SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


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


                  For the quarterly period ended: June 30, 2003


                        Commission File Number: 000-31929


                              SONOMA VALLEY BANCORP
             (Exact name of Registrant as specified in its charter)


          CALIFORNIA                                     68-0454068
   (State of Incorporation)                 (I.R.S. Employer Identification No.)

                  202 West Napa Street Sonoma, California 95476
               (Address of principal executive offices)(Zip Code)

                                  (707)935-3200
              (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No |_|

Indicate by a check mark  whether the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No X

The number of shares outstanding of the registrant's Common Stock, no par value,
as of August, 11 2003 was 1,451,786.







                                     Page 1

<PAGE>



INDEX

Part 1 Financial Information                                         Page Number

Item 1.  Financial Statements (Unaudited):

         Consolidated Balance Sheets at June 30, 2003,
         December 31, 2002 and June 30, 2002...................................3

         Consolidated Statements of Operations for the
         three months and six months ended June 30, 2003 and 2002..............4

         Consolidated Statements of Changes in Shareholders Equity
         for the six months ended June 30, 2003,
         and the years ended December 31, 2002 and 2001........................5

         Consolidated Statements of Cash Flows for the
         six months ended June 30, 2003 and 2002...............................7

         Notes to Consolidated Financial Statements............................8

         Average Balances, Yields and Rates Paid
         for the six months ended June 30, 2003 and 2002......................10

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations........................11

Item 3.  Quantitative and Qualitative Disclosure About Market Risk............22

Item 4.  Controls and Procedures..............................................22


Part II  Other Information

Item 1.  Legal Proceedings....................................................24

Item 2.  Changes in Securities and Use of Proceeds............................24

Item 3.  Default Upon Senior Securities.......................................24

Item 4.  Submission of Matters to a Vote of Security Holders..................24

Item 5.  Other Information....................................................25

Item 6.  Exhibits and Reports on Form 8-K.....................................25

Signatures....................................................................26

Certifications................................................................27

The information  furnished in these interim statements  reflects all adjustments
and  accruals  which are, in the  opinion of  management,  necessary  for a fair
statement  of the results for such  periods.  The results of  operations  in the
interim  statements  are not  necessarily  indicative of the results that may be
expected for the full year.


                                     Page 2

<PAGE>



                                     Part I

Item 1. The  information  furnished  in these  interim  statements  reflects all
adjustments and accruals which are, in the opinion of management,  necessary for
a fair  statement of the results for such periods.  The results of operations in
the interim statements are not necessarily indicative of the results that may be
expected for the full year.

                              FINANCIAL STATEMENTS
                      SONOMA VALLEY BANCORP AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

                 June 30, 2003 (Unaudited) and December 31, 2002
                     (Audited)and June 30, 2002 (Unaudited)

<TABLE>
<S>                                                                        <C>                <C>                <C>
                                                                                June 30           December 31         June 30
ASSETS                                                                           2003                2002              2002
                                                                           --------------     --------------     --------------
Cash and due from banks                                                    $    9,406,889     $    8,422,599     $    8,878,954
Federal funds sold                                                             26,840,000         23,095,000          4,470,000
                                                                           --------------     --------------     --------------
                                         Total cash and cash equivalents       36,246,889         31,517,599         13,348,954
Investment securities available-for-sale at fair value                         14,045,526          3,823,259          5,562,202
Investment securities held-to-maturity (fair
  value of $11,803,000, $10,440,000 and
  $11,563,000, respectively)                                                   11,165,263          9,923,737         11,114,931
Loans and lease financing receivables, net                                    119,318,628        125,269,181        113,027,763
Premises and equipment, net                                                     1,117,100            875,697            673,787
Accrued interest receivable                                                       908,680            799,282            850,666
Cash surrender value of life insurance                                          7,559,156          7,387,712          7,163,005
Other assets                                                                    2,629,646          3,006,260          2,391,617
                                                                           --------------      -------------      -------------
                                                            Total assets   $  192,990,888      $ 182,602,727      $ 154,132,925
                                                                           ==============      =============      =============
LIABILITIES
Non interest-bearing demand deposits                                       $   39,193,991      $  38,760,806      $  31,091,090
Interest-bearing transaction deposits                                          29,619,477         24,627,589         21,262,165
Savings and money market deposits                                              56,662,440         51,802,714         45,743,459
Time deposits, $100,000 and over                                               24,466,069         25,018,603         17,686,611
Other time deposits                                                            19,833,979         19,778,540         17,603,258
                                                                           --------------      -------------      -------------
                                                          Total deposits      169,775,956        159,988,252        133,386,583
Accrued interest payable and other liabilities                                  3,208,416          3,374,165          2,918,528
                                                                           --------------      -------------      -------------
                                                       Total liabilities      172,984,372        163,362,417        136,305,111
SHAREHOLDERS' EQUITY                                                       ==============      =============      =============
Common stock, no par value; 10,000,000 shares
authorized; 1,452,277 shares at June 30, 2003, 1,401,146
shares at December 31, 2002 and 1,391,426 shares at
June 30, 2002 issued & outstanding.                                            14,967,466         12,936,225         12,750,744
Retained earnings                                                               4,882,517          6,215,790          4,975,042
Accumulated other comprehensive income                                            156,533             88,295            102,028
                                                                           --------------      -------------      -------------
                                              Total shareholders' equity       20,006,516         19,240,310         17,827,814
                              Total liabilities and shareholders' equity   $  192,990,888      $ 182,602,727      $ 154,132,925
                                                                           ==============      =============      =============
</TABLE>



                                     Page 3

<PAGE>



                      SONOMA VALLEY BANCORP AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<S>                                                           <C>               <C>               <C>               <C>

                                                                   For the Three Months                  For the Six Months
                                                                       Ended June 30,                      Ended June 30,
                                                                   2003              2002              2003               2002
                                                              -------------     -------------     -------------     -------------
INTEREST INCOME
  Loans and leases                                            $   2,276,001     $   2,358,919     $   4,718,704     $   4,635,119
  Taxable securities                                                 88,392           105,728           141,828           253,323
  Tax-exempt securities                                             109,492           125,509           218,093           262,696
  Federal funds sold                                                 93,395            23,801           169,555            60,552
  Dividends                                                           7,095             3,749             7,095             7,773
                                                              -------------     -------------     -------------     -------------
                                      Total interest income       2,574,375         2,617,706         5,255,275         5,219,463
INTEREST EXPENSE
  Interest-bearing transaction deposits                              15,119            21,468            27,981            44,240
  Savings and money market deposits                                 120,058           153,301           246,271           329,758
  Time deposits, $100,000 and over                                  184,525           141,286           380,440           295,899
  Other time deposits                                               122,480           126,993           252,882           266,946
                                                              -------------     -------------     -------------     -------------
                                     Total interest expense         442,182           443,048           907,574           936,843
                                                              -------------     -------------     -------------     -------------
NET INTEREST INCOME                                               2,132,193         2,174,658         4,347,701         4,282,620
  Provision for loan and lease losses                                     0            75,000            20,000           135,000
                                        NET INTEREST INCOME   -------------     -------------     -------------     -------------
                                        AFTER PROVISION FOR
                                             LOAN AND LEASE
                                                     LOSSES       2,132,193         2,099,658         4,327,701         4,147,620
NON-INTEREST INCOME                                                 436,925           383,170           841,021           780,966
NON-INTEREST EXPENSE
  Salaries and employee benefits                                    815,644           833,302         1,659,640         1,684,734
  Premises and equipment                                            183,376           159,102           365,021           299,214
  Other                                                             509,675           407,135         1,045,531           794,892
                                                              -------------     -------------     -------------     -------------
                                 Total non-interest expense       1,508,695         1,399,539         3,070,192         2,778,840
                                    Income before provision   -------------     -------------     -------------     -------------
                                           for income taxes       1,060,423         1,083,289         2,098,530         2,149,746
  Provision for income taxes                                        353,545           365,806           697,923           723,941
                                                              -------------     -------------     -------------     -------------
                                                 NET INCOME   $     706,878     $     717,483     $   1,400,607     $   1,425,805
                                                              =============     =============     =============     =============
NET INCOME PER SHARE                                          $         .48     $         .49     $         .96     $         .97
NET INCOME PER SHARE-                                         =============     =============     =============     =============
ASSUMING DILUTION                                             $         .44     $         .45     $         .88     $         .90
                                                              =============     =============     =============     =============
</TABLE>


                                     Page 4

<PAGE>



                      SONOMA VALLEY BANCORP AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

     For the six months ended June 30, 2003 (Unaudited), and the years ended
                 December 31, 2002 (Audited) and 2001 (Audited)
<TABLE>
<S>                             <C>                <C>          <C>              <C>              <C>                <C>

                                                                                                    Accumulated
                                                                                                        Other
                                Comprehensive           Common  Stock              Retained         Comprehensive
                                    Income          Shares        Amount           Earnings             Income             Total
                                -------------     ---------     ------------     ------------     ---------------     -------------
BALANCE AT
   JANUARY 1, 2001                                1,281,680     $  9,585,003     $  4,641,551     $     78,692        $  14,305,246

5% stock dividend                                    63,104        1,381,976       (1,381,976)
Fractional shares                                                                     (11,955)                              (11,955)
Redemption and retirement
  of stock                                          (27,717)        (207,323)        (364,085)                             (571,408)
Stock options exercised and
 related tax benefits                                16,437          266,229                                                266,229
Net income for the year         $   2,600,244                                       2,600,244                             2,600,244
Other comprehensive loss,
  net of tax:
  Unrealized holding losses
    on securities available-
    for-sale arising during
    the year, net of taxes
    of $57,842                         82,706
Other comprehensive loss,       -------------
  net of taxes                         82,706                                                           82,706               82,706
                                -------------     ---------     ------------     ------------     -------------      --------------
Total comprehensive income      $   2,682,950
                                =============
BALANCE AT
  DECEMBER 31, 2001                               1,333,504     $ 11,025,885     $  5,483,779     $    161,398       $   16,671,062

5% stock dividend                                    65,742        1,775,026       (1,775,026)
Fractional shares                                                                     (13,951)                             (13,951)
Redemption and retirement
  of stock                                          (14,596)        (121,257)        (223,345)                            (344,602)
Stock options exercised and
  related tax benefits                               16,496          256,571                                               256,571
Net income for the year         $   2,744,333                                       2,744,333                            2,744,333
Other comprehensive income,
  net of tax:
  Unrealized holding gains
    on securities available-
    for-sale arising during
    the year, net of taxes
    of $51,125                        (73,103)
Other comprehensive income,     -------------
  net of taxes                        (73,103)                                                         (73,103)            (73,103)
                                -------------     ---------     ------------     -----------      --------------     -------------
Total comprehensive income      $   2,671,230
                                =============
</TABLE>



                                     Page 5

<PAGE>



                      SONOMA VALLEY BANCORP AND SUBSIDIARY
     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Continued)

               For the six months ended June 30, 2003 (Unaudited),
       and the years ended December 31, 2002 (Audited) and 2001 (Audited)


<TABLE>
<S>                             <C>                 <C>          <C>                  <C>           <C>               <C>
                                                                                                     Accumulated
                                                                                                        Other
                                Comprehensive           Common  Stock               Retained        Comprehensive
                                   Income           Shares          Amount          Earnings           Income            Total
                                -------------     ----------     -----------      ------------      -------------     -----------

BALANCE AT
  DECEMBER 31, 2002                                1,401,146     $12,936,225      $  6,215,790      $      88,295     $19,240,310

Stock dividend                                        69,156       2,011,615        (2,011,615)
Redemption and retirement
  of stock                                           (38,617)       (357,858)         (722,265)                        (1,080,123)
Stock options exercised and
  related tax benefits                                20,592         377,484                                              377,484
Net income for the period       $  1,400,607                                         1,400,607                          1,400,607
Other comprehensive income,
  net of tax:
  Unrealized holding losses
    on securities available-
    for-sale arising during
    the year, net of taxes
    of $ (47,723)                     68,238
Other comprehensive income,     ------------
  net of taxes                        68,238                                                               68,238          68,238
                                ------------      ----------     -----------      ------------      -------------     -----------
Total comprehensive income      $  1,468,845
                                ============
BALANCE AT
 JUNE 30, 2003                                     1,452,277     $14,967,466      $  4,882,517      $     156,533     $20,006,516
                                                   =========     ===========      ============      =============     ===========
</TABLE>


                                     Page 6

<PAGE>



                      SONOMA VALLEY BANCORP AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                 For the six months ended June 30, 2003 and 2002

<TABLE>
<S>                                                                                   <C>                  <C>

                                                                                         2003                 2002
OPERATING ACTIVITIES                                                                 ------------         ------------

    Net income                                                                       $  1,400,607         $  1,425,805
    Adjustments to reconcile net income to net cash provided by operating
activities:
      Provision for loan losses                                                            20,000              135,000
      Depreciation                                                                        108,995               73,120
      Amortization and other                                                               41,153               21,927
      Net change in interest receivable                                                  (109,399)             101,395
      Net change in other assets                                                          335,892              506,743
      Net change in cash surrender value of life insurance                               (171,444)            (132,474)
      Net change in interest payable and other liabilities                               (165,749)            (105,635)
                                                                                     ------------        -------------
                                       NET CASH PROVIDED BY OPERATING ACTIVITIES        1,460,055            2,025,881
INVESTING ACTIVITIES
   Purchases of securities held-to-maturity                                            (2,766,843)                   0
   Purchases of securities available-for-sale                                         (10,884,142)              (7,700)
   Proceeds from maturing securities held-to-maturity                                   1,505,000              665,000
   Proceeds from maturing securities available-for-sale                                   750,000            5,000,000
   Net change in loans                                                                  5,930,553           (8,130,555)
   Purchases of life insurance                                                                  0           (2,000,000)
   Purchases of premises and equipment                                                   (350,398)            (126,255)
                                                                                     ------------        -------------
                                          NET CASH USED FOR INVESTING ACTIVITIES       (5,815,830)          (4,599,510)
FINANCING ACTIVITIES
   Net change in demand, interest-bearing transaction and savings deposits             10,284,799           (3,588,936)
   Net change in time deposits                                                           (497,095)            (679,460)
   Exercise of stock options                                                              377,484               20,625
   Stock repurchases                                                                   (1,080,123)            (230,308)
                                                                                     ------------        -------------
                                 NET CASH PROVIDED(USED) BY FINANCING ACTIVITIES        9,085,065           (4,478,079)
                                                                                     ------------        -------------
                                         NET CHANGE IN CASH AND CASH EQUIVALENTS        4,729,290           (7,051,708)
   Cash and cash equivalents at beginning of period                                    31,517,599           20,400,662
                                                                                     ------------        -------------
                                      CASH AND CASH EQUIVALENTS AT END OF PERIOD     $ 36,246,889        $  13,348,954
SUPPLEMENTAL DISCLOSURES:                                                            ============        =============
Cash paid during the period for:
   Interest                                                                          $    914,317        $     953,015
   Income taxes                                                                           280,000              285,000
Change in unrealized gains and losses
on securities available-for-sale                                                          115,961             (100,890)
Change in deferred income taxes on
unrealized holding gains and losses on securities                                         (47,723)              41,520
</TABLE>



                                     Page 7

<PAGE>



                      SONOMA VALLEY BANCORP AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)

Note 1 - Basis of Presentation

In the opinion of  Management,  the  unaudited  interim  consolidated  financial
statements  contain all  adjustments  of a normal  recurring  nature,  which are
necessary to present fairly the financial condition of Sonoma Valley Bancorp and
Subsidiary  at June 30,  2003 and  results of  operations  for the three and six
months then ended.

Certain information and footnote  disclosures  presented in the Company's annual
financial  statements  are not included in these interim  financial  statements.
Accordingly,   the  accompanying   unaudited  interim   consolidated   financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements  and notes thereto  included in the  Company's  2002 Annual Report on
Form 10- K. The results of  operations  for the three and six months  ended June
30,  2003  are not  necessarily  indicative  of the  operating  results  through
December 31, 2003.

Note 2 - Consolidation

The  consolidated  financial  statements  include the accounts of Sonoma  Valley
Bancorp  and its wholly  owned  subsidiary  Sonoma  Valley  Bank.  All  material
intercompany accounts and transactions have been eliminated in consolidation.

Note 3 - Commitments

The Company has no  outstanding  performance  letters of credit at June 30, 2003
and June 30, 2002.

Note 4 - Net Income Per Common Share

Net income per share is calculated by using the weighted  average  common shares
outstanding.  The weighted average number of common shares used in computing the
basic net income  per  common  share for the  period  ending  June 30,  2003 was
1,463,457 and for the period ending June 30, 2002 was 1,464,783.

Net income per share  (diluted)  is  calculated  by using the  weighted  average
common  shares  (diluted)  outstanding.  The weighted  average  number of common
shares (diluted) used in computing the net income per common share (diluted) for
the period ending June 30, 2003 was 1,596,772 and for the period ending June 30,
2002 was 1,582,033.

These outstanding shares have been retroactively  adjusted to reflect a 5% stock
dividend  declared  June 18, 2003,  to  shareholders  of record July 2, 2003 and
payable on July 16, 2003.




                                     Page 8

<PAGE>



Note 5 - Stock Option Accounting

The Company has two  stock-based  employee and director  compensation  plans. In
December  2002 the  Financial  Accounting  Standards  Board issued SFAS No. 148,
Accounting for Stock-Based Compensation, an Amendment of SFAS No. 123 ("SFAS No.
123") in an effort to encourage the recognition of compensation  expense for the
issuance of stock options. The Company adopted SFAS No. 148 effective January 1,
2003  using  the  prospective   application  method.   Under  this  method,  the
compensation expense and related tax benefit associated with stock option grants
issued on or after January 1, 2003 will be  recognized in the income  statement.
Prior to  January 1, 2003,  the  Company  accounted  for those  plans  under the
recognition  and  measurement  principles of APB Opinion No. 25,  Accounting for
Stock  Issued  to  Employees,  and  related   Interpretations.   No  stock-based
compensation  cost is reflected in net income for stock options granted prior to
January 1, 2003, as all options  granted under those plans had an exercise price
equal to the market value of the  underlying  common stock on the date of grant.
The following table  illustrates the effect on net income and earnings per share
if the  Company  had  applied  the fair  value  recognition  provisions  of FASB
Statement No. 123,  Accounting  for  Stock-Based  Compensation,  to  stock-based
compensation on stock options granted prior to January 1, 2003.
<TABLE>
<S>                                                   <C>              <C>             <C>             <C>

                                                             For the Three Months           For the Six Months
                                                                Ended June 30                 Ended June 30

                                                           2003          2002              2003            2002
                                                      -------------    -----------     ------------    ------------
    Net Income, as reported                           $     706,878    $   717,483     $  1,400,607    $  1,425,805
    Deduct: Total stock-based
       compensation expense determined
       under fair value based method for all
       awards, net of related tax effects                   (44,978)       (46,480)         (89,956)        (92,960)
                                                      -------------    -----------     ------------     -----------
    Pro forma net income                              $     661,900    $   671,003     $  1,310,651     $  1,332,845
                                                      =============    ===========     ============     ============
Net income per share:
    Basic - As reported                                         .48            .49              .96              .97
    Basic - Pro forma                                           .45            .46              .90              .91
    Diluted - As reported                                       .44            .45              .88              .90
    Diluted - Pro forma                                         .41            .42              .82              .84
</TABLE>





                                     Page 9

<PAGE>



                              SONOMA VALLEY BANCORP
                     AVERAGE BALANCES/YIELDS AND RATES PAID
                 For the six months ended June 30, 2003 and 2002
                             (dollars in thousands)
<TABLE>
<S>                                                              <C>         <C>          <C>        <C>          <C>        <C>

                                                                         2003                                2002
                                                                       --------                            -------
                                                                 Average     Income/      Yield/     Average     Income/     Yield/
ASSETS                                                           Balance     Expense      Rate       Balance     Expense      Rate

Interest-earning assets:
Loans(2):
  Commercial                                                      84,518      3,162        7.54%     72,291       2,867       8.00%
  Consumer                                                        12,175        464        7.69%     13,276         548       8.32%
  Real estate construction                                        20,099        795        7.98%     17,599         845       9.68%
  Real estate mortgage                                             4,508        193        8.63%      6,257         260       8.38%
  Tax exempt loans (1)                                             3,182        132        8.37%      3,450         146       8.53%
  Leases                                                              85         13       30.84%        192          14      14.70%
  Tax exempt leases (1)                                               63          7       22.41%        121           7      11.67%
  Unearned loan fees                                                (415)                              (430)
                                                                --------     ------                --------     -------
         Total loans                                             124,215      4,766        7.74%    112,756       4,687       8.38%
Investment securities
  Available for sale:
         Taxable                                                   7,313        134        3.70%      7,967         246       6.23%
         Tax exempt(1)                                                 0          0        0.00%          0           0       0.00%
  Hold to maturity:
         Taxable                                                     378          8        4.27%        202           6       5.99%
         Tax exempt (1)                                            9,544        330        6.97%     11,269         398       7.12%
                                                                --------     ------                 -------     -------
         Total investment securities                              17,235        472        5.52%     19,438         650       6.74%
Federal funds sold                                                29,179        170        1.17%      7,316          61       1.68%
FHLB Stock                                                           285          7        4.95%        271           8       5.95%
Total due from banks/Interest bearing                                 71          0        0.00%        112           1       1.80%
                                                                --------     ------                --------     -------
  Total interest earning assets                                  170,985      5,415        6.39%    139,893       5,407       7.79%
Noninterest-bearing assets:                                                  ======                             =======
  Reserve for loan losses                                         (2,785)                            (2,472)
  Cash and due from banks                                          8,783                              7,252
  Premises and equipment                                             972                                608
  Other assets                                                    10,919                              9,668
                                                                --------                           --------
                                             Total assets       $188,874                           $154,949
LIABILITIES AND SHAREHOLDERS' EQUITY                            ========                           ========
Interest bearing liabilities:
  Interest bearing deposits
         Interest bearing transaction                             29,000         28        0.19%     22,867          44       0.39%
         Savings deposits                                         55,168        246        0.90%     46,186         330       1.44%
         Time deposits over $100,000                              24,930        381        3.08%     17,704         296       3.37%
         Other time deposits                                      19,897        253        2.56%     17,528         267       3.07%
                                                                --------      -----                --------     -------
           Total interest bearing Deposits                       128,995        908        1.42%    104,285         937       1.81%
   Long term debt & other borrowings                                   0          0        0.00%          0           0       0.00%
                                                                --------     ------                --------     -------
           Total interest bearing liabilities                    128,995     $  908        1.42%    104,285     $   937       1.81%
Non interest bearing liabilities:                                            ======                             =======
  Non interest bearing demand deposits                            36,949                             30,475
  Other liabilities                                                3,180                              2,877
                                     Shareholders' equity         19,750                             17,312
                                                                --------                           --------
               Total liabilities and shareholders' equity       $188,874                           $154,949
                                                                ========                           ========
Interest rate spread                                                                       4.97%                              5.98%
                                                                                           ====                               ====
Interest income                                                              $5,415        6.39%                $ 5,407       7.79%
Interest expense                                                                908        1.07%                    937       1.35%
                                                                             ------        ----                 -------       ----
Net interest income/margin                                                   $4,507        5.32%                $ 4,470       6.44%
                                                                             ======        ====                 =======
</TABLE>

(1)  Fully tax equivalent  adjustments are based on a federal income tax rate of
     34% in 2003 and 2002.

(2)  Non accrual loans have been included in loans for the purposes of the above
     presentation.  Loan fees of approximately $188,870 and $190,160 for the six
     months ended June 30, 2003 and June 30, 2002, respectively,  were amortized
     to the appropriate interest income categories.


                                     Page 10

<PAGE>



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

                  For the Six Month Periods
                  Ended June 30, 2003 and 2002

Forward Looking Statements

With the exception of historical facts stated herein,  the matters  discussed in
this  Form  10-Q  are  "forward  looking"  statements  that  involve  risks  and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
projected  results.  Such  "forward  looking"  statements  include,  but are not
necessarily  limited  to  statements  regarding  anticipated  levels  of  future
revenues and earnings from the operation of Sonoma Valley Bancorp's wholly owned
subsidiary,  Sonoma  Valley  Bank,  projected  costs  and  expenses  related  to
operations of the bank's liquidity,  capital resources,  and the availability of
future equity capital on commercially reasonable terms. Factors that could cause
actual results to differ  materially  include,  in addition to the other factors
identified in this Form 10-Q,  the  following;  (i) increased  competition  from
other  banks,  savings  and loan  associations,  thrift  and loan  associations,
finance  companies,  credit  unions,  offerors of money market funds,  and other
financial  institutions;  (ii) the risks and  uncertainties  relating to general
economic  and  political  conditions,  both  domestically  and  internationally,
including,  but not limited to, inflation,  or natural  disasters  affecting the
primary  service area of the Bank or its major  industries;  or (iii) changes in
the laws and regulations  governing the Bank's activities at either the state or
federal  level.  Readers  of this Form  10-QSB  are  cautioned  not to put undue
reliance on "forward looking"  statements which, by their nature,  are uncertain
as reliable  indicators of future  performance.  Sonoma Valley Bancorp disclaims
any obligation to publicly update these "forward looking" statements, whether as
a result of new information, future events, or otherwise.

Overview

Sonoma Valley Bancorp (the "Company")  reported net income of $1,400,607 for the
first six months of 2003  compared with  $1,425,805  for the first six months of
2002. On a per share basis, net income equaled $.96 compared with $.97 per share
during the same period in 2002.

Return on average total assets on an annualized basis for the six-month  periods
was 1.50% in 2003 and 1.86% in 2002. Return on average  shareholders'  equity on
an annualized basis for the same periods was 14.30% and 16.61%, respectively.

RESULTS OF OPERATIONS

Net interest Income

Net interest  income is the difference  between total interest  income and total
interest expense.  Net interest income,  adjusted to a fully taxable  equivalent
basis,  as shown on the table- Average  Balance,  Yields and Rates Paid, on page
10, is higher than net interest  income on the  statement  of income  because it
reflects adjustments applicable to tax-exempt income from certain


                                     Page 11

<PAGE>



securities  and loans  ($160,000  in 2003 and  $187,000 in 2002,  based on a 34%
federal income tax rate).

The  improvement in net interest  income  (stated on a fully taxable  equivalent
basis) is a result of an $8,000  increase in  interest  income  combined  with a
decrease in interest expense of $29,000.

Net interest income (stated on a fully taxable  equivalent basis) expressed as a
percentage of average earning assets, is referred to as net interest margin. The
Company's net interest margin for 2003 declined to 5.32% from 6.44% for the same
period in 2002.

Interest Income

As previously  stated,  interest  income  (stated on a fully taxable  equivalent
basis)  increased  by $8,000 to $5.4  million in the six months of 2003,  a .15%
increase over the $5.4 million realized during the same period in 2002.  Average
balances increased from $140.0 million to $171.0 million an increase of 22%. The
increase in volume of average  balances was responsible for a $570,000  increase
in interest income offset by a $562,000  decline in interest income, a result of
the 250 basis point  decline in the prime  lending  rate.  The net result was an
increase in interest income of $8,000.

Interest Expense

Total interest expense  decreased by $29,000 to $908,000.  The average rate paid
on all interest-  bearing  liabilities  decreased from 1.81% in 2002 to 1.42% in
2003.  Average balances increased from $104.3 million to $129.0 million, a 23.7%
gain in deposits. The increase in volume of average balances was responsible for
a $233,000 increase in interest expense offset by a $262,000 decrease in expense
related to lower interest rates resulting in lower interest expense of $29,000.

Individual  components of interest  income and interest  expense are provided in
the table-Average Balances, Yields and Rates Paid on page 10.

Provision for Loan Losses

The  provision  for loan losses  charged to operations is based on the Company's
monthly  evaluation of the loan  portfolio and the adequacy of the allowance for
loan  losses in  relation  to total  loans  outstanding.  The  provision  to the
allowance for loan losses  amounted to $20,000 during the six months of 2003 and
$135,000 in the same period in 2002. The decline in the provision is a result of
the  $6.0  million  decline  in loans  and due to  management's  evaluation  and
assessment of the loan portfolio.

Loans  charged-off were $38,000 and recoveries were $9,000 for the six months of
2003 compared with $16,000 in charge-offs  and $6,000 in recoveries for the same
period in 2002.





                                     Page 12

<PAGE>



Non-interest Income

Non-interest income of $841,000 increased 7.7% over the $781,000 recorded in the
comparable  period in 2002.  The growth in non interest  income is a result of a
54.6%  increase  in loan  referral  income,  growth  of 28.6% in  income on life
insurance policies and income on deposit accounts grew by 2.2%.

Non-interest Expense

Total non-interest expense increased 10.5% to $3.1 million during the six months
of 2003 from $2.8 million for the same period in 2002.  Non-interest  expense on
an annualized basis  represented  3.28% of average total assets in 2003 compared
with 3.62% in the comparable period in 2002.

Salaries  and  benefits  decreased  1.49% in 2003.  The 2003  decrease  reflects
consolidation  of  jobs  and  normal  attrition.  The  Company  has  experienced
increases in premiums  for workers'  compensation  and employee  benefits  which
could effect future salary and benefit  costs.  At June 30, 2003 total full time
equivalent employees were 48 compared to 45 in 2002.

Expense  related to premises and equipment  increased  22.0% to $365,000 in 2003
from $299,000 in 2002. In 2002 the Company completed a remodel of the Operations
Center which added work space for seven  additional  people and the Company also
continues to  emphasize  investment  in  technology  in order to better  utilize
employees'  time and offer  additional  services  and a higher level of customer
service.   The  increase  in  premises  and  equipment  expense  represents  the
implementation  of check imaging and Internet bank in addition to the Operations
Center remodel.

Other  operating  expenses  increased  by 31.5%  to $1.0  million  in 2003  from
$795,000 in 2002. The increases represent  professional fees associated with the
Bank's   involvement  in  check  imaging  and  archival  and  Internet  banking.
Additionally,  the Bank has been  investing  in employees  through  training and
education relating to the new endeavors.

Provision for Income Taxes

The provision  for income taxes  declined to an effective tax rate of 33.26% for
the six months of 2003 compared  with 33.68% for the six months of 2002.  Income
taxes reported in the financial statements include deferred taxes resulting from
timing  differences in the recognition of items for tax and financial  statement
reporting purposes.

BALANCE SHEET ANALYSIS

Investments

Investment  securities  were $25.2 million at June 30, 2003,  an 83.4%  increase
from the $13.7  million at  December  31, 2002 and a 51.2%  increase  from $16.7
million at June 30,  2002.  The Company  maintains  an  investment  portfolio of
securities rated A or higher by Standard and Poor's


                                     Page 13

<PAGE>



and or  Moody's  Investors  Service.  Local  tax-exempt  bonds are  occasionally
purchased  without an A rating.  On  occasion  bonds are  downgraded  during the
holding period.

Securities  are  classified  as held to  maturity,  if the  Company has both the
intent and the  ability to hold these  securities  to  maturity.  As of June 30,
2003, the Company had  securities  totaling $11.2 million with a market value of
$11.8 million  categorized as held to maturity.  Decisions to acquire  municipal
securities, which are generally placed in this category, are based on generating
higher earnings, tax planning needs and pledge requirements.

Securities are  classified as available for sale if the Company  intends to hold
these debt  securities for an indefinite  period of time, but not necessarily to
maturity.  Investment securities which are categorized as available for sale are
acquired as part of the overall  asset and  liability  management  function  and
serve as a primary  source of  liquidity.  Decisions  to  acquire  or dispose of
different  investments  are  based on an  assessment  of  various  economic  and
financial factors,  including, but not limited to, interest rate risk, liquidity
and capital  adequacy.  Securities  held in the  available for sale category are
recorded at market value,  which is $14.0 million  compared to an amortized cost
of $13.8 million as of June 30, 2003.

Although the quoted market values fluctuate, investment securities are generally
held to maturity, and accordingly,  gains and losses to the income statement are
recognized upon sale, or at such time as management  determines that a permanent
decline in value exists.

Loans

The Company's  loan  portfolio was $122.1  million at June 30, 2003, or 71.9% of
total deposits.  This compares with $128.1 million,  or 80.0% of total deposits,
at December 31, 2002 and $115.6 million, or 86.6% of total deposits, at June 30,
2002. A comparative  schedule of average loan balances is presented in the table
on page 10;  period end and  year-end  balances are  presented in the  following
table.
<TABLE>
<S>                          <C>             <C>           <C>               <C>         <C>             <C>


                                June 30,     Percentage     December 31,     Percentage     June 30,     Percentage
                                  2003        of Total         2002           of Total        2002        of Total
                             ------------    ----------    ------------      ----------  ------------    ----------
Commercial                   $ 89,840,964       73.3%      $ 89,507,230        69.7%     $ 79,537,695       68.6%
Consumer                       11,359,551        9.3%        13,374,774        10.4%       13,197,630       11.4%
Real estate construction       17,448,570       14.2%        19,507,906        15.2%       17,820,862       15.4%
Real estate mortgage            3,748,583        3.1%         5,911,082         4.6%        5,104,704        4.4%
Leases                             93,277        0.1%           174,409         0.1%          288,005        0.2%
                             ------------                  ------------                  ------------
                              122,490,945      100.0%       128,475,401       100.0%      115,948,896      100.0%
Deferred loan fees                             =====                          =====                        =====
 and costs, net                  (399,186)                     (424,258)                     (379,937)
Allowance for loan
 and lease losses              (2,773,131)                   (2,781,962)                   (2,541,196)
                             ------------                  ------------                  ------------
                             $119,318,628                  $125,269,181                  $113,027,763
                             ============                  ============                  ============
</TABLE>


                                     Page 14

<PAGE>



Risk Elements

The majority of the Company's  loan activity is with  customers  located  within
Sonoma County.  Approximately 83% of the total loan portfolio is secured by real
estate located in the Company's service area.

Significant  concentrations  of  credit  risk  may  exist  if a  number  of loan
customers  are  engaged  in  similar   activities  and  have  similar   economic
characteristics.  The  Company  believes  it has  policies  in place to identify
problem loans and to monitor concentrations of credits.

Based  on its  risk  management  review  and a  review  of its  loan  portfolio,
management  believes that its  allowance for losses for the quarter  ending June
30, 2003, is sufficient to absorb losses  inherent in the loan  portfolio.  This
assessment  is based  upon  the  best  available  information  and does  involve
uncertainty and matters of judgment.  Accordingly, the adequacy of the loan loss
reserve  cannot  be  determined  with  precision  and  could be  susceptible  to
significant change in future periods.

Non Performing Assets

Management  classifies all loans as non accrual loans when they become more than
90 days past due as to principal or interest,  or when the timely  collection of
interest or principal becomes uncertain,  if earlier, unless they are adequately
secured and in the process of collection.

A loan remains in a non accrual  status until both  principal  and interest have
been  current for 6 months and when other  criteria  are met or when the loan is
determined to be uncollectible and is charged off against the allowance for loan
losses,  or, in the case of real  estate  loans,  is  transferred  to other real
estate owned. A loan is classified as a restructured loan when the interest rate
is materially  reduced,  when the term is extended beyond the original  maturity
date or other  concessions  are made by the bank because of the inability of the
borrower to repay the loan under the original terms.

There were $3.1  million of non accrual  loans and no loans 90 days or more past
due and still  accruing  at June 30,  2003.  There were  $428,000 of non accrual
loans and no loans 90 days or more past due and still accruing at June 30, 2002.
Relative  to the non  accrual  loans,  99% of the amount is centered in four (4)
credits secured by real estate and in the process of collection.

Allowance for Loan Losses

The allowance for loan losses is  maintained at a level  considered  adequate to
provide  for  losses  that  can be  reasonably  anticipated.  The  allowance  is
increased by provisions charged to operating expense and reduced by charge-offs,
net of recoveries.  The allowance is based on estimates, and ultimate losses may
vary from the current  estimates.  These estimates are reviewed  monthly and, as
adjustments  become  necessary,  they are reported in earnings in the periods in
which they become known.



                                     Page 15

<PAGE>



The  review   process  is  intended  to  identify  loan  customers  who  may  be
experiencing financial difficulties. In these circumstances,  a specific reserve
allocation  or  charge-off  may be  recommended.  Other  factors  considered  by
management in evaluating  the adequacy of the  allowance  include:  loan volume,
historical net loan loss experience,  the condition of industries and geographic
areas  experiencing  or  expected to  experience  economic  adversities,  credit
evaluations and current  economic  conditions.  The allowance for loan losses is
not a precise amount,  but based on the factors above,  represents  management's
best  estimate of losses that may be  ultimately  realized from the current loan
portfolio.

Worsening  conditions in certain  economic  sectors and  geographic  areas could
adversely affect the loan portfolio,  necessitating  larger  provisions for loan
losses  than  currently  estimated.  However,  as of June 30,  2003 the  Company
believes its overall allowance for loan losses is adequate based on its analysis
of conditions at that time.

At June 30, 2003,  the allowance  for loan losses was $2.8 million,  or 2.27% of
period-end loans,  compared with $2.8 million, or 2.17% at December 31, 2002 and
$2.5 million, or 2.20% at June 30, 2002.

An analysis of the changes in the allowance for loan losses, including
charge-offs and recoveries by loan categories, is presented below.
<TABLE>
<S>                                         <C>                   <C>                   <C>


                                            For the Six Months       For the Year       For the Six Months
                                                Ended                   Ended                 Ended
                                               6/30/03                 12/31/02              6/30/02
Balance beginning of year                   $    2,781,962        $    2,415,555        $    2,415,555
Charge-offs:
  Commercial                                        (4,955)              (10,741)              (10,741)
  Consumer                                         (33,294)              (34,872)               (5,072)
                                            --------------        --------------        --------------
                      Total charge-offs            (38,249)              (45,613)              (15,813)
Recoveries:

  Commercial                                         4,480                 9,474                 3,074
  Consumer                                           4,938                 9,546                 3,380
                                            --------------        --------------        --------------
                       Total recoveries              9,418                19,020                 6,454

Net (chargeoffs) recoveries                        (28,831)              (26,593)               (9,359)
Provision charged to operations                     20,000               393,000               135,000
                                            --------------        --------------        --------------
Balance end of period                       $    2,773,131        $    2,781,962        $    2,541,196
Ratio of net charge-offs                    ==============        ==============        ==============
 annualized to average loans                          0.05%                 0.02%                 0.02%
Balance in allowance as a percentage                  2.27%                 2.17%                 2.20%
  of loans outstanding at period end


YTD AVG LOANS                                  124,215,135           116,867,238           112,756,312
PERIOD END LOANS                            $  122,091,759        $  128,051,143        $  115,568,960
</TABLE>


                                     Page 16

<PAGE>



Deposits

A comparative  schedule of average deposit balances is presented in the table on
page 10; period end and year-end deposit balances are presented in the following
table.
<TABLE>
<S>                          <C>                <C>           <C>                 <C>          <C>               <C>


                                June 30,        Percentage     December 31,       Percentage     June 30,        Percentage
                                 2003            of Total           2002          of Total         2002           of Total
                             ------------       ----------    -------------       ----------   ------------      ----------
Interest bearing
 transaction deposits        $ 29,619,477          17.4%      $ 24,627,589          15.4%      $ 21,262,165          15.9%
Savings deposits               56,662,440          33.4%        51,802,714          32.4%        45,743,459          34.3%
Time deposits,
 $100,000
 and over                      24,466,069          14.4%        25,018,603          15.6%        17,686,611          13.3%
Other time deposits            19,833,979          11.7%        19,778,540          12.4%        17,603,258          13.2%
                             ------------         -----       ------------         -----       ------------         -----
Total interest bearing
 deposits                     130,581,965          76.9%       121,227,446          75.8%       102,295,493          76.7%
Demand deposits                39,193,991          23.1%        38,760,806          24.2%        31,091,090          23.3%
                             ------------         -----       ------------         -----       ------------         -----
Total deposits               $169,775,956         100.0%      $159,988,252         100.0%      $133,386,583         100.0%
                             ============         =====       ============         =====       ============         =====
</TABLE>

Total  deposits  increased by $9.8  million,  during the six months of 2003,  to
$169.8  million  from $160.0  million at December  31,  2002.  Interest  bearing
checking  and  savings  showed the  largest  increase  of $5.0  million and $4.9
million  respectively,  over year end  balances.  Time  deposits  over  $100,000
decreased $553,000.  Non-interest  bearing demand deposits increased $433,000 to
$39.2 million from $38.8 at December 31, 2002.

Risk-Based Capital

The Federal Deposit Insurance  Corporation (FDIC) has adopted risk-based capital
guidelines  which establish a risk-adjusted  ratio relating capital to different
categories of assets and off- balance sheet exposures. Under current guidelines,
as of June 30,  2003,  the Company was required to have minimum Tier I and total
risk-based  capital  ratios of 4% and 8%  respectively.  To be well  capitalized
under Prompt  Corrective  Action  Provisions  requires  minimum Tier I and total
risk-based capital ratios should be 6% and 10% respectively.

The FDIC has also adopted  minimum  leverage ratio  guidelines for compliance by
banking organizations.  The guidelines require a minimum leverage ratio of 4% of
Tier 1 capital to total average assets. Banks experiencing high growth rates are
expected to  maintain  capital  positions  well above the  minimum  levels.  The
leverage ratio in conjunction  with the risk-based  capital ratio constitute the
basis for determining the capital adequacy of banking organizations.



                                     Page 17

<PAGE>



The table below presents Tier 1 capital,  total capital and total  risk-weighted
assets at June 30, 2003,  along with the related  risk-based  capital  ratio and
leverage ratio. (dollars in thousands)
<TABLE>
<S>     <C>             <C>         <C>       <C>         <C>      <C>

           Total
        Risked-based     TIER 1                TOTAL               Leverage
           Assets       Capital     Ratio     Capital     Ratio     Ratio
        ------------    --------    -----     -------     -----    --------
         $157,314        $18,842    11.98%    $20,818     13.23%    9.81%
</TABLE>

Market Risk Management

Overview.  Market risk is the risk of loss from adverse changes in market prices
and rates.  The Company's  market risk arises  primarily from interest rate risk
inherent in its loan and deposit functions. The goal for managing the assets and
liabilities of the Company is to maximize  shareholder  value and earnings while
maintaining a high quality  balance sheet without  exposing the Company to undue
interest rate risk.  The Board of Directors has overall  responsibility  for the
interest  rate risk  management  policies.  Sonoma  Valley Bank has an Asset and
Liability  Management  Committee (ALCO) that establishes and monitors guidelines
to control the sensitivity of earnings to changes in interest rates.

Asset/Liability  Management.  Activities involved in asset/liability  management
include but are not  limited to lending,  accepting  and  placing  deposits  and
investing  in  securities.  Interest  rate  risk  is  the  primary  market  risk
associated with asset/liability management.  Sensitivity of earnings to interest
rate changes  arises when yields on assets change in a different  time period or
in a different  amount from that of interest costs on  liabilities.  To mitigate
interest rate risk,  the structure of the balance sheet is managed with the goal
that  movements of interest rates on assets and  liabilities  are correlated and
contribute  to  earnings  even  in  periods  of  volatile  interest  rates.  The
asset/liability  management  policy  sets  limits  on the  acceptable  amount of
variance  in net  interest  margin and  market  value of equity  under  changing
interest environments.  The Company uses simulation models to forecast earnings,
net interest margin and market value of equity.

Simulation  of earnings is the primary tool used to measure the  sensitivity  of
earnings to interest  rate  changes.  Using  computer-modeling  techniques,  the
Company is able to estimate the potential  impact of changing  interest rates on
earnings.  A balance sheet forecast is prepared quarterly using inputs of actual
loans,  securities and interest bearing  liabilities (i.e.  deposits/borrowings)
positions as the beginning base. The forecast balance sheet is processed against
four interest rate  scenarios.  The scenarios  include a 100 and 200 basis point
rising rate  forecasts,  a flat rate forecast and a 100 basis point falling rate
forecast which take place within a one year time frame.  The net interest income
is  measured  during  the year  assuming  a  gradual  change  in rates  over the
twelve-month horizon. The Company's 2003 net interest income, as forecast below,
was modeled  utilizing a forecast  balance  sheet  projected  from year-end 2002
balances. The following table summarizes the effect on net interest income (NII)
of a +/-100 and +200 basis point change in interest rates as measured  against a
constant rate (no change) scenario.





                                     Page 18

<PAGE>



Interest Rate Risk Simulation of Net Interest Income as of June 30, 2003
(In thousands)

Variation from a constant rate scenario            $ Change in NII
                  +200bp                                 $ 994
                  +100bp                                   456
                  -100bp                                  (363)

The  simulations of earnings do not incorporate  any management  actions,  which
might moderate the negative consequences of interest rate deviations. Therefore,
they do not reflect likely actual results,  but serve as conservative  estimates
of interest rate risk.

Interest Rate Sensitivity  Analysis.  Interest rate sensitivity is a function of
the repricing characteristics of the portfolio of assets and liabilities.  These
repricing  characteristics are the time frames within which the interest-bearing
assets  and  liabilities  are  subject  to change in  interest  rates  either at
replacement, repricing or maturity. Interest rate sensitivity management focuses
on the maturity of assets and liabilities and their repricing  during periods of
changes in market interest rates.  Interest rate  sensitivity is measured as the
difference  between  the  volumes  of  assets  and  liabilities  in the  current
portfolio  that  are  subject  to  repricing  at  various  time  horizons.   The
differences are known as interest sensitivity gaps.

A positive  cumulative  gap may be equated to an asset  sensitive  position.  An
asset  sensitive  position in a rising  interest rate  environment  will cause a
bank's interest rate margin to expand. This results as floating or variable rate
loans reprice more rapidly than fixed rate  certificates of deposit that reprice
as they mature over time. Conversely, a declining interest rate environment will
cause the  opposite  effect.  A  negative  cumulative  gap may be  equated  to a
liability  sensitive  position.  A  liability  sensitive  position  in a  rising
interest rate  environment will cause a bank's interest rate margin to contract,
while a declining interest rate environment will have the opposite effect.

The following table sets forth the dollar amounts of maturing  and/or  repricing
assets and liabilities for various periods.  This does not include the impact of
prepayments  or other  forms of  convexity  caused by changing  interest  rates.
Historically, this has been immaterial and estimates for them are not included.

The Company has more  liabilities  than assets  repricing  during the next year.
However,  because the Company's asset rates change more than deposit rates,  the
Company's  interest  income  will  change more than the cost of funds when rates
change.  Its net interest margin should therefore  increase  somewhat when rates
increase and shrink somewhat when rates fall.

The Company controls its long term interest rate risk by keeping long term fixed
rate assets  (longer  than 5 years) less than its long term fixed rate  funding,
primarily  demand deposit  accounts and capital.  The following table sets forth
cumulative  maturity  distributions  as of  June  30,  2003  for  the  Company's
interest-bearing  assets and  interest-bearing  liabilities,  and the  Company's
interest rate sensitivity gap as a percentage of total interest-earning  assets.
The table shows $60.5  million in fixed rate loans over 5 years.  Many  variable
rate credit lines reached  floors in 2002,  and were  reclassified  to the fixed
rate category.  As soon as interest rates increase,  the loans will no longer be
at floors and will reclass back to the floating rate category.


                                     Page 19

<PAGE>


<TABLE>
<S>                                           <C>          <C>           <C>          <C>        <C>        <C>         <C>



June 30, 2003                                 3 months     12 months     3 years      5 years    15 years   >15 years    Totals
(in thousands)

ASSETS:
  Fixed rate investments                      $   1,404    $   1,893     $   10,990   $   4,981  $   4,605  $   1,339   $  25,212
  Variable rate investments                           0            0              0           0          0        289         289
  Fixed rate loans                               10,872       16,727          8,209      26,679     35,157      2,781     100,425
  Variable rate loans                            17,898        1,046              0           0          0          0      18,944
  Interest-bearing balances due from banks           35                                                                        35
  Fed funds sold                                 26,840                                                                    26,840
                                              ---------    ---------     ----------   ---------   --------   --------   ---------
     Interest bearing assets                     57,049       19,666         19,199      31,660     39,762      4,409     171,745
                                              ---------    ---------     ----------   ---------   --------   --------   ---------
LIABILITIES:
  Interest bearing transaction deposits          29,619                                                                    29,619
  Savings deposits                               56,662                                                                    56,662
  Time Deposits
     Fixed rate >100m                             7,231        7,220          8,189       1,767                            24,407
     Fixed rate <100m                             5,573        7,952          5,343         980                            19,848
     Floating rate >100m                                                                                                        0
     Floating rate <100m                             46                                                                        46
  Borrowings                                          0                                                                         0
                                              ---------    ---------     ----------   ---------  ---------  ---------   ---------
    Interest Bearing Liabilities              $  99,131    $  15,172     $   13,532   $   2,747  $       0  $       0   $ 130,582
                                              ---------    ---------     ----------   ---------  ---------  ---------   ---------
Rate Sensitivity Gap                            (42,082)       4,494          5,667      28,913     39,762      4,409
                                              ---------    ---------     ----------   ---------  ---------  ---------
Cumulative Rate Sensitivity Gap                 (42,082)     (37,588)       (31,921)     (3,008)    36,754     41,163
                                              ---------    ---------     ----------   ---------  ---------  ---------
Cumulative Position to Total Assets              -21.81%      -19.48%        -16.54%      -1.56%     19.05%     21.33%
                                              =========    =========     ==========   =========  =========  =========
</TABLE>

For the Three Month Periods
Ended June 30, 2003 and 2002

Overview

The  Company  reported  net income of  $707,000  for the second  quarter of 2003
compared with $718,000 for the second quarter of 2002. On a per share basis, net
income for the three months ended June 30, 2003 equaled $.48 per share  compared
with $.49 per share during the same period in 2002.

Return on average total assets on an annualized basis for the three months ended
June 30,  2003 and 2002 was 1.46% and  1.86%,  respectively.  Return on  average
shareholders'  equity on an annualized basis for the three months ended June 30,
2003 and 2002 was 14.2% and 16.3%, respectively.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income,  adjusted to a fully taxable  equivalent  basis,  decreased
$55,000 to $2.2 million for the three months ended June 30, 2003, down 2.4% from
the $2.3 million in the  comparable  period of 2002.  Net  interest  income on a
fully taxable equivalent basis, as shown on the table -Average Balances,  Yields
and Rates Paid on page 23, is higher than net interest income


                                     Page 20

<PAGE>



on the  statements  of income  because it  reflects  adjustments  applicable  to
tax-exempt income from certain securities and loans ($80,000 in 2003 and $92,000
in 2002, based on a 34% federal income tax rate).

Net interest income (stated on a fully taxable  equivalent basis) expressed as a
percentage of average earning assets, is referred to as net interest margin. The
Company's net interest  margin for the second  quarter of 2003 declined to 5.07%
from 6.53% for the comparable  period in 2002.  This variance is the result of a
higher loan to deposit  ratio and  management's  efforts to hold  existing  loan
rates steady and the ability to lower interest rates paid on deposits.

Interest Income

Interest income for the three months ended June 30, 2003 decreased by $56,000 to
$2.7 million, 2.1% decline from the $2.7 million realized during the same period
in 2002.

Interest Expense

Total  interest  expense for the three  months  ended June 30, 2003  declined by
$1,000 to  $442,000  compared  with  $443,000  in the same  period of 2002.  The
average rate paid on all interest- bearing liabilities for the second quarter of
2003  declined  to 1.35% from 1.72% in the second  quarter of 2002,  and average
balances for the second  quarter of 2003 increased to $131.7 million from $103.0
million in the same period of 2002, a 27.8% gain.

The gain in volume of average  balances was responsible for a $121,000  increase
in interest expense offset by a $122,000 decline related to lower interest rates
paid.

Individual  components of interest  income and interest  expense are provided in
the table - Average Balances, Yields and Rates Paid on page 23.

Provision for Loan Losses

There was no provision for loan losses during the second quarter of 2003 and the
provision  was  $75,000  for the second  quarter of 2002.  The  decrease  in the
provision is the result of  managements'  evaluation  and assessment of the loan
portfolio.

Non-interest Income

Non-interest  income of $437,000 for the second  quarter of 2003  represented  a
increase of $54,000,  or 14.1%,  from the $383,000 for the comparable  period in
2002.

Non-interest Expense

For the second quarter of 2003,  non-interest  expense was $1.5 million compared
with $1.4  million  for the same  period in 2002,  representing  an  increase of
$110,000,  or 7.86%.  The  largest  increase of non  interest  expense was other
operating expense,  which increased $103,000,  or 25.3%, compared with the three
months ended June 30, 2002.



                                     Page 21

<PAGE>



Premises and equipment expense increased $24,000,  or 15.1%, to $183,000 for the
second quarter of 2003 from $159,000 for the second quarter of 2002.

Salary and benefit  expense for the three  months  ended June 30, 2003  declined
2.0% to $816,000 from $833,000 in the same period in 2002.

Provision for Income Taxes

The  provision  for income taxes  increased to an effective tax rate of 33.3% in
the second  quarter of 2003  compared  with 33.8% for the  comparable  period in
2002. Income taxes reported in the financial  statements  include deferred taxes
resulting  from  timing  differences  in the  recognition  of items  for tax and
financial reporting purposes.

Item 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Information regarding Quantitative and Qualitative Disclosures about Market Risk
appears on page 18 through 20 under the  caption  "Management's  Discussion  and
Analysis of Consolidated  Financial Condition and Results of Operations - Market
Risk Management" and is incorporated herein by reference.

Item 4.    CONTROLS AND PROCEDURES

The  Company  carried  out an  evaluation,  under the  supervision  and with the
participation  of  the  Company's  management,  including  the  Company's  Chief
Executive  Officer  along with the Company's  Chief  Financial  Officer,  of the
effectiveness of the design and operation of the Company's  disclosure  controls
and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation,
the Company's Chief  Executive  Officer along with the Company's Chief Financial
Officer  concluded that the Company's  disclosure  controls and procedures as of
the end of the period covered by this Form 10-Q are effective in timely alerting
them to material  information relating to the Company required to be included in
this Form 10-Q.




                                     Page 22

<PAGE>



                              SONOMA VALLEY BANCORP
                     AVERAGE BALANCES/YIELDS AND RATES PAID
                For the three months ended June 30, 2003 and 2002
                             (dollars in thousands)
<TABLE>
<S>                                                       <C>          <C>          <C>        <C>          <C>          <C>

                                                                                      2003                               2002
                                                            Average     Income/       Yield/    Average     Income/      Yield/
ASSETS                                                      Balance     Expense       Rate      Balance     Expense      Rate

Interest-earning assets:
Loans(2):
  Commercial                                                83,074       1,530       7.39%       74,618       1,474       7.92%
  Consumer                                                  11,943         226       7.59%       12,883         267       8.31%
  Real estate construction                                  19,797         384       7.78%       18,959         438       9.27%
  Real estate mortgage                                       3,736          83       8.91%        5,867         121       8.27%
  Tax exempt loans (1)                                       3,180          66       8.32%        3,497          75       8.60%
  Leases                                                        73           7      38.46%          178           7      15.77%
  Tax exempt leases (1)                                         63           4      25.47%          122           3       9.86%
  Unearned loan fees                                          (406)                                (403)
                                                          --------     -------                 --------     -------
         Total loans                                       121,460       2,300       7.60%      115,721       2,385       8.27%
Investment securities
  Available for sale:
         Taxable                                            10,918          84       3.09%        6,341          99       6.26%
         Tax exempt(1)                                           0           0       0.00%            0           0       0.00%
  Hold to maturity:
         Taxable                                               549           5       3.65%          201           3       5.99%
         Tax exempt (1)                                      9,624         165       6.88%       11,039         195       7.09%
                                                          --------     -------                 --------     -------
         Total investment securities                        21,091         254       4.83%       17,581         297       6.78%
Federal funds sold                                          31,945          93       1.18%        5,532          24       1.74%
FHLB Stock                                                     288           7       9.75%          273           4       5.88%
Total due from banks/Interest bearing                          107           0       0.37%           22           0       1.82%
                                                          --------     -------                 --------     -------
  Total interest earning assets                            174,891       2,654       6.09%      139,129       2,710       7.81%
Non interest-bearing assets:                                           =======                              =======
  Reserve for loan losses                                   (2,772)                              (2,506)
  Cash and due from banks                                    8,902                                7,180
  Premises and equipment                                     1,039                                  599
  Other assets                                              11,007                               10,190
                                                          --------                             --------
                                        Total assets      $193,067                             $154,592
LIABILITIES AND SHAREHOLDERS' EQUITY                      ========                             ========
Interest bearing liabilities:
  Interest bearing deposits
         Interest bearing transaction                       31,119     $    15       0.19%       23,544          21       0.36%
         Savings deposits                                   56,231         120       0.86%       44,443         154       1.39%
         Time deposits over $100,000                        24,514         185       3.03%       17,680         141       3.20%
         Other time deposits                                19,823         122       2.49%       17,380         127       2.93%
                                                          --------     -------                 --------     -------
           Total interest bearing Deposits                 131,687         442       1.35%      103,047         443       1.72%
 Other short term borrowings                                     0           0       0.00%            0           0       0.00%
                                                          --------     -------                 --------     -------
           Total interest bearing liabilities              131,687     $   442       1.35%      103,047     $   443       1.72%
Non interest bearing liabilities:                                      =======                              =======
  Non interest bearing demand deposits                      38,258                               31,071
  Other liabilities                                          3,185                                2,906
                                Shareholders' equity        19,937                               17,568
                                                          --------                             --------
          Total liabilities and shareholders' equity      $193,067                             $154,592
                                                          ========                             ========
Interest rate spread                                                                 4.74%                                6.09%
                                                                                    =====                                =====
Interest income                                                        $ 2,654       6.09%                  $ 2,710       7.81%
Interest expense                                                           442       1.02%                      443       1.28%
                                                                       -------      -----                   -------      -----
Net interest income/margin                                             $ 2,212       5.07%                  $ 2,267       6.53%
                                                                       =======      =====                   =======      =====
</TABLE>

(1)  Fully tax equivalent  adjustments are based on a federal income tax rate of
     34% in 2003 and 2002.

(2)  Non accrual loans have been included in loans for the purposes of the above
     presentation.  Loan fees of approximately $87,889 and $62,378 for the three
     months ended June 30, 2003 and June 30, 2002, respectively,  were amortized
     to the appropriate interest income categories.


                                     Page 23

<PAGE>



                                     Part II

Item 1.  LEGAL PROCEEDINGS

From time to time the Company may be a party to legal proceedings arising in the
ordinary course of business. The Company is not currently a party to, nor is any
of its properties the subject of, any material pending legal proceedings.

Item 2.  CHANGES IN SECURITIES

None

Item 3.  DEFAULTS UPON SENIOR SECURITIES

None

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

The  Company  held the  annual  meeting of  shareholders  on May 14,  2003.  The
following table sets forth the proposals and outcome from the voting.

Proposal Number 1          Election of Directors; and
<TABLE>
<S>                       <C>             <C>                               <C>

                          Shares voted    Shares Withholding Authority/     Abstentions and
Nominees                     For              Voted Against                 Broker Non-Votes
                          ------------    -----------------------------     ----------------
Suzanne Brangham          1,003,443             17,464
Dale T. Downing           1,008,313             12,594
Fred H. Harland             998,203             22,704
Robert B. Hitchcock       1,006,077             14,830
Gerald J. Marino            979,592             41,315
Gary D. Nelson              991,397             29,510
Robert J. Nicholas        1,009,114             11,793
Angelo C. Sangiacomo      1,005,783             15,124
J. Robert Stone           1,006,099             14,808
Mel Switzer, Jr.            960,148             60,758
Harry Weise               1,012,860              8,047
</TABLE>

Proposal Number 2        Ratification of Richardson and Company
<TABLE>
<S>                      <C>            <C>         <C>       <C>

Total shares voted:      For            Against     Abstain    Broker Non-Votes
                         ---------      -------     -------    ----------------
                         1,004,221      3,087       13,599
</TABLE>








                                     Page 24

<PAGE>



Item 5.             OTHER INFORMATION

None

Item 6.             EXHIBITS AND REPORTS ON FORM 8-K

    (a)      Exhibits

          31.1 Certification   of   CEO   pursuant   to   Section   302  of  the
               Sarbanes-Oxley Act

          31.2 Certification   of   CFO   pursuant   to   Section   302  of  the
               Sarbanes-Oxley Act

          32   Certification  of CEO  and CFO  pursuant  to  Section  906 of the
               Sarbanes-Oxley Act

    (b) Reports on Form 8-K

        Date of Report        Date of Event           Item Reported
        --------------        --------------          -------------

        April 16, 2003        April 15, 2003          Press Release announcing
                                                      results of first quarter

        July 16, 2003         July 15, 2003           Press Release announcing
                                                      results of second quarter






























                                     Page 25

<PAGE>



                                   SIGNATURES

Under the  requirements 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.


                                           SONOMA VALLEY BANCORP




Date:   August 13, 2003                    /s/ Mel Switzer, Jr.
     ------------------                    -------------------------------------
                                           Mel Switzer, Jr.
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)




Date:   August 13, 2003                    /s/ Mary Quade Dieter
     ------------------                    -------------------------------------
                                           Mary Quade Dieter
                                           Executive Vice President and
                                           Chief Operating Officer
                                           (Principal Accounting Officer)



                                     Page 26