UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D. C. 20549

FORM 10-K

|ý                                           | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|------------------------------------------- | ----------------------------------------------------------------------------------------
|For the Fiscal Year Ended December 31, 2003
|Commission File Number: 0-27384            
|o                                           | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the Transition Period From  to         

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CAPITAL CORP OF THE WEST(Exact name of registrant as specified in its charter)

|California                                                                                                                         |  | 77-0405791                          
|---------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization)                                                                     |  | (I.R.S. Employer Identification No.)
|550 West Main Street, Merced, California                                                                                           |  | 95340                               
|(Address of principal executive offices)                                                                                           |  | (Zip Code)                          
|(209) 725-2269(Registrant's telephone number, including area code)                                                                
|Securities registered under Section 12(b) of the Act: None                                                                        
|Securities registered under Section 12(g) of the Act (Title of Class): Common Stock, no par value;
Preferred Share Purchase Rights

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The Registrant 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 Company was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. o

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

Aggregate market value of the voting stock held by nonaffiliates of the Registrant was $139,113,869.40 (based on the $24.79
average of bid and ask prices per common share on June 30, 2003).

The number of shares outstanding of the Registrant's common stock, no par value, as of March 1, 2004 was 5,679,192.

Documents incorporated by reference:

Portions of the definitive proxy statement for the 2004 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A are incorporated by reference in Part III, Items 10 through 14 and portions of the Annual Report to Shareholders for 2003 are incorporated by reference in
Part II, Item 5 through 8.



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Capital Corp of the West  Table of Contents

|         |  |                                                                                                |  | Page |  | Reference                                
|-------- |  | ---------------------------------------------------------------------------------------------- |  | ---- |  | -----------------------------------------
|PART I  
|ITEM 1.  |  | BUSINESS                                                                                       |  | 4    |  |                                          
|ITEM 2.  |  | PROPERTIES                                                                                     |  | 27   |  |                                          
|ITEM 3.  |  | LEGAL PROCEEDINGS                                                                              |  | 30   |  |                                          
|ITEM 4.  |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                            |  | 30   |  |                                          
|PART II 
|ITEM 5.  |  | MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.                     |  | 31   |  | Page 28 of 2003 Annual Report            
|ITEM 6.  |  | SELECTED FINANCIAL DATA                                                                        |  | 31   |  | Page 17 of 2003 Annual Report            
|ITEM 7.  |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS          |  | 32   |  | Pages 18 through 28 of 2003 Annual Report
|ITEM 7A. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                     |  | 32   |  | Pages 18 through 28 of 2003 Annual Report
|ITEM 8.  |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                    |  | 32   |  | Pages 30 through 54 of 2003 Annual Report
|ITEM 9.  |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE           |  | 32   |  |                                          
|ITEM 9A. |  | CONTROLS AND PROCEDUARES                                                                       |  | 32   |  | Proxy Statement for 2004 Annual Meeting  
|PART III
|ITEM 10. |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                             |  | 33   |  | Proxy Statement for 2004 Annual Meeting  
|ITEM 11. |  | EXECUTIVE COMPENSATION                                                                         |  | 33   |  | Proxy Statement for 2004 Annual Meeting  
|ITEM 12. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |  | 33   |  | Proxy Statement for 2004 Annual Meeting  
|ITEM 13. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                 |  | 33   |  | Proxy Statement for 2004 Annual Meeting  
|         |  |                                                                                                |  |      |  |                                          

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|ITEM 14.      |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                           |  | 34 |  | Proxy Statement for 2004 Annual Meeting
|------------- |  | ---------------------------------------------------------------- |  | -- |  | ---------------------------------------
|PART IV      
|ITEM 15.      |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K |  | 34 |  |                                        
|SIGNATURES    |  |                                                                  |  | 35 |  |                                        
|EXHIBIT INDEX |  |                                                                  |  |    |  |                                        

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PART I

ITEM 1. BUSINESS

In addition to historical information, this discussion and analysis includes certain forward-looking statements that are subject to risks and uncertainties and
include information about possible or assumed future results of operations. Many possible events or factors could affect the future financial results and performance of the Company. This could cause
results or performance to differ materially from those expressed in our forward-looking statements. Words such as "expects", "anticipates", "believes", "estimates", "intends", "plans", "assumes",
"projects", "predicts", "forecasts", variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted
in, or implied by, such forward-looking statements.

Readers
of the Company's Annual Report and Form 10-K should not rely solely on forward looking statements and should consider all uncertainties and risks discussed
throughout this report. These statements are representative only on the date hereof, and the Company undertakes no obligation to update any forward-looking statements made. Some possible events or
factors that could occur that may cause differences from expected results include the following: the Company's loan growth is dependent on economic conditions, as well as various discretionary
factors, such as decisions to sell, or purchase certain loans or loan portfolios; or sell or buy participations of loans; the quality and adequacy of management of the borrower, developments in the
industry the borrower is involved in, product and geographic concentrations and the mix of the loan portfolio. The rate of charge-offs and provision expense can be affected by local,
regional and international economic and market conditions, concentrations of borrowers, industries, products and geographical conditions, the mix of the loan portfolio and management's judgements
regarding the collectibility of loans. Liquidity requirements may change as a result of fluctuations in assets and liabilities and off-balance sheet exposures, which will impact the
capital and debt financing needs of the Company and the mix of funding sources. Decisions to purchase, hold, or sell securities are also dependent on liquidity requirements and market volatility, as
well as on and off-balance sheet positions. Factors that may impact interest rate risk include local, regional and international economic conditions, levels, mix, maturities, yields or
rates of assets and liabilities and the wholesale and retail funding sources of the Company. The Company is also exposed to the potential of losses
arising from adverse changes in market rates and prices which can adversely impact the value of financial products, including securities, loans, and deposits. In addition, the banking industry in
general is subject to various monetary and fiscal policies and regulations, which include those determined by the Federal Reserve Board, the Federal Deposit Insurance Corporation and state regulators,
whose policies and regulations could affect the Company's results.

Other
factors that may cause actual results to differ from the forward-looking statements include the following: competition with other local and regional banks, savings and loan
associations, credit unions and other non-bank financial institutions, such as investment banking firms, investment advisory firms, brokerage firms, mutual funds and insurance companies,
as well as other entities which offer financial services; interest rate, market and monetary fluctuations; inflation; market volatility; general economic conditions; introduction and acceptance of new
banking-related products, services and enhancements; fee pricing strategies, mergers and acquisitions and their integration into the Company, civil disturbances or terrorist threats or acts, or
apprehension about the possible future occurrences or acts of this type, outbreak or escalation of hostilities in which the United States is involved, any declaration of war by the U.S. Congress or
any other national or international calamity, crisis or emergency; changes in laws and regulations; and management's ability to manage these and other risks.

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General Development of the Company

General

Capital Corp of the West (the "Company") is a bank holding company incorporated under the laws of the State of California on April 26, 1995. On
November 1, 1995, the Company became registered as a bank holding company and is the holder of all of the capital stock of County Bank (the "Bank"). During 1999, Town and Country Finance and
Thrift (the "Thrift") was merged into County Bank. The Company's primary asset is the Bank and the Bank is the Company's primary source of income. As of February 1, 2004, the Company had
outstanding 5,665,609 shares of Common Stock, no par value, held by approximately 1,700 shareholders. There were no preferred shares outstanding at March 1, 2004. The Company has one
wholly-owned investment advisory and asset management company, Regency Investment Advisors, Incorporated ("RIA") which was acquired in June, 2002. The Company also has one wholly-owned inactive
nonbank subsidiary, Capital West Group ("CWG") at December 31, 2003. The Bank has three wholly-owned subsidiaries, Merced Area Investment & Development, Inc. ("MAID"), County
Asset Advisors ("CAA") and County Investment Trust ("REIT"). CAA is currently
inactive. All references herein to the "Company" includes direct subsidiaries of the Company as well as the Bank and the Bank's subsidiaries, unless the context otherwise requires.

Information about Commercial Banking & General Business of the Company and its Subsidiaries

The Bank was organized on August 1, 1977, as County Bank of Merced, a California state banking corporation. The Bank commenced operations in 1977. In
November 1992, the Bank changed its legal name to County Bank. The Bank's deposits are insured by the Federal Deposit Insurance Corporation ("FDIC"), up to applicable limits. The Bank is a
member of the Federal Reserve System.

Industry & Market Area

The Bank engages in general commercial banking business primarily in Fresno, Madera, Mariposa, Merced, San Francisco, San Joaquin, Stanislaus, and Tuolomne
counties. The Bank has nineteen full service branch offices; two of which are located in Merced with the branch located in downtown Merced currently serving as both a branch and as administrative
headquarters. There are offices in Atwater, Hilmar, Los Banos, Sonora, Stockton, two offices in Modesto and two offices in Turlock. In 1997, the Bank also opened an office in Madera and purchased
three branch offices from Bank of America in Livingston, Dos Palos and Mariposa. During 1999, the Bank opened its first office in Fresno, and in 2000 expanded its presence in Fresno by adding an
additional office. On January 18, 2001 the Bank opened a loan production office in San Francisco that during 2001 was converted into a full service branch. During 2003, a third full service
branch facility was opened in Fresno. The Bank's administrative headquarters also provides accommodations for the activities of MAID, the Bank's wholly-owned real estate subsidiary.

(See
"ITEM 2. PROPERTIES")

Competition

The Company's primary market area consists of Fresno, Madera, Mariposa, Merced, San Francisco, San Joaquin, Stanislaus, and Tuolomne Counties and nearby
communities. The banking business in California generally, and specifically in the Company's primary market area, is highly competitive with respect to both loans and deposits. The banking business is
dominated by a relatively small number of major banks which have many offices operating over wide geographic areas. Many of the major commercial banks offer certain services (such as international,
trust and securities brokerage services) which are not offered directly by the Company or through its correspondent banks. By virtue

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of
their greater total capitalization, such banks have substantially higher lending limits than the Company and substantial advertising and promotional budgets.

Smaller
independent financial institutions, savings and loans and credit unions also serve as competition in our service area. In the past, the Bank's principal competitors for deposits
and loans have been other banks (particularly major banks), savings and loan associations and credit unions. To a lesser extent, competition was also provided by thrift and loans, mortgage brokerage
companies and insurance companies. Other institutions, such as brokerage houses, credit card companies, and even retail establishments have offered new investment vehicles, such as money-market funds,
which also compete with banks. The direction of federal legislation in recent years seems to favor competition between different types of financial institutions and to foster new entrants into the
financial services market, and it is anticipated that this trend will continue.

To
compete effectively in our service area, the Bank relies upon specialized services, responsive handling of customer needs, local promotional activity, and personal contacts by its
officers, directors and staff. For customers whose loan demands exceed the Bank's lending limits, the Bank seeks to arrange funding for such loans on a participation basis with its correspondent banks
or other independent commercial banks. The Bank also assists customers requiring services not offered by the Bank to obtain such services from its correspondent banks.

See
also the discussion under "Regulation and SupervisionFinancial Services Modernization Legislation."

Bank's Services and Markets

Bank

The Bank conducts a general commercial banking business including the acceptance of demand (includes interest bearing), savings and time deposits. The Bank also
offers commercial, agriculture, real estate, personal, home improvement, home mortgage, automobile, credit card and other installment and term loans. The Bank offers travelers' checks, safe deposit
boxes, banking-by-mail, drive-up facilities, 24-hour automated teller machines, and other customary banking services to its customers. The Bank does not
operate a trust department nor does it offer these services through a correspondent banking relationship to its customers.

The
five general areas in which the Bank has directed its lendable assets are (i) real estate mortgage loans, (ii) commercial loans, (iii) agricultural loans,
(iv) real estate construction loans, and (v) consumer loans. As of December 31, 2003, these five categories accounted for approximately 42%, 26%, 12%, 11% and 9%, respectively, of
the Bank's loan portfolio.

In
1994, the Bank organized a department to originate loans within the underwriting standards of the Small Business Administration ("SBA"). The Bank originates, packages and subsequently
sells these loans in the secondary market and retains servicing rights on these loans.

The
Bank's deposits are attracted primarily from individuals and small and medium-sized business-related sources. The Bank also attracts some deposits from municipalities and other
governmental agencies and entities. In connection with the deposits of municipalities or other governmental agencies, the Bank is generally required to pledge securities to secure such deposits,
except when the depositor signs a waiver with respect to the first $100,000 of such deposits, which amount is insured by the FDIC.

The
principal sources of the Bank's revenues are (i) interest and fees on loans, (ii) interest on investment securities (principally U.S. government agency securities,
mortgage-backed securities, collateralized mortgage obligations, municipal and corporate bonds), and (iii) service charges on deposit accounts. For the year ended December 31, 2003,
these sources comprised approximately 67%, 18%, and 8% respectively, of the Bank's total interest and noninterest income.

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Most
of the Bank's business originates from individuals, businesses and professional firms located in its service area. The Bank is not dependent upon a single customer or group of
related customers for a material portion of its deposits, nor is a material portion of the Bank's loans concentrated within a
single industry or group of related industries. The quality of Bank assets and Bank earnings could be adversely affected by a downturn in the local economy, including the agricultural sector.

Regency Investment Advisors, Inc (RIA)

RIA provides investment advisory services in the markets served by the Company. Customers of RIA are charged an asset management fee for investment advisory
services performed by RIA related to business, personal and retirement brokerage accounts.

Bank's Real Estate Subsidiary (MAID)

California state-chartered banks previously were allowed, under state law, to engage in real estate development activities either directly or through investment
in a wholly-owned subsidiary. Pursuant to this authorization, the Bank established MAID, its wholly-owned subsidiary, as a California corporation on February 18, 1987. MAID engaged in real
estate development activities for approximately seven years.

Federal
law now precludes banks from engaging in real estate development. At December 31, 2003, MAID held no real estate investments for sale. The last remaining real estate
parcel held by MAID was sold during 2000. MAID does not currently intend to purchase or develop any new investment properties for sale or lease. During 2003, MAID was used to own, operate, and
maintain the County Bank Merced downtown branch and County Bank administration building. MAID may only serve as owner for additional branch premise properties in the future. The state regulatory
charter for MAID was changed in 2001 to only allow MAID to invest in additional branch premises property in the future.

County Investment Trust (REIT)

The County Investment Trust is a real estate investment trust that invests in loan participations serviced by the Bank. The REIT provides the Bank with another
vehicle in which business may be conducted and equity capital could be raised. While the Bank owns 100% of the common equity of the REIT, approximately 120 officers and employees of the Bank own a
minority interest in the REIT in the aggregate amount of $31,000.

Employees

As of December 31, 2003, the Company employed a total of 310 full-time equivalent employees. The Company believes that employee relations are
excellent.

Seasonal Trends in the Company's Business

Although the Company does experience some immaterial seasonal trends in deposit growth and funding of its agricultural and construction loan portfolios, in
general the Company's business is not seasonal.

Operations in Foreign Countries

The Company conducts no operations in any foreign country.

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Other Financial Information:

Recently Issued Accounting Standards

In December 2003, the FASB issued FASB Interpretation No. 46 (revised December 2003),Consolidation of Variable
Interest Entities, which addresses how a business enterprise should evaluate whether it has a controlling financial interest in a "Variable Interest Entity" ("VIE") through
means other than voting rights and accordingly should consolidate the entity. FIN 46R replaces FASB Interpretation No. 46,Consolidation of Variable Interest
Entities, which was issued in January 2003. The Company will be required to apply FIN 46R to variable interests in VIEs created after December 31, 2003. For
variable
interests in VIEs created before January 1, 2004, the Interpretation will be applied beginning on January 1, 2005. For any VIEs that must be consolidated under FIN 46R that were created
before January 1, 2004, the assets, liabilities and noncontrolling interests of the VIE initially would be measured at their carrying amounts with any difference between the net amount added to
the balance sheet and any previously recognized interest being recognized as the cumulative effect of an accounting change. If determining the carrying amounts is not practicable, fair value at the
date FIN 46R first applies may be used to measure the assets, liabilities and noncontrolling interest of the VIE.

The
Company has adopted FIN 46R and applied it to existing VIEs in which the Company has variable interests. As a result of adopting FIN 46R, the balance sheet line items related to
Capital Securities and the related income statement effect of dividends on Capital Securities in the 2002 consolidated financial statements have been reclassified to conform with the 2003
presentation.

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity". The provisions of Statement 146 were effective for exit or disposal activities initiated after December 31, 2002, with early application encouraged.

In
December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based CompensationTransition and Disclosure, an amendment of FASB Statement
No. 123." SFAS No. 148 amends Statement No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value
based methods of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirement of SFAS No. 123 to require prominent disclosures in both annual
and interim financial statements about the fair value based method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition amendments
to SFAS No. 123 were effective for financial statements for fiscal years ended after December 15, 2002. The Company is not currently considering the adoption of fair value based
compensation of stock options. The potential impact to the Company of adopting such accounting can be seen in Footnote 1 of the Notes to Consolidated Financial Statements.

In
May 2003, FASB issued Statement No. 150,Accounting for Certain Financial Instruments with Characteristics of both Liabilities and
Equity.This Statement establishes standards for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. The
Statement also includes required disclosures for financial instruments within its scope. For the Company, the Statement was effective for instruments entered into or modified after May 11, 2004
and otherwise will be effective as of January 1, 2004 except for mandatorily redeemable financial instruments. For certain mandatorily redeemable instruments, the Statement will be effective
for the Company on January 1, 2005. The effective date has been deferred indefinitely for certain other types of mandatorily redeemable financial instruments. The Company does not currently
have any financial instruments that are within the scope of this Statement.

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In
December 2003, FASB issued Statement No. 132 (revised 2003),Employers' Disclosures about Pensions and Other Postretirement
Benefits.This Statement prescribes employers' disclosures about pension plans and other postretirement benefit plans; it does not change the measurement or recognition of
those plans. The Statement retains and revises the disclosure requirements contained in the original Statement 132. It also requires additional disclosures about the assets, obligations, cash flows,
and net periodic benefit cost of defined benefit plans and other postretiment benefit plans. The Statement generally is effective for fiscal years ending after December 15, 2003. The Company
currently does not have any postretirement benefit plans that are within the scope of this Statement.

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REGULATION AND SUPERVISION

REGULATORY ENVIRONMENT

The
banking and financial services industry is heavily regulated. Regulations, statutes and policies affecting the industry are frequently under review by Congress and state
legislatures, and by the federal and state agencies charged with supervisory and examination authority over banking institutions. Changes in the banking and financial services industry can be expected
to occur in the future. Some of the changes may create opportunities for the Company and the Bank to compete in financial markets with less regulation. However, these changes also may create new
competitors in geographic and product markets which have historically been limited by law to bank institutions, such as the Bank. Changes in the regulation, statutes or policies that impact the
Company and the Bank cannot necessarily be predicted and may have a material effect on their business and earnings.

The
operations of bank holding companies and their subsidiaries are affected by the regulatory oversight and the credit and monetary policies of the Federal Reserve Board (FRB). An
important function of the FRB is to regulate the national supply of bank credit. Among the instruments of monetary policy used by the FRB to implement its objectives are open market operations in U.S.
government securities, changes in the discount rate on bank borrowings and changes in reserve requirements on bank deposits. These instruments of monetary policy are used in varying combinations to
influence the overall level of bank loans, investments and deposits, the interest rates charged on loans and paid for deposits, the price of the dollar in foreign exchange markets, and the level of
inflation. The credit and monetary policies of the FRB will continue to have a significant effect on the Bank and on the Company.

Set
forth below is a summary of significant statutes, regulations and policies that apply to the operation of banking institutions. This summary is qualified in its entirety by reference
to the full text of such statutes, regulations and policies.

BANK HOLDING COMPANY ACT

The
Company is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended ("BHCA"). As a bank holding company, Capital Corp is subject to examination by
the FRB. Pursuant to the BHCA, Capital Corp is also subject to limitations on the kinds of businesses in which it can engage directly or through subsidiaries. It may, of course, manage or control
banks. Generally, however, it is prohibited, with certain exceptions, from acquiring direct or indirect ownership or control of more than five percent of any class of voting shares of an entity
engaged in nonbanking activities, unless the FRB finds such activities to be "so closely related to banking" as to be deemed "a proper incident thereto" within the meaning of the BHCA. As a bank
holding company, the Company may not acquire more than five percent of the voting shares of any domestic bank without the prior approval of (or, for "well managed" companies, prior written notice to)
the FRB.

The
BHCA includes minimum capital requirements for bank holding companies. See section titled "Regulation and SupervisionRegulatory Capital Requirements". Regulations and
policies of the FRB also require a bank holding company to serve as a source of financial and managerial strength to its subsidiary banks. It is the FRB's policy that a bank holding company should
stand ready to use available resources to provide adequate capital funds to a subsidiary bank during periods of financial stress or adversity and that it should maintain the financial flexibility and
capital-raising capacity needed to obtain additional resources for assisting the subsidiary bank. Under certain conditions, the FRB may conclude that certain actions of a bank holding company, such as
the payment of a cash dividend, would constitute an unsafe and unsound banking practice.

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COUNTY BANK

County
Bank is a California state-licensed bank. The Bank is a member of the Federal Reserve System. The Bank's deposits are insured by the Federal Deposit Insurance Corporation (FDIC)
and thus is subject to the rules and regulations of the FDIC pertaining to deposit insurance, including deposit insurance assessments. The Bank is subject to regulation and supervision by the FRB and
the California Department of Financial Institutions (the "Department" or "DFI"). Applicable federal and state regulations address many aspects of the Bank's business and activities, including
investments, loans, borrowings, transactions with affiliates, branching, reporting and other areas. County Bank may acquire other banks or branches of other banks with the approval of the FRB and the
Department. County Bank is subject to examination by both the FRB and the Department.

DIVIDENDS

The
Company may make a distribution to its shareholders if the corporation's retained earnings equal at least the amount of the proposed distribution. In the event sufficient retained
earnings are not available for the proposed distribution, the Company may nevertheless make a distribution to its shareholders if, after giving effect to the distribution, the Company's assets equal
at least 125% of its liabilities and certain other conditions are met. Since the 125% ratio translates into a minimum capital ratio of 20%, most bank holding companies, including the Company, based on
its current capital ratios, are unable to satisfy this second test.

The
primary source of funds for payment of dividends by the Company to its shareholders is the receipt of dividends from the Bank. The Bank's ability to pay dividends to the Company is
limited by applicable state and federal law. A California state-licensed bank may not make a cash distribution to its shareholders in excess of the lesser of: (i) the bank's retained earnings,
or (ii) the bank's net income for its last three fiscal years, less the amount of any distributions made by the bank to its shareholders during such period. However, with the approval of the
Commissioner of Financial Institutions (the "Commissioner"), a California state-licensed bank may pay dividends in an amount not to exceed the greater of (i) the bank's retained earnings,
(ii) its net income for its last fiscal year, or (iii) its net income for the current fiscal year.

The
FRB, FDIC and the Commissioner have authority to prohibit a bank from engaging in practices which are considered to be unsafe and unsound. Depending on the financial condition of the
Bank and upon other factors, the FRB or the Commissioner could determine that payment of dividends or other payments by the Bank might constitute an unsafe or unsound practice. Finally, any dividend
that would cause a bank's capital to fall below required regulatory capital levels could also be prohibited.

REGULATORY CAPITAL REQUIREMENTS

The
Company and the Bank are both required to maintain a minimum risk-based capital ratio of 8% (at least 4% in the form of Tier 1 capital) of
risk-weighted assets and off-balance sheet items. "Tier 1" capital consists of common equity, non-cumulative perpetual preferred stock and minority interests
in the equity accounts of consolidated subsidiaries, and excludes goodwill. "Tier 2" capital consists of cumulative perpetual preferred stock, limited-life preferred stock, mandatory
convertible securities, subordinated debt and (subject to a limit of 1.25% of risk-weighted assets) general loan loss reserves. In calculating the relevant ratio, a bank's assets and
off-balance sheet commitments are risk-weighted; thus, for example, loans are included at 100% of their book value while assets considered less risky are included at a
percentage of their book value (20%, for example, for interbank obligations, and 0% for vault cash and U.S. Government securities).

The
Company and the Bank are also subject to leverage capital ratio guidelines. The leverage ratio guidelines require maintenance of a minimum ratio of 3% Tier 1 capital to total assets
for the most

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highly
rated organizations. Institutions that are less highly rated, anticipating significant growth or subject to other significant risks will be required to maintain capital levels ranging from 1%
to 2% above the 3% minimum.

Federal
regulation has established five tiers of capital measurement, ranging from "well capitalized" to "critically undercapitalized." Federal bank regulatory authorities are required
to take prompt corrective action with respect to inadequately capitalized banks. If a bank does not meet the minimum capital requirements set by its regulators, the regulators are compelled to take
certain actions, which may include a prohibition on the payment of dividends to a parent holding company and requiring adoption of an acceptable plan to restore capital to an acceptable level. Failure
to comply will result in further sanctions, which may include orders to raise capital, merge with another institution, restrict transactions with affiliates, limit asset growth or reduce asset size,
divest certain investments and /or elect new directors. It is the Company's intention to maintain risk-based capital ratios for itself and for the Bank at above the minimum for the "well
capitalized" level (6% Tier 1 risk-based; 10% total risk-based) and to maintain the leverage capital ratio for County Bank above the 5% minimum for
"well-capitalized" banks. At December 31, 2003, the Company's leverage, Tier 1 risk-based and total risk-based capital ratios were 8.55%, 10.31% and 11.57%,
and the Bank's leverage, Tier 1 risk-based and total risk-based capital ratios were 7.66%, 9.25% and 10.50%. No assurance can be given that the Company or the Bank will be able
to maintain capital ratios in the "well capitalized" level in the future.

"SOURCE OF STRENGTH" POLICY

According
to FRB policy, bank holding companies are expected to act as a source of financial strength to each subsidiary bank and to commit resources to support such subsidiary.

LIMITATIONS ON ACTIVITIES

The
Federal Deposit Insurance Corporation Improvement Act ("FDICIA") prohibits state chartered banks and their subsidiaries from engaging, as principal, in activities not permissible by
national banks and their subsidiaries, unless the bank's primary federal regulator determines the activity poses no significant risk to the Bank Insurance Fund ("BIF") and the state bank is and
continues to be adequately capitalized. Similarly, state bank subsidiaries may not engage, as principal, in activities
impermissible by subsidiaries of national banks. This prohibition extends to acquiring or retaining any investment, including those that would otherwise be permissible under California law.

The
State Bank Parity Act, eliminates certain disparities between California state chartered banks and federally chartered national banks by authorizing the Commissioner to address such
disparities through a streamlined rulemaking process. The Commissioner has taken action pursuant to the Parity Act to authorize, among other matters, previously impermissible share repurchases by
state banks, subject to the prior approval of the Commissioner.

Under
regulations of the Office of the Comptroller of the Currency ("OCC") eligible institutions (those national banks that are well-capitalized, have a high overall rating
and a satisfactory CRA rating, and are not subject to an enforcement order) may engage in activities related to banking through operating subsidiaries after going through a new expedited application
process. In addition, the new regulations include a provision whereby a national bank may apply to the OCC to engage in an activity through a subsidiary in which the bank itself may not engage. In
determining whether to permit the subsidiary to engage in the activity, the OCC will evaluate why the bank itself is not permitted to engage in the activity and whether a Congressional purpose will be
frustrated if the OCC permits the subsidiary to engage in the activity. The State Bank Parity Act may permit state-licensed banks to engage in similar activities, subject to the discretion of the
Commissioner.

12

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TIE-IN ARRANGEMENTS AND TRANSACTIONS WITH AFFILIATED PERSONS

A
bank is prohibited from certain tie-in arrangements in connection with any extension of credit, sale or lease of property or furnishing of services. For example, with
certain exceptions, a bank may not condition an extension of credit on a promise by its customer to obtain other services provided by it, its holding company or other subsidiaries (if any), or on a
promise by its customer not to obtain other services from a competitor.

Directors,
officers and principal shareholders of the Company, and the companies with which they are associated, may conduct banking transactions with the Company in the ordinary course
of business. Any loans and commitments to loans included in such transactions must be made in accordance with applicable law, on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other persons of similar creditworthiness, and on terms not involving more than the normal risk of collectibility or presenting other
unfavorable features.

CROSS-INSTITUTION ASSESSMENTS

Any
insured depository institution owned by the Company can be assessed for losses incurred by the FDIC in connection with assistance provided to, or the failure of, any other depository
institution owned by the Company.

INSURANCE PREMIUMS AND ASSESSMENTS

The
FDIC has authority to impose a special assessment on members of the BIF to ensure that there will be sufficient assessment income for repayment of BIF obligations and for any other
purpose which it deems necessary. The FDIC is authorized to set semi-annual assessment rates for BIF members at levels sufficient to maintain the BIF's reserve ratio to a designated level
of 1.25% of insured deposits. The FDIC has developed a risk-based assessment system, under which the assessment rate for an insured depository institution varies according to the level of
risk incurred in its activities. An institution's risk category is based upon whether the institution is "well capitalized," "adequately capitalized," or "undercapitalized." Each insured depository
institution is also assigned to "supervisory subgroup" A, B or C. Subgroup A institutions are financially sound institutions with no more than a few minor weaknesses; Subgroup B institutions are
institutions that demonstrate weaknesses which, if not corrected, could result in significant deterioration; and Subgroup C institutions are institutions for which there is a substantial probability
that the FDIC will suffer a loss in connection with the institution unless effective action is taken to correct the areas of weakness. The FDIC assigns each member institution an annual FDIC
assessment rate which, as of the date of this report, varies between 0.0% per annum with a $2,000 minimum (for well capitalized Subgroup A institutions) and 0.27% per annum (for undercapitalized
Subgroup C institutions). Insured institutions are not permitted to disclose their risk assessment classification.

AUDIT REQUIREMENTS

All
insured depository institutions are required to have an annual, full-scope on-site examination. Depository institutions with assets greater than
$500 million are required to have annual independent audits, prepare financial statements in accordance with generally accepted accounting principles, and develop policies that ensure adequate
internal controls over financial reporting. Insured depository institutions are also required to have an independent audit committee comprised entirely of outside directors.

13

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COMMUNITY REINVESTMENT ACT

The
Community Reinvestment Act ("CRA") requires banks to identify the communities served by the bank's offices and to identify the types of credit the bank is prepared to extend within
such communities. It also requires the bank's regulators to assess the bank's performance in meeting the credit needs of its community and to take that assessment into consideration in reviewing
applications for mergers, acquisitions and other transactions. During January, 2003, a CRA examination was completed. The Bank was assigned a CRA rating of "outstanding" as of this examination.

BANK SECRECY ACT

The
Bank Secrecy Act requires financial institutions to keep records and file reports regarding certain financial transactions that involve cash, and to implement counter-money
laundering programs and compliance procedures.

SECURITIES AND EXCHANGE COMMISSION FILINGS

Under
Section 13 of the Securities Exchange Act of 1934 ("Exchange Act") and the SEC's rules, the Company must electronically file periodic and current reports as well as proxy
statements with the Securities and Exchange Commission (the "SEC"). The Company electronically files the following reports with the SEC: Form 10-K (Annual Report),
Form 10-Q (Quarterly Report), and Form 8-K (Current Report). The Company may prepare additional filings as required. The SEC maintains an Internet site, http://www.sec.gov, at which all forms
filed electronically may be accessed. Our SEC filings are also available on our website at http://www.ccow.com.

POTENTIAL ENFORCEMENT ACTIONS

Banks
and their institution-affiliated parties may be subject to potential enforcement actions by the bank regulatory agencies for unsafe or unsound practices in conducting their
businesses, or for violations of any law, rule, regulation or provision, any consent order with any agency, any condition imposed in writing by an agency, or any written agreement with the agency.
Enforcement actions may include the imposition of a conservator or receiver, cease-and-desist orders and written agreements, the termination of deposit insurance, the
imposition of civil money
penalties, and removal and prohibition orders against institution-affiliated parties. See "County Bank".

INTERSTATE BANKING

Bank
holding companies (including bank holding companies that also are financial holding companies) are required to obtain the prior approval of the Federal Reserve Board before
acquiring more than five percent of any class of voting stock of any non-affiliated bank. Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "Interstate Banking and Branching Act"), a bank holding company may acquire banks located in states other than its home state without regard to the permissibility of such acquisitions under state
law, but subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the bank holding company,
after the proposed acquisition, controls no more than 10 percent of the total amount of deposits of insured depository institutions in the United States and no more than 30 percent or
such lesser or grater amount set by state law of such deposits in that state.

Subject
to certain restrictions, the Interstate Banking and Branching Act also authorizes banks to merge across state lines to create interstate banks. The Interstate Banking and
Branching Act also permits a bank to open new branches in a state in which it does not already have banking operations if such state enacts a law permitting de novo branching.

14

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FINANCIAL SERVICES MODERNIZATION LEGISLATION

The
Gramm-Leach-Bliley Act of 1999 (the "Modernization Act repealed two provisions of the Glass-Steagall Act: Section 20, which restricted the affiliation of Federal Reserve
member banks with firms "engaged principally" in specified securities activities; and Section 32, which restricted officer, director, or employee interlocks between a member bank and any
company or person "primarily engaged" in specified securities activities. In addition, the Modernization Act also expressly preempts any state law restricting the establishment of financial
affiliations, primarily related to insurance. The law establishes a comprehensive framework to permit affiliations among commercial banks, insurance companies, securities firms, and other financial
service providers by revising and expanding the BHC Act framework to permit a holding company and its subsidiaries to engage in a full range of financial activities through a new entity known as a
Financial Holding Company. "Financial activities" is broadly defined to include not only banking, insurance, and securities activities, but also merchant banking and additional activities that the
Federal Reserve, in conjunction with the Secretary of the Treasury, determine to be financial in nature, incidental to such financial activities, or complementary activities
that do not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally.

In
order for the Company to take advantage of the authority provided by the Modernization Act to affiliate with other financial service providers, it must become a "Financial Holding
Company." To do so, the Company would file a declaration with the FRB, electing to engage in activities permissible for Financial Holding Companies and certifying that it is eligible to do so
because its insured depository institution subsidiary (the Bank) is well-capitalized and well-managed. In addition, the Federal Reserve must determine that an insured
depository institution subsidiary has at least a "satisfactory" rating under the Community Reinvestment Act. The Company currently meets the requirements for Financial Holding Company status. The
Company will continue to monitor its strategic business plan to determine whether, based on market conditions and other factors, the Company wishes to utilize any of its expanded powers provided in
the Modernization Act.

The
Modernization Act also includes a new section of the Federal Deposit Insurance Act which governs subsidiaries of state banks that engage in activities as principal that would only be
permissible for a national bank to conduct in a financial subsidiary. The Act expressly preserves the ability of a state bank to retain all existing subsidiaries. Because California currently permits
commercial banks chartered by the state to engage in any activity permissible for national banks, the Bank will be permitted to form subsidiaries to engage in the activities authorized by the
Modernization Act to the same extent as a national bank. In order to form a financial subsidiary, the Bank must be well-capitalized, and the Bank would be subject to the same
capital deduction, risk management and affiliate transaction rules as are applicable to national banks. The Bank currently meets those requirements.

Under
the Modernization Act, securities firms and insurance companies that elect to become Financial Holding Companies may acquire banks and other financial institutions. The Company
does not believe that the Modernization Act will have a material adverse effect on its operations in the near-term. However, to the extent that it permits banks, securities firms, and
insurance companies to affiliate, the financial services industry may experience further consolidation. The Modernization Act is intended to grant to community banks certain powers as a matter of
right that larger institutions have accumulated on an ad hoc basis. Nevertheless, the Modernization Act may have the effect of increasing the amount of competition that the Company and the Bank face
from larger institutions and other types of companies that offer financial products, many of which may have substantially more financial resources than the Company and the Bank.

15

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INTERNATIONAL MONEY LAUNDERING ABATEMENT AND FINANCIAL ANTI-TERRORISM ACT OF 2001

The
terrorist attacks in September, 2001, impacted the financial services industry and led to federal legislation that attempts to address certain issues involving financial
institutions. On October 26, 2001, President Bush signed into law the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(the "USA PATRIOT Act").

Part
of the USA PATRIOT Act is the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 ("IMLAFATA"). IMLAFATA authorizes the Secretary of the
Treasury, in consultation with the heads of other government agencies, to adopt special measures applicable to banks, bank holding companies, and other financial institutions. These measures may
include enhanced recordkeeping and reporting requirements for certain financial transactions that are of primary money laundering concern, due diligence requirements concerning the beneficial
ownership of certain types of accounts, and restrictions or prohibitions on certain types of accounts with foreign financial institutions.

Among
its other provisions, IMLAFATA requires each financial institution to: (i) establish an anti-money laundering program; (ii) establish due diligence
policies, procedures and controls with respect to its private banking accounts and correspondent banking accounts involving foreign individuals and certain foreign banks; and (iii) avoid
establishing, maintaining, administering, or managing correspondent accounts in the United States for, or on behalf of, a foreign bank that does not have a physical presence in any country. In
addition, IMLAFATA contains a provision encouraging cooperation among financial institutions, regulatory authorities and law enforcement authorities with respect to individuals, entities and
organizations engaged in, or reasonably suspected of engaging in, terrorist acts or money laundering activities. IMLAFATA expands the circumstances under which funds in a bank account may be forfeited
and requires covered financial institutions to respond under certain circumstances to requests for information from federal banking agencies within 120 hours. IMLAFATA also amends the Bank
Holding Company Act and the Bank Merger Act to require the federal banking agencies to consider the effectiveness of a financial institution's anti-money laundering activities when
reviewing an application under these acts.

Treasury
regulations implementing the due diligence requirements of IMLAFATA include standards to verify customer identity, to encourage cooperation among financial institutions, federal
banking agencies, and law enforcement authorities regarding possible money laundering or terrorist activities, to prohibit the anonymous use of "concentration accounts," and to require all covered
financial institutions to have in place a Bank Secrecy Act compliance program.

SARBANES-OXLEY ACT OF 2002

On
July 30 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 ("SOX"). The stated goals of the SOX are to increase corporate responsibility, to provide for
enhanced penalties for accounting and auditing improprieties at publicly-traded companies, and to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to
the securities laws.

The
SOX generally applies to all companies, both U.S. and non-U.S., that file or are required to file periodic reports with the SEC under the Exchange Act. Given the
extensive SEC role in implementing rules relating to many of the SOX's new requirements, the final scope of these requirements remains to be determined.

The
SOX includes very specific additional disclosure requirements and new corporate governance rules, requires the SEC and securities exchanges to adopt extensive additional disclosure,
corporate governance and other related rules, and mandates further studies of certain issues by the SEC and the Comptroller General. The SOX represents significant federal involvement in matters
traditionally left to state regulatory systems, such as the regulation of the accounting profession, and to state corporate law,

16

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such
as the relationship between a board of directors and management and a board of directors and its committees.

The
SOX addresses, among other matters: audit committees for all reporting companies; certification of financial statements by the chief executive officer and the chief financial
officer; the forfeiture of bonuses or other incentive-based compensation and profits from the sale of an issuer's securities by directors and senior officers in the twelve month period following
initial publication of any financial statements that later require restatement; a prohibition on insider trading during black out periods; disclosure of off-balance sheet transactions; a
prohibition on personal loans to directors and officers; expedited filing requirements for Form 4's; disclosure of a code of ethics and filing of a Form 8-K for a change or
waiver of such code; "real time" filing of issuers' periodic reports; the formation of a public accounting oversight board; auditor independence; and various increased criminal penalties for violation
of securities laws.

The
SOX contains provisions which became effective upon enactment on July 30, 2002 and provisions which will become effective from within 30 days to one year from
enactment. The SEC has been delegated the task of enacting rules to implement various provisions with respect to, among other matters, disclosure in periodic filings pursuant to the Exchange Act

REGULATION W

Transactions
between a bank and its "affiliates" are quantitatively and qualitatively restricted under the Federal Reserve Act. The Federal Deposit Insurance Act ("FDIA") applies
Section 23A and 23B to insured nonmember banks in the same manner and to the same extent as if they were members of the Federal Reserve System. The FRB has also issued Regulation W,
which codifies prior regulations under Section 23A and 23B of the Federal Reserve Act and provides interpretive guidance with respect to affiliate transactions. Regulation W incorporates
the exemption from the affiliate transaction rules but expands the exemption to cover the purchase of any type of loan or extension of credit from an affiliate. Affiliates of a bank include, among
other entities, the bank's holding company and companies that are under common control with the bank. The Company is considered to be an affiliate of the Bank. In general, subject to certain specified
exemptions, a bank or its subsidiaries are limited in their ability to engage in "covered transactions" with affiliates: (i) to an amount equal to 10% of the bank's capital and surplus in the
case of covered transactions with any one affiliate; and (ii) to an amount equal to 20% of the bank's capital and surplus in the case of covered transactions with all affiliates. In addition, a
bank and its subsidiaries may engage in covered transactions and other specified transactions only on terms and under circumstances that are substantially the same, or at least as favorable to the
bank or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies. "Covered transactions" include: (i) a loan or extension of credit to an
affiliate; (ii) a purchase of, or an investment in, securities issued by an affiliate; (iii) a purchase of assets from an affiliate, with some exceptions; (iv) the acceptance of
securities issued by an affiliate as collateral for a loan or extension of credit to any party; and (v) the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate.
Additionally, under Regulation W, a bank and its subsidiaries may not purchase a low-quality asset from an affiliate; covered transactions and other specified transactions between a
bank or its subsidiaries and an affiliate must be on terms and conditions that are consistent with safe and sound banking practices; and with some exceptions, each loan or extension of credit by a
bank to an affiliate must be secured by collateral with a market value ranging from 100% to 130%, depending on the type of collateral, of the amount of the loan or extension of credit.

Regulation W
generally excludes all non-bank subsidiaries of the banks from treatment as affiliates, except to the extent that the Federal Reserve Board decides to
treat these subsidiaries as affiliates.

17

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Concurrent
with the adoption of Regulation W, the Federal Reserve Board has proposed a regulation that would further limit the amount of loans hat could be purchased by a bank
from an affiliate to not more than 100% of the bank's capital and surplus.

It
is impossible to predict with any degree of accuracy the competitive impact the laws and regulations described above will have on commercial banking in general and on the business of
the Company in particular. It is anticipated that the banking industry will continue to be a highly regulated industry. Additionally, there appears to be a continued lessening of the historical
distinction between the services offered by financial institutions and other businesses offering financial services. Finally, the trend toward nationwide interstate banking is expected to continue. As
a result of these factors, it is anticipated banks will experience increased competition for deposits and loans and, possibly, further increases in their cost of doing business.

Selected Statistical Information

The following tables on pages 16 through 22 present certain statistical information concerning the business of the Company. This information should be read in
conjunction with "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" incorporated in ITEM 7 of this report by reference to pages 18 through 28 of the Company's 2003
Annual Report to Shareholders and with the Company's Consolidated Financial Statements and the Notes thereto incorporated in Item 8 of this report by reference to pages 30 through 54 of the Company's
2003 Annual Report to Shareholders. The statistical information that follows is based on average daily amounts.

Interest Rates and Margins:

Managing interest rates and margins is essential to the Company in order to maintain profitability. The following table presents, for the periods indicated, the
distribution of average assets, liabilities and shareholder's equity, as well as the total dollar amount of interest income from average interest-earning

18

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assets
and resultant yields and the dollar amounts of interest expense and average interest-bearing liabilities, expressed both in dollars and rates.

|                                              |                                    | For the years ended December 31, |          
|--------------------------------------------- | ---------------------------------- | -------------------------------- | ---------
|
|
|Assets                                        |                                    |                                  |          
|Federal funds sold                            |                                    |                                  | 26,673   
|Time deposits at other financial institutions |                                    |                                  | 504      
|Nontaxable investment securities(1)           |                                    |                                  | 30,946   
|Taxable investment securities(1)              |                                    |                                  | 287,158  
|Loans, gross (2)                              |                                    |                                  | 687,419  
|                                              |                                    |                                  |          
|                                              | Total interest-earning assets      |                                  |          
|Allowance for loan losses                     |                                    |                                  | (13,413  
|Cash and due from banks                       |                                    |                                  | 35,454   
|Premises and equipment, net                   |                                    |                                  | 15,069   
|Interest receivable and other assets          |                                    |                                  | 42,379   
|                                              |                                    |                                  |          
|                                              | Total assets                       |                                  | $        
|                                              |                                    |                                  |          
|Liabilities and shareholders' equity          |                                    |                                  |          
|Negotiable orders of withdrawal               |                                    |                                  | 122,927  
|Savings deposits                              |                                    |                                  | 274,988  
|Time deposits                                 |                                    |                                  | 349,223  
|Subordinated Debentures                       |                                    |                                  | 6,607    
|Other borrowings                              |                                    |                                  | 104,920  
|                                              |                                    |                                  |          
|                                              | Total interest-bearing liabilities |                                  |          
|Noninterest-bearing deposits                  |                                    |                                  | 164,919  
|Accrued interest, taxes and other liabilities |                                    |                                  | 5,607    
|                                              |                                    |                                  |          
|                                              | Total liabilities                  |                                  |          
|Total shareholders' equity                    |                                    |                                  | 82,998   
|                                              |                                    |                                  |          
|Total liabilities and shareholders' equity    |                                    | $                                | 1,112,189
|                                              |                                    |                                  |          
|Net interest income and margin (3)            |                                    |                                  |          

---

19

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The Company's net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities. It is also affected by changes in yields
earned on interest-earning assets and rates paid on interest-bearing deposits and borrowed funds. The following table sets forth changes in interest income and interest expense for each major category
of interest-earning asset and interest-bearing liability and the amount of change attributable to volume and rate changes for the years indicated. The changes due to both rate and volume have been
allocated to rate and volume in proportion to the relationship of the absolute dollar amount of the change in each. Interest on non-accrual loans was recognized into income on a cash
basis. Tax equivalent adjustments have been made to reflect the before tax interest income for tax advantaged investments.

|                                           |                                    | 2003 Compared to 2002 |       | 2002 Compared to 2001 |  
|------------------------------------------ | ---------------------------------- | --------------------- | ----- | --------------------- | -
|
|
|Net Interest Income Variance Analysis      |                                    |                       |       |                       |  
|Increase (decrease) in interest income:    |                                    |                       |       |                       |  
|                                           | Loans                              |                       | $     | 8,031                 |  
|                                           | Taxable investment securities      |                       |       | 1,440                 |  
|                                           | Nontaxable investment securities   |                       |       | 117                   |  
|                                           | Federal funds sold                 |                       |       | 73                    |  
|                                           | Time deposit at other institutions |                       |       |                      |  
|                                           |                                    |                       |       |                       |  
|                                           |                                    |                       | Total |                       |  
|Increase (decrease) in interest expense:   |                                    |                       |       |                       |  
|                                           | Interest-bearing demand deposits   |                       |       | 31                    |  
|                                           | Savings deposits                   |                       |       | 698                   |  
|                                           | Time deposits                      |                       |       | 1,138                 |  
|                                           | Subordinated Debentures            |                       |       | 42                    |  
|                                           | Other borrowings                   |                       |       | (200                  | )
|                                           |                                    |                       |       |                       |  
|                                           |                                    |                       | Total |                       |  
|                                           |                                    |                       |       |                       |  
|Increase (decrease) in net interest income |                                    | $                     | 7,952 |                       | $
|                                           |                                    |                       |       |                       |  

Investment Portfolio Maturities

The following table sets forth the maturities of debt securities at December 31, 2003 and the weighted average yields of such securities calculated on a
book value basis using the weighted average yield within each scheduled maturity grouping. Maturities of mortgage-backed securities and collateralized mortgage obligations are stipulated in their
respective contracts, however, actual maturities may differ from contractual maturities because borrowers may have the right to call or

20

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prepay
obligations with or without call prepayment penalties. Yields on municipal securities have not been calculated on a tax-equivalent basis.

|                                           |  |        |  |      |   | One to Five Years |  | Five to Ten Years |   |        |  |      |   |        
|------------------------------------------ |  | ------ |  | ---- | - | ----------------- |  | ----------------- | - | ------ |  | ---- | - | -------
|
|
|
|Available for sale debt securities:        |  |        |  |      |   |                   |  |                   |   |        |  |      |   |        
|U.S. Treasury and U.S. Government agencies |  | 20,358 |  | 3.78 | % | 34,867            |  | 2.96              | % | 44     |  | 3.22 | % |       
|State and political subdivisions           |  |       |  |     |   |                  |  |                  |   |       |  |     |   | 1,073  
|Mortgage-backed securities                 |  |       |  |     |   | 131               |  | 7.68              |   | 63,334 |  | 4.14 |   | 66,717 
|Collateralized Mortgage Obligations        |  |       |  |     |   |                  |  |                  |   |       |  |     |   | 45,267 
|Corporate debt securities                  |  | 3,078  |  | 5.54 |   |                  |  |                  |   |       |  |     |   |       
|Held to maturity debt securities:          |  |        |  |      |   |                   |  |                   |   |        |  |      |   |        
|U.S. Treasury and U.S. Government agencies |  |       |  |     |   |                  |  |                  |   |       |  |     |   |       
|State and political subdivisions           |  |       |  |     |   | 4,110             |  | 4.50              |   | 20,320 |  | 4.67 |   | 18,052 
|Mortgage-backed securities                 |  |       |  |     |   |                  |  |                  |   | 1,452  |  | 8.01 |   | 38,733 
|Collateralized Mortgage Obligations        |  |       |  |     |   |                  |  |                  |   |       |  |     |   | 13,945 
|                                           |  |        |  |      |   |                   |  |                   |   |        |  |      |   |        
|Total debt securities                      |  | 23,436 |  | 4.01 | % | 39,108            |  | 3.14              | % | 85,150 |  | 4.33 | % | 183,787
|                                           |  |        |  |      |   |                   |  |                   |   |        |  |      |   |        

The Company does not own securities of a single issuer whose aggregate book value is in excess of 10% of its total equity.

Asset / Liability Repricing

The interest rate gaps reported in the table below arise when assets are funded with liabilities having different repricing intervals. Since these gaps are
actively managed and change daily as adjustments are made in interest rate views and market outlook, positions at the end of any period may not reflect the Company's interest rate sensitivity in
subsequent periods. Active management dictates that longer-term economic views are balanced against prospects for short-term interest rate changes in all repricing intervals.
For purposes of the analysis below, repricing of fixed-rate instruments is based

21

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upon
the contractual maturity of the applicable instruments. Actual payment patterns may differ from contractual payment patterns.

|                                                         |  | By Repricing Interval As of December 31, 2003
|-------------------------------------------------------- |  | ---------------------------------------------
|
|Assets                                                   |  |                                              
|Federal funds sold                                       |  | $                                            
|Time deposits at other institutions                      |  |                                              
|Investment securities                                    |  |                                              
|Loans                                                    |  |                                              
|Noninterest-earning assets and allowance for loan losses |  |                                              
|                                                         |  |                                              
|Total assets                                             |  | $                                            
|                                                         |  |                                              
|Liabilities and shareholders' equity                     |  |                                              
|Demand deposits                                          |  | $                                            
|Savings, money market & NOW deposits                     |  |                                              
|Time deposits                                            |  |                                              
|Other interest-bearing liabilities                       |  |                                              
|Subordinated Debentures                                  |  |                                              
|Other liabilities and shareholders' equity               |  |                                              
|                                                         |  |                                              
|Total liabilities and shareholders' equity               |  | $                                            
|                                                         |  |                                              
|Interest rate sensitivity gap                            |  | $                                            
|Cumulative interest rate sensitivity gap                 |  | $                                            

22

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Loan Portfolio

At December 31, 2003, the Company had approximately $348,282,000 in undisbursed loan commitments. This compares with $235,140,000 at December 31,
2002. Standby and performance letters of credit were $7,380,000 and $6,522,000, at December 31, 2003 and 2002. For further information about the composition of the Company's loan portfolio see
the information in "ITEM 7MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCredit Risk Management and Asset Quality," incorporated by
reference to pages 23 and 24 of the Company's 2003 Annual Report to Shareholders.

The
following table shows the composition of the loan portfolio of the Company by type of loan on the dates indicated:

|                                       |  | December 31,
|-------------------------------------- |  | ------------
|
|Commercial, financial and agricultural |  | $           
|Real estateconstruction               |  |             
|Real estatemortgage                   |  |             
|Consumer installment                   |  |             
|                                       |  |             
|Total                                  |  |             
|                                       |  |             

The
table that follows shows the maturity distribution of the portfolio of commercial and agricultural, real estate construction, real estate mortgage and installment loans on
December 31, 2003 by fixed and floating rate attributes:

|                               |  | December 31, 2003
|------------------------------ |  | -----------------
|
|Commercial and agricultural    |  |                  
|Loans with floating rates      |  | $                
|Loans with predetermined rates |  |                  
|                               |  |                  
|Subtotal                       |  |                  
|Real EstateConstruction       |  |                  
|Loans with floating rates      |  |                  
|Loans with predetermined rates |  |                  
|                               |  |                  
|Subtotal                       |  |                  
|Real EstateMortgage           |  |                  
|Loans with floating rates      |  |                  
|Loans with predetermined rates |  |                  
|                               |  |                  
|Subtotal                       |  |                  
|Consumer installment           |  |                  
|Loans with floating rates      |  |                  
|Loans with predetermined rates |  |                  
|                               |  |                  
|Subtotal                       |  |                  
|Total                          |  | $                
|                               |  |                  

The
Company seeks to mitigate the risks inherent in its loan portfolio by adhering to certain underwriting practices. They include analysis of prior credit histories, financial
statements, tax returns

23

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and
cash flow projections of its potential borrowers as well as obtaining independent appraisals on real and personal property taken as collateral and audits of accounts receivable or inventory
pledged as security.

The
Company also has an internal loan review process as well as periodic external reviews. The results of these reviews are assessed by the Company's audit committee. Collection of
delinquent loans is generally the responsibility of the Company's credit administration staff. However, certain problem loans may be dealt with by the originating loan officer. The Directors Loan
Committee reviews the status of delinquent and problem loans on a monthly basis. The Company's underwriting and review practices notwithstanding, in the normal course of business, the Company expects
to incur loan losses in the future.

Nonaccrual, Past Due and Restructured Loans

The following table summarizes nonperforming loans of the Company as of the dates indicated:

|                                        |                            | December 31, |      
|--------------------------------------- | -------------------------- | ------------ | -----
|
|Nonaccrual loans                        |                            | $            | 3,987
|Accruing loans past due 90 days or more |                            |              |     
|                                        |                            |              |      
|                                        | Total nonperforming loans  |              | $    
|Other real estate owned                 |                            |              | 60   
|                                        |                            |              |      
|                                        | Total nonperforming assets |              | $    
|                                        |                            |              |      
|Nonperforming loans to total loans      |                            |              | 0.52 
|Nonperforming assets to total assets    |                            |              | 0.33 

Loans
with significant potential problems or impaired loans are placed on nonaccrual status. Management defines impaired loans as those loans, regardless of past due status, in which
management believes the collection of principal and interest is in doubt. The amount of gross interest income that would have been recorded on nonaccrual loans in the periods then ended if the loans
had been current in accordance with the original terms and had been outstanding throughout the period or since origination, if held for part of the period, was $39,000, $131,000, $170,000 $224,000,
and $143,000 in 2003, 2002, 2001, 2000, and 1999. The amount of interest income on nonaccrual loans that was included in net income was $231,000, $210,000,
$105,000,$79,000, and $126,000 in 2003, 2002, 2001, 2000, and 1999.

24

---

Allocation of the Allowance for Loan Losses

The following table summarizes a breakdown of the allowance for loan losses by loan category and the percentage by loan category of total loans for the dates
indicated:

|                                       |  | December 31, |       
|-------------------------------------- |  | ------------ | ------
|
|
|Commercial, financial and agricultural |  |              | 7,295 
|Real estateconstruction               |  |              | 1,052 
|Real estatemortgage                   |  |              | 3,808 
|Installment                            |  |              | 1,108 
|                                       |  |              |       
|Total                                  |  | $            | 13,263
|                                       |  |              |       

Other Interest-Bearing Assets

The following table relates to other interest bearing assets not disclosed above for the dates indicated. This item consists of a salary continuation plan for the
Company's executive management and a deferred compensation plan for participating board members. The plans are informally linked with universal life insurance policies containing cash surrender values
as listed in the following table:

December 31(Dollars in thousands)2003

2002

2001Cash surrender value of life insurance

$
24,138

$
17,240

$
16,160


During
2003, 2002, and 2001 the Bank purchased $6,000,000, $172,000, and $9,595,000 in new bank owned life insurance policies. This additional life insurance is in the form of single
premium life policies covering bank officers. These policies have a variable rate of return that is reset annually by each insurer. The Bank is the owner of these policies and also the named
beneficiary.

Deposits

The following table sets forth the average balance and the average rate paid for the major categories of deposits for the years indicated:

Deposits

|                                    |  | For the Year Ended December 31, | 
|----------------------------------- |  | ------------------------------- | 
|
|
|
|Noninterest-bearing demand deposits |  | 164,919                         | 
|Interest-bearing demand deposits    |  | 122,927                         | 
|Savings deposits                    |  | 274,988                         | 
|Time deposits under $100,000        |  | 171,045                         | 
|Time deposits $100,000 and over     |  | 178,178                         | 

25

---

Maturities of Time Certificates of Deposits of $100,000 or More

Maturities of time certificates of deposits of $100,000 or more outstanding at December 31, 2003 are summarized as follows:

(Dollars in thousands)Remaining Maturity:Three months or less

$
68,249Over three through six months


37,829Over six through twelve months


31,060Over twelve months


35,600Total

$
172,738


Return on Equity and Assets

The following table sets forth certain financial ratios for the periods indicated (averages are computed using actual daily figures):

Return on Average Equity and Assets

For the year ended
December 31,2003

2002

2001Return on average assets

1.23
%
1.09
%
1.03
%Return on average equity

16.43

14.94

13.40Average equity to average assets

7.46
%
7.29
%
7.69
%


26

---



ITEM 2. PROPERTIES

The Bank

The
Bank's north Merced office is located at 490 West Olive Avenue in Merced with approximately 5,600 square feet of interior floor space. This building was constructed in 1978 at a cost
of approximately $400,000 and is situated on a lot of approximately 47,000 square feet, which the Bank purchased in 1977 for $186,000. The building was remodeled in 2002 at a cost of approximately
$703,000. Management believes that this facility will be adequate to accommodate the operations of this branch for the foreseeable future.

On
September 2, 1997, the Bank relocated its downtown Merced branch to 550 West Main Street in Merced where it serves as the main branch of the Bank. The facility is a three story
facility with a two story attached parking facility and is approximately 29,000 square feet. Approximately 19,800 square feet is occupied by the administrative and central support functions. The
facility cost was approximately $5.1 million to build. Management believes that this facility will be adequate to accommodate the operations of Company for the foreseeable future.

On
October 5, 1981, the Bank opened a branch office at 735 Bellevue Road, Atwater. The building contains approximately 6,000 square feet of interior floor space, and was built at
a total cost of approximately $500,000. In 1994, the Bank purchased the lot at a cost of $316,000. The data processing and central service support personnel and related equipment were relocated to the
new facility in downtown Merced, as discussed above in late 1997. The building was remodeled in 2001 to accommodate the training department at a cost of approximately $1,074,000. Management of the
Bank believes that this facility will be adequate to accommodate the operations of this branch for the foreseeable future

In
October of 1994, the Bank opened a full service banking facility relocated at 953 W. Pacheco Boulevard, Los Banos. The Bank entered into a ten-year lease with a
non-affiliated third party on the facility. The new facility contains 4,928 square feet of interior floor space. Remodeling and redecorating expenses were approximately $355,000.
Management believes that this facility will be adequate to accommodate the operation of the branch for the foreseeable future.

On
November 15, 1993, the Bank opened a branch office at 8019 N. Lander Avenue, Hilmar. The building was purchased at a cost of $328,000 and consists of a single story building of
approximately 4,456 square feet of interior floor space. Remodeling and redecorating expenses were approximately $53,000. Management believes that this facility will be adequate to accommodate the
operation of this branch for the foreseeable future.

On
January 12, 1996, the Bank received regulatory approval to open a full service banking facility at the Crossroads Shopping Center and entered into a five-year lease
with a non-affiliated third party on January 12, 1996 for a 2,500 square foot facility. On August 28, 1998, the Bank relocated from the Crossroads Shopping Center to a larger
facility of 3,131 square feet in a nearby shopping center. As part of the move the Bank entered into a ten-year lease with a non-affiliated third party. Management

27

---

believes
that this facility will be adequate to accommodate the operation of this branch for the foreseeable future.

On
September 1, 1995, the Bank opened a branch in Turlock, California. In May 1995 the Bank acquired 2 lots for $297,000 at 2001 Geer Road, Turlock. The Bank completed the
construction of a permanent facility in February 1997 at a cost of approximately $694,000 and the facility is approximately 3,300 square feet. In July, 2003, this building was sold to a private
investor and leased back for one year. Management intends to relocate the operations of this branch to 2891 Geer Road, Turlock, CA in 2004.

In
October 2002, the Bank received approval to purchase another facility. The new facility includes approximately 10,000 square feet at a cost of approximately $1,300,000. The
building is located at 2891 Geer Road, Turlock, CA. The building was purchased from Foster Farms. It is anticipated that the Geer Road Turlock branch will relocate to this facility in the
future.

In
September 2003, the Bank entered into a three-year lease to relocate the downtown Turlock branch located at 130 Main Street, Turlock to 241 Main Street Turlock.
This new facility includes approximately 3,900 square feet. The building was remodeled at a cost of approximately $201,000. Management believes that this facility will be adequate to accommodate the
operation of this branch for the foreseeable future.

On
January 24, 1996, the Bank received approval to open a full service banking facility in Modesto and entered into a ten-year lease with a non-affiliated
third party on
December 2, 1996 for an approximately 5,413 square foot building at 3508 McHenry Avenue, Modesto. The branch opened for business on December 10, 1996. Management believes that this
facility will be adequate to accommodate the branch for the foreseeable future.

On
June 1, 2000, the Bank renewed the lease on the branch in downtown Modesto and entered into a ten-year lease with a non-affiliated third party for an
approximately 8,208 square foot building at 1003 12th Street, Modesto. The branch opened for business on December 31, 1996. Management believes that this facility will be adequate to
accommodate the banking operation for the foreseeable future.

On
December 11, 1997, the Bank purchased the sites of three former branches of Bank of America. These facilities are located at 640 Main Street, Livingston, 1507 Center Street,
Dos Palos and 5121 Hwy 140, Mariposa. The branch in Livingston was purchased at a cost of $251,000 and is a 5,699 square feet facility. The Dos Palos branch was purchased at a cost of $296,000 and is
an 8,274 square feet facility. The Mariposa branch was purchased for a cost of $313,000 and is a 4,200 square feet facility. The Mariposa facility was remodeled in 2002 at a cost of approximately
$97,000. Management believes that these facilities will be adequate to accommodate the banking operation for the foreseeable future.

In
October, 1999, the Bank entered into a 3 year lease with a nonaffiliated third party for an approximate 4,000 square foot facility located at 413 Yosemite Avenue, Suite 101,
Madera, California. The branch relocated to this larger facility on October 29, 1999 from a temporary facility that was rented on a month to month basis. Management believes the new facility
will be adequate to accommodate the banking operation for the foreseeable future.

28

---

In
November, 1999, the Bank received approval to convert the Fresno Town and County branch into a full service County Bank office. The Bank relocated the previous Thrift office to a
larger facility, entering into a 4 year lease with a nonaffiliated party for an approximate 5,200 square foot facility located at 2150 West Shaw Avenue, Fresno, California. The new lease
agreement was entered into in August, 1999. The building was purchased in July 2002 at a cost of approximately $993,000. Management believes the facility will be adequate to accommodate the
banking operation for the foreseeable future.

In
September, 2000, the Bank opened a second full service office. The Bank entered into a 10 year lease with a nonaffiliated party for an approximately 4,755 square foot facility
located at 1330 East Shaw Avenue, Fresno, California. The new lease became effective July 1, 2000. Management believes the facility will be adequate to accommodate the banking operation for the
foreseeable future.

In
June 2002 the Bank received regulatory approval to purchase Regency Investment Advisors which is located at 7060 N. Fresno Street, Fresno, California. The Bank entered into a
facility lease agreement dated April 2002 for a term of 1 year with two 6 month extension options. Management is currently reviewing various alternatives related to this facility
and the operations of Regency Investment Advisors.

In
April 2003 the bank opened a full service banking facility located at 128 West Nees Avenue, Fresno, California. The Bank entered into a one-year lease with one
six-month option to renew with a nonaffiliated third party for approximately 1,600 square feet of office space. Management believes that this facility will be adequate to accommodate the
operation of this branch until the River Park property construction is complete. At the completion of the River Park Plaza, this branch will move to that location. The Bank has entered into a fifteen
year lease for approximately 4,200 square feet of office space with a nonaffiliated third party. Management believes that this facility will be adequate to accommodate the operation of this branch for
the foreseeable future.

In
October 2003, the Bank deposited $10,000 of earnest money to enter into a ten-year lease of a facility currently under construction at 2625 Divisadero Street in
Fresno, California. This site is being built to serve as a full service retail branch. Construction should be completed by the second quarter of 2004.

In
March 2001, the Bank opened a full service office in San Francisco, California. The current facility is located at 130 Battery Street in San Francisco. Effective
March 1, 2001, the Bank entered into a 5 year lease with a nonaffiliated party for approximately 2,880 square feet of office space at this location.
Management believes the facility will be adequate to accommodate the operation of the branch in San Francisco for the foreseeable future.

In
June 2001, the Bank opened a full service banking facility located at 4609 Quail Lakes Drive in Stockton, California. The Bank entered into a five-year lease with a
nonaffiliated third party for approximately 1,740 square feet of office space. Management believes that this facility will be adequate to accommodate the operation of this branch for the foreseeable
future.

In
April 2002, an additional 2225 square foot of office space was leased at 470 W. Main Street Merced, California. Several departments were relocated. In June 2003 an
additional 1200 square feet was added and more departments were relocated.

29

---

In
November, 2003, an additional 600 square feet of office space was leased at 1636 Canal Street Merced, California. The appraisal department was relocated to this location.

In
November 2003, a building located at 1235 W. Main Street in Merced was purchased for approximately $1,847,000.The facility is
approximately 24,915 square feet. After the building is remodeled in 2004, several service and support departments are scheduled to be relocated to this facility. Management believes that this
facility will be adequate to accommodate the operation of Company support functions for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

As of December 31, 2003, the Company, is not a party to, nor is any of its properties the subject of, any material pending legal proceedings, nor are any
such proceedings known to be contemplated by government authorities.

The
Company is, however, exposed to certain potential claims encountered in the normal course of business. In the opinion of Management, the resolution of these matters will not have a
material adverse effect on the Company's consolidated financial position or results of operations in the foreseeable future.

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

The Company did not submit any matters to a vote of security holders in the quarter ended December 31, 2003.

30

---



PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

For information concerning the market for the Company's common stock and related shareholder matters, see page 28 of the Company's 2003 Annual Report to
Shareholders incorporated herein by reference.

For
information concerning the Company's dividend policy, see the "Capital Resources" discussion on page 11 of the Company's 2003 Annual Report to Shareholders incorporated herein by
reference.

Market for Company's Common Stock and Related Stock Matters

The Company's stock is included for quotation on the Nasdaq National Market System with a stock quotation symbol of CCOW. The following table indicates the range
of high and low bid prices for the period shown, based upon information provided by the Nasdaq National Market System. Such over-the-counter market quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily reflect actual transactions. There were approximately 1,700 CCOW shareholders as of
December 31, 2003.

2003

High

Low4th quarter

$
41.25

$
32.323rd quarter


35.30


24.342nd quarter


26.58


23.831st quarter


26.31


22.30


2002

High

Low4th quarter

$
23.95

$
17.113rd quarter


20.05


16.852nd quarter


22.00


17.681st quarter

$
20.11

$
14.50


ITEM 6. SELECTED FINANCIAL DATA

For selected consolidated financial data concerning the Company, see page 17 of the Company's 2003 Annual Report to Shareholders incorporated herein by reference.

31

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For management's discussion and analysis of financial condition and results of operations, see pages 18 through 28 of the Company's 2003 Annual Report to
Shareholders incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For management's discussion and analysis of market risk and interest rate risk management, see pages 18 through 28 of the Company's 2003 Annual Report to
Shareholders incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Audited Consolidated Balance Sheets as of December 31, 2003 and 2002 and Audited Consolidated Statements of Income and Comprehensive Income, Shareholders'
Equity and Cash Flows for the fiscal years ended December 31, 2003, 2002, and 2001 appear on pages 30 through 33 of the Company's 2003 Annual Report to Shareholders incorporated herein by
reference. Notes to the Consolidated Financial
Statements appear on pages 34 through 54 of the Company's 2003 Annual Report to Shareholders incorporated herein by reference. The Independent Auditors' Report appears on page 29 of the Company's 2003
Annual Report to Shareholders incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There were no changes in and there were no disagreements with accountants on accounting and financial disclosure.

ITEM 9A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Under
the supervision and with the participation of the Company's management, including its chief executive office and chief financial officer, the Company conducted an evaluation of the
effectiveness of the design and operation of its disclosure controls and procedures as defined by Rules 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of
1934.

Based
on the evaluation, the chief executive officer and chief financial officer concluded that as of the end of the period covered by this report the disclosure controls and procedures
were adequate and effective, and that the material information required to be included in this report, including information from the Company's consolidated subsidiaries, was made known to the chief
executive officer and chief financial officer by others within the Company in a timely manner, particularly during the period when this annual report on Form 10-K was being
prepared.

CHANGES IN INTERNAL CONTROLS

There
was no change in our internal control over financial reporting that occurred during the last quarter of 2004 that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.

32

---

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

As permitted by the Securities and Exchange Commission's rules relating to Form 10-K, the information called for by this item is incorporated
by reference from the section of the Company's 2004 Proxy Statement titled "Election of Directors," which is to be filed on or about March 12, 2004.

ITEM 11. EXECUTIVE COMPENSATION

As permitted by the Securities and Exchange Commission, the information called for by this item is incorporated by reference from the section of the Company's
2004 Proxy Statement titled "Information Pertaining to Election of Directors," which is to be filed on or about March 12, 2004.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

As permitted by the Securities and Exchange Commission's rules relating to Form 10-K, the information called for by this item is incorporated
by reference from the sections of the Company's 2004 Proxy Statement, titled "Beneficial Ownership of Management" and "Principal Shareholders" which is to be filed on or about March 12, 2004.

Securities authorized for issuance under equity compensation plans.



Equity Compensation Plan Information

|                                                           |  | (a)                                                                                         |  | (b)                                                                         |  | (c)                                                                                                                                    
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|Plan category                                              |  | Number of securities to be issued upon exercise of outstanding options, warrants and rights |  | Weighted-average exercise price of outstanding options, warrants and rights |  | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column)
|Equity compensation plans approved by security holders     |  | 356,483                                                                                     |  | $12.307                                                                     |  | 201,225                                                                                                                                
|Equity compensation plans not approved by security holders |  |                                                                                            |  |                                                                            |  |                                                                                                                                       
|                                                           |  |                                                                                             |  |                                                                             |  |                                                                                                                                        
|Total                                                      |  | 356,483                                                                                     |  | $12.307                                                                     |  | 201,225                                                                                                                                
|                                                           |  |                                                                                             |  |                                                                             |  |                                                                                                                                        

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As permitted by the Securities and Exchange Commission's rules relating to Form 10-K, the information called for by this item is incorporated
by reference from the Company's Proxy Statement, which was filed on or about March 12, 2004.

33

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

As permitted by the Securities and Exchange Commission, the information called for by this item is incorporated by reference from the sections of the Company's
2004 Proxy Statement titled "Auditor Fees," and "Audit Committee," which is to be filed on or about March 12, 2004.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a)Financial Statements and Schedules

An
index of all financial statements and schedules filed as part of this Form 10-K appears below and the material which begins on the pages of the Company's Annual
Report to Shareholders for the year ended December 31, 2003 listed, are incorporated herein by reference in response to Item 8 of this report.

|                                           |                                                                                                                 | Page*
|------------------------------------------ | --------------------------------------------------------------------------------------------------------------- | -----
|Financial Statements:                      |                                                                                                                 |      
|                                           | Report of Independent Accountants                                                                               |      
|                                           | Consolidated Balance Sheets at December 31, 2003 and 2002                                                       |      
|                                           | Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2003, 2002 and 2001 |      
|                                           | Consolidated Statements of Shareholders' Equity for the years ended December 31, 2003, 2002 and 2001            |      
|                                           | Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001                      |      
|Notes to Consolidated Financial Statements |                                                                                                                 | 34   

---

Schedules:

None

(b)Reports on Form 8-K

During
the fourth quarter of 2004, the Company filed a Current Report on 8-K dated December 3, 2003 (Items 7 and 10).

(c)Exhibits (Numbered in accordance with Item 601 of Regulation S-K)

The
Exhibit Index is located on the final page of this report on Form 10-K.

(d)Financial Statement Schedules

All
other supporting schedules are omitted because they are not applicable, not required, or the information required to be set forth therein is included in the financial statements or
notes thereto incorporated herein by reference.

34

---



SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on the 12th day of March, 2004.

| |  |                          |  |                                                                                                                                      
| |  | ------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------
| |  | CAPITAL CORP OF THE WEST
| |  | By:                      |  | /s/THOMAS T. HAWKERTHOMAS T. HAWKER President and Chief Executive Officer
(Principal Executive Officer)                              
| |  | By:                      |  | /s/R. DALE MCKINNEYR. DALE MCKINNEY Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)

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

|Signature                               |  | Capacity                                     |  | Date          
|--------------------------------------- |  | -------------------------------------------- |  | --------------
|                                        |  |                                              |  |               
|/s/DOROTHY L. BIZZINIDOROTHY L. BIZZINI |  | Director                                     |  | March 12, 2004
|/s/JERRY E. CALLISTERJERRY E. CALLISTER |  | Director                                     |  | March 12, 2004
|/s/JOHN FAWCETTJOHN FAWCETT             |  | Director                                     |  | March 12, 2004
|/s/G MICHAEL GRAVESG MICHAEL GRAVES     |  | Director                                     |  | March 12, 2004
|/s/THOMAS T. HAWKERTHOMAS T. HAWKER     |  | Director/CEO and Principal Executive Officer |  | March 12, 2004
|/s/CURTIS RIGGSCURTIS RIGGS             |  | Director                                     |  | March 12, 2004
|                                        |  |                                              |  |               

35

---

|/s/JERRY TAHAJIANJERRY TAHAJIAN                 |  | Director                           |  | March 12, 2004
|----------------------------------------------- |  | ---------------------------------- |  | --------------
|/s/JAMES W. TOLLADAYJAMES W. TOLLADAY           |  | Director                           |  | March 12, 2004
|/s/TOM A.L. VAN GRONINGENTOM A.L. VAN GRONINGEN |  | Chairman of the Board of Directors |  | March 12, 2004

36

---

Exhibit Index

The following is a list of all exhibits required by Item 601 of Regulation S-K to be filed as part of this 10-K. Exhibits not
attached to this 10-K are incorporated by reference as stated in the Index:

|Exhibit
Number |  | Exhibit                                                                                                                                                                                                                                                                                                                                                                                       |  |  
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -
|3.1            |  | Articles of Incorporation                                                                                                                                                                                                                                                                                                                                                                     |  |  
|3.2            |  | Bylaws (filed as Exhibit 3.2 of the Company's September 30, 1996 Form 10-Q filed with the SEC on or about November 14, 1996)                                                                                                                                                                                                                                                                  |  |  
|3.3            |  | Rights Agreement between Capital Corp of the West and Harris Trust Company of California dated as of September 26, 1997, including Form of Right Certificate attached thereto as Exhibit B and Certificate of Determination for Series A Junior
Participating Preferred Stock (filed as Exhibit 4 to the Company's Registration Statement on Form 8-A filed with the SEC on October 1, 1997). |  |  
|4.1            |  | Indenture, dated as of February 22, 2001 between Capital Corp of the West, as Issuer, and State Street Bank and Trust Company of Connecticut, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Quarterly Report on
Form 10-Q of the Company for the quarter ended September 30, 2003)                                                                            |  |  
|4.2            |  | Amended and Restated Declaration of Trust by and between State Street Bank and Trust Company of Connecticut, National Association, as Trustee, and Capital Corp of the West, as Sponsor (incorporated by reference to Exhibit 4.2 to Quarterly Report
on Form 10-Q of the Company for the quarter ended September 30, 2003)                                                                   |  |  
|4.3            |  | Indenture, dated as of December 17, 2003 between Capital Corp of the West, as Issuer, and U S. Bank National Association as Trustee                                                                                                                                                                                                                                                           |  |  
|4.4            |  | Amended and Restated Declaration of Trust by and among U. S. Bank National Association, as Institutional Trustee, and Capital Corp of the West, as Sponsor and Kenneth K. Lee, Janey Cabral, and David Curtis, as Administrators, dated as of
December 17, 2003.                                                                                                                              |  |  
|10             |  | Employment Agreement between Thomas T. Hawker and Capital Corp. of the West (Filed as Exhibit 10 of the Company's 1996 Form 10-K filed with the SEC on or about June 30, 1997).                                                                                                                                                                                                               |  | *
|10.1           |  | Administration Construction Agreement (filed as Exhibit 10.4 of the Company's 1995 Form 10-K filed with the SEC on or about March 31, 1996).                                                                                                                                                                                                                                                  |  |  
|10.2           |  | Stock Option Plan (filed as Exhibit 10.6 of the Company's 1995 Form 10-K filed with the SEC on or about March 31, 1996).                                                                                                                                                                                                                                                                      |  | *
|10.4           |  | Employee Stock Ownership Plan (filed as Exhibit 10.8 of the Company's 1995 Form 10-K filed with the SEC on or about March 31, 1996).                                                                                                                                                                                                                                                          |  |  
|10.5           |  | Change-in-Control Agreement between R. Dale McKinney and Capital Corp of the West (filed as Exhibit 10.6 of the Company's 1999 Form 10-K with the SEC on or about March 17, 2000).                                                                                                                                                                                                            |  | *
|10.6           |  | Deferred Compensation Agreement between members of the board of directors and Capital Corp of the West (filed as exhibit 10.7 of the Company's 1999 Form 10-K with the SEC on or about March 17, 2000).                                                                                                                                                                                       |  | *
|10.7           |  | Executive Salary Continuation Agreement between certain members of executive management and Capital Corp of the West (filed as Exhibit 10.8 of the Company's 1999 Form 10-K with the SEC in or about March 17, 2000).                                                                                                                                                                         |  | *
|               |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  

---

|10.9 |  | Executive Salary Continuation Agreement between senior executive management and Capital Corp of the West (incorporated by reference to Exhibit 10.10 to Quarterly Report on Form 10-Q of the Company for the quarter ended September 30,
2003) |  | *
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -
|11   |  | Statement Regarding the Computation of Earnings Per Share is incorporated herein by reference from Note 1 of the Company's Consolidated Financial Statements.                                                                                  |  |  
|13   |  | Annual Report to Security Holders.                                                                                                                                                                                                             |  |  
|14   |  | Code of Ethics (incorporated by reference to Exhibit 14.1 to the Company's Current Report on Form 8-K dated December 3, 2003)                                                                                                                  |  |  
|21   |  | List of subsidiaries.                                                                                                                                                                                                                          |  |  
|23   |  | Independent Auditors' Consent Letter.                                                                                                                                                                                                          |  |  
|31.1 |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                            |  |  
|31.2 |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                            |  |  
|32.1 |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                             |  |  
|32.2 |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                             |  |  

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