UNITED STATES
                       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: September 30, 2004


                        Commission File Number: 000-31929


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

            California                                  68-0454068
   (State or other jurisdiction                      (I.R.S. Employer
 of incorporation or organization)                  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 November, 1, 2004 was 2,142,104.


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

<PAGE>

INDEX

Part 1 Financial Information                                         Page Number

Item 1. Financial Statements (Unaudited):

    Consolidated Balance Sheets at September 30, 2004,
    December 31, 2003 and September 30, 2003..............................3

    Consolidated Statements of Operations for the
    three months and nine months ended September 30, 2004 and 2003........4

    Consolidated Statements of Changes in Shareholders Equity
    for the nine months ended September 30, 2004,
    and the years ended December 31, 2003 and 2002........................5

    Consolidated Statements of Cash Flows for the
    nine months ended September 30, 2004 and 2003.........................7

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

    Average Balances, Yields and Rates Paid
    for the nine months ended September 30, 2004 and 2003................11

Item 2. Managements Discussion and Analysis of
        Financial Condition and Results of Operations....................12

Item 3. Quantitative and Qualitative Disclosure about Market Risk........26

Item 4. Controls and Procedures..........................................26

Part II Other Information

Item 1. Legal Proceedings................................................26

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds......26

Item 3. Default Upon Senior Securities...................................27

Item 4. Submission of Matters to a Vote of Security Holders..............27

Item 5. Other Information................................................27

Item 6. Exhibits.........................................................27

Signatures...............................................................28

Certifications...........................................................29

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  - FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS
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
September 30, 2004 (Unaudited) and December 31, 2003 (Audited) and September 30,
2003 (Unaudited)

<TABLE>
<CAPTION>
<S>                                                                            <C>                <C>                <C>
                                                                          September 30        December 31       September 30
                                                                             2004                2003              2003
ASSETS                                                                    ------------        -----------       ------------
Cash and due from banks                                                    $ 8,292,339        $ 9,803,272       $ 8,481,664
Federal funds sold                                                           1,685,000         25,220,000        31,190,000
Interest-bearing due from banks                                                 35,406            330,930           330,764
                                                                          ------------        -----------       ------------
                                       Total cash and cash equivalents      10,012,745         35,354,202        40,002,428
Investment securities available-for-sale at fair value                      23,518,575         20,119,777        13,834,148
Investment securities held-to-maturity (fair
 value of $18,394,000, $17,042,000 and
 $14,011,000, respectively)                                                 17,794,884         16,558,153        13,620,606
Loans and lease financing receivables, net                                 144,537,306        119,833,989       119,040,732
Premises and equipment, net                                                  1,369,688          1,313,995         1,296,242
Accrued interest receivable                                                  1,159,065            906,958           931,593
Cash surrender value of life insurance                                       8,851,899          7,730,600         7,644,878
Other assets                                                                 3,457,580          3,288,463         3,303,338
                                                                          ------------        -----------       ------------
                                                          Total assets    $210,701,742       $205,106,137      $199,673,965
                                                                          ============        ===========       ============
LIABILITIES
Non interest-bearing demand deposits                                      $ 45,379,582       $ 37,947,577      $ 36,491,921
Interest-bearing transaction deposits                                       31,214,138         32,467,678        28,124,429
Savings and money market deposits                                           65,398,770         63,680,697        65,414,882
Time deposits, $100,000 and over                                            26,505,608         26,565,347        26,000,588
Other time deposits                                                         18,562,732         19,453,317        19,539,327
                                                                          ------------        -----------       ------------
                                                        Total deposits     187,060,830        180,114,616       175,571,147
Accrued interest payable and other liabilities                               3,756,149          3,520,242         3,489,366
                                                                          ------------        -----------       ------------
                                                     Total liabilities     190,816,979        183,634,858       179,060,513
SHAREHOLDERS' EQUITY
Common stock, no par value; 10,000,000 shares
authorized; 2,142,104 shares at September 30, 2004,
1,457,594 shares at December 31, 2003 and 1,451,486
shares at September 30, 2003 issued & outstanding.                          15,497,836         15,061,636        14,950,486
Retained earnings                                                            4,470,003          6,386,083         5,619,396
Accumulated other comprehensive income (loss)                                  (83,076)            23,560            43,570
                                                                          ------------        -----------       ------------
                                            Total shareholders' equity      19,884,763         21,471,279        20,613,452
                                                                          ------------        -----------       ------------
                            Total liabilities and shareholders' equity    $210,701,742       $205,106,137       $199,673,965
                                                                          ============        ===========       ============
</TABLE>

                                     Page 3
<PAGE>

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

                                                                    For the Three Months              For the Nine Months
                                                                     Ended September 30,              Ended September 30,
                                                                   2004              2003            2004               2003
                                                               ------------      ------------    ------------       -----------

INTEREST INCOME
  Loans and leases                                              $ 2,600,528       $ 2,479,394      $ 7,232,583      $ 7,198,098
  Taxable securities                                                199,716           106,046          626,080          247,874
  Tax-exempt securities                                             167,272           122,076          493,306          340,169
  Federal funds sold                                                 12,663            74,023           77,231          243,578
  Dividends                                                           8,093             3,111           13,849           10,206
                                                               ------------      ------------    -------------      ------------
                                      Total interest income       2,988,272         2,784,650        8,443,049        8,039,925
INTEREST EXPENSE
  Interest-bearing transaction deposits                              13,397            10,908           37,354           38,889
  Savings and money market deposits                                 109,155           113,500          312,162          359,771
  Time deposits, $100,000 and over                                  164,582           174,004          498,011          554,444
  Other time deposits                                                97,424           115,390          296,439          368,272
  Other borrowings                                                        0                29                0               29
                                                               ------------      ------------    -------------      ------------
                                     Total interest expense         384,558           413,831        1,143,966        1,321,405
                                                               ------------      ------------    -------------      ------------
                                        NET INTEREST INCOME       2,603,714         2,370,819        7,299,083        6,718,520
  Provision for loan and lease losses                                40,000                 0           70,000           20,000
                                                               ------------      ------------    -------------      ------------
                                        NET INTEREST INCOME
                                        AFTER PROVISION FOR
                                             LOAN AND LEASE
                                                     LOSSES       2,563,714         2,370,819        7,229,083        6,698,520

NON-INTEREST INCOME                                                 452,131           455,301        1,264,243        1,296,322
NON-INTEREST EXPENSE
  Salaries and employee benefits                                  1,102,331           914,569        3,113,135        2,574,209
  Premises and equipment                                            230,840           203,696          662,949          568,717
  Other                                                             533,372           593,362        1,629,757        1,638,893
                                                               ------------      ------------    -------------      ------------
                                 Total non-interest expense       1,866,543         1,711,627        5,405,841        4,781,819
                                                               ------------      ------------    -------------      ------------
                                    Income before provision
                                           for income taxes       1,149,302         1,114,493        3,087,485        3,213,023
  Provision for income taxes                                        404,574           372,151        1,005,594        1,070,074
                                                               ------------      ------------    -------------      ------------

                                                 NET INCOME       $ 744,728        $  742,342      $ 2,081,891      $ 2,142,949
                                                               ============      ============    =============      ============
NET INCOME PER SHARE                                                  $ .34             $ .34            $ .96            $ .99
                                                                      =====             =====            =====            ======
NET INCOME PER SHARE-
ASSUMING DILUTION                                                     $ .32             $ .31            $ .88            $ .91
                                                                      =====             =====            =====            ======
</TABLE>

                                     Page 4

<PAGE>


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

  For the nine months ended September 30, 2004 (Unaudited), and the years ended
                 December 31, 2003 (Audited) and 2002 (Audited)
<TABLE>
<CAPTION>
<S>                                        <C>           <C>          <C>            <C>               <C>              <C>

                                                                                                   Accumulated
                                                                                                      Other
                                     Comprehensive          Common Stock           Retained        Comprehensive
                                        Income          Shares       Amount        Earnings           Income           Total
                                     -------------    ----------   -----------    -----------      -------------   -------------

BALANCE AT
 JANUARY 1, 2002                                       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 loss,
  net of tax:
  Unrealized holding losses
    on securities available-
    for-sale arising during
    the year, net of taxes
    of $51,125                           (73,103)
                                     -------------
Other comprehensive loss,
  net of taxes                           (73,103)                                                     (73,103)          (73,103)
                                     -------------    ----------   -----------    -----------      -------------   --------------

Total comprehensive income           $ 2,671,230
                                     =============

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

5% stock dividend                                         68,665     1,997,422    (1,997,422)
Fractional shares                                                                    (14,193)                          (14,193)
Redemption and retirement
  of stock                                              (38,987)     (361,296)      (729,099)                       (1,090,395)
Stock options exercised and
  related tax benefits                                    26,770       489,285                                          489,285
Net income for the year              $ 2,911,007                                    2,911,007                         2,911,007
Other comprehensive loss,
  net of tax:
  Unrealized holding losses
    on securities available-
    for-sale arising during
    the year, net of taxes
    of $45,274                          (64,735)
                                      ------------
Other comprehensive loss,
  net of taxes                          (64,735)                                                     (64,735)          (64,735)
                                     -------------    ----------   -----------    -----------      -------------   --------------

Total comprehensive income           $ 2,846,272
                                     =============
</TABLE>


                                     Page 5

<PAGE>


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

  For the nine months ended September 30, 2004 (Unaudited), and the years ended
                 December 31, 2003 (Audited) and 2002 (Audited)
<TABLE>
<CAPTION>
<S>                                     <C>            <C>            <C>           <C>             <C>               <C>

                                                                                                Accumulated
                                                                                                   Other
                                   Comprehensive         Common Stock             Retained      Comprehensive
                                      Income         Shares         Amount        Earnings         Income             Total
                                   -------------    ---------     ------------   -----------    -------------    ----------------


BALANCE AT
  DECEMBER 31, 2003                                 1,457,594     $ 15,061,636   $ 6,386,083     $   23,560      $ 21,471,279

Redemption and retirement
  of stock                                               (601)          (6,218)      (11,839)                         (18,057)
Cash dividends                                                                      (906,732)                        (906,732)
Fractional shares                                                                     (7,497)                          (7,497)
Stock options granted                                                   72,576                                         72,576
Stock options exercised and
  related tax benefits                                 97,494        1,786,065                                      1,786,065
Redemption of stock
  under tender offer                                 (126,208)      (1,416,223)   (3,071,903)                      (4,488,126)
3 for 2 stock split                                   713,825
Net income for the period          $  2,081,891                                    2,081,891                        2,081,891
Other comprehensive loss,
  net of tax:
  Unrealized holding losses
    on securities available-
    for-sale arising during
    the year, net of taxes
    of $ 74,577                        (106,636)
                                   -------------
Other comprehensive loss,
  net of taxes                         (106,636)                                                   (106,636)         (106,636)
                                   -------------    ---------     ------------   -----------    -------------    ----------------

Total comprehensive income         $  1,975,255
                                   =============

BALANCE AT
 September 30, 2004                                 2,142,104     $ 15,497,836   $ 4,470,003    $   (83,076)     $ 19,884,763
                                                    =========     ============   ===========    =============    ================
</TABLE>


                                     Page 6
<PAGE>


                      SONOMA VALLEY BANCORP AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
              For the nine months ended September 30, 2004 and 2003
<TABLE>
<CAPTION>
<S>                                                                                            <C>                    <C>

                                                                                               2004                   2003
------                                                                                   ----------------        ---------------
OPERATING ACTIVITIES
    Net income                                                                               $ 2,081,891           $ 2,142,949
    Adjustments to reconcile net income to net cash provided by operating activities:
      Provision for loan losses                                                                   70,000             20,000
      Depreciation                                                                               227,462            166,568
      Gain on sale of premise and equipment                                                         (366)                 0
      Amortization and other                                                                     105,667             72,808
      Stock options granted                                                                       72,576                  0
      Net change in interest receivable                                                         (252,107)          (132,311)
      Net change in other assets                                                                 (94,540)          (265,799)
      Net change in cash surrender value of life insurance                                    (1,121,299)          (257,166)
      Net change in interest payable and other liabilities                                       235,907            115,201
                                                                                         ----------------        ---------------
                                            NET CASH PROVIDED BY OPERATING ACTIVITIES          1,325,191          1,862,250
INVESTING ACTIVITIES
   Purchases of securities held-to-maturity                                                   (2,519,972)        (6,812,829)
   Purchases of securities available-for sale                                                 (8,154,336)       (10,877,142)
   Proceeds from maturing securities held-to-maturity                                          1,201,900          3,083,400
   Proceeds from maturing securities available-for sale                                        4,550,000            750,000
   Net change in loans                                                                       (24,773,318)          6,208,450
   Purchases of life insurance                                                                         0                   0
   Purchases of premises and equipment                                                          (282,789)           (587,113)
                                                                                         ----------------        ---------------
                                               NET CASH USED FOR INVESTING ACTIVITIES        (29,978,515)         (8,235,234)
FINANCING ACTIVITIES
   Net change in demand, interest-bearing transaction and savings deposits                     7,896,538          14,840,123
   Net change in time deposits                                                                  (950,324)            742,772
   Cash dividend paid                                                                           (906,732)                  0
   Exercise of stock options                                                                   1,786,065             377,484
   Stock repurchases                                                                          (4,506,183)         (1,088,373)
   Fractional shares purchased                                                                    (7,497)            (14,193)
                                                                                         ----------------        ---------------
                                            NET CASH PROVIDED BY FINANCING ACTIVITIES          3,311,867          14,857,813
                                                                                         ----------------        ---------------
                                              NET CHANGE IN CASH AND CASH EQUIVALENTS        (25,341,457)          8,484,829
   Cash and cash equivalents at beginning of period                                           35,354,202          31,517,599
                                                                                         ----------------        ---------------
                                           CASH AND CASH EQUIVALENTS AT END OF PERIOD        $10,012,745        $ 40,002,428
                                                                                         ================        ===============
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
   Interest                                                                                   $1,145,990         $ 1,330,180
   Income taxes                                                                                  115,000           1,025,000
Stock dividend                                                                                         0           1,997,422
Change in unrealized gains and losses
 on securities available-for-sale                                                               (181,212)            (76,004)
Change in deferred income taxes on
  unrealized holding gains and losses on securities                                               74,577              31,279
</TABLE>

                                     Page 7

<PAGE>



                      SONOMA VALLEY BANCORP AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2004
                                   (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
(the  "Company")  and Subsidiary at September 30, 2004 and results of operations
for the three and nine 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  2003 Annual Report on
Form  10-K.  The  results  of  operations  for the three and nine  months  ended
September  30, 2004 are not  necessarily  indicative  of the  operating  results
through December 31, 2004.

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 September 30,
2004 and September 30, 2003.

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
net  income  per  common  share for the period  ending  September  30,  2004 was
2,173,330 and for the period ending September 30, 2003 was 2,167,662.

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  September  30, 2004 was  2,360,731 and for the period ending
September 30, 2003 was 2,366,643.

Prior year shares have been  adjusted to reflect 3 for 2 stock split on July 21,
2004.

                                     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>
<CAPTION>
<S>                                                           <C>             <C>             <C>             <C>

                                                              For the Three Months                For the Nine Months
                                                               Ended September 30                 Ended September 30
                                                             2004            2003              2004           2003
                                                       ----------------  -------------    --------------  -------------

    Net Income, as reported                               $ 744,728        $ 742,342       $ 2,081,891     $2,142,949
    Deduct: Total stock-based
       compensation expense determined
       under fair value based method for all
       awards, net of related tax effects                   (44,978)         (44,975)         (134,934)      (134,925)
                                                       ----------------  -------------    --------------  -------------
    Pro forma net income                                  $ 699,750        $ 697,367       $ 1,946,957    $ 2,008,024
                                                       ================  =============    ==============  =============

Net income per share:
    Basic - As reported                                       $ .34            $ .34             $ .96          $ .99
                                                              ======           ======            ======         =====
    Basic - Pro forma                                         $ .32            $ .32             $ .90          $ .93
                                                              ======           ======            ======         =====
    Diluted - As reported                                     $ .32            $ .31             $ .88          $ .91
                                                              ======           ======            ======         =====
    Diluted - Pro forma                                       $ .30            $ .29             $ .82          $ .85
                                                              ======           ======            ======         =====
</TABLE>

                                     Page 9


<PAGE>


Note 6 - Employee Benefit Plans

The Bancorp  provides  retirement  plans to its key officers and directors.  The
plans are unfunded and provide for the Bancorp to pay the officers and directors
specified amounts for specified periods after retirement.  The amount of pension
expense related to this plan, and the components of pension expense for the nine
months ended September 30, 2004 and 2003 are as follows:

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

                                                             Directors                        Officers
                                                     -------------------------         ------------------------
                                                         2004         2003                 2004         2003
                                                     ------------  -----------         ------------  ----------

Service cost                                           $ 47,407     $ 53,541             $ 138,276   $ 147,065

Interest cost on projected benefit obligation            16,363       10,229                51,853      56,214

Amortization of unrecognized liability at                                                  (22,644)    (26,114)
                                                     ------------  -----------         ------------  ----------
transition

Net periodic pension cost recognized                   $ 63,770     $ 63,770             $ 167,485   $ 177,165
                                                     ============  ===========         ============  ==========
</TABLE>

                                    Page 10



<PAGE>

                              SONOMA VALLEY BANCORP
                     AVERAGE BALANCES/YIELDS AND RATES PAID
              For the nine months ended September 30, 2004 and 2003
                             (dollars in thousands)
<TABLE>
<CAPTION>
<S>                                                   <C>        <C>       <C>           <C>         <C>          <C>

                                                                2004                                 2003
                                                                ----                                 ----
                                                    Average    Income/    Yield/       Average      Income/      Yield/
ASSETS                                              Balance    Expense     Rate        Balance      Expense       Rate
Interest-earning assets:
Loans(2):
  Commercial                                         95,539     5,089      7.12%        85,155        4,932       7.74%
  Consumer                                           13,667       681      6.66%        11,809          666       7.54%
  Real estate construction                           18,756     1,085      7.73%        19,532        1,176       8.05%
  Real estate mortgage                                4,439       245      7.37%         4,154          270       8.69%
  Tax exempt loans (1)                                3,055       192      8.39%         3,171          199       8.39%
  Leases                                                 33         6     24.29%            73           17      31.14%
  Tax exempt leases (1)                                   1         0      0.00%            52            8      20.57%
  Unearned loan fees                                   (447)                              (414)
                                                    --------   -------                 --------      ------
         Total loans                                135,043     7,298      7.22%       123,532        7,268       7.87%
Investment securities
  Available for sale:
         Taxable                                     23,626       614      3.47%         9,658          237       3.28%
         Tax exempt(1)                                    0         0      0.00%             0            0       0.00%
  Hold to maturity:
         Taxable                                        393         8      2.72%           388           10       3.45%
         Tax exempt (1)                              17,155       747      5.82%        10,147          517       6.80%
                                                    --------   -------                 --------      ------
         Total investment securities                 41,174     1,369      4.44%        20,193          764       5.05%
Federal funds sold                                   10,640        77       .97%        29,803          244       1.09%
Federal Home Loan Bank stock                            564        14      3.32%           287           10       4.66%
Total due from banks/Interest bearing                   194         4      2.75%           158            0       0.00%
                                                    --------   -------                 --------      ------
  Total interest earning assets                     187,615     8,762      6.24%       173,973        8,286       6.37%
                                                               =======                               ======
Noninterest-bearing assets:
  Reserve for loan losses                            (2,444)                            (2,781)
  Cash and due from banks                             9,652                              8,859
  Premises and equipment                              1,364                              1,057
  Other assets                                       12,038                             10,971
                                                    --------                           --------
                                   Total assets    $208,225                            $192,079
                                                    ========                           ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
  Interest bearing deposits
         Interest bearing transaction                32,924         37     0.15%         29,096          39       0.18%
         Savings deposits                            66,394        312     0.63%         57,659         360       0.83%
         Time deposits over $100,000                 25,446        498     2.61%         24,886         554       2.98%
         Other time deposits                         18,750        297     2.12%         19,843         368       2.48%
                                                    --------     ------                --------      ------
           Total interest bearing Deposits          143,514      1,144     1.06%        131,484       1,321       1.34%
  Federal Funds purchased                                 0          0     0.00%              0           0       0.00%
  Other short term borrowings                             0          0     0.00%              4           0       0.00%
                                                    --------     ------                --------      ------
           Total interest bearing liabilities       143,514     $1,144     1.06%        131,488      $1,321       1.34%
                                                                 ======                              ======
Non interest bearing liabilities:
  Non interest bearing demand deposits               40,293                              37,395
  Other liabilities                                   3,468                               3,236
                              Shareholders' equity   20,950                              19,960
                                                    --------                           --------
        Total liabilities and shareholders' equity $208,225                            $192,079
                                                    ========                           ========
Interest rate spread                                                       5.18%                                  5.03%
                                                                           =====                                  =====
Interest income                                                  $8,762    6.24%                     $8,286       6.37%
Interest expense                                                  1,144     .81%                      1,321       1.02%
                                                                 -------   -----                     ------       -----
Net interest income/margin                                       $7,618    5.43%                     $6,965       5.35%
                                                                 =======   =====                     =======      =====
</TABLE>


(1)  Fully tax equivalent adjustments are based on a federal income tax rate of
     34% in 2004 and 2003
(2)  Non accrual loans have been included in loans for the purposes of the above
     presentation. Loan fees of approximately $224,508 and $319,370 for the nine
     months ended September 30, 2004  and September 30, 2003, respectively, were
     amortized to the appropriate interest income categories.

                                    Page 11
<PAGE>


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

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  (the
"Company") wholly owned subsidiary,  Sonoma Valley Bank (the "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-Q 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.

For the Nine Month Periods
Ended September 30, 2004 and 2003

Overview

The Company continues to be profitable, however, net income decreased by $61,058
from  $2,142,949 for the nine months ended  September 30, 2003 to $2,081,891 for
the nine months ended September 30, 2004. The decrease in net income is a result
of the expenses  associated  with the opening of a new branch,  Banco de Sonoma,
during  the first  quarter  of 2004 and the  recognition  of  expense  for stock
options  granted during January 2004.  Additionally,  the Company  experienced a
decline in income associated with loan referral fees. The Company now originates
most of the mortgage loans previously  outsourced to a vendor. The net effect of
these  items  combined  to lower net income.  On a per share  basis,  net income
equaled $.96 compared with $.99 per share during the same period in 2003.

Return on average total assets on an annualized basis for the nine-month  period
was 1.34% in 2004 and 1.49% in 2003. Return on average  shareholders'  equity on
an  annualized  basis for the same periods was 13.27% and 14.35%,  respectively.
The  decline  in the  return  on  average  assets  in 2004 is the  result of the
increase in average assets from $192.1 million in 2003 to $208.2 million in 2004
and the lower income generated during the period.  The lower return on equity is
the result of the  decline  in income for the nine month  period of 2004 and the
$990,000  increase in average equity from $20.0 million in 2003 to $21.0 million
in 2004.

                                    Page 12
<PAGE>


Income for the nine month period  ending  September  30, 2004 is lower than 2003
due to the 65 basis point  decline in the yield on loans (see the  table-Average
Balances,  Yields and Rates Paid on page 11),  the  significant  decline in loan
referral  income,  the  increase  in  operating  expense due to the new Banco de
Sonoma Branch and the expensing of stock  options.  The Company has  experienced
pressure to refinance loans for customers and a portion of the loans are tied to
the prime lending rate and have repriced downward accordingly.

The most significant  event affecting the Company's growth is the opening of the
Banco de  Sonoma  branch  in Boyes  Hot  Springs.  Initially,  this  will have a
negative  effect on the Income  Statement  by  creating in excess of $200,000 in
additional  expense  for the  Company.  The branch is  offering  services to the
Latino  community in our market  place.  Management  identified  this as a niche
which was under-served  and an opportunity for future growth and  profitability.
All  employees  at the  branch  are  bilingual  and able to offer  full  service
banking.  An  additional  product  which has been added is the  ability  for the
customer  to  effect  an  immediate  transfer  of  funds to  Mexico.  Management
anticipates that the growth in the branch will be slow and steady and profitable
within three or four years.

Total shareholders' equity declined by $1.6 million or 7.39% for the nine months
ended  September 30, 2004. On May 21, 2004,  the Company closed the tender offer
purchasing 126,208 shares of stock at $35.00 per share for a total of $4,488,126
including expenses associated with the offering, lowering equity. In addition to
the tender offer,  the Company  repurchased  and retired 601 shares of stock for
$18,000.  For the nine months ending September 30, 2004 the Company reported net
income of $2,082,000 and paid out cash dividends of $371,000 in March,  2004 and
$536,000 in August, 2004. An additional $7,000 was paid for fractional shares in
August,  2004 as a result of the three for two stock split.  The  directors  and
officers  exercised  97,494  options  which  added $1.2  million to the  capital
accounts.  The tax benefit on these options  exercised was $617,000,  which also
increases equity. See page 6 for detail of "Changes in Shareholder Equity."

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
11, is higher than net interest  income on the  statement  of income  because it
reflects adjustments applicable to tax-exempt income from certain securities and
loans ($319,000 in 2004 and $246,000 in 2003,  based on a 34% federal income tax
rate).

The  improvement in net interest  income for the nine months ended September 30,
2004 (stated on a fully taxable  equivalent basis) is a result of the net effect
of a $477,000  increase  in  interest  income  offset by a decline  in  interest
expense of  $177,000,  resulting  in an increase of  $654,000.  The  increase in
interest  income is a result of the growth in the loan  portfolio  offset by the
low rates paid on deposit  accounts.  In 2004 there has been three  increases in
the target fed funds rate and prime  lending  rate.  A 25 basis  point  increase
occurred July 1, 2004, another August 11, 2004 and most recently 25 basis points
as of September 22, 2004.

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 2004  increased to 5.43% from 5.35% for the

                                    Page 13
<PAGE>

same period in 2003.  The increase in the net  interest  margin is the result of
the 75 basis point increase in the prime lending rate, growth in loan volume and
the transition of assets from fed funds sold to loan products.

Interest Income

As previously  stated,  interest  income  (stated on a fully taxable  equivalent
basis) increased by $477,000 to $8.8 million in the nine months of 2004, a 5.76%
increase  over the $8.3  million  realized  during the same period in 2003.  The
$13.6 million  increase in volume of average balances was responsible for a $1.2
million  increase in  interest  income  offset by a $725,000  decrease in income
related to lower  interest  rates.  The yield on earning  assets was 6.24% as of
September,  2004  compared  to 6.37% as of the same  period in 2003,  a 13 basis
point  decline.  The decline is  primarily a result of maturing  loans at higher
yields being replaced by lower yielding loans and existing loans  refinancing at
lower  rates due to the lower  market  rates.  The net effect was an increase in
interest income of $477,000.

Interest Expense

Total interest expense decreased by $177,000 to $1.1 million for the 2004 period
ending  September  compared to $1.3 million  during the same period of 2003. The
average rate paid on all  interest-bearing  liabilities  decreased from 1.34% in
2003 to 1.06% in 2004.  Average balances increased from $131.5 million to $143.5
million,  a 9.15% gain in deposits.  The increase in volume of average  balances
was responsible for a $52,000  increase in interest expense offset by a $229,000
decrease in expense  related to lower interest rates resulting in lower interest
expense of $177,000.

Individual  components of interest  income and interest  expense are provided in
the table-Average Balances, Yields and Rates Paid on page 11.

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.  Due to  managements'
evaluation and  assessment of the loan  portfolio as a result of loan growth,  a
provision of $70,000 was made during the nine months of 2004 compared to $20,000
during the same  period of 2003.  Management  anticipates  that loan growth will
continue in the fourth quarter which could  necessitate an additional  provision
to the reserve for loan losses.  The  provision for loan losses at year end 2003
was $20,000.

The economic climate  continues to slowly improve and the non-accrual  portfolio
dropped  to less than 1% of total  loans  during the nine  months of 2004,  down
40.4% or $733,000 from the level of  non-accrual  loans as of  September,  2003.
Loans charged-off were $336,000 (one loan represented over 80.3% of this figure)
and recoveries were $13,000 for the nine months of 2004 compared with $44,000 in
charge-offs  and $13,000 in recoveries  for the same period in 2003. See page 18
for an analysis in the changes in  allowance  for loan losses  including  charge
offs and recoveries.


                                    Page 14
<PAGE>



Non-interest Income

Non-interest  income of $1.26  million  decreased  2.5%  from the $1.30  million
recorded in the comparable period in 2003. The Company has experienced a decline
in loan  referral  income which is a result of the decline in loan  refinancings
and new purchase loans, offset by an increase in service charge income.

Non-interest Expense

Total  non-interest  expense  increased  13.1% to $5.4  million  during the nine
months of 2004  from  $4.8  million  for the same  period in 2003.  Non-interest
expense on an annualized basis represented 3.47% of average total assets in 2004
compared with 3.33% in the  comparable  period in 2003. The increase in the 2004
expense ratio  largely  reflects  expenses  incurred with the opening of our new
branch, Banco de Sonoma and the expensing of stock options.

The expenses for salaries and benefits increased 20.9% from $2.6 million in 2003
to $3.1 million in 2004. The $539,000  increase in 2004 is largely the result of
the  additional  staffing and benefits  required for the Banco de Sonoma  branch
which opened during the first  quarter;  and the effect of a 79.03%  increase in
the cost of Workers Compensation  insurance when comparing the nine months ended
September 30, 2004 with the same period of 2003. Additionally, the Company began
expensing stock options awarded in 2004. At September 30, 2004,  total full time
equivalent employees were 56 compared to 47 in 2003.

Expense  related to premises and equipment  increased  16.6% to $663,000 in 2004
from  $569,000 in 2003.  The $94,000  increase in expense in 2004 is a result of
the  amortization  of  expenses  from the  remodel of the Sonoma  Branch and the
opening of the Banco de Sonoma branch.  The bank continues to emphasize security
in its computer operations and equipment and software are monitored and upgraded
as  appropriate  to ensure  confidentiality  of customer and company  data.  The
company  continues to emphasize the  utilization  of  technology to  accommodate
customer and market demands.

Other  operating  expenses  declined by .56% in 2004 to $1.63 million from $1.64
million  in 2003.  The  Company  showed  a 20%  decline  in other  miscellaneous
expense. The most significant decline was in correspondent bank service charges.

Provision for Income Taxes

The  provision  for income taxes  declined to an effective tax rate of 32.6% for
the nine months of 2004  compared  with 33.3% for the nine  months of 2003.  The
lower effective tax rate is a reflection of the increase of municipal securities
in the investment  portfolio.  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.

BALANCE SHEET ANALYSIS

Investments

Investment securities were $41.3 million at September 30, 2004, a 12.7% increase
from the $36.7  million at  December  31, 2003 and a 50.5%  increase  from $27.5

                                    Page 15
<PAGE>

million at September  30, 2003.  The  significant  increase in the  portfolio is
management's  attempt to generate higher earnings by moving funds from Fed Funds
Sold to higher yielding investments. The Company purchases securities rated A or
higher by Standard and Poor's and or Moody's Investors  Service.  In the event a
security is downgraded,  the Company will monitor the investment more closely or
sell if appropriate.  Local tax-exempt bonds are occasionally  purchased without
an A rating.

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 September 30,
2004, the Company had  securities  totaling $17.8 million with a market value of
$18.4 million  categorized as held to maturity.  Decisions to acquire  municipal
securities,  which  are  generally  placed  in this  category,  are based on tax
planning needs, pledge requirements and earnings.

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 $23.5 million  compared to an amortized cost
of $23.7 million as of September 30, 2004.

There was one Federal Home Loan Mortgage Agency security of $1.0 million and two
Federal  Home Loan Bank  securities  of $1.3  million in the AFS  portfolio  and
$879,000  in  municipal  securities  in the HTM  portfolio  that  have been in a
continuous  loss position for 12 months or more as of September 30, 2004.  There
were seventeen Federal Home Loan Bank, Federal Home Loan Mortgage Corporation or
Federal  National  Mortgage  Association  securities of $17.6 million in the AFS
portfolio and six municipal securities of $1.6 million in the HTM portfolio that
have been  temporarily  impaired as of September 30, 2004.  The primary cause of
the  impairment of these  securities is interest rate  volatility  inherent in a
rising  rate  environment  which  causes the  market  value of the  security  to
decline.  Management  understood  the  potential  market  risks  at the  time of
acquisition  and  determined  the benefit to the Company of the higher  interest
rates received was a good business decision. It is the Company's intent to carry
the  securities  to maturity  date,  at which time the Company will receive face
value for the securities at no loss.

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 $146.9 million at September 30, 2004, or 78.5%
of  total  deposits.  This  compares  with  $122.5  million,  or  68.0% of total
deposits,  at December 31, 2003 and $121.8 million,  or 69.4% of total deposits,
at  September  30,  2003. A  comparative  schedule of average  loan  balances is
presented  in the  table  on page  11;  period-end  and  year-end  balances  are
presented in the following table.

                                    Page 16

<PAGE>

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

                             September 30,   Percentage   December 31,   Percentage  September 30,  Percentage
                                  2004        of Total        2003        of Total       2003        of Total
                                  ----        --------        ----        --------       ----        --------

Commercial                   $107,850,150       73.1%     $92,197,984       75.0%    $89,465,014       73.2%
Consumer                       15,147,103       10.3%      11,750,131        9.6%     11,096,839        9.1%
Real estate construction       17,483,054       11.9%      16,646,907       13.5%     18,606,701       15.2%
Real estate mortgage            6,857,318        4.7%       2,231,244        1.8%      2,987,397        2.4%
Leases                             20,714        0.0%          79,884        0.1%         71,060        0.1%
                             ------------                ------------               ------------
                              147,358,339      100.0%     122,906,150      100.0%    122,227,011      100.0%
                                               =====                       =====                      =====
Deferred loan fees
 and costs, net                  (439,618)                   (437,536)                  (414,889)
Allowance for loan
 and lease losses              (2,381,415)                 (2,634,625)                (2,771,390)
                             ------------                ------------               ------------

                             $144,537,306                $119,833,989               $119,040,732
                             ============                ============               ============
</TABLE>


Risk Elements

The majority of the Company's  loan activity is with  customers  located  within
Sonoma  County.  Approximately  86.5% 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
September  30,  2004,  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 $1.1  million of non accrual  loans and no loans 90 days or more past
due and still  accruing at September  30,  2004.  There were $1.8 million of non
accrual  loans  and no loans  90 days or more  past due and  still  accruing  at
September 30, 2003. The decline in non accrual loans is management's  attempt to
recognize and handle problems early.

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,

                                    Page 17
<PAGE>

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.

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 September 30, 2004 the Company
believes its overall allowance for loan losses is adequate based on its analysis
of conditions at that time.

At September 30, 2004, the allowance for loan losses was $2.4 million,  or 1.62%
of period-end loans,  compared with $2.6 million,  or 2.15% at December 31, 2003
and  $2.8  million,  or 2.28% at  September  30,  2003.  This  reduction  in the
allowance is consistent with the improved quality of the loan portfolio.

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

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

                                         For the Nine Months       For the Year      For the Nine Months
                                                Ended                 Ended                 Ended
                                               9/30/04               12/31/03              9/30/03

Balance beginning of year                    $ 2,634,625          $  2,781,962          $  2,781,962

Charge-offs:

  Commercial                                   (290,000)             (142,572)              ( 4,955)

  Consumer                                     ( 46,369)             ( 41,161)              (38,675)
                                             ------------         -------------         -------------

                      Total charge-offs        (336,369)             (183,733)              (43,630)

Recoveries:

  Commercial                                      11,621                 8,320                 6,400

  Consumer                                         1,538                 8,076                 6,658
                                             ------------         -------------         --------------

                       Total recoveries           13,159                16,396                13,058


Net (chargeoffs) recoveries                    (323,210)             (167,337)              (30,572)

Provision charged to operations                   70,000                20,000                20,000
                                             ------------         -------------         --------------

Balance end of period                        $ 2,381,415          $  2,634,625          $  2,771,390
                                             ============         =============         ==============

Ratio of net charge-offs
 annualized to average loans                        0.32%                 0.14%                 0.03%

Balance in allowance as a percentage
  of loans outstanding at period end                1.62%                 2.15%                 2.28%

YTD AVG LOANS                                135,043,182           123,043,664           123,531,714
PERIOD END LOANS                             146,918,721           122,468,614           121,812,123
</TABLE>

                                    Page 18
<PAGE>

Deposits

A comparative  schedule of average deposit balances is presented in the table on
page 11; period end and year-end deposit balances are presented in the following
table.

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

                          September 30,     Percentage     December 31,  Percentage   September 30,    Percentage
                               2004          of Total         2003        of Total        2003          of Total
                               ----          --------         ----        --------        ----          --------


Interest bearing
 transaction deposits      $31,214,138        16.7%        $32,467,678      18.0%      $28,124,429       16.0%

Savings deposits            65,398,770        35.0%         63,680,697      35.4%       65,414,882       37.3%

Time deposits, $100,000
 and over                   26,505,608        14.2%         26,565,347      14.7%       26,000,588       14.8%

Other time deposits         18,562,732         9.9%         19,453,317      10.8%       19,539,327       11.1%
                           -----------       --------      -----------     ------      -----------      ------

Total interest bearing
 deposits                  141,681,248        75.8%        142,167,039      78.9%      139,079,226       79.2%

Demand deposits             45,379,582        24.2%         37,947,577      21.1%       36,491,921       20.8%
                           -----------       ------        -----------     ------      -----------      ------

Total deposits            $187,060,830       100.0%       $180,114,616     100.0%     $175,571,147      100.0%
                           ===========       ======        ===========     ======      ===========      ======
</TABLE>

Total  deposits  increased by $6.9  million,  during the nine months of 2004, to
$187.1 million from $180.1  million at December 31, 2003.  Non interest  bearing
demand deposits  showed the greatest  increase of $7.4 million or 19.6% to $45.4
million at September  30, 2004 from $37.9 million as of December 31, 2003 and an
increase of $8.9 million or 24.4%  increase  from $36.5  million as of September
30, 2003.  Savings deposits increased $1.7 million or 2.7% to $65.4 million from
$63.7  million as of December 31, 2003 and a minimal  decline of $16,000 or .02%
from $65.4 million as of September 30, 2003.

When  compared to December 31, 2003,  the Company  showed  declines in all other
categories of deposits. Time deposits greater than $100,000, other time deposits
and interest bearing checking  declined by .22%, 4.6% and 3.9% to $26.5 million,
$18.6 million and $31.2 million,  respectively. Of those three, interest bearing
checking and time deposits  greater than $100,000 show  increases over September
30, 2003 of 11.0% and 1.9% from $28.1 million and $26.0  million,  respectively.
In addition to savings  accounts  mentioned  above,  the  category of other time
deposits  declined  by 5.0% from $19.5  million at  September  30, 2003 to $18.6
million as of September 30, 2004.  Customers may be allowing funds to accumulate
in demand and savings  accounts  rather than time  deposits to more readily take
advantage of future investment opportunities.

With the future of  interest  rates  uncertain  the Company  cannot  predict how
quickly rates may change on deposit accounts in a rising rate environment  which
could cause the net interest margin to decline, resulting in lower net income.

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,

                                    Page 19
<PAGE>

as of September 30, 2004, the Bank 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 new 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.

The table below presents Tier 1 capital,  total capital and total  risk-weighted
assets at September 30, 2004,  along with the related  risk-based  capital ratio
and leverage ratio.

(dollars in thousands)

   Total
Risked-based    TIER 1                   TOTAL                  Leverage
   Assets       Capital     Ratio       Capital       Ratio      Ratio
   ------       -------     -----       -------       -----      -----
  $186,271      $17,384     9.59%       $20,949       11.25%     8.78%

Off Balance Sheet Commitments

The Company's off balance sheet  commitments  consist of  commitments  to extend
credit of $34.8  million  and  standby  letters  of credit  of  $310,000.  These
commitments  are  extended to customers  in the normal  course of business.  The
Company also has  contractual  obligations  consisting  of operating  leases for
various facilities and payments to participants under the Company's supplemental
executive retirement plan and deferred compensation plan.

The following  table  summarizes  the Company's  contractual  obligations  as of
September 30, 2004.
<TABLE>
<CAPTION>
<S>                                  <C>             <C>           <C>             <C>             <C>

--------------------------------------------------------------------------------------------------------------------
                                                                Payments due by period
                                     -------------------------------------------------------------------------------
Contractual Obligations
--------------------------------------------------------------------------------------------------------------------
                                                  Less than                                     More than
                                     Total         1 year        1-3 years       3-5 years       5 years
--------------------------------------------------------------------------------------------------------------------
Operating Lease Obligations        1,396,914       293,450        855,329         248,135            -
--------------------------------------------------------------------------------------------------------------------
Executive Officer and
Director Supplemental
Retirement                         1,952,193         5,661         33,187         210,056       1,703,289
--------------------------------------------------------------------------------------------------------------------
Deferred Compensation              1,096,711         3,180         18,644         110,086         964,801
--------------------------------------------------------------------------------------------------------------------
</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

                                    Page 20
<PAGE>

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 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 2004 net interest income, as forecast below,
was modeled  utilizing a forecast  balance  sheet  projected  from year-end 2003
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.

Interest Rate Risk Simulation of Net Interest Income as of September 30, 2004
(In thousands)
Variation from a constant rate scenario         $ Change in NII
               +200bp                                $ 373
               +100bp                                  180
               -100bp                                 (398)

     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

                                    Page 21
<PAGE>

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  September  30,  2004  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 $34.2 million in fixed rate loans over
5 years.  Some variable  rate credit lines came off of floors in 2004,  and were
reclassified  from the fixed rate to the  variable  rate  category.  As interest
rates  increase,  more loans will come off floors and will  reclass  back to the
variable rate category.
<TABLE>
<CAPTION>
<S>                                           <C>        <C>        <C>       <C>       <C>        <C>         <C>
SEPTEMBER 30, 2004                          3 months  12 months   3 years   5 years   15 years  >15 years    Totals
                                            --------  ---------   --------  -------   --------  ---------   --------
(in thousands)

ASSETS:
  Fixed rate investments                    $  1,748  $    757    $ 15,995  $ 7,376   $ 14,459  $     978   $ 41,313
  Variable rate investments                        0         0           0        0          0        705        705
  Fixed rate loans                             9,428     7,884      15,507   39,929     31,613      2,606    106,967
  Variable rate loans                         36,287     1,414           0    1,610          0          0     39,311
  Interest-bearing balances due from banks        35                                                              35

  Fed funds sold                               1,685                                                           1,685
                                            --------  ---------   --------  -------   --------  ---------   --------

     Interest bearing assets                  49,183    10,055      31,502   48,915     46,072      4,289    190,016
                                            --------  ---------   --------  -------   --------  ---------   --------

LIABILITIES:
  Interest bearing transaction deposits       31,214                                                          31,214
  Savings deposits                            65,399                                                          65,399
Time Deposits
     Fixed rate >100m                          4,936    14,298       5,721    1,550                           26,505
     Fixed rate <100m                          4,528     9,441       3,717      854                           18,540
     Floating rate >100m                                                                                           0
     Floating rate <100m                          23                                                              23
  Borrowings                                                                                                       0
                                            --------  --------    --------  -------   --------  ---------   --------
    Interest Bearing Liabilities           $ 106,100  $ 23,739    $  9,438  $ 2,404   $     0   $       0   $141,681
                                            --------  --------    --------  -------   --------  ---------   --------

Rate Sensitivity Gap                         (56,917)  (13,684)     22,064   46,511    46,072       4,289
                                            --------  --------    --------  -------   -------   ---------
Cumulative Rate Sensitivity Gap              (56,917)  (70,601)    (48,537)  (2,026)   44,046      48,335
                                            --------  --------    --------  -------   -------   ---------

Cumulative Position to Total Assets           -27.01%   -33.51%     -23.04%   -0.96%    20.90%     22.94%
                                            ========  ========    ========  =======   =======   =========
</TABLE>

                                    Page 22
<PAGE>

For the Three Month Periods
Ended September 30, 2004 and 2003

Overview

The  Company  reported  net  income of  $745,000  for the third  quarter of 2004
compared with $742,000 for the third quarter of 2003. On a per share basis,  net
income for the three  months  ended  September  30, 2004  equaled $.34 per share
compared with $.34 per share during the same period in 2003.

Return on average total assets on an annualized basis for the three months ended
September  30, 2004 and 2003 was 1.40% and 1.50%,  respectively.  The decline in
the return on assets is because assets are growing faster than earnings.  Return
on average  shareholders'  equity on an  annualized  basis for the three  months
ended  September  30,  2004 and 2003 was 15.14% and  14.57%,  respectively.  The
increase  in the  return  on equity is a result  of the  decline  in the  equity
accounts. This decline is a result of the completion of the tender offer in May,
2004 and the payment of a cash dividend in August,  2004.  Together they lowered
capital by $5.0  million  which was  partially  offset by the  exercise of stock
options by directors and officers which increased capital by $1.8 million.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income,  adjusted to a fully taxable  equivalent  basis,  increased
$255,000 to $2.7  million for the three months ended  September  30, 2004,  from
$2.5 million  during the  comparable  period of 2003.  Net interest  income on a
fully taxable equivalent basis, as shown on the table -Average Balances,  Yields
and Rates Paid on page 25, is higher than net interest  income on the statements
of income because it reflects  adjustments  applicable to tax-exempt income from
certain  securities and loans ($108,000 in 2004 and $86,000 in 2003,  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 third quarter of 2004  increased to 5.64%
from 5.42% for the  comparable  period in 2003. The increase in the net interest
margin is the result of the  movement of funds from lower  yielding fed funds to
higher yielding  investments and loans,  the repricing of time deposits to lower
interest  rates and the 75 basis point increase in the fed funds target rate and
the prime lending rate in 2004.

Interest Income

Interest  income for the three  months  ended  September  30, 2004  increased by
$225,000 to $3.1 million, a 7.84% increase over the $2.9 million realized during
the same period in 2003. The gain in volume of average  balances was responsible
for a $571,000  increase in  interest  income  offset by a $346,000  decrease in
income related to lower interest rates. The net effect was a decline in interest
income of $225,000.

Interest Expense

Total interest expense for the three months ended September 30, 2004 declined by
$30,000 to $384,000  compared  with  $414,000  in the same  period of 2003.  The

                                    Page 23
<PAGE>

average rate paid on all  interest-bearing  liabilities for the third quarter of
2004  declined  to 1.06% from 1.20% in the third  quarter of 2003,  and  average
balances for the third quarter of 2004  increased to $144.7  million from $136.4
million in the same period of 2003, a 6.08% gain.

The gain in  volume of  average  balances  accounted  for a $5,000  increase  in
interest  expense  offset by a $35,000  decline  related to lower interest rates
paid resulting in a $30,000  decrease in interest  expense for the third quarter
of 2004.

Individual  components of interest  income and interest  expense are provided in
the table - Average Balances, Yields and Rates Paid on page 25.

Provision for Loan Losses

There was no provision for loan losses during the third quarter of 2003 compared
to the $40,000  provision  for the third  quarter of 2004.  The  increase in the
provision is the result of  managements'  evaluation  and assessment of the loan
portfolio and the loan growth the Company has experienced.

Non-interest Income

Non-interest  income of $452,000  for the third  quarter of 2004  represented  a
decrease of $3,000,  or .66%,  from the  $455,000 for the  comparable  period in
2003.

Non-interest Expense

For the third quarter of 2004,  non-interest  expense was $1.9 million  compared
with $1.7  million  for the same  period in 2003,  representing  an  increase of
$155,000,  or 9.05%.  The largest  increase of non interest expense was salaries
and benefits, which increased $187,000, or 20.4%, compared with the three months
ended September 30, 2003. The increase is largely a result of additional  salary
and benefit costs associated with our new branch, Banco de Sonoma. The full time
equivalent  employees at September 30, 2004 was 56 compared with 47 at September
30, 2003.

Premises and equipment expense increased $27,000,  or 13.2%, to $231,000 for the
third quarter of 2004 from $204,000 for the third quarter of 2003.  The increase
is tied to  depreciation  expense for the  remodel of the Sonoma  Branch and the
premises and equipment for the new branch, Banco de Sonoma.

Other non  interest  expense  for the three  months  ended  September  30,  2004
declined by 9.95% to  $534,000  compared to $593,000 in the same period in 2003.
The  largest  component  of  the  decline  is  a  result  of  lower  charges  by
correspondent banks for their check processing services.

Provision for Income Taxes

The  provision  for income taxes  increased to an effective tax rate of 35.2% in
the third quarter of 2004 compared with 33.4% for the comparable period in 2003.
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.


                                    Page 24
<PAGE>


                              SONOMA VALLEY BANCORP
                     AVERAGE BALANCES/YIELDS AND RATES PAID
             For the three months ended September 30, 2004 and 2003
                             (dollars in thousands)
<TABLE>
<CAPTION>
<S>                                       <C>             <C>            <C>              <C>               <C>            <C>
                                                         2004                                              2003
                                                         ====                                              ====
                                        Average         Income/         Yield/           Average          Income/         Yield/
ASSETS                                  Balance         Expense         Rate             Balance          Expense         Rate

Interest-earning assets:
Loans(2):
  Commercial                            101,190           1,822          7.16%            86,411            1,771          8.13%
  Consumer                               14,382             223          6.17%            11,088              202          7.23%
  Real estate construction               20,159             399          7.87%            18,422              381          8.21%
  Real estate mortgage                    6,593             113          6.82%             3,450               77          8.85%
  Tax exempt loans (1)                    3,031              64          8.40%             3,148               67          8.44%
  Leases                                     25               1         15.91%                50                4         31.74%
  Tax exempt leases (1)                       0               0          0.00%                31                1         12.80%
  Unearned loan fees                       (461)                                            (412)
                                        --------         ------         ------           --------         -------         -------
         Total loans                    144,919           2,622          7.20%           122,188            2,503           8.12%

Investment securities
  Available for sale:
         Taxable                         23,728             197          3.30%            14,266              103           2.86%
         Tax exempt(1)                        0               0          0.00%                 0                0           0.00%
  Hold to maturity:
         Taxable                            388               3          3.08%               408                2           1.94%
         Tax exempt (1)                  17,572             253          5.73%            11,345              186           6.50%
                                        ========         ======                          ========         ========
         Total investment securities     41,688             453          4.32%            26,019              291           4.44%
Federal funds sold                        3,908              13          1.32%            31,039               74           0.95%
Federal Home Loan Bank stock                700               8          4.55%               291                3           4.09%
Total due from banks/Interest bearing        35               0          0.00%               331                0           0.00%
                                        --------         ------                          -------          --------
  Total interest earning assets         191,250           3,096          6.44%           179,868            2,871           6.33%
                                                         ======                                           ========
Noninterest-bearing assets:
  Reserve for loan losses                (2,384)                                          (2,773)
  Cash and due from banks                 9,890                                            9,005
  Premises and equipment                  1,382                                            1,226
  Other assets                           12,388                                           11,078
                                        --------                                         --------
                       Total assets    $212,526                                         $198,404
                                        ========                                         ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
  Interest bearing deposits
         Interest bearing transaction    32,898            $ 13          0.16%            29,282             $ 11           0.15%
         Savings deposits                68,513             109          0.63%            62,577              114           0.72%
         Time deposits over $100,000     24,853             164          2.64%            24,808              174           2.77%
         Other time deposits             18,447              98          2.11%            19,735              115           2.31%
                                        --------         ------                          --------         --------
           Total interest bearing
            Deposits                    144,711             384          1.06%           136,402              414           1.20%
  Federal funds purchased                     0               0          0.00%                 0                0           0.00%
  Other short term borrowings                 0               0          00.0%                11                0           00.0%
                                        --------         ------                          --------         --------
           Total interest bearing
            liabilities                 144,711           $ 384          1.06%           136,413            $ 414           1.20%
                                                         ======                                           ========
Non interest bearing liabilities:
  Non interest bearing demand deposits   44,529                                           38,268
  Other liabilities                       3,609                                            3,349
               Shareholders' equity      19,677                                           20,374
                                        --------                                         --------
Total liabilities and shareholders'
 equity                                $212,526                                         $198,404
                                        ========                                         ========
Interest rate spread                                                     5.38%                                              5.13%
                                                                         =====                                              =====
Interest income                                           3,096          6.44%                              2,871           6.33%
Interest expense                                            384          0.80%                                414           0.91%
                                                         ------          -----                            --------          -----
Net interest income/margin                               $2,712          5.64%                             $2,457           5.42%
                                                         ======          =====                            ========          =====
</TABLE>

(1)  Fully  tax equivalent adjustments are based on a federal income tax rate of
     34% in 2004 and 2003
(2)  Non  accrual loans  have  been  included  in  loans for the purposes of the
     above  presentation.  Loan  fees of approximately $84,700  and $130,500 for
     the   nine  months  ended  September  30,  2004  and  September  30,  2003,
     respectively, were amortized to the appropriate interest income categories.

                                    Page 25
<PAGE>



Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Information regarding Quantitative and Qualitative Disclosures about Market Risk
appears on page 20 through 22 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 are
effective  in timely  alerting  them to  material  information  relating  to the
Company required to be included in this Form 10-Q.

                                    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.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following chart  summarizes the Company  repurchases of the Company's common
shares as part of the Company's publicly announced repurchase plan.
<TABLE>
<CAPTION>
<S>               <C>                   <C>                   <C>                    <C>                   <C>

           ---------------------------------------------------------------------------------------------------------------
                                        (a)                   (b)                    (c)                   (d)
                                                                                                      Maximum Number
                                                                                                      (or Approximate
                                                                               Total Number of       Dollar Value) of
                                                                               Shares (or Units)      Shares (or Units)
                                                                               Purchased as Part     that May Yet be
                                  Total Number of                                 of Publicly         Purchased Under
                                 Shares (or Units)     Average Price paid      Announced Plans or       the Plans or
                 Period              Purchased         per Share (or Unit)          Programs             Programs
           ---------------------------------------------------------------------------------------------------------------
           Month #7:                     0                      0                      0                      $0
           7/1/04 - 7/31/04
           ---------------------------------------------------------------------------------------------------------------
           Month #8:                     0                      0                      0                      $0
           8/1/04 - 8/31/04
           ---------------------------------------------------------------------------------------------------------------
           Month #9:                     0                      0                      0                      $0
           9/1/04 - 9/30/04
           ---------------------------------------------------------------------------------------------------------------
           Total                         0                      0                      0                      $0
           ---------------------------------------------------------------------------------------------------------------
</TABLE>

                                    Page 26
<PAGE>

Item 3.     DEFAULTS UPON SENIOR SECURITIES

None

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

None

Item 5.     OTHER INFORMATION

None

Item 6.     EXHIBITS

          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


                                    Page 27
<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
                                           Registrant



Date:  November 10, 2004                   /s/ Mel Switzer, Jr.
     -------------------                   -------------------------------------
                                           Mel Switzer, Jr.
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)




Date:  November 10, 2004                   /s/ Mary Dieter Smith
     -------------------                   -------------------------------------
                                           Mary Dieter Smith
                                           Executive Vice President,
                                           Chief Operating Officer and Chief
                                           Financial Officer
                                           (Principal Financial and Accounting
                                           Officer)


                                    Page 28