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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 September 30, 2001

                                       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 November 1, 2001 there were 1,614,300  shares of Common Stock, no
par value, outstanding.

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<PAGE>
                             FIRST FINANCIAL BANCORP

                                    FORM 10-Q
<TABLE>
         FOR THE QUARTER AND NINE MONTH PERIOD ENDED SEPTEMBER 30, 2001
                                TABLE OF CONTENTS
<CAPTION>
                                                                                         Page
                                                                                         ----
<S>         <C>                                                                           <C>
                               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 ................   17

                               PART II

Item 1.     Legal Proceedings .........................................................   17

Item 2.     Changes in Securities .....................................................   17

Item 3.     Defaults Upon Senior Securities ...........................................   17

Item 4.     Submission of Matters to a Vote of Security Holders .......................   17

Item 5.     Other Information .........................................................   17

Item 6.     Exhibits and Reports on Form 8-K ..........................................   17
</TABLE>



                                                 i
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
                                FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                                       Consolidated Balance Sheets
                                               (Unaudited)
                                   (in thousands except share amounts)
<CAPTION>
                                                                           September 30,      December 31,
Assets                                                                         2001              2000
------                                                                       --------          --------
<S>                                                                          <C>               <C>
Cash and due from banks                                                      $ 14,654          $ 10,909
Federal funds sold and securities purchased under resale agreements             2,344            10,115
Investment securities available for sale, at fair value                        39,701            29,560
Loans held for sale                                                             3,864             1,292

Loans, net of deferred loan fees                                              127,783           113,292
Less allowance for loan losses                                                  2,572             2,499
                                                                             --------          --------
  Net loans                                                                   125,211           110,793

Premises and equipment, net                                                     7,073             7,002
Accrued interest receivable                                                     1,342             1,447
Other assets                                                                   16,945            13,946
                                                                             --------          --------
        Total Assets                                                         $211,134          $185,064
                                                                             ========          ========
Liabilities and Stockholders' Equity

Liabilities:
  Deposits
    Noninterest bearing                                                      $ 26,317          $ 24,223
    Interest bearing                                                          164,929           138,038
                                                                             --------          --------
        Total deposits                                                        191,246           162,261


Accrued interest payable                                                          330               316
Short term borrowings                                                            --               4,588
Other liabilities                                                               1,996             1,445
                                                                             --------          --------
        Total liabilities                                                     193,572           168,610

Stockholders' equity:
Common stock - no par value; authorized
  9,000,000 shares, issued and outstanding
  in 2001 and 2000, 1,614,300 and 1,526,063,
  respectively                                                                 10,143             9,338
Retained earnings                                                               6,840             6,831
Accumulated other comprehensive income                                            579               285
                                                                             --------          --------
        Total stockholders' equity                                             17,562            16,454
                                                                             --------          --------
                                                                             $211,134          $185,064
                                                                             ========          ========
<FN>
See accompanying notes.
</FN>
</TABLE>
                                                   -1-
<PAGE>
<TABLE>
                                  FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                                      Consolidated Statements of Income
                                                 (Unaudited)
                                  (in thousands, except per share amounts)
<CAPTION>
                                                            Three Months Ended               Nine Months Ended
                                                               September 30,                     September 30,
                                                         ------------------------          -------------------------
                                                          2001              2000             2001             2000
                                                         -------          -------          -------          -------
<S>                                                      <C>              <C>              <C>              <C>
Interest income:
    Loans, including fees                                $ 2,892          $ 2,737          $ 8,222          $ 7,958
    Investment securities:
       Taxable                                               549              417            1,397            1,287
       Exempt from federal taxes                              58              133              196              410
    Federal funds sold                                        64               83              441              189
                                                         -------          -------          -------          -------
            Total interest income                          3,563            3,370           10,256            9,844

Interest expense:
    Deposit accounts                                       1,185            1,083            3,517            3,099
    Short term borrowings                                      1              142                5              316
                                                         -------          -------          -------          -------
            Total interest expense                         1,186            1,225            3,522            3,415
                                                         -------          -------          -------          -------
        Net interest income                                2,377            2,145            6,734            6,429

Provision for loan losses                                     55               35              245              135
                                                         -------          -------          -------          -------
        Net interest income after provision for
           loan losses                                     2,322            2,110            6,489            6,294
                                                         -------          -------          -------          -------
Non-interest income:
     Gain on sale of investment securities
         available for sale                                  267             --                267             --
     Gain on sale of other real estate                      --               --                222             --
     Service charges                                         346              313            1,052              957
     Premiums and fees from SBA and mortgage
         operations                                          201              155              621              482
     Miscellaneous                                           216              170              579              490
                                                         -------          -------          -------          -------
        Total non-interest income                          1,030              638            2,741            1,929

Non-interest expense:
     Salaries and employee benefits                        1,508            1,119            4,309            3,356
     Occupancy                                               140              155              696              618
     Equipment                                               345              262              721              572
     Other                                                   940              935            2,654            2,783
                                                         -------          -------          -------          -------
        Total non-interest expense                         2,933            2,471            8,380            7,329
                                                         -------          -------          -------          -------

Income before provision for income taxes                     419              277              850              894
Provision for income taxes                                    97               30              120              105
                                                         -------          -------          -------          -------
        Net income                                       $   322          $   247          $   730          $   789
                                                         =======          =======          =======          =======
Earnings per share:
         Basic                                           $  0.20          $  0.16          $  0.45          $  0.50
                                                         =======          =======          =======          =======
         Diluted                                         $  0.19          $  0.15          $  0.44          $  0.48
                                                         =======          =======          =======          =======
<FN>
See accompanying notes.
</FN>
</TABLE>

                                                            -2-
<PAGE>

<TABLE>
                                  FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                  Consolidated Statements of Stockholders' Equity and Comprehensive Income
                                                 (Unaudited)
                                     (in thousands except share amounts)
<CAPTION>
Nine Months Ended September 30, 2001
                                                                                           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, 2000            1,526,063   $  9,338                      6,831             285       16,454

Comprehensive income:
   Net income                                                     $       730       730                          730
                                                                -------------
   Other comprehensive income:
      Unrealized holding gains
      arising during the current
      period, net of tax
      effect of $213                                                      294
                                                                -------------
          Total other comprehensive
            income                                                        294                       294          294
                                                                -------------
   Comprehensive income                                           $     1,024
                                                                =============
Options exercised                          12,392         88                                                      88
Stock dividend                             75,845        717                       (717)
Cash in lieu of stock dividend                                                       (4)                          (4)
                                      -----------  ---------                    -------   -------------   ----------
Balance at September 30, 2001           1,614,300   $ 10,143                      6,840             579       17,562
                                      ===========  =========                    =======   =============   ==========


Nine Months Ended September 30, 2000

                                                                                           Accumulated
                                        Common       Common                                   Other
                                         Stock        Stock     Comprehensive   Retained  Comprehensive
            Description                 Shares       Amounts        Income      Earnings      Loss           Total
------------------------------------- -----------  ---------    -------------   -------   -------------   ----------
Balance at December 31, 1999            1,433,734   $  8,433                      6,354            (266)      14,521

Comprehensive income:
   Net income                                                     $       789       789                          789
                                                                -------------
   Other comprehensive income:
      Unrealized holding gains
      arising during the current
      period, net of tax effect of $208                                   288
                                                                -------------
          Total other comprehensive
             income                                                       288                       288          288
                                                                -------------
   Comprehensive income                                           $     1,077
                                                                =============
Options exercised                          12,184         90                                                      90
Stock dividend                             71,764        732                       (732)
Cash dividend                                                                       (74)                         (74)
                                      -----------  ---------                    -------   -------------   ----------
Balance at September 30, 2000           1,517,682   $  9,255                      6,337              22       15,614
                                      ===========  =========                    =======   =============   ==========
<FN>
See accompanying notes.
</FN>
</TABLE>

                                                          -3-
<PAGE>
<TABLE>
                                         FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                                           Consolidated Statements of Cash Flows
                                                        (Unaudited)
                                                      (in thousands)
                                              Nine Months Ended September 30,
<CAPTION>
                                                                                      2001               2000
                                                                                    --------           --------
<S>                                                                                 <C>                <C>
Cash flows from operating activities:
Net income                                                                          $    730           $    789
     Adjustments  to  reconcile  net  income to net cash
       (used in)  provided  by operating activities:
          (Increase) decrease in loans held for sale                                  (2,188)               476
          Gain on sale of loans                                                         (384)              (207)
          Increase in deferred loan income                                               129                 63
          Depreciation and amortization                                                  970                605
          Provision for loan losses                                                      245                135
          Gain on sale of investment securities
              available for sale                                                        (267)              --
          Gain on sale of other real estate owned                                       (222)              --
          Decrease (increase) in accrued interest receivable                             105                (37)
          Increase (decrease) in accrued interest payable                                 14                 (6)
          Increase (decrease) in other liabilities                                       551               (421)
          Increase in cash surrender value of life insurance                            (429)              (342)
          Increase in other assets                                                      (701)              (191)
                                                                                    --------           --------
                  Net cash (used in) provided by
                  operating activities                                                (1,447)               864

Cash flows from investing activities:
    Proceeds from maturity of available for sale securities                           15,034              3,835
    Proceeds from sale of available for sale securities                                3,578               --
    Purchases of available for sale securities                                       (28,040)              (901)
    Net increase in loans made to customers                                          (15,408)            (3,818)
    Proceeds from sale of other real estate                                              627                 10
    Purchase of cash surrender value life insurance                                   (2,000)              (900)
    Purchases of bank premises and equipment                                            (851)              (578)
                                                                                    --------           --------
                  Net cash used in investing activities                              (27,060)            (2,352)

Cash flows from financing activities:
    Net increase (decrease) in deposits                                               28,985             (1,706)
    (Decrease) increase in other borrowings                                           (4,588)             5,467
    Dividends paid                                                                      --                  (74)
    Payment for fractional stock dividends                                                (4)              --
    Proceeds from issuance of common stock                                                88                 90
                                                                                    --------           --------
                  Net cash provided by financing activities                           24,481              3,777

                  Net (decrease) increase in cash and cash
                  equivalents                                                         (4,026)             2,289
Cash and cash equivalents at beginning of period                                      21,024              9,409
                                                                                    --------           --------
Cash and cash equivalents at end of period                                          $ 16,998           $ 11,698
                                                                                    ========           ========
Supplemental Disclosures of Cash Flow Information:
    Cash paid for interest payments                                                 $  3,508              3,421
    Cash paid for taxes                                                             $    417                560
    Loans transferred to other real estate owned                                    $    616                405
    Stock dividend                                                                  $    717                732
<FN>
See accompanying notes.
</FN>
</TABLE>


                                      -4-
<PAGE>



                    FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                    September 30, 2001 and December 31, 2000

(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) and Western
     Auxiliary  Corporation (WAC) 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.

     Certain  amounts in prior year's  presentations  have been  reclassified to
     conform  with the  current  presentation.  These  reclassification  have no
     effect on previously reported income.

(2) Weighted Average Shares Outstanding

     Per share  information  is based on  weighted  average  number of shares of
     common stock  outstanding  during each three- and nine-month  periods after
     giving  retroactive effect for the five percent stock dividend declared for
     shareholders  of record May 8, 2001,  payable May 22, 2001.  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.


                                      -5-
<PAGE>
                    FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                    September 30, 2001 and December 31, 2000


(2) Weighted Average Shares Outstanding (continued)

     The  following  table  provides  a  reconciliation  of  the  numerator  and
     denominator of the basic and diluted earnings per share  computation of the
     three- and nine-month periods ending September 30, 2001 and 2000:
<TABLE>
<CAPTION>
                                                            Income             Shares       Per-Share
         Three months ended September 30, 2001           (numerator)       (denominator)      Amount
         ---------------------------------------------- ---------------  --------------- --------------
<S>                                                     <C>              <C>              <C>
         Basic earnings per share                            $ 322,000        1,614,300         $ 0.20
         Effect of dilutive securities                               -           38,537              -
                                                        ---------------  ---------------
         Diluted earnings per share                          $ 322,000        1,652,837         $ 0.19
                                                        ===============  ===============

                                                            Income           Shares         Per-Share
         Three months ended September 30, 2000           (numerator)     (denominator)        Amount
         ---------------------------------------------- ---------------  ---------------  --------------
         Basic earnings per share                            $ 247,000        1,592,638         $ 0.16
         Effect of dilutive securities                               -           38,764              -
                                                        ---------------  ---------------
         Diluted earnings per share                          $ 247,000        1,631,402         $ 0.15
                                                        ===============  ===============

                                                            Income           Shares         Per-Share
         Nine months ended September 30, 2001            (numerator)     (denominator)        Amount
         ---------------------------------------------- ---------------  ---------------  --------------
         Basic earnings per share                            $ 730,000        1,607,178         $ 0.45
         Effect of dilutive securities                               -           37,562              -
                                                        ---------------  ---------------
         Diluted earnings per share                          $ 730,000        1,644,740         $ 0.44
                                                        ===============  ===============

                                                            Income           Shares         Per-Share
         Nine months ended September 30, 2000            (numerator)      (denominator)       Amount
         ---------------------------------------------- ---------------  ---------------   -------------
         Basic earnings per share                            $ 789,000         1,589,932        $ 0.50
         Effect of dilutive securities                               -            41,302             -
                                                        ---------------  ---------------
         Diluted earnings per share                          $ 789,000         1,631,234        $ 0.48
                                                        ===============  ===============
</TABLE>

(3) Allowance for Loan Losses

         The following  summarizes  changes in the allowance for loan losses for
         the nine month periods ended September 30, 2001 and 2000 and the twelve
         month period ended December 31, 2000:

(in thousands)                           9/30/01        9/30/00        12/31/00
                                         -------        -------        -------
Balance at beginning of period           $ 2,499          2,580          2,580
  Loans charged off                         (194)          (171)          (246)
  Recoveries                                  22             21             30
  Provisions charged to operations           245            135            135
                                         -------        -------        -------
Balance at end of period                 $ 2,572          2,565          2,499
                                         =======        =======        =======


                                      -6-
<PAGE>
                   FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                    September 30, 2001 and December 31, 2000


(4) Basis of Presentation

         First  Financial  Bancorp is the holding company for Bank of Lodi, N.A.
         and Western Auxiliary  Corporation.  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 nine
         months ended September 30, 2001 are not  necessarily  indicative of the
         results which may be expected for the year ended December 31, 2001. The
         unaudited  consolidated financial statements presented herein should be
         read in  conjunction  with the  consolidated  financial  statements and
         notes included in the 2000 Annual Report to Shareholders.

(5) Gain Or Loss On Sale Of Loans And Servicing Rights

         Effective  April 1, 2001,  the Company  adopted FASB Statement No. 140,
         Accounting  for  Transfers  and  Servicing  of  Financial   Assets  and
         Extinguishments  of  Liabilities,  a replacement  of FASB Statement No.
         125,  which  supersedes and replaces the guidance in FASB Statement No.
         125,  Accounting  for Transfers  and Servicing of Financial  Assets and
         Extinguishments of Liabilities. Statement No. 140 revises the standards
         for accounting  for  securitizations  and other  transfers of financial
         assets and collateral and requires certain disclosures,  but it carries
         over  most  of  the   provisions   of   Statement   No.   125   without
         reconsideration.  FASB Technical Bulletin No. 01-1 delays the effective
         date for the isolation  standards and related  guidance under Statement
         No. 140 to transfers of financial assets by affected entities occurring
         after  December 31, 2001,  instead of March 31, 2001.  The Company does
         not expect  adoption of Statement No. 140 to have a material  impact on
         the financial condition or operating results of the Company.

(6) Impact Of Recently Issued Accounting Standards

         In July 2001, the FASB issued Statement No. 141, Business Combinations,
         and Statement No. 142, Goodwill and Other Intangible Assets.  Statement
         141 requires  that the purchase  method of  accounting  be used for all
         business  combinations  initiated  after  June 30,  2001 as well as all
         purchase  method business  combinations  completed after June 30, 2001.
         Statement 141 also specifies  criteria  intangible assets acquired in a
         purchase  method  business  combination  must meet to be recognized and
         reported apart from goodwill,  noting that any purchase price allocable
         to  an  assembled  workforce  may  not  be  accounted  for  separately.
         Statement  142 will require 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 142.  Statement 142 will also require 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  SFAS  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 141 on July 1, 2001 and
         is  required  to  adopt  Statement  142  effective   January  1,  2002.
         Furthermore,  any goodwill and any intangible  asset determined to have
         an  indefinite  useful life that are  acquired  in a purchase  business
         combination  completed  after June 30, 2001 will not be amortized,  but
         will  continue to be evaluated for  impairment  in accordance  with the
         appropriate  pre-Statement  142  accounting  literature.  Goodwill  and
         intangible  assets acquired in business  combinations  completed before
         July 1, 2001 will  continue to be  amortized  prior to the  adoption of
         Statement  142. The Company  does not have any goodwill and  intangible
         assets acquired in business combinations completed before July 1, 2001.
         The Company does not expect  adoption of Statements  No. 141 and 142 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
                    September 30, 2001 and December 31, 2000


         The  Financial   Accounting  Standards  Board  (FASB)  recently  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 is in process of determining  what effect,  if
         any, adoption of Statement No. 143 will have on the financial condition
         or operating results of the Company.

         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  statement  is  required  to be adopted  for fiscal  years
         beginning  after  December  15, 2001 and interim  periods  within those
         fiscal years. Early adoption is encouraged. The Company does not expect
         adoption  of  Statement  No.  144 to  have  a  material  impact  on the
         financial condition or operating results of the Company.


                                      -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 8, as well as other  information  presented  throughout
this report.

Changes in Financial Condition

Consolidated total assets at September 30, 2001 were approximately $211 million,
which represents an increase of $26,070 thousand, or 14.1%, above the comparable
level  at  December  31,  2000.  The  increase  in  total  assets  was  directly
attributable  to a  $28,985  thousand,  or  17.9%,  increase  in total  deposits
combined with a $4,588 thousand, or 100.0%, decrease in short term borrowings as
compared to December 31, 2000.  The growth in deposits is the result of a $2,094
thousand, or 8.6%, increase in demand deposit accounts, $4,101 thousand, or 9.3%
increase in NOW  accounts,  $273  thousand,  or 1.8%  decrease  in money  market
accounts,  $3,007 thousand,  or 11.3% increase in savings accounts and a $20,056
thousand, or 38.8% increase in Certificates of Deposit from December 31, 2000 to
September  30,  2001,  respectively.  The  increase in  certificates  of deposit
resulted from the Company  offering deposit rates at or slightly above the rates
offered in its  immediate  market  area,  the intent of which was to attract new
customers while providing  funding for projected loan growth.  In addition,  the
new  certificates  of deposit are from  depositors in the local markets in which
the Company operates and does not consist of brokered deposits.

Total gross loans increased $17,192  thousand,  or 14.9%, from December 31, 2000
to September 30, 2001. The net increase in gross loans is the result of a $5,445
thousand,  or 12.4%  increase in real estate loans,  $5,278  thousand,  or 39.4%
increase in commercial loans,  $4,094 thousand,  or 17.2% increase in SBA loans,
$2,572  thousand,  or 199.1% increase in loans held for sale, $210 thousand,  or
1.8%  increase  in  construction  loans,  $223  thousand,  or 1.3%  decrease  in
agricultural  loans and a $184  thousand,  or 5.1%  decrease in consumer  loans.
During  the  first  quarter  of  2001,  the  Company  opened  a  Small  Business
Administration  ("SBA") loan production office in Folsom California,  moving its
operations for SBA loans from its Lodi office to the Folsom area.


                                      -9-
<PAGE>

The  allowance  for loan  losses  (the  "allowance")  is  established  through a
provision  for loan losses  charged to expense.  The  allowance at September 30,
2001 represented 1.94% of gross loans and was in excess of the December 31, 2000
allowance by $73 thousand, or 2.9%, as a result of a provision for $245 thousand
and net charge offs totaling $172 thousand. This compares to a provision of $135
thousand and net charge offs totaling $150 thousand for the first nine months of
2000. The increased provision resulted primarily from three events; increases in
loan growth and the  potential  for  declines in the economy  combined  with the
resolution of several  nonperforming  loans. The loan portfolio during the first
nine months of 2001 increased  $17,192  thousand,  or 14.9%,  exceeding the rate
that occurred during the first nine months of 2000 ($3,336  thousand,  or 3.0%).
In addition,  during 2001,  management  became  increasingly  concerned over the
potential for possible declines in the credit quality of its borrowers resulting
from  declines in the  national  economy.  Furthermore,  the Company  eliminated
several  nonperforming  loans  during the year  without  sustaining  substantial
charge off activity.

At September  30, 2001,  nonperforming  loans were $4,412  thousand,  or 3.3% of
gross loans outstanding. This compares to $5,655 thousand or 4.9% of gross loans
outstanding  at December 31, 2000.  At September  30, 2000 the Company  reported
nonperforming loans totaling $7,731 thousand, or 6.7% of gross loans. Subsequent
to  September  30,  2000,  the  Company  reduced  nonperforming  loans by $3,319
thousand  or 42.9%.  Additionally,  during  the first nine  months of 2001,  the
resolution of the  nonperforming  loans  resulted in the Company  realizing $251
thousand in previously forgone interest income.

At September 30, 2001, the Company has a total of 30 nonperforming  loans.  Some
of the nonperforming loans are guaranteed by government agencies,  including the
SBA.  The Company is in the  process of  liquidating  some of the  nonperforming
loans and expects to receive payments totaling $454 thousand from the government
agencies.  The Company has two loans to one borrower  which total  approximately
26% of total  nonperforming  loans and are secured by real estate.  In addition,
nonperforming loans with outstanding balances ranging from $250 thousand to $600
thousand  total  approximately  43% of total  nonperforming  loans,  loans  with
balances  ranging  from  $100  thousand  to $250  thousand  total  20% of  total
nonperforming  loans and loans with balances  below $100  thousand  total 11% of
total nonperforming loans.  Management continues to actively work to resolve the
nonperforming  loans,  the  majority of which are secured by real estate and, in
the opinion of management,  are well collateralized.  In several instances,  the
Company is continuing to receive  payments from the borrowers and has elected to
apply all payments received to the reduction of principal.

The allowance to  nonperforming  loan coverage ratio  increased to 0.58 times at
September  30,  2001 from 0.44  times at  December  31,  2000.  Total  portfolio
delinquency  at  September  30, 2001 was 5.3%,  compared to 5.1% at December 31,
2000.  Excluding  the  nonperforming  loans,  total  portfolio   delinquency  at
September 30, 2001 was $2,545 thousand, or 1.9% of gross loans, compared to $259
thousand,  or 0.2% of gross loans at December  31, 2000.  At September  30, 2001
loans past due 30 to 59 days  totaled  $1,288,  or 0.97% of gross  loans and was
comprised of 13 loans and loans past due 60 to 89 days totaled $1,257  thousand,
or 0.95% of gross loans and was comprised of 5 loans.

Interest  forgone or reversed on non-accrual  loans during the first nine months
of 2001  totals  approximately  $463  thousand.  For the third  quarter of 2001,
interest forgone on nonaccrual loans totaled $131 thousand.  The majority of the
loans placed on nonaccrual were internally identified as classified assets as of
December 31, 1999 and specific  reserves  for possible  losses were  established
within the allowance as of December 31, 1999.  Management  continues to actively
monitor the status of these  nonperforming  loans and as of  September  30, 2001
does not believe any  material  increases  to the  specific  reserves  for these
nonperforming loans as compared to December 31, 2000 was necessary.

Management  believes the  allowance at September  30, 2001 is adequate to absorb
loan losses inherent in the portfolio.  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 nine months and year ended  September
30, 2001 and December 31, 2000, respectively:

                                      September 30,      December 31,
                                          2001               2000
                                         -------           -------
Balance at beginning of period           $ 2,499           $ 2,580
   Charge-offs:
     Commercial                             (168)             (201)
     Real estate                            --                --
     Consumer                                (26)              (45)
                                         -------           -------
  Total charge-offs                         (194)             (246)
  Recoveries:
     Commercial                                8                15
     Real estate                            --                --
     Consumer                                 14                15
                                         -------           -------
  Total recoveries                            22                30
                                         -------           -------
Net charge-offs                             (172)             (216)
Provision charged to operations              245               135
                                         -------           -------
Balance at end of period                 $ 2,572           $ 2,499
                                         =======           =======

Allocation of the Allowance for Loan Losses

                     -----------------------           ----------------------
                       September 30, 2001                December 31, 2000
                     -----------------------           ---------------------
                     Amount           % of             Amount         % of
Loan Category        (000's)          Loans            (000's)        Loans
                     ------           ------           ------       -------
Commercial           $  911            87.84%          $  879        86.46%
Real Estate             506             9.49%             594        10.41%
Consumer                  2             2.67%               1         3.13%
Unallocated           1,153              N/A            1,025         N/A
                     ------           ------           ------       -------
                     $2,572           100.00%          $2,499       100.00%
                     ======           ======           ======       =======


Investments

Investments  consist of federal  funds  sold,  investment  securities  and money
market mutual funds. Investment securities increased $10,141 thousand, or 34.3%,
from  December 31, 2000 to September  30, 2001.  In addition  federal funds sold
decreased  $7,771  thousand,  or 76.8% from  December 31, 2000 to September  30,
2001.  The  increase  in  investment  securities  resulted  primarily  from  the
conversion  of federal  funds sold to  investment  securities.  The purchases of
investment  securities  during  2001  consisted  primarily  of  mortgage  backed
securities  with short  average  lives that are  intended to provide the Company
with  investment  income in excess of federal  funds  rates  while  providing  a
continuing cash flow stream for use in funding new loan growth.

Other Assets

Other Assets  increased  $2,999  thousand,  or 21.5%,  from December 31, 2000 to
September  30, 2001.  The increase is  attributable  primarily to an increase of
$2,429 in the cash surrender value of life  insurance.  The cash surrender value
of life  insurance  consists  primarily of the Bank's  contractual  rights under
single-premium  life insurance policies written on the lives of certain officers
and the directors of the Company and the Bank.  The policies  were  purchased in
order to indirectly  offset  anticipated  costs of certain benefits payable upon
the  retirement,  and the death or  disability  of the  directors  and  officers
pursuant  to  deferred  compensation   agreements.   The  cash  surrender  value
accumulates  tax-free based upon each policy's  crediting rate which is adjusted
by the insurance company on an annual basis.


                                      -11-
<PAGE>
Equity

Consolidated  equity  increased  $1,108  thousand  from  December  31,  2000  to
September  30,  2001.   Consolidated  equity  represented  8.32%  and  8.89%  of
consolidated  assets at September 30, 2001 and December 31, 2000,  respectively.
In  addition  to the year to date  earnings  of $730  thousand,  equity  capital
increased  by $88  thousand  from the  exercise of stock  options  over the nine
months ended September 30, 2001 and $294 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 September  30,
2001 compared to December 31, 2000.  Year-to-date  capital reductions totaled $4
thousand resulting from the cash payout for fractional shares as a result of the
5% stock dividend  declared in May 2001. The total risk-based  capital ratio for
the Company's wholly owned subsidiary,  Bank of Lodi was 10.56% at September 30,
2001 compared to 11.27% at December 31, 2000. The Bank's leverage  capital ratio
was 7.61% at September  30, 2001 versus 7.99% at December 31, 2000.  The capital
ratios are in excess of the regulatory minimums for a well-capitalized bank.

Changes in Results of Operations-Three and  Nine Months ended September 30, 2001

Summary of Earnings Performance
<TABLE>
<CAPTION>
                                  --------------------------------   ------------------------------
                                        Three Months Ended                 Nine Months Ended
                                           September 30,                     September 30,
                                  --------------------------------   ------------------------------
                                    2001                  2000         2001                2000
                                  -------------       ------------   ------------      ------------
<S>                                   <C>                 <C>            <C>                <C>
Earnings (in thousands)               $  322              $  247         $ 730              $ 789
Basic earnings per share              $ 0.20              $ 0.16         $0.45              $0.50
Diluted earnings per share            $ 0.19              $ 0.15         $0.44              $0.48
Return on average assets                0.62%               0.54%         0.49%              0.59%
Return on average equity                7.70%               6.65%         5.78%              7.30%
Dividend payout ratio                     --                  --            --               9.62%
Average equity to average assets        8.07%               8.09%         8.54%              8.02%
</TABLE>

The Company  reported net income of $322 thousand ($.19 per share,  diluted) for
the three months ended  September 30, 2001,  compared to $247 thousand ($.15 per
share,  diluted)  for the same  period in 2000.  Net income for the nine  months
ended September 30, 2001 was $730 thousand ($.44 per share, diluted) compared to
$789  thousand  ($.48 per share,  diluted).  The  increase in net income for the
third quarter in 2001 when compared to the same period one year ago is due to an
increase of $232 thousand in net interest income, an increase of $20 thousand in
the  provision  for loan  losses,  an increase of $392  thousand in  noninterest
income,  an increase of $462 thousand in noninterest  expense and an increase of
$67  thousand in the  provision  for income  taxes.  The  decrease in net income
during the first nine months of 2001 when compared to the same period in 2000 is
due to an increase of $305 thousand in net interest income,  an increase of $110
thousand in the  provision  for loan  losses,  an  increase of $812  thousand in
noninterest income, an increase of $1,051 thousand in noninterest expense and an
increase of $15 thousand in the provision for income taxes.


                                      -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 September 30,
                                  ---------------------------------------------------------------------------------
                                                2001                                            2000
                                  ---------------------------------------   ---------------------------------------
                                   Average      Income/         Yield (1)   Average       Income/          Yield
Dollars In Thousands               Balance      Expense           (1)       Balance       Expense            (1)
                                  --------      --------        -------     --------      --------        -------
<S>                               <C>           <C>             <C>         <C>           <C>             <C>
Earning Assets:
Investment securities(1)(2)       $ 43,536      $    607           5.53%    $ 34,414      $    550           6.34%
Federal funds sold                   7,178            64           3.54%       5,383            83           6.12%
Loans (2)(3)                       123,737         2,892           9.27%     116,590         2,737           9.31%
                                  --------      --------        -------     --------      --------        -------
                                  $174,451      $  3,563           8.10%    $156,387      $  3,370           8.55%
                                  ========      ========        =======     ========      ========        =======
Liabilities:
Non-interest bearing              $ 26,362      $   --              --      $ 21,810      $   --          --
Savings, money market,
& NOW deposits                      90,853           300           1.31%      83,480           341           1.62%
Time deposits                       71,069           885           4.94%      54,020           742           5.45%
Other borrowings                        96             1           4.13%       8,318           142           6.77%
                                  --------      --------        -------     --------      --------        -------
Total Liabilities                 $    380      $  1,186           2.50%    $167,628      $  1,225           2.90%
                                  ========      ========        =======     ========      ========        =======
Net Interest Spread                                                5.61%                                     5.65%
                                                                =======                                   =======

                                   Earning      Income                      Earning       Income
                                   Assets      (Expense)         Yield       Assets      (Expense)         Yield
                                  --------      --------        -------     --------      --------        -------
Yield on average earning assets   $174,451      $  3,563           8.10%    $156,387      $  3,370           8.55%
Cost of funding average
earning assets                    $174,451        (1,186)         (2.70)%   $156,387        (1,225)         (3.11)%
                                  --------      --------        -------     --------      --------        -------
Net Interest Margin               $174,451      $  2,377           5.40%    $156,387      $  2,145           5.44%
                                                ========        =======                   ========        =======
<FN>
(1)  Held 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.
</FN>
</TABLE>


                                                          -13-
<PAGE>
<TABLE>
<CAPTION>
                              ---------------------------------------------------------------------------------
                                                   For the Three Months Ended September 30,
                              ---------------------------------------------------------------------------------
                                            2001                                            2000
                              ---------------------------------------   ---------------------------------------
<S>                           <C>           <C>             <C>         <C>           <C>             <C>
                               Average      Income/         Yield (1)   Average       Income/          Yield
Dollars In Thousands           Balance      Expense           (1)       Balance       Expense            (1)
                              --------      --------        ---------   --------      --------        -------
Earning Assets:
Investment securities(1)      $ 34,143      $  1,593           6.24%    $ 38,321      $  1,697          5.90%
Federal funds sold              12,734           441           4.63%       3,950           189          6.37%
Loans(2)(3)                    118,841         8,222           9.25%     114,300         7,958          9.27%
                              --------      --------        ----------  --------      --------        -------
                              $165,718      $ 10,256           8.27%    $156,571      $  9,844          8.38%
                              ========      ========        ==========  ========      ========        =======
Liabilities:
Non-interest bearing
deposits                      $ 24,439      $   --               --     $ 20,330      $    --             --
Savings, money market, &
NOW deposits                    89,320           967           1.45%      83,570         1,008          1.61%
Time deposits                   64,800         2,550           5.26%      53,820         2,091          5.18%
Other borrowings                   126             5           5.31%       6,500           316          6.48%
                              --------      --------        ----------  --------      --------        -------
Total Liabilities             $178,685      $  3,522           2.64%    $164,220       $ 3,415          2.77%
                              ========      ========        ==========  ========      ========        =======
Net Interest Spread                                            5.64%                                    5.61%
                                                            =========                                 =======

                               Earning      Income                      Earning       Income
                               Assets      (Expense)         Yield       Assets      (Expense)         Yield
                              --------      --------        ----------  --------      --------        -------
Yield on average earning
assets                        $165,718      $ 10,256           8.27%    $156,571      $  9,844          8.38%
Cost of funding average
earning assets                $165,718      $ (3,522)        (2.84)%    $156,571      $ (3,415)        (2.91)%
                              --------      --------        ----------  --------      --------        -------
Net Interest Margin           $165,718      $  6,734           5.43%    $156,571      $  6,429          5.47%
                                            ========        ==========                ========        =======
<FN>
(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.
</FN>
</TABLE>

Interest  income for the third quarter of 2001  increased by $193  thousand,  or
5.7%,  over the same quarter of 2000.  The net interest  margin of 5.40% for the
third quarter of 2001  decreased  from 5.44% for the third quarter of 2000.  For
the first nine months of 2001,  interest income  increased by $412 thousand,  or
4.2%,  over the same period one year ago. The net  interest  margin of 5.43% for
the first nine months of 2001 decreased from 5.47% over the same period one year
ago.  Interest  income  increased as a result of increases in average  loans and
earning assets combined with the recovery of interest income from  nonperforming
loans and was  negatively  impacted by declines in interest rates which resulted
from the  Federal  Reserve  reducing  interest  rates  eight  times  during 2001
resulting in a 350 basis point  reduction in the prime lending rate. The decline
in the net interest  margin  resulted  primarily from the impact of increases in
deposits  being  invested  in  earning  assets  during  a  lower  interest  rate
environment  that existed during the third quarter and first nine months of 2001
as compared to that which existed during the third quarter and first nine months
of 2000.


                                      -14-
<PAGE>

Average gross loans for the three months ended  September 30, 2001  increased by
$7,147 thousand,  or 6.1% compared to the prior year quarter. For the first nine
months of 2001, average gross loans increased $4,541 thousand, or 4.0%, compared
to the first  nine  months of 2000.  This  increase  has been the  result of the
Bank's efforts to increase total loans.

Average deposits for the three months ended September 30, 2001 increased $28,974
thousand, or 18.2%, compared to the prior year quarter. The average rate paid on
savings, money market and NOW accounts decreased from 1.62% in the third quarter
of 2000 to 1.31%  for the  third  quarter  of 2001.  The  average  rate  paid on
certificates of deposits decreased,  from 5.45% for the third quarter of 2000 to
4.94% for the same  quarter of 2001.  The decline in the average  rates paid are
reflective of the lower  interest rate  environment  during the third quarter of
2001 as compared to the same period in 2000.  For the first nine months of 2001,
average deposits  increased  $20,839 thousand,  or 13.2%,  compared to the first
nine months of 2000.  The average  rate paid on  savings,  money  market and NOW
accounts was 1.45% for 2001 compared to 1.61% for 2000. The average rate paid on
certificates of deposit was 5.26% for 2001 compared to 5.18% for 2000.

Average  non-interest  bearing  deposits  have  increased  as a percent of total
interest  bearing  deposits  from a year  ago and make up 14% of  average  total
deposits for both the third quarter and first nine months of 2001 as compared to
13% and 12% for the third  quarter and first nine months of 2000,  respectively.
This has  helped  to keep  down  the cost of  funding  earning  assets.  Average
certificates  of deposit for the third quarter and the first nine months of 2001
were 38% and 36% of average deposits, respectively,  compared to 32% and 33% for
the same periods of 2000.

Provision for Loan Losses

The  provision  for loan  losses  for the three and nine  months  periods  ended
September 30, 2001 was $55 and $245 thousand compared with $35 thousand and $135
thousand for the three and nine months  periods ended  September 30, 2000.  Also
see "Allowance for Loan Losses" contained herein.

Non-interest Income

Non-interest  income for the third quarter of 2001 increased  $392 thousand,  or
61.4%,  over the same  period  last  year.  For the first  nine  months of 2001,
non-interest  income  increased $812 thousand,  or 42.1%,  compared to the first
nine months of 2000.

Gains on the sale of investment  securities totaling $267 thousand were realized
during the third quarter of 2001. In addition, during the first quarter of 2001,
the Company  realized  gains of $222 thousand  resulting  from the sale of other
real estate  owned.  There we no sales of  investment  securities  or other real
estate owned during the first nine months of 2000.

Service charge income for the third quarter of 2001  increased $33 thousand,  or
10.5%,  compared to the same quarter of 2000. For the first nine months of 2001,
service  charge income  increased $95 thousand,  or 9.9%,  compared to the first
nine months of 2000.  The  increases are  consistent  with the growth in average
interest  bearing  demand  deposits and savings  accounts in 2001 as compared to
2000.

Income  from the  premiums  and fees from SBA and  mortgage  operations  for the
current year third quarter  increased $46  thousand,  or 29.7%,  compared to the
prior year third quarter.  For the first nine months of 2001,  premiums and fees
from SBA and mortgage operations increased $139 thousand,  or 28.8%, compared to
the first nine months of 2000.  The  increase in income is a result of increases
in the total volume of loans  generated  and sold,  particularly  in the area of
mortgage  loans.  The increase in mortgage loan activity is  attributable to the
decline in mortgage  lending  interest rates that has resulted in an increase in
the  origination of new loans in addition to increased  refinancing  activity of
existing loans.

Non-interest Expenses

Non-interest  expenses for the third quarter of 2001 increased by $462 thousand,
or 18.7%, compared to the prior year quarter. For the first nine months of 2001,
non-interest expense increased $1,051 thousand,  or 14.3%, compared to the first
nine months of 2000. The increase in non-interest expense results primarily from
increases  in  salary  and  benefits,  occupancy  and  equipment  combined  with
decreases in consulting, marketing and problem loan resolution.


                                      -15-
<PAGE>
For the third  quarter,  salary and employee  benefits  expense  increased  $389
thousand,  or 34.8%,  occupancy  expense  decreased $15 thousand,  or 9.7%,  and
equipment expense increased $83 thousand, or 31.7%.

Year to date, salary and employee  benefits expense increased $953 thousand,  or
28.4%,  occupancy  expense  increased 78 thousand,  or 12.6%,  equipment expense
increased $149 thousand,  or 26.0%, and director fees and benefits increased $59
thousand, or 41.5%, while consulting expenses decreased $128 thousand, or 56.9%,
and problem loan resolution expenses decreased $158 thousand, or 73.1%, 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 occupancy  and  equipment
expenses  occurred  primarily  as a result of the  addition  of the  Folsom  SBA
lending office and the  relocation of the branch in Folsom,  combined with other
general  upgrades in equipment  and  technology.  The  consulting  expenses have
related  primarily to matters  engaged and completed  during 2000  regarding the
enhancement  of  noninterest   income,   personnel  and  employee  benefits  and
improvements in technology.  The increase in director fees and benefits resulted
from the addition of new directors to the Board combined with increased  benefit
costs. Problem loan resolution costs declined during 2001 as compared to 2000 as
a result of specific collection and collateral maintenance requirements incurred
during 2000 which were not incurred during 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 September 30, 2001 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 2000,  liquidity
increased  in 2001 as a result of the growth in deposit  portfolio  combined the
sales and maturities of available-for-sale investment securities.

Basis of Presentation

First  Financial  Bancorp is the  holding  company  for Bank of Lodi,  N.A.  and
Western Auxiliary  Corporation.  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 nine months
ended September 30, 2001 are not necessarily indicative of the results which may
be expected for the year ended  December 31, 2001.  The  unaudited  consolidated
financial  statements  presented  herein should be read in conjunction  with the
consolidated  financial  statements and notes included in the 2000 Annual Report
to Shareholders.


                                      -16-
<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 nine months ended
September 30, 2001, there were no material changes in the market risk profile of
the Company or the Bank as described in the Company's 2000 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

                  None

       (b)        Reports on Form 8-K

                  None


                                      -17-
<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: November 13, 2001                         /s/ Allen R. Christenson
      -----------------                         ------------------------
                                                Allen R. Christenson
                                                Senior Vice President
                                                Chief Financial Officer