <C> 
Available-for-sale: (3)
    U.S. government
    agencies ..........   $   607,055   5.79%   $   919,202   6.52%   $ 8,199,599   6.65%   $      --       --
    States & political
    subdivisions (2) ..            --     --             --     --             --     --       389,776   13.50%
---------------------------------------------------------------------------------------------------------------
        Total .........   $   607,055   5.79%   $   919,202   6.52%   $ 8,199,599   6.65%   $  389,776   13.50%
---------------------------------------------------------------------------------------------------------------
Held-to-maturity:
    U.S. government
    agencies ..........   $    23,020   8.14%   $ 3,171,817   8.00%   $10,642,289   7.35%   $ 1,591,160   7.57%
    States & political
    subdivisions (2) ..            --     --             --     --             --     --             --     --
---------------------------------------------------------------------------------------------------------------
        Total .........   $    23,020   8.14%   $ 3,171,817   8.00%   $10,642,289   7.35%   $ 1,591,160   7.57%
---------------------------------------------------------------------------------------------------------------
<FN>
(1)  Yields are calculated on a tax equivalent basis using the Federal statutory rate of 34%.
(2)  There were no securities which exceeded 10% of stockholders' equity.
(3)  Federal Reserve and other stock not included in balance.
</FN>
</TABLE>

Loan Composition:  The loan portfolio  totaled  $49,394,123 at December 31, 1996
with a  6.18%  increase  over  $46,519,819  in  1995.  There  was a  shift  from
commercial  loans to real estate  construction  and mortgage loans.  Real estate
construction increased  approximately 46% over the same period in 1995. Consumer
loans continue to decline due to recessionary influences and competition.

The composition of the Bank's loan portfolio as of December 31, is as follows:

--------------------------------------------------------------------------------
                                            Percentage                Percentage
                                             of Total                  of Total
                                 1996         Loans         1995         Loans
--------------------------------------------------------------------------------
Commercial, financial and
agricultural................ $ 21,428,989      42.16%    $ 22,755,013    47.30%
Real Estate - construction..   13,404,461      26.37%       9,175,475    19.10%
Real Estate - mortgage .....   14,160,539      27.86%      14,090,502    29.30%
Installment loans to
individuals ................    1,837,465       3.61%       2,073,749     4.30%
--------------------------------------------------------------------------------
                             $ 50,831,454     100.00%    $ 48,094,739   100.00%
Unearned discount ........        (61,208)                    (80,189)
Allowance for possible
loan losses ..............     (1,082,278)                 (1,219,304)
Deferred loan fees .......       (293,845)                   (275,427)
--------------------------------------------------------------------------------
    Loans, net (l) .......   $ 49,394,123                 $46,519,819
--------------------------------------------------------------------------------
(1)  There were no lease financing or foreign loans
<PAGE>
Loan maturities as of December 31, 1996 are as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                                                 RE            RE
                                   Comc'l        Comc'l        Const.        Const.        Other          Other
                     Total         Fixed        Variable        Fixed       Variable       Fixed        Variable
--------------------------------------------------------------------------------------------------------------------
<S>                <C>           <C>           <C>           <C>           <C>           <C>           <C>        
One year or
less ...........   $25,086,302   $ 4,446,973   $ 5,705,311   $   553,626   $ 9,941,309   $ 1,566,918   $ 2,872,165
After one year
through five
years ..........    21,376,837     2,333,327     6,234,807             -     2,909,526     1,560,338     8,338,839
After five
years ..........     4,368,315       330,291     2,378,280             -             -        50,056     1,609,688
--------------------------------------------------------------------------------------------------------------------

    Total ......   $50,831,454   $ 7,110,591   $14,318,398   $   553,626   $12,850,835   $ 3,177,312   $12,820,692
--------------------------------------------------------------------------------------------------------------------
</TABLE>

The Bank's customers are primarily  located in Stanislaus County and San Joaquin
County.  Approximately  54%  of  the  Bank's  loans  are  for  real  estate  and
construction  and  approximately  42%  of  the  Bank's  loans  are  for  general
commercial uses including professional, retail, agricultural and small business.
Generally  real estate  loans are secured by real  property and  commercial  and
other  loans are  secured by funds on  deposit,  business  or  personal  assets.
Repayment is generally  expected  from the proceeds of the sales of property for
real estate  construction  loans,  and from cash flows of the borrower for other
loans.

Neither  the  Bank  or  the  regulators  have  placed  any  limitations  on  the
composition of the Bank's loan portfolio.  There were no concentrations of loans
exceeding 10% of total loans which were not otherwise disclosed as a category of
loans in the above table.  Unsecured loans are not a significant  portion of the
loan portfolio depicted in the above table. There were no other interest bearing
assets at the end of the period.

The Bank has collateral  management policies in place so that collateral lending
of all types is on a basis  which it  believes  is  consistent  with  regulatory
lending  standards.  Valuation  analyses are utilized to take into consideration
the  potentially   adverse  economic   conditions  under  which  liquidation  of
collateral could occur. It is generally the Bank's policy to fully collateralize
all loans with  loan-to-value  ratios  determined  on an  individual  loan basis
taking into account the  financial  stability of each borrower and the value and
type of the collateral.

Allowance  for Loan  Losses:  The  provision  for  loan  losses  is  based  upon
management's  evaluation  of the  adequacy of the existing  allowance  for loans
outstanding.  These evaluations take into  consideration such factors as changes
in the nature and  volume of the  portfolio,  overall  portfolio  quality,  loan
concentrations,  specific loan problems and current economic conditions that may
affect  the  borrower's  ability  to repay.  The  allowance  for loan  losses is
increased by provisions  charged to expense and reduced by loan  charge-offs net
of  recoveries.  Early  recognition  of  problem  credits is  critical  to avoid
shortages in the allowance.  The allowance for loan losses totaled $1,082,278 or
2.13% of total gross loans at December 31, 1996, compared to $1,219,304 or 2.54%
at December 31, 1995 and $599,422 or 1.25% at December 31, 1994. The increase in
the  allowance  in 1995 was  primarily  a  response  to the  state of the  dairy
industry  at that  time  which had  somewhat  deteriorated.  One  dairy  loan in
particular  accounted for a significant portion of the increase to the allowance
in 1995 over 1994. As of December 31, 1996, the allowance  reflects the inherent
risk in each component of the portfolio in addition to a sizeable allocation for
a commercial  retail center that is  experiencing  difficulty in leases and cash
flow.

The provision for loan losses is a product of the Bank's allowance for loan loss
methodology that reflects the potential losses in the loan portfolio. The Bank's
conservative  lending  philosophy  allows this provision to be quite manageable.
Loans  totaling  $488,608  were  charged off during the period and  $166,042 was
collected in recoveries. Loans charged off totaled $112,366 in 1995 and $563,719
in 1994, while  recoveries  totaled  $108,234 and $163,848,  respectively.  As a
percent of average loans outstanding during the year, net loans charged off were
 .65% in 1996, .009% in 1995, and .88% in 1994.
<PAGE>
The following table summarizes the loan loss experience of the Company for 1996,
1995, and 1994:

--------------------------------------------------------------------------------
                                         1996            1995          1994
--------------------------------------------------------------------------------
Balance at January 1 ..............   $1,219,304     $  599,422     $  807,543
Charge Offs:
    Commercial, financial and
    agricultural ..................     (324,340)          --         (357,634)
    Real Estate - construction ....      (61,638)          --             --
    Real Estate - mortgage ........      (48,696)          --         (163,896)
    Installment loans to
    individuals ...................      (53,934)      (112,366)      ( 42,189)
--------------------------------------------------------------------------------
           Total Charge Offs ......     (488,608)      (112,366)      (563,719)
--------------------------------------------------------------------------------
Recoveries:
    Commercial, financial and
    agricultural ..................         --            1,390          3,448
    Real Estate - construction ....      123,139         80,425         80,436
    Real Estate - mortgage ........        2,000          2,200         60,292
    Installment loans to
    individuals....................       40,903         24,219         19,672
--------------------------------------------------------------------------------
           Total Recoveries .......      166,042        108,234        163,848
--------------------------------------------------------------------------------
Net charge offs ...................     (322,566)      (  4,132)      (399,871)
Additions charged to operations ...      185,540        624,014        191,750
--------------------------------------------------------------------------------
Balance at December 31, ...........   $1,082,278     $1,219,304     $  599,422
--------------------------------------------------------------------------------
Ratio of net charge-offs during 
period to average loans
outstanding .......................      .650%          .009%          .879%
--------------------------------------------------------------------------------

The  following  table sets  forth the  allocation  for loan  losses to each loan
category and the  percentage  of each loan  category to total loans for the past
two  years.  The  allocation  of the  allowance  for loan  losses  should not be
interpreted  as an indication  that  charge-offs  will occur in these amounts or
that the allocation indicates future charge-off trends. Furthermore, the portion
allocated  to each loan  category is not the total amount  available  for future
losses that might occur within such categories.

--------------------------------------------------------------------------------
                                      1996                       1995
--------------------------------------------------------------------------------
                                           Percentage                Percentage
                                            of Loans                  of Loans
                                            in each                   in each
                                          Category to               Category to
                                             Total                     Total
                                Allowance    Loans        Allowance    Loans
--------------------------------------------------------------------------------
Commercial, financial and 
agricultural ...............   $  276,128    42.16%     $  599,783     47.30%
Real Estate - construction .      258,633    26.37%        262,944     19.10%
Real Estate - mortgage .....      509,594    27.86%        313,455     29.30%
Installment loans to
individuals ................       37,923     3.61%         43,122      4.30%
Unallocated ................            -      -                 -         -
--------------------------------------------------------------------------------
    Total Reserves .........   $1,082,278   100.00%     $1,219,304    100.00%
--------------------------------------------------------------------------------
<PAGE>
Total loans classified for regulatory purposes as loss, doubtful, substandard,
or special mention (including non-accrual loans and troubled debt restructuring)
at December 31, 1996 and 1995 were $3,945,378 and $9,189,084,  respectively.  Of
the total classified,  one of the loans was classified as doubtful at the end of
1996 totalling  $71,634 and none were classified as doubtful at the end of 1995.
Management  is not aware of any other  material  credit  which  there is serious
doubt  regarding  the ability to repay other than those  reflected in classified
loans and in the allowance for possible loan losses.

Impaired Loans:  Impaired  loans, as defined,  are measured based on the present
value of expected future cash flows discounted at the loan's effective  interest
rate or, as a practical expedient,  at the loan's observable market price or the
fair value of the collateral if the loan is collateral dependent.

Impaired  loans totaled  $1,460,793 at December 31, 1996 and  $2,840,637 at year
end 1995, of which  $1,131,184 and $1,146,080,  respectively are the result of a
troubled debt  restructuring.  The average  investment in impaired  loans during
1996 was  approximately  $1,850,000,  compared to $1,572,000 in 1995.  The total
allowance  for loan losses  relating to these loans was $281,345  and  $334,981,
respectively,  for 1996 and 1995.  Total cash collected on impaired loans during
1996 approximated  $710,800,  compared to $78,800 in 1995. In 1996, $602,600 was
credited to the principal  balance  outstanding  and $108,200 was  recognized as
interest  income.  In  1995,  $6,300  was  credited  to  the  principal  balance
outstanding, and $72,500 was recognized as interest income. Interest income that
would have been  recognized  on impaired  loans was  approximately  $205,000 and
$210,000 for the years ended December 31, 1996 and 1995, respectively.

A loan is considered  impaired when, based on current information and events, it
is probable  that a creditor will be unable to collect all amounts due according
to the  contractual  terms of the loan  agreement.  Amounts due according to the
contractual  terms  include  both  principal  and  interest.   The  Company  has
determined  that the  definition of impaired loans will include any loans placed
on non-accrual status and any loans which have had a modification of terms under
troubled  debt  restructuring.  Loans in the amount of  $300,000 or more will be
evaluated individually.  Large groups of smaller-balance homogenous loans, under
$300,000,  will be evaluated on a composite basis using historical data, such as
average  recovery  period and average amount  recovered,  along with a composite
rate of  interest as a means of  measuring  for  impairment.  Loans that are not
evaluated individually will be grouped together by similar risk characteristics.
The following  categories will be grouped  together:  Agricultural,  Commercial,
Real Estate Construction, Residential Real Estate, Consumer, and Commercial Real
Estate loans.

Loan  impairment is measured by estimating the present value of expected  future
cash flows  discounted at the loan's  effective  interest  rate,  its observable
market  price,  or the  fair  value  of  collateral  if the  loan is  collateral
dependent.  When it has been  substantiated that a loss is evident and should be
recognized,  the impaired  loan will be charged off. The recorded  investment in
these  loans  and the  valuation  allowance  for  loan  losses  related  to loan
impairment are as follows:

--------------------------------------------------------------------------------
Recorded Investment                                        1996          1995
--------------------------------------------------------------------------------
Principal amount of impaired loans .................    $1,460,793    $2,840,637
Accrued Interest ...................................         4,068           267
Deferred loan costs ................................           231         1,408
--------------------------------------------------------------------------------
                                                         1,465,092     2,842,312
Less valuation allowance ...........................       281,345       334,981
--------------------------------------------------------------------------------
Total carrying value ...............................    $1,183,747    $2,507,331
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Valuation Allowance                                        1996          1995
--------------------------------------------------------------------------------
Valuation allowance at beginning of period ..........    $ 334,981     $       -
Net charges to operations for impairment ............      307,911       334,981
Direct write-downs ..................................     (361,547)            -
Recoveries ..........................................         --               -
--------------------------------------------------------------------------------

Valuation allowance at end of period ................    $ 281,345     $ 334,981
--------------------------------------------------------------------------------
<PAGE>
Non-Accrual  Loans,  Restructured  Loans  and  Real  Estate  Owned:  Information
regarding  non-accrual loans, past due loans and restructured loans is presented
below.

--------------------------------------------------------------------------------
At December 31,                                       1996             1995
--------------------------------------------------------------------------------
Non-accrual loans:
    Commercial loans .........................   $    --           $1,200,342
                                                                    
    Real estate loans ........................      329,609           494,214
    Consumer loans ...........................        --                --
--------------------------------------------------------------------------------
        Total non-accrual loans ..............   $  329,609        $1,694,556
--------------------------------------------------------------------------------
Loans past due 90 days or more
still accruing interest ......................        --                --
--------------------------------------------------------------------------------
Troubled debt restructuring ..................   $1,131,184        $1,146,080
--------------------------------------------------------------------------------

Non-accrual  loans at year-end  amounted to $329,609,  down from  $1,694,556  at
December  31,  1995.  One real  estate  loan  makes up the major  portion of the
non-accrual  loans.  Gross  interest  income that would have been  recorded  for
non-accrual  loans if loans had been current in accordance  with original  terms
and had been outstanding throughout the period or since origination for 1996 and
1995 was  $55,425  and  $115,869,  respectively.  There was no  interest  income
included in net income for the period for non-accrual loans. There were no loans
past due 90 days or more which were still accruing interest.

Management  is  constantly  aware  of  the  need  for  maintaining  high  credit
standards.  The Company is not involved in foreign lending and is not engaged in
high yield, high risk loans. A loan is placed on non-accrual  status when either
principal or interest is in default for 90 days more, or when  external  factors
indicate that payment in full of principal and interest  appears unlikely unless
the loan is well secured and in the process of collection. When a loan is placed
on non-accrual  status, all interest previously accrued but uncollected shall be
reversed against the appropriate  income account.  In most cases, if the loan is
rated  substandard  or better,  payments  shall be applied to interest first and
then principal  provided no loss is anticipated.  If a loss is anticipated,  all
payments shall be applied to principal first and then interest. When one loan of
a customer is placed on non-accrual status, related borrowings will be evaluated
as to whether  they should  also be placed on  non-accrual  status.  Non-accrual
loans will be restored to an accruing  status when  principal and interest is no
longer past due and unpaid,  or the loan  otherwise  becomes well secured and in
the process of collection.

A troubled  debt  restructuring  occurs  when the Bank,  for  economic  or legal
reasons related to the debtor's financial  difficulties,  grants a concession to
the debtor that it would not ordinarily  consider.  Troubled debt  restructuring
can  occur in a  variety  of  forms,  such as  transferring  assets in a full or
partial  settlement  of the debt,  issuing debt,  or modifying  terms  including
reducing the stated interest rate,  extending maturity dates,  reducing the face
amount or maturity of the debt, or reducing accrued interest. Restructured loans
totaled $1,131,184 at December 31, 1996 and $1,146,080 at December 31, 1995. All
restructured loans were current as to principal and interest.

Foreclosed real estate owned includes real estate  properties  acquired through,
or in lieu of,  foreclosure  are to be sold and are  initially  recorded  at the
lower  of  carrying  amount  or fair  value  less  cost  to sell at the  date of
foreclosure.  After  foreclosure,   valuations  are  periodically  performed  by
management.  Any  subsequent  revisions  in estimates of fair value less cost to
sell are  reported  as  adjustments  to the  carrying  amount of the real estate
provided that the adjusted carrying amount does not exceed the original carrying
amount at the date of  foreclosure.  Revenue and expenses  from  operations  and
changes in the  valuation  allowance are included in other  operating  expenses.
Total  foreclosed  real estate was $784,193 at December  31,  1996,  compared to
total  foreclosed  real estate of $856,167 at December 31,  1995.  At the end of
1996, this consisted of two properties,  one of which  represents bare land. The
second  property is a condominium  complex  consisting of eight units which were
completed  and  placed in  service as rental  units by the Bank.  The  valuation
allowance at the end of 1996 totaled $284,193 and $295,567 in 1995.
<PAGE>
FUNDING SOURCES

Deposits:  Total deposits amounted to $81,052,506 at December 31, 1996, compared
to $84,839,377 at the end of 1995, a decrease of 4.5%.  Average  deposits during
the year were approximately $81,559,000 and $81,579,000,  respectively, for 1996
and 1995.

Non-interest bearing demand deposits averaged approximately $13,987,000 in 1996,
compared  to   $12,786,000  in  1995.   Interest   bearing   deposits   averaged
approximately  $67,572,000  in 1996, a decrease of 1.8%, or $1,221,000  from the
average for 1995.

--------------------------------------------------------------------------------
                                           1996                     1995
--------------------------------------------------------------------------------
                                    Average     Average      Average    Average
                                    Balance      Rate        Balance     Rate
--------------------------------------------------------------------------------
Interest bearing deposits
         Checking accounts ....   $14,186,109    1.88%     $14,368,972   2.12%
         Savings ..............    18,142,195    4.24%      21,271,869   3.91%
         Time deposits (1) ....    35,243,466    4.13%      33,152,076   5.59%
Non-interest bearing deposits..    13,987,382               12,786,029
--------------------------------------------------------------------------------
 (1)   Included at December 31, 1996 are  $21,906,825  in time  certificates  of
       $100,000  or  more,  of which  $6,997,212  matures  in 3 months  or less,
       $4,967,265  matures  in 3 to 6  months,  $5,973,745  matures  in 6 to  12
       months, and $3,968,603 matures in more than 12 months.

Other Borrowings:  There were no other borrowings as of December 31, 1996 or
December 31, 1995.

Capital:  Retained  earnings from  operations has been the primary source of new
capital for the  Company.  As of December  31,  1996,  stockholders'  equity was
$10,607,355,  compared to $9,771,029  at year-end  1995.  Risk-adjusted  capital
guidelines,  issued by bank regulatory agencies, assign risk weighting to assets
and off-balance sheet items and place increased  emphasis on common equity.  The
guidelines  require  adequately  capitalized  institutions  to maintain a Tier I
(core)  capital  ratio of 4% and a combined  Tier I and Tier II capital ratio of
8%.  Institutions  whose Tier I and total  capital  ratios meet or exceed 6% and
10%,  respectively,  are deemed to be well capitalized.  For the Company, Tier I
capital   consists  of  common   stockholders'   equity.   In  addition  to  the
risk-weighted  ratios, all banks are expected to maintain leverage ratios, to be
determined on an individual  basis, but not below a minimum of 3%. This ratio is
defined as Tier I capital to average  total assets for the most recent  quarter.
At December 31, 1996, the Company  exceeded its capital  requirements.  Based on
the guidelines,  the Bank's Tier I and combined Tier I and Tier II risk-weighted
ratios at December 31, 1996 were as follows:

--------------------------------------------------------------------------------
                               Minimum        1996        1995       1994
--------------------------------------------------------------------------------
Risk Based Capital Ratio        8.00%        19.76%      18.14%     15.47%
Tier I Ratio                    4.00%        18.50%      16.88%     14.49%
Leverage Ratio                  3.00%        11.23%      10.02%      9.92%
--------------------------------------------------------------------------------
<PAGE>
                        SELECTED STATISTICAL INFORMATION

FINANCIAL RATIOS

The following  table shows key financial  ratios for the Company for 1996,  1995
and 1994:

--------------------------------------------------------------------------------
                                                         1996     1995     1994
--------------------------------------------------------------------------------
Net income as a percentage of:
    Average stockholders' equity ....................   10.28%    8.73%    9.18%
    Average total assets ............................    1.21%     .93%     .94%
    Average earning assets ..........................    1.31%    1.01%    1.01%
Stockholders' equity at year-end as a percentage of:
    Total assets at year-end ........................   11.53%   10.29%    9.81%
    Net loans at year-end ...........................   21.47%   21.00%   18.60%
    Total deposits at year-end ......................   13.09%   11.52%   10.90%
Average stockholders' equity as a percentage of:
    Average assets ..................................   11.76%   10.69%   10.19%
    Average loans ...................................   22.09%   20.61%   19.67%
    Average deposits ................................   13.45%   12.08%   11.42%
--------------------------------------------------------------------------------

PROPERTIES

Manteca  Branch - In 1981 the Bank  acquired the  property  located at 611 North
Main Street in Manteca, California, for $308,000. The Company's headquarters and
administrative  offices are also located  there.  The  property  consists of 2.4
acres and a building of approximately  13,000 square feet. On December 31, 1987,
the property was transferred to the Company.  Under the terms of the lease which
expires in January, 1998, the Bank pays the Company $2,000 per month.

Riverbank  Branch - In 1996, the Bank leased the facility  located at 3300 Santa
Fe in  Riverbank,  California.  Under the terms of the lease  which  expires  in
April,  1997, the Bank pays $3,000 per month.  Land was purchased by the Bank in
1995 for the  purpose of  building a new  Riverbank  facility.  The  facility is
projected to be open by the end of 1997 or beginning of 1998.

Denair  Branch - The Bank  currently  leases the  facility  located at 4701 Main
Street, Denair, California. Under the terms of the lease the Bank currently pays
$3,100 per month.  The lease  expires in July,  1998 with the option of renewing
until 2003 and then again until the year 2008.

Modesto Branch - The Bank currently  leases the facility located at 1901 McHenry
Ave, Modesto,  California.  Under the terms of the lease the Bank currently pays
$1,721 per month.  The lease  expires in the year 2000 with one ten year  option
available.

LEGAL PROCEEDINGS

Except for minor and usual  collection  litigation  there are no pending  claims
against the Company,  or its subsidiary  which in counsel's  reasonable  opinion
will result in a substantial loss.
<PAGE>
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters  submitted  during the fourth  quarter of the fiscal  year
covered by this report to a vote of security holders through the solicitation of
proxies or otherwise.

MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's common stock is listed with A. G. Edwards, Inc.  The Company's
stock is not listed with the National Association of Securities Dealers
automated quotations system.  There has been a limited trading market in the
stock.

The following  table states the high and low sales prices of the Company's stock
for all quarters in 1996 and 1995:

--------------------------------------------------------------------------------
                                     1996                    1995

                                High        Low        High        Low
--------------------------------------------------------------------------------
First  Quarter ........       $  35.00   $  26.00    $  17.50   $  16.50

Second Quarter ........          28.00      26.00       17.00      16.75

Third Quarter .........          26.00      23.00       19.50      19.00

Fourth Quarter ........          27.00      26.00       21.00      19.50
--------------------------------------------------------------------------------

There can be no assurance that an established public market for the common stock
will develop and the Company  presently  has no intention to seek the listing of
the common  stock on any  Securities  Exchange or  quotation on the NASDAQ inter
dealer quotation system, in the foreseeable future.

As of December,  1996,  the Company had  approximately  315 holders of record of
Delta National  Bancorp Stock.  The stockholders of the Company will be entitled
to receive dividends when and as declared.

The following table shows the dividends declared and paid by the Company for the
years 1996, 1995 and 1994:

--------------------------------------------------------------------------------
                                                1996        1995        1994
--------------------------------------------------------------------------------
Cash Dividends Paid ....................    $ 263,747   $ 263,747   $ 263,747
Dividend payout ratio ..................       23.39%      30.67%      32.11%
Book value at year end .................   $   28.15    $  25.93    $  23.22
Market price/book value at year end ....       92.35%      80.99%      72.13%
--------------------------------------------------------------------------------
<PAGE>

                      DELTA NATIONAL BANCORP AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                                  December 31,

                                     ASSETS

                                                          1996          1995
                                                      -----------   -----------

Cash and due from banks ......................         $ 5,052,387   $ 4,330,351
Interest-bearing deposits in bank ............             676,115        51,043
Federal funds sold ...........................           7,600,000     7,600,000
                                                       -----------   -----------
       Total cash and cash
           equivalents (notes A13 and B) .....          13,328,502    11,981,394

Securities available-for-sale(notes A4 and C).          10,349,542    12,926,352
Securities held-to-maturity(notes A3 and C) ..          15,428,286    20,351,537
Loans, net (notes A5, A6, and D) .............          49,394,123    46,519,819
Property and equipment (notes A7 and E) ......           1,719,682     1,342,500
Interest receivable and other assets
(notes A8, F, G and K)........................           1,804,980     1,802,731
                                                       -----------   -----------

                                                       $92,025,115   $94,924,333
                                                       ===========   ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits
    Demand - non interest-bearing ............         $16,702,725   $15,980,639
    Demand - interest-bearing ................          12,908,637    13,912,667
    Regular savings ..........................          16,271,723    19,375,825
    Time, under $100,000 (note H) ............          13,262,596    10,710,398
    Time, $100,000 and over (note H) .........          21,906,825    24,859,848
                                                       -----------   -----------

           Total deposits ....................          81,052,506    84,839,377

Accrued interest and other liabilities .......             365,254       313,927
                                                       -----------   -----------

           Total liabilities .................          81,417,760    85,153,304

Stockholders' equity
    Common stock, no par value
       Authorized - 5,000,000 shares
       Issued and outstanding-376,782 shares..           3,531,886     3,531,886
    Retained earnings ........................           7,058,211     6,194,358
    Net unrealized appreciation on securities
       available-for-sale, net of tax of $12,302
       and $31,827 at December 31, 1996 and
       1995, respectively (note C) ...........              17,258        44,785
                                                       -----------   -----------

           Total stockholders' equity ........          10,607,355     9,771,029
                                                       -----------   -----------

                                                       $92,025,115   $94,924,333
                                                       ===========   ===========

        The accompanying notes are an integral part of these statements.
                                      

<PAGE>


                      DELTA NATIONAL BANCORP AND SUBSIDIARY

                       CONSOLIDATED STATEMENTS OF EARNINGS

                             Year ended December 31,

                                               1996          1995        1994
                                            ----------   ----------   ----------
Interest income
   Interest and fees on loans ...........   $5,831,747   $5,564,417   $4,889,682
   Securities available-for-sale ........      728,848    1,023,444    1,004,370
   Securities held-to-maturity ..........    1,148,438      976,537      474,260
   Federal funds sold ...................      300,689      300,467      243,408
   Interest-bearing deposits in banks ...       12,934          215           50
                                            ----------   ----------   ----------

      Total interest income .............    8,022,656    7,865,080    6,611,770

Interest expense on deposits (note J) ...    2,738,228    3,018,513    2,310,192
                                            ----------   ----------   ----------

      Net interest income ...............    5,284,428    4,846,567    4,301,578

Provision for loan losses ...............      185,540      624,014      191,750
                                            ----------   ----------   ----------

      Net interest income after
        provision for loan losses .......    5,098,888    4,222,553    4,109,828

Other income
   Service charges on deposits ..........      510,753      486,673      516,347
   Foreclosed assets (note F) ...........      518,175       26,655         --
   Other ................................      271,367      161,349      176,301
                                            ----------   ----------   ----------
                                             1,300,295      674,677      692,648
                                            ----------   ----------   ----------
Other expenses
   Salaries and wages ...................    1,839,069    1,589,306    1,502,791
   Employee benefits ....................      378,472      307,076      222,797
   Occupancy and equipment ..............      749,379      673,222      586,905
   Foreclosed assets (note F) ...........      686,423       67,107       29,198
   Stationery and supplies ..............       87,595       84,328       91,022
   Professional fees ....................      135,567      155,132      137,757
   FDIC assessments .....................       40,671      129,117      207,213
   Other operating ......................      589,407      480,065      664,396
                                            ----------   ----------   ----------
                                             4,506,583    3,485,353    3,442,079
                                            ----------   ----------   ----------

      Earnings before income taxes ......    1,892,600    1,411,877    1,360,397

Income taxes (notes A9 and K) ...........      765,000      552,000      539,000
                                            ----------   ----------   ----------

      NET EARNINGS ......................   $1,127,600   $  859,877   $  821,397
                                            ==========   ==========   ==========

Net earnings per share (note A11) .......   $     2.99   $     2.28   $     2.18
                                            ==========   ==========   ==========
        The accompanying notes are an integral part of these statements.
                    
<PAGE>


                      DELTA NATIONAL BANCORP AND SUBSIDIARY

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                       Three years ended December 31, 1996


<TABLE>
<CAPTION>


                                                                            Net change
                                                                           in available-
                                        Common stock          Retained       for-sale
                                    Shares      Amount        earnings      securities         Total
<S>                               <C>       <C>            <C>             <C>             <C>      
Balances at
   January 1, 1994 .......        376,782   $  3,531,886   $  5,040,578    $     26,243    $  8,598,707

Cash dividends
   paid ($.70 per share) .           --             --         (263,747)           --          (263,747)

Net changes in
   unrealized depreciation
   on available-for-sale
   securities ............           --             --             --          (408,822)       (408,822)

Net earnings .............           --             --          821,397            --           821,397
                             ------------   ------------   ------------    ------------    ------------

Balances at
   December 31, 1994 .....        376,782      3,531,886      5,598,228        (382,579)      8,747,535

Cash dividends
   paid ($.70 per share) .           --             --         (263,747)           --          (263,747)

Net changes in
   unrealized appreciation
   on available-for-sale
   securities ............           --             --             --           427,364         427,364

Net earnings .............           --             --          859,877            --           859,877
                             ------------   ------------   ------------    ------------    ------------

Balances at
   December 31, 1995 .....        376,782      3,531,886      6,194,358          44,785       9,771,029

Cash dividends
   paid ($.70 per share) .           --             --         (263,747)           --          (263,747)

Net changes in
   unrealized appreciation
   on available-for-sale
   securities ............           --             --             --           (27,527)        (27,527)

Net earnings .............           --             --        1,127,600            --         1,127,600
                             ------------   ------------   ------------    ------------    ------------

Balances at
   December 31, 1996 .....        376,782   $  3,531,886   $  7,058,211    $     17,258    $ 10,607,355
                             ============   ============   ============    ============    ============
</TABLE>



         The accompanying notes are an integral part of this statement.
                                       

<PAGE>


                      DELTA NATIONAL BANCORP AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             Year ended December 31,
<TABLE>
<CAPTION>

                                                      1996             1995             1994
                                                  ------------   --------------   -------------
<S>                                               <C>             <C>             <C>
Increase (decrease) in cash and
   cash equivalents

Cash flows from operating activities:
   Net earnings ...............................   $  1,127,600    $    859,877    $    821,397
      Adjustments to reconcile net
        earnings to net cash provided
        by operating activities
           (Gain) loss on sale of assets ......         (1,211)          6,654          (2,914)
           Provision for loan losses ..........        185,540         624,014         191,750
           Provision for depreciation and
             amortization .....................        580,717         467,219         340,759
           Provision for losses on foreclosed
             real estate ......................        112,560          37,923         261,544
           Decrease (increase) in interest
             receivable and other assets ......        278,913        (548,317)        407,577
           Increase in interest
             payable and other liabilities ....         51,327          93,199          85,875
                                                  ------------    ------------    ------------

                 Net cash provided by
                   operating activities .......      2,335,446       1,540,569       2,105,988
                                                  ------------    ------------    ------------


Cash flows from investing activities:
   Proceeds from sales of securities
      available-for-sale ......................           --           483,000            --
   Proceeds from calls and maturities of
      securities available-for-sale ...........      3,898,366       8,485,510       2,547,296
   Proceeds from calls and maturities of
      securities held-to-maturity .............      6,573,515       4,253,496       6,529,093
   Purchase of securities available-for-sale ..     (1,383,320)           --        (6,257,374)
   Purchase of securities held-to-maturity ....     (1,982,717)    (12,984,116)     (7,230,577)
   Net increase in loans ......................     (3,908,991)       (100,233)     (5,012,193)
   Purchase of property and equipment .........       (622,576)       (707,079)       (280,859)
   Proceeds from sale of property and
      equipment ...............................         20,800           9,850          16,000
   Proceeds from sale of foreclosed assets ....        467,203         496,613         316,293
                                                  ------------    ------------    ------------

                 Net cash provided by (used in)
                   investing activities .......      3,062,280         (62,959)     (9,372,321)
                                                  ------------    ------------    ------------
</TABLE>
 
<PAGE>


                      DELTA NATIONAL BANCORP AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                             Year ended December 31,
<TABLE>
<CAPTION>


                                                          1996            1995            1994
                                                     -------------   ------------    -------------

<S>                                                    <C>              <C>             <C>      
Cash flows from financing activities:
   Net (decrease) increase in demand deposit
      and  savings accounts ......................     (3,386,046)      3,125,241       3,233,049
   Net (decrease) increase in time deposits ......       (400,825)      1,493,375         159,377
   Cash dividends ................................       (263,747)       (263,747)       (263,747)
                                                     ------------    ------------    ------------

             Net cash (used in) provided by
                financing activities .............     (4,050,618)      4,354,869       3,128,679
                                                     ------------    ------------    ------------

Net increase (decrease) in cash and
   cash equivalents ..............................      1,347,108       5,832,479      (4,137,654)

Cash and cash equivalents at
      beginning of year ..........................     11,981,394       6,148,915      10,286,569
                                                     ------------    ------------    ------------

Cash and cash equivalents at
      end of year ................................   $ 13,328,502    $ 11,981,394    $  6,148,915
                                                     ============    ============    ============

Supplemental disclosures of cash flow information:
      Cash paid during the year for:
        Interest .................................   $  2,808,700    $  2,970,959    $  2,251,309
        Income taxes .............................   $    857,600    $    982,000    $    188,000
</TABLE>

      Noncash investing and financing activities:
        The Bank foreclosed on loans with balances of $849,147 and $375,051 in
        1996 and 1994, respectively.  No loans were foreclosed upon during 1995.

        During 1996, the Bank recognized a decrease in the unrealized gain on
        available-for-sale  securities of $47,052. As a result, the deferred tax
        asset was increased by $19,525 and equity was reduced by $27,527.

        During 1995, the Bank  recognized an increase in the unrealized  gain on
        available-for-sale securities of $730,537. As a result, the deferred tax
        asset was decreased by $303,173 and equity was increased by $427,364.

        During 1994, the Bank  recognized a decrease in the  unrealized  gain on
        available-for-sale securities of $698,841. As a result, the deferred tax
        asset was increased by $290,019 and equity was reduced by $408,822.

        The accompanying notes are an integral part of these statements.
                                    

<PAGE>


                      DELTA NATIONAL BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 1996, 1995 and 1994


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Delta National Bancorp (the Company) was  incorporated  under the laws of the
   State of California on December 21, 1981 for the purpose of serving as a bank
   holding  company  under the Bank Holding  Company Act of 1956.  The Company's
   wholly-owned  subsidiary,  Delta  National  Bank (the  Bank),  operates  as a
   commercial  bank in the cities of  Manteca,  Riverbank,  Denair and  Modesto,
   California.  Through its branches the Bank  provides  traditional  commercial
   banking services to individuals and small and medium-sized businesses located
   in the California  Central Valley.  The accounting and reporting  policies of
   the  Company  and  the  Bank  conform  with  generally  accepted   accounting
   principles and general practice within the banking industry.

   In preparing  financial  statements in  conformity  with  generally  accepted
   accounting   principles,   management  is  required  to  make  estimates  and
   assumptions  that affect the reported  amounts of assets and  liabilities and
   the  disclosure  of  contingent  assets  and  liabilities  at the date of the
   financial  statements and revenues and expenses  during the reported  period.
   Actual results could differ from those estimates.

   A summary of the significant  accounting  policies applied in the preparation
   of the accompanying financial statements follows.

   1.    Consolidation

   The consolidated  financial statements of the Company include the accounts of
   the Company and the Bank. Significant  intercompany  transactions and amounts
   have been eliminated.

   2.    Fair values of financial instruments

   The financial  statements include various estimated fair value information as
   required by  Statement  of  Financial  Accounting  Standards  (SFAS) No. 107,
   "Disclosures  about Fair Value of Financial  Instruments."  Such information,
   which  pertains  to  the  Bank's  financial  instruments,  is  based  on  the
   requirements  set forth in SFAS No. 107 and does not purport to represent the
   aggregate net fair value of the Bank.  Further,  the fair value estimates are
   based on various  assumptions,  methodologies and subjective  considerations,
   which  vary  widely  among  different  financial  institutions  and which are
   subject to change.

   Cash and cash equivalents: The carrying amounts reported in the balance sheet
   for cash and short-term instruments approximate those assets' fair values.

   Securities:  Fair values for  securities  are based on quoted market  prices,
   where available.  If quoted market prices are not available,  fair values are
   based on quoted market prices of comparable instruments. Securities purchased
   under repurchase agreements are carried at the contract price.

   Loans receivable: For variable-rate loans that reprice frequently and with no
   significant  change in credit risk, fair values are based on carrying values.
   The fair  values for other loans are  estimated  using  discounted  cash flow
   analyses, using interest rates currently being offered for loans with similar
   terms to borrowers of similar credit quality.  The carrying amount of accrued
   interest approximates its fair value.
                                                   

<PAGE>



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

   Off-balance-sheet  instruments:  Fair values for the Bank's off-balance-sheet
   instruments  are  based  on fees  currently  charged  to enter  into  similar
   agreements, taking into account the remaining terms of the agreements and the
   credit standing of the counterparties.

   Deposit liabilities:  The fair values estimated for demand deposits (interest
   and  non-interest  checking,  passbook  savings,  and certain  types of money
   market accounts) are, by definition, equal to the amount payable on demand at
   the reporting date (i.e., their carrying  amounts).  The carrying amounts for
   variable-rate,  fixed-term  money market accounts and certificates of deposit
   approximate  their  fair  values  at the  reporting  date.  Fair  values  for
   fixed-rate certificates of deposit are estimated using a discounted cash flow
   calculation   that  applies   interest  rates   currently  being  offered  on
   certificates to a schedule of the aggregate  expected  monthly  maturities on
   time deposits.  The carrying amount of accrued interest payable  approximates
   its fair value.

   Short-term  borrowings:  The carrying  amounts of borrowings under repurchase
   agreements and other short term borrowings approximate their fair values.

   3.    Securities held-to-maturity

   Bonds,  notes and debentures  for which the Bank has the positive  intent and
   ability to hold to maturity are reported at cost,  adjusted for  amortization
   of premiums and accretion of discounts,  which are  recognized as adjustments
   to interest income over the period to maturity.

   4.    Securities available-for-sale

   Available-for-sale  securities  consist of bonds,  notes and  debentures  not
   classified as trading securities or held-to-maturity  securities.  Unrealized
   holding  gains and  losses,  net of tax,  are  reported  as a net amount in a
   separate component of stockholders'  equity until realized.  Gains and losses
   on the  sale  of  available-for-sale  securities  are  determined  using  the
   specific identification method. The amortization of premiums and accretion of
   discounts are recognized as adjustments to interest income over the period to
   maturity.

   5.    Loans

   Loans are  reported  at the  principal  amount  outstanding,  net of unearned
   income,  deferred  loan fees,  and the  allowance  for loan losses.  Unearned
   discounts on installment loans are recognized as income over the terms of the
   loans.  Interest on other loans is  calculated  by using the simple  interest
   method on the daily balance of the principal amount outstanding.

   Loan fees net of certain  direct  costs of  origination,  which  represent an
   adjustment to interest yield, are deferred and amortized over the contractual
   term of the loan.

   Loans on which the accrual of interest has been  discontinued  are designated
   as non-accrual  loans.  Accrual of interest on loans is  discontinued  either
   when reasonable doubt exists as to the full and timely collection of interest
   or principal or when a loan becomes  contractually past due by ninety days or
   more  with  respect  to  interest  or  principal.  When a loan is  placed  on
   non-accrual  status,  all interest  previously  accrued but not  collected is
   reversed against current period interest income. Income on such loans is then
   recognized  only to the  extent  that cash is  received  and where the future
   collection  of principal is probable.  Interest  accruals are resumed on such
   loans only when they are brought  fully  current with respect to interest and
   principal and when, in the judgment of management, the loans are estimated to
   be fully collectible as to both principal and interest.


<PAGE>



   NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

   6.    Allowance for loan losses

   The  allowance  for loan losses is  established  through a provision for loan
   losses charged to expenses.  Loans are charged against the allowance for loan
   losses when management  believes that the  collectibility of the principal is
   unlikely.  The  allowance  is an  amount  that  management  believes  will be
   adequate  to absorb  losses  inherent in existing  loans and  commitments  to
   extend  credit,  based  on  evaluations  of  collectibility  and  prior  loss
   experience of loans and commitments to extend credit.  The  evaluations  take
   into  consideration  such  factors as changes in the nature and volume of the
   portfolio,  overall portfolio quality, loan concentrations,  specific problem
   loans,  commitments,  and  current  economic  conditions  that may affect the
   borrowers' ability to pay.

   The Bank adopted SFAS No. 114  "Accounting  by Creditors for  Impairment of a
   Loan"  and SFAS  No.  118,  "Accounting  by  Creditors  for  Impairment  of a
   Loan--Income  Recognition and  Disclosures,"  as of January 1, 1995. SFAS No.
   114  requires  that  impaired  loans,  as defined,  be measured  based on the
   present  value  of  expected  future  cash  flows  discounted  at the  loan's
   effective  interest  rate  or,  as  a  practical  expedient,  at  the  loan's
   observable  market price or the fair value of the  collateral  if the loan is
   collateral dependent.  The Bank considers a loan impaired when it is probable
   that all amounts of principal and interest due,  according to the contractual
   terms  of the  loan  agreement,  will  not be  collected,  which  is the same
   criteria  used for the  transfer  of loans to  non-accrual  status.  Interest
   income is  recognized  on impaired  loans in the same  manner as  non-accrual
   loans.

   7.    Property and equipment

   Premises and equipment are stated at cost less  accumulated  depreciation and
   amortization.  Depreciation  and  amortization  are  provided  for in amounts
   sufficient to relate the cost of depreciable  assets to operations over their
   estimated service lives.  Leasehold improvements are amortized over the lives
   of the improvements or the terms of the related leases, whichever is shorter.
   The straight-line  method of depreciation is followed for financial reporting
   purposes, but accelerated methods are used for tax purposes.  Deferred income
   taxes have been provided for the resulting depreciation differences.

   8.    Foreclosed real estate

   Real estate properties  acquired through, or in lieu of, loan foreclosure are
   to be sold and are initially recorded at the lower of carrying amount or fair
   value  less  cost to sell at the  date  of  foreclosure.  After  foreclosure,
   valuations are periodically performed by management. Any subsequent revisions
   in estimates of fair value less cost to sell are reported as  adjustments  to
   the carrying  amount of the real estate  provided that the adjusted  carrying
   amount  does  not  exceed  the  original  carrying  amount  at  the  date  of
   foreclosure.  Revenue  and  expenses  from  operations  and  changes  in  the
   valuation allowance are included in other operating expenses.

   9.    Income taxes

   Deferred tax assets and liabilities are reflected at currently enacted income
   tax  rates  applicable  to the  period in which the  deferred  tax  assets or
   liabilities are expected to be realized or settled. As changes in tax laws or
   rates are enacted,  deferred tax assets and liabilities are adjusted  through
   the provision for income taxes.


<PAGE>



   NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

   10.   Long-lived assets and intangibles

   The Bank adopted SFAS No. 121,  "Accounting  for the Impairment of Long-Lived
   Assets and for  Long-Lived  Assets to Be Disposed Of," as of January 1, 1996.
   SFAS No.  121  requires  that  long-lived  assets  and  certain  identifiable
   intangibles  that are used in operations be reviewed for impairment  whenever
   events or changes  in  circumstances  indicate  that the  carrying  amount of
   assets might not be recoverable.  The financial impact of this  pronouncement
   was not material.

   11.   Earnings per share

   Earnings per share amounts are computed on the basis of the weighted  average
   number of shares outstanding during each year. The weighted average number of
   shares outstanding for 1996, 1995 and 1994 was 376,782.


   12.   Stock based compensation

   In October 1995,  the FASB issued SFAS No. 123,  "Accounting  for Stock Based
   Compensation." This Statement requires entities to disclose the fair value of
   their employee stock options, but permits entities to continue to account for
   employee stock options under Accounting  Principles Board ("APB") Opinion No.
   25,  "Accounting for Stock Issued to Employees." The Bank has determined that
   it will  continue to use the method  prescribed  by APB Opinion No. 25, which
   recognizes  compensation  cost to the extent of the  difference  between  the
   quoted  market  price of the  stock at the date of grant  and the  amount  an
   employee  must pay to acquire  the stock.  The Bank grants  stock  options to
   employees  with an exercise  price greater than or equal to the quoted market
   price of the stock at the date of grant. Accordingly, no compensation cost is
   recognized for stock option  grants.  Disclosure  requirements  in accordance
   with SFAS No. 123 are included at Note M.

   13.   Cash and cash equivalents

   For purposes of the  statement  of cash flows,  the Bank  considers  due from
   banks,  interest-bearing deposits in banks and federal funds sold for one-day
   periods to be cash equivalents.

   14.   Reclassifications

   Certain  reclassifications  have  been  made to the 1995  and 1994  financial
   statements to conform to the 1996 presentation.

   15.   New accounting pronouncement

   In June 1996,  the FASB issued SFAS No. 125,  "Accounting  for  Transfers and
   Servicing of  Financial  Assets and  Extinguishments  of  Liabilities."  This
   Statement  provides  accounting  and  reporting  standards  for  transfers of
   financial  assets and servicing of financial  assets and  extinguishments  of
   liabilities.  Those  standards  are  based  on  consistent  application  of a
   financial-components  approach that focuses on control.  Under that approach,
   after a transfer of financial  assets,  an entity  recognizes  the  financial
   assets and servicing  assets it controls and the liabilities it has incurred,
   derecognizes  financial  assets  when  control  has  been  surrendered,   and
   derecognizes   liabilities  when   extinguished.   This  Statement   provides
   consistent  standards for  distinguishing  transfers of financial assets that
   are sales from  transfers  that are secured  borrowings.  The Bank will adopt
   this  Statement  as of  January  1,  1997 and has made no  assessment  of the
   potential impact of adopting SFAS No. 125 at this time.


<PAGE>



NOTE B - CASH AND DEPOSITS

   Cash and due from banks includes  balances with the Federal Reserve and other
   correspondent  banks. The Bank is required to maintain  specified reserves by
   the Federal  Reserve Bank. The average  reserve  requirements  are based on a
   percentage  of the Bank's  deposit  liabilities.  in  addition,  the  Federal
   Reserve requires the Bank to maintain a certain minimum balance at all times.

NOTE C - SECURITIES

   Amortized  cost and estimated  fair values of debt  securities as of December
   31, 1996 are as follows:
                                              Gross       Gross      Estimated
                               Amortized    Unrealized  Unrealized     Fair
                                  Cost        Gains       Losses       Value
Available-for-sale securities:
  Obligations of other U.S.
    government agencies.... $ 9,725,856  $        91  $  (105,130)  $ 9,620,817
  Obligations of states and
    political subdivisions.     389,776      134,599           --       524,375
  Other ...................     204,350           --           --       204,350
                             -----------  -----------  -----------   -----------

  Total ................... $10,319,982   $   134,690  $  (105,130)  $10,349,542
                            ===========   ===========  ===========   ===========

Held-to-maturity securities:
  Obligation of other U.S.
    government agencies.... $15,428,286   $   141,729  $   (29,535)  $15,540,480
                            ===========   ===========  ===========   ===========


   The amortized  cost and estimated  fair value of debt  securities at December
   31, 1996, by contractual  maturity are shown below.  Expected maturities will
   differ from contractual  maturities  because  borrowers may have the right to
   call or prepay obligations with or without call or prepayment penalties.

                                                                      Estimated
                                                   Amortized            Fair
                                                     Cost               Value
Available-for-sale securities:
  Due in one year or less ..................       $   499,890       $   499,375
  Due after ten years ......................           389,776           524,376
  Not due at a single date .................         9,430,316         9,325,791
                                                   -----------       -----------

                                                   $10,319,982       $10,349,542
                                                   ===========       ===========
Held-to-maturity securities:
  Not due at a single date .................       $15,428,286       $15,540,480
                                                   ===========       ===========


   As of December 31, 1996, approximately 65% of the Bank's securities portfolio
   consisted of Small Business Administration Guaranteed Loan Pool Certificates.
   Credit  risk  related  to  such  securities  is  greater  than  that  of U.S.
   Treasuries.

   Investment  securities  with a carrying value of $18,630,980 and a fair value
   of $18,708,595 at December 31, 1996 were pledged to secure public deposits as
   required or permitted by law.  Pledged  securities at December 31, 1995 had a
   carrying value of $10,802,942 and a fair value of $10,943,601.


<PAGE>



NOTE C - SECURITIES - CONTINUED

   Amortized  cost and estimated  fair values of debt  securities as of December
   31, 1995 are as follows:
                                              Gross        Gross      Estimated
                              Amortized     Unrealized   Unrealized     Fair
                                Cost          Gains        Losses       Value
Available-for-sale securities:
  Obligations of other U.S.
    government agencies ...  $12,188,734  $    14,960  $   (80,692)  $12,123,002
  Obligations of states and
    political subdivisions.      605,656      142,415          (71)      748,000
  Corporate bonds and othe.       55,350           --           --        55,350
                             -----------   -----------   ----------- -----------

  Total ...................  $12,849,740  $   157,375  $   (80,763)  $12,926,352
                             ===========  ===========  ===========   ===========

Held-to-maturity securities:
  Obligation of other U.S.
    government agencies.... $18,252,276   $   145,215   $    (2,931) $18,394,560
  Obligation of states and
    political subdivisions.     695,578            --        (1,918)     693,660
  Corporate bonds and other   1,403,683            --        (7,981)   1,395,702
                            -----------   -----------   -----------  -----------

  Total ................... $20,351,537   $   145,215   $   (12,830) $20,483,922
                            ===========   ===========   ===========  ===========


   Proceeds from sales of available-for-sale securities were approximately
   $483,000 in 1995.  Gross losses of $17,000 were realized on these sales.


NOTE D - LOANS

   The composition of the Bank's loan portfolio at December 31, is as follows:

                                                    1996                1995
                                               ------------        ------------
Commercial, financial
  and agricultural .....................       $ 21,428,989        $ 22,755,013
Real estate - construction .............         13,404,461           9,175,475
Real estate - mortgage .................         14,160,539          14,090,502
Installment ............................          1,837,465           2,073,749
                                               ------------        ------------
                                                 50,831,454          48,094,739
Unearned discount ......................            (61,208)            (80,189)
Allowance for loan losses ..............         (1,082,278)         (1,219,304)
Deferred loan fees .....................           (293,845)           (275,427)
                                               ------------        ------------

    Loans, net .........................       $ 49,394,123        $ 46,519,819
                                               ============        ============

   Non-performing  assets are loans  which are not  accruing  interest  and real
   estate  acquired  through  foreclosure.   At  December  31,  1996  and  1995,
   non-performing assets amounted to $1,113,802 and $2,550,723, respectively.






<PAGE>



NOTE D - LOANS - CONTINUED

   Changes in the allowance for loan losses for the years ended December 31,
   are summarized as follows:
                                          1996           1995           1994
                                      -----------    -----------    -----------

Balance at January 1, .............   $ 1,219,304    $   599,422    $   807,543
Provision charged to operations ...       185,540        624,014        191,750
Recoveries of loans previously
  charged off .....................       166,042        108,234        163,848
Loans charged off .................      (488,608)      (112,366)      (563,719)
                                      -----------    -----------    -----------

Balance at December 31, ...........   $ 1,082,278    $ 1,219,304    $   599,422
                                      ===========    ===========    ===========


   Impaired loans aggregated approximately $1,461,000 and $2,841,000 at December
   31, 1996 and 1995, respectively.  Of these amounts,  approximately $1,131,000
   and  $1,146,000  were the  result  of a  troubled  debt  restructuring  as of
   December 31, 1996 and 1995, respectively.  The average investment in impaired
   loans  during  1996 and 1995 was  approximately  $1,850,000  and  $1,572,000,
   respectively. Total cash collected on impaired loans during 1996 approximated
   $710,800,   of  which   $602,600  was  credited  to  the  principal   balance
   outstanding,  and  $108,200 was  recognized  as interest  income.  Total cash
   collected on impaired loans during 1995 approximated $78,800, of which $6,300
   was credited to the principal balance outstanding, and $72,500 was recognized
   as  interest  income.  Interest  income  that would have been  recognized  on
   impaired  loans was  approximately  $205,000 and $210,000 for the years ended
   December 31, 1996 and 1995, respectively.

   Changes in the  allowance for loan losses  related to impaired  loans for the
   years ended December 31, are summarized  below. This allowance is included in
   the overall  allowance for loan losses  summarized above. As SFAS No. 114 was
   adopted on January 1, 1995, there was no allowance for loan losses related to
   impaired loans in 1994.

                                                          1996           1995
                                                        ---------      ---------

Balance at January 1, .............................     $ 334,981      $    --
Provision charged to operations ...................       307,911        334,981
Recoveries of loans previously charged off ........          --             --
Loans charged off .................................      (361,547)          --
                                                        ---------      ---------

Balance at December 31, ...........................     $ 281,345      $ 334,981
                                                        =========      =========


   The Bank's  customers  are  primarily  located in  Stanislaus  County and San
   Joaquin County. Approximately 54% of the Bank's loans are for real estate and
   construction  and  approximately  42% of the  Bank's  loans  are for  general
   commercial  uses  including  professional,  retail,  agricultural  and  small
   business.  Agricultural  loans make up  approximately  25% of the Bank's loan
   portfolio.  Generally,  real estate  loans are secured by real  property  and
   commercial  and other  loans are  secured by funds on  deposit,  business  or
   personal  assets.  Repayment is generally  expected  from the proceeds of the
   sales of property for real estate  construction loans, and from cash flows of
   the borrower for other loans.



<PAGE>



NOTE E - PROPERTY AND EQUIPMENT

   Property and equipment, stated at cost, consists of the following at December
   31:

                                              1996          1995
                                          ----------    ----------

Land .................................    $  636,117    $  636,117
Building and improvements ............       444,475       444,475
Furniture, fixtures and equipment ....     2,266,476     1,704,532
Leasehold improvements ...............       143,428       143,428
Automobiles ..........................        38,912        64,042
Construction in progress .............        76,368        46,238
                                          ----------    ----------
                                           3,605,776     3,038,832
Less accumulated depreciation and
  amortization .......................     1,886,094     1,696,332
                                          ----------    ----------

                                          $1,719,682    $1,342,500
                                          ==========    ==========


   Depreciation  expense on property and equipment  was  $233,554,  $241,353 and
   $231,468 in 1996, 1995 and 1994, respectively.

   During 1995, the Bank purchased land and prepared for the  construction  of a
   branch in the town of Riverbank, California.


NOTE F - ACCRUED INTEREST RECEIVABLE AND OTHER ASSETS

   Accrued interest receivable and other assets at December 31, are as follows:
                                                          1996           1995
                                                       ----------     ----------

Interest income receivable - investments .........     $  347,987     $  464,509
Interest and fee income receivable - loans .......        379,324        327,622
Deferred income tax asset ........................        397,000        450,000
Foreclosed real estate, net ......................        500,000        560,600
Other ............................................        180,669           --
                                                       ----------     ----------

                                                       $1,804,980     $1,802,731
                                                       ==========     ==========


   In May 1996, the Bank foreclosed on a loan which was  collateralized by dairy
   cattle.  The Bank earned revenues from the sale of milk and incurred expenses
   relating to dairy operations until the cattle were sold in December 1996.

NOTE G - FORECLOSED REAL ESTATE

   Changes in the allowance for losses for foreclosed  real estate for the years
ended December 31, are as follows:

                                              1996         1995          1994
                                           ---------     ---------    ----------

Balance at January 1, .................    $ 295,567     $ 257,644    $    --
Provision charged to operations .......      112,560        37,923      261,544
Charge-offs, net of recoveries ........     (123,934)         --         (3,900)
                                           ---------     ---------    ---------

Balance at December 31, ...............    $ 284,193     $ 295,567    $ 257,644
                                           =========     =========    =========

 

<PAGE>



NOTE H - TIME DEPOSITS

   At December 31, 1996, the scheduled maturities of certificates of deposit are
   as follows:

                   1997                   $30,241,378
                   1998                     3,912,544
                   1999                       637,782
                   2000                        58,987
                   2001                       318,730
                                          -----------

                                          $35,169,421


NOTE I - EMPLOYEE BENEFIT PLANS

   Under the terms of the employee  profit-sharing plan, a portion of the Bank's
   profits, determined annually by the Board of Directors, will be set aside and
   maintained  in  a  trust  fund  for  the  benefit  of  qualified   employees.
   Contributions to the plan, included in employee benefits on the statements of
   earnings,  were  $150,000  and  $100,000 in 1996 and 1995,  respectively.  No
   contribution was made to the plan for 1994.

   During 1995, the Bank adopted a defined  contribution 401(k) plan (the Plan).
   The Plan is available to all  employees  who are at least 18 years of age and
   who have worked a minimum of six months for the Bank.  Eligible employees who
   elect to  participate,  may choose to  contribute  to the Plan,  up to 10% of
   their  compensation  for the plan  year.  The  Bank  may  also  elect to make
   matching  contributions  to the  Plan.  The Bank  did not  make any  matching
   contributions to the Plan in 1996 or 1995.

NOTE J - INTEREST EXPENSE ON DEPOSITS

   Interest  expense on deposits was  comprised of the  following  for the years
   ended December 31:

                                                1996        1995          1994
                                            ----------   ----------   ----------

Demand deposits and regular savings .....   $  847,054   $1,209,711   $  755,796
Time deposits less than $100,000 ........      634,295      522,539      559,932
Time deposits greater than $100,000 .....    1,256,879    1,286,263      994,464
                                            ----------   ----------   ----------

                                            $2,738,228   $3,018,513   $2,310,192
                                            ==========   ==========   ==========


NOTE K - INCOME TAXES

   The provision for income taxes for the years ended  December 31,  consists of
   the following:

                                   1996               1995               1994
                                ---------          ---------          ----------
    Current:
      Federal .........         $ 487,000          $ 632,000          $ 429,000
      State ...........           205,000            241,000            167,000
                                ---------          ---------          ---------
                                  692,000            873,000            596,000
                                ---------          ---------          ---------

    Deferred:
      Federal .........            62,000           (240,000)           (55,000)
      State ...........            11,000            (81,000)            (2,000)
                                ---------          ---------          ---------
                                   73,000           (321,000)           (57,000)
                                ---------          ---------          ---------

                                $ 765,000          $ 552,000          $ 539,000
                                =========          =========          =========
                                                                            
<PAGE>



   NOTE K - INCOME TAXES - CONTINUED

   A reconciliation  of income taxes computed at the federal  statutory rate and
   the  provision  for  income  taxes for the years  ended  December  31, are as
   follows:
                                              1996          1995         1994
                                            ---------    ---------    ---------

Income taxes at statutory rates .........   $ 643,000    $ 480,000    $ 463,000
Reduction for tax exempt interest .......     (42,000)     (38,000)     (53,000)
State income taxes, net of federal
  income tax benefit ....................     142,000      106,000      103,000
Other ...................................      22,000        4,000       26,000
                                            ---------    ---------    ---------

                                            $ 765,000    $ 552,000    $ 539,000
                                            =========    =========    =========

The tax effect of temporary differences giving rise to the Bank's deferred
income tax asset at December 31, is as follows:

                                                            1996          1995
Deferred tax assets:
  Allowance for loan losses ..........................   $ 265,000    $ 318,000
  Foreclosed real estate .............................     134,000      142,000
  State income taxes .................................      70,000       80,000
                                                         ---------    ---------

                                                           469,000      540,000
                                                         ---------    ---------
Deferred tax liabilities:
  Depreciation on property and equipment .............     (52,000)     (52,000)
  Unrealized gain on available-for-sale securities ...     (12,000)     (32,000)
  Accretion on investment securities .................      (8,000)      (6,000)
                                                         ---------    ---------

                                                           (72,000)     (90,000)
                                                         ---------    ---------

Deferred income tax asset (included in other
  assets on the balance sheet) .......................   $ 397,000    $ 450,000
                                                         =========    =========


NOTE L - COMMITMENTS AND CONTINGENCIES

   The  Company  leases the  Riverbank,  Denair,  and Modesto  facilities  under
   operating  leases  with  initial  terms  expiring  in 1996,  1998  and  2000,
   respectively.

   At December  31, 1996 the future  minimum  rental  payments  under  operating
   leases are as follows:

             Year ending December 31,
                     1997                           $        92,337
                     1998                                    69,857
                     1999                                    42,357
                     2000                                    20,657
                     2001                                     3,443
                     Thereafter                                   -
                                                    ---------------

                                                    $       228,651

   Rent expense under operating leases was $92,337, $88,705 and $86,973 for
   the years ended December 31, 1996, 1995 and 1994, respectively.
                                             

<PAGE>



NOTE M - STOCK OPTION PLAN

   During 1996, the Company's  Board of Directors  approved a fixed stock option
   plan accounted for under APB Opinion No. 25 and related Interpretations.  The
   plan allows the Company to grant incentive and non-qualified stock options to
   key employees and  directors  for up to 113,035  shares of common stock.  The
   options  have a term of ten  years  when  issued  and vest  immediately.  The
   exercise  price of each  option is greater  than or equal to the fair  market
   value  of  the  Company's  stock  on  the  date  of  grant.  Accordingly,  no
   compensation cost has been recognized for the plan. Had compensation cost for
   the plan been determined  based on the fair value of the options at the grant
   dates consistent with the method of SFAS No. 123, "Accounting for Stock-Based
   Compensation",  the  Company's net earnings and earnings per share would have
   been reduced to the pro forma amounts indicated below. For those options that
   are  non-qualified  stock options for income tax purposes,  the pro forma net
   earnings  reflect the Company's  estimated future tax deduction upon exercise
   of the options.

                                                         1996
         Net earnings
               As reported                       $      1,127,600
               Pro forma                         $        729,821

         Earnings per share
               As reported                       $           2.99
               Pro forma                         $           1.94

   The fair value of each option  grant is  estimated on the date of grant using
   the Black-Scholes  options-pricing model with the following  weighted-average
   assumptions  used for grants in 1996:  dividend  yield of 2.7 percent a year;
   expected  volatility of 20 percent;  risk-free interest rates of 6.8 percent;
   and expected life of 10 years.

   A summary of the status of the Company's fixed stock option plan for the year
   ended December 31, 1996 is presented below.

                                                                    Weighted
                                                                    Average
                                                                    Exercise
                                                     Shares          Price

         Outstanding at January 1, 1996                   -     $             -
         Granted                                     80,355     $         27.22
         Outstanding at December 31, 1996            80,355     $         27.22

         Options exercisable at December 31, 1996    80,355     $         27.22

         Weighted-average fair value of options
           granted during the year                                        $7.85


   The  following  information  applies to options  outstanding  at December 31,
   1996:

         Number outstanding                                   80,355
         Range of exercise prices                         $26.00 - $28.60
         Weighted-average exercise price                      $27.22
         Weighted-average remaining contractual life         9.5 years
                                                                

<PAGE>



NOTE N - FINANCIAL INSTRUMENTS

   The Bank is a party to financial instruments with  off-balance-sheet  risk in
   the normal course of business to meet the financial  needs of its  customers.
   These financial  instruments include commitments to extend credit in the form
   of loans or through standby letters of credit.  These instruments involve, to
   varying  degrees,  elements of credit and interest rate risk in excess of the
   amount  recognized  in the  balance  sheet.  The  contract  amounts  of those
   instruments  reflect  the extent of  involvement  the Bank has in  particular
   classes of financial instruments.

   The Bank's  exposure  to credit  loss in the event of  nonperformance  by the
   other party to the financial  instrument for commitments to extend credit and
   standby letters of credit is represented by the  contractual  amount of those
   instruments. The Bank uses the same credit policies in making commitments and
   conditional obligations as it does for on-balance-sheet instruments.

                                                          Contract
                                                           Amount
     Financial instruments whose contract amounts
     represent credit risk:
         Undisbursed loan commitments               $      8,389,438
         Visa/Mastercard lines                             1,535,872
         Standby letters of credit                           226,324
                                                    ----------------
                                                    $     10,151,634

   Commitments  to extend credit are agreements to lend to a customer as long as
   there  is  no  violation  of  any  condition  established  in  the  contract.
   Commitments  generally  have  fixed  expiration  dates or  other  termination
   clauses and may require  payment of a fee. Since many of the  commitments are
   expected to expire without being drawn upon, the total commitment  amounts do
   not necessarily  represent future cash requirements.  The Bank evaluates each
   customer's  credit  worthiness  on  a  case-by-case   basis.  The  amount  of
   collateral  obtained,  if  deemed  necessary  by the Bank upon  extension  of
   credit, is based on management's  credit  evaluation.  Collateral held varies
   but  may  include  accounts  receivable,   inventory,   property,  plant  and
   equipment,  and  income-producing  commercial  properties.  All of the Bank's
   commitments are variable rate with no caps or floors.

   Standby letters of credit are conditional  commitments  issued by the Bank to
   guarantee  the  performance  of a customer to a third party.  The credit risk
   involved  in  issuing  letters  of  credit  is  essentially  the same as that
   involved in extending loan facilities to customers.

   The  following  table  provides  summary  information  on the  fair  value of
   financial instruments at December 31, 1996:
                                             Carrying             Estimated
                                             Amount               Fair Value
   Financial assets:
   Cash and cash equivalents            $       13,328,502   $      13,328,502
   Securities available-for-sale                10,349,542          10,349,542
   Securities held-to-maturity                  15,428,286          15,540,480
   Loans receivable                             50,831,454          50,640,589
   Accrued interest receivable                     727,311             727,311

   Financial liabilities:
   Deposits                                    (81,051,046)        (81,094,126)
   Accrued interest payable                       (129,978)           (129,978)

   Off-balance-sheet liabilities:
   Commitments and letters of credit                     -            (210,000)
                                        

<PAGE>



NOTE N - FINANCIAL INSTRUMENTS - CONTINUED

   The  following  table  provides  summary  information  on the  fair  value of
   financial instruments at December 31, 1995:
                                             Carrying             Estimated
                                              Amount              Fair value
   Financial assets:
   Cash and cash equivalents            $       11,981,394   $      11,981,394
   Securities available-for-sale                12,926,352          12,926,352
   Securities held-to-maturity                  20,351,537          20,483,922
   Loans receivable                             48,094,739          47,877,723
   Accrued interest receivable                     814,267             814,267

   Financial liabilities:
   Deposits                                    (84,839,377)        (84,854,153)
   Accrued interest payable                       (199,188)           (199,188)

   Off-balance-sheet liabilities:
   Commitments and letter of credit                      -            (157,000)

   The carrying  amounts  include  $329,609 and $1,694,556 of non-accrual  loans
   (loans  that are not  accruing  interest)  at  December  31,  1996 and  1995,
   respectively.  Management  has  determined  that  primarily  because  of  the
   uncertainty  and the  difficulty of predicting  the timing of such cash flows
   excessive  amounts of time and money would be  incurred to estimate  the fair
   values of  nonperforming  assets.  The  following  aggregate  information  is
   provided about the contractual provisions of these assets at December 31:
                                                1996                 1995
                                           ---------------    ----------------

             Aggregate carrying amount     $       329,609    $      1,694,556
             Effective rate                          11.5%              11.25%
             Average term to maturity            13 months           19 months


NOTE O - RELATED-PARTY TRANSACTIONS

   The Bank,  in the  ordinary  course of  business,  makes  loans and  receives
   deposits  from its directors  and  stockholders.  As of December 31, 1996 and
   1995  such  loans   amounted  to  $63,067  and  $39,700,   respectively.   In
   management's opinion, these transactions were on substantially the same terms
   as comparable  transactions  with other  customers of the Bank.  During 1996,
   $132,033 was paid to related  parties in connection with the operation of the
   Bank's foreclosed assets.

NOTE P - REGULATORY MATTERS

   The Bank is subject to various regulatory capital  requirements  administered
   by the federal banking agencies. Failure to meet minimum capital requirements
   can     initiate     certain      mandatory--and      possibly     additional
   discretionary--actions by regulators that, if undertaken, could have a direct
   material effect on the Bank's  financial  statements.  Under capital adequacy
   guidelines and the regulatory  framework for prompt  corrective  action,  the
   Bank must meet specific capital guidelines that involve  quantitative measure
   of the Bank's assets,  liabilities,  and certain  off-balance-sheet  items as
   calculated under regulatory accounting practices.  The Bank's capital amounts
   and  classification  are  also  subject  to  qualitative   judgments  by  the
   regulators about components, risk weightings, and other factors.
                                                        


<PAGE>



NOTE P - REGULATORY MATTERS - CONTINUED

   Quantitative  measures  established by regulation to ensure capital  adequacy
   require  the Bank to  maintain  minimum  amounts and ratios (set forth in the
   table below) of total and Tier I capital (as defined in the  regulations)  to
   risk-weighted  assets (as  defined),  and of Tier I capital  (as  defined) to
   average assets (as defined).  Management  believes,  as of December 31, 1996,
   that the Bank meets all capital adequacy requirements to which it is subject.

   As of December 31, 1996, the most recent  notification from the Office of the
   Comptroller of the Currency  categorized the Bank as well  capitalized  under
   the regulatory  framework for prompt corrective  action. To be categorized as
   well  capitalized  the Bank must maintain  minimum total  risk-based,  Tier I
   risk-based,  and Tier I leverage ratios as set forth in the table.  There are
   no conditions or events since that notification that management believes have
   changed the institution's category.

   The Bank's actual  capital  amounts and ratios are presented in the following
   table.

<TABLE>
<CAPTION>
                                                                                                To be well
                                                                                             capitalized under
                                                              For capital                    prompt corrective
                                      Actual               Adequacy purposes:                action provisions:
                               Amount        Ratio      Amount           Ratio            Amount            Ratio

<S>                         <C>            <C>       <C>           <C>            <C>    <C>          <C>            <C>  
As of December 31, 1996:
  Total Capital (to Risk                                           greater than                       greater than
    Weighted Assets) ....   $10,936,000    19.75%    $ 4,429,500   or equal to    8.0%   $ 5,536,900  or equal to   10.0%

  Tier I Capital (to Risk                                          greater than                       greater than
    Weighted Assets) ....   $10,239,000    18.49%    $ 2,214,800   or equal to    4.0%   $ 3,322,100  or equal to    6.0%

  Tier I Capital (to                                               greater than                       greater than 
    Average Assets) .....   $10,239,000    11.23%    $ 3,647,000   or equal to    4.0%   $ 4,558,800  or equal to    5.0%
 

</TABLE>


NOTE Q - CONDENSED FINANCIAL DATA

   The  following is the condensed  financial  data for Delta  National  Bancorp
   (parent company only):

                                 BALANCE SHEETS

                                  December 31,

                                     ASSETS

                                                          1996           1995
                                                       -----------   -----------

Cash ...............................................   $    76,408   $    42,426
Investment in subsidiary ...........................    10,239,942     9,399,721
Property and equipment, net ........................       273,747       284,097
                                                       -----------   -----------

                                                       $10,590,097   $ 9,726,244
                                                       ===========   ===========


               LIABILITIES AND STOCKHOLDERS' EQUITY


Liabilities ........................................   $      --     $      --

Stockholders' equity ...............................    10,590,097     9,726,244
                                                       -----------   -----------

                                                       $10,590,097   $ 9,726,244
                                                       ===========   ===========
<PAGE>



NOTE Q - CONDENSED FINANCIAL DATA - CONTINUED




                             STATEMENTS OF EARNINGS

                             Year ended December 31,


                                              1996           1995         1994
                                            ----------   ----------   ----------
Income
  Interest ..............................   $    1,233   $      943   $    2,487
  Rent ..................................       86,226       83,698       74,800
  Other .................................          240          475          315
                                            ----------   ----------   ----------

                                                87,699       85,116       77,602
                                            ----------   ----------   ----------

Expenses
  General and administrative ............       73,270       31,049       28,513
  Depreciation ..........................       10,350       10,350       10,350
                                            ----------   ----------   ----------

                                                83,620       41,399       38,863
                                            ----------   ----------   ----------

      Earnings before income taxes
        and equity in earnings of
        subsidiary ......................        4,079       43,717       38,739

Income tax expense ......................        1,700       18,000       16,000
                                            ----------   ----------   ----------

                                                 2,379       25,717       22,739
Equity in earnings of
  Delta National Bank ...................    1,125,221      834,160      798,658
                                            ----------   ----------   ----------

NET EARNINGS ............................   $1,127,600   $  859,877   $  821,397
                                            ==========   ==========   ==========


<PAGE>



NOTE Q - CONDENSED FINANCIAL DATA - CONTINUED


                            STATEMENTS OF CASH FLOWS

                             Year ended December 31,

<TABLE>
<CAPTION>

                                                         1996            1995            1994
                                                      -----------    -----------    -----------
<S>                                                   <C>            <C>            <C>        
Increase (decrease) in cash and cash equivalents

   Cash flows from operating activities:
     Net earnings .................................   $ 1,127,600    $   859,877    $   821,397
     Adjustment to reconcile net earnings
       to net cash provided by operating activities
         Provision for depreciation and
           amortization ...........................        10,350         10,350         10,350
         (Decrease) increase in accrued expenses
           and other liabilities ..................          --          (55,546)        16,179
         Undistributed earnings of subsidiary .....    (1,125,221)      (834,160)      (798,658)
                                                      -----------    -----------    -----------

           Net cash provided by (used in)
             operating activities .................        12,729        (19,479)        49,268

   Cash flows from investing activities:
     Cash dividends from subsidiary ...............       285,000        290,000         87,500
                                                      -----------    -----------    -----------

           Net cash provided by
             investing activities .................       285,000        290,000         87,500

   Cash flows from financing activities:
     Cash dividends ...............................      (263,747)      (263,747)      (263,747)
                                                      -----------    -----------    -----------

           Net cash used in financing activities ..      (263,747)      (263,747)      (263,747)
                                                      -----------    -----------    -----------

   Net increase (decrease) in cash and
     cash equivalents .............................        33,982          6,774       (126,979)

Cash and cash equivalents at beginning of year ....        42,426         35,652        162,631
                                                      -----------    -----------    -----------

Cash and cash equivalents at end of year ..........   $    76,408    $    42,426    $    35,652
                                                      ===========    ===========    ===========

</TABLE>
<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Board of Directors and Stockholders
Delta National Bancorp

We have audited the accompanying  consolidated  balance sheets of Delta National
Bancorp  and  Subsidiary  as of  December  31,  1996 and 1995,  and the  related
consolidated  statements  of earnings,  stockholders'  equity and cash flows for
each of the three years in the period ended December 31, 1996.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial  position of Delta National
Bancorp and  Subsidiary as of December 31, 1996 and 1995,  and the  consolidated
results of their  operations and their  consolidated  cash flows for each of the
three years in the period ended December 31, 1996, in conformity  with generally
accepted accounting principles.



/s/ Grant Thornton, LLP
Stockton, California
January 27, 1997


<PAGE>
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

There were no changes in or  disagreements  with  accountants  on accounting and
financial disclosures during the fiscal years ending December 31, 1996 and 1995.

DIRECTORS & EXECUTIVE COMPENSATION

Identification  of  directors:  The names of each  director  of the  Company and
certain information about them, is set forth below:

--------------------------------------------------------------------------------
                                                                       Director
       Director      Age      Principal Occupation                      Since
--------------------------------------------------------------------------------
Andrew J. Rossi      65    President and Chief Executive                 1973
                           Officer - Delta National Bank
                           (Executive Officer)
                           President - A. Rossi, Inc.

Jack Dozier          81    Attorney - Atherton & Dozier                  1976


Joseph A. Freitas    70    Secretary to the Board                        1973
                           Public Relations-Delta National Bank
                           - Retired 1991

Theodore Poulos      69    Chairman of the Board - Delta National Bank   1973
                           Public Relations - Delta National Bank
                           President - Manteca Drug, Inc.
                           - Retired 1994

Toinette Rossi       39    Vice President & Manager                      1994
                           Delta National Bank (Executive Officer)
--------------------------------------------------------------------------------

Each of the directors has been engaged in his/her principal occupation set forth
above during the past five years.

Identification of executive officers: The names of each executive officer of the
Company not already  listed in the table  above and  certain  information  about
them, is set forth below:

--------------------------------------------------------------------------------
   Executive               Principal Occupations                        Period
   Officer         Age     with Delta National Bank                     Served
--------------------------------------------------------------------------------
Warren E. Wegge    48    Executive Vice President                        1994
                         Senior Vice President/Credit Administrator      1991
                         Vice President/Corporate Banking Officer        1988

Chad B. Meyer      43    Senior Vice President/Credit Administrator      1994
                         Vice President/Corporate Banking Officer        1991

Ronald P. Dalben   40    Vice President (Investment Officer & Appraiser) 1987
                         Various other positions                         1980

Barbara Jordan     55    Vice President/Operations                       1992
                         Assistant Vice President/Operations             1990
                         Various other positions                         1983

Eileen Pastenieks  35    Vice President/Accounting                       1994
                         Assistant Vice President/Note Dept.             1993
                         Operations Officer                              1990
--------------------------------------------------------------------------------
<PAGE>
Family  relationships:  Except  for Andrew  Rossi and  Toinette  Rossi,  who are
related to each other, there are no other family relationships between any other
director or executive officer of the Company.


Directorships:  The following individuals hold other directorships as indicated
below:

--------------------------------------------------------------------------------
DIRECTOR/EXECUTIVE OFFICER                   OTHER DIRECTORSHIPS HELD
--------------------------------------------------------------------------------
Theodore Poulos                              Doctors Hospital of Manteca
                                             Virotest, PLC
                                             Manteca District Ambulance

Joseph A. Freitas                            Manteca Boys & Girls Club

Jack C. Dozier                               Cal Cedar Products
                                             Duraflame, Inc.
                                             Rylock Ltd.
                                             Cal Mills
--------------------------------------------------------------------------------

Involvement  in certain  legal  proceedings:  None of the directors or executive
officers named above have been involved in certain legal proceedings.

<PAGE>
EXECUTIVE COMPENSATION

Director Compensation Table:  The following table sets forth information
concerning compensation for Directors in 1996.  (See "Summary Compensation
Table" for additional information on Executive Officers)

--------------------------------------------------------------------------------
                                        Annual
                             BCORP       Bank      
                            Director   Director    Committee
             Name             Fees       Fees       Fees (1)      Other (2)
--------------------------------------------------------------------------------
Andrew J. Rossi ...........$ 5,800    $    --      $     --        $     -- 

Jack Dozier ...............  5,800      7,200            --              --

Joseph A. Freitas .........  5,800      7,200            --              --

Theodore Poulos ...........  5,800      7,200        15,600          25,800

Toinette Rossi ............  5,800         --            --              --
--------------------------------------------------------------------------------
(1)   Finance Committee Annual Fee
(2)   Salary from Bank $24,000 for Public Relations and Past Due Meetings $1,800


Summary Compensation Table:  The following table shows, as to the Chief
Executive Officer and each of the four other most highly compensated executive
officers, information concerning compensation for services to the Company in
all capacities.  (Also see "Director Compensation Table")

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                                                      Club or
     Name and                                                      Organization        Profit
     Principal                               Bonus ($) Automobile   Membership      Sharing Plan
     Position             Year   Salary ($)    (1)        Use          Fees              (2)
--------------------------------------------------------------------------------------------------
<S>                        <C>   <C>         <C>         <C>         <C>             <C>     
Andrew J. Rossi .....      1996  $127,627   $ 45,000     $ 2,255     $ 2,262         $ 36,656
President and Chief        1995   112,000     10,000       1,500       2,300           13,944
Executive Officer          1994   100,000         --          --          --            4,081
                           1993    88,860     10,000          --          --            3,897
                                                                    
Warren E. Wegge .....      1996  $ 84,194   $ 21,000     $    --     $    --         $ 23,108
Executive Officer          1995    78,000     13,500          --          --            9,680
                           1994    65,460      2,500          --          --            2,397
                           1993    60,660      7,595                                    2,200
                                          
Chad B. Meyer .......      1996  $ 64,341   $ 13,000     $    --     $    --         $ 11,793
Senior Vice                1995    62,400      6,750          --          --            6,086
President/Credit           1994    60,000      1,000          --          --              775
Administrator              1993    53,400      4,716          --          --              603  
                                                                                   
Toinette Rossi ......      1996  $ 61,690   $ 14,495     $    --     $    --         $ 28,552
Vice President &           1995    60,000      5,316          --          --            9,577
Manager                    1994    57,600      1,822          --          --            3,970
                           1993    54,780      1,480          --          --            3,913
--------------------------------------------------------------------------------------------------
<FN>
(1)  1996 Bonuses were actually paid in 1996 for services rendered in 1996
(2)  Profit Sharing
</FN>

</TABLE>
<PAGE>

During 1996,  the  Company's  Board of  Directors  approved a fixed stock option
plan.  The plan allows the Company to grant  incentive  and  non-qualifed  stock
options to key employees and directors for up to 113,035 shares of common stock.
The  options  have a term of ten years  when  issued and vest  immediately.  The
exercise  price of each option is greater than or equal to the fair market value
of the Company's stock on the date of grant.  The following table represents the
options granted in the last fiscal year:
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------
                                 Individual Grants                      Potential Realizable Value
                    ----------------------------------------------------------------------------------------
                      No. of   Percentage  Exercise                                             Grant Date
                     Options    of Total    Price     Expiration                                 Present
       Name          Granted    Options     ($/sh)       Date        5% ($)         10% ($)       Value
------------------------------------------------------------------------------------------------------------
<S>                    <C>         <C>    <C>            <C>         <C>          <C>           <C>       
Andrew Rossi (1)       37,679      46.9%  $   28.00      03/18/06    $1,107,763   $1,160,513    $1,055,012
Theodore Poulos        15,437      19.3%      26.00      03/18/06       421,430      441,498       401,362
Jack Dozier             6,051       7.5%      26.00      03/18/06       165,192      173,059       157,326
Toinette Rossi          3,151       3.9%      26.00      03/18/06        86,022       90,119        81,926
Joseph Freitas         13,037      16.2%      26.00      03/18/06       355,910      372,858       338,962
Warren Wegge            5,000       6.2%      26.00      03/18/06       136,500      143,000       130,000
------------------------------------------------------------------------------------------------------------
             Total     80,355       100%
------------------------------------------------------------------------------------------------------------
<FN>
(1)  Excercise price is 110% of FV because ownership is greater than 10%. If
     Andrew is granted options under the incentive plan the term is 5 years,
     not 10 years.
</FN>
</TABLE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF  MANAGEMENT

The following table sets forth as of December 31, 1996  information  relating to
the beneficial  owners of the Company's Common Stock by each person known by the
Company  to be the  beneficial  owner  of more  than  five  percent  (5%) of the
outstanding shares of Common Stock.

--------------------------------------------------------------------------------
                                                      Total Shares    Percent of
       Name                           Address             Owned          Class
--------------------------------------------------------------------------------
Andrew J. Rossi                    611 North Main St.    94,704         25.14%
                                   Manteca, CA 95336

The Cede & Co. (Nominee of the     P. O. Box 222         22,694          6.02%
Depository Trust Company)          New York, New York
                                   10041
--------------------------------------------------------------------------------
<PAGE>

Common Stock Ownership of Directors and Executive Officers:  The following table
reflects  shares of Common  Stock  beneficially  owned by each  director  of the
Company,  each of the executive officers named in the Summary Compensation Table
appearing  elsewhere  herein,  and by all directors and executive  officers as a
group, as of December 31, 1996.

--------------------------------------------------------------------------------
                                        Direct   Indirect   Total    Approx.
                                        Shares    Shares    Shares   Percent.
        Name           Position         Owned     Owned     Owned     Owned
--------------------------------------------------------------------------------
Jack C. Dozier ........Director           5,190      --     5,190      1.38%
Joseph A. Freitas .....Director          11,566      --    11,566      3.07%
Theodore Poulos .......Chairman of the   
                       Board/Director    12,100    1,142   13,242      3.52%
Andrew J. Rossi (1) ...President & 
                       CEO/Director      75,539   19,165   94,704     25.14%
Toinette Rossi ........V.P. & Manager/
                       Director           3,296       --    3,296  less than 1%
Warren E. Wegge .......Executive Vice
                       President            130       --      130  less than 1%
Ronald P. Dalben ......Vice President       100       --      100  less than 1%
--------------------------------------------------------------------------------
All directors and executive
 officers as a group:                                     128,228     34.03%
--------------------------------------------------------------------------------
(1) Indirect  5.09% of class
    Direct   20.05% of class

                                                              
CERTAIN RELATIONSHIPS & RELATED PARTIES

In 1996, the Bank renewed an extension of credit to Joseph A. Freitas,  Director
of the Company, in the amount of $13,055. As of December 31, 1996, the principal
balance owing was $6,635.  This loan bears interest at the a fixed rate of 7.75%
and is due to  mature  on  April  21,  1997.  The  loan is  collateralized  by a
certificate of deposit.  In addition,  the Bank funded a secured loan of $30,000
at a fixed rate of 8%. As of December 31, 1996, the principal  balance owing was
$29,293. The loan matures April 3, 1997.

In 1996,  the bank  funded a loan to  Melissa  Braun,  granddaughter  of  Joseph
Freitas, Director of the Company, in the amount of $10,000. The loan has a fixed
rate of 8% and is secured by a  certificate  of deposit.  The  balance  owing at
December 31, 1996 was $9,552 and is scheduled to mature July 2, 1997.

In 1994, the Bank funded an unsecured  loan to Linda Abeldt,  daughter of Joseph
Freitas,  Director of the Company,  in the amount of $12,000.  In 1995, the Bank
funded an additional  unsecured loan in the amount of $9,000. The two loans bear
interest at a fixed rate of 7% and 10%,  respectively.  As of December 31, 1996,
the  principal  balance  owing was $5,550 and  $6,386,  respectively  on the two
loans. The loans are scheduled to mature on January 25, 1999 and March 22, 2000,
respectively.

In 1991, the Bank extended  credit to Valerie  Salas,  daughter of Andrew Rossi,
President,  Chief Executive  Officer and Director of the Company,  and sister of
Toinette  Rossi,  Vice  President/Manager  and Director of the  Company,  in the
amount of $16,595. At December 31, 1996, the principal balance owing was $4,263.
The loan is  unsecured  and  bears  interest  at a fixed  rate of 13%.  The loan
matures on April 23, 1997.

In 1996,  the Bank  renewed an  unsecured  line of credit to John Rossi,  son of
Andrew Rossi,  President,  Chief Executive  Officer and Director of the Company,
and  brother of  Toinette  Rossi,  Vice  President/Manager  and  Director of the
Company, in the amount of $303,250. On December 31, 1996, there was no principal
balance owed.  This loan bears  interest at the Bank's  reference rate plus 2.5%
and is scheduled to mature on November 27, 1997.  John Rossi is also a guarantor
on a small  installment loan with a current balance of $1,388.  The rate on this
loan is fixed at l4.75% and is scheduled to mature March 14, 1997.
<PAGE>

EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8K

(a)      1.       Financial Statements: Delta National Bancorp and Subsidiary
                  See Item 8 for a listing of all financial statements.

         2.       Financial Statement Schedules
                  Additional Supplementary Data not included in this section
                  have been omitted because the information required has been
                  included in the financial statements or notes thereto or are
                  not applicable or not required.

         3.       Exhibits
                  Registrant's Articles of Incorporation and Bylaws are
                  furnished by way of incorporation by reference to Exhibit 3 to
                  registrant's  registration  statement  on Form S-14,  as filed
                  under  the  Securities  Act of  1933 on  Sept.  10,  1982  and
                  declared effective on Oct. 8, 1982.

                  Plan of Reorganization and Agreement of Merger is furnished by
                  reference  to  registrant's  Form  S-14  as  filed  under  the
                  Securities  Act of 1933 on  September  10,  1982 and  declared
                  effective on October 8, 1982.

(b)               Reports on Form 8-K
                  The registrant did not file any reports on Form 8-K during
                  the ended December 31, 1996.
<PAGE>
                                                                  
                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                             DELTA NATIONAL BANCORP
                                                 (Registrant)



                                                     
                                             By:  /s/ Andrew Rossi
                                                  President and Chief Executive
                                                  Officer/Director
                                                  March 14, 1997


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the indicated capacities, on March 14, 1997.





/s/ Andrew Rossi                                   /s/ Theodore Poulos
Andrew Rossi                                       Theodore Poulos
President and                                      Chairman of the Board
Chief Executive Officer                            and Director
and Director
(Principal Executive Officer)




/s/ Joseph Freitas                                 /s/ Eileen Pastenieks
Joseph Freitas                                     Eileen Pastenieks
Secretary of the Board and                         Staff Vice President/
Director                                           Accounting
                                                  (Principal Accounting Officer)




/s/ Warren Wegge                                   /s/ Toinette Rossi
Warren Wegge                                       Toinette Rossi
Executive Vice President                           Vice President and Manager
and (Principal Financial Officer)                  Director