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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

     [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                       For the period ended June 30, 2002

                                       OR

    [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934.
                        For the transition period from to

                        Commission File Number : 0-12499

                             First Financial Bancorp
             (Exact name of registrant as specified in its charter)

               California                                94-28222858
    (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                   Identification No.)

   701 South Ham Lane, Lodi, California                      95242
 (Address of principal executive offices)                  (Zip Code)

                                 (209)-367-2000
              (Registrant's telephone number, including area code)

                                       NA
              (Former name, former address and former fiscal year,
                         if changed since last report.)

         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.
                                                [ X ] Yes         [   ] No

         As of August 5, 2002 there were  1,616,884  shares of Common Stock,  no
par value, outstanding.

================================================================================

<PAGE>

                             FIRST FINANCIAL BANCORP

                                    FORM 10-Q

            FOR THE QUARTER AND SIX MONTH PERIOD ENDED JUNE 30, 2002
                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                     PART I

Item 1.    Consolidated Financial Statements and Notes to Consolidated
           Financial Statements ............................................   1

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations .......................................   9

Item 3.    Quantitative and Qualitative Disclosures about Market Risk ......  18

                                     PART II

Item 1.    Legal Proceedings ...............................................  18

Item 2.    Changes in Securities ...........................................  18

Item 3.    Defaults Upon Senior Securities .................................  18

Item 4.    Submission of Matters to a Vote of Security Holders .............  18

Item 5.    Other Information ...............................................  18

Item 6.    Exhibits and Reports on Form 8-K ................................  18

                                        i
<PAGE>


ITEM 1. FINANCIAL STATEMENTS

                    FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                           Consolidated Balance Sheets
                                   (Unaudited)
                       (in thousands except share amounts)

                                                           June 30, December 31,
Assets                                                       2002       2001
------                                                       ----       ----

Cash and due from banks                                    $ 15,707   $ 13,328
Federal funds sold and securities purchased
    under resale agreements                                    --        6,129
Investment securities available for sale, at fair value      47,080     41,015
Loans held for sale                                           5,930      3,876

Loans, net of deferred loan fees                            149,141    138,098
Less allowance for loan losses                                2,980      2,668
                                                           --------   --------

  Net loans                                                 146,161    135,430

Premises and equipment, net                                   7,230      7,185
Accrued interest receivable                                   1,295      1,265
Other assets                                                 17,660     17,947
                                                           --------   --------

    Total Assets                                           $241,063   $226,175
                                                           ========   ========

Liabilities and Stockholders' Equity

Liabilities:
    Deposits
       Noninterest bearing                                 $ 33,796   $ 29,758
       Interest bearing                                     168,924    171,813
                                                           --------   --------
          Total deposits                                    202,720    201,571

    Accrued interest payable                                    187        307
    Short term borrowings                                    12,360      4,000
    Other liabilities                                         2,419      2,434
                                                           --------   --------
          Total liabilities                                 217,686    208,312

    Obligated mandatorily redeemable capital
        securities of subsidiary trust                        5,000       --
                                                           --------   --------

Stockholders' equity:
    Preferred stock - no par value; authorized 1,000,000
          shares, no shares issued and outstanding
    Common stock - no par value; authorized 9,000,000
          shares, issued and outstanding in 2002 and 2001,
          1,616,884 and 1,622,300 respectively               10,088     10,191
    Retained earnings                                         7,795      7,317
     Accumulated other comprehensive income                     494        355
                                                           --------   --------

          Total stockholders' equity                         18,377     17,863
                                                           --------   --------

                                                           $241,063   $226,175
                                                           ========   ========

See accompanying notes.


<PAGE>

                    FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                        Consolidated Statements of Income
                                   (Unaudited)
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                  Three Months Ended    Six Months Ended
                                                        June 30,             June 30,
                                                  ------------------    -----------------
                                                    2002       2001       2002      2001
                                                  -------    -------    -------   -------
Interest income:
<S>                                               <C>        <C>        <C>       <C>
    Loans, including fees                         $ 3,044    $ 2,645    $ 5,781   $ 5,330
    Investment securities:
       Taxable                                        466        475        788       848
       Exempt from federal taxes                       45         67         89       138
    Federal funds sold                                 35        196         81       377
                                                  -------    -------    -------   -------
            Total interest income                   3,590      3,383      6,739     6,693

Interest expense:
    Deposit accounts                                  867      1,229      1,861     2,332
    Other borrowings                                   98          1        104         4
                                                  -------    -------    -------   -------
            Total interest expense                    965      1,230      1,965     2,336
                                                  -------    -------    -------   -------
        Net interest income                         2,625      2,153      4,774     4,357

Provision for loan losses                             181       --          376       190
                                                  -------    -------    -------   -------
        Net interest income after provision for
           loan losses                              2,444      2,153      4,398     4,167
Non-interest income:
     Gain on sale of investment securities           --         --          262      --
     Gain on sale of other real estate               --         --           22       222
     Gain on sale of loans                            145        109        374       216
     Service charges                                  413        373        777       706
     Premiums and fees from SBA and mortgage
         operations                                   230        203        556       420
     Miscellaneous                                    127         73        149       147
                                                  -------    -------    -------   -------
        Total non-interest income                     915        758      2,140     1,711

Non-interest expense:
     Salaries and employee benefits                 1,597      1,396      3,076     2,801
     Occupancy                                        251        335        493       556
     Equipment                                        231        145        479       376
     Other                                          1,084        906      1,958     1,714
                                                  -------    -------    -------   -------
        Total non-interest expense                  3,163      2,782      6,006     5,447
                                                  -------    -------    -------   -------
Income before provision for income taxes              196        129        532       431
Provision for income tax (benefit) expense             (1)       (24)        54        23
                                                  -------    -------    -------   -------
        Net income                                $   197    $   153    $   478   $   408
                                                  =======    =======    =======   =======
Earnings per share:
         Basic                                    $  0.12    $  0.10    $  0.29   $  0.25
                                                  =======    =======    =======   =======

         Diluted                                  $  0.12    $  0.09    $  0.28   $  0.25
                                                  =======    =======    =======   =======
</TABLE>

See accompanying notes

<PAGE>

                    FIRST FINANCIAL BANCORP AND SUBSIDIARIES
    Consolidated Statements of Stockholders' Equity and Comprehensive Income
                                   (Unaudited)
                       (in thousands except share amounts)


Six Months Ended June 30, 2002
<TABLE>
<CAPTION>
                                                                                                Accumulated
                                        Common       Common                                        Other
                                         Stock        Stock     Comprehensive     Retained     Comprehensive
            Description                 Shares       Amounts        Income        Earnings         Income           Total
------------------------------------- ------------ ------------ --------------- ------------- ----------------- ---------------
<S>                                     <C>          <C>             <C>               <C>                 <C>          <C>
Balance at December 31, 2001            1,622,300    $  10,191                         7,317               355          17,863

Comprehensive income:
   Net income                                                        $     478           478                               478
                                                                ---------------
   Other comprehensive income:
      Unrealized holding gain arising
          during the current period, net
          of tax effect of $204                                            294
      Reclassification adjustment
          due to gains realized, net of
          tax effect of $107                                              (155)
      Total other comprehensive
          income, net of
          tax effect of $97                                     ---------------
                                                                           139                             139             139
                                                                ---------------
      Comprehensive income                                           $     617
                                                                ===============
Options exercised                          5,309           25                                                               25
Stock repurchase                         (10,725)        (128)                                                            (128)
                                      ------------ ------------                 ------------- ----------------- ---------------
Balance at June 30, 2002                1,616,884    $  10,088                         7,795               494          18,377
                                      ============ ============                 ============= ================= ===============
</TABLE>

See accompanying notes.



<PAGE>

                    FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
                                 (in thousands)
                            Six Months Ended June 30,
<TABLE>
<CAPTION>
                                                                                            2002              2001
                                                                                          --------          --------
<S>                                                                                       <C>               <C>
Cash flows from operating activities:
Net income                                                                                $    478          $    408
     Adjustments  to  reconcile  net  income  to  net  cash  used  in  operating
     activities:
          Loans held for sale:
              Increase in loans held for sale                                               (1,680)           (2,098)
              Gain on sale of loans                                                           (374)             (216)
          Increase (decrease) in deferred loan income                                            1                (4)
          Depreciation and amortization                                                        522               584
          Provision for loan losses                                                            376               190
          Gain on sale of securities                                                          (262)                -
          Gain on sale of other real estate owned                                              (22)             (222)
          (Increase) decrease in accrued interest
          receivable                                                                           (30)               29
          (Decrease) increase in accrued interest payable                                     (120)               20
          Decrease in other liabilities                                                        (15)              (97)
          Increase in cash surrender value of life insurance                                  (337)             (285)
          Decrease (increase) in other assets                                                  400              (269)
                                                                                          --------          --------
                  Net cash used in operating activities                                     (1,063)           (1,960)

Cash flows from investing activities:
    Investment securities available-for-sale
       Purchases                                                                           (25,608)          (22,366)
       Proceeds from prepayments                                                             6,707             2,947
       Proceeds from maturity                                                                3,500             7,353
       Proceeds from sale                                                                    9,649                 -
    Net increase in loans made to customers                                                (11,198)           (3,497)
    Proceeds from sale of other real estate                                                     90               627
    Purchase of cash surrender value life insurance                                              -            (1,500)
    Purchases of bank premises and equipment                                                  (233)             (507)
                                                                                          --------          --------
                  Net cash used in investing activities                                    (17,093)          (16,943)

Cash flows from financing activities:
    Net increase in deposits                                                                 1,149            28,035
    Proceeds from issuance of company obligated mandatorily redeemable
      securities of subsidiary trust                                                         5,000                 -
    Increase (decrease) in other borrowings                                                  8,360            (4,588)
    Payment for fractional stock dividends                                                       -                (4)
    Payments for repurchase of common stock                                                   (128)                -
    Proceeds from issuance of common stock                                                      25                18
                                                                                          --------          --------
                  Net cash provided by financing activities                                 14,406            23,461

                  Net (decrease) increase in cash and cash
                  equivalents                                                               (3,750)            4,558

Cash and cash equivalents at beginning of period                                            19,457            21,024
                                                                                          --------          --------
Cash and cash equivalents at end of period                                                $ 15,707          $ 25,582
                                                                                          ========          ========

Supplemental Disclosures of Cash Flow Information:
    Cash paid for interest payments                                                       $  2,085          $  2,316
    Cash paid for taxes                                                                        707               285
    Loans transferred to other real estate owned                                                 -                90
</TABLE>

See accompanying notes.


<PAGE>

                    FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                       June 30, 2002 and December 31, 2001


(1) Summary of Significant Accounting Policies

     The  accounting  and  reporting  policies of First  Financial  Bancorp (the
     Company) and its  subsidiaries,  Bank of Lodi,  N.A.,  (the Bank),  Western
     Auxiliary  Corporation  (WAC) and First  Financial (CA)  Statutory  Trust I
     conform with accounting  principles generally accepted in the United States
     of America  and  prevailing  practices  within  the  banking  industry.  In
     preparing the consolidated financial statements,  management is required to
     make estimates and assumptions  that affect the reported  amounts of assets
     and liabilities as of the date of the balance sheet and revenue and expense
     for the period. Actual results could differ from those estimates applied in
     the preparation of the consolidated financial statements.

(2) Weighted Average Shares Outstanding

     Per share  information  is based on  weighted  average  number of shares of
     common stock outstanding  during each three- and six-month  periods.  Basic
     earnings  per share (EPS) is computed by dividing  net income  available to
     shareholders by the weighted average common shares  outstanding  during the
     period.  Diluted  earnings  per share is computed  by  dividing  net income
     available to shareholders by the weighted average common shares outstanding
     during  the  period  plus  potential  common  shares  outstanding.  Diluted
     earnings per share  reflects  the  potential  dilution  that could occur if
     securities  or other  contracts  to issue  common  stock were  exercised or
     converted  into common  stock or resulted in the  issuance of common  stock
     that then shared in the earnings of the Company.

     The  following  table  provides  a  reconciliation  of  the  numerator  and
     denominator of the basic and diluted earnings per share  computation of the
     three- and six-month period ending June 30, 2002 and 2001:
<TABLE>
<CAPTION>
                                                           Income             Shares        Per-Share
         Three months ended June 30, 2002               (numerator)       (denominator)       Amount
         -----------------------------------------------------------------------------------------------
<S>                                                         <C>                <C>                <C>
         Basic earnings per share                           $ 197,000          1,624,308          $ .12
         Effect of dilutive securities                              -             66,559              -
                                                       ---------------    ---------------
         Diluted earnings per share                         $ 197,000          1,690,867          $ .12
                                                       ===============    ===============

                                                           Income             Shares        Per-Share
         Three months ended June 30, 2001               (numerator)       (denominator)       Amount
         -----------------------------------------------------------------------------------------------
         Basic earnings per share                           $ 153,000          1,604,056          $ .10
         Effect of dilutive securities                              -             34,825              -
                                                       ---------------    ---------------
         Diluted earnings per share                         $ 153,000          1,638,881          $ .09
                                                       ===============    ===============

                                                           Income             Shares        Per-Share
         Six months ended June 30, 2002                 (numerator)       (denominator)       Amount
         -----------------------------------------------------------------------------------------------
         Basic earnings per share                           $ 478,000          1,625,949          $ .29
         Effect of dilutive securities                              -             63,059              -
                                                       ---------------    ---------------
         Diluted earnings per share                         $ 478,000          1,689,008          $ .28
                                                       ===============    ===============

                                                           Income             Shares        Per-Share
         Six months ended June 30, 2001                 (numerator)        (denominator)      Amount
         -----------------------------------------------------------------------------------------------
         Basic earnings per share                           $ 408,000           1,603,130         $ .25
         Effect of dilutive securities                              -              36,003             -
                                                       ---------------    ----------------
         Diluted earnings per share                         $ 408,000           1,639,133         $ .25
                                                       ===============    ================
</TABLE>


                                      -5-
<PAGE>


                    FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                       June 30, 2002 and December 31, 2001


(3) Allowance for Loan Losses

         The following  summarizes  changes in the allowance for loan losses for
         the six month periods ended June 30, 2002 and 2001 and the twelve month
         period ended December 31, 2001:
<TABLE>
<CAPTION>
         (in thousands)                                                6/30/02          6/30/01          12/31/01
                                                                    --------------    -------------    --------------
<S>                                                              <C>                       <C>                <C>
         Balance at beginning of period                             $      2,668            2,499             2,499
           Loans charged off                                                 (83)            (163)             (283)
           Recoveries                                                         19               15                61
           Provisions charged to operations                                  376              190               391
                                                                    --------------    -------------    --------------
         Balance at end of period                                   $      2,980            2,541             2,668
                                                                    ==============    =============    ==============
</TABLE>

(4) Trust Preferred Securities


         On March 26, 2002,  First Financial (CA) Statutory  Trust I (Trust),  a
         Connecticut  statutory business trust and 100%-owned finance subsidiary
         of  First  Financial  Bancorp,  issued  $5  million  in  floating  rate
         Cumulative Trust Preferred Securities (Securities). The securities have
         an initial  interest  rate of 5.59% and mature on March 26,  2032,  but
         prior  redemption  is permitted  under certain  circumstances,  such as
         changes in tax or regulatory  capital rules. The principal asset of the
         Trust is a $5.2 million  floating  rate  subordinated  debenture of the
         Company.  The subordinated  debenture bears an initial interest rate of
         5.59% and matures  March 26, 2032,  subject to prior  redemption  under
         certain  circumstances.  First Financial Bancorp owns all of the common
         securities of the Trust.

         The  Securities,  the  assets of the Trust,  and the common  securities
         issued  by the  Trust  are  redeemable  in whole or in part on or after
         March 26, 2007, or at any time in whole, but not in part, from the date
         of issuance upon the occurrence of certain  events.  The Securities are
         included   in  Tier  1  capital   for   regulatory   capital   adequacy
         determination purposes, subject to certain limitations. The obligations
         of  the  Company  with  respect  to  the  issuance  of  the  Securities
         constitute  a full and  unconditional  guarantee  by the Company of the
         Trust's obligation with respect to the Securities.

         Subject to certain  exceptions and  limitations,  the Company may, from
         time to time, defer subordinated  debenture  interest  payments,  which
         would  result in a deferral  of  distribution  payments  on the related
         Securities  and,  with  certain  exceptions,  prevent the Company  from
         declaring or paying cash distributions on the Company's common stock or
         debt securities that rank junior to the subordinated debenture.

(5) Basis of Presentation

         First Financial  Bancorp is the holding company for Bank of Lodi, N.A.,
         Western Auxiliary  Corporation and First Financial (CA) Statutory Trust
         I.  In  the  opinion  of   management,   the   accompanying   unaudited
         consolidated  financial statements reflect all adjustments  (consisting
         of normal  recurring  accruals and other  accruals as explained  above)
         necessary for a fair presentation of financial position as of the dates
         indicated and results of operations for the periods shown. All material
         intercompany   accounts  and  transactions   have  been  eliminated  in
         consolidation.  In preparing  the financial  statements,  management is
         required to make  estimates  and  assumptions  that affect the reported
         amounts.  The results for the three and six months  ended June 30, 2002
         are not necessarily indicative of the results which may be expected for
         the year ended December 31, 2002. The unaudited  consolidated financial
         statements  presented  herein  should be read in  conjunction  with the
         consolidated financial statements and notes included in the 2001 Annual
         Report to Shareholders.


                                      -6-
<PAGE>


                    FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                       June 30, 2002 and December 31, 2001


(6) Impact Of Recently Issued Accounting Standards

         In July 2001,  the FASB issued  Statement  No. 142,  Goodwill and Other
         Intangible  Assets.  Statement  No.  142  requires  that  goodwill  and
         intangible  assets with indefinite useful lives no longer be amortized,
         but instead tested for impairment at least annually in accordance  with
         the  provisions of Statement  No. 142.  Statement No. 142 also requires
         that  intangible  assets with definite  useful lives be amortized  over
         their  respective  estimated  useful lives to their estimated  residual
         values,  and reviewed for  impairment in accordance  with Statement No.
         121,  Accounting  for  the  Impairment  of  Long-Lived  Assets  and for
         Long-Lived Assets to Be Disposed Of.

         The Company  adopted the  provisions of Statement No. 142 on January 1,
         2002. The adoption of Statement No. 142 did not have a material  impact
         on the  financial  condition or operating  results of the Company.  The
         only exception to Statement No. 142 is the amortization of goodwill and
         intangible  assets  acquired  under the provisions of Statement No. 72,
         Accounting of Certain  Acquisitions of Banking or Thrift  Institutions.
         The Company will continue to amortize  goodwill and  intangible  assets
         acquired in  accordance  with this  statement.  At June 30,  2002,  the
         Company's   goodwill   totaled  $16   thousand,   net  of   accumulated
         amortization of $42 thousand and intangible assets  (consisting of core
         deposit   premiums)   totaled  $412   thousand,   net  of   accumulated
         amortization  of $1,563  thousand.  Goodwill and intangible  assets are
         amortized over 7 years.

         The Financial  Accounting  Standards Board (FASB) issued  Statement No.
         143,  Accounting for Asset Retirement  Obligations in August 2001. This
         Statement addresses financial  accounting and reporting for obligations
         associated  with the retirement of tangible  long-lived  assets and the
         associated asset retirement costs. As a result,  FASB Statement No. 143
         applies to all entities that have legal obligations associated with the
         retirement  of  long-lived   tangible   assets  that  result  from  the
         acquisition,  construction,  development or normal use of the asset. As
         used in this Statement,  a legal obligation  results from existing law,
         statute, ordinance,  written or oral contract, or by legal construction
         of a contract under the doctrine of promissory estoppels. Statement No.
         143  requires  an  enterprise  to  record  the  fair  value of an asset
         retirement obligation as a liability in the period in which it incurs a
         legal   obligation   associated  with  the  retirement  of  a  tangible
         long-lived asset.  Since the requirement is to recognize the obligation
         when incurred, approaches that have been used in the past to accrue the
         asset  retirement  obligation  over the life of the asset are no longer
         acceptable.  Statement No. 143 also  requires the  enterprise to record
         the contra to the initial  obligation  as an  increase to the  carrying
         amount of the related  long-lived  asset (i.e.,  the  associated  asset
         retirement costs) and to depreciate that cost over the remaining useful
         life of the asset.  The  liability is changed at the end of each period
         to reflect the passage of time (i.e., accretion expense) and changes in
         the  estimated  future cash flows  underlying  the  initial  fair value
         measurement.  Enterprises  are required to adopt  Statement No. 143 for
         fiscal  years  beginning  after  June  15,  2002.   Early  adoption  is
         encouraged.  The Company does not expect  adoption of Statement No. 143
         to have a  material  impact on the  financial  condition  or  operating
         results of the Company.


                                      -7-
<PAGE>


                    FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                       June 30, 2002 and December 31, 2001


         On October 3, 2001,  the Financial  Accounting  Standards  Board issued
         FASB  Statement No. 144,  Accounting  for the Impairment or Disposal of
         Long-Lived Assets,  which addresses financial  accounting and reporting
         for the impairment or disposal of long-lived  assets.  While  Statement
         No.  144  supersedes  FASB  Statement  No.  121,   Accounting  for  the
         Impairment  of  Long-Lived  Assets  and  for  Long-Lived  Assets  to Be
         Disposed  Of, it retains  many of the  fundamental  provisions  of that
         Statement.  Statement  No.  144  also  supersedes  the  accounting  and
         reporting  provisions  of APB Opinion No. 30,  Reporting the Results of
         Operations--Reporting  the  Effects  of  Disposal  of  a  Segment  of a
         Business, and Extraordinary,  Unusual and Infrequently Occurring Events
         and Transactions, for the disposal of a segment of a business. However,
         it  retains  the  requirement  in  Opinion  30  to  report   separately
         discontinued operations and extends that reporting to a component of an
         entity that either has been disposed of (by sale, abandonment,  or in a
         distribution  to  owners)  or  is  classified  as  held  for  sale.  By
         broadening the presentation of discontinued  operations to include more
         disposal  transactions,  the FASB has enhanced  management's ability to
         provide  information that helps financial statement users to assess the
         effects of a  disposal  transaction  on the  ongoing  operations  of an
         entity.  The Company adopted the provisions of Statement 144 on January
         1, 2002.  The  adoption  of  Statement  No. 144 did not have a material
         impact on the financial condition or operating results of the Company.

         Statement Financial  Accounting  Standards No. 145 rescinds SFAS No. 4,
         which requires all gains and losses from  extinguishment  of debt to be
         aggregated and, if material,  classified as an extraordinary  item, net
         of related income tax effect. As a result,  the criteria in Opinion No.
         30 will now be used to classify  those  gains and  losses.  SFAS No. 64
         amended SFAS No. 4, and is no longer  necessary  because SFAS No. 4 has
         been  rescinded.  The accounting,  disclosure and financial  statements
         provision of SFAS No. 145 are  effective  for  financial  statements in
         fiscal  years  beginning  after  May  15,  2002.  Any  gain  or loss on
         extinguishment of debt that was classified as an extraordinary  item in
         prior periods  presented that does not meet the criteria in Opinion No.
         30 for  classification as an extraordinary  item shall be reclassified.
         The  implementation  of  Statement  No. 145 is not  expected  to have a
         material impact on the financial  condition or operating results of the
         Company.

         The Financial Accounting Standards Board issued FASB Statement No. 146,
         Accounting for Costs Associated with Exit or Disposal  Activities which
         requires  the  Company  to  recognize  costs  associated  with  exit or
         disposal activities when they are incurred rather than at the date of a
         commitment  to an exit or disposal  plan.  SFAS 146  replaces  Emerging
         Issues Task Force ("EITF") Issue No. 94-3,  "Liability  Recognition for
         Certain  Employee  Termination  Benefits  and  Other  Costs  to Exit an
         Activity  (including Certain Costs Incurred in a  Restructuring)."  The
         provisions  of SFAS  146  are to be  applied  prospectively  to exit or
         disposal activities initiated after December 31, 2002.


                                      -8-
<PAGE>

Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Cautionary  Statement  for the  Purposes  of the Safe Harbor  Provisions  of the
Private Securities Litigation Reform Act of 1995.

The Company is including the following cautionary statement to take advantage of
the "Safe Harbor" provisions of the Private Securities  Litigation Reform Act of
1995 for any  forward-looking  statement  made by, or on behalf of, the Company.
The factors  identified in this cautionary  statement are important factors (but
not necessarily all important factors) that could cause actual results to differ
materially from those expressed in any forward-looking  statement made by, or on
behalf of, the Company.

Where any such forward-looking statement includes a statement of the assumptions
of bases underlying such forward-looking  statement,  the Company cautions that,
while it believes such  assumptions  or bases to be reasonable and makes them in
good faith,  assumed facts or bases almost always vary from actual results,  and
the  differences  between  assumed  facts or bases  and  actual  results  can be
material,  depending  on  the  circumstances.   Where,  in  any  forward-looking
statement,  the Company expresses an expectation or belief as to future results,
such  expectation  or belief is  expressed  in good faith and believed to have a
reasonable  basis,  but  there  can  be  no  assurance  that  the  statement  of
expectation or belief will result, or be achieved or accomplished.

Taking into account the foregoing, such risks and uncertainties include, but are
not  limited  to, the  following  factors:  competitive  pressure in the banking
industry; changes in the interest rate environment; general economic conditions,
either  nationally  or  regionally  becoming  less  favorable  than expected and
resulting  in, among other  things,  a  deterioration  in credit  quality and an
increase in the provision for possible  loan losses;  changes in the  regulatory
environment;  changes  in  business  conditions;  volatility  of rate  sensitive
deposits; operational risks, including data processing system failures or fraud;
asset/liability   matching  risks  and  liquidity  risks;  and  changes  in  the
securities markets.

The  following  discussion  addresses  information  pertaining  to the financial
condition  and results of  operations  of the Company  that may not be otherwise
apparent  from a review of the  consolidated  financial  statements  and related
footnotes.  It should be read in  conjunction  with those  statements  and notes
found on pages 1 through 7, as well as other  information  presented  throughout
this report.

Critical Accounting Policies and Estimates

The Company's  discussion and analysis of its financial condition and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting  principles  generally accepted
in the United States. The preparation of these financial statements requires the
Company to make  estimates  and  judgments  that affect the reported  amounts of
assets,  liabilities,  income and expenses, and related disclosure of contingent
assets  and  liabilities.  On an  on-going  basis,  the  Company  evaluates  its
estimates,  including those related to the allowance for loan losses, other real
estate owned,  investments and income taxes.  The Company bases its estimates on
historical  experience and on various other  assumptions that are believed to be
reasonable  under the  circumstances,  the  results  of which form the basis for
making  judgments about the carrying  values of assets and liabilities  that are
not readily  apparent from other  sources.  Actual results may differ from these
estimates under different assumptions or conditions.

The Company believes the following critical  accounting policies affect its more
significant  judgments and estimates used in the preparation of its consolidated
financial statements. The Company maintains allowances for loan losses resulting
from the inability to make required loan payments.  If the financial  conditions
of the Company's  customers were to  deteriorate,  resulting in an impairment of
their  ability to make  payments,  additional  allowances  may be required.  The
Company  invests in debt and equity  securities.  If the Company  believes these
securities have experienced a decline in value that is other than temporary,  an
investment  impairment  charge is  recorded.  Future  adverse  changes in market
conditions or poor operating  results of underlying  investments could result in
losses or an inability to recover the carrying value of the investments that may
not be  reflected  in an  investment's  carrying  value,  thereby  requiring  an
impairment charge in the future.

The  following  discussion  addresses  information  pertaining  to the financial
condition  and results of  operations  of the Company  that may not be otherwise
apparent  from a review of the  consolidated  financial  statements  and related
footnotes.  It should be read in  conjunction  with those  statements  and notes
found on pages 1 through 6, as well as other  information  presented  throughout
this report.


                                      -9-
<PAGE>

Changes in Financial Condition

Consolidated  total  assets  at  June  30,  2002  totaled  $241  million,  which
represents an increase of $14,888 thousand,  or 6.6%, above the comparable level
at December 31, 2001. The increase in total assets was attributable to a $13,114
thousand,  or 9.2%,  increase in gross loans, and a $6,065  thousand,  or 14.8%,
increase in investment  securities  combined with a $6,129 thousand,  or 100.0%,
decrease  in federal  funds sold as  compared  to  December  31,  2001.  The net
increase in gross loans is primarily the result of increases of $6,145 thousand,
or  11.6%,  $3,673  thousand,  or 26.8%,  $2,054  thousand,  or 53.0%,  and $988
thousand, or 6.1%, in real estate loans, construction loans, loans held for sale
and agricultural loans, respectively, combined with a decrease of $511 thousand,
or 2.3%, in commercial loans.

Total deposits  increased  $1,149  thousand,  or 0.6%, from December 31, 2001 to
June 30,  2002.  The growth in deposits is the result of a $7,440  thousand,  or
7.4%,  increase in demand deposits and a $3,559  thousand,  or 11.2% increase in
savings  accounts  combined with a $9,850,  or 14.1% decrease in certificates of
deposit.  The decrease in  certificates  of deposit  resulted from  management's
decision to focus on increasing  core deposits  rather than pay higher  interest
rates for  certificates  of  deposit.  In order to  maintain a desired  level of
liquidity,  the company obtained short-term borrowings and sold securities under
agreements to repurchase (reverse repo).

Allowance for Loan Losses

The  allowance  for loan  losses  (the  "allowance")  is  established  through a
provision for loan losses charged to expense. The allowance at June 30, 2002 was
in excess of the December 31, 2001  allowance by $312 thousand,  or 11.7%,  as a
result of a  provision  for $376  thousand  and net  charge  offs  totaling  $64
thousand. This compares to a provision of $190 thousand for the first six months
of 2001.  The increased  provision is a result of the general growth of the loan
portfolio during the first six months of 2002 ($13.1 million, or 9.2%) exceeding
the rate that  occurred  during the first six months of 2001 ($5.5  million,  or
4.8%).

At June 30, 2002,  nonperforming  loans were $3,454  thousand,  or 2.2% of gross
loans  outstanding.  This  compares  to $3,246  thousand  or 2.3% of gross loans
outstanding at December 31, 2001. The allowance to  nonperforming  loan coverage
ratio  increased  to 0.86 times at June 30, 2002 from 0.82 times at December 31,
2001.  Management continues to actively work to resolve the nonperforming loans,
the  majority  of which are  secured  by real  estate  that,  in the  opinion of
management,  are well collateralized.  Management believes that the allowance at
June 30, 2002 is adequate to absorb known and reasonably  estimable loan losses.
However,  there can be no assurances  that future economic events may negatively
impact the Bank's  borrowers,  thereby causing loan losses to exceed the current
allowance.


                                      -10-
<PAGE>

The  following  tables  depict  activity  in the  allowance  for loan losses and
allocation of reserves as of and for the six months and year ended June 30, 2002
and December 31, 2001, respectively:

Analysis of the Allowance for Loan Losses

                                                        June 30,    December 31,
                                                         2002          2001
                                                        -------      -------
          Balance at beginning of period                $ 2,668      $ 2,499
             Charge-offs:
               Commercial                                   (13)        (226)
               Real estate                                  (62)          --
               Consumer                                      (8)         (57)
                                                        -------      -------
            Total charge-offs                               (83)        (283)
            Recoveries:
               Commercial                                    15           21
               Real estate                                   --           --
               Consumer                                       4           40
                                                        -------      -------
            Total recoveries                                 19           61
                                                        -------      -------
          Net charge-offs                                   (64)        (222)
          Provision charged to operations                   376          391
                                                        -------      -------
          Balance at end of period                      $ 2,980      $ 2,668
                                                        =======      =======

Allocation of the Allowance for Loan Losses
<TABLE>
<CAPTION>
                                            ---------------------------------     ----------------------------------
                                                     June 30, 2002                        December 31, 2001
                                            ---------------------------------     ----------------------------------
                                                 Amount                              Amount
Loan Category                                    (000's)         % of Loans          (000's)            % of Loans
----------------------------------------    ----------------    -------------     ---------------    ---------------
<S>                                              <C>                 <C>              <C>                 <C>
Commercial and other real estate                 $2,104              85.75%           $2,122              87.82%
Real estate construction                            801              11.60%              466               9.61%
Installment and other                                75               2.65%                0               2.57%
                                                 ------              ------           ------              ------
                                                 $2,980             100.00%           $2,668             100.00%
                                                 ======              ======           ======              ======
</TABLE>

Investments

Investments consist of federal funds sold and investment securities.  Investment
securities  increased $6,065 thousand,  or 14.8%, from December 31, 2001 to June
30, 2002. Federal funds sold decreased $6,129 thousand,  or 100.0% from December
31,  2001 to June 30,  2002.  The  increase  in  investment  securities  and the
corresponding  decrease in Federal funds sold resulted  from  utilizing  Federal
funds  sold  to  purchase  short  term  investment  securities.  The  investment
securities purchased were collateralized  mortgage obligations,  the majority of
which have average lives of less than five years.


                                      -11-
<PAGE>

Equity

Consolidated  equity  increased $514 thousand from December 31, 2001 to June 30,
2002.  Consolidated equity represented 7.62% and 7.90% of consolidated assets at
June 30, 2002 and December 31, 2001,  respectively.  In addition to the earnings
of $478 thousand,  equity capital increased by $25 thousand from the exercise of
stock  options  over the six months  ended June 30,  2002 and $139  thousand  to
reflect the increase in the  after-tax  market  value of the  available-for-sale
investment  securities  portfolio.  The  increase  in  the  investment  security
portfolio's  market value reflects the decrease in the level of market  interest
rates at June 30, 2002  compared  to December  31,  2001.  Year-to-date  capital
reductions  totaled $128 thousand  resulting from the repurchase of shares.  The
total risk-based  capital ratio for the Company's wholly owned subsidiary,  Bank
of Lodi was 11.18% at June 30, 2002 compared to 10.24% at December 31, 2001. The
Bank's  leverage  capital  ratio  was  8.37% at June 30,  2002  versus  7.45% at
December 31, 2001. The capital  ratios are in excess of the regulatory  minimums
for a well-capitalized bank.

The funds for the capital contribution by the holding company were provided as a
result of a $5 million floating rate pooled trust preferred  securities offering
which closed March 26, 2002.  Subsequent to the issuance of the trust  preferred
securities the Company  announced a stock repurchase  program  effective through
December 31, 2002 whereby the Company,  as authorized by the Board of Directors,
intends  to  purchase  up to $2  million  of the  Company's  stock in  privately
negotiated transactions or on the open market. The Board allocated $2 million of
the proceeds from the trust preferred securities offering to be used to fund the
stock repurchase program.

Changes in Results of Operations - Three and Six Months ended June 30, 2002

Summary of Earnings Performance
<TABLE>
<CAPTION>
                                         ---------------------------------    --------------------------------
                                               Three Months Ended                    Six Months Ended
                                                    June 30,                             June 30,
                                         ---------------------------------    --------------------------------
                                           2002                  2001            2002                2001
                                         -------------       -------------    -------------      -------------
<S>                                          <C>                <C>             <C>                 <C>
Earnings (in thousands)                      $  197             $  153          $ 478               $ 408
Basic earnings per share                     $ 0.12             $ 0.10          $0.29               $0.25
Diluted earnings per share                   $ 0.12             $ 0.09          $0.28               $0.25
Return on average assets                       0.33%              0.30%          0.42%               0.42%
Return on average equity                       4.34%              3.74%          5.11%               4.87%
Average equity to average assets               7.70%              8.13%          8.14%               8.68%
</TABLE>

The Company reported net income of $197 thousand ($0.12 per share,  diluted) for
the three  months  ended June 30,  2002,  compared to $153  thousand  ($0.09 per
share, diluted) for the same period in 2001. Net income for the six months ended
June 30,  2002 was $478  thousand  ($0.28 per share,  diluted)  compared to $408
thousand ($0.25 per share,  diluted).  The increase in net income for the second
quarter  in 2002  when  compared  to the same  period  one year ago is due to an
increase of $472 thousand in net interest income, a increase of $181 thousand in
the  provision  for loan losses,  an increase of $157  thousand in  non-interest
income,  an increase of $381 thousand in non-interest  expense and a decrease of
$23 thousand in the provision for income tax benefit. The increase in net income
during the first six months of 2002 when  compared to the same period in 2001 is
due to an increase of $417 thousand in net interest income,  an increase of $186
thousand in the  provision  for loan  losses,  an  increase of $429  thousand in
non-interest  income, an increase of $559 thousand in non-interest expense and a
increase of $31 thousand in the provision for income tax.


                                      -12-
<PAGE>

Net Interest Income

The following tables provides a detailed analysis of the net interest spread and
net interest margin for the periods indicated:
<TABLE>
<CAPTION>
                                -------------------------------------------------------------------------------------------
                                                           For the Three Months Ended June 30,
                                -------------------------------------------------------------------------------------------
                                                   2002                                            2001
                                --------------------------------------------    -------------------------------------------
                                  Average          Income/           Yield        Average         Income/         Yield
   Dollars In Thousands           Balance          Expense            (1)         Balance         Expense          (1)
                                ------------     -------------    ----------    -----------     ------------    -----------
Earning Assets:
<S>                             <C>              <C>                 <C>        <C>             <C>                 <C>
Investment securities (1)(2)    $    40,096      $        511        5.11%      $   33,347      $       542         6.52%
Federal funds sold                    7,584                35        1.85%          18,089              196         4.35%
Loans (2) (3)                       147,690             3,044        8.27%         117,868            2,645         9.00%
                                ------------     -------------    ----------    -----------     ------------    -----------
                                $   195,370      $      3,590        7.37%      $  169,304      $     3,383         8.01%
                                ============     =============    ==========    ===========     ============    ===========
Liabilities:
Non-interest bearing
deposits                        $    35,515      $         --           --      $   24,572      $        --            --
Savings, money market, &
NOW deposits                        108,664               346        1.28%          90,391              325         1.44%
Time deposits                        65,892               521        3.17%          67,643              904         5.36%
Other borrowings                     10,616                98        3.70%              78                1         5.14%
                                ------------     -------------    ----------    -----------     ------------    -----------
Total Liabilities               $   220,687      $        965        1.75%      $  182,684      $     1,230         2.70%
                                ============     =============    ==========    ===========     ============    ===========
Net Interest Spread                                                  5.62%                                          5.31%
                                                                  ==========                                    ===========

                                -------------------------------------------------------------------------------------------
                                  Earning           Income                      Earning           Income
                                  Assets          (Expense)         Yield         Assets         (Expense)        Yield
                                ------------     -------------    ----------    -----------     ------------    -----------
Yield on average earning        $   195,370      $      3,590        7.37%      $  169,304      $     3,383         8.01%
assets
Cost of funding average
earning assets                  $   195,370             ( 965)      (1.98)%     $  169,304          ( 1,230)       (2.91)%
                                                 -------------    ----------                    ------------    -----------
Net Interest Margin             $   195,370      $      2,625        5.39%      $  169,304      $        53         5.10%
                                                 =============    ==========                    ============    ===========
</TABLE>

     (1)  Yield for  period  annualized  on actual  number of days in period and
          based on a 365-day year.
     (2)  Income  on  tax-exempt  securities  has  not  been  adjusted  to a tax
          equivalent basis.
     (3)  Nonaccrual  loans are  included  in the loan  totals for each  period;
          however, only collected interest on such loans is included in interest
          income.


                                      -13-
<PAGE>
<TABLE>
<CAPTION>
                                -------------------------------------------------------------------------------------------
                                                            For the Six Months Ended June 30,
                                -------------------------------------------------------------------------------------------

                                                   2002                                            2001
                                --------------------------------------------    -------------------------------------------
                                  Average          Income/          Yield        Average          Income/          Yield
   Dollars In Thousands           Balance          Expense           (1)         Balance          Expense           (1)
                                ------------     -------------    ----------    -----------     ------------    -----------
Earning Assets:
<S>                             <C>              <C>                 <C>        <C>             <C>                 <C>
Investment securities (1)(2)    $    35,114      $        877        5.04%      $   29,355      $       986         6.77%
Federal funds sold                    9,145                81        1.79%          15,569              377         4.88%
Loans (2) (3)                       150,484             5,781        7.75%         116,371            5,330         9.24%
                                ------------     -------------    ----------    -----------     ------------    -----------
                                $   194,743      $      6,739        6.98%      $  161,295      $     6,693         8.37%
                                ============     =============    ==========    ===========     ============    ===========
Liabilities:
Non-interest bearing
deposits                        $    32,388      $         --          --       $   23,464      $        --           --
Savings, money market, &
NOW deposits                        105,563               682        1.30%          88,552              666         1.52%
Time deposits                        68,040             1,179        3.49%          61,617            1,666         5.45%
Other borrowings                      5,519               104        3.80%             140                4         5.76%
                                ------------     -------------    ----------    -----------     ------------    -----------
Total Liabilities               $   211,510      $      1,965        1.87%      $  173,773      $     2,336         2.71%
                                ============     =============    ==========    ===========     ============    ===========
Net Interest Spread                                                  5.11%                                          5.66%
                                                                  ==========                                    ===========

                                -------------------------------------------------------------------------------------------
                                  Earning           Income                      Earning           Income
                                  Assets          (Expense)         Yield         Assets         (Expense)        Yield
                                ------------     -------------    ----------    -----------     ------------    -----------
Yield on average earning        $   194,743      $      6,739        6.98%      $  161,295      $     6,693         8.37%
assets
Cost of funding average
earning assets                  $   194,743      $     (1,965)      (2.04)%     $  161,295      $    (2,336)       (2.92)%
                                                 -------------    ----------                    ------------    -----------
Net Interest Margin             $   194,743      $      4,774        4.94%      $  161,295      $        57         5.45%
                                                 =============    ==========                    ============    ===========
</TABLE>

     (1)  Yield for  period  annualized  on actual  number of days in period and
          based on a 365-day year.
     (2)  Income  on  tax-exempt  securities  has  not  been  adjusted  to a tax
          equivalent basis.
     (3)  Nonaccrual  loans are  included  in the loan  totals for each  period;
          however, only collected interest on such loans is included in interest
          income.

Interest  income for the second quarter of 2002  increased by $207 thousand,  or
6.1%,  over the same quarter of 2001.  The net interest  margin of 5.39% for the
second  quarter of 2002 increased from 5.10% for the second quarter of 2001. For
the first six months of 2002,  interest  income  increased by $46  thousand,  or
0.7%,  over the same period one year ago. The net  interest  margin of 4.94% for
the first six months of 2002  decreased from 5.45% over the same period one year
ago. Improvement in interest income was the result of the higher volume of loans
combined with an increase in total earning assets


                                      -14-
<PAGE>

Average  loans for the three  months  ended June 30, 2002  increased  by $29,822
thousand,  or 25.3% compared to the prior year quarter. For the first six months
of 2002,  average loans increased  $34,113 thousand,  or 29.3%,  compared to the
first six months of 2001.  Average  liabilities  for the three months ended June
30, 2002  increased by $38,003  thousand,  or 20.8%,  compared to the prior year
quarter.  The  average  rate paid on  savings,  money  market  and NOW  accounts
decreased  from  1.44% in the  second  quarter  of 2001 to 1.28% for the  second
quarter of 2002. The average rate paid on  certificates  of deposits  decreased,
from 5.36% for the second quarter of 2001 to 3.17% for the same quarter of 2002.
For the  first  six  months  of  2002,  average  liabilities  increased  $37,737
thousand, or 21.7%, compared to the first six months of 2001.

Interest income is also affected by nonaccrual loan activity.  Interest  forgone
or  reversed  on  non-accrual  loans  during the first six months of 2002 totals
approximately $170 thousand. For the second quarter of 2002, interest forgone on
non-accrual  loans  totaled $93  thousand.  When  combined  with a $180 thousand
collection  of interest on  non-accrual  loans,  there is a net  recovery of $87
thousand for the second quarter of 2002 or $10 thousand for the first six months
of 2002.

Average non-interest bearing deposits have kept pace with the growth in interest
bearing  deposits from a year ago and make up 17% of average total  deposits for
the second quarter and 16% for the first six months of 2002.  This has helped to
keep down the cost of funding  earning assets.  Average  certificates of deposit
for the  second  quarter  and the first  six  months of 2002 were 31% and 33% of
average deposits, respectively,  compared to 37% and 35% for the same periods of
2001.

Provision for Loan Losses

The  provision  for loan losses for the three and six months ended June 30, 2002
was $181 and $376 thousand  compared with $0 and $190 thousand for the three and
six months ended June 30, 2001. The year-to-date increase is consistent with the
increase in the growth  rate of gross loans  during the first six months of 2002
as  compared  to the first  six  months of 2001.  Also see  "Allowance  for Loan
Losses" contained herein.

Noninterest Income

Non-interest  income for the second  quarter of 2002 increased by $157 thousand,
or 20.7%,  over the same  period  last  year.  For the first six months of 2002,
non-interest income increased $429 thousand, or 25.1%, compared to the first six
months of 2001.  During the first quarter of 2002, the Company realized gains on
the sale of investment securities totaling $262 thousand.

Service  charge income for the second quarter of 2002 increased by $40 thousand,
or 10.7%,  compared  to the same  quarter  of 2001.  For the first six months of
2002,  service charge income increased $71 thousand,  or 10.1%,  compared to the
first six months of 2001.  The  increases in service  charge income are directly
related to the growth in average demand deposits and savings accounts.

Income from  premiums and fees from SBA and mortgage  operations  increased  $27
thousand,  or 13.3%,  during the second quarter of 2002 as compared to the prior
year second  quarter.  For the first six months of 2002,  premiums and fees from
SBA and mortgage operations increased $136 thousand,  or 32.4%,  compared to the
first six months of 2001.  The  increase in income is a result of  increases  in
total volumes of loans  generated and sold combined with changes in market rates
paid for sold loans.  During the second  quarter of 2002,  the Company  sold SBA
loans totaling  $1,002  thousand and mortgage loans totaling  $5,454 thousand as
compared  to the same  period  last  year in which  the  Company  sold SBA loans
totaling $437 thousand and mortgage loans totaling $6,892  thousand.  During the
first six months of 2002,  the Company sold SBA loans totaling  $3,573  thousand
and  mortgage  loans  totaling  $14,031  thousand as compared to SBA loans sales
totaling  $1,148  thousand and mortgage  loans sales totaling  $10,234  thousand
during the first six months of 2001.


                                      -15-
<PAGE>

Noninterest Expenses

Non-interest  expenses increased by $381 thousand,  or 13.7%,  during the second
quarter of 2002 compared to the prior year quarter.  For the first six months of
2002,  non-interest expense increased $559 thousand,  or 10.3%,  compared to the
first six months of 2001. The increase in non-interest expense results primarily
from increases in salary and benefits,  equipment and  accounting  fees combined
with decreases in consulting and legal.

For the second quarter of 2002,  salary and employee  benefits expense increased
$201 thousand,  or 14.4%,  equipment expense  increased $86 thousand,  or 59.3%,
accounting fees increased $58 thousand, or 214.8%, consulting expenses increased
$20 thousand,  or 90.9%, while legal expenses decreased $35 thousand,  or 72.9%,
and occupancy decreased $84 thousand, or 25.1% compared to the prior year.

Year to date, salary and employee  benefits expense increased $275 thousand,  or
9.8%,  equipment  expense  increased $103 thousand,  or 27.4%,  accounting  fees
increased  $59  thousand,  or 107.0%,  while  occupancy  expense  decreased  $63
thousand,  or 11.3%,  consulting expenses decreased $36 thousand,  or 43.9%, and
legal expenses decreased $24 thousand, or 35.8% compared to the prior year.

Salary and employee  benefits  expense  increased as a result of the addition of
certain staffing positions combined with general merit increases in salaries and
increased  employee benefit costs. The increase in equipment  expenses  occurred
primarily  as a result  of the  increase  in  depreciation  expense  for the new
equipment combined with other general upgrades in equipment and technology.  The
increase in the accounting expenses relates primarily to the Company's expansion
of its internal audit function.  Occupancy  expense decreases were due to higher
expenses in the prior year for the addition of the Folsom SBA lending office and
the relocation of the Folsom branch.

Income Taxes

The Company  recorded a tax benefit of $1 thousand and $24  thousand  during the
second quarter of 2001 and 2002, respectively. For the first six months of 2002,
the provision for income taxes totaled $54 thousand compared to $23 thousand for
the first six months of 2001.  The tax benefit during the second quarter of 2002
and 2001  resulted  primarily  from the level of tax exempt  income  relative to
total pre-tax income.  The increase in income taxes during the six months ending
June 30, 2002 as compared to the same period in 2001 is primarily  related to an
overall increase in pretax earnings.

The two  primary  components  of tax exempt  income  are income  from tax exempt
investment  securities  and  increases  in the  cash  surrender  value  of  life
insurance.  Income from tax exempt investment securities decreased $22 thousand,
or 32.8%  during the second  quarter of 2002 as  compared  to the same period in
2001. Income from tax exempt investment  securities  decreased $49 thousand,  or
35.5% during the first six months of 2002 as compared to the first six months of
2001.  During  the  second  quarter of 2002,  the cash  surrender  value of life
insurance  increased  $23  thousand,  or 16.1%  compared to same period in 2001.
During the first six months of 2002, the cash surrender  value of life insurance
increased $52 thousand, or 18.2% when compared to the first six months of 2001.

Liquidity

The  Company's  primary  source of  liquidity is  dividends  from the Bank.  The
Company's  primary uses of liquidity are associated with dividend  payments made
to the shareholders, and operating expenses.

The Bank's  liquidity is managed on a daily basis by maintaining  cash,  federal
funds sold, and short-term investments at levels commensurate with the estimated
requirements  for loan  demand and  fluctuations  in  deposits.  Loan demand and
deposit  fluctuations  are affected by a number of factors,  including  economic
conditions,  seasonality  of the  borrowing and deposit  bases,  and the general
level of  interest  rates.  The  Bank  maintains  three  lines  of  credit  with
correspondent  banks as a  supplemental  source of  short-term  liquidity in the
event that saleable  investment  securities  and loans or available new deposits
are not adequate to meet liquidity needs. The Bank has also established  reverse
repurchase  agreements  with two  brokerage  firms  which  allow for short  term
borrowings that are secured by the Bank's  investment  securities.  Furthermore,
the Bank may also borrow on a short-term  basis from the Federal  Reserve in the
event that other liquidity sources are not adequate.

At June 30, 2002 liquidity was considered  adequate,  and funds available in the
local deposit  market and scheduled  maturities of  investments  are  considered
sufficient  to meet  long-term  liquidity  needs.  Compared  to  2001  liquidity
increased in 2002 as a result of the growth in deposit  portfolio  combined with
the sales and maturities of available-for-sale investment securities.


                                      -16-
<PAGE>

Basis of Presentation

First Financial  Bancorp is the holding company for Bank of Lodi, N.A.,  Western
Auxiliary Corporation and First Financial (CA) Statutory Trust I. In the opinion
of management,  the accompanying  unaudited  consolidated  financial  statements
reflect all  adjustments  (consisting  of normal  recurring  accruals  and other
accruals as explained  above)  necessary  for a fair  presentation  of financial
position as of the dates  indicated  and results of  operations  for the periods
shown. All material  intercompany accounts and transactions have been eliminated
in consolidation. In preparing the financial statements,  management is required
to make estimates and assumptions that affect the reported amounts.  The results
for the three and six months ended June 30, 2002 are not necessarily  indicative
of the results which may be expected for the year ended  December 31, 2002.  The
unaudited  consolidated  financial statements presented herein should be read in
conjunction with the consolidated financial statements and notes included in the
2001 Annual Report to Shareholders.


                                      -17-
<PAGE>

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

While there are several  varieties of market risk,  the market risk  material to
the Company and the Bank is interest  rate risk.  Within the context of interest
rate risk,  market  risk is the risk of loss due to  changes in market  interest
rates that have an adverse effect on net interest income,  earnings,  capital or
the fair  value of  financial  instruments.  Exposure  to this type of risk is a
regular part of a financial institution's operations. The fundamental activities
of making  loans,  purchasing  investment  securities,  and  accepting  deposits
inherently  involve  exposure to interest  rate risk.  The Company  monitors the
repricing  differences  between  assets and  liabilities  on a regular basis and
estimates  exposure to net interest income,  net income,  and capital based upon
assumed  changes in the market yield  curve.  As of and for the six months ended
June 30, 2002,  there were no material changes in the market risk profile of the
Company or the Bank as described in the Company's 2001 Form 10-K.

PART II -- OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS

                  Not Applicable.

ITEM 2.           CHANGES IN SECURITIES

                  Not Applicable.

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES

                  Not Applicable.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  Not Applicable

ITEM 5.           OTHER INFORMATION

                  Not Applicable

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

       (a)        Exhibits

                  99.1  Certification  of Registrant's  Chief Executive  Officer
                        Pursuant To 18 U.S.C. Section 1350

                  99.2  Certification  of Registrant's  Chief Financial  Officer
                        Pursuant To 18 U.S.C. Section 1350

       (b)       Reports on Form 8-K

                  Not Applicable


                                      -18-
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  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.


                                         FIRST FINANCIAL BANCORP




Date: August 13, 2002                    /s/ Allen R. Christenson
                                         ------------------------
                                         Allen R. Christenson
                                         Senior Vice President
                                         Chief Financial Officer


                                      -19-