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, 2003


                        Commission File Number: 000-31929


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

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

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

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



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding  12  months (or for  such shorter  period that  the Registrant was
required  to  file  such  reports), and  (2)  has  been  subject  to such filing
requirements for the past 90 days.
                                  Yes o 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 o

The number of shares outstanding of the registrant's Common Stock, no par value,
as of November, 10, 2003 was 1,451,486.







                                     Page 1

<PAGE>



INDEX

Part 1 Financial Information                                         Page Number


Item 1.  Financial Statements (Unaudited):

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

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

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

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

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

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

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

Item 3.  Quantitative and Qualitative Disclosure about Market Risk............24

Item 4.  Controls and Procedures..............................................24


Part II  Other Information

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

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

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

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

Item 5.  Other Information....................................................24

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

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

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

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


                                     Page 2

<PAGE>



                                     Part I

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

                              FINANCIAL STATEMENTS
                      SONOMA VALLEY BANCORP AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

       September 30, 2003 (Unaudited) and December 31, 2002 (Audited) and
                         September 30, 2002 (Unaudited)
<TABLE>
<S>                                                                   <C>              <C>              <C>

                                                                      September 30      December 31     September 30
ASSETS                                                                     2003            2002            2002
                                                                      ------------     ------------     ------------

Cash and due from banks                                               $  8,812,428     $  8,422,599     $  7,618,219
Federal funds sold                                                      31,190,000       23,095,000       22,235,000
                                                                      ------------     ------------     ------------
                                  Total cash and cash equivalents       40,002,428       31,517,599       29,853,219
Investment securities available-for-sale at fair value                  13,834,148        3,823,259        4,109,952
Investment securities held-to-maturity (fair
  value of $14,011,000, $10,440,000 and
  $11,597,000, respectively)                                            13,620,606        9,923,737       10,912,269
Loans and lease financing receivables, net                             119,040,732      125,269,181      117,436,218
Premises and equipment, net                                              1,296,242          875,697          799,961
Accrued interest receivable                                                931,593          799,282          895,545
Cash surrender value of life insurance                                   7,644,878        7,387,712        7,229,242
Other assets                                                             3,303,338        3,006,260        2,903,422
                                                                      ------------     ------------     ------------
                                                     Total assets     $199,673,965     $182,602,727     $174,139,828
                                                                      ============     ============     ============
LIABILITIES
Non interest-bearing demand deposits                                  $ 36,491,921     $ 38,760,806     $ 33,904,346
Interest-bearing transaction deposits                                   28,124,429       24,627,589       24,199,502
Savings and money market deposits                                       65,414,882       51,802,714       50,626,679
Time deposits, $100,000 and over                                        26,000,588       25,018,603       23,967,400
Other time deposits                                                     19,539,327       19,778,540       19,824,973
                                                                      ------------     ------------     ------------
                                                   Total deposits      175,571,147      159,988,252      152,522,900
Accrued interest payable and other liabilities                           3,489,366        3,374,165        3,075,469
                                                                      ------------     ------------     ------------
                                                Total liabilities      179,060,513      163,362,417      155,598,369
SHAREHOLDERS' EQUITY
Common stock, no par value; 10,000,000 shares
authorized; 1,451,486 shares at September 30, 2003,
1,401,146 shares at December 31, 2002 and 1,394,433
shares at September 30, 2002 issued & outstanding.                      14,950,486       12,936,225       12,839,336
Retained earnings                                                        5,619,396        6,215,790        5,594,567
Accumulated other comprehensive income                                      43,570           88,295          107,556
                                                                      ------------     ------------     ------------
                                       Total shareholders' equity       20,613,452       19,240,310       18,541,459
                                                                      ------------     ------------     ------------
                       Total liabilities and shareholders' equity     $199,673,965     $182,602,727     $174,139,828
                                                                      ============     ============     ============
</TABLE>



                                     Page 3

<PAGE>



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


                                                               For the Three Months                 For the Nine Months
                                                               Ended September 30,                  Ended September 30,
                                                              2003               2002            2003              2002
                                                           -------------     -------------    ------------     -------------

INTEREST INCOME
  Loans and leases                                         $   2,479,394     $   2,391,314     $ 7,198,098     $   7,026,433
  Taxable securities                                             106,046            67,203         247,874           320,526
  Tax-exempt securities                                          122,076           125,914         340,169           388,610
  Federal funds sold                                              74,023            70,407         243,578           130,959
  Dividends                                                        3,111             3,800          10,206            11,573
                                                           -------------     -------------     -----------     -------------
                                 Total interest income         2,784,650         2,658,638       8,039,925         7,878,101
INTEREST EXPENSE
  Interest-bearing transaction deposits                           10,908            22,082          38,889            66,322
  Savings and money market deposits                              113,500           167,254         359,771           497,012
  Time deposits, $100,000 and over                               174,004           175,805         554,444           471,704
  Other time deposits                                            115,390           136,667         368,272           403,613
  Other borrowings                                                    29                 0              29                 0
                                                           -------------     -------------     -----------     -------------
                                Total interest expense           413,831           501,808       1,321,405         1,438,651
                                                           -------------     -------------     -----------       -----------
                                   NET INTEREST INCOME         2,370,819         2,156,830       6,718,520         6,439,450
  Provision for loan and lease losses                                  0            70,000          20,000           205,000
                                                           -------------     -------------     -----------       -----------
                                   NET INTEREST INCOME
                                   AFTER PROVISION FOR
                                        LOAN AND LEASE
                                                LOSSES         2,370,819         2,086,830       6,698,520         6,234,450

NON-INTEREST INCOME                                              455,301           383,088       1,296,322         1,164,054
NON-INTEREST EXPENSE
  Salaries and employee benefits                                 914,569           878,696       2,574,209         2,563,429
  Premises and equipment                                         203,696           156,747         568,717           455,961
  Other                                                          593,362           400,550       1,638,893         1,195,443
                                                           -------------     -------------     -----------      ------------
                            Total non-interest expense         1,711,627         1,435,993       4,781,819         4,214,833
                                                           -------------     -------------     -----------      ------------
                               Income before provision
                                      for income taxes         1,114,493         1,033,925       3,213,023         3,183,671
  Provision for income taxes                                     372,151           346,821       1,070,074         1,070,762
                                                           -------------     -------------     -----------      ------------

                                            NET INCOME     $     742,342     $     687,104     $ 2,142,949     $   2,112,909
                                                           =============     =============     ===========     =============
NET INCOME PER SHARE                                       $         .51     $         .47     $      1.47     $        1.44
                                                           =============     =============     ===========     =============
NET INCOME PER SHARE-
ASSUMING DILUTION                                          $         .47     $         .43     $      1.35     $        1.33
                                                           =============     =============     ===========     =============
</TABLE>



                                     Page 4

<PAGE>



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

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


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

BALANCE AT
   JANUARY 1, 2001                                1,281,680     $   9,585,003     $   4,641,551     $      78,692      $ 14,305,246

5% stock dividend                                    63,104         1,381,976        (1,381,976)
Fractional shares                                                                       (11,955)                            (11,955)
Redemption and retirement
  of stock                                          (27,717)         (207,323)         (364,085)                           (571,408)
Stock options exercised and
 related tax benefits                                16,437           266,229                                               266,229
Net income for the year         $   2,600,244                                         2,600,244                           2,600,244
Other comprehensive loss,
  net of tax:
  Unrealized holding losses
    on securities available-
    for-sale arising during
    the year, net of taxes
    of $57,842                         82,706
                                -------------
Other comprehensive loss,
  net of taxes                         82,706                                                             82,706             82,706
                                -------------     ---------     -------------     -------------     ------------       ------------

Total comprehensive income      $   2,682,950
                                =============

BALANCE AT
  DECEMBER 31, 2001                               1,333,504     $  11,025,885     $   5,483,779     $    161,398       $ 16,671,062

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

Total comprehensive income      $   2,671,230
                                =============
</TABLE>


                                     Page 5

<PAGE>



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

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


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


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

Stock dividend                                      68,665         1,997,422        (1,997,422)
Fractional shares                                                                      (14,193)                            (14,193)
Redemption and retirement
  of stock                                         (38,917)         (360,645)         (727,728)                         (1,088,373)
Stock options exercised and
  related tax benefits                              20,592           377,484                                               377,484
Net income for the period      $   2,142,949                                         2,142,949                           2,142,949
Other comprehensive income,
  net of tax:
  Unrealized holding losses
    on securities available-
    for-sale arising during
    the year, net of taxes
    of $ 31,279                      (44,725)
                               -------------
Other comprehensive income,
  net of taxes                       (44,725)                                                            (44,725)          (44,725)
                               -------------     ---------     -------------     -------------     -------------     -------------

Total comprehensive income     $   2,098,224
                               =============

BALANCE AT
 SEPTEMBER 30, 2003                              1,451,486     $  14,950,486     $   5,619,396     $      43,570     $  20,613,452
                                                 =========     =============     =============     =============     =============
</TABLE>




                                     Page 6

<PAGE>



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

              For the nine months ended September 30, 2003 and 2002
<TABLE>
<S>                                                                                       <C>             <C>
                                                                                             2003              2002
                                                                                          -----------     -----------
OPERATING ACTIVITIES

  Net income                                                                              $ 2,142,949     $ 2,112,909
  Adjustments to reconcile net income to net cash provided by operating activities:
   Provision for loan losses                                                                   20,000         205,000
   Depreciation                                                                               166,568         108,717
   Amortization and other                                                                      72,808          31,779
   Net change in interest receivable                                                         (132,311)         56,516
   Net change in other assets                                                                (265,799)         (5,228)
   Net change in cash surrender value of life insurance                                      (257,166)       (198,711)
   Net change in interest payable and other liabilities                                       115,201          51,306
                                                                                          -----------       ---------
                                           NET CASH PROVIDED BY OPERATING ACTIVITIES        1,862,250       2,362,288
  INVESTING ACTIVITIES
   Purchases of securities held-to-maturity                                                (6,812,829)              0
   Purchases of securities available-for sale                                             (10,877,142)       (551,947)
   Proceeds from maturing securities held-to-maturity                                       3,083,400         860,000
   Proceeds from maturing securities available-for sale                                       750,000       7,000,000
   Net change in loans                                                                      6,208,450     (12,609,009)
   Purchases of life insurance                                                                      0      (2,000,000)
   Purchases of premises and equipment                                                       (587,113)       (288,026)
                                                                                          -----------     -----------
                                              NET CASH USED FOR INVESTING ACTIVITIES       (8,235,234)     (7,588,982)
  FINANCING ACTIVITIES
   Net change in demand, interest-bearing transaction and savings deposits                 14,840,123       7,044,877
   Net change in time deposits                                                                742,772       7,823,044
   Exercise of stock options                                                                  377,484         154,321
   Stock repurchases                                                                       (1,088,373)       (329,040)
   Fractional shares purchased                                                                (14,193)        (13,951)
                                                                                          -----------     -----------
                                           NET CASH PROVIDED BY FINANCING ACTIVITIES       14,857,813      14,679,251
                                                                                          -----------     -----------
                                             NET CHANGE IN CASH AND CASH EQUIVALENTS        8,484,829       9,452,557
   Cash and cash equivalents at beginning of period                                        31,517,599      20,400,662
                                                                                          -----------     -----------
                                          CASH AND CASH EQUIVALENTS AT END OF PERIOD      $40,002,428     $29,853,219
                                                                                          ===========     ===========
  SUPPLEMENTAL DISCLOSURES:
   Cash paid during the period for:
   Interest                                                                               $ 1,330,180     $ 1,440,953
   Income taxes                                                                             1,025,000         860,000
   Stock dividend                                                                           1,997,422       1,788,977
   Change in unrealized gains and losses
     on securities available-for-sale                                                         (76,004)        (91,497)
   Change in deferred income taxes on
     unrealized holding gains and losses on securities                                         31,279          37,655
</TABLE>



                                     Page 7

<PAGE>



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

Note 1 - Basis of Presentation

In the opinion of  Management,  the  unaudited  interim  consolidated  financial
statements  contain all  adjustments  of a normal  recurring  nature,  which are
necessary to present fairly the financial condition of Sonoma Valley Bancorp and
Subsidiary  at September  30, 2003 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  2002 Annual Report on
Form  10-K.  The  results  of  operations  for the three and nine  months  ended
September  30, 2003 are not  necessarily  indicative  of the  operating  results
through December 31, 2003.

Note 2 - Consolidation

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

Note 3 - Commitments

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

Note 4 - Net Income Per Common Share

Net income per share is calculated by using the weighted  average  common shares
outstanding.  The weighted average number of common shares used in computing the
net  income  per  common  share for the period  ending  September  30,  2003 was
1,459,162 and for the period ending September 30, 2002 was 1,463,612.

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, 2003 was  1,591,815 and for the period ending
September 30, 2002 was 1,590,507.

Prior year shares have been  adjusted to reflect the 5% stock  dividend  paid on
July 16, 2003.


                                     Page 8

<PAGE>



Note 5 - Stock Option Accounting

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


                                                         For the Three Months        For the Nine Months
                                                         Ended September 30          Ended September 30

                                                      2003            2002             2003           2002
                                                 ------------     -----------     -----------     -----------

    Net Income, as reported                      $    742,342     $   687,104     $ 2,142,949     $ 2,112,909
    Deduct: Total stock-based
       compensation expense determined
       under fair value based method for all
       awards, net of related tax effects             (44,978)        (46,480)       (134,935)       (139,439)
                                                 ------------     -----------     -----------     -----------
    Pro forma net income                         $    697,364     $   640,624     $ 2,008,014     $ 1,973,470
                                                 ============     ===========     ===========     ===========

Net income per share:
    Basic - As reported                                   .51             .47            1.47            1.44
    Basic - Pro forma                                     .48             .44            1.38            1.35
    Diluted - As reported                                 .47             .43            1.35            1.33
    Diluted - Pro forma                                   .44             .40            1.26            1.34
</TABLE>





                                     Page 9

<PAGE>


                              SONOMA VALLEY BANCORP
                     AVERAGE BALANCES/YIELDS AND RATES PAID
              For the nine months ended September 30, 2003 and 2002
                             (dollars in thousands)

<TABLE>
<S>                                                  <C>         <C>         <C>         <C>         <C>         <C>
                                                                  2003                               2002
                                                                  ----                               ----
                                                     Average     Income/     Yield/      Average     Income/     Yield/
ASSETS                                               Balance     Expense     Rate        Balance     Expense     Rate

Interest-earning assets:
Loans(2):
  Commercial                                          85,155      4,932       7.74%       73,959      4,406      7.96%
  Consumer                                            11,809        666       7.54%       13,178        817      8.29%
  Real estate construction                            19,532      1,176       8.05%       18,296      1,265      9.24%
  Real estate mortgage                                 4,154        270       8.69%        5,856        368      8.40%
  Tax exempt loans (1)                                 3,171        199       8.39%        3,420        217      8.48%
  Leases                                                  73         17      31.14%          178         20     15.02%
  Tax exempt leases (1)                                   52          8      20.57%          113         11     13.02%
  Unearned loan fees                                    (414)                               (426)
                                                    --------     ------                 --------     ------
         Total loans                                 123,532      7,268       7.87%      114,574      7,104      8.29%
Investment securities
  Available for sale:
         Taxable                                       9,658        237       3.28%        6,743        310      6.15%
         Tax exempt(1)                                     0          0       0.00%            0          0      0.00%
  Hold to maturity:
         Taxable                                         388         10       3.45%          202          9      5.96%
         Tax exempt (1)                               10,147        517       6.80%       11,105        589      7.09%
                                                      ------     ------                 --------     ------
         Total investment securities                  20,193        764       5.05%       18,050        908      6.73%
Federal funds sold                                    29,803        244       1.09%       10,444        131      1.68%
Federal Home Loan Bank stock                             287         10       4.66%          273         12      5.88%
Total due from banks/Interest bearing                    158          0       0.00%           85          1      1.57%
                                                    --------     ------                 --------     ------
  Total interest earning assets                      173,973      8,286       6.37%      143,426      8,156      7.60%
                                                                 ======      =====                   ======     =====
Noninterest-bearing assets:
  Reserve for loan losses                             (2,781)                             (2,509)
  Cash and due from banks                              8,859                               7,307
  Premises and equipment                               1,057                                 652
  Other assets                                        10,971                               9,857
                                                    --------                            --------
                                   Total assets     $192,079                            $158,733
                                                    ========                            ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
  Interest bearing deposits
         Interest bearing transaction                 29,096         39       0.18%       23,217         66      0.38%
         Savings deposits                             57,659        360       0.83%       46,748        497      1.42%
         Time deposits over $100,000                  24,886        554       2.98%       18,690        472      3.38%
         Other time deposits                          19,843        368       2.48%       17,907        404      3.02%
                                                    --------     -------                --------     ------
           Total interest bearing Deposits           131,484      1,321       1.34%      106,562      1,439      1.81%
  Federal Funds purchased                                  0          0       0.00%            0          0      0.00%
  Other short term borrowings                              4          0       0.00%            0          0      0.00%
                                                    --------     ------                 --------     ------
           Total interest bearing liabilities        131,488     $1,321       1.34%      106,562     $1,439      1.81%
                                                                 ======                              ======
Non interest bearing liabilities:
  Non interest bearing demand deposits                37,395                              31,604
  Other liabilities                                    3,236                               2,935
                           Shareholders' equity       19,960                              17,632
                                                    --------                            --------
     Total liabilities and shareholders' equity     $192,079                            $158,733
                                                    ========                            ========
Interest rate spread                                                          5.03%                              5.79%
                                                                             =====                              =====
Interest income                                                  $8,286       6.37%                  $8,156      7.60%
Interest expense                                                  1,321       1.02%                   1,439      1.34%
                                                                 ------      -----                   ------     -----
Net interest income/margin                                       $6,965       5.35%                  $6,717      6.26%
                                                                 ======      =====                   ======     =====
</TABLE>

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

(2)  Non accrual loans have been included in loans for the purposes of the above
     presentation. Loan fees of approximately $319,370 and $267,023 for the nine
     months ended September 30, 2003 and September 30, 2002, respectively,  were
     amortized to the appropriate interest income categories.

                                     Page 10







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

For the Nine Month Periods
Ended September 30, 2003 and 2002

Forward Looking Statements

With the exception of historical facts stated herein,  the matters  discussed in
this  Form  10-Q  are  "forward  looking"  statements  that  involve  risks  and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
projected  results.  Such  "forward  looking"  statements  include,  but are not
necessarily  limited  to  statements  regarding  anticipated  levels  of  future
revenues and earnings from the operation of Sonoma Valley Bancorp's wholly owned
subsidiary,  Sonoma  Valley  Bank (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 Sonoma Valley Bancorp's Form 10-K for the year ended
December 31, 2002, 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.

Overview

Sonoma Valley Bancorp (the "Company")  reported net income of $2,142,949 for the
first nine months of 2003 compared with  $2,112,909 for the first nine months of
2002. On a per share basis,  net income  equaled  $1.47  compared with $1.44 per
share during the same period in 2002.

Return on average total assets on an annualized basis for the nine-month periods
was 1.49% in 2003 and 1.78% in 2002. Return on average  shareholders'  equity on
an annualized basis for the same periods was 14.35% and 16.02%, respectively.

RESULTS OF OPERATIONS

Net interest Income

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

                                     Page 11


<PAGE>



income  because it reflects  adjustments  applicable to  tax-exempt  income from
certain  securities and loans ($246,000 in 2003 and $278,000 in 2002, based on a
34% federal income tax rate).

The  improvement in net interest  income  (stated on a fully taxable  equivalent
basis) is a result of a $130,000  increase in interest  income and a decrease in
interest expense of $117,000.

Net interest income (stated on a fully taxable  equivalent basis) expressed as a
percentage of average earning assets, is referred to as net interest margin. The
Company's  net  interest  margin for 2003  decreased to 5.35% from 6.26% for the
same period in 2002.  The continuing  decline in the net interest  margin is the
result of timing  differences coming in to play from the 475 basis point drop in
the prime lending rate in 2001, the 50 basis point drop in 2002 and the 25 basis
point drop in 2003.

Interest Income

As previously  stated,  interest  income  (stated on a fully taxable  equivalent
basis) increased by $130,000 to $8.3 million in the nine months of 2003, a 1.59%
increase  over the $8.2  million  realized  during the same period in 2002.  The
increase in volume of average balance was responsible for a $862,000 increase in
interest  income  offset  by a  $732,000  decrease  in income  related  to lower
interest rates. The net effect was a decline in interest income of $130,000.

Interest Expense

Total interest expense  decreased by $117,000 to $1.3 million.  The average rate
paid on all interest-bearing  liabilities  decreased from 1.81% in 2002 to 1.34%
in 2003.  Average  balances  increased from $106.6 million to $131.4 million,  a
23.39%  gain in  deposits.  The  increase  in volume  of  average  balances  was
responsible  for a $333,000  increase in interest  expense  offset by a $451,000
decrease in expense  related to lower interest rates resulting in lower interest
expense of $118,000.

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

Provision for Loan Losses

The  provision  for loan losses  charged to operations is based on the Company's
monthly  evaluation of the loan  portfolio and the adequacy of the allowance for
loan  losses in  relation  to total  loans  outstanding.  The  provision  to the
allowance for loan losses amounted to $20,000 during the nine months of 2003 and
$205,000 in the same period in 2002.  The  decrease in the  provision  is due to
management's evaluation and assessment of the loan portfolio.

Loans  charged-off  were $44,000 and recoveries were $13,000 for the nine months
of 2003 compared with $21,000 in  charge-offs  and $14,000 in recoveries for the
same period in 2002. See page 16 for an analysis in the changes in allowance for
loan losses including charge offs and recoveries.





                                     Page 12

<PAGE>



Non-interest Income

Non-interest  income  of $1.3  million  increased  11.4%  over the $1.2  million
recorded  in the  comparable  period in 2002.  Services  Charges  were up due to
customers  carrying  lower  balances and deposit  growth,  loan referral  income
increased due to loan refinancings and earnings on life insurance  increased due
to the purchases of an additional life insurance policies during 2002.

Non-interest Expense

Total  non-interest  expense  increased  13.5% to $4.8  million  during the nine
months of 2003  from  $4.2  million  for the same  period in 2002.  Non-interest
expense on an annualized basis represented 3.33% of average total assets in 2003
compared with 3.55% in the comparable period in 2002.

Salaries  and  benefits  increased  .42% from  $2.563  million in 2002 to $2.574
million in 2003. At September 30, 2003 total full time equivalent employees were
47 compared to 46 in 2002.

Expense  related to premises and equipment  increased  24.7% to $569,000 in 2003
from $456,000 in 2002. The increase in premises and equipment is a reflection of
the  remodel  of the  Operations  Center in 2002 and the  remodel  of the Sonoma
Branch in 2003,  as well as the  continued  investment  in  technology to better
utilize employees' time and offer a higher level of customer service.

Other operating  expenses  increased by 37.10% to $1.6 million in 2003 from $1.2
million  in  2002.  The  largest   category  of  other   non-interest   expense,
professional  fees, is primarily  comprised of data processing,  item processing
and ATM services, as well as accounting, legal and other professional fees.

Provision for Income Taxes

The provision  for income taxes  declined to an effective tax rate of 33.30% for
the nine months of 2003 compared with 33.63% for the nine months of 2002. Income
taxes reported in the financial statements include deferred taxes resulting from
timing  differences in the recognition of items for tax and financial  reporting
purposes.

BALANCE SHEET ANALYSIS

Investments

Investment  securities  were $27.5  million at  September  30,  2003,  an 99.71%
increase from the $13.7 million at December 31, 2002 and a 82.76%  increase from
$15.0 million at September 30, 2002. The increase in investment is the result of
the strong growth in deposits and declining loan demand.  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.



                                     Page 13

<PAGE>



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,
2003, the Company had  securities  totaling $13.6 million with a market value of
$14.0 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 $13.8 million  compared to an amortized cost
of $13.8 million as of September 30, 2003.

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

Loans

The Company's loan portfolio was $121.8 million at September 30, 2003, or 69.38%
of  total  deposits.  This  compares  with  $128.1  million,  or  80.0% of total
deposits,  at December 31, 2002 and $120.1 million,  or 78.7% of total deposits,
at  September  30,  2002. A  comparative  schedule of average  loan  balances is
presented  in the  table  on page  10;  period  end and  year-end  balances  are
presented in the following table.
<TABLE>
<S>                          <C>               <C>            <C>              <C>            <C>               <C>



                             September 30,     Percentage     December 31,     Percentage     September 30,     Percentage
                                 2003           of Total         2002          of Total          2002           of Total
                             ------------      ----------    ------------      ----------     ------------      ----------

Commercial                   $ 89,465,014           73.2%    $ 89,507,230            69.7%    $ 81,484,879            67.6%
Consumer                       11,096,839            9.1%      13,374,774            10.4%      13,269,622            11.0%
Real estate construction       18,606,701           15.2%      19,507,906            15.2%      20,550,668            17.1%
Real estate mortgage            2,987,397            2.4%       5,911,082             4.6%       4,959,109             4.1%
Leases                             71,060            0.1%         174,409             0.1%         226,216             0.2%
                             ------------                    ------------                     ------------
                              122,227,011          100.0%     128,475,401           100.0%     120,490,494           100.0%
                                                   =====                            =====                            =====
Deferred loan fees
 and costs, net                  (414,889)                       (424,258)                        (440,307)
Allowance for loan
 and lease losses              (2,771,390)                     (2,781,962)                      (2,613,969)
                             ------------                    ------------                     ------------

                             $119,040,732                    $125,269,181                     $117,436,218
                             ============                    ============                     ============
</TABLE>

Risk Elements

The majority of the Company's  loan activity is with  customers  located  within
Sonoma  County.  Approximately  83.1% of the total loan  portfolio is secured by
real estate located in the Company's service area.


                                     Page 14

<PAGE>



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,  2003,  is  sufficient  to  absorb  losses  inherent  in the loan
portfolio. This assessment is based upon the best available information and does
involve  uncertainty and matters of judgment.  Accordingly,  the adequacy of the
loan loss reserve  cannot be determined  with precision and could be susceptible
to significant change in future periods.

Non Performing Assets

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

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

There were $1,813,000 of non accrual loans and no loans 90 days or more past due
and still  accruing at September  30, 2003.  There were  $402,000 of non accrual
loans and no loans 90 days or more past due and still  accruing at September 30,
2002.  Relative to the non accrual  loans,  97% of the non accrual loans in 2003
are  centered in six(6) real estate  secured  loans.  One of the six, a $105,000
loan, has been subsequently repaid.

Allowance for Loan Losses

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

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,


                                     Page 15

<PAGE>



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, 2003 the Company
believes its overall allowance for loan losses is adequate based on its analysis
of conditions at that time.

At September 30, 2003, the allowance for loan losses was $2.8 million,  or 2.28%
of period- end loans,  compared with $2.8 million, or 2.17% at December 31, 2002
and $2.6 million, or 2.18% at September 30, 2002.

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


                                             For the Nine         For the Year       For the Nine
                                             Months Ended           Ended            Months Ended
                                               9/30/03             12/31/02            9/30/02

Balance beginning of year                $      2,781,962     $      2,415,555     $      2,415,555
Charge-offs:
  Commercial                                       (4,955)             (10,741)             (10,741)
  Consumer                                        (38,675)             (34,872)             (10,070)
                                         ----------------     ----------------     ----------------

               Total charge-offs                  (43,630)             (45,613)             (20,811)
Recoveries:

  Commercial                                        6,400                9,474                6,914
  Consumer                                          6,658                9,546                7,311
                                         ----------------     ----------------     ----------------

                Total recoveries                   13,058               19,020               14,225

Net (chargeoffs) recoveries                       (30,572)             (26,593)              (6,586)
Provision charged to operations                    20,000              393,000              205,000
                                         ----------------     ----------------     ----------------
Balance end of period                    $      2,771,390     $      2,781,962     $      2,613,969
                                         ================     ================     ================
Ratio of net charge-offs
 annualized to average loans                         0.03%                0.02%                0.01%
Balance in allowance as a percentage                 2.28%                2.17%                2.18%
 of loans outstanding at period end

YTD AVG LOANS                                 123,531,714          116,867,238           114,573,975
PERIOD END LOANS                              121,812,123          128,051,143           120,050,186
</TABLE>


                                     Page 16

<PAGE>



Deposits

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


                            September 30,     Percentage     December 31,     Percentage     September 30,     Percentage
                               2003           of Total          2002          of Total          2002           of Total
                            ------------      ----------     ------------     ----------     ------------      ----------

Interest bearing
 transaction deposits       $ 28,124,429       16.0%         $ 24,627,589      15.4%         $ 24,199,502       15.9%
Savings deposits              65,414,882       37.3%           51,802,714      32.4%           50,626,679       33.2%
Time deposits,
$100,000
 and over                     26,000,588       14.8%           25,018,603      15.6%           23,967,400       15.7%
Other time deposits           19,539,327       11.1%           19,778,540      12.4%           19,824,973       13.0%
                            ------------      -----          ------------     -----          ------------      -----
Total interest bearing
 deposits                    139,079,226       79.2%          121,227,446      75.8%          118,618,554       77.8%
Demand deposits               36,491,921       20.8%           38,760,806      24.2%           33,904,346       22.2%
                            ------------      -----          ------------     -----          ------------      -----
Total deposits              $175,571,147      100.0%         $159,988,252     100.0%         $152,522,900      100.0%
                            ============      =====          ============     =====          ============      =====
</TABLE>

Total deposits  increased by $15.6  million,  during the nine months of 2003, to
$175.6  million from $160.0 million at December 31, 2002.  Savings  deposits and
interest  bearing  transaction  accounts  showed the  largest  increase of $13.6
million  and $3.5  million  respectively,  over year end  balances.  Other  time
deposits also increased  $982,000 to $26.0 million.  Non interest bearing demand
deposits and time deposit  greater  than  $100,000  declined by $2.3 million and
$239,000 respectively.

Risk-Based Capital

The Federal Deposit Insurance  Corporation (FDIC) has adopted risk-based capital
guidelines  which establish a risk-adjusted  ratio relating capital to different
categories of assets and off- balance sheet exposures. Under current guidelines,
as of September 30, 2003, 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.




                                     Page 17

<PAGE>



The table below presents Tier 1 capital,  total capital and total  risk-weighted
assets at September 30, 2003,  along with the related  risk-based  capital ratio
and leverage ratio.

(dollars in thousands)
<TABLE>
<S>    <C>              <C>         <C>       <C>         <C>       <C>

          Total
       Risked-based     TIER 1                 TOTAL                Leverage
          Assets        Capital     Ratio     Capital     Ratio       Ratio

       $163,964         $19,606     11.96%    $21,664     13.21%    9.93%
</TABLE>

Market Risk Management

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

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

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




                                     Page 18

<PAGE>



Interest Rate Risk  Simulation  of Net Interest  Income as of September 30, 2003
(In thousands)
<TABLE>
<S>               <C>                              <C>


Variation from a constant rate scenario            $ Change in NII
                  +200bp                           $ 1,089
                  +100bp                               504
                  -100bp                              (384)
</TABLE>

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

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

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

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

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

     The Company  controls its long term interest rate risk by keeping long term
fixed  rate  assets  (longer  than 5 years)  less than its long term  fixed rate
funding, primarily demand deposit accounts and capital. The following table sets
forth  cumulative  maturity  distributions  as of  September  20,  2003  for the
Company's  interest-bearing  assets and  interest-bearing  liabilities,  and the
Company's   interest   rate   sensitivity   gap  as  a   percentage   of   total
interest-earning  assets. The table shows $62.9 million in fixed rate loans over
5 years. Many variable rate credit lines reached


                                     Page 19

<PAGE>



floors in 2002, and were  reclassified  to the fixed rate  category.  As soon as
interest rates increase,  the loans will no longer be at floors and will reclass
back to the floating rate category.
<TABLE>
<S>                                      <C>          <C>           <C>          <C>           <C>           <C>           <C>


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

ASSETS:
  Fixed rate investments                 $     946    $   2,241     $  10,834    $   3,765     $   8,693     $     976     $  27,455
  Variable rate investments                      0            0             0            0             0           292           292
  Fixed rate loans                          10,737       19,654        10,814       28,320        31,841         2,696       104,062
  Variable rate loans                       15,136        1,216             0            0             0             0        16,352
  Interest-bearing balances due from banks      35                                                                                35

  Fed funds sold                            31,190                                                                            31,190
                                         ---------    ---------     ---------    ---------     ---------     ---------     ---------
     Interest bearing assets                58,044       23,111        21,648       32,085        40,534         3,964       179,386
                                         ---------    ---------     ---------    ---------      --------     ---------     ---------

LIABILITIES:
  Interest bearing transaction deposits     28,125                                                                            28,125
  Savings deposits                          65,415                                                                            65,415
Time Deposits
     Fixed rate >100m                        5,982       11,569         6,250        2,062                                    25,863
     Fixed rate <100m                        5,148        9,293         4,265          926                                    19,632
     Floating rate >100m                                                                                                           0
     Floating rate <100m                        44                                                                                44
  Borrowings                                                                                                                       0
                                         ---------    ---------     ---------    ---------     ---------     --------      ---------

    Interest Bearing Liabilities         $ 104,714    $  20,862     $  10,515    $   2,988     $       0            0      $ 139,079
                                         ---------    ---------     ---------    ---------     ---------     --------      ---------

Rate Sensitivity Gap                       (46,670)       2,249        11,133       29,097        40,534        3,964
                                         ---------    ---------     ---------    ---------     ---------     --------
Cumulative Rate Sensitivity Gap            (46,670)     (44,421)      (33,288)      (4,191)       36,343       40,307
                                         ---------    ---------     ---------    ---------     ---------     --------

Cumulative Position to Total Assets        -23.40%       -22.27%       -16.69%       -2.10%        18.22%       20.21%
                                         ========     =========     =========    =========     =========     ========
</TABLE>

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

Overview

The  Company  reported  net  income of  $742,000  for the third  quarter of 2003
compared with $687,000 for the third quarter of 2002. On a per share basis,  net
income for the three  months  ended  September  30, 2003  equaled $.51 per share
compared with $.47 per share during the same period in 2002.

Return on average total assets on an annualized basis for the three months ended
September 30, 2003 and 2002 was 1.50% and 1.65%, respectively. Return on average
shareholders' equity on an annualized basis for the three months ended September
30, 2003 and 2002 was 14.6% and 15.0%, respectively.




                                     Page 20

<PAGE>



RESULTS OF OPERATIONS

Net Interest Income

Net interest income,  adjusted to a fully taxable  equivalent  basis,  increased
$210,000 to $2.5  million for the three months ended  September  30, 2003,  from
$2.2 million  during the  comparable  period of 2002.  Net interest  income on a
fully taxable equivalent basis, as shown on the table - Average Balances, Yields
and Rates Paid on page 23, is higher than net interest  income on the statements
of income because it reflects  adjustments  applicable to tax-exempt income from
certain  securities and loans  ($86,000 in 2003 and $90,000 in 2002,  based on a
34% federal income tax rate).

Net interest income (stated on a fully taxable  equivalent basis) expressed as a
percentage of average earning assets, is referred to as net interest margin. The
Company's  net interest  margin for the third  quarter of 2003 declined to 5.42%
from 5.93% for the comparable period in 2002. The continuing  decline in the net
interest  margin is the result of timing  differences  coming into play from the
475 basis point drop in the prime lending rate in 2001,  the 50 basis point drop
in 2002 and the 25 basis point drop in 2003.

Interest Income

Interest  income for the three  months  ended  September  30, 2003  increased by
$122,000 to $2.9 million, a 4.40% increase over the $2.7 million realized during
the same period in 2002. The gain in volume of average  balances was responsible
for a $232,000  increase in  interest  income  offset by a $111,000  decrease in
income related to lower interest rates. The net effect was a decline in interest
income of $121,000.

Interest Expense

Total interest expense for the three months ended September 30, 2003 declined by
$88,000 to $414,000  compared  with  $502,000  in the same  period of 2002.  The
average rate paid on all  interest-bearing  liabilities for the third quarter of
2003  declined  to 1.20% from 1.79% in the third  quarter of 2002,  and  average
balances for the third quarter of 2003  increased to $136.4  million from $111.1
million in the same period of 2002, a 22.8% gain.

The gain in volume of  average  balances  accounted  for a $99,000  increase  in
interest  expense offset by a $188,000  decline  related to lower interest rates
paid resulting in a $89,000  decrease in interest  expense for the third quarter
of 2003.

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







                                     Page 21

<PAGE>



Provision for Loan Losses

There was no provision for loan losses during the third quarter of 2003 compared
to the $70,000  provision  for the third  quarter of 2002.  The  decrease in the
provision is the result of  managements'  evaluation  and assessment of the loan
portfolio.

Non-interest Income

Non-interest  income of $455,000 for the third  quarter of 2003  represented  an
increase of $72,000,  or 18.8%,  from the $383,000 for the comparable  period in
2002.

Non-interest Expense

For the third quarter of 2003,  non-interest  expense was $1.7 million  compared
with $1.4  million  for the same  period in 2002,  representing  an  increase of
$276,000, or 19.22%. Salaries and benefits increased $36,000, or 4.10%, compared
with the three months ended September 30, 2002.

Premises and equipment expense increased $47,000, or 29.94%, to $204,000 for the
third quarter of 2003 from $157,000 for the third quarter of 2002.

Other operating expenses for the three months ended September 30, 2003 increased
48.25% to $593,000 from $400,000 in the same period in 2002.

Provision for Income Taxes

The  provision  for income taxes  declined to an effective tax rate of 33.39% in
the third  quarter of 2002  compared  with 33.54% for the  comparable  period in
2002. Income taxes reported in the financial  statements  include deferred taxes
resulting  from  timing  differences  in the  recognition  of items  for tax and
financial reporting purposes.











                                     Page 22

<PAGE>


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

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

Interest-earning assets:
Loans(2):
  Commercial                                        86,411         1,770      8.13%       77,252      1,539      7.90%
  Consumer                                          11,088           202      7.23%       12,986        269      8.22%
  Real estate construction                          18,422           381      8.21%       19,667        420      8.47%
  Real estate mortgage                               3,450            77      8.85%        5,067        108      8.46%
  Tax exempt loans (1)                               3,148            67      8.44%        3,359         71      8.39%
  Leases                                                50             4     31.74%          149          6     15.98%
  Tax exempt leases (1)                                 31             1     12.80%           96          4     16.53%
  Unearned loan fees                                  (412)                                 (418)
                                                  --------        ------                --------
         Total loans                               122,188         2,502      8.12%      118,158      2,417      8.12%
Investment securities
  Available for sale:
         Taxable                                    14,266           103      2.86%        4,333         64      5.86%
         Tax exempt(1)                                   0             0      0.00%            0          0      0.00%
  Hold to maturity:
         Taxable                                       408             2      1.94%          201          3      5.92%
         Tax exempt (1)                             11,345           186      6.50%       10,781        191      7.03%
                                                  --------        ------                --------     ------
         Total investment securities                26,019           291      4.44%       15,315        258      6.68%
Federal funds sold                                  31,039            74      0.95%       16,639         70      1.67%
Federal Home Loan Bank stock                           291             3      4.09%          277          4      5.73%
Total due from banks/Interest bearing                  331             0      0.00%           34          0      0.00%
                                                  --------        ------                --------     ------
  Total interest earning assets                    179,868         2,870      6.33%      150,423      2,749      7.25%
                                                                  ======                             ======
Noninterest-bearing assets:
  Reserve for loan losses                           (2,773)                               (2,583)
  Cash and due from banks                            9,005                                 7,417
  Premises and equipment                             1,226                                   739
  Other assets                                      11,078                                10,231
                                                  --------                              --------
                                 Total assets     $198,404                              $166,227
                                                  ========                              ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
  Interest bearing deposits
         Interest bearing transaction               29,282        $   11      0.15%       23,914         22      0.36%
         Savings deposits                           62,577           114      0.72%       47,864        167      1.38%
         Time deposits over $100,000                24,808           173      2.77%       20,651        176      3.38%
         Other time deposits                        19,735           115      2.31%       18,660        137      2.91%
                                                  --------        ------                --------     ------
   Total interest bearing Deposits                 136,402           413      1.20%      111,089        502      1.79%
  Federal funds purchased                                0             0      0.00%            0          0      0.00%
  Other short term borrowings                           11             0      0.00%            0          0      0.00%
                                                  --------        ------                --------     ------
  Total interest bearing liabilities               136,413        $  413      1.20%      111,089     $  502      1.79%
                                                                  ======                             ======
Non interest bearing liabilities:
  Non interest bearing demand deposits              38,268                                33,824
  Other liabilities                                  3,349                                 3,050
                         Shareholders' equity       20,374                                18,264
                                                  --------                              --------
   Total liabilities and shareholders' equity     $198,404                              $166,227
                                                  ========                              ========
Interest rate spread                                                          5.13%                              5.46%
                                                                             =====                              =====
Interest income                                                    2,870      6.33%                  $2,749      7.25%
Interest expense                                                     413      0.91%                     502      1.32%
                                                                  ------     -----                   ------     -----
Net interest income/margin                                        $2,457      5.42%                  $2,247      5.93%
                                                                  ======     =====                   ======     =====
</TABLE>

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

(2)  Non accrual loans have been included in loans for the purposes of the above
     presentation.  Loan fees of approximately $130,500 and $76,863 for the nine
     months ended September 30, 2003 and September 30, 2002, respectively,  were
     amortized to the appropriate interest income categories.

                                     Page 23





Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

Item 4.  CONTROLS AND PROCEDURES

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

                                     Part II

Item 1.  LEGAL PROCEEDINGS

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

Item 2.  CHANGES IN SECURITIES

None

Item 3.  DEFAULTS UPON SENIOR SECURITIES

None

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

None

Item 5.  OTHER INFORMATION

None


                                    PAGE 24


<PAGE>

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

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

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

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

     (b)  Reports on Form 8-K

          Date of Report            Date of Event          Item Reported

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

          October 10, 2003          October 9, 2003        Press Release
                                                           announcing results
                                                           of third quarter

                                    PAGE 25


<PAGE>








                                   SIGNATURES

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


                                                           SONOMA VALLEY BANCORP
                                                                      Registrant



Date:  November 12, 2003            /s/ Mel Switzer, Jr.
     -------------------            -------------------------------------
                                    Mel Switzer, Jr.
                                    President and Chief Executive Officer
                                    (Principal Executive Officer)




Date:   November 12, 2003           /s/ Mary Quade Dieter
     --------------------           --------------------------------------------
                                    Mary Quade Dieter
                                    Executive Vice President,
                                    Chief Operating Officer and
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)


                                     Page 26