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

                                  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, 2003

                                       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

         Indicate by check mark whether the Registrant is an  accelerated  filer
(as defined in Rule 12b-2 of the Act).
                                                    [   ] Yes         [ X ] No

         As of October 31, 2003 there were 1,621,104  shares of Common Stock, no
par value, outstanding.
================================================================================

<PAGE>

                             FIRST FINANCIAL BANCORP

                                    FORM 10-Q

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2003
                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
                                     PART I

Item 1.  Financial Statements ...............................................  1

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations ..............................................  8

Item 3.  Quantitative and Qualitative Disclosures about Market Risk ......... 17

Item 4.  Controls and Procedures ............................................ 17

                                     PART II

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

Item 2.  Changes in Securities and Use of Proceeds .......................... 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

Signatures .................................................................. 19

Index to Exhibits ........................................................... 20

                                       i
<PAGE>

ITEM 1. FINANCIAL STATEMENTS

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

                                                             Sept. 30,  Dec. 31,
Assets                                                         2003       2002
                                                             --------   --------
Cash and due from banks                                      $ 18,030   $ 14,988
Federal funds sold and securities purchased under resale
    agreements                                                  2,709     19,634
Investment securities available for sale, at fair value        68,650     33,125
Loans held for sale                                             5,610      7,578

Loans, net of deferred loan fees                              171,806    157,147
Less allowance for loan losses                                  3,264      3,057
                                                             --------   --------

  Net loans                                                   168,542    154,090

Premises and equipment, net                                     6,632      6,745
Accrued interest receivable                                     1,247        772
Other assets                                                   18,527     18,314
                                                             --------   --------

    Total Assets                                             $289,947   $255,246
                                                             ========   ========

Liabilities and Stockholders' Equity

Liabilities:
    Deposits:
       Noninterest bearing                                   $ 42,416   $ 34,673
       Interest bearing                                       217,545    176,006
                                                             --------   --------

          Total deposits                                      259,961    210,679

    Accrued interest payable                                      185        144
    Short term borrowings                                        --       14,885
    Other liabilities                                           5,080      5,268
    Obligated mandatorily redeemable capital
       securities of subsidiary trust                           5,000      5,000
                                                             --------   --------

    Total liabilities                                         270,226    235,976
                                                             --------   --------

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 2003 and 2002, 1,621,104 and 1,621,837,
          respectively                                         10,092     10,143
    Retained earnings                                           9,564      8,672
     Accumulated other comprehensive income                        65        455
                                                             --------   --------

          Total stockholders' equity                           19,721     19,270
                                                             --------   --------

                                                             $289,947   $255,246
                                                             ========   ========

See accompanying notes.

                                       1
<PAGE>

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

<TABLE>
<CAPTION>
                                                                        Three Months Ended                     Nine Months Ended
                                                                            September 30,                        September 30,
                                                                      -------------------------            -------------------------
                                                                        2003             2002               2003              2002
                                                                      -------           -------            -------           -------
<S>                                                                   <C>               <C>                <C>               <C>
Interest income:
    Loans, including fees                                             $ 2,996           $ 3,081            $ 9,248           $ 8,862
    Investment securities:
       Taxable                                                            110               389                563             1,177
       Exempt from federal taxes                                           65                39                128               128
    Federal funds sold                                                     25                30                 94               111
                                                                      -------           -------            -------           -------
            Total interest income                                       3,196             3,539             10,033
                                                                                                                              10,278

Interest expense:
    Deposit accounts                                                      680               702              1,880             2,563
    Other borrowings                                                       70                97                206               201
                                                                      -------           -------            -------           -------
            Total interest expense                                        750               799              2,086             2,764
                                                                      -------           -------            -------           -------
        Net interest income                                             2,446             2,740              7,947             7,514

Provision for loan losses                                                --                 162                312               538
                                                                      -------           -------            -------           -------
        Net interest income after provision for
           loan losses                                                  2,446             2,578              7,635             6,976
Noninterest income:
     Gain on sale of investment securities                               --                 341                 88               603
     Gain (loss) on sale of other real estate                            --                  (6)                 5                16
     Gain on sale of loans                                                313               296                939               670
     Service charges                                                      424               404              1,233             1,181
     Premiums and fees from SBA and mortgage
         operations                                                       135               114                376               296
     Increase in cash surrender value of life
         insurance                                                        121               156                404               493

     Miscellaneous                                                         98               113                316               299
                                                                      -------           -------            -------           -------
        Total non-interest income                                       1,091             1,418              3,361             3,558

Noninterest expense:
     Salaries and employee benefits                                     1,756             1,644              5,276             4,720
     Occupancy                                                            289               271                795               764
     Equipment                                                            207               252                645               654
     Other                                                              1,081               913              3,106             2,948
                                                                      -------           -------            -------           -------
        Total non-interest expense                                      3,333             3,080              9,822             9,086
                                                                      -------           -------            -------           -------
Income before provision for income taxes                                  204               916              1,174             1,448

Provision for income tax (benefit) expense                                 13               304                282               358
                                                                      -------           -------            -------           -------
        Net income                                                    $   191           $   612            $   892           $ 1,090
                                                                      =======           =======            =======           =======

Earnings per share:
         Basic                                                        $  0.12           $  0.37            $  0.55           $  0.66
                                                                      =======           =======            =======           =======

         Diluted                                                      $  0.11           $  0.36            $  0.52           $  0.64
                                                                      =======           =======            =======           =======
</TABLE>

See accompanying notes.

                                       2
<PAGE>

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

Nine Months Ended September 30, 2003

<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, 2002                     1,621,837    $    10,143                         8,672           455        19,270

Comprehensive income:
   Net income                                                                $       892            892                         892
                                                                             ----------
   Other comprehensive income:
      Unrealized holding loss
        arising during the current
        period, net of tax effect
        of $235                                                                     (338)
      Reclassification adjustment
        due to gains realized, net of
        tax effect of $36                                                            (52)
      Total other comprehensive
          income, net of
          tax effect of $271                                                                                    (390)          (390)
                                                                              ----------
                                                                                    (390)
                                                                              ----------
      Comprehensive income                                                    $      502
                                                                              ==========
Options exercised                                    8,261            101                                                       101
Stock repurchase                                     8,994           (152)                                                     (152)
                                               -----------    -----------                   -----------   -----------   -----------
Balance at September 30, 2003                    1,621,104    $    10,092                         9,564            65        19,721
                                               ===========    ===========                   ===========   ===========   ===========
</TABLE>

See accompanying notes.

                                       3
<PAGE>

                    FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
                                 (in thousands)
                         Nine Months Ended September 30,

<TABLE>
<CAPTION>
                                                                                                         2003                2002
                                                                                                       --------            --------
<S>                                                                                                    <C>                 <C>
Cash flows from operating activities:
Net income                                                                                             $    892            $  1,090
     Adjustments to reconcile net income to net cash
     Provided by (used in) operating activities:
          (Decrease) increase in deferred loan income                                                       (60)                 84
          Depreciation and amortization                                                                   2,103               1,313
          Provision for loan losses                                                                         312                 538
          Gain on sale of securities                                                                        (88)               (603)
          Loans held for sale:
              Loans originated                                                                          (56,298)            (31,793)
              Proceeds from sale                                                                         59,205              30,151
              Gain on sale of loans                                                                        (939)               (670)
          Gain on sale of other real estate owned                                                            (5)                (16)
          (Increase) decrease in accrued interest
          receivable                                                                                       (475)                179
          Increase (decrease) in accrued interest payable                                                    41                (160)
          (Decrease) increase in other liabilities                                                         (188)                479
          Increase in cash surrender value of life insurance                                               (404)               (493)
          Decrease (increase) in other assets                                                                77              (2,208)
                                                                                                       --------            --------
                  Net cash provided by (used in) operating activities                                     4,173              (2,109)

Cash flows from investing activities:
    Investment securities available-for-sale
       Purchases                                                                                        (62,474)            (25,892)
       Proceeds from prepayments                                                                         24,149               9,597
       Proceeds from maturity                                                                                --               3,600
       Proceeds from sale                                                                                 1,056              23,487
    Net increase in loans made to customers                                                             (14,777)            (19,440)
    Proceeds from sale of other real estate                                                                 334                 296
    Purchases of bank premises and equipment                                                               (690)             (618))
                                                                                                       --------            --------
                  Net cash used in investing activities                                                 (52,402)             (8,970)


Cash flows from financing activities:
    Net increase in deposits                                                                             49,282               8,989
    Proceeds from issuance of company obligated
      mandatorily redeemable securities of subsidiary trust                                                  --               5,000
    (Decrease) increase in other borrowings                                                             (14,885)              4,059
    Payments for repurchase of common stock                                                                (152)               (162)
    Proceeds from issuance of common stock                                                                  101                 281
                                                                                                       --------            --------
                  Net cash provided by financing activities                                              34,346              18,167

                  Net (decrease) increase in cash and cash
                    equivalents                                                                         (13,883)              7,088

Cash and cash equivalents at beginning of period                                                         34,622              19,457
                                                                                                       --------            --------
Cash and cash equivalents at end of period                                                             $ 20,739            $ 26,545
                                                                                                       ========            ========
Supplemental Disclosures of Cash Flow Information:
    Cash paid for interest payments                                                                    $  2,045            $  2,924
    Cash paid for taxes                                                                                     230                 707
    Loans transferred to other real estate owned                                                             73                  --
    Unrealized (loss) gain on available-for-sale securities, net of tax                                    (338)                657
</TABLE>

See accompanying notes.

                                       4
<PAGE>

                    FIRST FINANCIAL BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                    September 30, 2003 and December 31, 2002
                                   (Unaudited)

(1) Summary of Significant Accounting Policies

         First Financial Bancorp (the "Company") operates  principally as a bank
         holding  company for its wholly owned  subsidiary,  Bank of Lodi,  N.A.
         (the  "Bank").  The Bank is the  principal  source  of  income  for the
         Company.  The Company also holds all of the capital  stock of its other
         subsidiaries,  Western  Auxiliary  Corporation and First Financial (CA)
         Statutory Trust I. All references  herein to the "Company"  include the
         Bank and all other subsidiaries, unless the context otherwise requires.

         Basis of Presentation

         The accompanying  unaudited  consolidated  financial  statements of the
         Company have been prepared in  accordance  with  accounting  principles
         generally  accepted  in  the  United  States  of  America  for  interim
         financial  information and with the  instructions to Form 10-Q and Rule
         10-01 of Regulation  S-X.  Accordingly,  they do not include all of the
         information and footnotes required by accounting  principles  generally
         accepted  in the  United  States  of  America  for  complete  financial
         statements.  In the opinion of management,  the consolidated  financial
         statements   reflect  all   adjustments,   including  normal  recurring
         adjustments,  necessary for a fair  presentation of the results for the
         interim periods.

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

         These  statements  should  be  read in  conjunction  with  the  audited
         consolidated  financial  statements  and related notes  included in the
         Company's  2002 Annual Report on Form 10-K.  Operating  results for the
         three  and  nine  month  periods  ended  September  30,  2003  are  not
         necessarily indicative of the results that may be expected for the year
         ending December 31, 2003.

         Stock Based Compensation

         In December 2002, the FASB issued Statement No. 148 ("Statement  148"),
         Accounting for Stock-Based  Compensation-Transition  and  Disclosure-an
         amendment of FASB  Statement No. 123. This statement  amends  Statement
         123 to provide  alternative methods of transition to a voluntary change
         to the fair value based method of accounting for  stock-based  employee
         compensation.   In  addition,   Statement  148  amends  the  disclosure
         requirements  to  require  prominent  disclosures  in both  annual  and
         interim  financial  statements  about  the  method  of  accounting  for
         stock-based employee  compensation and the effect of the method used on
         reported  results.  Statement  148 is effective for fiscal years ending
         after  December  15,  2002,  and for interim  periods  beginning  after
         December 15, 2002.

         During the first  quarter of 2003,  the Company  adopted the fair value
         recognition  provisions  of FASB  Statement  No.  123,  Accounting  for
         Stock-Based Compensation (SFAS No. 123), for stock-based  compensation,
         effective as of January 1, 2003. Under the provisions of Statement 148,
         the  Company has adopted the  prospective  method  whereby  stock-based
         employee  compensation  expense is  recognized  as awards are  granted,
         modified or settled.

                                       5
<PAGE>

         The following  table presents the effect on net income and earnings per
         share  as if the fair  value  based  method  had  been  applied  to all
         outstanding and unvested awards in each period.


<TABLE>
<CAPTION>
                                                                                   Three Month Period           Nine Month Period
                                                                                    Ended September 30,         Ended September 30,
                                                                                   --------------------        --------------------
                                                                                    2003          2002          2003          2002
                                                                                   ------        ------        ------        ------
<S>                                                                                <C>              <C>           <C>         <C>
Net income, as reported (in thousands)                                             $  191           612           892         1,090
     Add: Stock based employee compensation expense included
     in reported net income, net of tax effects                                         1            --             2            --
     Deduct: Stock based employee compensation determined under
     fair value based method for all awards, net of tax effects                       (12)          (16)          (24)          (39)
                                                                                   ------        ------        ------        ------
     Pro forma net income                                                             180           596           870         1,051
                                                                                   ======        ======        ======        ======

Earnings per share-basic
     As reported                                                                   $ 0.12          0.37          0.55          0.66
     Pro-forma
Earnings per share-assuming dilution
     As reported                                                                   $ 0.11          0.36          0.52          0.64
     Pro-forma
</TABLE>


(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 period. 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  tables  provides a  reconciliation  of the numerator and
         denominator of the basic and diluted earnings per share computation for
         the three and nine month periods ending September 30, 2003 and 2002:

                                            Income         Shares      Per-Share
Three months ended September 30, 2003     (numerator)   (denominator)   Amount
------------------------------------------------------------------------------
Basic earnings per share                   $ 191,000      1,626,893      $.12
Effect of dilutive securities                     --        114,770        --
                                           ---------      ---------
Diluted earnings per share                 $ 191,000      1,741,663      $ 11
                                           =========      =========

                                            Income         Shares      Per-Share
Three months ended September 30, 2002     (numerator)   (denominator)   Amount
------------------------------------------------------------------------------
Basic earnings per share                   $ 612,000      1,642,422      $.37
Effect of dilutive securities                     --         55,626        --
                                           ---------      ---------
Diluted earnings per share                 $ 612,000      1,698,048      $.36
                                           =========      =========

                                       6
<PAGE>

                                            Income         Shares      Per-Share
Nine months ended September 30, 2003      (numerator)   (denominator)   Amount
------------------------------------------------------------------------------
Basic earnings per share                  $  892,000      1,628,906      $ .55
Effect of dilutive securities                     --         93,131         --
                                          ----------     ----------
Diluted earnings per share                $  892,000      1,722,037      $ .52
                                          ==========     ==========

                                            Income         Shares      Per-Share
Nine months ended September 30, 2002      (numerator)   (denominator)   Amount
------------------------------------------------------------------------------
Basic earnings per share                  $1,090,000      1,648,865      $ .66
Effect of dilutive securities                     --         56,116         --
                                          ----------     ----------
Diluted earnings per share                $1,090,000      1,704,981      $ .64
                                          ==========     ==========


(3) Investment Securities

         During the three month  period  ending  September  30,  2003,  interest
         income for investment securities was reduced as a result of accelerated
         prepayments of mortgage backed securities and  collateralized  mortgage
         obligations (MBS/CMO) combined with the impact from general declines in
         interest rates. As a result of the accelerated prepayments, the Company
         was  required  to  accelerate  the  amortization  of  premiums  paid to
         purchase MBS/CMO securities.

(4) Allowance for Loan Losses

         The following  summarizes  changes in the allowance for loan losses for
         the nine month periods ended September 30, 2003 and 2002 and the twelve
         month period ended December 31, 2002:

(in thousands)                                9/30/03      9/30/02      12/31/02
                                              -------      -------      -------
Balance at beginning of period                $ 3,057        2,668        2,668
  Loans charged off                              (134)        (146)        (270)
  Recoveries                                       29           30           34
  Provisions charged to operations                312          538          625
                                              -------      -------      -------
Balance at end of period                      $ 3,264        3,090        3,057
                                              =======      =======      =======


(5) Impact Of Recently Issued Accounting Standards

         In  January  2003,  the  FASB  issued  FIN  46,  which   clarifies  the
         application of Accounting  Research  Bulletin ("ARB") 51,  consolidated
         financial  statements,  to certain entities  (called variable  interest
         entities) in which equity investors do not have the  characteristics of
         a controlling  financial  interest or do not have sufficient  equity at
         risk for the  entity  to  finance  its  activities  without  additional
         subordinated  financial  support  from other  parties.  The  disclosure
         requirements  of this  Interpretation  are  effective for all financial
         statements   issued   after   January  31,  2003.   The   consolidation
         requirements  apply to all variable  interest  entities  created  after
         January 31, 2003.  The  interpretation's  effective  date was postponed
         from June 30, 2003 to December 31, 2003 and requires  existing variable
         interest   entities  to  be  consolidated  if  those  entities  do  not
         effectively disburse risks among parties involved.  Management does not
         expect  this   Interpretation   to  have  a  material   impact  to  the
         consolidated financial statements.

         In May of 2003,  the FASB  issued  Statement  No. 150,  Accounting  for
         Certain Financial  Instruments with Characteristics of both Liabilities
         and  Equity.  The  provisions  of  this  Statement  are  effective  for
         financial  instruments entered into or modified after May 31, 2003, and
         otherwise are  effective at the  beginning of the first interim  period
         beginning  after  June 15,  2003,  except  for  mandatorily  redeemable
         financial instruments of nonpublic entities. It is to be implemented by
         reporting the cumulative effect of a change in an accounting  principle
         for  financial  instruments  created  before  May 15,  2003  and  still
         existing  at  the   beginning  of  the  interim   period  of  adoption.
         Restatement is not permitted. Management does not expect this Statement
         to have a material impact to the consolidated financial statements upon
         adoption of the Statement on July 1, 2003.

                                       7
<PAGE>

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

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

Certain statements in this Quarterly Report on Form 10-Q include forward-looking
information  within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
are   subject  to  the  "safe   harbor"   created  by  those   sections.   These
forward-looking  statements  involve certain risks and uncertainties  that could
cause  actual  results to differ  materially  from those in the  forward-looking
statements.  Forward-looking statements,  which are based on certain assumptions
and  describe  future  plans,  strategies,   and  expectations,   are  generally
identifiable  by  the  use of  words  such  as  "believe",  "expect",  "intend",
"anticipate",  "estimate", "project", "assume," "plan," "predict," "forecast" or
similar  expressions.  These  forward-looking  statements relate to, among other
things,  expectations of the business environment in which the Company operates,
projections  of future  performance,  potential  future  performance,  potential
future credit experience,  perceived opportunities in the market, and statements
regarding the Company's mission and vision.

The  Company's  actual  results,   performance,   and  achievements  may  differ
materially from the results,  performance, and achievements expressed or implied
in  such   forward-looking   statements  due  to  a  wide  range  of  risks  and
uncertainties. 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; monetary and fiscal
policies of the U.S. Government;  changes in real estate valuations;  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;  civil  disturbances or terrorist  threats or acts or
apprehension  about the possible  future  occurrences  of acts of this type; and
changes in the securities markets. In addition,  other events have increased the
uncertainty  related to the national and California  economic  outlook and could
have an  effect  on the  future  operations  of the  Company  or its  customers,
including borrowers.

The Company does not undertake,  and specifically  disclaims any obligation,  to
update any  forward-looking  statements to reflect  occurrences or unanticipated
events or circumstances after the date of such statements.

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  an  allowance  for loan  losses
resulting from the inability of borrowers 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 7, as well as other  information  presented  throughout
this report.

                                       8
<PAGE>

Summary

The Company recorded net income totaling $892 thousand for the nine month period
ended September 30, 2003, representing a decrease of $198 thousand or 18.2% over
net income of $1,090  thousand for the same period in 2002 and had net income of
$191 thousand for the three month period ended September 30, 2003,  representing
a decrease of $421  thousand or 68.8% over net income of $612  thousand  for the
same period in 2002.

Included in net income  during the nine month period  ending  September 30, 2002
were gains on the sale of investment  securities totaling $603 thousand.  During
the same period in 2003, gains on the sale of investment  securities totaled $88
thousand, a reduction of $515 thousand from the prior year. Additionally, during
the  nine  month  period  ending   September  30,  2003,  the  Company  incurred
unanticipated  costs  totaling $158  thousand in response to disruptive  actions
initiated by three dissident directors.

During the third  quarter of 2002,  the  Company  reported  gains on the sale of
investment  securities  totaling  $341  thousand.  The  Company did not sell any
securities  during the third  quarter  of 2003.  In  addition,  during the third
quarter of 2003, the Company incurred  unanticipated costs totaling $64 thousand
in response to disruptive actions initiated by three dissident directors.

Additionally,  on September 2, 2003 the Company opened a new full service branch
in downtown  Sacramento,  adding its ninth full service branch.  The addition of
the Downtown  Sacramento Branch further enhances the Company's ability to market
within the greater  Sacramento  Area,  adding to the  existing  Sacramento  area
branches which are located in Elk Grove and Folsom.

Changes in Financial Condition

Consolidated  total assets as of  September  30, 2003 were $290  million,  which
represents an increase of $34,701  thousand,  or 13.6% above the amount reported
at December 31, 2002. The increase in total assets was attributable to a $49,282
thousand,  or 23.4%  increase in total  deposits net of a decrease in short term
borrowings totaling $14,885 thousand, or 100.0% since December 31, 2002.

During the first nine months of 2003, the growth in deposits resulted  primarily
from an increase of $41,539  thousand,  or 23.6% in  interest  bearing  deposits
combined  with a $7,743  thousand  or 22.3%  increase  in  non-interest  bearing
deposits.  The  interest  bearing  deposit  growth  consisted  of an increase of
$19,637  thousand,  or 35.3%,  $9,996 thousand,  or 33.0%,  $6,722 thousand,  or
17.0%,  and $5,184 thousand,  or 10.2% in certificates of deposit,  money market
accounts, savings accounts and NOW accounts, respectively.

The  increase in total  assets  included an  increase  of $35,525  thousand,  or
107.2%, in investment  securities,  an increase  totaling $12,631  thousand,  or
7.6%, in gross loans  combined with a $16,925  thousand,  or 86.2%,  decrease in
federal  funds sold as compared to December 31, 2002.  The net increase in gross
loans is primarily the result of increases of $8,643 thousand,  or 13.7%, $4,058
thousand,  or 28.4%,  and  $2,896  thousand,  or 10.9%,  in real  estate  loans,
agricultural loans, and commercial loans, respectively, combined with a decrease
of $1,198 thousand, or 5.8%, in construction loans.

Allowance for Loan Losses

The  allowance  for loan  losses  (the  "allowance")  is  established  through a
provision  for  possible  loan  losses  charged to  expense.  The  allowance  at
September  30, 2003 was in excess of the  December  31, 2002  allowance  by $207
thousand, or 6.8%, as a result of a provision of $312 thousand combined with net
charge-offs   of  $105   thousand.   During  the  first  nine  months  of  2003,
nonperforming  loans decreased by $49 thousand,  to $2,360 thousand.  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.  Management believes that the allowance at September 30, 2003 is
adequate to absorb known and reasonably  estimated loan losses.  However,  there
can be no assurances that future  economic events may not negatively  impact the
Bank's borrowers, thereby causing loan losses to exceed the current allowance.

The  following  tables  depict  activity  in the  allowance  for loan losses and
allocation of reserves for and at the nine and twelve months ended September 30,
2003 and December 31, 2002, respectively:

                                       9
<PAGE>

                                             Nine Months Ended    Year Ended
                                               September 30,      December 31,
                                                    2003             2002
                                                  -------          -------
Balance at beginning of period                    $ 3,057          $ 2,668
   Charge-offs:
     Commercial                                       (88)            (178)
     Real estate                                       --              (62)
     Consumer                                         (46)             (30)
                                                  -------          -------
  Total charge-offs                                  (134)            (270)
  Recoveries:
     Commercial                                        25               26
     Real estate                                       --               --
     Consumer                                           4                8
                                                  -------          -------
  Total recoveries                                     29               34
                                                  -------          -------
Net charge-offs                                      (105)            (236)
Provision charged to operations                       312              625
                                                  -------          -------
Balance at end of period                          $ 3,264          $ 3,057
                                                  =======          =======

Allocation of the Allowance for Loan Losses

<TABLE>
<CAPTION>
                                        9/30/03          9/30/03        12/31/02         12/31/02
Loan Category                            Amount        % of Loans         Amount        % of Loans
-------------                            ------        ----------         ------        ----------
<S>                                    <C>                <C>           <C>                <C>
Commercial and other real estate       $  2,212           87.27%        $  2,182           85.77%
Real estate construction                    992           11.18%             807           12.38%
Installment and other                        60            1.55%              68            1.85%
                                       --------          ------         --------          ------
                                       $  3,264          100.00%        $  3,057          100.00%
                                       ========          ======         ========          ======
</TABLE>

Investments

Investment  securities increased $35,525 thousand,  or 107.2%, from December 31,
2002 to  September  30,  2003.  This  increase  resulted  from the  purchase  of
investment   securities   totaling   $62,474  thousand  net  of  prepayments  on
mortgage-backed  securities  totaling  $24,149  thousand and sales of investment
securities  totaling $1,056 thousand.  The Company realized gross gains totaling
$88 thousand on the sale of  investment  securities  during the first quarter of
2003.

Equity

Consolidated  equity increased $451 thousand from December 31, 2002 to September
30, 2003. Consolidated equity represented 6.80% and 7.55% of consolidated assets
at  September  30, 2003 and December  31,  2002,  respectively.  The increase in
equity  during 2003  resulted from earnings of $892 thousand for the nine months
ended  September  30, 2003 and $101 thousand in cash received on the exercise of
stock  options  combined  with  reductions  to  equity  totaling  $152  thousand
resulting from stock  repurchases  and a $390 thousand  decline in the after-tax
market value of the  available-for-sale  investment  securities  portfolio.  The
decline in the investment security  portfolio's market value resulted from gains
realized  on the sale of  investment  securities  combined  with the  effects of
changes in interest rates at September 30, 2003 compared to December 31, 2002.

The total risk-based  capital ratio for the Company's  wholly owned  subsidiary,
Bank of Lodi was 10.98% at September 30, 2003 compared to 11.16% at December 31,
2002.

                                       10
<PAGE>

Changes in Results of  Operations  - Three and Nine Months ended  September  30,
2003

Summary of Earnings Performance

<TABLE>
<CAPTION>
                                                      Three Months Ended                    Nine Months Ended
                                                         September 30,                        September 30,
                                                  -------------------------              ------------------------
                                                   2003                2002               2003              2002
                                                  ------              -----              -----            -------
<S>                                               <C>                 <C>                <C>              <C>
Earnings (in thousands)                           $  191              $ 612              $ 892            $ 1,090

Basic earnings per share                          $ 0.12              $ 0.37             $ 0.55           $  0.66

Diluted earnings per share                        $ 0.11              $ 0.36             $ 0.52           $  0.64

Return on average assets                            0.27%               1.01%              0.44%             0.62%

Return on average equity                            3.86%              12.97%              6.10%             7.90%

Average equity to average assets                    6.93%               7.75%              7.15%             7.79%

Dividend Payout Ratio                                 --                  --                 --                --

</TABLE>

                                       11
<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,
                                             --------------------------------------------------------------------------------------
                                                               2003                                          2002
                                             -----------------------------------------      ---------------------------------------
                                             Average          Income/                       Average         Income/
Dollars In Thousands                         Balance          Expense          Yield(1)     Balance         Expense         Yield(1)
                                             --------         --------         -------      --------        --------        -------
<S>                                          <C>              <C>                 <C>       <C>                  <C>           <C>
Earning Assets:
Investment securities(1)(2)                  $ 68,213         $    175            1.03%     $ 36,766             428           4.67%
Federal funds sold                              9,938               25            1.01%        7,020              30           1.71%
Loans(2)(3)                                   171,891            2,996            6.99%      160,315           3,081           7.71%
                                             --------         --------         -------      --------        --------        -------
Total Earning Assets                         $250,042         $  3,196            5.13%     $204,101           3,539           6.95%
                                             ========         ========         =======      ========        ========        =======
Liabilities:
Non-interest bearing
deposits                                     $ 43,769         $                             $ 37,053            --              --
Savings, money market,
  & NOW deposits                              137,127              290            0.85%      118,508             332           1.12%
Time deposits                                  76,948              390            2.03%       56,347             370           2.63%
Other borrowings                                8,541               70            3.29%       10,613              97           3.67%
                                             --------         --------         -------      --------        --------        -------
Total Liabilities                            $266,385         $    750            1.13%     $222,521             799           1.44%
                                             ========         ========         =======      ========        ========        =======
Net Interest Spread                                                               4.00%                                        5.51%
                                                                               =======                                      =======
</TABLE>

<TABLE>
<CAPTION>
                                           --------------------------------------------------------------------------------------
                                           Earning          Income                       Earning           Income
                                           Assets         (Expense)          Yield        Assets          (Expense)         Yield
                                           ------         ---------          -----        ------          ---------         -----
<S>                                       <C>             <C>                 <C>        <C>                <C>              <C>
Yield on average earning
  assets                                  $250,042        $  3,196            5.13%      $204,101           3,539            6.95%
Cost of funding average
earning assets                            $250,042            (750)          (1.20%)     $204,101            (799)          (1.57)%
                                                          --------            ----                          -----            ----
Net Interest Margin                       $250,042        $  2,446            3.93%      $204,101           2,740            5.38%
                                                          ========            ====                          =====            ====
</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.

                                       12
<PAGE>

Net interest  income for the third quarter of 2003 decreased  $294 thousand,  or
10.7%,  over the same quarter of 2002. The change is attributable to the effects
of  increases in volumes of earning  assets and  liabilities  combined  with the
effects of decreases in the yield on average  earning  assets and in the cost of
funding  average  earning  assets.  The  increase in volumes of average  earning
assets and  liabilities  resulted in an increase in net interest income totaling
$431 thousand  while the decline in interest rates resulted in a decrease in net
interest  income totaling $725 thousand when comparing the third quarter of 2003
to the same period last year.

Average earning assets  increased  $45,941  thousand during the third quarter of
2003 as compared to the third quarter of 2002.  Average loans increased  $11,576
thousand,   federal  funds  sold  increased  $2,918  thousand,   and  investment
securities increased $31,447 thousand.  When comparing the third quarter of 2003
to the third  quarter of 2002,  the  increase  in the volume of average  earning
assets  resulted  in an  increase in interest  income  totaling  $601  thousand.
However,  interest  rates on average  earning  assets  declined 183 basis points
(from 6.95% to 5.13%) when  compared to the same period in 2002,  resulting in a
decrease  in  interest  income  totaling  $944  thousand,  for a net  decline in
interest income totaling $343 thousand.

In addition,  during the third quarter of 2003,  interest  income for investment
securities  was  reduced as a result of  continued  accelerated  prepayments  of
mortgage backed securities and  collateralized  mortgage  obligations  (MBS/CMO)
combined with the impact from general declines in interest rates. As a result of
the  accelerated  prepayments,  the  Company  was  required  to  accelerate  the
amortization of premiums paid to purchase MBS/CMO  securities.  During the third
quarter of 2003,  the Company  received  proceeds  from  prepayments  of MBS/CMO
totaling  $15,749  thousand as compared to  proceeds  totaling  $8,400  thousand
during the first six months of 2003 and proceeds totaling $2,890 thousand during
the third quarter of 2002. As a result of increased  liquidity  during the third
quarter of 2003 (resulting  primarily from increased  deposits combined with the
proceeds from prepayments of MBS/CMO), the Company purchased $37,362 thousand in
investment securities.  The purchases represent a 78% increase in the balance of
investment  securities  owned by the Company at June 30, 2003.  These securities
were  purchased  with a weighted  average yield of 2.45% and a weighted  average
life of 3.45 years. Hence, the effect of the accelerated  amortization  combined
with  the  purchases  of  investment  securities  during a lower  interest  rate
environment  resulted in a reduction in the yield of the  investment  securities
from 2.16% during the second  quarter of 2003 to 1.03% during the third  quarter
of 2003. At September 30, 2003, the investment securities portfolio is projected
to yield 2.24% with an average life of 3.05 years. While the direction of future
interest  rates and the prepayment  pattern of MBS/CMO is uncertain,  management
does not anticipate the accelerated level of prepayments  experienced during the
third quarter of 2003 to continue throughout the remainder of the year.

When  compared  to the same  period  last year,  average  liabilities  increased
$43,864  thousand  during the third quarter of 2003. Of that  increase,  average
noninterest  bearing deposits  increased  $6,716 thousand,  NOW and money market
accounts increased $11,084 thousand,  savings accounts increased $7,535 thousand
and  certificates of deposit  increased  $20,601 thousand while other borrowings
decreased $2,072 thousand.  The increase in average  liabilities  resulted in an
increase  in  interest  expense  totaling  $170  thousand.  As a  result  of the
declining  interest rate environment,  the cost of interest bearing  liabilities
decreased  31 basis  points  (from 1.44% to 1.13%)  resulting  in a reduction in
interest expense totaling $219 thousand.

                                       13
<PAGE>

<TABLE>
<CAPTION>
                                             --------------------------------------------------------------------------------------
                                                                       For the Nine Months Ended September 30,
                                             --------------------------------------------------------------------------------------
                                                               2003                                          2002
                                             -----------------------------------------      ---------------------------------------
                                             Average          Income/                       Average         Income/
Dollars In Thousands                         Balance          Expense          Yield(1)     Balance         Expense         Yield(1)
                                             --------         --------         -------      --------        --------        -------
<S>                                          <C>              <C>                 <C>       <C>                <C>             <C>
Earning Assets:
Investment securities(1)(2)                  $ 47,359         $    691            1.95%     $ 35,690           1,305           4.89%
Federal funds sold                             10,803               94            1.16%        8,428             111           1.76%
Loans(2)(3)                                   170,133            9,248            7.27%      152,858           8,862           7.75%
                                             --------         --------         -------      --------        --------        -------
Total Earning Assets                         $228,295         $ 10,033            5.88%     $196,976          10,278           6.98%
                                             ========         ========         =======      ========        ========        =======
Liabilities:
Non-interest bearing
deposits                                     $ 40,631         $                             $ 33,954             --             --
Savings, money market,
  & NOW deposits                              129,121              788            0.82%      109,919           1,015           1.23%
Time deposits                                  67,005            1,092            2.18%       64,105           1,549           3.23%
Other borrowings                                7,253              206            3.80%        8.791             200           3.04%
                                             --------         --------         -------      --------        --------        -------
Total Liabilities                            $244,010         $  2,086            1.14%     $216,990           2,764           1.70%
                                             ========         ========         =======      ========        ========        =======
Net Interest Spread                                                               4.74%                                        5.28%
                                                                               =======                                      =======
</TABLE>

<TABLE>
<CAPTION>
                                           --------------------------------------------------------------------------------------
                                           Earning          Income                       Earning           Income
                                           Assets         (Expense)          Yield        Assets          (Expense)         Yield
                                           ------         ---------          -----        ------          ---------         -----
<S>                                       <C>             <C>                 <C>        <C>               <C>               <C>
Yield on average earning
  assets                                  $228,295        $ 10,033            5.88%      $196,976          10,278            6.98%
Cost of funding average
earning assets                            $228,295        $ (2,086)          (1.23)%     $196,976          (2,764)          (1.88)%
                                                          --------            ----                         ------            ----
Net Interest Margin                       $228,295        $  7,947            4.65%      $196,976           7,514            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.

During  the first  nine  months of 2003,  net  interest  income  increased  $433
thousand,  or 5.8%,  over the same period of 2002. The increase is the result of
increases in volumes of earning assets and liabilities combined with the effects
of decreases in the yield on average  earning  assets and in the cost of funding
average  earning  assets.  An increase in net interest  income  totaling  $1,243
thousand  resulted  from the increase in volumes of average  earning  assets and
liabilities  while the decline in interest  rates  resulted in a decrease in net
interest  income  totaling $810 thousand when comparing the first nine months of
2003 to 2002.

                                       14
<PAGE>

During the first nine months of 2003,  average earning assets increased  $31,319
thousand  when  compared to the same  period of 2002.  Average  loans  increased
$17,275 thousand,  federal funds sold increased $2,375 thousand,  and investment
securities  increased  $11,669  thousand.  The September  30, 2003  year-to-date
increase  in the volume of average  earning  assets  resulted  in an increase in
interest income totaling $1,459 thousand when compared to the September 30, 2002
year-to-date figures. However, interest rates on average earning assets declined
110 basis points (from 6.98% to 5.88%) when compared to the same period in 2002,
resulting in a decrease in interest income totaling $1,704 thousand.

In  addition,  during  the  first  nine  months  of 2003,  interest  income  for
investment  securities  was reduced as a result of  accelerated  prepayments  of
mortgage backed securities and  collateralized  mortgage  obligations  (MBS/CMO)
combined with the impact from general declines in interest rates. As a result of
the  accelerated  prepayments,  the  Company  was  required  to  accelerate  the
amortization of premiums paid to purchase MBS/CMO  securities.  During the first
nine months of 2003, the Company  received  proceeds from prepayments of MBS/CMO
totaling  $24,149  thousand versus proceeds  totaling $9,597 thousand during the
same period in 2002. As a result of increased liquidity during the third quarter
of 2003 (resulting  primarily from increased deposits combined with the proceeds
from  prepayments  of  MBS/CMO),  the  Company  purchased  $62,474  thousand  in
investment  securities.  The  purchases  represent  an  increase  of 189% in the
balance of  investment  securities  owned by the Company at December  31,  2002.
These  securities  were purchased  with a weighted  average yield of 2.56% and a
weighted  average life of 3.03 years.  At September  30,  2003,  the  investment
securities  portfolio  is  projected to yield 2.24% with an average life of 3.05
years.  While the direction of future interest rates and the prepayment  pattern
of MBS/CMO is uncertain, management does not anticipate the accelerated level of
prepayments  experienced during the third quarter of 2003 to continue throughout
the remainder of the year.

Average  liabilities  increased $27,241 thousand during the first nine months of
2003  as  compared  to the  same  period  of  2002.  Of that  increase,  average
noninterest  bearing deposits  increased  $6,677 thousand,  NOW and money market
accounts increased $11,657 thousand, savings accounts increased $7,545 thousand,
certificates  of  deposit  increased  $2,900  thousand  while  other  borrowings
decreased  $1,538.  An increase  in  interest  expense  totaling  $216  thousand
resulted from the increased  volume in average  liabilities.  As a result of the
decline  in  interest  rates  from 2003 to 2002,  the cost of  interest  bearing
liabilities  decreased  56 basis  points  (from 1.70% to 1.14%)  resulting  in a
reduction in interest expense totaling $894 thousand.

Nonaccrual  loan  activity also affects  interest  income.  Interest  forgone or
reversed  on  nonaccrual  loans  during  the  first  nine  months  of  2003  was
approximately $251 thousand and approximately $76 thousand for the third quarter
of 2003. Interest was collected on nonaccrual loans for the first nine months of
2003 and for the third  quarter  of 2003 in the  amount of $35  thousand  and $9
thousand, respectively.

Provision for Loan Losses

The provision for loan losses for the three and nine months ended  September 30,
2003 was $0 and $312 thousand compared with $162 and $538 thousand for the three
and nine  months  ended  September  30,  2002.  Though the  Company  reduced the
provision  for loan loss (when  compared  to the prior year three and nine month
periods) the allowance  for loan losses has remained  consistent as a percentage
of total  loans.  As of  September  30, 2003 the  allowance  for loan losses was
$3,264 thousand or 1.8% of total loans, which compares to the allowance for loan
losses of $3,057  thousand or 1.8% of total loans as of December 31, 2002. As of
September 30, 2003, nonperforming loans totaled $2,360 thousand or 1.3% of total
loans compared to $2,409 thousand or 1.5% at December 31, 2002. No assurance can
be given that  nonperforming  loans will not increase or that the  allowance for
loan losses will be adequate  to cover  losses  inherent in the loan  portfolio.
Also see "Allowance for Loan Losses" contained herein.

Noninterest Income

Noninterest  income  for the three and nine  months  ended  September  30,  2003
decreased by $327 thousand,  or 23.1%, and $197 thousand, or 5.5%, when compared
to the same  periods  in  2002.  The  decreases  are  primarily  the  result  of
reductions in the gains realized on the sale of investment  securities  totaling
$341  thousand  and $515  thousand  during  the  three  and nine  months  ending
September 30, 2003.  During the third quarter of 2003,  the Company did not sell
any  investment  securities.  During  the third  quarter  of 2002,  the  Company
realized  gains on the sale of investment  securities  totaling  $341  thousand.
During the first nine months of 2003, the Company  realized gains on the sale of
investment  securities  totaling $88 thousand  compared to $603 thousand for the
same period of 2002. In addition,  the Company  realized  gains from the sale of
other real estate  totaling $5 thousand and $16  thousand  during the first nine
months of 2003 and 2002, respectively.

Income from the sale and  servicing of loans  totaled $448  thousand  during the
third quarter of 2003, which increased by $38 thousand, or 9.3%, compared to the
prior year quarter.  During the first nine months of 2003,  income from the sale
and servicing of loans totaled $1,315 thousand,  an increase of $349 thousand or
36.1% over the same period of 2002.  The decline in mortgage  loan rates  during
2002 and 2003 led to  increased  refinancing  activity of  residential  mortgage
loans resulting in increased income from the sale and servicing of those loans.

The income  recognized on the cash surrender  value of life insurance  decreased
$35 thousand  and $89  thousand,  during the third  quarter and year to date for
2003, respectively,  when compared to the same periods in 2002. The decrease was
the result of an overall  decline in  interest  rates in 2003 as compared to the
same  period  in 2002.  The  income  recognized  from the  increase  in the cash

                                       15
<PAGE>

surrender value of life insurance is exempt from income taxes. The tax effective
yield of the increase in the cash surrender value of the life insurance  totaled
7.1%  during the third  quarter  of 2003 as  compared  to 8.2%  during the third
quarter of 2002.  For the first nine  months of 2003,  the tax  effective  yield
totaled 6.8% as compared to 5.9% during the same period in 2002.

Noninterest Expenses

Noninterest  expenses  increased $253 thousand,  or 8.2%, and $736 thousand,  or
8.1%, when comparing the three and nine month periods ending  September 30, 2003
to the same periods of 2002. Personnel expense increased $112 thousand,  or 6.8%
and $556  thousand,  or 11.8% when  comparing  the three and nine month  periods
ending  September  30, 2003 to 2002.  This  increase is primarily due to general
merit  increases for existing  personnel  combined with an increase in number of
full  time  equivalent  employees,  from  122 at  September  30,  2002 to 136 at
September 30, 2003. Four of the additional  full time equivalent  employees were
new hires for the  Sacramento  branch.  The increase in the  Company's  mortgage
origination  activities  has  also  led to  increased  sales  commissions.  When
comparing the first nine months of 2003 to 2002, occupancy expense increased $31
thousand or 4.1% of which $20 thousand is due to increased taxes,  insurance and
utilities.  Occupancy expense increased $18 thousand, or 6.6% when comparing the
third quarter of 2003 to 2002. Equipment expense during the first nine months of
2003  decreased $9 thousand,  or 1.4% when  compared to 2002 and is due to a $17
thousand  decrease  in  depreciation  expense  and  a $7  thousand  increase  in
equipment  maintenance  expense.  During the third  quarter  of 2003,  equipment
expense decreased $45 thousand,  or 17.9%, when compared to the third quarter of
2002.  For the three and nine month  periods  ended  September  30, 2003,  other
noninterest  expense  increased  $168 thousand,  or 18.4% and $158 thousand,  or
5.4%, respectively, when compared to the same periods of 2002.

Included in other  noninterest  expense  during the three and nine month periods
ended  September  30, 2003 are costs  totaling $64  thousand  and $158  thousand
associated  with  responding  to  the  disruptive  actions  initiated  by  three
dissident  directors.  Without this  unanticipated  expense,  other  noninterest
expense  would  have  increased  $104  thousand,  or 11.3% and  would  have been
unchanged  during the three and nine month periods  during 2003 when compared to
the same period in 2002.

Income Taxes

As a result of  increases in tax exempt  income  combined  with reduced  taxable
income,  the  Company's  income tax  provision for the third quarter of 2003 was
$13,000  compared to a tax  provision  of $304,000  during the third  quarter of
2002.  For the first nine months of 2003, the provision for income taxes totaled
$282,000 as compared  to $358,000  during the same period last year.  During the
third  quarter of 2003 the Company had an effective tax rate of 6.4% compared to
33.2% during the third quarter of 2002.  For the first nine months of 2003,  the
Company's  effective tax rate was 24.0% as compared to 24.7% for the same period
in 2002.

Liquidity

The  Company's  primary  sources of liquidity  are the  proceeds  from the trust
preferred  securities  combined  with  dividends  from the Bank.  The  Company's
primary uses of liquidity are  associated  with  interest  payments on the trust
preferred  securities,  dividend  payments  made to  shareholders  and operating
expenses.

Loan demand, deposit fluctuations,  and investment leveraging  opportunities are
affected by a number of factors,  including economic conditions,  seasonality of
the  borrowing  and  deposit  bases,  and the general  level of interest  rates;
therefore,  the Bank's  liquidity is actively managed on a daily basis. The sale
of loans, sale of investment  securities and use of borrowing facilities are all
employed to maintain cash,  federal funds sold,  and  short-term  investments at
levels commensurate with estimated liquidity needs. The Bank maintains two lines
of credit with correspondent  banks and has reverse  repurchase  agreements with
two brokerage firms,  which allow for short-term  borrowings that are secured by
investment  securities.  Finally, the Bank may also borrow on a short-term basis
from the Federal Reserve in the event that the aforementioned  liquidity sources
are not adequate.

At  September  30,  2003  liquidity  was  considered  adequate  given  the funds
available  in the  local  deposit  market,  scheduled  maturities  of loans  and
investments,  and the available  capacity on borrowing  facilities.  Compared to
2002  liquidity  decreased in 2003  primarily as a as a result of  reductions in
short term borrowings.

                                       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 three and nine
months ended  September 30, 2003,  there were no material  changes in the market
risk profile of the Company or the Bank as described in the Company's  2002 Form
10-K.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We carried out an evaluation,  under the supervision and with the  participation
of our management,  including our President and Chief Executive  Officer and our
Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure  controls and  procedures as of the end of the period covered by this
report,  pursuant to Rule 13a-15(b)  under the Securities  Exchange Act of 1934.
Based on their review of our disclosure  controls and procedures,  the President
and Chief Executive  Officer and Chief Financial Officer have concluded that our
disclosure  controls and  procedures  are  effective in timely  alerting them to
material  information  relating  to us that is  required  to be  included in our
periodic SEC filings.

Internal Controls and Procedures

There were no changes in our internal  controls over  financial  reporting  that
occurred  during our last fiscal  quarter that has materially  affected,  or are
reasonably  likely to materially  effect,  our internal  controls over financial
reporting.

                                       17
<PAGE>

PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Not Applicable.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         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

                  The  exhibit  list  required by this item is  incorporated  by
                  reference  to the  Index  to  Exhibits  filed  as part of this
                  report.

         (b)      Reports on Form 8-K

                  None.

                                       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

                                             By: /s/ Allen R. Christenson
Date: November 12, 2003                          -------------------------------
      -----------------                          Allen R. Christenson
                                                 Senior Vice President
                                                 Chief Financial Officer
                                                 (Principal Accounting and
                                                 Financial Officer)

                                       19
<PAGE>

                                INDEX TO EXHIBITS


Exhibit              Description
-------              -----------
31.1                 Certification  of  Registrant's   Chief  Executive  Officer
                     Pursuant to Section 302 of the Sarbanes-Oxley Act of 2003

31.2                 Certification  of  Registrant's   Chief  Financial  Officer
                     Pursuant to Section 302 of the Sarbanes-Oxley Act of 2003

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

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

                                       20