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

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FORM 10-Q

|(Mark One)                                        |                                                                                         
|------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                 | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|For the quarterly period ended September 30, 2002
|OR                                               
|o                                                 | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period
from to                

Commission File Number0-26552

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California Independent Bancorp(Exact name of registrant as specified in its charter)

|California(State or other jurisdiction of
incorporation or organization)                                 |  | 68-0349947(IRS Employer
Identification No.)
|-------------------------------------------------------------------------------------------------------- |  | -------------------------------------------
|1227 Bridge St., Suite C, Yuba City, California 95991(Address of principal executive offices)
(Zip Code)
|(530) 674-6025(Registrant's telephone number, including area code)                                      
|N/A(Former name, former address and former fiscal year, if changed since last report)                   

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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 ý    No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

Class

Outstanding at
September 30, 2002Common stock, no par value

2,227,756 shares


This
report contains 30 pages. The Exhibit Index is on page 26.

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PART IFINANCIAL INFORMATION

|ITEM 1                    |                                                                                       |                                                     
|------------------------- | ------------------------------------------------------------------------------------- | ----------------------------------------------------
|                          | CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES UNAUDITED FINANCIAL STATEMENTS:       |                                                     
|                          |                                                                                       | CONSOLIDATED BALANCE SHEETS                         
|                          |                                                                                       | CONSOLIDATED STATEMENTS OF INCOME FOR THREE MONTHS  
|                          |                                                                                       | CONSOLIDATED STATEMENTS OF INCOME FOR NINE MONTHS   
|                          |                                                                                       | CONSOLIDATED STATEMENTS OF CASH FLOWS               
|                          |                                                                                       | NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
|ITEM 2                    |                                                                                       |                                                     
|                          | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |                                                     
|ITEM 3                    |                                                                                       |                                                     
|                          | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |                                                     
|ITEM 4                    |                                                                                       |                                                     
|                          | DISCLOSURE CONTROLS AND PROCEDURES                                                    |                                                     
|PART IIOTHER INFORMATION
|ITEM 1                    |                                                                                       |                                                     
|                          | LEGAL PROCEEDINGS                                                                     |                                                     
|ITEM 2                    |                                                                                       |                                                     
|                          | CHANGES IN SECURITIES AND USE OF PROCEEDS                                             |                                                     
|ITEM 3                    |                                                                                       |                                                     
|                          | DEFAULTS UPON SENIOR SECURITIES                                                       |                                                     
|ITEM 4                    |                                                                                       |                                                     
|                          | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |                                                     
|ITEM 5                    |                                                                                       |                                                     
|                          | OTHER INFORMATION                                                                     |                                                     
|ITEM 6                    |                                                                                       |                                                     
|                          | EXHIBITS AND REPORTS ON FORM 8-K                                                      |                                                     
|SIGNATURES                |                                                                                       | 27                                                  

2

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PART IFinancial Information

ITEM 1. FINANCIAL STATEMENTS

CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS        As of September 30, 2002, December 31, 2001, and September 30, 2001    
(dollars in thousands)        (UNAUDITED)

|                                             |                                                                                                                                          | September 30,
2002                         |         | December 31,
2001 |         | September 30,
2001 |        
|-------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------------- | ------- | ------------------ | -------
|Assets                                       |                                                                                                                                          |                                            |         |                   |         |                    |        
|Cash and Due From Banks                      |                                                                                                                                          | $                                          | 13,850  |                   | $       | 17,747             |        
|Federal Funds Sold                           |                                                                                                                                          |                                            |        |                   |         | 5,300              |        
|                                             |                                                                                                                                          |                                            |         |                   |         |                    |        
|                                             | Cash and Cash Equivalents                                                                                                                |                                            |         | 13,850            |         |                    | 23,047 
|Investment Securities:                       |                                                                                                                                          |                                            |         |                   |         |                    |        
|                                             | Held-to-Maturity Securities, at amortized cost (fair value of $2,420, $3,698, and $3,942, respectively)                                  |                                            |         | 2,335             |         |                    | 3,604  
|                                             | Available-for-Sale Securities, at fair value                                                                                             |                                            |         | 89,579            |         |                    | 74,753 
|                                             |                                                                                                                                          |                                            |         |                   |         |                    |        
|                                             |                                                                                                                                          | Total Investment Securities                |         |                   | 91,914  |                    |        
|Loans and Leases                             |                                                                                                                                          |                                            | 222,214 |                   |         | 192,281            |        
|                                             | Less: Allowance for Loan and Lease Losses                                                                                                |                                            |         | (5,913            | )       |                    | (5,498 
|                                             |                                                                                                                                          |                                            |         |                   |         |                    |        
|                                             |                                                                                                                                          | Net Loans and Leases                       |         |                   | 216,301 |                    |        
|Premises and Equipment, Net                  |                                                                                                                                          |                                            | 6,717   |                   |         | 6,937              |        
|Interest Receivable                          |                                                                                                                                          |                                            | 2,057   |                   |         | 2,091              |        
|Other Real Estate Owned                      |                                                                                                                                          |                                            | 455     |                   |         | 542                |        
|Cash Surrender Value of Insurance Policies   |                                                                                                                                          |                                            | 5,292   |                   |         | 5,108              |        
|Other Assets                                 |                                                                                                                                          |                                            | 2,119   |                   |         | 3,140              |        
|Net Assets From Discontinued Operations      |                                                                                                                                          |                                            |        |                   |         | 163                |        
|                                             |                                                                                                                                          |                                            |         |                   |         |                    |        
|                                             | Total Assets                                                                                                                             |                                            | $       | 338,705           |         | $                  | 306,168
|                                             |                                                                                                                                          |                                            |         |                   |         |                    |        
|Liabilities and Shareholders' Equity         |                                                                                                                                          |                                            |         |                   |         |                    |        
|Deposits:                                    |                                                                                                                                          |                                            |         |                   |         |                    |        
|                                             | Noninterest-Bearing                                                                                                                      |                                            | $       | 58,491            |         | $                  | 69,968 
|                                             | Interest-Bearing                                                                                                                         |                                            |         | 223,539           |         |                    | 205,608
|                                             |                                                                                                                                          |                                            |         |                   |         |                    |        
|                                             | Total Deposits                                                                                                                           |                                            |         | 282,030           |         |                    | 275,576
|Interest Payable                             |                                                                                                                                          |                                            | 1,082   |                   |         | 1,247              |        
|Deferred Compensation Payable                |                                                                                                                                          |                                            | 1,362   |                   |         | 935                |        
|FHLB Borrowings                              |                                                                                                                                          |                                            | 15,000  |                   |         |                   |        
|Other Borrowings                             |                                                                                                                                          |                                            | 6,880   |                   |         | 120                |        
|Other Liabilities                            |                                                                                                                                          |                                            | 2,610   |                   |         | 1,077              |        
|Net Liabilities From Discontinued Operations |                                                                                                                                          |                                            | 70      |                   |         |                   |        
|                                             |                                                                                                                                          |                                            |         |                   |         |                    |        
|                                             | Total Liabilities                                                                                                                        |                                            |         | 309,034           |         |                    | 278,955
|Shareholders' Equity                         |                                                                                                                                          |                                            |         |                   |         |                    |        
|                                             | Common Stock, No Par ValueAuthorized20,000,000 shares                                                                                  |                                            |         |                   |         |                    |        
|                                             | Issued and outstanding2,227,756 shares September 30, 2002, 2,115,419 shares December 31, 2001, and 2,109,466 shares September 30, 2001. |                                            |         | 24,484            |         |                    | 22,322 
|                                             | Retained Earnings                                                                                                                        |                                            |         | 4,220             |         |                    | 4,481  
|                                             | Debt Guarantee of ESOP                                                                                                                   |                                            |         | (120              | )       |                    | (120   
|                                             | Accumulated Other Comprehensive Income                                                                                                   |                                            |         | 1,087             |         |                    | 530    
|                                             |                                                                                                                                          |                                            |         |                   |         |                    |        
|                                             |                                                                                                                                          | Total Shareholders' Equity                 |         |                   | 29,671  |                    |        
|                                             |                                                                                                                                          |                                            |         |                   |         |                    |        
|                                             |                                                                                                                                          | Total Liabilities and Shareholders' Equity |         | $                 | 338,705 |                    | $      
|                                             |                                                                                                                                          |                                            |         |                   |         |                    |        

The accompanying notes are an integral part of these unaudited consolidated financial statements

3

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CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF INCOME        (dollars in thousands except share data)        (UNAUDITED)

|                                         |                                                               | Three months
ended
September 30, 2002 |           | Three months
ended
September 30, 2001
|---------------------------------------- | ------------------------------------------------------------- | ------------------------------------- | --------- | -------------------------------------
|Interest Income:                         |                                                               |                                       |           |                                      
|                                         | Interest and Fees on Loans and Leases                         |                                       | $         | 4,078                                
|                                         | Interest on Investments                                      |                                       |           |                                      
|                                         |                                                               | Taxable Interest Income               |           |                                      
|                                         |                                                               | Nontaxable Interest Income            |           |                                      
|                                         | Interest on Federal Funds Sold and Other Interest Income      |                                       |           | 10                                   
|                                         |                                                               |                                       |           |                                      
|                                         |                                                               | Total Interest Income                 |           |                                      
|                                         |                                                               |                                       |           |                                      
|Interest Expense:                        |                                                               |                                       |           |                                      
|                                         | Interest on Deposits                                          |                                       |           | 1,212                                
|                                         | Interest on FHLB Borrowings & Other Borrowings                |                                       |           | 178                                  
|                                         |                                                               |                                       |           |                                      
|                                         |                                                               | Total Interest Expense                |           |                                      
|                                         |                                                               |                                       |           |                                      
|                                         |                                                               | Net Interest Income                   |           |                                      
|Provision for Loan and Lease Losses      |                                                               |                                       | 150       |                                      
|                                         |                                                               |                                       |           |                                      
|                                         | Net Interest Income After Provision for Loan and Lease Losses |                                       |           | 3,850                                
|                                         |                                                               |                                       |           |                                      
|Noninterest Income:                      |                                                               |                                       |           |                                      
|                                         | Service Charges on Deposit Accounts                           |                                       |           | 406                                  
|                                         | Loan Servicing Fees                                           |                                       |           | 115                                  
|                                         | Brokered Loan Fees                                            |                                       |           | 39                                   
|                                         | Alternative Investment Fee Income                             |                                       |           | 33                                   
|                                         | Cash Surrender Value of Life Insurance Policies               |                                       |           | 73                                   
|                                         | Other                                                         |                                       |           | 58                                   
|                                         |                                                               |                                       |           |                                      
|                                         |                                                               | Total Noninterest Income              |           |                                      
|                                         |                                                               |                                       |           |                                      
|Noninterest Expense:                     |                                                               |                                       |           |                                      
|                                         | Salaries and Employee Benefits                                |                                       |           | 1,728                                
|                                         | Occupancy Expense                                             |                                       |           | 234                                  
|                                         | Furniture and Equipment Expense                               |                                       |           | 309                                  
|                                         | Other Operating and Administrative Expense                    |                                       |           | 749                                  
|                                         |                                                               |                                       |           |                                      
|                                         |                                                               | Total Noninterest Expense             |           |                                      
|                                         |                                                               |                                       |           |                                      
|Income Before Provision for Income Taxes |                                                               |                                       | 1,554     |                                      
|Provision for Income Taxes               |                                                               |                                       | 585       |                                      
|                                         |                                                               |                                       |           |                                      
|                                         | Net Income From Continuing Operations                         |                                       |           | 969                                  
|                                         | Income from Discontinued Operations, net of tax effect        |                                       |           | 12                                   
|                                         |                                                               |                                       |           |                                      
|                                         | Net Income                                                    |                                       | $         | 981                                  
|                                         |                                                               |                                       |           |                                      
|Per Share Amounts:                       |                                                               |                                       |           |                                      
|                                         | Basic Earnings Per Share From Continuing Operations           |                                       | $         | 0.44                                 
|                                         | Diluted Earnings Per Share From Continuing Operations         |                                       |           | 0.43                                 
|                                         | Basic Earnings Per Share After Discontinuance of Subsidiary   |                                       |           | 0.44                                 
|                                         | Diluted Earnings Per Share After Discontinuance of Subsidiary |                                       |           | 0.44                                 
|Weighted Average Basic Shares            |                                                               |                                       | 2,225,069 |                                      
|Weighted Average Diluted Shares          |                                                               |                                       | 2,239,169 |                                      

The accompanying notes are an integral part of these unaudited consolidated financial statements

4

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CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF INCOME        (dollars in thousands except share data)        (UNAUDITED)

|                                         |                                                               | Nine months
ended
September 30, 2002 |           | Nine months
ended
September 30, 2001
|---------------------------------------- | ------------------------------------------------------------- | ------------------------------------ | --------- | ------------------------------------
|Interest Income:                         |                                                               |                                      |           |                                     
|                                         | Interest and Fees on Loans and Leases                         |                                      | $         | 11,608                              
|                                         | Interest on Investments                                      |                                      |           |                                     
|                                         |                                                               | Taxable Interest Income              |           |                                     
|                                         |                                                               | Nontaxable Interest Income           |           |                                     
|                                         | Interest on Federal Funds Sold and Other Interest Income      |                                      |           | 52                                  
|                                         |                                                               |                                      |           |                                     
|                                         |                                                               | Total Interest Income                |           |                                     
|                                         |                                                               |                                      |           |                                     
|Interest Expense:                        |                                                               |                                      |           |                                     
|                                         | Interest on Deposits                                          |                                      |           | 3,290                               
|                                         | Interest on FHLB Borrowings & Other Borrowings                |                                      |           | 438                                 
|                                         |                                                               |                                      |           |                                     
|                                         |                                                               | Total Interest Expense               |           |                                     
|                                         |                                                               |                                      |           |                                     
|                                         |                                                               | Net Interest Income                  |           |                                     
|Provision for Loan and Lease Losses      |                                                               |                                      | 450       |                                     
|                                         |                                                               |                                      |           |                                     
|                                         | Net Interest Income After Provision for Loan and Lease Losses |                                      |           | 11,343                              
|                                         |                                                               |                                      |           |                                     
|Noninterest Income:                      |                                                               |                                      |           |                                     
|                                         | Service Charges on Deposit Accounts                           |                                      |           | 1,104                               
|                                         | Loan Servicing Fees                                           |                                      |           | 273                                 
|                                         | Brokered Loan Fees                                            |                                      |           | 100                                 
|                                         | Alternative Investment Fee Income                             |                                      |           | 117                                 
|                                         | Cash Surrender Value of Life Insurance Policies               |                                      |           | 217                                 
|                                         | Loss on Sale of Available-for-Sale Security                   |                                      |           | (55                                 
|                                         | Other                                                         |                                      |           | 132                                 
|                                         |                                                               |                                      |           |                                     
|                                         |                                                               | Total Noninterest Income             |           |                                     
|                                         |                                                               |                                      |           |                                     
|Noninterest Expense:                     |                                                               |                                      |           |                                     
|                                         | Salaries and Employee Benefits                                |                                      |           | 5,363                               
|                                         | Occupancy Expense                                             |                                      |           | 641                                 
|                                         | Furniture and Equipment Expense                               |                                      |           | 946                                 
|                                         | Other Operating & Administrative Expense                      |                                      |           | 2,325                               
|                                         |                                                               |                                      |           |                                     
|                                         |                                                               | Total Noninterest Expense            |           |                                     
|                                         |                                                               |                                      |           |                                     
|Income Before Provision for Income Taxes |                                                               |                                      | 3,956     |                                     
|Provision for Income Taxes               |                                                               |                                      | 1,461     |                                     
|                                         |                                                               |                                      |           |                                     
|                                         | Net Income From Continuing Operations                         |                                      |           | 2,495                               
|                                         | Income from Discontinued Operations, net of tax effect        |                                      |           | 44                                  
|                                         |                                                               |                                      |           |                                     
|                                         | Net Income                                                    |                                      | $         | 2,539                               
|                                         |                                                               |                                      |           |                                     
|Per Share Amounts:                       |                                                               |                                      |           |                                     
|                                         | Basic Earnings Per Share From Continuing Operations           |                                      | $         | 1.12                                
|                                         | Diluted Earnings Per Share From Continuing Operations         |                                      |           | 1.12                                
|                                         | Basic Earnings Per Share After Discontinuance of Subsidiary   |                                      |           | 1.14                                
|                                         | Diluted Earnings Per Share After Discontinuance of Subsidiary |                                      |           | 1.14                                
|Weighted Average Basic Shares            |                                                               |                                      | 2,223,610 |                                     
|Weighted Average Diluted Shares          |                                                               |                                      | 2,235,551 |                                     

The accompanying notes are an integral part of these unaudited consolidated financial statements

5

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CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS        For the Nine-month Periods ended September 30, 2002 and September 30, 2001        (dollars in thousands)        (UNAUDITED)

|                                                                                  |                                               | September 30, 2002                                   |         | September 30, 2001 |        
|--------------------------------------------------------------------------------- | --------------------------------------------- | ---------------------------------------------------- | ------- | ------------------ | -------
|Cash Flows From Operating Activities                                              |                                               |                                                      |         |                    |        
|Net Income                                                                        |                                               | $                                                    | 2,539   |                    | $      
|Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: |                                               |                                                      |         |                    |        
|                                                                                  | Depreciation and Amortization                 |                                                      |         | 725                |        
|                                                                                  | Provision for Loan and Lease Losses           |                                                      |         | 450                |        
|                                                                                  | Loss on Disposal of Investment Security       |                                                      |         | 55                 |        
|                                                                                  | Proceeds from Loan and Lease Sales            |                                                      |         | 130                |        
|                                                                                  | Gain on Sale of Other Real Estate Owned       |                                                      |         | (32                | )      
|                                                                                  | Gain on Sale of Loans and Leases, net         |                                                      |         | (6                 | )      
|                                                                                  | (Gain) Loss on Sale of Premises and Equipment |                                                      |         | (10                | )      
|(Increase) Decrease in Assets:                                                    |                                               |                                                      |         |                    |        
|                                                                                  | Interest Receivable                           |                                                      |         | 34                 |        
|                                                                                  | Deferred Taxes                                |                                                      |         |                   |        
|                                                                                  | Cash Surrender Value of Insurance Policies    |                                                      |         | (184               | )      
|                                                                                  | Income Tax Receivable                         |                                                      |         | 500                |        
|                                                                                  | Net Assets From Discontinued Operations       |                                                      |         | 163                |        
|                                                                                  | Other Assets                                  |                                                      |         | 66                 |        
|Increase (Decrease) in Liabilities:                                               |                                               |                                                      |         |                    |        
|                                                                                  | Interest Payable                              |                                                      |         | (164               | )      
|                                                                                  | Deferred Compensation Payable                 |                                                      |         | 426                |        
|                                                                                  | Net Liabilities From Discontinued Operations  |                                                      |         | 70                 |        
|                                                                                  | Other Liabilities                             |                                                      |         | 1,533              |        
|                                                                                  |                                               |                                                      |         |                    |        
|                                                                                  |                                               | Net Cash Provided By Operating Activities            |         |                    | 6,295  
|Cash Flows From Investing Activities                                              |                                               |                                                      |         |                    |        
|Net Increase in Loans and Leases                                                  |                                               |                                                      | (30,250 | )                  |        
|Purchase of Securities Available-for-Sale                                         |                                               |                                                      | (25,788 | )                  |        
|Proceeds From Maturity of Securities Held-to-Maturity                             |                                               |                                                      | 450     |                    |        
|Proceeds From Sales, Maturities and Calls of Securities Available-for-Sale        |                                               |                                                      | 12,738  |                    |        
|Proceeds From Sales of Other Real Estate Owned                                    |                                               |                                                      | 277     |                    |        
|Purchases of Premises and Equipment                                               |                                               |                                                      | (496    | )                  |        
|                                                                                  |                                               |                                                      |         |                    |        
|                                                                                  |                                               | Net Cash (Used For) Provided By Investing Activities |         |                    | (43,069
|Cash Flows From Financing Activities                                              |                                               |                                                      |         |                    |        
|Net Decrease in Noninterest Bearing Deposits                                      |                                               |                                                      | (11,477 | )                  |        
|Net Increase in Interest Bearing Deposits                                         |                                               |                                                      | 17,931  |                    |        
|Net Increase in Other Borrowings                                                  |                                               |                                                      | 21,760  |                    |        
|Repurchase of Common Stock                                                        |                                               |                                                      | (117    | )                  |        
|Stock Options Exercised                                                           |                                               |                                                      | 188     |                    |        
|Cash Dividends                                                                    |                                               |                                                      | (698    | )                  |        
|Cash Paid in Lieu of Fractional Shares                                            |                                               |                                                      | (10     | )                  |        
|                                                                                  |                                               |                                                      |         |                    |        
|                                                                                  |                                               | Net Cash Provided By Financing Activities            |         |                    | 27,577 
|Net (Decrease) Increase in Cash and Cash Equivalents                              |                                               |                                                      | (9,197  | )                  |        
|                                                                                  |                                               |                                                      |         |                    |        
|Cash and Cash Equivalents, Beginning of Year                                      |                                               |                                                      | 23,047  |                    |        
|                                                                                  |                                               |                                                      |         |                    |        
|Cash and Cash Equivalents, End of Period                                          |                                               |                                                      | 13,850  |                    |        
|                                                                                  |                                               |                                                      |         |                    |        

The accompanying notes are an integral part of these unaudited consolidated financial statements

6

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CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange
Commission ("SEC"). In the opinion of Management, the unaudited consolidated financial statements contain all adjustments (consisting solely of recurring adjustments) that are necessary to present
fairly the financial position of California Independent Bancorp ("CIB") and its subsidiaries (collectively, the "Company") at September 30, 2002, December 31, 2001, and
September 30, 2001, the results of its operations for the three and nine-month periods ended September 30, 2002 and September 30, 2001, and cash flows for the
nine-month period ended September 30, 2002 and September 30, 2001.

Certain
information and footnote disclosures normally presented in annual financial statements prepared in accordance with generally accepted accounting principles have been omitted in
accordance with SEC rules or regulations. The results of operations for the three and nine-month periods ended September 30, 2002 are not necessarily indicative of the operating
results for the full year ending December 31, 2002. It is suggested that these financial statements be read in conjunction with the financial statements and notes included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2001.

Note 2Principles of Consolidation

The accompanying financial statements include the accounts of CIB and its wholly owned subsidiary, Feather River State Bank ("Bank") and its wholly owned
subsidiary, E.P.I. Leasing Co., Inc. ("EPI"), whose operations have been discontinued and are in the process of being wound-down. Significant intercompany balances and transactions
have been eliminated in consolidation.

Note 3Commitments and Contingent Liabilities

In the normal course of business there are various outstanding commitments and contingent liabilities, such as commitments to extend credit and letters of credit
that are not reflected in the financial statements. Management does not anticipate any material loss as a result of these transactions.

The
contract amount of commitments not reflected on the balance sheet at September 30, 2002 were as follows:

Loan Commitments

$
48,437,000Standby Letters of Credit

$
520,000


Note 4Cash and Stock Dividends

In February, May, August, and November of 2001, and February, May, and August of 2002, CIB paid an eleven-cent per share cash dividend.

On
August 20, 2002, CIB's Board of Directors authorized and declared a five percent (5%) stock dividend for shareholders of record as of September 5, 2002. The dividend was
distributed on September 20, 2002, and resulted in the issuance of 105,405 additional shares of common stock. The stock dividend resulted in a transfer within the Shareholder's Equity section
of the Balance Sheet of $2,091,000 from Retained Earnings to Common Stock.

7

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Note 5Earnings Per Share

Basic earnings per share ("EPS") excludes dilution and is computed by dividing income available to the common shareholders by the weighted average number of
common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if options or other contracts to issue common stock were exercised or converted into common
stock, or resulted in the issuance of common stock that then shared in the earnings of the Company. Basic and diluted EPS are restated for all periods presented, for the effect of stock dividends.

Note 6Comprehensive Income

For the Company, comprehensive income includes net income and changes in the fair value, net of applicable taxes, of its
Available-for-Sale investment securities. Total comprehensive income for the three and nine months ended September 30, 2002 and September 30, 2001 was $1,176,000
and $1,039,000, respectively, and $3,096,000 and $3,152,000, respectively, as shown in the following table.

|                            |                                                                          | For the Three months ended September 30 |       | For the Nine months ended September 30
|--------------------------- | ------------------------------------------------------------------------ | --------------------------------------- | ----- | --------------------------------------
|
|Net Income                  |                                                                          | $                                       | 981   |                                       
|Other Comprehensive Income: |                                                                          |                                         |       |                                       
|                            | Change in Gain on Available-for-Sale investment securities, net of taxes |                                         |       | 195                                   
|                            | Reclassification Adjustment for loss on sale of securities, net of taxes |                                         |       |                                      
|                            |                                                                          |                                         |       |                                       
|Total Comprehensive Income  |                                                                          | $                                       | 1,176 |                                       
|                            |                                                                          |                                         |       |                                       

Note 7Federal Home Loan Bank Borrowings

The Company has borrowings from the Federal Home Loan Bank with the following amounts and terms: a 5-year $2,500,000 note maturing on
January 25, 2007 with an interest rate of 4.90%; a 3-year $2,500,000 note maturing on January 25, 2005 with an interest rate of 4.05%; a 5-year $2,500,000 note
maturing on January 29, 2007 with an interest rate of 5.11%; a 3-year $2,500,000 note maturing on January 31, 2005 with an interest rate of 4.24%; and a 10-year
$5,000,000 note (callable by issuer after 2 years) maturing on April 16, 2012 with an interest rate of 3.64%.

Note 8Financial Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, "Business Combinations" ("SFAS
No. 141"),and SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"). These Statements change the method of
accounting for business combinations and goodwill in two significant ways. First, SFAS No. 141 prohibits the use of the pooling of interests method and requires the purchase method of
accounting to be used for all business combinations initiated after June 30, 2001. Second, SFAS No. 142 changes the accounting method for goodwill from an amortization method to an
impairment-only approach. As a result, goodwill will be accounted for as an asset unless it declines in value. Companies will be required to test their goodwill valuation periodically for
"impairment" or loss and to recognize any change on their books. The amortization of goodwill,

8

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including goodwill recorded in past business combinations, will cease upon adoption of SFAS No. 142. On January 1, 2002, the Company adopted SFAS No. 141 and SFAS No. 142.
Management does not believe that these Statements had a material impact on the Company's financial position or results of operations.

In
April 2002, the FASB issued SFAS No. 145,Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections. This Statement rescinds SFAS No. 4,Reporting Gains and Losses from Extinguishment of Debt, and an
amendment of that Statement, SFAS No. 64,Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This Statement also
rescinds SFAS No. 44,Accounting for Intangible Assets of Motor Carriers. This Statement amends SFAS No. 13, Accounting for Leases, to eliminate
an inconsistency between the required accounting for sale-leaseback transactions and the required
accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This Statement also amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. This Statement is effective for fiscal years beginning after
May 15, 2002. Adoption of this statement is not expected to have a material effect on the Company's consolidated financial statements.

In
June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. This Statement addresses financial accounting and reporting
for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). This Statement is effective for exit or disposal activities initiated after December 31, 2002.
Adoption of this statement is not expected to have a material effect on the Company's consolidated financial statements.

On
October 1, 2002, the FASB issued SFAS No. 147,Acquisitions of Certain Financial Institutions.This statement, which
provides guidance on the accounting for the acquisition of a financial institution, applies to all acquisitions except those between two or more mutual enterprises (the Board has a separate project on
its agenda that will provide guidance on the accounting for transactions between mutual enterprises).

The
provisions of Statement 147 reflect the following conclusions:



9

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The
adoption of Statement No. 147 is not expected to have a material effect on the Company's consolidated financial statements.

Note 9Reclassifications

Certain reclassifications have been made to amounts previously reported to conform with current presentation methods.

10

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

California Independent Bancorp ("CIB"), through its wholly owned subsidiary Feather River State Bank ("Bank"), engages in a broad range of financial service
activities. The Bank commenced operations in 1977 as a California state chartered commercial bank. CIB was formed in 1994 and became the holding company for the Bank in May 1995 after receiving
regulatory and shareholder approval. In October 1996, the Bank acquired E.P.I. Leasing Co. Inc., ("EPI") and has operated it as a subsidiary. Consistent with the Bank's decision in the
first quarter of 2000 to discontinue originating and purchasing leases through EPI, it is anticipated that the business affairs of EPI will be dissolved following the orderly wind-down of
the remaining lease portfolio.

Certain
statements in this Form 10-Q quarterly report, and in Management's Discussion and Analysis of Financial Condition and Results of Operations (excluding
statements of fact or historical financial information), involve forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended, and are subject to the "safe harbor" created by those sections. These forward-looking statements involve certain risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: competitive pressure in the
banking industry increases significantly; changes in the interest rate environment reduce margins; general economic conditions, either nationally or regionally, are less favorable than expected,
resulting in, among other things, a deterioration in credit quality and an increase in the provision for possible loan and lease losses; loss of key personnel; change in the regulatory environment;
changes in business conditions; volatility of rate sensitive deposits; operational risks including data processing system failures or fraud; lending concentration in real estate; volatility in
agricultural lending; asset and liability matching risks and liquidity risks; changes in the securities markets; and the effects of terrorism, including the events of September 11, 2001 and
thereafter, and the conduct of the war on terrorism by the United States and its allies.

The
following discussion and analysis is designed to provide a better understanding of the significant changes and trends related to CIB's and the Bank's (collectively, the "Company's")
financial condition, operating results, asset and liability management, liquidity and capital resources; and should be read in conjunction with the Consolidated Financial Statements of the Company and
its accompanying notes.

OVERVIEW OF CHANGES IN THE FINANCIAL STATEMENTS

Total assets at September 30, 2002 were $338,705,000. This figure represents an increase of 10.6% over $306,168,000, at December 31, 2001, and an
increase of 10.2% over $307,235,000, at September 30, 2001.

Gross
loans and leases were $222,214,000 at September 30, 2002, an increase of 15.6% from $192,281,000, at December 31, 2001, and an 18.0% increase from $188,273,000, at
September 30, 2001. The increase in loans over the past twelve-month period is attributable to the Bank's successful business development efforts. The Bank has recommitted itself to promoting a
productive sales culture that emphasizes relationship banking.

Other
Real Estate Owned ("OREO") was $455,000 at September 30, 2002, a decrease of 16.0% from $542,000 at December 31, 2001. Since December 31, 2001, sales of OREO
were $245,000 while the addition to OREO was $158,000.

The
Company's investment portfolio at September 30, 2002 was $91,914,000, compared to $78,357,000 at December 31, 2001, and $72,096,000 at September 30, 2001.
Increases in the Company's investment portfolio during the first nine months of 2002 were in large part due to a change in

11

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investment strategy, whereby the Company invested its excess funds in qualified Available-for-Sale Securities rather than federal funds sold and the adoption of a leveraged
investment strategy whereby qualified securities were purchased utilizing borrowed funds. Cash and cash equivalents, which consisted of cash and due from banks and federal funds sold, were $13,850,000
at September 30, 2002, $23,047,000 at December 31, 2001, and $33,789,000 at September 30, 2001.

Total
deposits of the Company were $282,030,000, $275,576,000, and $269,063,000 at September 30, 2002, December 31, 2001, and September 30, 2001, respectively. Total
deposits have increased due to the Bank's focus on customer service and new customer-centered product development. The Bank offered a tiered Certificate of Deposit ("CD") product in celebration of its
25th anniversary. The tiered CD product was a success and brought in approximately $14 million in new money to the Bank.

The
ratio of gross loans to deposits was 78.8%, 69.8%, and 70.0% at September 30, 2002, December 31, 2001, and September 30, 2001, respectively.



The Company continues to emphasize real estate, real estate construction, commercial, agricultural, and consumer lending activities. The Company has intensified
its focus on real estate secured and commercial lending to meet customers' needs in its geographic market segments. The Company lends primarily to small and medium-sized businesses, small to
large-sized farms, professionals, and consumers within its market area, which is principally comprised of Sutter, Yuba, Colusa, Yolo, and Placer counties; and, secondarily, Sacramento, El Dorado,
Butte, and Glenn counties.

Due
to the loan and lease portfolio's composition, the Company sustains moderate variations in outstanding loan totals. More specifically, certain seasonal variations are expected to
occur in the agricultural and construction loan portfolios. The table below sets forth the composition of the Company's loan and lease portfolio as of September 30, 2002, December 31,
2001, and September 30, 2001.

Composition of Loan and Lease Portfolio  (dollars in thousands)

|Loan Category            |       | September 30, 2002 |         | December 31, 2001 |   | September 30, 2001
|------------------------ | ----- | ------------------ | ------- | ----------------- | - | ------------------
|Commercial               |       | $                  | 24,644  |                   | $ | 26,764            
|Agricultural             |       |                    | 20,247  |                   |   | 13,329            
|Real Estate-Construction |       |                    | 35,288  |                   |   | 32,268            
|Real Estate-Mortgage     |       |                    | 128,397 |                   |   | 100,685           
|Leases                   |       |                    | 6,992   |                   |   | 11,654            
|Consumer                 |       |                    | 4,539   |                   |   | 4,827             
|Other                    |       |                    | 2,107   |                   |   | 2,754             
|                         |       |                    |         |                   |   |                   
|                         | Total |                    | $       | 222,214           |   | $                 
|                         |       |                    |         |                   |   |                   

The
principal changes in the loan and lease portfolio between September 30, 2002,    December 31, 2001, and September 30, 2001 are discussed below:



12

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During
the third quarter of 2002, there were no significant changes in the Bank's loan management, lending philosophy, or credit delivery procedures. The Company continues to emphasize
high credit quality and superior customer service as two key components of its strategic direction. The Company has renewed its focus on relationship banking and on providing customer centered
products and services.

13

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The Company places loans and leases on nonaccrual status when either principal or interest has been past due for 90 days or more. Exceptions to this policy
can be made if the loan or lease is well secured and in the process of collection. The Company also places loans and leases on nonaccrual when payment in full of principal or interest is not expected,
or the financial condition of the borrower has significantly deteriorated. At the time that a loan or lease is placed on nonaccrual, any accrued but uncollected interest is reversed and additional
income is recorded on a cash basis as payments are received as long as the principal is not impaired. Loans or leases that are in the process of renewal in the normal course of business, or that are
well secured and in the process of collection, may not be placed on nonaccrual status at the discretion of Management. A nonaccrual loan or lease may be restored to an accrual basis when interest and
principal payments are current and the prospects for future payments are no longer in doubt.

Nonperforming
loans and leases consist of accruing loans and leases past due 90 days or more and nonaccrual loans and leases. The table below summarizes the composition of
nonperforming loans and leases as of September 30, 2002, December 31, 2001, and September 30, 2001, as well as the changes between the periods. There were no loans and leases that
were accruing interest that were past due as to principal or interest for 90 days or more at September 30, 2002, December 31, 2001, or September 30, 2001.

Composition of Nonperforming Loans and Leases  (dollars in thousands)

|                                     |                          | September 30,
2002 |       | % Change From
September 30,
2001 To September 30,
2002 |      | December 31,
2001 |    | % Change From
September 30,
2001 To December 31,
2001 |       | September 30,
2001
|------------------------------------ | ------------------------ | ------------------ | ----- | ------------------------------------------------------ | ---- | ----------------- | -- | ----------------------------------------------------- | ----- | ------------------
|Nonaccrual Loans and Leases          |                          |                    |       |                                                        |      |                   |    |                                                       |       |                   
|                                     | Commercial               |                    | $     | 99                                                     |      | (78.5             | )% | $                                                     |      |                   
|                                     | Agricultural             |                    |       | 115                                                    |      | (92.3             | )% |                                                       | 389   |                   
|                                     | Real Estate-Construction |                    |       |                                                       |      | 0.0%              |    |                                                       |      |                   
|                                     | Real Estate-Mortgage     |                    |       | 4,791                                                  |      | 82.4%             |    |                                                       | 2,665 |                   
|                                     | Leases                   |                    |       |                                                       |      | 0.0%              |    |                                                       |      |                   
|                                     | Consumer                 |                    |       | 17                                                     |      | 1600.0%           |    |                                                       | 6     |                   
|                                     |                          |                    |       |                                                        |      |                   |    |                                                       |       |                   
|Total Nonperforming Loans and Leases |                          | $                  | 5,022 |                                                        | 9.8% |                   | $  | 3,060                                                 |       | (33.1             
|                                     |                          |                    |       |                                                        |      |                   |    |                                                       |       |                   

Total
nonperforming loans and leases have increased $448,000, or 9.8%, since September 30, 2001 and have increased $1,962,000, or 64.1%, since December 31, 2001. This
increase is principally due to one large commercial real estate secured loan.

The
composition of the Company's nonaccrual loans and leases remains primarily limited to a few large agricultural real estate, commercial real estate, and commercial construction real
estate relationships. At September 30, 2002, 94.7% of the Company's total nonaccrual loans and leases were concentrated in four relationships. Two of the relationships equaling $1,384,000, or
27.6%, are agricultural real estate; one totaling $2,443,000, or 48.6%, is a commercial real estate construction relationship; and one totaling $928,000, or 18.5%, is a commercial real estate
relationship. Each of these nonaccrual loan relationships is assigned to the Company's Special Assets Department, which is responsible for and has developed written work-out arrangements
for each of these relationships.

14

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As
of December 31, 2001, 95.6% of the Company's total nonaccrual loans and leases were concentrated in five relationships. Four of the relationships, totaling $2,664,000, or
87.1%, were commercial real estate relationships, while the remainder, totaling $260,000, or 8.5%, was an agricultural business relationship.

The
Company's allowance for loan and lease losses ("ALLL") totaled $5,913,000, or 2.7% of gross loans and leases, as of September 30, 2002. This amount compares to
$5,498,000, or 2.9% of gross loans and leases, as of December 31, 2001, and $4,615,000, or 2.5% of gross loans and leases, as of September 30, 2001. The ALLL is maintained at a level
considered adequate by Management to provide for losses that can be reasonably anticipated. Loan and lease losses are charged against the ALLL, and recoveries are credited to it. Management believes
that the total ALLL is adequate to cover potential losses in the loan and lease portfolios. While Management uses all available information to provide for loan and lease losses, future additions to
the ALLL may be necessary based on changes in economic conditions and other factors.

Additions
to the ALLL are made by provisions for possible loan and lease losses. The provision for possible loan and lease losses is charged to operating expense and is based upon past
loss experience and estimates of potential losses which, in Management's judgment and in accordance with generally accepted accounting principles, deserve current recognition. Other factors considered
by Management include growth, composition, and overall quality of the loan and lease portfolio; review of specific problem loans and leases; and current economic conditions that may affect the
customer's ability to repay the obligation. Actual losses may vary from current estimates. The estimates are reviewed regularly and adjustments, as necessary, are charged to operations in the period
in which they become known.

Provisions
to the ALLL totaled $450,000 and $0 for the nine-month periods ended September 30, 2002 and September 30, 2001, respectively; and $150,000 and $0 for
the three-month periods ended September 30, 2002 and September 30, 2001, respectively. Total provisions to the ALLL for the year ended December 31, 2001 equaled $2,450,000. Loan
and lease charge-offs for the nine months ended September 30, 2002 totaled $369,000, as compared to $1,427,000 for the nine months ended September 30, 2001. Loan and lease
recoveries were $334,000 for the nine months ended September 30, 2002, compared to $317,000 for the nine months ended September 30, 2001. The large increase in the fourth quarter of 2001
to the provision was primarily due to an acceleration of the already softening economic environment on the Bank's exposure to a large, long running agribusiness problem credit relationship, a
construction loan relationship, and a limited number of other previously identified problem credits. The Bank deemed it prudent to move aggressively to value those exposures to market. The following
table illustrates the activity in the Bank's ALLL for the nine months ended September 30, 2002 and September 30, 2001.

15

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Activity in Allowance for Loan and Lease Losses  (dollars in thousands)

|                              |              | For the Three months ended September 30 |       | For the Nine months ended September 30
|----------------------------- | ------------ | --------------------------------------- | ----- | --------------------------------------
|
|Beginning Balance             |              | $                                       | 5,817 |                                       
|Charge-offs by Loan Category: |              |                                         |       |                                       
|                              | Commercial   |                                         |       |                                      
|                              | Agricultural |                                         |       |                                      
|                              | Real Estate  |                                         |       |                                      
|                              | Leases       |                                         |       | 167                                   
|                              | Consumer     |                                         |       | 5                                     
|                              |              |                                         |       |                                       
|                              | Total        |                                         |       | 173                                   
|                              |              |                                         |       |                                       
|Recoveries by Loan Category:  |              |                                         |       |                                       
|                              | Commercial   |                                         |       | 2                                     
|                              | Agricultural |                                         |       | 92                                    
|                              | Real Estate  |                                         |       |                                      
|                              | Leases       |                                         |       | 23                                    
|                              | Consumer     |                                         |       | 2                                     
|                              |              |                                         |       |                                       
|                              | Total        |                                         |       | 119                                   
|                              |              |                                         |       |                                       
|Net (Recoveries) Charge-offs  |              |                                         | 54    |                                       
|Provision Charged to Expense  |              |                                         | 150   |                                       
|                              |              |                                         |       |                                       
|Balance, September 30         |              | $                                       | 5,913 |                                       
|                              |              |                                         |       |                                       



The Company's investment portfolio was $91,914,000 at September 30, 2002, compared to $78,357,000 at December 31, 2001, and $72,096,000 at
September 30, 2001. The increase of $19,818,000, or 27.5%, from September 30, 2001 to September 30, 2002, is primarily due to a change in investment strategy whereby the Company
has invested its excess funds in qualified Available-for-Sale Securities rather than federal funds sold and the adoption of a leveraged investment strategy whereby qualified
securities were purchased utilizing borrowed funds. The Company has implemented this strategy to take advantage of the interest spread between funds borrowed and the interest earned on the
investments. Specifically, in order to achieve the desired return, the Company purchases securities with an average life of three to five years and matches those securities with similar term funding.

As
of September 30, 2002, the Company's "Available-for-Sale" category adjustment reflected an unrealized gain of $1,976,000. The approximate market value
of the Company's investment portfolio at September 30, 2002 was $91,999,000. As of September 30, 2001, the Company's "Available-for-Sale" category adjustment
reflected an unrealized gain of $1,510,000 and the approximate market value of the Company's investment portfolio was $72,202,000. The $466,000 change in the unrealized gain/loss between the two
periods is primarily the result of decreasing interest rates and changes in the portfolio composition.

16

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RESULTS OF OPERATIONS    Three and Nine Months Ended September 30, 2002  Compared with  Three and Nine Months Ended September 30, 2001

The
Company recognized net income of $2,539,000 for the first nine months of 2002, which is an increase of $461,000, or 22.2%, over $2,078,000, the net income for the comparable nine
months in 2001. The diluted earnings per share after discontinuance of subsidiary was $1.14 for the first nine months of 2002 which is a 23.9% increase over $0.92, the diluted earnings per share after
discontinuance of subsidiary for the comparable nine months in 2001. Net income for the three-month period ended September 30, 2002 was $981,000, which is an increase of $294,000, or 42.8%,
over $687,000, the net income for the same period in 2001. The diluted earnings per share after discontinuance of subsidiary was $0.44 for the three months ended September 30, 2002, which is an
increase of 46.7% over $0.30, the diluted earnings per share after discontinuance of subsidiary for the same period in 2001. (Earnings per share calculations for the three and nine-month
periods ended September 30, 2001 reflect the Company's 5% stock dividend distributed on September 20, 2002.)

Net
interest income rose for the nine months ended September 30, 2002 to $11,793,000 from $10,870,000 for the same nine-month period in 2001, which is an increase of
$923,000, or 8.5%. Net interest income also increased for the three months ending September 30, 2002 to $4,000,000 from $3,571,000 for the same three-month period in 2001, which is an increase
of $429,000, or 12.0%. This increase reflects the combined effects of a variety of factors affecting interest income and interest expense as described below.

The
Company's primary source of income is interest and fees on loans and leases. The table below depicts average loans and leases, and yields for the three and nine-month
periods ending September 30, 2002 and September 30, 2001.

|Loans and Leases                     |  | Three-months
ended
September 30, 2002 |         | Three-months
ended
September 30, 2001 |   | Nine-months
ended
September 30, 2002 |   | Nine-months
ended
September 30, 2001 |        
|------------------------------------ |  | ------------------------------------- | ------- | ------------------------------------- | - | ------------------------------------ | - | ------------------------------------ | -------
|
|Average loans and leases outstanding |  | $                                     | 210,267 |                                       | $ | 190,579                              |   | $                                    | 197,669
|Average yields                       |  |                                       | 7.76    | %                                     |   | 8.75                                 | % |                                      | 7.83   
|Interest and fees earned             |  | $                                     | 4,078   |                                       | $ | 4,169                                |   | $                                    | 11,608 
|Average prime rate                   |  |                                       | 4.75    | %                                     |   | 6.57                                 | % |                                      | 4.75   

The
three and nine-month average outstanding loans and leases total at September 30, 2002 were up $19,668,000, or 10.3%, and $15,350,000, or 8.4%, respectively, over
the comparable three and nine-month periods in 2001. The increase in average outstanding loans and leases is reflective of the Bank's marketing efforts and the Bank's expansion into Placer
County. Both the volume and rate have been impacted as a result of the declining interest rate environment experienced during 2001, as well as 2002, and competitive pressure to acquire and retain
quality customers. The decline in average yields is also in part the result of obtaining business under a more stringent credit underwriting process.

17

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Rates
and amounts paid on average deposits, including noninterest-bearing deposits, for the three and nine-month periods ended September 30, 2002, compared to the same
periods in 2001, are set forth in the following table:

|Deposits                     |  | Three-months
ended
September 30, 2002 |         | Three-months
ended
September 30, 2001 |   | Nine-months
ended
September 30, 2002 |   | Nine-months
ended
September 30, 2001 |        
|---------------------------- |  | ------------------------------------- | ------- | ------------------------------------- | - | ------------------------------------ | - | ------------------------------------ | -------
|
|Average deposits outstanding |  | $                                     | 283,341 |                                       | $ | 259,495                              |   | $                                    | 274,291
|Average rates paid           |  |                                       | 1.71    | %                                     |   | 2.52                                 | % |                                      | 1.60   
|Interest expense             |  | $                                     | 1,212   |                                       | $ | 1,635                                |   | $                                    | 3,290  

The
Company experienced a decrease in total interest expense of $283,000, or 16.9%, for the three-month period ended September 30, 2002, in comparison to the same three-month
period for 2001. Total interest expense decreased $1,909,000, or 33.9%, for the nine-month period ended September 30, 2002, in comparison to the same nine-month period
of 2001. Average rates paid on deposits decreased from 2.52% for the three-month period ended September 30, 2001 to 1.71% for the three-month period ended September 30, 2002. Average
rates paid on deposits decreased from 2.86% for the nine-month period ended September 30, 2001 to 1.60% for the nine-month period ended September 30, 2002.
Interest-bearing deposits comprised 79.3% of total deposits at September 30, 2002, as compared to 77.4% at September 30, 2001. The overall decrease in interest expense is attributed to a
decrease in interest rates.



The Company experienced an increase in total noninterest income of $111,000, or 18.1%, for the three-month period ended September 30, 2002 versus the same
period in 2001. Total noninterest income increased by $163,000, or 9.4%, for the nine-month period ended September 30, 2002 over the same period in 2001. Total noninterest income
consists principally of service charges on deposit accounts, loan servicing fees, brokered loan fees, and other noninterest income.

Service
charge income on deposit accounts, one of the primary components of noninterest income, showed an increase of $134,000, or 49.3%, for the three-month period ended
September 30, 2002 over the three-month period ended September 30, 2001. Service charge income on deposit accounts showed an increase of $301,000, or 37.5%, for the
nine-month period ended September 30, 2002 over the nine-month period ended September 30, 2001. Income derived from service charges on deposit accounts was
$406,000 and $272,000 for the three-month periods ended September 30, 2002 and September 30, 2001, respectively, and $1,104,000 and $803,000 for the nine-month periods ended
September 30, 2002 and September 30, 2001, respectively. The increase in service charge income on deposit accounts is due to an increase in total deposits and an increase in charges
administered.

Loan
servicing fee income for the three-month period ended September 30, 2002 decreased $33,000, or 22.3%, in comparison to the three-month period ended September 30, 2001.
Loan servicing fee income for the nine-month period ended September 30, 2002 decreased $67,000, or 19.7%, in comparison to the nine-month period ended
September 30, 2001. The decrease is attributable to normal principal amortization on serviced loans, loan payoffs, and fewer originations of "servicing retained" brokered and sold loans. The
decreasing trend in loan servicing fee income is expected to continue due to the Company's emphasis on brokered loans rather than serviced loans.

Income
from brokered loan fees for the three-months ended September 30, 2002 decreased $8,000, or 17.0%, in comparison to the three-month period ended September 30, 2001,
and decreased $13,000, or 11.5%, for the nine-month period ended September 30, 2002, compared to the nine-month period ended September 30, 2001. The decrease is
predominantly due to unfavorable pricing variances on the brokering of non-conforming residential real estate loans.

18

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All
other noninterest income, which consists of alternative investment fee income, cash surrender value of life insurance policies, and other noninterest income, increased by $18,000 for
the three-month period ended September 30, 2002, in comparison to the three-month period ended September 30, 2001, and decreased by $58,000 for the nine-month period ended
September 30, 2002, in comparison to the nine-month period ended September 30, 2001. Included in the change in other noninterest income is a gain on sale of OREO of $32,000.



During the three-month period ended September 30, 2002, the Company experienced a decrease of $109,000, or 3.5%, in total noninterest expense over the
three-month period ended September 30, 2001. Total noninterest expense stood at $3,020,000 for the three-month period ended September 30, 2002, compared to $3,129,000 for the three-month
period ended September 30, 2001. Total noninterest expense decreased $131,000, or 1.4%, for the nine-month period ended September 30, 2002, in comparison to the
nine-month period ended September 30, 2001. Noninterest expenses consist of salaries and employee benefits, occupancy, furniture and equipment expense, legal and professional fees,
telephone expense, and other general and administrative operating expenses.

Salaries
and employee benefits decreased $84,000, or 4.6%, for the three-month period ended September 30, 2002, over the same period in 2001 and decreased $78,000, or 1.4%, for
the nine-month period ended September 30, 2002, over the same period in 2001. Salaries and employee benefits for the three-month period ended September 30, 2002 were
$1,728,000, compared to $1,812,000 for the same period in 2001 and $5,363,000 for the nine-month period ended September 30, 2002, compared to $5,441,000 for the same period in 2001.
The decrease in salaries and employee benefits is due to improved efficiencies and productivity.

Collectively,
occupancy and furniture and equipment expenses were the same amount for the three-month period ended September 30, 2002, compared to the same period in 2001 and
increased $117,000, or 8.0%, for the nine-month period ended September 30, 2002, over the same period in 2001. These two categories stood jointly at $543,000 for the three-month
periods ended September 30, 2002 and September 30, 2001, and $1,587,000 and $1,470,000 for the nine-month periods ended September 30, 2002 and September 30,
2001, respectively. The opening of branches in Lincoln and Roseville, California, on May 31, 2001 and September 26, 2001, respectively, primarily drove the
year-over-year increase.

Other Operating and Administrative Expenses  (dollar in thousands)

|                          |       | Three-months
ended
September 30, 2002 |     | Three-months
ended
September 30, 2001 |   | Nine-months
ended
September 30, 2002 |     | Nine-months
ended
September 30, 2001
|------------------------- | ----- | ------------------------------------- | --- | ------------------------------------- | - | ------------------------------------ | --- | ------------------------------------
|Legal & Professional Fees |       | $                                     | 95  |                                       | $ | 143                                  |     | $                                   
|Telephone Expense         |       |                                       | 67  |                                       |   | 86                                   |     |                                     
|Stationary & Supplies     |       |                                       | 53  |                                       |   | 44                                   |     |                                     
|Director Fees             |       |                                       | 56  |                                       |   | 64                                   |     |                                     
|Insurance                 |       |                                       | 48  |                                       |   | 48                                   |     |                                     
|Courier                   |       |                                       | 57  |                                       |   | 34                                   |     |                                     
|Other                     |       |                                       | 373 |                                       |   | 355                                  |     |                                     
|                          |       |                                       |     |                                       |   |                                      |     |                                     
|                          | Total |                                       | $   | 749                                   |   | $                                    | 774 |                                     
|                          |       |                                       |     |                                       |   |                                      |     |                                     

Legal
and professional fees, consisting primarily of outside legal counsel, independent accountants, and consultants, were $95,000 for the three-month period ended September 30,
2002, compared to

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$143,000 for the same period in 2001, which was a decrease of $48,000, or 33.6%. Legal and professional fees were $390,000 for the nine-month period ended September 30, 2002,
compared to $473,000 for the same period in 2001, which was a decrease of $83,000, or 17.5%. The decrease in legal and professional fees is due to management continuing to monitor costs and continuing
to take cost saving opportunities.

Telephone
expenses, which include data line transmissions, decreased $19,000, or 22.1%, for the three-month period ended September 30, 2002, compared to the same period in 2001
and decreased $59,000, or 22.8%, for the nine-month period ended September 30, 2002, compared to the same period in 2001. The decrease in telephone expenses is also due to
management's cost saving efforts including negotiating new agreements with telephone service providers.

All
other operating and administrative expenses in the aggregate increased $42,000, or 7.7%, for the three-month period ended September 30, 2002, compared to the same period in
2001 and decreased $28,000, or 1.6%, for the nine-month period ended September 30, 2002, compared to the same period in 2001. The decline in total other noninterest operating and
administrative expense is attributed primarily to a variety of initiatives implemented by the Company to further streamline workflow processes and improve its use of technology, thereby achieving
greater operational efficiency.



Applicable income taxes from continuing operations for the three and nine-month periods ended September 30, 2002, were $585,000 and $1,461,000,
respectively. This compares to $380,000 and $1,149,000 for the three and nine-month periods, ended September 30, 2001, respectively. The Company's effective tax rate was 37.6% and
36.9% for the three and nine-month periods ended September 30, 2002, respectively, and 36.0% for the three and nine-month periods, ended September 30, 2001.

INTEREST RATE SENSITIVITY

Interest rate sensitivity is the relationship between market interest rates and net interest income ("NII") due to the repricing characteristics of assets and
liabilities. As interest rates change, interest income and expense also change, thereby changing NII. If more liabilities reprice than assets in a given period, a liability sensitive position is
created. If interest rates decline, a liability sensitive position will
benefit NII. Alternatively, where assets reprice more quickly than liabilities in a given period (an asset sensitive position), a decline in market rates will have an adverse effect on NII.

Asset
and liability management encompasses an analysis of market risk, the control of interest rate risk (interest sensitivity management), and the ongoing maintenance and planning of
liquidity and capital. The composition of the Company's balance sheet is planned and monitored by the Asset and Liability Committee ("ALCO"), a committee comprised of the Bank's executive management.
The primary tool used by the ALCO to measure and manage interest rate exposure is a simulation model. Use of the model, to perform simulations reflecting changes in interest rates over one and
two-year time horizons, has enabled Management to develop and initiate strategies for managing exposure to interest rate risks. The ALCO believes that, both individually and in the
aggregate, its modeling assumptions are reasonable, but the complexity of the simulation modeling process results in a sophisticated estimate, not an absolutely precise calculation of exposure. The
Company's interest rate sensitivity analysis is discussed in the "Interest Rate Risk" section.

MARKET RISK

Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates and prices such as interest rates, foreign currency
exchange rates, commodity prices, and equity prices. The Company's primary market risk exposure is interest rate risk. The continuous monitoring

20

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and management of this risk is an important component of the Company's asset and liability management process and is governed by policies established by its Board of Directors, which are reviewed and
approved annually. The Board of Directors delegates responsibility to the ALCO for carrying out the asset and liability management policies. In this capacity, Management develops guidelines and
strategies that impact the Company's asset and liability management related activities based upon estimated market risk sensitivity, policy limits, and overall market interest rate levels and trends.

INTEREST RATE RISK

Interest rate risk represents the sensitivity of earnings to changes in market interest rates. As interest rates change, the interest income and expense streams
associated with the Company's financial instruments also change, thereby impacting NII, the primary component of the Company's earnings. The ALCO utilizes the results of a detailed and dynamic
simulation model to quantify the estimated exposure of NII to sustained interest rate changes.

The
simulation model captures the impact of changing interest rates on the interest income received and interest expense paid on all assets and liabilities reflected on the Company's
balance sheet as well as for off-balance sheet financial instruments. This sensitivity analysis is compared to policy limits that
specify a maximum tolerance level for NII exposure over a one-year horizon, assuming no balance sheet growth, given both a 200 basis point ("bp") upward and downward shift in interest
rates. A parallel and pro rata shift in rate over a 12-month period is assumed. The Bank's policy limit threshold is that NII exposure shall not exceed 10% of estimated NII over the next
12 months.

Based
on a 200 bp upward or downward shift in interest rates, the Company's short-term as well as long-term sensitivity analysis projects an asset sensitive
forecast, which is a projection of increasing net interest income in an increasing interest rate environment and a decreasing net interest income in a decreasing interest rate environment. For this
analysis, short-term and long-term is defined as current to three months and over two years, respectively. Based on the same shift of 200 bp, the Company's
intermediate-term sensitivity analysis projects a liability sensitive position, which is a projection of increasing net interest income in a decreasing interest rate environment and a
decreasing net interest income in an increasing interest rate environment. Intermediate-term refers to the period over three months yet less than two years.

The
preceding sensitivity analysis does not represent a Company forecast and should not be relied upon as being indicative of future operating results. These hypothetical estimates are
based on numerous assumptions, such as: the nature and timing of interest rate levels, including yield curve shape; repayments on loans, leases, and securities; deposit rates; pricing decisions on
loans and deposits; reinvestment and replacement of assets; and liability cash flows. While assumptions are developed based upon current economic and local market conditions, the Company cannot make
any assurances as to the predictive nature of these assumptions, including how customer preferences or competitor influences might change. Also, as market conditions vary from those assumed in the
sensitivity analysis, actual results will also differ due to prepayment and refinancing levels deviating from those assumed, the varying impact of interest rate change caps or floors on adjustable
rate assets, the potential effect of changing debt service levels on customers with adjustable rate loans, depositor early withdrawals, customer product preference changes, and other internal and
external variables. Furthermore, the sensitivity analysis does not reflect actions that the ALCO might take in responding to or anticipating changes in interest rates.

LIQUIDITY

The need for liquidity in a banking institution arises principally to provide for deposit withdrawals, the credit needs of its customers, and to take advantage of
investment opportunities. A banking

21

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institution may achieve desired liquidity from both assets and liabilities. The Company considers cash and deposits held in other banks, federal funds sold, other short-term investments,
maturing loans and investments, receipts of principal and interest on loans, investments available for sale, and potential loan sales as sources of asset liquidity. Deposit growth, access to credit
lines established with correspondent banks, and market sources of funds are considered by the Company as sources of liability liquidity.

Historically,
during the first half of each year the Bank experiences excess liquidity. The Bank's seasonal agricultural and construction loan demand typically occurs each year from
early June through late October. This demand tends to absorb excess liquidity and usually results in a net borrowed position during that time frame.

The
Bank's short-term liquid assets consist of cash and due from banks, federal funds sold, and investment securities with maturities of one year or less (exclusive of
pledged securities). Irrespective of maturity, U.S. Government and Agency securities qualify as collateral for borrowings at the Federal Home Loan Bank ("FHLB"), Federal Reserve Bank, and with
broker-dealers.

In
order to fund its liquidity needs, the Bank has formal and informal borrowing arrangements with the Federal Reserve Bank to meet unforeseen deposit outflows or seasonal loan funding
demands. The Bank has also entered an agreement to borrow funds from the FHLB secured by U.S. Government and Agency obligations in the Bank's investment portfolio. As of September 30, 2002, the
Bank had $21,760,000 outstanding on these lines, and as of September 30, 2001 $5,000,000 was outstanding. There were no borrowings outstanding at December 31, 2001.

The
Bank monitors its credit facility availability and unencumbered qualifying collateral in conjunction with its asset and liability management process. Policy limits are established
and monitored for maximum borrowings and minimum contingency liquidity levels.

Management
believes that the Company maintains adequate amounts of liquidity to meet its needs.

CAPITAL RESOURCES

CIB and the Bank are subject to respective Federal Reserve Board ("FRB") and Federal Deposit Insurance Corporation ("FDIC") regulations governing capital
adequacy. These regulations are intended to reflect the degree of risk associated with both on and off-balance sheet items. Financial institutions are expected to comply with a minimum
ratio of qualifying total capital to risk-weighted assets of 8.0%. At least half of the qualifying total capital must be in Tier 1 Capital, as defined by the regulations. Federal
regulatory agencies have also adopted a minimum leverage ratio of 4.0%, which is intended to supplement the risk-based capital requirements and to ensure that all financial institutions
continue to maintain a minimum level of core capital.

Total
shareholders' equity on September 30, 2002 increased by $2,458,000, or 9.0%, to $29,671,000 over December 31, 2001 total shareholders' equity of $27,213,000. The
increase is attributed to net income of $2,539,000 during the first nine months of 2002, and an increase in other comprehensive income, net of tax, of $557,000 associated with the market value
adjustment on the Company's Available-for-Sale securities and an increase of $188,000 due to the exercise of stock options. Cash dividends paid in the amount of $699,000 offset
these increases to shareholders' equity, as well as, the cash paid in lieu of
fractional shares which totaled $10,000 and the repurchase of CIB stock which totaled $117,000. As can be seen by the following table, the Company and Bank exceeded all regulatory capital ratios on
September 30, 2002.

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Capital Ratios As of September 30, 2002

|                                   |  | Company |         | Bank
|---------------------------------- |  | ------- | ------- | ----
|
|
|Risk Based Capital Ratios          |  |         |         |     
|Tier 1 Risk-Based Capital          |  | $       | 28,426  |     
|Tier 1 Capital Minimum Requirement |  |         | 10,616  |     
|                                   |  |         |         |     
|Excess                             |  | $       | 17,810  |     
|                                   |  |         |         |     
|Total Risk-Based Capital           |  |         | 31,775  |     
|Total Capital Minimum Requirement  |  |         | 21,231  |     
|                                   |  |         |         |     
|Excess                             |  | $       | 10,544  |     
|                                   |  |         |         |     
|Net Risk-Weighted Assets           |  | $       | 265,390 |     
|                                   |  |         |         |     
|Leverage Capital Ratio             |  |         |         |     
|Tier 1 Capital to average assets   |  | $       | 28,426  |     
|Minimum leverage requirement       |  |         | 13,352  |     
|                                   |  |         |         |     
|Excess                             |  | $       | 15,074  |     
|                                   |  |         |         |     
|Average total assets               |  | $       | 333,806 |     
|                                   |  |         |         |     

On
November 13, 2001, CIB's Board of Directors approved a plan to repurchase, as conditions warrant, up to five percent (5%) of CIB's common stock on the open market. The duration
of the plan is open-ended and the timing of the purchases is dependent on market conditions. During the nine-month period ended September 30, 2002, CIB repurchased 7,400
shares of its own common stock pursuant to the plan, which are the total shares repurchased since inception of the repurchase plan. Under California law, the Company must retire all repurchased
shares.

SUPERVISION AND REGULATION

CIB and the Bank operate in a highly regulated environment and are subject to supervision and examination by various federal and state regulatory agencies. CIB,
as a bank holding company, is subject to regulation and supervision by primarily the FRB, and the Bank, as a California-chartered commercial bank, is subject to supervision and regulation primarily by
the FDIC and the California Department of Financial Institutions ("DFI"). Federal and California state laws and regulations govern numerous matters involving both entities, including maintenance of
adequate capital and financial condition, permissible types, amounts and terms of extensions of credit and investments, permissible non-banking activities, the level of reserves against
deposits, and restrictions on dividend payments. The
federal and state regulatory agencies possess extensive discretion and powers to prevent or remedy unsafe or unsound practices or violations of law by banks and bank holding companies. CIB and the
Bank also undergo periodic examinations by one or more of these regulatory agencies, which may subject them to changes in asset valuations, in amounts of required loss allowances, and in operating
restrictions resulting from the regulators' judgments based on information available to them at the time of their examination. The Bank's operations are also subject to a wide variety of state and
federal consumer protection and similar statutes and regulations. Those and other restrictions limit the manner in which CIB and the Bank may conduct business and obtain financing. The laws and
regulations to which CIB and the Bank are subject can, and do, change significantly from time to time, and such changes could materially affect the Company's business, financial condition, and
operating results.

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President George W. Bush signed the Public Company Accounting Reform and Investor Protection Act of 2002 (the "Act") on July 30, 2002, which responds to
recent issues in corporate governance and accountability. Among other matters, key provisions of the Act provide for:



The
effect of the Act upon corporations is uncertain; however, it is likely that compliance costs may increase as corporations modify procedures if required to conform to the provisions
of the Act. The Company does not currently anticipate that compliance with the Act will have a material effect upon its financial position or results of its operations or its cash flows.



President Bush signed the USA Patriot Act of 2001 ("Patriot Act") on October 26, 2001. This legislation was enacted in response to the terrorist attacks in
New York, Pennsylvania and Washington, D.C. on September 11, 2001. The Patriot Act is intended to strengthen U.S. law enforcement and the intelligence communities' ability to work together to
combat terrorism on a variety of levels. The potential impact of the Patriot Act on financial institutions is significant and wide ranging. The Patriot Act contains sweeping anti-money
laundering and financial transparency laws and requires various regulations, including:



Until
all new regulations, rules or standards have been developed, the Company is not able to predict the impact of the new laws and regulations on its financial condition or results of
operations.

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OTHER MATTERS



The
terrorist acts of September 11, 2001, and thereafter, has had significant adverse effects upon the United States economy. It is uncertain whether and to what extent, if any,
future terrorist activities, and the response of the United States and its allies in combating terrorism on a worldwide basis will adversely impact the Company. Such events, however, have had, and may
continue to have, an adverse effect on the economy in the Company's market areas. Such continued economic deterioration could adversely affect the Company's future results of operations by, among
other matters, reducing the demand for the Bank's loans and other products, increasing nonperforming loans and the amounts reserved for loan losses, and causing a decline in the Company's stock price.



On October 30, 2002, the Company announced the issuance of $10,000,000 of Trust Preferred Securities which closed and funded on October 29, 2002. The
proceeds from the sale of the securities will be used for general corporate and strategic purposes. The Company and the Bank are considered to be well-capitalized as defined by regulatory guidance and
the issuance of the Trust Preferred Securities will further enhance these ratios.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In Management's opinion, the Company's market risk and interest rate risk profiles are within reasonable tolerances at this time. (See Item 2. Management
Discussion and Analysis of Financial Condition and Results of Operations, sections discussing "Market Risk," "Interest Rate Risk" and "Liquidity" at pages 20-21.) No significant changes to the market
risk or interest rate risk positions of the Company have occurred since December 31, 2001.

ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this Form 10-Q, the Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's President and 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 President and 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
(including its consolidated subsidiaries) required to be included in this Form 10-Q.

There
have been no significant changes in the Company's internal controls or in other factors, which could significantly affect internal controls subsequent to the date the Company
carried out its evaluation.

25

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PART IIOTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None reported.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

No changes.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

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

None reported.

ITEM 5. OTHER INFORMATION.

None reported.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8K.



|Exhibit No. |  |                                                                                                                                
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------
|99.1        |  | Certification of the Quarterly Report of the Company on Form 10-Q pursuant to    section 906 of the Sarbanes-Oxley Act of 2002.





26

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SIGNATURES

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

|                        |  | CALIFORNIA INDEPENDENT BANCORP                                                                                            
|----------------------- |  | --------------------------------------------------------------------------------------------------------------------------
|                        |  |                                                                                                                           
|Date: November 12, 2002 |  | /s/JOHN I. JELAVICHJohn I. Jelavich President/Chief Executive Officer                                                     
|                        |  |                                                                                                                           
|Date: November 12, 2002 |  | /s/KEVIN R. WATSONKevin R. Watson Chief Financial Officer/Corporate Secretary
(Principal Financial and Accounting Officer)

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Section 302 Certification

CERTIFICATION FOR QUARTERLY REPORT ON FORM 10-Q

I, John I. Jelavich, certify that:





|Date: November 12, 2002 |  |                                                       
|----------------------- |  | ------------------------------------------------------
|                        |  | /s/JOHN I. JELAVICH                                   
|                        |  | John I. Jelavich President and Chief Executive Officer

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Section 302 Certification

CERTIFICATION FOR QUARTERLY REPORT ON FORM 10-Q

I, Kevin R. Watson, certify that:





|Date: November 12, 2002 |  |                                        
|----------------------- |  | ---------------------------------------
|                        |  | /s/KEVIN R. WATSON                     
|                        |  | Kevin R. Watson Chief Financial Officer

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