<PAGE>   1
                    OFFICE OF THE COMPTROLLER OF THE CURRENCY

                             Washington, D.C. 20219

                                    FORM 10-Q

(MARK ONE)

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

         For the quarterly period ended          SEPT. 30, 1999
                                       ---------------------------------

                                                                 OR

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

         For the transition period from                 to
                                       -----------------    ---------------


For Quarter Ended    SEPT. 30, 1999      Commission file number   18029
                 ---------------------                        ----------

                             WESTERN SIERRA BANCORP
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                 CALIFORNIA                             680390121
        -------------------------------      ---------------------------------
        (State or other jurisdiction of      (IRS Employer Identification No.)
         incorporation or organization)

           4011 PLAZA GOLDORADO CIRCLE, CAMERON PARK, CALIFORNIA 95682
           -----------------------------------------------------------
             (Address of principal executive offices)    (Zip Code)

        (Registrant's telephone number, including area code) 530-677-5600
                                                             ------------

 ------------------------------------------------------------------------------
   (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. Yes X . No .
                                             ---    ---

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes___. No___.

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

COMMON STOCK - ISSUED AND OUTSTANDING 2,408,750 SHARES AT SEPT. 30, 1999.
<PAGE>   2
                    WESTERN SIERRA BANCORP and SUBSIDIARIES
                                   FORM 10-Q
                                  (UNAUDITED)
               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999


PART 1- FINANCIAL INFORMATION
------------------------------------------
Item 1 Consolidated Financial Statements

Following are the consolidated financial statements of Western Sierra Bancorp
and Subsidiaries as of and for the period ended September 30, 1999. The
consolidated financial statements are unaudited. However, in the opinion of
management, all the adjustments have been made for a fair presentation of the
consolidated financial condition and results of operations of Western Sierra
Bancorp and Subsidiaries. All such adjustments were of a normal recurring
nature.

Effective April 30, 1999, Lake Community Bank and Roseville 1st Community
Bancorp were merged into the Company in stock-for-stock transactions which were
accounted for under the pooling-of-interest method of accounting. Accordingly,
the Company's consolidated financial statements have been restated for all
periods prior to the business combinations.

Certain information and footnote disclosures normally presented in consolidated
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. These interim consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Registrant's 1998 Annual Report to Shareholders.

In preparing such 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 revenues and expenses for
the period. Actual results could differ significantly from those estimates.
Material estimates that are particularly susceptible to significant changes in
the near term relate to the determination of the allowance for loan and lease
losses and the carrying value of other real estate.


<PAGE>   3
                    WESTERN SIERRA BANCORP and SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                    September 30,      December 31
                     ASSETS                             1999              1998
                                                    -------------     -------------
<S>                                                 <C>               <C>
 1 Cash and due from banks                          $      14,034     $      12,046
 2 Interest-bearing deposits in other banks                 1,093             3,960
 3 Federal funds sold                                      18,150            34,220
 6 Investment securities (Note 1)                          49,381            57,491
 7 Loans
        Total loans (Note 2)                              209,181           168,661
        Allowance for loan losses                          (2,762)           (2,431)
        Unearned income                                      (533)             (406)
 8 Premises and equipment, net                              8,872             8,370
10 Other assets                                            10,494             8,717
                                                    -------------     -------------

11 Total assets                                     $     307,910     $     290,628
                                                    =============     =============

                 LIABILITIES

12 Deposits                                         $     273,978     $     263,720
13 Short-term borrowing                                     6,000
15 Other liabilities                                        3,030             2,978

             STOCKHOLDERS EQUITY

21 Common stock                                            14,175            13,431
22 Other stockholders equity (Note 3)                      10,727            10,499
                                                    -------------     -------------

23 Total liabilities and stockholders equity        $     307,910     $     290,628
                                                    =============     =============
</TABLE>


<PAGE>   4
                     WESTERN SIERRA BANCORP and SUBSIDIARIES
                        CONSOLIDATED STATEMENT OF INCOME
                                   (UNAUDITED)
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED             NINE MONTHS ENDED
                                                 SEPTEMBER 30,                 SEPTEMBER 30,
                                              1999          1998            1999           1998
                                           ---------      ---------      ---------      ---------
<S>                                        <C>            <C>            <C>            <C>
 1 Interest and fees on loans              $   4,574      $   4,087      $  12,658      $  12,009
 2 Interest and dividends on
    investment securities
        Taxable Interest                         574            635          1,852          1,793
        Non taxable interest                     186             93            545            235
 4 Other interest                                191            407            620            796
                                           ------------------------      ------------------------
 5 Total interest income                       5,525          5,222         15,675         14,833
                                           ------------------------      ------------------------
 6 Interest on deposits                        1,888          2,044          5,559          5,820
 7 Interest on short term borrowing               60                            60
                                           ------------------------      ------------------------
 9 Total interest expense                      1,948          2,044          5,619          5,820
                                           ------------------------      ------------------------
10 Net interest income                         3,577          3,178         10,056          9,013
11 Provision for loan losses                     115            235            430            625
                                           ------------------------      ------------------------
12 Net interest income after
    provision for loan losses                  3,462          2,943          9,626          8,388
                                           ------------------------      ------------------------
13 Other income
        Service charges and fees                 280            333            855          1,079
        Other income                             479            609          1,506          1,682
14 Other expenses
        Salaries and benefits                  1,710          1,474          4,509          4,742
        Net occupancy expense                    485            272          1,473            790
        Other expenses                           893          1,256          2,993          3,407
                                           ------------------------      ------------------------
15 Income before income tax                    1,133            883          3,012          2,210
16 Income taxes                                  378            308          1,009            780
                                           ------------------------------------------------------
20 Net income                              $     755      $     575      $   2,003      $   1,430
                                           ======================================================
21 Earnings per share
        Basic                                   0.31           0.25           0.84           0.64
        Fully diluted                           0.29           0.24           0.78           0.61
</TABLE>


<PAGE>   5
                     WESTERN SIERRA BANCORP and SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                              NINE MONTHS ENDED
                                                                                                SEPTEMBER 30,
                                                                                            1999             1998
                                                                                          --------         --------
<S>                                                                                       <C>              <C>
Cash flows from operating activities:
     Net income                                                                           $  2,003         $  1,430
     Adjustments to reconcile net income to cash (used in)
      provided by operating activities:
            Provision for loan and lease losses                                                430              625
            Depreciation and amortization                                                      860              678
            Deferred loan origination costs and fees, net                                      127             (150)
            Amortization of investment security premiums, net                                                    57
            Amortization of intangible assets                                                                    46
            Provision for losses on other real estate                                           18              100
            (Gain) loss on sale of equipment                                                                     11
            (Gain) loss on sale of other real estate                                            39              (19)
            Decrease (increase) in loans held for sale                                       2,689           (1,037)
            Increase in accrued interest receivable and other assets                         1,304             (623)
            Decrease in accrued interest payable and other liabilities                        (109)             174
            Deferred taxes                                                                                      (89)
                                                                                          --------         --------
                      Net cash provided by (used in) operating
                           activities                                                        7,361            1,203
                                                                                          --------         --------

Cash flow from investing activities
            Net decrease (increase) in interest bearing deposits in bank                     2,867                3
            Proceeds from sale or call of available for sale investment securities           5,000            7,798
            Proceeds from matured available for sale investment securities                   1,600            3,500
            Proceeds from call of held to maturity investment securities                                      2,000
            Proceeds from maturity of held to maturity investment securities                    50               25
            Principal payments received from available for sale SBA pools
              and mortgage backed securities                                                 2,879            2,034
            Principal payments received from held to maturity
              and mortgage backed securities                                                    10               36
            Purchase of available for sale investment securities                            (3,591)         (27,923)
            Purchase of held to maturity investment securities                                (274)
            Net (increase) decrease in loans and leases                                    (45,244)          (4,104)
            Purchase of life insurance                                                        (419)
            Purchase of premises and equipment                                              (1,260)            (869)
            Acquisition of other real estate                                                                    (75)
            Capitalized additions to other real estate                                                          (81)
            Capitalized costs of former bank premises                                                            (6)
            Proceeds from sale of other real estate                                                             197
                                                                                          --------         --------
                      Net cash (used in) provided by investing
                           activities                                                      (38,382)         (17,465)
                                                                                          --------         --------
</TABLE>


<PAGE>   6
                     WESTERN SIERRA BANCORP and SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                              NINE MONTHS ENDED
                                                                          -------------------------
                                                                                SEPTEMBER 30,
                                                                            1999             1998
                                                                          --------         --------
<S>                                                                       <C>              <C>
Cash flow from financing activities

     Net increase in demand, interest-bearing and savings deposits           6,961           12,277
     Net increase in time deposits                                           3,297           13,703
     Net increase in short term borrowing                                    6,161
     Proceeds from ESOP loan
     Proceeds from exercise of stock options                                   520              885
     Payment of cash dividends                                                                 (335)
     Reacquisition of common stock
                                                                          --------         --------
                      Net cash (used in) provided by financing
                           activities                                       16,939           26,530
                                                                          --------         --------

                      Increase (decrease) in cash and cash
                           equivalents                                     (14,082)          10,268

Cash and cash equivalents at beginning of period                            46,266           29,632
                                                                          --------         --------

Cash and cash equivalents at end of period                                $ 32,184         $ 39,900
                                                                          ========         ========

Supplemental disclosure of cash flow information:

     Cash paid during the period for:
            Interest expense                                              $  6,323         $  3,978
            Income taxes                                                  $  1,090         $    685

     Non cash investing activities
            Real estate acquired through foreclosure                      $     53         $    758
            Net change in unrealized gain (loss) on available
                 for sale securities                                      $ (2,336)        $    287

-
</TABLE>


<PAGE>   7
                    WESTERN SIERRA BANCORP and SUBSIDIARIES
                                   FORM 10-Q
                                  (UNAUDITED)
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999


Item 1      CONSOLIDATED FINANCIAL STATEMENTS

Note 1      INVESTMENT SECURITIES
            (in thousands)

            The amortized cost and estimated market value of investment
            securities at September 30, 1999 and December 31, 1998 consisted of
            the following:

            AVAILABLE FOR SALE


<TABLE>
<CAPTION>
                                                                                  September 30, 1999
                                                          ------------------------------------------------------------------
                                                                              GROSS              GROSS             ESTIMATED
                                                          AMORTIZED         UNREALIZED         UNREALIZED           MARKET
                                                            COST              GAINS              LOSSES             VALUE
                                                          ------------------------------------------------------------------
<S>                                                       <C>               <C>                <C>                 <C>
            US Treasuries
            US Government agencies                        24,782                  2                (742)             24,042
            Obligations of states and
                 political subdivisions                   16,146                 30              (1,048)             15,128
            Government guaranteed mortgage
                 backed securities                         3,260                  2                (183)              3,079
            Corporate debt                                 3,808                                    (63)              3,745
            Federal Reserve Bank Stock                       212                                                        212
            Federal Home Loan Bank Stock                     720                                                        720
            Pacific Coast Builders Bank Stock                225                                                        225
            Minority interests in other banks                129                                                        129
                                                          -----------------------------------------------------------------
                                                          49,282                 34              (2,036)             47,280
                                                          =================================================================
</TABLE>


<TABLE>
<CAPTION>
                                                                           December 31, 1998
                                                       -------------------------------------------------------------------
                                                                            GROSS                GROSS           ESTIMATED
                                                       AMORTIZED          UNREALIZED          UNREALIZED          MARKET
                                                         COST               GAINS               LOSSES             VALUE
                                                       -------------------------------------------------------------------
<S>                                                    <C>                <C>                 <C>                <C>
            US Treasuries                              $   499             $     1              $                  $   500
            US Government agencies                      26,256                 155                  (35)            26,376
            Obligations of states and
                 political subdivisions                 15,306                 232                 (172)            15,366
            Government guaranteed mortgage
                 backed securities                       8,452                  27                  (44)             8,435
            Corporate debt                               4,052                  23                  (11)             4,064
            Federal Reserve Bank Stock                     212                                                         212
            Federal Home Loan Bank Stock                   576                                                         576
            Pacific Coast Builders Bank Stock               75                                                          75
                                                       -------------------------------------------------------------------
                                                       $55,428             $   438              $  (262)           $55,604
                                                       ===================================================================
</TABLE>


<PAGE>   8
                     WESTERN SIERRA BANCORP and SUBSIDIARIES
                                    FORM 10-Q
                                   (UNAUDITED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999


            HELD TO MATURITY:

<TABLE>
<CAPTION>
                                                                                  September 30, 1999
                                                        --------------------------------------------------------------------
                                                                                 GROSS              GROSS          ESTIMATED
                                                             AMORTIZED         UNREALIZED         UNREALIZED         MARKET
                                                               COST              GAINS              LOSSES           VALUE
                                                        --------------------------------------------------------------------
<S>                                                     <C>                    <C>                <C>              <C>
            US Government agencies                              1,000                                  (18)              982
            Obligations of states and
                 political subdivisions                         1,060                                  (30)            1,030
            Government guaranteed mortgage
                 backed securities                                 42                 1                                   43
                                                        --------------------------------------------------------------------
                                                                2,102                 1                (48)            2,055
                                                        ====================================================================
</TABLE>


<TABLE>
<CAPTION>
                                                                                December 31, 1998
                                                             --------------------------------------------------------
                                                                            GROSS            GROSS         ESTIMATED
                                                             AMORTIZED    UNREALIZED       UNREALIZED        MARKET
                                                               COST         GAINS            LOSSES          VALUE
                                                             --------------------------------------------------------
<S>                                                          <C>          <C>              <C>             <C>
            US Government agencies                            1,000               13                            1,013
            Obligations of states and
                 political subdivisions                         835               20                              856
            Government guaranteed mortgage
                 backed securities                               53                2                               55
                                                             --------------------------------------------------------
                                                              1,888               35               0            1,923
                                                             ========================================================
</TABLE>

            There were no sales or transfers of held to maturity investment
            securities for the nine months ended September 30, 1999 and 1998,
            respectively.


<PAGE>   9
                     WESTERN SIERRA BANCORP and SUBSIDIARIES
                                    FORM 10-Q
                                   (UNAUDITED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999


Note 2      LOANS AND LEASES

            Outstanding loans and leases are summarized below:
                               (in thousands)


<TABLE>
<CAPTION>
                                                             September 30,           December 31,
                                                                  1999                  1998
                                                             -------------          -------------
<S>                                                          <C>                    <C>
            Commercial                                       $      29,214          $      30,580
            Real estate-mortgage                                   111,314                 91,244
            Real estate-construction                                44,156                 19,382
            Lease financing                                          1,795                  1,383
            Installment                                              3,215                  5,323
            Agricultural                                            17,695                 16,268
                                                             -------------          -------------
                                                                   207,389                164,180
            Loans held for sale                                      1,792                  4,481
                                                             -------------          -------------
                 Total loans                                       209,181                168,661

            Deferred loans and lease origination
            fees and costs, net                                       (533)                  (406)
            Allowance for loan and lease losses                     (2,762)                (2,431)
                                                             -------------          -------------

            Total                                            $     205,886          $     165,824
                                                             =============          =============
</TABLE>


            Changes in the allowance for loan and lease losses were as follows:


<TABLE>
<CAPTION>
                                                              NINE MONTHS ENDED                  YEAR ENDED
                                                                SEPTEMBER 30,                   DECEMBER 31,
                                                          1999                 1998                 1998
                                                        ---------            ---------          -----------
<S>                                                     <C>                  <C>                <C>
            Balance, beginning of year                  $   2,431            $   2,624            $   2,624
            Provision charged to operations                   430                  625                  776
            Losses charged to allowance                      (196)                (812)              (1,045)
            Recoveries                                         97                   44                   76
                                                        ---------------------------------------------------
            Balance, period end                         $   2,762            $   2,481            $   2,431
                                                        ===================================================
</TABLE>


            The recorded investment in loans that were considered to be impaired
            totaled $954,761 and $1,128,900 at September 30, 1999 and December
            31, 1998, respectively. The allowance for loan losses for these
            loans at September 30, 1999 and December 31, 1998 was $293,700 and
            $293,700, respectively. The average investment in impaired loans for
            the nine month period ended September 30, 1999 and the year ended
            December 31, 1998 was $1,085,600 and $1,666,300 respectively. The
            Company recognized $35,000 in interest income on impaired loans
            during the nine months ended September 30, 1999. Interest income of
            $11,059 on the impaired loans was recognized during the prior year.

            At September 30, 1999 and December 31, 1998, nonaccrual loans
            totaled $954,761 and $1,405,800, respectively. Interest foregone on
            nonaccrual loans totaled $70,986 and $63,283 for the nine months
            ended September 30, 1999 and 1998 respectively.

            Salaries and employee benefits totaling $570,222 and $530,272 have
            been deferred as loan and lease origination costs during the nine
            month periods ended September 30, 1999 and 1998, respectively.


<PAGE>   10
                     WESTERN SIERRA BANCORP and SUBSIDIARIES
                                    FORM 10-Q
                                   (UNAUDITED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

Note 3      SHAREHOLDER'S EQUITY

            EARNINGS PER SHARE

            A reconciliation of the numerators and denominators of the basic and
            diluted earnings per share computations is as follows:


<TABLE>
<CAPTION>
                                                                              WEIGHTED
                                                                               AVERAGE
                                                                              NUMBER OF
            FOR THE THREE MONTH                              NET                SHARES                 PER
              PERIODS ENDED                                 INCOME            OUTSTANDING             SHARE
                                                         (in thousands)
            ---------------------------------------      ----------------------------------------------------
<S>                                                      <C>                  <C>                    <C>
            September 30, 1999

            Basic earnings per share                     $     755             2,405,982             $    0.31

            Effect of dilutive stock options                                     178,774

                                                         -----------------------------------------------------

            Diluted earnings per share                   $     755             2,584,756             $    0.29
                                                         =====================================================


            September 30, 1998

            Basic earnings per share                     $     575             2,291,677             $    0.25

            Effect of dilutive stock options                                     109,940
                                                         -----------------------------------------------------
            Diluted earnings per share                   $     575             2,401,617             $    0.24
                                                         =====================================================

             FOR THE NINE MONTH
              PERIODS ENDED

            ---------------------------------------      -----------------------------------------------------
            September 30, 1999

            Basic earnings per share                     $   2,003             2,372,733             $    0.84

            Effect of dilutive stock options                                     183,523
                                                         -----------------------------------------------------
            Diluted earnings per share                   $   2,003             2,556,256             $    0.78
                                                         =====================================================

            September 30, 1998

            Basic earnings per share                     $   1,430             2,232,271             $    0.52

            Effect of dilutive stock options                                     128,048

                                                         -----------------------------------------------------
            Diluted earnings per share                   $   1,430             2,360,319             $    0.51
                                                         =====================================================
</TABLE>


<TABLE>
<CAPTION>
            OTHER SHAREHOLDER'S EQUITY                                September 30,      December 31,
            Other shareholder's equity is composed of:                   1999                1998
                                                                         ----                ----
<S>                                                                   <C>                <C>
            Retained earnings                                         $ 12,347              $ 10,384
            Unearned ESOP shares                                      $   (311)
            Accumulated other comprehensive income (loss)             $ (1,309)                  115
                                                                      ------------------------------
                 Total                                                $ 10,727              $ 10,499
                                                                      ==============================
</TABLE>


<PAGE>   11
                     WESTERN SIERRA BANCORP and SUBSIDIARIES
                                    FORM 10-Q
                                   (UNAUDITED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999


Note 4      COMPREHENSIVE INCOME

            Effective January 1, 1998, the company adopted Statement of
            Financial Accounting Standard No.130 (SFAS 130), REPORTING
            COMPREHENSIVE INCOME. SFAS 130 establishes new rules for reporting
            and display of comprehensive income and its components. For example,
            SFAS 130, requires unrealized gains and losses on the Company's
            available for sale investment securities to be included in other
            comprehensive income. An analysis of comprehensive income follows:


<TABLE>
<CAPTION>
                                                                                         FOR THE NINE MONTHS ENDED
                                                                                               SEPTEMBER 30,
                                                                                           1999                1998
                                                                                           ----                ----
<S>                                                                                      <C>                  <C>
            Net income                                                                   $ 2,003              $ 1,430
            Other comprehensive loss, net of tax:
                 Unrealized loss on available for sale investment securities             $(1,426)                 312
                                                                                         ----------------------------
                               Total comprehensive income                                $   577              $ 1,742
                                                                                         ============================
</TABLE>


<TABLE>
<CAPTION>
                                                                                      FOR THE THREE MONTHS ENDED
                                                                                            SEPTEMBER 30,
                                                                                         1999             1998
                                                                                         ----             ----
<S>                                                                                   <C>                 <C>
            Net income                                                                    769              575
            Other comprehensive loss, net of tax:
                 Unrealized loss on available for sale investment securities             (486)             364
                                                                                         ---------------------
                               Total comprehensive income                                $283             $939
                                                                                         =====================
</TABLE>


Note 5      NEW ACCOUNTING PRONOUNCEMENTS

            In June 1998, the Financial Accounting Standards Board issued
            Statement No. 133 (SFAS 133), ACCOUNTING FOR DERIVATIVE INSTRUMENTS
            AND HEDGING ACTIVITIES. In July 1999, Statement No. 137 was issued
            which delayed the effective date of SFAS 133 one year to fiscal
            quarters of fiscal years beginning after June 15, 2000. Management
            does not believe that the adoption of SFAS 133 will have a
            significant impact on its financial position and results of
            operation when implemented.


<PAGE>   12
                     WESTERN SIERRA BANCORP and SUBSIDIARIES
                                    FORM 10-Q
                                   (UNAUDITED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

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

            Certain matters discussed or incorporated by reference in the
            Quarterly Report on Form 10Q are forward looking statements that are
            subject to risks and uncertainties that could cause actual results
            to differ materially from those projected. Such risks and
            uncertainties include, but are not limited to, matters described
            herein. Therefore, the information set forth herein should be
            carefully considered when evaluating the business prospects of the
            Company.

            FINANCIAL CONDITION

            TOTAL ASSETS-Total assets increased by 5.96% to $307.9 million at
            September 30, 1999 from $290.6 million at December 31, 1998. This is
            the first quarter of asset growth after two quarters of decline. The
            major decline in the first quarter was due primarily to two title
            company customers with unusually large year end deposits and the
            subsequent draw downs in the first quarter. The Bank, knowing these
            deposits to be temporary in nature, invested in Federal Funds Sold
            and was therefore able to fund the draw down without effecting its
            overall investment program. The second quarter decline was a minimal
            0.20%. The third quarter growth was due to an increase in overall
            deposits that is a reflection of growing economy in the area
            serviced. In addition, the company used short term borrowing to
            finance loan growth.

            NET LOANS-Net loans totaled $205.9 million at September 30,1999,
            representing a 75.15% loan to deposit ratio, compared to net loans
            of $161.3 million at December 31,1998, representing a $61.2% loan to
            deposit ratio. Management anticipates continued loan growth
            throughout the remainder of the year.

            ALLOWANCE FOR LOAN LOSSES-The provision for loan losses corresponds
            directly to the level of allowance that management deems adequate to
            offset potential loan losses. Among the factors used in determining
            the adequacy of the allowance are current economic conditions, the
            mix of the loan portfolio, past loan experience and such other micro
            and macro economic factors as deserve recognition in estimating
            potential loan losses. The allowance represents 1.33% of loans
            outstanding at the end of the third quarter.

            RESULTS OF OPERATION FOR THE QUARTER ENDED SEPTEMBER 30, 1999

            INTEREST INCOME-Interest income continued to increase on a quarterly
            basis this year and exceeds that earned in the same quarter of the
            prior year. Quarterly interest this year was $5.53 million third
            quarter, $5.12 million second quarter and $5.03 million first
            quarter. Although the earning asset base continues to expand, market
            forces are keeping interest rates low. Interest this quarter
            exceeded the same quarter prior year by $0.30 million or 5.81%. The
            primary reason for the continued growth is the shift of earning
            assets from lower yielding investments into higher yielding loans.

            INTEREST EXPENSE-Interest expense has decreased this year because of
            these same market forces. Interest expense decreased 4.70% to $1.95
            million for the quarter from $2.04 million for same quarter prior
            year. This decrease occurred in spite of an increase in deposits of
            $26.9 million from $247.08 million one year ago. Interest rate paid
            is the primary factor.

            NON-INTEREST INCOME-Non-interest income decreased 19.4% to $759
            thousand for the quarter ended September 30, 1999 from $942 thousand
            for the same quarter prior year. The decrease was primarily due to a
            decrease in the gains on the sale and packaging of loans by the
            mortgage department. This decrease is due to an increase in interest
            rate and a decrease in the number of loans refinanced.

            LIQUIDITY-The companies bank subsidiaries have an asset and
            liability management program allowing them to monitor and maintain
            interest margins during times of both rising and falling interest
            rates and to maintain sufficient liquidity. Liquidity at each bank
            subsidiary consists of cash and due from banks, investments not
            pledged, federal funds sold and loans available-for-sale. In
            addition, the banks subsidiaries maintain lines of credit with
            several correspondent banks and a line at the Federal Reserve. At
            December 31, 1998 the bank subsidiaries had no outstanding balances
            on these credit lines. At September 30, 1999 one subsidiary had
            borrowed $6 million against the Federal Home Loan Bank line of
            credit.


<PAGE>   13
                     WESTERN SIERRA BANCORP and SUBSIDIARIES
                                    FORM 10-Q
                                   (UNAUDITED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

            ALLOWANCE FOR LOAN LOSSES-The allocation to the Allowance for Loan
            Losses was $115 thousand compared to $235 thousand for the same
            period the prior year. It is the opinion of management that the
            allocation is adequate because of a 71% drop in the number and
            amount of problem loans.

            OTHER EXPENSES-Other expenses increased from $3.002 million in the
            third quarter of 1998 to $3.088 million this quarter, an increase of
            2.86%. This increase is well within the anticipations of management
            and appears to be mostly timing when examined within the confines of
            year to date which has only increased 0.4% over the same period the
            prior year.

            NET INCOME-Net income for the current quarter was $755 thousand
            compared to $575 thousand for the same quarter prior year.

            RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999.

            INTEREST INCOME-Interest income increased 5.68% to $15.68 million
            for the nine months ended September 30, 1999 from $14.83 million for
            the same period the prior year. The increase was due to an overall
            increase in earning assets and a movement away from lower yielding
            to higher yielding investments and an overall increase in loan
            volume.

            INTEREST EXPENSE-Interest expense decreased 3.46% to $5.6 million
            for the year to date from $5.8 million for the same period the prior
            year. This decrease is a reflection of the overall market
            conditions. The deposit base has grown from $247.1 million at
            September 30, 1998 to $274.0 million at the statement date. The
            overall mix of deposits has changed however from 77.7% to 73.2%
            interest bearing verses non-interest bearing.

            OTHER INCOME-Other income has decreased 14.5% overall from $2.76
            million for the first nine months of 1998 to $2.36 million the
            current year. This decrease was a result of the previously mentioned
            mortgage loan activity decrease, other service charges and fees have
            netted an overall decease of $35 thousand.

            ALLOWANCE FOR LOAN LOSSES-The allocation to the allowance for loan
            losses for the nine months just ended was $430 thousand compared to
            $625 thousand for the same period in 1998. Net loss for the nine
            months just ended was $99 compared to a net loss of $786 the prior
            nine month period. See previous comment on improved quality of loan
            portfolio.

            OTHER EXPENSES-Other expenses showed a minimal net increase of
            0.41%.

            NET INCOME-Net income for nine months totaled $2.00 million compared
            to prior year to date total of $1.43 million.

            LIQUIDITY

            The Company's bank subsidiaries have a combined asset and liability
            management program allowing them to monitor and maintain interest
            margins during times of both raising and falling interest rates and
            to maintain sufficient liquidity. Liquidity at each bank subsidiary
            consists of cash and due from banks, investments not pledged,
            federal funds sold and loans available-for sale. In addition the
            bank subsidiaries maintain lines of credit with several
            correspondent banks and lines of credit with the Federal Reserve
            Bank. At September 30, 1999 total borrowing against the Federal Home
            Loan Bank line of credit was $6 million compared no borrowing at
            prior year end.

            CAPITAL RESOURCES

            Total shareholder's equity accounts of the Company increased to
            $24.9 million from $23.9 million at prior year end, December 31,
            1998. The change was due to retaining the $2.00 million in earnings
            from the nine month period, a change in the effect of the unrealized
            gain (loss) on available-for-sale securities of ($1.31) million,
            additional paid in capital of $744 thousand, unearned ESOP shares of
            ($311) thousand.

            The Bank Subsidiaries are subject to various regulatory capital
            requirements administered by the federal banking agencies. Under
            capital adequacy guidelines and the regulatory framework for prompt
            and corrective action, the Bank Subsidiaries must meet specific
            capital guidelines that involve quantitative measures of the assets,
            liabilities and certain off-balance sheet items as calculated under
            regulatory accounting practices. The capital amounts and
            classifications are also subject to qualitative judgements by the
            regulators about components, risk weighting and other factors.


<PAGE>   14
                     WESTERN SIERRA BANCORP and SUBSIDIARIES
                                    FORM 10-Q
                                   (UNAUDITED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

            The Federal Deposit Insurance Corporation Improvement Act of 1991
            (FDICIA) established the following to determine that a bank meets
            the highest capital standards and is a "well capitalized"
            institution:


<TABLE>
<CAPTION>
                                                      September 30,        December 31,
                                                          1999                1998
                                                          ----                ----
<S>                                                   <C>                  <C>
            Total Risk-Based Capital Ratio

                 Regulatory Requirement                   10.0%               10.0%
                 Bank Ratio                               11.8%               12.0%
            Tier 1 Risk based Capital Ratio

                 Regulatory Requirement                    6.0%                6.0%
                 Bank Ratio                               10.7%               10.8%
            Leverage Ratio

                 Regulatory Requirement                    5.0%                5.0%
                 Bank Ratio                                8.1%                8.1%
</TABLE>


            As noted in the above schedule, the Company and its bank
            subsidiaries meet all the regulatory capital requirements of a "well
            capitalized" institution.

            YEAR 2000 READINESS DISCLOSURE-The "year 2000 issue" (Y2K) relates
            to the fact that many computer programs use only two digits to
            represent a year, which means that in the year 2000 such programs
            could incorrectly treat that year as the year 1900. This issue has
            grown in importance as the use of computers and microchips has
            become more pervasive throughout the economy. The issue is a
            business problem, not simply a computer problem, because its effects
            could ripple through the economy. The Bank could be materially and
            adversely affected either directly or indirectly by the Y2K issue.
            This could happen if any of its critical computer systems or
            equipment containing preprogrammed computer chips fail, if the local
            infrastructure fails, if its significant vendors are adversely
            impacted, or if its borrowers or depositors are adversely impacted
            by their internal systems or those of their customers or suppliers.
            Failure to complete testing and renovation of critical systems on a
            timely basis could have a material adverse effect on the Bank, as
            could Y2K problems faced by the Bank's customers.

            Federal banking regulators have the responsibility of determining if
            each institution has an effective plan for identifying, renovating,
            testing and implementing solutions for their Y2K processing and
            coordinating these capabilities with its customers, vendors and
            payment system partners. These same regulators are also required to
            assess the soundness of a bank's internal controls and to identify
            if further corrective action may be necessary to assure an
            appropriate level of attention to Y2K processing capabilities.

            The Bank has a written plan to address the risk's associated with
            the impact of Y2K. The plan directs the compliance efforts under the
            framework of a five step program mandated by the Federal Financial
            Institutions Examination Council (FFIEC). The program consists of
            five phases; awareness, assessment, renovation, validation and
            implementation. The awareness, assessment, validation and
            implementation phases are 100% complete as to mission critical
            systems. The "Business Resumption Contingency Plan" is complete
            through the simulation phase and operational training is scheduled
            before November 30, 1999. Overall project status is 82% complete as
            of September 30,1999.

            The Bank is utilizing both internal and external resources to
            identify, correct, and test its systems for Y2K compliance. It has
            identified 57 vendors and 52 software applications that management
            has determined are material to operations. Based on test results and
            information received from vendors, it is believed that 94% of such
            vendors are now Y2K compliant. Testing of the critical system
            applications for the core banking product provided by the primary
            vendor are complete. It was successfully retested in January, 1999
            and completely verified by February 5, 1999.

            The Bank has identified 13 vendors that apparently will not be Y2K
            compliant by November 1, 1999. Of these vendors, six have been
            identified as 90% compliant. All remaining vendors are not material
            to bank operations and have been included in the contingency plan
            for possible replacement.


<PAGE>   15
                     WESTERN SIERRA BANCORP and SUBSIDIARIES
                                    FORM 10-Q
                                   (UNAUDITED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

            The Bank is making efforts to ensure that its customers, and in
            particular its significant customers, are aware of the Y2K problem.
            The Bank has sent Y2K correspondence to its significant deposit and
            loan customers.

            A customer is deemed significant if they have:

              * Total deposits of $250,000 or more.

              * Total indebtedness to the bank of $250,000 or more.

            A significant customer is deemed to have potential Y2K problems if
              they:

              * Have a business that is dependent on the use of high technology
                and/or the electronic exchange of information.

              * Have a business dependent on third party providers of data
                processing services or products.

              * Have their loans secured by collateral which could become
                impaired by Y2K problems.

              * Have unsecured lines of credit that can be drawn at will.

            The Bank has modified its credit authorization documentation to
            include of the Y2K problem. Significant customers are evaluated for
            Y2K readiness and assigned an overall assessment of "high",
            "medium" or "low" risk. Risk evaluation was completed December
            31,1998 and revised during the second and third quarter of 1999. Any
            significant customer deemed to have a high or medium risk is
            scheduled for reevaluation every ninety days until they reduce their
            risk level to low. Six loan customers with loans totaling $1.3
            million are considered high risk and closely monitored for progress.
            All significant customers are deemed low risk with the exception of
            the aforementioned six.

            Because of the multiplicity of potential Y2K related problems it is
            impossible to determine the total potential costs in a worst-case
            scenario. In order to deal with the uncertainty associated with Y2K
            related problems the bank has developed a contingency plan. The
            contingency plan includes manual processing of information for
            critical information technology systems and increased cash on hand.
            The contingency plans were completed prior to June 30, 1999 and the
            appropriate implementation training took place prior to September
            30, 1999.

            As of September 30, 1999, the Bank has incurred approximately
            $115,000 in Y2K related costs. Total Y2K costs are estimated to be
            $259,000. This estimate does not include the cost of internal staff
            time to test program changes. Testing is not expected to add
            significant costs to the program.


<PAGE>   16
                     WESTERN SIERRA BANCORP and SUBSIDIARIES
                                    FORM 10-Q
                                   (UNAUDITED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

            PART II-OTHER INFORMATION

            ITEM 1. LEGAL PROCEEDINGS

            The Company is subject to legal proceedings and claims which arise
            in the ordinary course of business. In the opinion of management,
            the amount of ultimate liability with respect to these actions will
            not materially affect the financial position or results of
            operations of the company.

            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 6.  EXHIBITS AND REPORTS ON FORM 8-K

            (a)     Exhibit 27 - Financial Data Schedule

            (b)     The Company filed no reports on Form 8-K during the quarter
                    ended September 30, 1999
<PAGE>   17
                     WESTERN SIERRA BANCORP and SUBSIDIARIES
                                    FORM 10-Q
                                   (UNAUDITED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

                                   SIGNATURES

            Pursuant to the requirements of the Securities Exchange Act of 1934,
            the registrant has duly caused this report to be signed on the
            behalf by the undersigned thereunto duly authorized.


                                          WESTERN SIERRA BANCORP

                                          /s/  Gary Gall

                                          -------------------------------------
         Dated, November 11, 1999         Gary Gall
                                          President and
                                          Chief Executive Officer

                                          /s/ Lesa Fynes

                                          -------------------------------------
                                          Lesa Fynes
                                          Chief Financial Officer