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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, 2003            
|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 Number 0-265520

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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

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes o    No ý

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, 2003Common stock, no par value

2,074,957 shares


This
report contains 28 pages. The Exhibit Index is on pages 27.

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PART IFINANCIAL INFORMATION

|ITEM 1 |                                                                                              |                                                     
|------ | -------------------------------------------------------------------------------------------- | ----------------------------------------------------
|       | CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES UNAUDITED CONSOLIDATED 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 |                                                                                              |                                                     
|       | 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 |                                                     | 28

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, 2003, December 31, 2002, and September 30, 2002  (Dollars in thousands except share data)
(UNAUDITED)

|                                                                                                                                                                                            |                                           | September 30,
2003                         |         | December 31,
2002 |         | September 30,
2002 |        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | ------------------------------------------ | ------- | ----------------- | ------- | ------------------ | -------
|Assets                                                                                                                                                                                      |                                           |                                            |         |                   |         |                    |        
|Cash and Due From Banks                                                                                                                                                                     |                                           | $                                          | 16,780  |                   | $       | 21,801             |        
|Federal Funds Sold                                                                                                                                                                          |                                           |                                            | 17,515  |                   |         | 18,245             |        
|                                                                                                                                                                                            |                                           |                                            |         |                   |         |                    |        
|                                                                                                                                                                                            |                                           | Cash and Cash Equivalents                  |         |                   | 34,295  |                    |        
|Investment Securities Held-to-Maturity                                                                                                                                                      |                                           |                                            | 2,440   |                   |         | 2,265              |        
|Investment Securities Available-for-Sale                                                                                                                                                    |                                           |                                            | 116,880 |                   |         | 97,974             |        
|                                                                                                                                                                                            |                                           |                                            |         |                   |         |                    |        
|                                                                                                                                                                                            |                                           | Total Investments                          |         | $                 | 119,320 |                    | $      
|Loans and Leases                                                                                                                                                                            |                                           |                                            | 204,391 |                   |         | 214,428            |        
|                                                                                                                                                                                            | Less: Allowance for Loan and Lease Losses |                                            |         | (5,975            | )       |                    | (6,532 
|                                                                                                                                                                                            |                                           |                                            |         |                   |         |                    |        
|                                                                                                                                                                                            |                                           | Net Loans and Leases                       |         | $                 | 198,416 |                    | $      
|Premises and Equipment, Net                                                                                                                                                                 |                                           |                                            | 6,381   |                   |         | 6,731              |        
|Other Real Estate                                                                                                                                                                           |                                           |                                            | 2,875   |                   |         |                   |        
|Cash Surrender Value of Insurance Policies                                                                                                                                                  |                                           |                                            | 6,421   |                   |         | 6,239              |        
|Other Assets                                                                                                                                                                                |                                           |                                            | 8,193   |                   |         | 5,932              |        
|                                                                                                                                                                                            |                                           |                                            |         |                   |         |                    |        
|                                                                                                                                                                                            |                                           | Total Assets                               |         | $                 | 375,901 |                    | $      
|                                                                                                                                                                                            |                                           |                                            |         |                   |         |                    |        
|Liabilities and Shareholders' Equity                                                                                                                                                        |                                           |                                            |         |                   |         |                    |        
|Deposits:                                                                                                                                                                                   |                                           |                                            |         |                   |         |                    |        
|                                                                                                                                                                                            | Noninterest-Bearing                       |                                            | $       | 75,164            |         | $                  | 75,381 
|                                                                                                                                                                                            | Interest-Bearing                          |                                            |         | 241,411           |         |                    | 231,345
|                                                                                                                                                                                            |                                           |                                            |         |                   |         |                    |        
|                                                                                                                                                                                            |                                           | Total Deposits                             |         | $                 | 316,575 |                    | $      
|Federal Home Loan Bank Borrowings                                                                                                                                                           |                                           |                                            | 15,000  |                   |         | 15,000             |        
|Other Borrowings                                                                                                                                                                            |                                           |                                            | 80      |                   |         | 80                 |        
|Mandatorily Redeemable Cumulative Trust Preferred Securities of Subsidiary Grantor Trust                                                                                                    |                                           |                                            | 10,000  |                   |         | 10,000             |        
|Other Liabilities                                                                                                                                                                           |                                           |                                            | 6,589   |                   |         | 6,221              |        
|                                                                                                                                                                                            |                                           |                                            |         |                   |         |                    |        
|Total Liabilities                                                                                                                                                                           |                                           | $                                          | 348,244 |                   | $       | 338,027            |        
|                                                                                                                                                                                            |                                           |                                            |         |                   |         |                    |        
|Commitments and Contingencies                                                                                                                                                               |                                           |                                            |         |                   |         |                    |        
|Shareholders' Equity:                                                                                                                                                                       |                                           |                                            |         |                   |         |                    |        
|Common Stock, No Par ValueShares Authorized20,000,000, Shares Issued and Outstanding2,074,957 at September 30, 2003, 2,152,751 at December 31, 2002, and 2,227,756 at September 30,
2002 |                                           | $                                          | 20,348  |                   | $       | 22,600             |        
|Retained Earnings                                                                                                                                                                           |                                           |                                            | 7,489   |                   |         | 5,589              |        
|Debt Guarantee of ESOP                                                                                                                                                                      |                                           |                                            | (80     | )                 |         | (80                | )      
|Accumulated Other Comprehensive (Loss) Income                                                                                                                                               |                                           |                                            | (100    | )                 |         | 947                |        
|                                                                                                                                                                                            |                                           |                                            |         |                   |         |                    |        
|                                                                                                                                                                                            |                                           | Total Shareholders' Equity                 |         | $                 | 27,657  |                    | $      
|                                                                                                                                                                                            |                                           |                                            |         |                   |         |                    |        
|                                                                                                                                                                                            |                                           | Total Liabilities and Shareholders' Equity |         | $                 | 375,901 |                    | $      
|                                                                                                                                                                                            |                                           |                                            |         |                   |         |                    |        

The accompanying notes are an integral part of these 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, 2003                         |           | Three months
ended
September 30, 2002
|---------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------------------------- | --------- | -------------------------------------
|Interest Income                                                                                      |                            |                                                               |           |                                      
|Interest and Fees on Loans and Leases                                                                |                            | $                                                             | 3,695     |                                      
|Interest on Investments                                                                             |                            |                                                               |           |                                      
|                                                                                                     | Taxable Interest Income    |                                                               |           | 1,146                                
|                                                                                                     | Nontaxable Interest Income |                                                               |           | 27                                   
|Interest on Federal Funds Sold                                                                       |                            |                                                               | 8         |                                      
|                                                                                                     |                            |                                                               |           |                                      
|                                                                                                     |                            | Total Interest Income                                         |           |                                      
|                                                                                                     |                            |                                                               |           |                                      
|Interest Expense                                                                                     |                            |                                                               |           |                                      
|Interest on Deposits                                                                                 |                            |                                                               | 1,012     |                                      
|Interest on Mandatorily Redeemable Cumulative Trust Preferred Securities of Subsidiary Grantor Trust |                            |                                                               | 119       |                                      
|Interest on Borrowed Funds                                                                           |                            |                                                               | 178       |                                      
|                                                                                                     |                            |                                                               |           |                                      
|                                                                                                     |                            | Total Interest Expense                                        |           |                                      
|                                                                                                     |                            |                                                               |           |                                      
|                                                                                                     |                            | Net Interest Income                                           |           |                                      
|Provision for Loan and Lease Losses                                                                  |                            |                                                               |          |                                      
|                                                                                                     |                            |                                                               |           |                                      
|                                                                                                     |                            | Net Interest Income After Provision for Loan and Lease Losses |           |                                      
|                                                                                                     |                            |                                                               |           |                                      
|Noninterest Income                                                                                   |                            |                                                               |           |                                      
|Service Charges on Deposit Accounts                                                                  |                            |                                                               | 374       |                                      
|Brokered Loan Fees                                                                                   |                            |                                                               | 81        |                                      
|Loan Servicing Fees                                                                                  |                            |                                                               | 101       |                                      
|Gain on Sale of Other Real Estate                                                                    |                            |                                                               | 243       |                                      
|Other                                                                                                |                            |                                                               | 120       |                                      
|                                                                                                     |                            |                                                               |           |                                      
|                                                                                                     |                            | Total Noninterest Income                                      |           |                                      
|                                                                                                     |                            |                                                               |           |                                      
|Noninterest Expense                                                                                  |                            |                                                               |           |                                      
|Salaries and Employee Benefits                                                                       |                            |                                                               | 1,672     |                                      
|Occupancy Expense                                                                                    |                            |                                                               | 236       |                                      
|Furniture and Equipment Expense                                                                      |                            |                                                               | 330       |                                      
|Merger and Acquisition Related Expenses                                                              |                            |                                                               | 378       |                                      
|Other                                                                                                |                            |                                                               | 715       |                                      
|                                                                                                     |                            |                                                               |           |                                      
|                                                                                                     |                            | Total Noninterest Expense                                     |           |                                      
|                                                                                                     |                            |                                                               |           |                                      
|                                                                                                     |                            | Income Before Provision for Income Taxes                      |           |                                      
|Provision for Income Taxes                                                                           |                            |                                                               | 385       |                                      
|                                                                                                     |                            |                                                               |           |                                      
|Net Income                                                                                           |                            | $                                                             | 770       |                                      
|                                                                                                     |                            |                                                               |           |                                      
|Per Share Amounts                                                                                    |                            |                                                               |           |                                      
|Basic Earnings Per Share                                                                             |                            | $                                                             | 0.37      |                                      
|                                                                                                     |                            |                                                               |           |                                      
|Diluted Earnings Per Share                                                                           |                            | $                                                             | 0.35      |                                      
|                                                                                                     |                            |                                                               |           |                                      
|Basic Weighted Average Shares Outstanding                                                            |                            |                                                               | 2,074,269 |                                      
|                                                                                                     |                            |                                                               |           |                                      
|Diluted Weighted Average Shares Outstanding                                                          |                            |                                                               | 2,178,510 |                                      
|                                                                                                     |                            |                                                               |           |                                      

The accompanying notes are an integral part of these 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, 2003                          |           | Nine months
ended
September 30, 2002 |       
|------------------------------------------------------------- | -------------------------------------- | ------------------------------------------------------------- | --------- | ------------------------------------ | ------
|Interest Income                                               |                                        |                                                               |           |                                      |       
|Interest and Fees on Loans and Leases                         |                                        | $                                                             | 11,536    |                                      | $     
|Interest on Investments                                      |                                        |                                                               |           |                                      |       
|                                                              | Taxable Interest Income                |                                                               |           | 3,511                                |       
|                                                              | Nontaxable Interest Income             |                                                               |           | 71                                   |       
|Interest on Federal Funds Sold                                |                                        |                                                               | 108       |                                      |       
|                                                              |                                        |                                                               |           |                                      |       
|                                                              |                                        | Total Interest Income                                         |           |                                      | 15,226
|                                                              |                                        |                                                               |           |                                      |       
|Interest Expense                                              |                                        |                                                               |           |                                      |       
|Interest on Deposits                                          |                                        |                                                               | 3,200     |                                      |       
|Interest on Mandatorily Redeemable Cumulative Trust Preferred |                                        |                                                               |           |                                      |       
|                                                              | Securities of Subsidiary Grantor Trust |                                                               |           | 364                                  |       
|Interest on Borrowed Funds                                    |                                        |                                                               | 508       |                                      |       
|                                                              |                                        |                                                               |           |                                      |       
|                                                              |                                        | Total Interest Expense                                        |           |                                      | 4,072 
|                                                              |                                        |                                                               |           |                                      |       
|                                                              |                                        | Net Interest Income                                           |           |                                      | 11,154
|Provision for Loan and Lease Losses                           |                                        |                                                               | 10        |                                      |       
|                                                              |                                        |                                                               |           |                                      |       
|                                                              |                                        | Net Interest Income After Provision for Loan and Lease Losses |           |                                      | 11,144
|                                                              |                                        |                                                               |           |                                      |       
|Noninterest Income                                            |                                        |                                                               |           |                                      |       
|Service Charges on Deposit Accounts                           |                                        |                                                               | 1,078     |                                      |       
|Brokered Loan Fees                                            |                                        |                                                               | 209       |                                      |       
|Loan Servicing Fees                                           |                                        |                                                               | 234       |                                      |       
|Loss on Disposal of Available-for-Sale Security               |                                        |                                                               |          |                                      |       
|Gain on Sale of Other Real Estate                             |                                        |                                                               | 351       |                                      |       
|Other                                                         |                                        |                                                               | 463       |                                      |       
|                                                              |                                        |                                                               |           |                                      |       
|                                                              |                                        | Total Noninterest Income                                      |           |                                      | 2,335 
|                                                              |                                        |                                                               |           |                                      |       
|Noninterest Expense                                           |                                        |                                                               |           |                                      |       
|Salaries and Employee Benefits                                |                                        |                                                               | 5,065     |                                      |       
|Occupancy Expense                                             |                                        |                                                               | 663       |                                      |       
|Furniture and Equipment Expense                               |                                        |                                                               | 964       |                                      |       
|Merger and Acquisition Related Expenses                       |                                        |                                                               | 378       |                                      |       
|Other                                                         |                                        |                                                               | 2,273     |                                      |       
|                                                              |                                        |                                                               |           |                                      |       
|                                                              |                                        | Total Noninterest Expense                                     |           |                                      | 9,343 
|                                                              |                                        |                                                               |           |                                      |       
|                                                              |                                        | Income Before Provision for Income Taxes                      |           |                                      | 4,136 
|Provision for Income Taxes                                    |                                        |                                                               | 1,442     |                                      |       
|                                                              |                                        |                                                               |           |                                      |       
|Net Income                                                    |                                        | $                                                             | 2,694     |                                      | $     
|                                                              |                                        |                                                               |           |                                      |       
|Per Share Amounts                                             |                                        |                                                               |           |                                      |       
|Basic Earnings Per Share                                      |                                        | $                                                             | 1.28      |                                      | $     
|                                                              |                                        |                                                               |           |                                      |       
|Diluted Earnings Per Share                                    |                                        | $                                                             | 1.23      |                                      | $     
|                                                              |                                        |                                                               |           |                                      |       
|Basic Weighted Average Shares Outstanding                     |                                        |                                                               | 2,110,896 |                                      |       
|                                                              |                                        |                                                               |           |                                      |       
|Diluted Weighted Average Shares Outstanding                   |                                        |                                                               | 2,197,898 |                                      |       
|                                                              |                                        |                                                               |           |                                      |       

The accompanying notes are an integral part of these 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, 2003 and September 30, 2002  (Dollars in thousands)
(UNAUDITED)

|                                                |                                   | September 30, 2003                                                         |                                           | September 30, 2002 |        
|----------------------------------------------- | --------------------------------- | -------------------------------------------------------------------------- | ----------------------------------------- | ------------------ | -------
|Cash Flows From Operating Activities            |                                   |                                                                            |                                           |                    |        
|Net Income                                      |                                   | $                                                                          | 2,694                                     |                    | $      
|Adjustments to Reconcile Net Income to Net Cash |                                   |                                                                            |                                           |                    |        
|                                                | Provided by Operating Activities: |                                                                            |                                           |                    |        
|                                                |                                   | Depreciation and Amortization                                              |                                           |                    | 745    
|                                                |                                   | Provision for Loan and Lease Losses                                        |                                           |                    | 10     
|                                                |                                   | Loss on Disposal of Investment Securities                                  |                                           |                    |       
|                                                |                                   | Proceeds from Loan and Lease Sales                                         |                                           |                    |       
|                                                |                                   | Gain on Sale of Other Real Estate, Net                                     |                                           |                    | (351   
|                                                |                                   | Gain on Sale of Loans and Leases, Net                                      |                                           |                    |       
|                                                |                                   | Gain on Sale of Premises and Equipment                                     |                                           |                    |       
|(Increase) Decrease in Other Assets             |                                   |                                                                            | (1,819                                    | )                  |        
|(Decrease) Increase in Other Liabilities        |                                   |                                                                            | (485                                      | )                  |        
|                                                |                                   |                                                                            |                                           |                    |        
|                                                |                                   |                                                                            | Net Cash Provided By Operating Activities |                    |        
|Cash Flows From Investing Activities            |                                   |                                                                            |                                           |                    |        
|                                                |                                   | Net Decrease (Increase) in Loans and Leases                                |                                           |                    | 7,688  
|                                                |                                   | Purchases of Securities Available-for-Sale                                 |                                           |                    | (73,378
|                                                |                                   | Purchases of Securities Held-to-Maturity                                   |                                           |                    | (1,175 
|                                                |                                   | Proceeds From Maturity of Securities Held-to-Maturity                      |                                           |                    | 1,000  
|                                                |                                   | Proceeds From Sales, Maturities and Calls of Securities Available-for-Sale |                                           |                    | 52,566 
|                                                |                                   | Proceeds From Sales of Other Real Estate                                   |                                           |                    | 351    
|                                                |                                   | Purchases of Premises and Equipment                                        |                                           |                    | (395   
|                                                |                                   |                                                                            |                                           |                    |        
|                                                |                                   |                                                                            | Net Cash Used for Investing Activities    |                    |        
|Cash Flows From Financing Activities            |                                   |                                                                            |                                           |                    |        
|                                                |                                   | Net Decrease in Noninterest-Bearing Deposits                               |                                           |                    | (217   
|                                                |                                   | Net Increase in Interest-Bearing Deposits                                  |                                           |                    | 10,066 
|                                                |                                   | Net Increase in Borrowed Funds                                             |                                           |                    |       
|                                                |                                   | Repurchase of Common Stock                                                 |                                           |                    | (2,361 
|                                                |                                   | Cash Dividends                                                             |                                           |                    | (794   
|                                                |                                   | Stock Options Exercised                                                    |                                           |                    | 104    
|                                                |                                   | Cash Paid in Lieu of Fractional Shares                                     |                                           |                    |       
|                                                |                                   |                                                                            |                                           |                    |        
|                                                |                                   |                                                                            | Net Cash Provided by Financing Activities |                    |        
|                                                |                                   |                                                                            | Net Decrease in Cash and Cash Equivalents |                    |        
|Cash and Cash Equivalents, Beginning of Year    |                                   |                                                                            | 40,046                                    |                    |        
|                                                |                                   |                                                                            |                                           |                    |        
|Cash and Cash Equivalents, End of Period        |                                   | $                                                                          | 34,295                                    |                    | $      
|                                                |                                   |                                                                            |                                           |                    |        

The accompanying notes are an integral part of these 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 accounting principles generally accepted in the United States
of America and 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, 2003, December 31, 2002, and September 30, 2002, the results of its operations for the three and nine-month periods ended September 30, 2003 and
September 30, 2002, and cash flows for the nine-month periods ended September 30, 2003 and September 30, 2002.

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, 2003 are not necessarily indicative of the operating
results for the full year ending December 31, 2003. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2002.

Note 2Principles of Consolidation

The consolidated financial statements include the accounts of CIB and its wholly owned subsidiaries, Feather River State Bank, E.P.I. Leasing
Company, Inc., and CIB Capital Trust. Significant intercompany transactions and balances 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, 2003 and September 30, 2002 were as follows:

(Dollars in thousands)

September 30, 2003

September 30, 2002Loan Commitments

$
55,806

$
48,437Standby Letters of Credit


840


520


Note 4Cash and Stock Dividends

In February, May, August, and November of 2002, CIB paid an eleven-cent ($0.11) per share cash dividend and in February, May, and August of 2003, CIB
paid a twelve and one-half cent ($0.125) per share cash dividend.

Note 5Stock-Based Compensation

At September 30, 2003, the Company had three stock-based compensation plans: the Feather River State Bank 1989 Amended and Restated Stock Option Plan, the
California Independent Bancorp 1996 Stock Option Plan, and the California Independent Bancorp 2000 Stock Option Plan (the "Plans"). The Company accounts for the Plans under the recognition and
measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations. No stock-

7

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based
compensation cost is reflected in net income, as all options granted under the Plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

For
purposes of pro forma disclosures, the estimated fair value of stock-based compensation is recognized to expense primarily over the vesting period. The following tables illustrate
the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, "Accounting for Stock-Based Compensation," to
stock-based compensation.

|                                                                                                                                               |             | For the three-months ended, |    
|---------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | --------------------------- | ---
|
|Net Income, As Reported                                                                                                                        |             | $                           | 770
|Deduct Total Stock-Based Employee Compensation Expense Determined Under the Fair Value Based Method for all Awards, Net of Related Tax Effects |             |                             | (42
|                                                                                                                                               |             |                             |    
|Pro Forma Net Income                                                                                                                           |             | $                           | 728
|                                                                                                                                               |             |                             |    
|Basic Earnings Per Share:                                                                                                                      |             |                             |    
|                                                                                                                                               | As Reported |                             | $  
|                                                                                                                                               | Pro Forma   |                             | $  
|Diluted Earnings Per Share:                                                                                                                    |             |                             |    
|                                                                                                                                               | As Reported |                             | $  
|                                                                                                                                               | Pro Forma   |                             | $  

|                                                                                                                                               |             | For the nine-months ended, |      
|---------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | -------------------------- | -----
|
|Net Income, As Reported                                                                                                                        |             | $                          | 2,694
|Deduct Total Stock-Based Employee Compensation Expense Determined Under the Fair Value Based Method for all Awards, Net of Related Tax Effects |             |                            | (124 
|                                                                                                                                               |             |                            |      
|Pro Forma Net Income                                                                                                                           |             | $                          | 2,570
|                                                                                                                                               |             |                            |      
|Basic Earnings Per Share:                                                                                                                      |             |                            |      
|                                                                                                                                               | As Reported |                            | $    
|                                                                                                                                               | Pro Forma   |                            | $    
|Diluted Earnings Per Share:                                                                                                                    |             |                            |      
|                                                                                                                                               | As Reported |                            | $    
|                                                                                                                                               | Pro Forma   |                            | $    

8

---

The
fair value of each option granted during the periods indicated was estimated on the date of grant using an option-pricing model with the following assumptions:

Three-months ended,
September 30, 2002Weighted Average Fair Value of Options Granted

$
5.66Dividend Yield


2.33
%Expected Volatility


30.78
%Risk-Free Interest Rate


3.50
%Expected Option Life


7.50 Years


For the nine months ended,September 30, 2003

September 30, 2002Weighted Average Fair Value of Options Granted

$
9.29

$
3.64Dividend Yield


1.70
%

2.33
%Expected Volatility


32.65
%

30.78
%Risk-Free Interest Rate


3.54
%

3.53
%Expected Option Life


7.50 Years


7.50 Years


There
were no option grants made for the three-month period ended September 30, 2003.

Note 6Earnings Per Share

Basic earnings per share ("EPS"), which excludes dilution, is computed by dividing income available to common stockholders by the weighted-average number of
shares of common stock outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options, result in
the issuance of common stock, which shares in the earnings of the Company. All data with respect to computing earnings per share is retroactively adjusted to reflect stock dividends and the treasury
stock method is applied to determine the dilutive effect of stock options in computing diluted EPS.

Note 7Comprehensive Income

For the Company, total comprehensive income or loss includes net income and unrealized changes in the fair value, net of applicable taxes, of its
Available-for-Sale investment securities. Total comprehensive income (loss) for the three and nine months ended September 30, 2003 and September 30, 2002 was
($121,000) and $1,647,000, respectively, and $1,176,000 and $3,096,000, respectively, as shown in the following table.

|                                   |                                                                                     | For the Three months
ended September 30, |      | For the Nine months
ended September 30,
|---------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------------------- | ---- | ---------------------------------------
|
|
|Net Income                         |                                                                                     | $                                        | 770  |                                        
|Other Comprehensive (Loss) Income: |                                                                                     |                                          |      |                                        
|                                   | Change in Unrealized Gain on Available-for-Sale Investment Securities, net of taxes |                                          |      | (891                                   
|                                   | Reclassification Adjustment for Loss on Sale of Securities, net of taxes            |                                          |      |                                       
|                                   |                                                                                     |                                          |      |                                        
|Total Comprehensive (Loss) Income  |                                                                                     | $                                        | (121 | )                                      
|                                   |                                                                                     |                                          |      |                                        

9

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Note 8Financial Accounting Pronouncements

In November 2002, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 requires that a liability for the fair value of an obligation for guarantees issued or modified
after December 31, 2002 be recorded in the financial statements of the guarantor. Guarantees existing before the implementation of FIN 45 are required to be disclosed in financial statements
issued after December 15, 2002. While the Company has various guarantees included in contracts in the normal course of business, primarily in the form of indemnities,
these guarantees would only result in immaterial increases in future costs, and do not represent significant commitments or contingent liabilities of the indebtedness of others.

In
January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"), which requires the consolidation of variable interest
entities, as defined. FIN 46 is currently applicable to variable interest entities created after January 31, 2003. In October 2003, the FASB agreed to defer the effective date of FIN 46
for variable interests held by public companies in all entities that were acquired prior to February 1, 2003. This deferral is to allow time for certain implementation issues to be addressed
through the issuance of a potential modification to the interpretation. The deferral revised the effective date for consolidation of these entities to the period ended December 31, 2003 for
calendar year end companies. Based on the current rules, the Company does not believe that the implementation of the interpretation will have a material impact on the Company's financial position or
results of operations.

In
December 2002, the FASB issued Statement of Financial Accounting Standard ("SFAS") No. 148, "Accounting for Stock-Based Compensation-Transition and
Disclosure-an amendment of FASB Statement No. 123" ("SFAS No. 148"). This Statement amends SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS
No. 123"), to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement
amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The transition guidance and annual disclosure provisions of SFAS No. 148 are effective for fiscal years ending after
December 15, 2002. The interim disclosure provisions are effective for financial reporting containing financial statements for interim periods beginning after December 15, 2002. Because
the Company accounts for the compensation cost associated with its stock option plans under the intrinsic value method, the alternative methods of transition will not apply to the Company. The
additional disclosure requirements of the statement are included in these financial statements. Management does not believe that the adoption of this Statement had a material impact on the Company's
consolidated financial position or results of operations.

In
April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." This Statement amends and clarifies the
accounting for derivative instruments by providing guidance related to circumstances under which a contract with a net investment meets the characteristics of a derivative as discussed in Statement
133. The Statement also clarifies when a derivative contains a financing component. The Statement is intended to result in more consistent reporting for derivative contracts and must be applied
prospectively for contracts entered into or modified after June 30, 2003, except for hedging relationships designated after June 30, 2003. Management does not believe that the adoption
of this Statement had a material effect on the Company's consolidated financial position or results of operations.

In
May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This Statement establishes
standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It

10

---

requires
that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This Statement is effective for financial instruments entered into
or modified by the Company after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company has previously accounted
for its mandatorily redeemable cumulative trust preferred securities in a manner consistent with the Statement and, in management's opinion, adoption of this Statement did not have a material effect
on the Company's consolidated financial position or results of operations.

Note 9Reclassifications

Certain reclassifications have been made to amounts previously reported to conform to current presentation methods. Such reclassifications have no effect on net
income or shareholders' equity previously reported.

Note 10Merger

On August 11, 2003, the Company entered into a definitive Agreement and Plan of Merger with Humboldt Bancorp. Under the terms of the merger agreement, the
Company will merge into Humboldt Bancorp and Feather River State Bank will merge in Humboldt Bank although it will operate as a division of Humboldt Bank retaining its local identity.

Based
on the closing value for a share of Humboldt Bancorp as of on the date of the merger agreement, the transaction is valued at approximately $80 million, or $35.50 per share
of the Company. Company shareholders may elect to exchange each share held for cash or stock, although elections may be subject to proration if the results of all shareholders' elections differ from
Humboldt's targeted stock-cash split of 60%-40%. The aggregate cash consideration will be approximately $32 million, or 40% of the total consideration, and a total of
approximately 3.28 million shares of Humboldt common stock will be issued, representing 60% of the total consideration.

The
companies anticipate that the transaction will qualify as a tax-free reorganization, and in general, expect that Company shareholders will not recognize income to the
extent they exchange all of their shares of common stock of the Company for Humboldt stock and do not receive
cash in lieu of any fractional shares, although shareholders should consult their own tax advisors for the consequences of the merger to them.

Subject
to receipt of regulatory and shareholder approval, CIB expects this transaction will be completed during the first quarter of 2004.

11

---



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

California Independent Bancorp ("CIB") is a California corporation located in Yuba City, California and the holding company for Feather River State Bank ("the
Bank"). The Bank was incorporated as a California state banking corporation on December 1, 1976, and commenced operations on April 6, 1977. CIB was incorporated on October 28,
1994, and became the holding company for the Bank on May 2, 1995. The Bank engages in a broad range of financial services activities, and its primary market is located in the Sacramento Valley,
with a total of nine branches. The main source of income for the Bank is from lending activities, including commercial, agricultural, real estate, consumer, and installment loans and leases. CIB
formed a nonbank subsidiary, CIB Capital Trust, on October 2, 2002, for the sole purpose of issuing trust preferred securities.

CIB
has entered into an agreement with Humboldt Bancorp pursuant to which CIB will merge with and into Humboldt Bancorp. Further details may be found in the Form S-4
filed with the SEC by Humboldt Bancorp on October 20, 2003. The Special Meeting of CIB shareholders, at which the principal terms of the transaction will be submitted for approval, will take
place on December 15, 2003.

Certain
statements in the quarterly report on Form 10-Q 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; reduction in net interest margins due to changes in the interest rate environment; general economic conditions, either nationally or regionally that may result in, among other
things, a deterioration in credit quality and an increase in the provision for possible loan and lease losses; the loss of key personnel; changes 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; and
asset/liability matching risks and liquidity risks.

The
following discussion and analysis is designed to provide a better understanding of the significant changes and trends related to California Independent Bancorp's and Feather River
State Bank's (CIB and the Bank are collectively, the "Company") financial condition, operating results, asset and liability
management, and liquidity and capital resources; and should be read in conjunction with the Consolidated Financial Statements of the Company and its accompanying notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2002.

OVERVIEW OF CHANGES IN THE FINANCIAL STATEMENTS

Total assets at September 30, 2003 were $375,901,000, an increase of 2.4% over $367,083,000 at December 31, 2002 and an increase of 11.0% over
$338,705,000 at September 30, 2002.

Gross
loans and leases were $204,391,000 at September 30, 2003, a decrease of 4.7% from $214,428,000 at December 31, 2002, and a decrease of 8.0% from $222,214,000 at
September 30, 2002. The decrease in loans over the past twelve-month period is due to refinancing of loans, resulting from the unprecedented low interest rate environment, intense competitive
pressure in the loan market, and the Bank's continued emphasis on credit quality, high underwriting standards, and conservative pricing.

The
Company's investment portfolio at September 30, 2003 was $119,320,000, compared to $100,239,000 at December 31, 2002, and $91,032,000 at September 30, 2002.
Increases in the Company's investment portfolio during the first nine months of 2003 were due to the Company

12

---

investing
in qualified Available-for-Sale Securities with excess funds. Cash and cash equivalents, which consisted of cash and due from banks and federal funds sold, were
$34,295,000 at September 30, 2003, $40,046,000 at December 31, 2002, and $13,850,000 at September 30, 2002. The increased balance of cash and cash equivalents at
September 30, 2003 and December 31, 2002 was primarily due to the growth in total deposits and the issuance of trust preferred securities in the fourth quarter of 2002.

Total
deposits of the Company were $316,575,000, $306,726,000, and $282,030,000 at September 30, 2003, December 31, 2002, and September 30, 2002, respectively. The
increase at September 30, 2003 from December 31, 2002 and September 30, 2002 is primarily due to the Bank's focus on customer service, growth of newer branches, relationship
banking, as well as new customer-centered product development.

The
ratio of gross loans to deposits was 64.6%, 69.9%, and 78.8% at September 30, 2003, December 31, 2002, and September 30, 2002, respectively.



The Company continues to emphasize real estate, real estate construction, commercial, agricultural, and consumer lending activities. The Company has proactively
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, 2003, December 31,
2002, and September 30, 2002.

COMPOSITION OF LOAN AND LEASE PORTFOLIO
(Dollars in thousands)

|Loan Category                       |       | September 30, 2003 |         | December 31, 2002 |   | September 30, 2002 |        
|----------------------------------- | ----- | ------------------ | ------- | ----------------- | - | ------------------ | -------
|Commercial                          |       | $                  | 19,296  |                   | $ | 25,375             |        
|Agricultural                        |       |                    | 19,000  |                   |   | 17,536             |        
|Real EstateConstruction            |       |                    | 36,628  |                   |   | 35,287             |        
|Real EstateMortgage                |       |                    | 123,339 |                   |   | 125,094            |        
|Leases                              |       |                    | 3,308   |                   |   | 5,891              |        
|Consumer                            |       |                    | 3,699   |                   |   | 4,391              |        
|Other                               |       |                    |        |                   |   | 1,905              |        
|                                    |       |                    |         |                   |   |                    |        
|                                    |       | $                  | 205,270 |                   | $ | 215,479            |        
|Deferred Loan Fees, Net             |       |                    | (879    | )                 |   | (1,051             | )      
|Allowance for Loan and Lease Losses |       |                    | (5,975  | )                 |   | (6,532             | )      
|                                    |       |                    |         |                   |   |                    |        
|                                    | Total |                    | $       | 198,416           |   | $                  | 207,896
|                                    |       |                    |         |                   |   |                    |        

The
principal changes in the loan and lease portfolio between September 30, 2003, December 31, 2002, and September 30, 2002 are discussed below:

The
Bank makes commercial and small business loans (including lines of credit) that are secured by the assets of the business. Commercial loans decreased $6,079,000, or 24.0%, from
December 31, 2002, and decreased $5,280,000, or 21.5%, from September 30, 2002. The decrease in the first nine

13

---

months
of 2003, as well as the decrease over the year is due to increased refinancing of existing loans outside the Bank, intensified competition and the softening of commercial loan market demand in
the Bank's core market areas.

The
Bank provides agricultural production lines of credit and other agricultural loans that are secured by crops, crop proceeds, and other collateral. Agricultural loans increased
$1,464,000, or 8.3%, over December 31, 2002 but decreased $1,247,000, or 6.2% from September 30, 2002. The increase since December 31, 2002 is due to the seasonality of
agricultural loan demand resulting from the agricultural cycle.

The
Bank makes real estate construction loans, primarily to finance a variety of commercial, office, and retail projects, as well as for the construction of single-family homes. At
September 30, 2003, real estate construction loans increased $1,341,000, or 3.8%, over December 31, 2002, and increased $1,340,000, or 3.8%, over September 30, 2002. The increase
over December 31, 2002 and September 30, 2002 is due to the Bank's business development efforts in its primary market area.

Mortgage
loans secured by commercial, residential, and agricultural real estate decreased $1,755,000, or 1.4%, from December 31, 2002, and decreased $6,170,000, or 4.8%, from
September 30, 2002. At September 30, 2003, the real estate mortgage portfolio was 60.1% of the total loan portfolio. Increased portfolio limits have been approved as a result of enhanced
monitoring analysis and limitations set on the sub-classifications within this portfolio segment.

Lease
financing receivables declined $3,684,000, or 52.7%, between September 30, 2002 and September 30, 2003 and $2,583,000, or 43.8%, from December 31, 2002. This
decline is the direct result of the Bank's decision in the first quarter of 2000 to discontinue originating and purchasing leases through E.P.I. Leasing Company, Inc. Consequently, the
reduction of the Bank's lease portfolio was primarily due to scheduled lease portfolio principal reductions.

The
Company makes consumer loans, including secured and unsecured loans and lines of credit, to finance a variety of consumer needs. Consumer loans decreased $841,000, or 18.5%, between
September 30, 2002 and September 30, 2003 and $692,000, or 15.8%, from December 31, 2002. The decrease in this loan category was due to increased competition in the Bank's core
market area and special pricing programs for new car financing by automakers and other financial institutions. Further, the Bank's Consumer lending group has focused on home equity and home
improvement loans through a promotional product that is recorded in the real estate loan category.

During
the first nine months of 2003, 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 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 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.

14

---

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, 2003, December 31, 2002, and September 30, 2002, 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, 2003, December 31, 2002, or September 30, 2002.

Nonperforming Assets  (Dollars in thousands)

|                                     |                          | September 30, 2003 |       | % Change From December 31, 2002
to September 30, 2003 |       | December 31, 2002 |    | % Change From September 30, 2002
to September 30, 2003 |       | September 30, 2002
|------------------------------------ | ------------------------ | ------------------ | ----- | ----------------------------------------------------- | ----- | ----------------- | -- | ------------------------------------------------------ | ----- | ------------------
|Nonaccrual Loans and Leases          |                          |                    |       |                                                       |       |                   |    |                                                        |       |                   
|                                     | Commercial               |                    | $     | 119                                                   |       | n/a               |    | $                                                      |      |                   
|                                     | Agricultural             |                    |       | 15                                                    |       | (87.0             | )% |                                                        | 115   |                   
|                                     | Real EstateConstruction |                    |       | 1,119                                                 |       | (56.3             | )% |                                                        | 2,560 |                   
|                                     | Real EstateMortgage     |                    |       | 993                                                   |       | (41.7             | )% |                                                        | 1,702 |                   
|                                     | Leases                   |                    |       |                                                      |       | 0.0               | %  |                                                        |      |                   
|                                     | Consumer                 |                    |       | 10                                                    |       | (33.3             | )% |                                                        | 15    |                   
|                                     |                          |                    |       |                                                       |       |                   |    |                                                        |       |                   
|Total Nonperforming Loans and Leases |                          | $                  | 2,256 |                                                       | (48.6 | )%                | $  | 4,392                                                  |       | (55.1             
|                                     |                          |                    |       |                                                       |       |                   |    |                                                        |       |                   
|Other Real Estate                    |                          | $                  | 2,875 |                                                       | n/a   |                   | $  |                                                       |       | 531.9             
|                                     |                          |                    |       |                                                       |       |                   |    |                                                        |       |                   
|Total Nonperforming Assets           |                          | $                  | 5,131 |                                                       | 16.8  | %                 | $  | 4,392                                                  |       | (6.3              
|                                     |                          |                    |       |                                                       |       |                   |    |                                                        |       |                   

Total nonperforming loans and leases have decreased $2,766,000, or 55.1%, since September 30, 2002 and $2,136,000, or 48.6%, since
December 31, 2002. This decrease corresponds with the increase in nonperforming assets due to one large commercial real estate secured loan transitioning to other real estate from nonperforming
loans. Management continues its emphasis on reducing classified assets and enhancing quality control in the management of the loan and lease portfolios.

The
composition of the Company's nonaccrual loans and leases remain limited primarily to two borrowers. At September 30, 2003, 88.3% of the Company's total nonaccrual loans and
leases were concentrated with these two borrowers. One of the relationships totaling $1,119,000, or 49.6%, is a commercial construction real estate relationship while the other totaling $874,000, or
38.7%, is a commercial real estate relationship. Each of these nonaccrual loan relationships is in the process of collection and in management's opinion is adequately supported by collateral.

As
of December 31, 2002, $4,108,000, or 93.5%, of the Company's total nonaccrual loans and leases were concentrated in three relationships, consisting of a real estate
construction loan relationship totaling $2,443,000, or 55.6%, an agricultural loan relationship for $747,000, or 17.0%, and a commercial real estate loan relationship for $918,000, or 20.9%.

15

---



The Company maintains an allowance for loan and lease losses ("ALLL ") to absorb probable losses inherent in the loan and lease portfolio and is based upon management's
estimated range of those losses. The ALLL is established through a provision for loan and lease losses and is increased by provisions charged against current earnings and reduced by net
charge-offs. Actual losses for these loans can vary significantly from this estimate. The methodology and assumptions used to calculate the allowance are continually reviewed as to their
appropriateness given the most recent losses realized and other factors that influence the estimation process. The model assumptions and resulting allowance level are adjusted accordingly as these
factors change. The Company's ALLL totaled $5,975,000, or 2.9% of gross loans and leases, as of September 30, 2003. This amount compares to $6,532,000, or 3.0% of gross loans and leases, as of
December 31, 2002 and $5,913,000, or 2.7% of gross loans and leases, as of September 30, 2002.

The
adequacy of the ALLL and the level of the related provision for loan and lease losses is determined based on management's judgment after consideration of numerous factors including
but not limited to: (i) local and regional economic conditions, (ii) borrowers' financial condition, (iii) loan impairment and the related level of expected
charge-offs, (iv) evaluation of industry trends, (v) industry and other concentrations, (vi) loans which are contractually current as to payment terms but demonstrate
a higher degree of risk as identified by management, (vii) continuing evaluations of the performing loan portfolio, (viii) ongoing review and evaluation of problem loans identified as
having loss potential, (ix) quarterly review by the Board of Directors, and (x) assessments by banking regulators and other third parties. Management and the Board of Directors evaluate
the ALLL and determine its desired level considering objective and subjective measures, such as knowledge of the borrowers' businesses, valuation of collateral, the determination of impaired loans or
leases and exposure to potential losses.

The
Company establishes general reserves in accordance with Statement of Accounting Standards ("SFAS") No. 5., "Accounting for Contingencies," and specific reserves in accordance
with SFAS No. 114, "Accounting by Creditors for Impairment of a Loan." The ALLL is maintained by categories of the loan portfolio based on loan type and loan rating; however, the entire
allowance is available to cover actual loan and lease losses. While Management uses available information to recognize possible losses on loans and leases, future additions to the allowance may be
necessary, based on changes in economic conditions and other matters. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's
ALLL. Such agencies may require the Company to provide additions to the allowance based on their judgment of information available to them at the time of their examination.

The
adequacy of the ALLL is determined based on three components. First considered is the dollar weighted risk rating of the loan portfolio, including all outstanding loans and leases.
Every extension of credit has been assigned a risk rating based upon a comprehensive definition intended to measure the inherent risk of lending money. Each rating has an assigned risk factor
expressed as a reserve
percentage. Secondly, established specific reserves consistent with SFAS No. 114, "Accounting by Creditors for Impairment of a Loan" are assigned to individually impaired and adversely graded
loans. These are estimated potential losses associated with specific borrowers based upon estimated cash flows or collateral value and events affecting the risk rating. Thirdly, the Company maintains
a reserve for qualitative factors that may affect the portfolio as a whole, such as those factors described above, including a reserve for model imprecision consistent with SFAS No. 5,
"Accounting for Contingencies."

Provisions
to the ALLL are made to maintain an ALLL level deemed adequate by Management. No provision to the ALLL was made during the three-month period ended September 30, 2003,
while a provision to the ALLL of $150,000 was made for the three-month period ended September 30, 2002. Provisions to the ALLL totaled $10,000 and $450,000 for the nine-month
periods ended September 30, 2003 and September 30, 2002, respectively. Total provisions to the ALLL for the year ended

16

---

December 31,
2002 equaled $550,000. Loan and lease charge-offs for the three months ended September 30, 2003 totaled $36,000, compared to $172,000 for the three months ended
September 30, 2002. Loan and lease charge-offs for the nine months ended September 30, 2003 totaled $728,000, compared to $369,000 for the nine months ended
September 30, 2002. Loan and lease recoveries were $48,000 for the three months ended September 30, 2003, compared to $119,000 for the three months ended September 30, 2002. For
the nine months ended September 30, 2003 and September 30, 2002, loan and lease recoveries were $161,000 and $334,000, respectively. The following table illustrates the activity in the
Bank's ALLL for the three and nine months ended September 30, 2003 and September 30, 2002.

The
decrease in provisions made to the ALLL in 2003 is primarily due to the improvement in asset quality and reduction in total outstanding loans.

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             |              | $                                        | 5,963 |                                        
|Charge-offs by Loan Category: |              |                                          |       |                                        
|                              | Commercial   |                                          |       |                                       
|                              | Agricultural |                                          |       | 9                                      
|                              | Real Estate  |                                          |       |                                       
|                              | Leases       |                                          |       | 22                                     
|                              | Consumer     |                                          |       | 5                                      
|                              |              |                                          |       |                                        
|                              |              | Total                                    |       |                                        
|                              |              |                                          |       |                                        
|Recoveries by Loan Category:  |              |                                          |       |                                        
|                              | Commercial   |                                          |       |                                       
|                              | Agricultural |                                          |       |                                       
|                              | Real Estate  |                                          |       |                                       
|                              | Leases       |                                          |       | 48                                     
|                              | Consumer     |                                          |       |                                       
|                              |              |                                          |       |                                        
|                              |              | Total                                    |       |                                        
|                              |              |                                          |       |                                        
|Net (Recoveries) Charge-offs  |              |                                          | (12   | )                                      
|Provision Charged to Expense  |              |                                          |      |                                        
|                              |              |                                          |       |                                        
|Balance, September 30         |              | $                                        | 5,975 |                                        
|                              |              |                                          |       |                                        



The Company's investment portfolio was $119,320,000 at September 30, 2003, compared to $100,239,000 at December 31, 2002, and $91,032,000 at
September 30, 2002. The increase of $28,288,000, or 31.1%, from September 30, 2002 to September 30, 2003, is primarily due to the Company investing its excess funds in qualified
Available-for-Sale Securities.

As
of September 30, 2003, the Company's "available-for-sale" category adjustment reflected a net unrealized loss of $100,000, net of taxes. The approximate
market value of the Company's investment

17

---

portfolio
at September 30, 2003 was $119,138,000. As of September 30, 2002, the Company's "available-for-sale" category adjustment reflected a net unrealized gain
of $1,087,000, net of taxes, and the approximate market value of the Company's investment portfolio was $93,008,000. The $1,187,000 change in the unrealized gain/loss, net of taxes, between the two
periods is primarily the result of the interest rate environment and changes in the portfolio's composition.

RESULTS OF OPERATIONSThree and Nine Months Ended September 30, 2003  Compared with  Three and Nine Months Ended September 30, 2002

The
Company recognized net income of $2,694,000 for the nine-month period ended September 30, 2003, resulting in diluted earnings per share of $1.23. Net income for
the three months ended September 30, 2003 was $770,000, resulting in diluted earnings per share of $0.35. Net Income and diluted earnings per share for the nine-month period ended
September 30, 2003 were higher than the same period in 2002, while net income and diluted earnings per share for the three-month period ended September 30, 2003 were lower that the
comparable period in 2002 due to merger and acquisition related expenses. Net income for the three and nine-month periods ended September 30, 2002 were $981,000 and $2,539,000,
respectively. The diluted earnings per share for the same three and nine-month periods were $0.44 and $1.14, respectively. The return on average equity and the return on average assets for
the three-month period ended September 30, 2003 were 11.17% and 0.82%, respectively, as compared to 13.39% and 1.18%, respectively, for the same period in 2002. The return on average equity and
the return on average assets for the nine-month period ended September 30, 2003 were 12.58% and 0.98%, respectively, as compared to 11.92% and 1.05%, respectively, for the same
period in 2002.

Net
interest income for the three and nine months ended September 30, 2003 were $3,567,000 and $11,154,000, respectively, compared to $3,911,000 and $11,521,000, respectively, for
the same three and nine-month periods in 2002. The change in net interest income for three and nine months ended September 30, 2003 reflects the combined effect of a variety of
factors, including the average loan balance and interest rates, affecting interest income and interest expense as shown and described below.

18

---

Average Daily Balance Sheets(Dollars in thousands, except percentages)

|                                           |                                    | Three Months Ended,
|------------------------------------------ | ---------------------------------- | -------------------
|
|
|Assets                                     |                                    |                    
|EarningAssets:                            |                                    |                    
|                                           | Short-Term Investments:            |                    
|                                           | Federal Funds Sold                 |                    
|                                           |                                    |                    
|Investment Securities:                     |                                    |                    
|                                           | Taxable                            |                    
|                                           | Non-Taxable                        |                    
|                                           |                                    |                    
|Total                                      |                                    |                    
|Loans and Leases                           |                                    |                    
|                                           |                                    |                    
|Total Earning Assets                       |                                    |                    
|Allowance for Loan and Lease Losses        |                                    |                    
|Non Earning Assets:                        |                                    |                    
|                                           | Cash and Due From Banks            |                    
|                                           | Premises and Equipment             |                    
|                                           | Other                              |                    
|                                           |                                    |                    
|Total Non-Earning Assets                   |                                    |                    
|                                           |                                    |                    
|Total Assets                               |                                    | $                  
|                                           |                                    |                    
|Liabilities and Shareholders' Equity       |                                    |                    
|Interest-Bearing Liabilities:              |                                    |                    
|                                           | Demand, Savings and Money Market   |                    
|                                           | Time Certificates                  |                    
|                                           | Other Interest-Bearing Liabilities |                    
|                                           |                                    |                    
|Total Interest-Bearing Liabilities         |                                    |                    
|                                           |                                    |                    
|Noninterest-Bearing Liabilities:           |                                    |                    
|                                           | Demand                             |                    
|                                           | Other Liabilities                  |                    
|                                           |                                    |                    
|Total Noninterest-Bearing Liabilities      |                                    |                    
|                                           |                                    |                    
|                                           | Shareholders' Equity               |                    
|                                           |                                    |                    
|Total Liabilities and Shareholders' Equity |                                    |                    
|                                           |                                    |                    
|Net Interest Income                        |                                    |                    
|                                           |                                    |                    
|Net Interest Margin                        |                                    |                    
|                                           |                                    |                    

19

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Average Daily Balance Sheets(Dollars in thousands, except percentages)

|                                           |                                    | Nine Months Ended,
|------------------------------------------ | ---------------------------------- | ------------------
|
|
|Assets                                     |                                    |                   
|EarningAssets:                            |                                    |                   
|                                           | Short-Term Investments:            |                   
|                                           | Federal Funds Sold                 |                   
|                                           |                                    |                   
|Investment Securities:                     |                                    |                   
|                                           | Taxable                            |                   
|                                           | Non-Taxable                        |                   
|                                           |                                    |                   
|Total                                      |                                    |                   
|Loans and Leases                           |                                    |                   
|                                           |                                    |                   
|Total Earning Assets                       |                                    |                   
|Allowance for Loan and Lease Losses        |                                    |                   
|Non Earning Assets:                        |                                    |                   
|                                           | Cash and Due From Banks            |                   
|                                           | Premises and Equipment             |                   
|                                           | Other                              |                   
|                                           |                                    |                   
|Total Non-Earning Assets                   |                                    |                   
|                                           |                                    |                   
|Total Assets                               |                                    | $                 
|                                           |                                    |                   
|Liabilities and Shareholders' Equity       |                                    |                   
|Interest-Bearing Liabilities:              |                                    |                   
|                                           | Demand, Savings and Money Market   |                   
|                                           | Time Certificates                  |                   
|                                           | Other Interest-Bearing Liabilities |                   
|                                           |                                    |                   
|Total Interest-Bearing Liabilities         |                                    |                   
|                                           |                                    |                   
|Noninterest-Bearing Liabilities:           |                                    |                   
|                                           | Demand                             |                   
|                                           | Other Liabilities                  |                   
|                                           |                                    |                   
|Total Noninterest-Bearing Liabilities      |                                    |                   
|                                           |                                    |                   
|Shareholders' Equity                       |                                    |                   
|                                           |                                    |                   
|Total Liabilities and Shareholders' Equity |                                    |                   
|                                           |                                    |                   
|Net Interest Income                        |                                    |                   
|                                           |                                    |                   
|Net Interest Margin                        |                                    |                   
|                                           |                                    |                   

20

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The Company's net interest margin was 4.18% for the three months ended September 30, 2003, a decrease from 5.07% at September 30, 2002. For the nine months ended
September 30, 2003, the net interest margin was 4.41% compared to 5.20% for the comparable period in 2002. The Company has been impacted by the repricing characteristics of certain assets in
the current low interest rate environment. Additionally, the Company was impacted due to the composition of its earning assets. Securities increased by a larger percentage than loans
year-over-year, but were more heavily impacted by the low rate environment, with the yield on securities decreasing from 5.54% to 4.05%.

The
Company's primary source of income is interest and fees on loans and leases. The three-month average outstanding loans and leases at September 30, 2003 were down $3,016,000,
or 1.4%, while nine-month average outstanding loans and leases at September 30, 2003 were up $8,899,000, or 4.5%, over the comparable three and nine-month periods in
2002. The Bank experienced a decrease in yield, which was primarily the result of the low interest rate environment and the increase in competitive pressure to acquire and retain quality customers.

The
three and nine-month average interest-bearing deposits at September 30, 2003 were $239,795,000 and $236,996,000, respectively, compared to $223,546,000 and
$214,961,000, respectively, for the same periods in 2002. Considering the increase in average interest-bearing deposits, the increase in interest expense on deposits was lessened by the decrease in
rates paid, resulting from the low interest rate environment. The average rate paid on interest-bearing deposits fell from 2.17% for the three months ended September 30, 2002 to 1.69% for the
three months ended September 30, 2003. For the nine months ended September 30, 2003, the average rate paid on interest-bearing deposits was 1.80%, compared to 2.04% for the same period
in 2002.

The
Company experienced a decrease in total interest expense of 5.8%, or $81,000, for the three-month period ended September 30, 2003, in comparison to the same three-month period
for 2002. For the nine-month period ended September 30, 2003, the Company experienced an increase in total interest expense of $344,000, or 9.2%, compared to the same period in
2002. The primary component of the increase in total interest expense for the nine-month period ended September 30, 2003 was the result of the issuance of trust preferred securities
during the fourth quarter of 2002. The Bank continues to monitor its cost of funds.



The Company experienced an increase in total noninterest income of $372,000, or 19.0%, for the nine-month period ended September 30, 2003
versus the same period in 2002. For the three-month period ended September 30, 2003, the Company experienced an increase in noninterest income of $175,000, or 23.5%, compared to the same period
in 2002. The three and nine-month periods increase over the same periods in the prior year are primarily due to gains on the sale of Other Real Estate. 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 showed a decrease of $32,000, or 7.9%, for the three-month period ended September 30, 2003 and a decrease of $26,000, or 2.4%, for the
nine-month period ended September 30, 2003, compared to the same periods in 2002. Income derived from service charges on deposit accounts was $374,000 and $1,078,000, respectively,
for the three and nine-month periods ended September 30, 2003, compared to $406,000 and $1,104,000, respectively, for the comparable periods in 2002.

Loan
service fee income for the three-month period ended September 30, 2003 decreased $14,000, or 12.2%, and decreased $39,000, or 14.3%, for the nine-month period
ended September 30, 2003 in comparison to the same periods in 2002. The decrease is attributable to normal principal amortization on serviced loans, loan payoffs, and fewer originations of
"servicing retained" brokered and sold loans.

21

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Income
from brokered loan fees for the three months ended September 30, 2003 increased $42,000, or 107.7%, and increased $109,000, or 109.0%, for the nine months ended
September 30, 2003 in comparison to the same periods in 2002. The increases are predominantly due to the steady demand in the refinance market.

Gain
on sale of other real estate was $243,000 and $351,000, respectively, for the three and nine-month periods ended September 30, 2003. For both the three and
nine-month periods ended September 30, 2002, gain on sale of other real estate was $32,000.



During the three and nine-month periods ended September 30, 2003, the Company experienced increases of $400,000, or 13.6%, and $340,000, or
3.8%, in total noninterest expense from the three and nine-month periods ended September 30, 2002. Total noninterest expense stood at $3,331,000 and $9,343,000, respectively, for
the three and nine-month periods ended September 30, 2003 compared to $2,931,000 and $9,003,000, respectively, for the same periods ended September 30, 2002. Noninterest
expenses consist of salaries and employee benefits, occupancy, furniture and equipment expense, merger and acquisition related expenses, legal and professional fees, telephone expense, and other
general and administrative operating expenses. The overall increase in total noninterest expense is primarily due to merger and acquisition related expenses.

Salaries
and employee benefits increased $33,000, or 2.0%, but decreased $26,000, or 0.5%, respectively, for the three and nine-month periods ended September 30, 2003,
over the same periods in 2002. Salaries and employee benefits for the three and nine-month periods ended September 30, 2003 were $1,672,000 and $5,065,000, respectively, compared to
$1,639,000 and $5,091,000, respectively, for the same periods in 2002.

Collectively,
occupancy and furniture and equipment expenses increased $23,000, or 4.2%, and $40,000, or 2.5%, respectively, for the three and nine-month periods ended
September 30, 2003, over the same periods in 2002. These two categories stood jointly at $566,000 and $1,627,000, respectively, for the three and nine-month periods ended
September 30, 2003, compared to $543,000 and $1,587,000, respectively, for the same periods ended September 30, 2002.

Merger
and acquisition related expenses for both three and nine-month periods ended September 30, 2003 were $378,000. There were no such expenses for the same periods
ended September 30, 2002.

Other
noninterest expense decreased from $749,000 and $2,325,000, respectively, for the three and nine months ended September 30, 2002 to $715,000 and $2,273,000, respectively,
for the three and nine months ended September 30, 2003. The components of other noninterest expense are illustrated in the table below.

22

---

Other Operating and Administrative Expenses(Dollars in thousands)

|                          |       | Three-months
ended
September 30, 2003 |     | Three-months
ended
September 30, 2002 |   | Nine-months
ended
September 30, 2003 |     | Nine-months
ended
September 30, 2002
|------------------------- | ----- | ------------------------------------- | --- | ------------------------------------- | - | ------------------------------------ | --- | ------------------------------------
|Legal & Professional Fees |       | $                                     | 110 |                                       | $ | 96                                   |     | $                                   
|Telephone Expense         |       |                                       | 58  |                                       |   | 67                                   |     |                                     
|Stationery & Supplies     |       |                                       | 57  |                                       |   | 53                                   |     |                                     
|Courier Expense           |       |                                       | 43  |                                       |   | 57                                   |     |                                     
|Director Fees             |       |                                       | 69  |                                       |   | 56                                   |     |                                     
|Stockholders Expense      |       |                                       | 23  |                                       |   | 50                                   |     |                                     
|Postage Expense           |       |                                       | 39  |                                       |   | 51                                   |     |                                     
|Insurance                 |       |                                       | 61  |                                       |   | 48                                   |     |                                     
|Other                     |       |                                       | 255 |                                       |   | 271                                  |     |                                     
|                          |       |                                       |     |                                       |   |                                      |     |                                     
|                          | Total |                                       | $   | 715                                   |   | $                                    | 749 |                                     
|                          |       |                                       |     |                                       |   |                                      |     |                                     

Legal
and professional fees consisted primarily of outside legal counsel, independent accountants, and consultants.



Applicable income taxes for the three and nine-months ended September 30, 2003, were $385,000 and $1,442,000, respectively. This compares to
$593,000 and $1,492,000 for the three and nine-month periods ended September 30, 2002, respectively. The Company's effective tax rate was 33.3% and 34.9% for the three and
nine-month periods ended September 30, 2003, respectively, compared to 37.7% and 37.0%, for the three and nine months ended September 30, 2002, respectively.

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 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, which typically occurs each year
from early June through late October, 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 maintains 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,

23

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2003,
the Bank had $15,000,000 outstanding on these lines. There were FHLB borrowings outstanding of $15,000,000 at December 31, 2002, as well as September 30, 2002. Also, during the
fourth quarter of 2002, CIB Capital Trust issued 10,000 of its Floating Rate Trust Preferred Securities with a liquidation amount of $1,000 per security for gross proceeds of $10,000,000.

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 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. Under applicable regulatory guidance, the amount of trust preferred securities that is eligible as Tier I capital is limited to twenty-five percent of the Company's Tier I
capital on a pro forma basis. At September 30, 2003, $9,185,000 of the Trust Preferred Securities qualified as Tier I capital, and the remaining $815,000 as Tier II capital.

Total
shareholders' equity on September 30, 2003 decreased by $1,399,000, or 4.8%, to $27,657,000 from December 31, 2002 total shareholders' equity of $29,056,000. The
decrease is attributed to a decrease in other comprehensive income, net of tax, of $1,047,000 associated with the market value adjustment on the Company's Available-for-Sale
securities, cash dividends paid in the amount of $794,000 and the repurchase of common stock of $2,361,000. These decreases to shareholders' equity were offset by net income of $2,694,000 during the
first nine months of 2003 and exercised options of $104,000 with a $5,000 tax benefit. As can be seen by the following table, the Company and Bank exceeded all minimum regulatory capital ratio
guidelines at September 30, 2003.

24

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Capital Ratios
(Dollars in thousands)

|                             |                                                        | Sept 30, 2003 |  
|---------------------------- | ------------------------------------------------------ | ------------- | -
|
|Tier 1 Leverage Ratio:       |                                                        |               |  
|                             | California Independent Bancorp and Subsidiaries        |               | $
|                             | Minimum regulatory requirement                         |               | $
|                             | Feather River State Bank                               |               | $
|                             | Minimum requirement for "Well Capitalized" institution |               | $
|                             | Minimum regulatory requirement                         |               | $
|Tier 1 Risked Based Capital: |                                                        |               |  
|                             | California Independent Bancorp and Subsidiaries        |               | $
|                             | Minimum regulatory requirement                         |               | $
|                             | Feather River State Bank                               |               | $
|                             | Minimum requirement for "Well Capitalized" institution |               | $
|                             | Minimum regulatory requirement                         |               | $
|Total Risk-Based Capital:    |                                                        |               |  
|                             | California Independent Bancorp and Subsidiaries        |               | $
|                             | Minimum regulatory requirement                         |               | $
|                             | Feather River State Bank                               |               | $
|                             | Minimum requirement for "Well Capitalized" institution |               | $
|                             | Minimum regulatory requirement                         |               | $

On
November 13, 2001, CIB's Board of Directors approved a plan to repurchase, as conditions warrant, up to 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. In addition, CIB has purchased shares in privately negotiated transactions. During the first nine months of
2003, CIB repurchased in open market and private transactions 83,384 of its own common stock at a weighted average purchase price of $28.31 per share.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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.

25

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Use
of the model to perform simulations reflecting changes in interest rates over one and two-year time horizons have 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
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
Consolidated Balance Sheet as well as for off balance sheet financial instruments. This sensitivity analysis is compared to the ALCO 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 shift in rate,
pro-rated 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.

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, including 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, and others. 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 and 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.

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 and management of this risk is an important component
of the Company's asset and liability management process, which is governed by policies established by its Board of Directors, which are reviewed and approved annually. The Board of Directors delegates
responsibility for carrying out the asset and liability management policies to the ALCO. In this capacity, Management develops guidelines and strategies impacting 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.

In
Management's opinion, the Company's market risk and interest rate risk profiles are within reasonable tolerances at this time. No significant changes to the market risk or interest
rate risk positions of the Company have occurred since December 31, 2002.

ITEM 4.    CONTROLS AND PROCEDURES

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

26

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PART IIOTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS.

During the normal course of business, CIB and the Bank are involved in certain litigation arising in the ordinary course of business. Based on current
information, CIB does not believe that the current litigation involving the Bank or CIB will have a material adverse effect on either CIB or the Bank.

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 8-K.



|Exhibit No. |  |                                                                                                                                                  
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|31.1        |  | Certification by the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act                                               
|31.2        |  | Certification by the Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act                                
|32          |  | Certification by the Principal Executive Officer and Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act





27

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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, 2003 |  | /s/JOHN I. JELAVICHJohn I. Jelavich President and Chief Executive Officer
(Principal Executive Officer)                       
|Date: November 12, 2003 |  | /s/KEVIN R. WATSONKevin R. Watson Chief Financial Officer and Corporate Secretary
(Principal Financial and Accounting Officer)

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