<PAGE>

                                                              CALIFORNIA
                                                     [LOGO]   INDEPENDENT

                                                              BANCORP

                                                      1999 Annual Report

[GRAPHIC]

                                        Structuring for growth to meet the
                                        challenges of a changing region.

<PAGE>

TABLE OF CONTENTS

<TABLE>
<S>                                                                        <C>
Stockholder Information ..............................................      2
Financial Highlights .................................................      3
Letter to the Shareholders ...........................................      4
Structuring for Growth to Meet the Challenges of a Changing Region ...      6
Management's Discussion and Analysis .................................      8
Report of Independent Public Accountants .............................     23
Consolidated Financial Statements ....................................     24
Notes to Financial Statements ........................................     28
CIB, FRSB & Subsidiary Directors and Management Team .................     40
</TABLE>

<PAGE>

CORPORATE PROFILE

California Independent Bancorp ("Company") is structuring for growth to meet the
challenges of a changing region. While looking to the future, California
Independent Bancorp, the holding company for Feather River State Bank ("Bank"),
is positioning the Company for future growth.

Feather River State Bank is a growing community bank that has not only been a
financial leader in the communities we have served since 1977, but an integral
member of these communities, too. Feather River State Bank's seven retail
branches span the Central Sacramento Valley and are located in Yuba, Sutter,
Colusa and Yolo counties. In addition to our retail branches, Feather River
State Bank boasts a business and consumer lending center as well as agricultural
and residential real estate departments. At year-end 1999, Feather River State
Bank's assets were $300 million.

Feather River State Bank's professionalism and attention to client needs has
contributed to our long-standing relationships and growing reputation as the
premier community bank in the Central Sacramento Valley. Responsive,
relationship banking with experienced officers and staff is the foundation upon
which California Independent Bancorp and Feather River State Bank prepare for
the future.

Feather River State Bank's full range of traditional banking products fits the
banking needs of business, consumer, commercial, agri-business and real estate
customers. The Bank is a member of the Federal Deposit Insurance Corporation,
guaranteeing each depositor's accounts are insured up to $100,000.

Feather River State Bank continues to offer alternative investment financial
services through Select Advisors, Inc., a registered investment adviser, and
Select Capital Corporation, a registered broker/dealer. These alternative
investments are not insured by the FDIC, are not Bank deposits or other
obligations of the Bank and are not guaranteed by the Bank.

As we look to the future, California Independent Bancorp and Feather River State
Bank anticipate a year of growth. It is with great excitement that we embrace
the new millennium and the opportunities it will bring to our region. We feel
the Company is strategically placed to meet the financial needs of the growing
Central California Valley and we have the financial tools to expand our depth
into the business, consumer, real estate and agricultural banking arenas,
ensuring Feather River State Bank's status as the premier community bank in the
region.

                                                                               1

<PAGE>

STOCKHOLDER INFORMATION

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is traded on the NASDAQ National Market under the
trading symbol "CIBN." The Company's Common Stock began trading on the NASDAQ
National Market on July 31, 1996. Prior to that time, the Company's Common Stock
was listed on the NASDAQ Bulletin Board and was the subject of limited trading.

The prices indicated below may not necessarily represent actual transactions.

<TABLE>
<CAPTION>

                   SALE PRICE OF COMMON STOCK

                   --------------------------
QUARTER ENDED 1999         BID      ASK

                           ---      ---
<S>                 <C>           <C>
December 31         $   16.00     $   18.00
September 30            18.25         19.00
June 30                 20.38         20.88
March 31                20.25         21.00

<CAPTION>

QUARTER ENDED 1998         BID      ASK

                           ---      ---
<S>                 <C>           <C>
December 31         $   20.00     $   20.12
September 30            22.50         24.50
June 30                 25.00         27.50
March 31                24.50         26.25
</TABLE>

CASH DIVIDEND INFORMATION

Cash dividends paid on the Company's Common Stock were $.42 per share for the
year ending December 31, 1999, and $.40 per share for the year ending December
31, 1998, adjusted to reflect 5% stock dividends in 1999 and 1998.

The Company has paid cash dividends on its Common Stock since 1980, and has paid
thirty-six consecutive quarterly cash dividends since 1991. It is currently the
intention of the Board of Directors of California Independent Bancorp to
continue the payment of cash dividends on a quarterly basis. However, there is
no assurance that cash dividends will be paid in the future, as they are
dependent upon the earnings, financial condition, and capital requirements of
the Company and its subsidiary, Feather River State Bank, as well as legal and
regulatory requirements. As of December 31, 1999, the Company had $1,057,833
available for payment of dividends to its shareholders without any restrictions.

The number of shares issued and outstanding as of December 31, 1999, was
1,904,618. Call your stockbroker or one of our market makers for stock
information:

First Union Securities              888-383-3112

Ryan, Beck & Co.                    800-342-2325

First Security Van Kasper           800-652-1747

First Union Securities now offers Dividend Reinvestment Plans. These plans allow
conversion of cash dividends into whole or fractional shares of CIBN stock. This
service is offered free of fee or commission charges.

SHAREHOLDER INFORMATION

Shareholders wishing more detailed information about California Independent
Bancorp may obtain a copy of the Company's Form 10-K, The California Independent
Quarterly Newsletter or CIB Stock Marketing Packages upon request from:

California Independent Bancorp
Investor Relations Department
Annette Bertolini
P.O. Box 929002
Yuba City, California 95992
(530) 674-4444

STOCKHOLDER ACCOUNT INFORMATION

If you have questions concerning your stockholder account, please call our
transfer agent:

U.S. Stock Transfer Corporation
1745 Gardena Avenue
Glendale, California 91204
(800) 835-8778

ANNUAL MEETING

The annual shareholders' meeting of California Independent Bancorp will be held
May 17, 2000, 6:00 P.M., at our Colusa Avenue Branch located at 777 Colusa
Avenue in Yuba City.

2
<PAGE>

Financial Highlights

California Independent Bancorp and Subsidiaries for the Years Ended December 31,

<TABLE>
<CAPTION>

                                          1999                 1998               1997               1996               1995
                                      ------------        ------------       ------------        ------------       ------------
<S>                                   <C>                 <C>                <C>                 <C>                <C>
Interest Income                       $ 23,279,582        $ 24,799,713       $ 23,386,677        $ 20,574,110       $ 19,002,834
Interest Expense                         8,573,383           8,830,774          9,288,694           7,448,898          6,316,594
                                      ------------        ------------       ------------        ------------       ------------
Net Interest Income                   $ 14,706,199        $ 15,968,939       $ 14,097,983        $ 13,125,212       $ 12,686,240
Provision for Loan Losses                1,000,000           2,246,145          6,153,000             385,000            875,000
                                      ------------        ------------       ------------        ------------       ------------
Net Interest Income After
  Provision for Loan Losses           $ 13,706,199        $ 13,722,794       $  7,944,983        $ 12,740,212       $ 11,811,240
Noninterest Income                       2,564,447           3,454,179          3,142,139           2,812,030          2,226,967
Noninterest Expense                     13,810,491          12,850,678         11,900,255           9,981,827          8,936,485
                                      ------------        ------------       ------------        ------------       ------------
Income (Loss) Before Provision
  for Income Taxes                    $  2,460,155        $  4,326,295       $   (813,133)       $  5,570,415       $  5,101,722
Provision (Benefit) for Income Taxes       865,000           1,603,600           (511,350)          2,201,000          2,036,000
                                      ------------        ------------       ------------        ------------       ------------
Net Income (Loss) From Continuing
  Operations                          $  1,595,155        $  2,722,695       $   (301,783)       $  3,369,415       $  3,065,722
                                      ------------        ------------       ------------        ------------       ------------
Loss on Disposal of Subsidiary        $   (713,772)            $     -              $   -                $  -                  -
Income (Loss) on Discontinued
  Operations                              (277,685)            157,781            140,353              31,636                  -
                                      ------------        ------------       ------------        ------------       ------------
Net Income (Loss)                     $    603,698        $  2,880,476       $   (161,430)       $  3,401,051       $  3,065,722
                                      ------------        ------------       ------------        ------------       ------------
                                      ------------        ------------       ------------        ------------       ------------
PER COMMON SHARE DATA
Basic Earnings Per Share From
  Continuing Operations               $       0.88        $       1.54       $      (0.17)       $       1.97       $       1.71
Cash Dividends                        $       0.42        $       0.40       $       0.38        $       0.36       $       0.35
Book Value                            $      12.20        $      12.99       $      11.65        $      12.29       $      10.73
Dividend Payout Ratio                        47.73%              25.97%               n/a               18.27%             20.47%
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING - BASIC               1,821,549           1,763,408          1,738,917           1,707,878          1,796,495
FINANCIAL RATIOS FROM
CONTINUING OPERATIONS
Return on Average Assets                      0.54%               0.95%             (0.11)%              1.51%              1.56%
Return on Average Common
  Shareholders' Equity                        6.70%              11.82%             (1.33)%             16.56%             17.54%
Net Interest Margin                           4.84%               5.40%              4.92%               5.64%              5.45%
Net Charge-Offs to
  Average Loans and Leases, Net               0.14%               0.91%              2.70%               0.16%              0.19%
Allowance for Loan and Lease Loss
  as a Percent of Net Loans and Leases        4.20%               3.33%              3.29%               2.68%              3.05%
Efficiency Ratio                             79.96%              66.16%             69.03%              62.63%             59.92%
</TABLE>


              [CHART]               [CHART]              [CHART]

                                                                               3

<PAGE>

                                    [PHOTO]

(left to right) David Offutt, Chairman of the Board, Larry Hartwig,
President/CEO

MISSION STATEMENT

"To maximize shareholder value, corporate image and reputation in the community
on a consistent basis, while creating an environment for our employees to have
the opportunity for personal growth and achievement."

                                               We don't want
                                               to be the biggest...
                                               just the best.

4
<PAGE>

LETTER TO THE SHAREHOLDERS:

In 1999, California Independent Bancorp's ("CIB") wholly-owned subsidiary
Feather River State Bank ("Bank") completed its 23rd year in business. The last
half of 1999 was spent on strategically repositioning CIB and the Bank to gain
efficiency, firmly establish a strong credit culture, and develop excellence in
our sales and service.

From an operating standpoint, CIB's net income from continuing operations for
1999 was $1,595,155 or $0.88 per share, as compared to $2,722,695 or $1.54 per
share for fiscal 1998. CIB's net interest margin remained strong at 4.84% for
1999, compared to 5.40% for 1998. Our allowance for loan and lease losses were
$6,770,523 for 1999 versus $6,024,111 for 1998. Our allowance for loan and lease
losses as a percentage of total loans was 4.20% and 3.33% for 1999 and 1998,
respectively. Also, for the first time, CIB closed the year with total assets in
excess of $300 million.

CIB's consolidated capital position remains strong, with all ratios well in
excess of regulatory requirements. At December 31, 1999, CIB reported a total
risk-based capital ratio of 11.8%, a tier 1 risk-based capital ratio of 10.6%,
and a leverage capital ratio of 8.0%.

Our earnings have been held back by the high cost of managing problem loans and
higher than normal non-interest expenses. Much work has been done in both areas
to align CIB with its peer group competitors. The containment of both these
expenses will take more time, but we are well down the road to success in these
areas.

As change in our industry accelerates, we are faced with both challenges and
opportunities. The primary challenges are associated with the intensely
competitive market for full-range banking and financial services. The continuing
consolidation of Northern California independent banks offers a major
opportunity for CIB to expand its services into new market segments for
diversity and into neighboring communities for growth.

During this year, your Board of Directors and Senior Management have carefully
evaluated the re-engineering options necessary to assure CIB's future success.
In July, the Board of Directors selected a new president and chief executive
officer, Larry Hartwig, and the following strategic steps were taken to improve
asset quality and operating efficiencies:

- Streamlining the branch delivery system to improve operating efficiency and
  closing two underperforming loan production offices;

- Reducing non-interest expense, including trimming the equivalent of 16
  full-time staff;

- Introducing automated credit scoring technology and new business and consumer
  products that deliver real value to the customer;

- Intensifying our focus on proactive relationship banking which builds customer
  loyalty and service satisfaction while enhancing profitability;

- Enhancing the effectiveness of our professional banking staff through
  training, incentive programs, and a strong emphasis on customer sales and
  quality service;

- Building a strong, motivated management team through training, focusing on
  performance comparisons with peer group banks, and gaining momentum in
  improving credit quality;

- Deciding that "application only" leases do not fit the Bank's future strategy
  and electing to exit by the orderly closure of EPI Leasing Company; and

- Improving consumer and business products and services to promote
  diversification of our loan portfolio.

We will continue to strive for improvements in operating efficiencies and
expense reductions while focusing on profitable growth in loans, deposits, and
revenues. This, along with California's continued bright economic outlook,
points toward a good year in 2000.

We will continue to refocus our efforts toward the needs and expectations of our
customers and our commitment to relationship banking. Because we know that
customers value responsiveness and convenience, we are now setting goals and
challenging our bankers to better respond to customer requests. We thrive on
differentiating ourselves from big bank competitors through flexible, personal
service. We do not want to be the biggest . . . just the best.

We wish to thank all of our shareholders, customers, and employees for their
continuing support in helping us build on our strengths as a premier provider of
financial services and a leading Northern California community bank. We know
that it is energy, commitment, and hard work that will allow us to prosper.

/S/ David A. Offutt

David A. Offutt

CHAIRMAN OF THE BOARD

/S/ Larry Hartwig

Larry Hartwig

PRESIDENT/CEO

                                                                               5

<PAGE>

             STRUCTURING FOR GROWTH TO MEET THE CHALLENGES OF A CHANGING REGION.

Twenty-three years and still growing, California Independent Bancorp laid the
groundwork in 1999 for future growth for Feather River State Bank. Everywhere we
look there are new opportunities to satisfy more of our customers' financial
needs, to attract new customers and to customize our services to reflect the
needs of each customer.

Our Board of Directors and Senior Management have outlined the agenda for
diversifying the Company's portfolio. As we move into a sales and service
culture, we are laying the foundation for a stronger company. Just as we have
for the last 23 years, our focus on providing solutions for our customers and
creating value for our shareholders remains steadfast.

During 1999, a dedicated team of employees, officers and directors worked to
build a strong foundation for future growth and profitability. In July, Larry D.
Hartwig agreed to join the Company and the Bank as president, chief executive
officer and director. Mr. Hartwig is a veteran community banker and a strong
supporter of relationship banking.

With plans to grow our marketshare in the Northern California region over the
next 4 to 5 years, the selection of the president and chief executive officer
was critical. Mr. Hartwig fit the profile the Board was looking for in a leader
for the Company and Bank. His experience and management skills will direct our
future strategy. His employee, stockholder and community dedication will lead us
into the next century.

In addition to a new president and CEO, two new directors were added to the
Boards of both California Independent Bancorp and Feather River State Bank in
1999. The new directors bring with them energy and vision, as well as solid
business backgrounds and outstanding judgement. The new directors were carefully
selected for their expertise in the arenas of agriculture and lending. Alfred
Montna and John Dowdell are welcome additions to the Boards.

Feather River State Bank crossed a new threshold in 1999 when we celebrated
becoming a $300 million dollar bank. As we continue to strive to reach our full
potential, we have developed deep roots in the Central Sacramento Valley. These
roots are the basis upon which we will branch out and diversify our portfolio.

6
<PAGE>

LOOKING FORWARD TO GROWTH IN BUSINESS BANKING. Feather River State Bank is a
community-owned bank. Decisions are made right here in Yuba, Sutter, Colusa and
Yolo counties. Because we know the demanding needs of our business community,
Feather River State Bank offers full service banking products and services
tailored to meet the needs of today's business.

LOOKING FORWARD TO GROWTH IN CONSUMER LENDING. In 1999, we strengthened our
Consumer Lending segment of the Bank. Realizing the potential needs that could
be met in this area of lending, the Bank became more competitive and streamlined
its application process. As we enter the new millennium we look forward to
future growth in the Consumer Lending Department.

LOOKING FORWARD TO GROWTH IN AGRICULTURAL LENDING. Feather River State Bank
continues to establish strong, solid relationships and continued growth in both
agricultural and agricultural real estate lending. Feather River State Bank is
proud of its tradition of service to area farmers. By providing financial
products to agri-businesses, we assist hundreds of farm families, help fund a
critical component of our economy and in turn realize an economic benefit for
the Bank and its customers.

LOOKING FORWARD TO GROWTH IN OUR COMMUNITY INVOLVEMENT. Contributions to our
communities continue to be the cornerstone of our Bank. The commitment of our
employees in promoting Feather River State Bank shows in the thousands of
volunteer hours accumulated over the past year. From the Prune Festival and
Yuba-Sutter Free Health Fair to the Colusa Livestock Auction and a variety of
civic organizations, the employees of the Bank show that banking is not just a 9
to 5 job.

LOOKING FORWARD TO GROWTH IN STOCKHOLDER RELATIONS. Maintaining stockholder
trust and confidence as we build growing relationships for the new millennium is
top priority for the Company. Many of our shareholders take advantage of the
special banking privileges that accompany shareholder status at Feather River
State Bank. We encourage all shareholders to develop a banking relationship with
the Bank as we continue to enhance shareholder relations.

LOOKING FORWARD TO OUR FUTURE... THE ABC'S OF COMMUNITY BANKING. When looking
towards the future, it is hard to overlook the local schools. Feather River
State Bank continues to support education by helping to put learning
opportunities at the fingertips of local kindergartners. The Bank joined forces
with a local school district and the federal government forming a unique
partnership to create the "Literacy Academy" for kindergarten and early primary
students in the Marysville Joint Unified School District. The School District
identified a need for an enhanced reading program that could break down the
barriers that hindered children's ability to learn to read. The $2.1 million
program was made possible by a zero-interest bond financed by the Bank using the
Qualified Zone Academy Bonds. Tax credits are offered in lieu of charging
interest to the school district. Feather River State Bank is proud to make this
investment in our community.

In 1999, we all became very familiar with the term, Y2K. Feather River State
Bank's preparations for the Year 2000 were initiated in 1997 by a dedicated team
of employee experts. At the stroke of midnight on January 1, Feather River State
Bank welcomed the Year 2000 with uninterrupted service. Feather River State Bank
was committed to meeting the Year 2000 challenge, while looking ahead to protect
the integrity of our customer's deposits and ensure the safety and soundness of
our institution. Throughout 1999 regular public forums were held at the Bank. We
also reached out into our service communities, addressing senior citizen groups
and non-profit agencies. Educational forums encouraged customers and citizens to
make informed decisions regarding how to prepare for the Year 2000. Feather
River State Bank collaborated with other public officials to report not only on
the Bank's level of preparedness, but the status of public services, utilities
and our area hospitals.

The challenge for the future is to utilize existing and new technology to
enhance the delivery of our services through our experienced financial service
representatives, while reducing costs. Our products and services, customers,
shareholders and communities will continue to be our guiding principles as
California Independent Bancorp structures for growth to meet the challenges of a
changing region.

                                                                               7

<PAGE>

CIB/MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS

CALIFORNIA INDEPENDENT BANCORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1999 AND
1998

Certain statements in the annual report, Form 10-K and in this Management's
Discussion and Analysis of Financial Condition and Results of Operations
(excluding statements of fact or historical financial information) involve
forward-looking information within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, and are subject to the "safe harbor" created by those sections.
These forward-looking statements involve certain risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statements. Such risks and uncertainties include, but are not
limited to, the following factors: competitive pressure in the banking industry
increases significantly; changes in the interest rate environment reduce
margins; general economic conditions, either nationally or regionally, are less
favorable than expected, resulting in, among other things, a deterioration in
credit quality and an increase in the provision for possible loan and lease
losses; 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;
asset/liability matching risks and liquidity risks; changes in the securities
markets; and the cost and steps necessary to address the residual effects, if
any, of Year 2000 issues.

The following discussion and analysis is designed to provide a better
understanding of the significant changes and trends related to California
Independent Bancorp and Feather River State Bank's financial condition,
operating results, asset and liability management, liquidity and capital
resources, and should be read in conjunction with the Consolidated Financial
Statements of the Company and its accompanying notes.

SUMMARY OF FINANCIAL RESULTS

California Independent Bancorp (the "Company") through its wholly owned
subsidiary, Feather River State Bank (the "Bank") engages in a broad range of
financial service activities. The Bank commenced operations in 1977. The Company
was formed in 1994 and, after receiving regulatory and shareholder approval,
became the holding company for the Bank in May 1995. In October 1996, the Bank
acquired E.P.I. Leasing Co., Inc. ("EPI"), and has operated it as a subsidiary.

On March 21, 2000, the Board of Directors of the Bank, voting as the sole
shareholder of EPI, approved the dissolution and winding up of EPI's affairs.
The provision for the loss on discontinued operations reflected in the
consolidated statement of operations includes the write-down of the assets of
EPI to estimated net realizable values and the estimated costs of disposing of
these operations, less the expected tax benefits applicable thereto. The loss
associated with the 1999 operation and disposal of EPI is $991,457, net of
income tax benefits. This amount includes write-off of the Bank's original
investment in its subsidiary and the goodwill associated with it.

This annual report, the Form 10-K, and the following Management's Discussion and
Analysis along with the accompanying financial statements, tables and charts
have been written to exclude the effects of EPI for the periods stated.

In 1999, the Company recognized a slight increase in total assets of 1.9% from
$294,875,041 in 1998 to $300,360,462 at December 31, 1999. Cash and cash
equivalents decreased

8

<PAGE>

to $37,887,475 in 1999 from $42,358,060 in 1998, while total investments
increased to $86,998,504 at December 31, 1999 from $60,639,334 in 1998. The
increase in total investments represents a shifting in the allocation of
assets from loans coupled with an increase in deposits. Net loans and leases
decreased 11.6% from $174,847,943 in 1998 to $154,550,147 at December 31,
1999. Total deposits rose 1.9% over the same period. The Company's
shareholders' equity decreased $566,133 or 2.4% after the effect of the
discontinuance of EPI.

During 1999, the Company recognized net income from continuing operations of
$1,595,155, a decrease of $1,127,540 over 1998. Net income after disposal and
discontinuance of EPI was $603,698 and $2,880,476, for the years ended December
31, 1999 and 1998, respectively. The decline in net income was attributable to
several factors including high costs associated with managing problem loans and
higher than normal noninterest expenses. Another factor was a decline in
noninterest income of $889,732 or 25.8%, primarily the result of a significant
reduction in real estate brokered loan fee income during 1999 over 1998. These
factors were mitigated by a decrease in the allowance for loan and lease losses.
Each of these factors is discussed further in the loan section of this report.

In 1997, the Company suffered an operating loss from continuing operations of
$301,783 and a loss of $161,430 net of the discontinued operations of EPI. The
decrease, after fourteen consecutive annual increases, was the result of a
provision for loan and lease losses of $6,153,000, which was required to
recognize the increased risk exposure in a small number of sizable loans in the
Bank's portfolio.

Net interest income, the difference in interest earning assets and interest paid
on liabilities, declined to $14,706,199 in 1999 from a 1998 net interest income
figure of $15,968,939. This 7.9% decrease is primarily attributable to a decline
of $8,726,079 in average loan and lease balances, which are the primary sources
of the interest earning assets held by the Company. Interest earning assets
consist of overnight federal funds sold, investment securities and loans and
leases. In total, these assets averaged $263,069,549, $257,864,723 and
$243,619,122 in 1999, 1998 and 1997, respectively. Average loans and leases were
$181,165,760, $189,891,839 and $173,905,665 in 1999, 1998 and 1997,
respectively, representing a decrease of 4.6% in 1999 over 1998 and a 9.2%
increase in 1998 over 1997.

The decrease in interest income on loans in 1999 was partially offset by an
increase in interest earned on Investment Securities. Average investment
securities in 1999, 1998 and 1997, respectively, were $70,179,271, $57,776,867
and $40,522,132. Interest income on the investment securities for the same
periods were $4,062,096, $3,510,629 and $2,588,233, respectively. The increase
in average investment securities of $12,402,404 or 21.5% in 1999 was the result
of the Company's strategy to apply the liquidity from the decline in loans and
leases into securities. The increase in interest income on investments was 15.7%
or $551,467 in 1999 over 1998. Interest income on investments rose $922,396 or
35.6% in 1998 over 1997 primarily due to the Company's shifting of funds from
lower yielding federal funds to longer-term, higher yielding investments. Net
interest income increased in 1998 over 1997 reflecting an increase in the volume
of interest earning assets.

Average interest-bearing liabilities, consisting of interest paid on
interest-bearing deposits and other borrowed money, increased to $213,732,624 in
1999 from $209,492,335 in 1998, and $198,616,007 in 1997. The average rate paid
on interest-bearing liabilities was 4.0%, 4.2% and 4.7%, respectively. The
primary component of interest bearing liabilities is interest bearing deposits
which stood at $212,975,320, $202,800,415 and $204,706,508 in 1999, 1998 and
1997, respectively.

The Company recognized a decrease of $3,894,572 or 49.2% in average other
borrowed money, which consists primarily of borrowings on the Bank's Federal
Reserve Bank Seasonal borrowing line. Typically during its peak lending season,
the second and third quarters of the year, the Bank borrows on this line. The
average balance of other borrowed funds was $4,028,291, $7,922,863 and $621,054,
in 1999, 1998 and 1997, respectively. Due to the decline in loan volume the
Bank's liquidity position did not require the levels of borrowing in 1999 that
it did in 1998. The Company recognized a substantial increase in other borrowed
money in 1998 over 1997. The increase in 1998 was due to the Bank's need to
borrow funds from its seasonal credit line with the Federal Reserve Bank, in
order to fund increased loan demand during peak lending periods.

Average noninterest-bearing demand deposits, consisting primarily of business
checking accounts, increased to $54,675,233 in 1999 from $52,364,097 in 1998 and
$49,283,416 in 1997. The continued increase in these deposits from 1997 to 1999
reflects the successful marketing efforts of the Bank and the influx of deposits
resulting from large financial institution branch consolidations and closings in
the Company's market area.

Earnings per share from continuing operations in 1999 were $0.88, a decrease
over 1998 earning per share from continuing operations of $1.54. Both years were
more than 1997, which stood at a loss from continuing operations of ($0.17) per
share. The loss in 1997 was primarily due to the need to provide for and
replenish the reserve for loan and lease losses.

The Company paid cash dividends of $0.42 per share in 1999, $0.40 per share in
1998 and $0.38 in 1997. Additionally, the Company provided 5% stock dividends in
1997, 1998 and 1999. Earnings per share have been adjusted retroactively to
reflect the stock dividends.

Management believes that the Company has adequate liquidity to meet its needs,
such as funding the undisbursed portion of borrower's lines of credit,
withdrawals by depositors, managing interest and market rate risk in the event
of significant changes in interest rates, and meeting its cash needs.

The following table depicts the Average Balance Sheets for the years ended 1999,
1998 and 1997. This table shows the composition of average earning assets and
average interest-bearing liabilities, average yields and rates, and the
Company's net interest margin for years 1997 through 1999.

                                                                               9

<PAGE>

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCE SHEETS

                                                 1999                                        1998
                          ----------------------------------------------   ----------------------------------------
                               AVERAGE          YIELD/       INTEREST       AVERAGE         YIELD/      INTEREST
                               BALANCE           RATE         AMOUNT        BALANCE          RATE         AMOUNT

                          ----------------------------------------------   ----------------------------------------
<S>                          <C>               <C>       <C>             <C>               <C>       <C>
ASSETS

Earning Assets:
  Short-Term Investments:
  Federal Funds Sold         $  11,724,518       5.06%   $     593,197   $  10,196,017       5.26%   $     536,411
---------------------------------------------------------------------------------------------------------------------
Investment Securities:
  Taxable                       66,143,534       5.90%       3,900,332      51,637,291       6.23%       3,219,517
  Non-Taxable                    4,035,737       4.01%         161,764       6,139,576       4.74%         291,112
---------------------------------------------------------------------------------------------------------------------
Total                           70,179,271       5.79%       4,062,096      57,776,867       6.08%       3,510,629

Loans                          181,165,760      10.28%      18,624,289     189,891,839      10.93%      20,752,673
---------------------------------------------------------------------------------------------------------------------
Total Earning Assets           263,069,549       8.85%      23,279,582     257,864,723       9.62%      24,799,713

Allowance for Possible
  Loan and Lease Losses         (6,515,380)                                 (5,622,159)
Non Earning Assets:
  Cash and Due From Banks       17,858,822                                  16,453,103
  Premises and Equipment,
   Net                           7,626,073                                   7,951,201
  Other                         11,949,985                                  10,377,232
  Net Assets From
   Discontinued Operations         434,413                                     420,043
                                   -------                                     -------
Total Non Earning Assets        37,869,293                                  35,201,579
                                ----------                                  ----------
Total Assets                 $ 294,423,462                               $ 287,444,143
                             -------------                               -------------
                             -------------                               -------------

LIABILITIES AND
SHAREHOLDERS' EQUITY

Interest-Bearing Deposits:
 Demand, Savings and
    Money Market             $ 112,541,448       3.09%   $   3,473,386   $ 107,440,206       3.00%   $   3,225,520
  Time Certificates             97,162,885       5.06%       4,917,252      94,129,266       5.50%       5,176,284
  Other Interest-
     Bearing Liabilities         4,028,291       4.54%         182,745       7,922,863       5.41%         428,970
---------------------------------------------------------------------------------------------------------------------
Total                          213,732,624       4.01%       8,573,383     209,492,335       4.22%       8,830,774
---------------------------------------------------------------------------------------------------------------------

Noninterest-Bearing
  Deposits and Other
  Liabilities:
    Demand, Noninterest-
     Bearing                    54,675,233                                  52,364,097
    Other Liabilities            2,203,717                                   2,553,772
                                 ---------                                   ---------
Total                           56,878,950                                  54,917,869
                                ----------                                  ----------
Shareholders' Equity            23,811,888                                  23,033,939
                                ----------                                  ----------
Total Liabilities and
 Shareholders' Equity        $ 294,423,462                               $ 287,444,143
                             -------------                               -------------
                             -------------                               -------------
Net Interest Income                                      $  14,706,199                               $  15,968,939
                                                         -------------                               -------------
                                                         -------------                               -------------
Net Interest Margin                              4.84%                                       5.40%
                                                 ----                                        ----
                                                 ----                                        ----



<CAPTION>

AVERAGE BALANCE SHEETS

                                                     1997

                                   -------------------------------------
                                     AVERAGE        YIELD/     INTEREST
                                     BALANCE         RATE        AMOUNT

                                   -------------------------------------
<S>                               <C>              <C>       <C>
ASSETS

Earning Assets:
  Short-Term Investments:
  Federal Funds Sold              $  29,191,325      5.39%   $   1,573,312
---------------------------------------------------------------------------
Investment Securities:
  Taxable                            35,319,174      6.55%       2,313,612
  Non-Taxable                         5,202,958      5.28%         274,620
---------------------------------------------------------------------------
Total                                40,522,132      6.39%       2,588,232

Loans                               173,905,665     11.05%      19,225,133
---------------------------------------------------------------------------
Total Earning Assets                243,619,122      9.60%      23,386,677

Allowance for Possible
  Loan and Lease Losses              (4,137,285)
Non Earning Assets:
  Cash and Due From Banks            16,193,569
  Premises and Equipment,
   Net                                7,860,329
  Other                               9,633,965
  Net Assets From
   Discontinued Operations              228,652
                                        -------
Total Non Earning Assets             33,916,515
                                     ----------
Total Assets                      $ 273,398,352
                                  -------------
                                  -------------

LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-Bearing Deposits:
 Demand, Savings and
    Money Market                  $ 104,673,000      3.73%   $   3,904,111
  Time Certificates                  93,321,953      5.74%       5,360,741
  Other Interest-
     Bearing Liabilities                621,054      3.84%          23,842
---------------------------------------------------------------------------
Total                               198,616,007      4.68%       9,288,694
---------------------------------------------------------------------------

Noninterest-Bearing
  Deposits and Other
  Liabilities:
    Demand, Noninterest-
     Bearing                         49,283,416
    Other Liabilities                 2,807,123
                                      ---------
Total                                52,090,539
                                     ----------
Shareholders' Equity                 22,691,806
                                     ----------
Total Liabilities and
 Shareholders' Equity             $ 273,398,352
                                  -------------
                                  -------------
Net Interest Income                                          $  14,097,983
                                                             -------------
                                                             -------------
Net Interest Margin                                  4.92%
                                                     ----
                                                     ----
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

INTEREST INCOME

Interest income decreased 6.1% in 1999 to $23,279,582 from $24,799,713 in 1998
and was $23,386,677 in 1997. The yield on interest earning assets was 8.9%, 9.6%
and 9.6% in 1999, 1998 and 1997, respectively.

10
<PAGE>

The average interest rate earned on loans was 10.3% in 1999, compared to 10.9%
in 1998 and 11.1% in 1997. The Company's loan portfolio closely follows interest
rate trends as it is comprised primarily of loans that reprice immediately with
changes in the Bank's reference rate. The 0.6% decrease in loan and lease yields
from 1998 to 1999 is the result of several factors: increased nonperforming
loans and leases (discussed further in the section of this analysis titled
nonperforming loans); the requirement to obtain higher quality loans; intense
competition in the loan marketplace; and a change in the portfolio's mix with a
decreased emphasis on higher yielding agricultural loans replaced with lower
yielding real estate and consumer loans.

Average federal funds sold were $11,724,518 in 1999, $10,196,017 in 1998, and
$29,191,325 in 1997 representing an increase of 15.0% in 1999 over 1998 and a
significant decrease of 65.1% in 1998 over 1997. The decrease in 1998 and 1999
over 1997 was primarily due to the Company's shifting of funds into longer term,
higher yielding investments. The yield on federal funds sold was 5.1%, 5.3% and
5.4% at 1999, 1998 and 1997, respectively.

Total interest expense decreased 2.9% to $8,573,383 in 1999 from $8,830,774 in
1998 and decreased 4.9% in 1998 from $9,288,694 in 1997. The decrease in
interest expense from 1997 to 1999 is reflective of the Company's decision to
adjust rates it pays on deposits to levels consistent with the market it serves,
thereby resulting in a lower average interest rate paid on deposits.

CHANGES IN INTEREST RATES AND THE VOLUME OF INTEREST SENSITIVE ASSETS AND
LIABILITIES

Changes in the rates earned and paid and the volume of interest-earning assets
and interest-bearing liabilities affect the Company's net yield on
interest-earning assets. The impact of changes in volume and rate on net
interest income in 1999 and 1998 is shown in the following table.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
CHANGES IN VOLUME/RATE
                                               1999 COMPARED TO 1998                          1998 COMPARED TO 1997
                                      --------------------------------------         -------------------------------------
                                       VOLUME           RATE           TOTAL         VOLUME           RATE           TOTAL
                                      -------        --------         ------         ------         -------        -------
                                                                      (DOLLARS IN THOUSANDS)
<S>                                  <C>            <C>             <C>             <C>              <C>           <C>
Federal Funds Sold                   $     80       $     (23)      $     57        $(1,024)         $  (13)       $(1,037)
Investment Securities:
  Taxable                                 904            (223)           681          1,069            (163)           906
  Non-Taxable                            (100)            (29)          (129)            49             (33)            16
Loans                                    (954)         (1,174)        (2,128)         1,766            (238)         1,528
--------------------------------------------------------------------------------------------------------------------------
    Total                            $    (70)        $(1,449)       $(1,519)       $ 1,860           $(447)       $ 1,413
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Demand, Savings and
  Money Market                        $   153       $      95       $    248       $    103           $(782)      $   (679)
Time Certificates                         167            (426)          (259)            46            (230)          (184)
Other                                    (211)            (35)          (246)           280             125            405
--------------------------------------------------------------------------------------------------------------------------
    Total                             $   109        $   (366)      $   (257)      $    429           $(887)      $   (458)
--------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net
   Interest Income                    $  (179)        $(1,083)       $(1,262)       $ 1,431           $ 440        $ 1,871
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
</TABLE>

LOANS

Outstanding total loans averaged $181,165,760 in 1999, as compared to
$189,891,839 in 1998 and $173,905,665 in 1997. This represents a decrease of
$8,726,079 or 4.6% in 1999, compared to an increase of $15,986,174 or 9.2% in
1998.

The decrease in average total loans during 1999 is attributable to decreases in
three loan categories: commercial loans, leases and agricultural loans. Average
commercial loans outstanding decreased 19.5% or $5,000,000 during 1999 while
leases decreased 16.7% or $4,900,000 and agricultural loans decreased $2,100,000
or 3.7%. The declines in commercial and agricultural loans realized were due to
the collection of certain problem loans and the Bank's enhanced credit standards
which resulted in the Bank choosing not to renew certain commercial and
agricultural loans during 1999. A reduction in lease financing occurred due to
the sale of a lease portfolio and the Bank purchasing fewer leases from its
subsidiary EPI.


                                                                              11
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF LOAN PORTFOLIO
                                                                          DECEMBER 31,
                                       1999                1998              1997               1996              1995
                                   ------------       ------------       ------------      -------------      ------------
<S>                             <C>                <C>                <C>                  <C>                <C>
Commercial and Agricultural     $ 55,111,154       $ 72,104,377       $ 79,384,520         $ 71,527,482       $ 74,355,093
Real Estate-Construction          30,513,920          53,967,821        23,927,538           29,916,204         18,048,005
Real Estate-Mortgage              46,003,764         28,930,047         28,032,552           28,564,640         28,288,337
Consumer                           2,523,695          2,443,283          1,956,254            2,983,939          2,814,717
Lease Financing                   27,009,815         23,033,956         33,223,586           15,892,783          3,216,140
Other                                158,322            392,570          1,021,665            2,214,574          1,522,174
------------------------------------------------------------------------------------------------------------------------------
Total                           $161,320,670       $180,872,054        $167,546,115        $151,099,622       $128,244,466
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The Company lends to consumers, small and medium sized businesses and farmers
within its market area. The Company's primary market area is Sutter, Yuba,
Colusa and Yolo counties and, secondarily Butte, Glenn, Sacramento and Placer
counties.

A significant portion of the Company's loan portfolio consists of loans secured
by residential, commercial and agricultural real estate.

Real estate mortgages and construction loans, including loans secured by
agricultural real estate and commercial real estate, equaled $76,517,684 or
47.4% and $82,897,868 or 29.8% of the total loan portfolio at December 31, 1999
and 1998, respectively. These loans are secured by real estate, and advances are
generally limited to 65% to 80% of the appraised value depending on the type of
loan.

The Company makes agricultural production loans and other agricultural loans
that are secured by crops, crop proceeds and other collateral. These loans are
generally at their peak in the third quarter of each year. The Company had
$35,645,913 or 22.1% and $50,505,360 or 27.9% of its loan portfolio in
agricultural production loans outstanding at December 31, 1999 and 1998,
respectively. Approximately 5% of these loans are guaranteed by the Farm Service
Agency which is an agency of the U.S. Department of Agriculture.

The Company makes commercial and small business loans (including lines of
credit) that are secured by the assets of the business. The Company had
$19,465,241 or 12.1% and $21,599,017 or 11.9% of its loan portfolio in
commercial and industrial loans outstanding at December 31, 1999 and 1998,
respectively.

The Company originates mortgage loans on residential and agricultural
properties, which it sells into the secondary market to divest itself of the
interest rate risk associated with these mostly fixed-interest rate products.
The Company accounts for these loans in accordance with Statement of Financial
Accounting Standards No. 125 "Accounting for Transfers of Financial Assets and
Extinguishment of Liabilities."

As of December 31, 1999, 1998, and 1997 total loans serviced by the Company were
$131,991,682, $146,025,594 and $151,619,000. Total loans sold by the Company
were $21,968,279 in 1999, $65,795,347 in 1998 and $66,953,000 in 1997. The
decrease in loans sold during 1999 is a function of lower production in
residential and farm mortgage lending and the Company's strategy to retain
certain real estate secured loans in its loan portfolio.

The higher interest rates experienced in 1999 severely curtailed mortgage loan
demand. As a result, the Company restructured its residential real estate
lending department during the fourth quarter of the year. Specifically, the
Bank's loan production offices located in Madera and Chico, California were
closed and staffing in the Bank's Yuba City Real Estate Department was reduced
by half. Real estate lending operations conducted from these loan production
offices were consolidated to the Bank's Yuba City Real Estate Department and its
Citrus Heights loan production office. In summary, the Bank streamlined its
residential lending operations to appropriately reflect the current loan demand.

Restructuring the Bank's residential real estate lending operations was done for
two purposes. First, operations were downsized and processes were modified to
gain expense efficiencies. The Bank anticipates substantial cost savings as a
result of the restructuring beginning in 2000. Secondly, the loan production
office closures were completed in an attempt to refocus the Bank's business
operations in its core market area. From a geographic perspective, the Company
is refocusing its real estate lending activities within the Sacramento Valley.
Residential loan activity is now principally conducted from the Bank's Yuba
City, Citrus Heights and Woodland locations.

QUALITY OF LOANS

Inherent in the lending function is the fact that loan losses will be
experienced and the risk of loss will vary with the type of loan extended and
the credit worthiness of the borrower. To reflect the estimated risks of loss
associated with its loan portfolio, provisions are made to the Company's
Allowance for loan and lease losses ("Allowance"). As an integral part of this
process, the Allowance is subject to review and possible adjustment as a result
of Management's assessment of risk or through regulatory examinations conducted
by governmental agencies.


12
<PAGE>

ALLOWANCE FOR LOAN AND LEASE LOSSES

The Company uses the Allowance method in providing for loan losses. Loan and
lease losses are charged against and recoveries are credited to the Allowance.
The Allowance at December 31, 1999 was $6,770,523 or 4.2% of total loans
outstanding as compared to $6,024,111 or 3.3% of total loans outstanding at
December 31, 1998. Management, after a careful analysis supported by a third
party loan review, believes that the Allowance at December 31, 1999, was
adequate to provide for losses that can be reasonably anticipated.

Additions to the Allowance are made by provisions for loan and lease losses. The
provision is charged as an operating expense and is based upon past loan and
lease loss experience and estimates of potential losses that, in Management's
judgment, deserve current recognition. Management determines the appropriate
size of the Allowance based upon specific allocations for classified and
impaired loans and leases and a general allocation for other loans based upon
the loss experience during the past twelve rolling months for each type of loan.
Other factors considered by Management include growth, composition, and overall
quality of the loan portfolio, and current economic conditions that may affect
the borrower's ability to pay. Actual losses may vary from current estimates.
The estimates are reviewed periodically and adjustments, as necessary, are
charged to operations in the period they become known.


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
ACTIVITY IN ALLOWANCE FOR LOAN AND LEASE LOSSES
                                         1999               1998              1997               1996               1995
                                       --------          ---------         ----------         ----------        ----------
                                                                     (DOLLARS IN THOUSANDS)
<S>                                     <C>              <C>                <C>                <C>                <C>
Total Loans and Leases Outstanding      $161,321         $180,872           $167,546           $151,100           $128,244
Average Loans and Leases                 181,166          189,892            173,906            148,294            131,893

Balance of Allowance at January 1          6,024            5,514              4,053              3,911              3,288
Charge-Off by Category:
  Commercial and Other                     1,009            2,095              4,311                323                413
  Consumer                                    15               49                 73                  -                 46
  Real Estate                                123              189                335                  4                 96
---------------------------------------------------------------------------------------------------------------------------
  Total                                 $  1,147         $  2,333           $  4,719           $    327           $    555
---------------------------------------------------------------------------------------------------------------------------
Recoveries by Loan Category:
  Commercial and Other                  $    627         $    499           $     19           $     53           $    249
  Consumer                                     -               98                  3                 31                 44
  Real Estate                                267                -                  5                  -                 10
---------------------------------------------------------------------------------------------------------------------------
  Total                                 $    894         $    597           $     27           $     84           $    303
---------------------------------------------------------------------------------------------------------------------------
Net Charge-Offs                         $    253         $  1,736           $  4,692           $    243           $    252
Provision Charged to Expense               1,000            2,246              6,153                385                875
---------------------------------------------------------------------------------------------------------------------------
Balance, December 31                    $  6,771         $  6,024           $  5,514           $  4,053           $  3,911
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Ratios:
Net Charge-Offs
  to Average Loans and Leases               0.14%            0.91%              2.70%              0.16%              0.19%
Allowance as a Percentage of
  Total Loans and Leases                    4.20%            3.33%              3.29%              2.68%              3.05%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

The Company had loan and lease charge-offs of $1,146,903 in 1999, $2,333,268 in
1998 and $4,718,424 in 1997, and net loan charge-offs (which includes
recoveries) of $253,588, $1,736,333, and 4,691,484, respectively. These net
charge-offs are equal to 0.1%, 0.9%, and 2.7% of average loans for 1999, 1998
and 1997.

The table above includes loan and lease losses sustained during 1999. Losses are
divided among three loan categories, "commercial and other" category totaled
$1,008,895 or 88.0% of total loan and lease losses, real estate loan losses
amounted to $122,933 or 10.7% and consumer loan losses were $15,075 or 1.3%.

The largest category of loss is "commercial and other" which includes
subcategories for commercial, agricultural and lease losses. Of these three
subcategories, lease losses were $929,406 or 81.0% of total losses and
represented the largest category of loss. Until the discontinuance of the
operations of EPI, the Company purchased leases from this subsidiary, who
originated the leases. Recognizing the inherent risks associated with this
activity, the Company maintains higher reserves for this portfolio than it does
for its other conventional loan portfolios. To date actual net charge-offs have
been higher than anticipated, but remains within established reserves for this
portfolio. The Company has made numerous changes to correct the higher than
desired charge-off rate for leases.

Commercial and agricultural loan losses at December 31, 1999 were limited to
$79,489 or 6.9% of total losses. Recoveries exceeded losses in the commercial
and agricultural subcategories and totaled $351,242. This was due to successful
recovery of previously charged off-loans in these categories. Real estate loans
also experienced $144,209 in net


                                                                              13
<PAGE>

recovery for 1999. Total recoveries for 1999 were $893,315 or 77.9% of the loans
and leases charged off during the year.

During 1998, five sizable charged-off loans accounted for 64.3% of the total
loan losses ($1,500,000) and one of these five credits accounted for 33.0% of
total loan losses ($770,000). The large agricultural loan loss was a livestock
loan. The producer experienced severe financial difficulty due to adverse market
trends and production problems. The other four loans in this group were all
commercial credits. Each of these businesses sustained cash flow difficulties
largely due to adverse economic conditions.

During 1997, loan losses were centered in five credit relationships and a group
of 22 leases. This group of credits comprised 93.0% of total loan and lease
losses. Of the five loans, two were agricultural loans (total charge-off of
$1,406,253) and one was a real estate development loan (total charge-off of
$343,424). The aggregate lease losses totaled $401,921.


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
ALLOCATION OF ALLOWANCE
                                    1999                1998               1997                 1996              1995
                                 CATEGORY TO         CATEGORY TO        CATEGORY TO          CATEGORY TO       CATEGORY TO
                               ----------------    ---------------    ----------------    ----------------    ----------------
                                 $         %         $        %         $         %         $         %         $         %
                               ------    ------    ------   ------    ------    ------    ------    ------    ------    ------
                                                                  (DOLLARS IN THOUSANDS)
<S>                             <C>      <C>      <C>       <C>      <C>       <C>      <C>       <C>      <C>          <C>
BALANCE APPLICABLE TO:
Commercial and Agricultural     $3,642    53.79%   $3,644    60.49%   $3,423    62.07%   $1,918    47.34%   $2,267       57.98%
Real Estate-Construction           417     6.16       925    15.36       897    16.28       802    19.80       550       14.07
Real Estate-Mortgage               542     8.00       610    10.13       392     7.11       766    18.90       863       22.06
Consumer                            48     0.71        32     0.53        31     0.56        80     1.97        86        2.19
Leases                             940    13.88       706    11.72       656    11.89       364     8.97         -        -
Other                            1,182    17.46       107     1.77       115     2.09       123     3.02       145        3.70

--------------------------------------------------------------------------------------------------------------------------------
 Total                          $6,771   100.00%   $6,024   100.00%   $5,514   100.00%   $4,053   100.00%   $3,911      100.00%
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------

NONPERFORMING LOANS:

Loans Accounted for on a
  Nonaccrual Basis              $6,115             $5,644             $7,585             $  846             $  293
Other Loans Contractually
  Past Due 90 Days or More           -                854                328              2,202                 60
                                ------             ------             ------             ------             ------
Total                           $6,115             $6,498             $7,913             $3,048             $  353
                                ------             ------             ------             ------             ------
                                ------             ------             ------             ------             ------
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The allocation of the Allowance as of the end of the last five fiscal years is
summarized in the table above. Any allocation or breakdown in the Allowance
lends an appearance of exactness that does not exist. Thus the allocation above
should not be interpreted as an indication of expected amounts or categories
where charge-offs will occur.

Management believes the total Allowance is adequate as of December 31, 1999. The
$1,182,000 amount shown as "Other" consisted of a special Year 2000 allocation
of $160,000 for borrowers that could have potentially experienced Year 2000
computer related problems, $133,000 reserved for undisbursed commitments on the
combined loan portfolios and $889,000 in unallocated reserves. This unallocated
reserve equals 13.1% of the reserve deemed necessary by Management and provides
an added margin of safety to the overall portfolio.

Management uses available information to provide for loan and lease loss reserve
allocation, however, future additions to the Allowance may be necessary based
upon changes in economic conditions and other variables.

NONPERFORMING LOANS

Loans are generally placed on nonaccrual status when they are 90 days past due
as to either interest or principal. The Company utilizes an automatic nonaccrual
policy for loans and leases that meet these criteria. At that time, any accrued
but uncollected interest is reversed, and additional income is recorded on a
cash basis as payments are received. At the discretion of Management, however,
loans that are in the process of renewal in the normal course of business or are
well-secured and in the process of collection, may not be placed on nonaccrual
status. A nonaccrual loan 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.

The trend in nonperforming assets has improved slightly over the past year as
nonperforming assets decreased from $6,498,000 or 3.6% of the portfolio on
December 31, 1998 to $6,115,399 or 3.8% of the portfolio on December 31, 1999.
The Company continues to successfully implement its classified asset reduction
plan and enhance quality control in the management of the loan portfolio.
Improvement was achieved despite poor agricultural results due to weather
adversities and oversupply conditions causing lower commodity prices for select
segments of the Company's agricultural borrowers. As a result, numerous
agricultural borrowers' financial positions continued to deteriorate from the
previous years adverse El Nino weather patterns and the Asian economic crisis.


14
<PAGE>

Due to continued adversities in the agricultural portfolio, at December 31,
1999, nonaccrual loans amounted to $6,115,399 or 3.8% of total loans. This
reflects a slight increase over December 31, 1998 when nonaccrual loans stood at
$5,644,000 or 3.1% of total loans. Nonaccrual loans at December 31, 1999,
remained below the $7,585,000 or 4.5% level sustained at December 31, 1997.

The Company's nonaccrual loans as of December 31, 1999 included four
agricultural relationships aggregating $5,699,787 or 93.2%, one commercial
relationship for $135,177 or 2.2%, and cumulative leases of $71,920 or 1.2% of
total nonaccrual loans. Two of the agricultural relationships comprise
$5,284,215 or 86.4% of the total nonaccrual loans. The largest agricultural
nonaccrual loan represents $2,788,036 or 45.6% of total nonaccrual loans. This
borrower was significantly impacted by adverse weather during the 1998 year. The
borrower has completed the 1999 operating year and has significantly reduced the
balance and is voluntarily liquidating real property collateral to repay this
debt. The Company is adequately supported by tangible real property collateral
supported by appraisal. The second largest nonaccrual agricultural loan
comprises $2,496,179 or 40.8% of total nonaccrual loans. This borrower is
currently in bankruptcy and now has a restructure plan confirmed by the
bankruptcy court. The Company has previously charged this relationship down to a
level that is adequately supported by appraised real property collateral. This
borrower has now made two consecutive years, 1998 and 1999, of required payments
as agreed.

The Company's nonaccrual assets as of December 31, 1998 included twelve loan
relationships and thirteen leases. Seventy percent of these nonaccrual loans
were concentrated in two credit relationships. The largest nonaccrual loan was
an agricultural loan. Nonaccrual loans to this borrower comprised 46.0% of the
Company's total nonaccrual loans as of December 31, 1998. The Company completed
a loan restructuring with this debtor that created a plan for orderly debt
repayment over a period of years. Twenty-three percent of the Company's
nonaccrual loans were extended to a real estate developer. The restructuring
plan with this debtor failed and the Company has foreclosed on the collateral.
The Company acquired this real property during 1999 and is in the process of
liquidating the collateral. Both of these large nonaccrual loans have been
partially charged down to a level below the value of the loan collateral.

The Company's nonaccrual assets at December 31, 1997 included twelve loan
relationships and ten leases. Ninety-two percent of these nonaccrual loans were
concentrated in five credit relationships. The largest nonaccrual loan
relationship was an agricultural loan and the second largest was a loan to a
real estate developer. Nineteen percent of the Company's December 31, 1997
nonaccrual loans existed in a loan to a livestock producer. This loan was not on
the Company's books at December 31, 1998. The remaining balance of the December
31, 1997, nonaccrual loans were distributed among a number of smaller loans and
leases. These loans were either in the process of collection or in the process
of being restructured.

Loans on accrual status that were past due 90 days or more as to the principal
and interest decreased to zero at December 31, 1999 compared to $854,000 at
December 31, 1998. Due to the implementation of the Company's automatic
nonaccrual policy when a loan's interest or principal is over 90 days past due,
there were no loans that were in accrual status that fit this criteria at
December 31, 1999. Loans that met these criteria as of December 31, 1997 totaled
$328,000. Although the automatic nonaccrual policy was implemented during 1998,
the increase experienced between 1997 and 1998 was due to one large loan being
modified at the end of the 1998-year. The modification was concluded in January
1999 and the loan was removed from nonaccrual status.

INVESTMENTS

In 1999, the Company's investment portfolio was $86,998,504 or 29.0% of total
assets, an increase from $60,639,334 or 20.6% of total assets in 1998, and
$57,198,043 or 19.6% of total assets in 1997. At December 31, 1999, 1998 and
1997, federal funds sold were $22,000,000, $12,100,000 and $35,600,000,
respectively. Federal funds sold are overnight deposits with other banks. In
1999 and 1998, the increase in investment securities was due in part to the
transfer of funds from overnight federal funds sold to longer term investments
that yield a higher return. Also the increase was due to deposits growing at a
faster pace than loans and the reduction of loan volume due to stricter credit
standards.

Under Statement of Financial Accounting Standard No. 115 ("SFAS 115"),
investments of a bank in debt and equity securities must be classified in three
different categories: "trading," "available-for-sale," and "held-to-maturity,"
and there are different accounting methods for each category. The Company has
classified all of its investment securities as either "available-for-sale" or
"held-to-maturity."

SFAS 115 requires that any unrealized gain or loss of the "available-for-sale"
category be reported as an adjustment to the Company's shareholders' equity,
even though this gain or loss would only be realized if the investment were
actually sold. If the investment is in the "held-to-maturity" category, no
unrealized gains or losses need be reported.

The following table summarizes the distribution of the Company's investment
securities as of December 31, 1999 and 1998.


                                                                              15
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
INVESTMENTS
                                                                              GROSS             GROSS
                                                         AMORTIZED         UNREALIZED        UNREALIZED            FAIR
                                                           COST               GAINS            LOSSES              VALUE
                                                       -----------        -----------       ------------       -----------
<S>                                                   <C>                 <C>              <C>                <C>
DECEMBER 31, 1999
Available-for-Sale:
  Obligations of U.S. Government Agencies              $52,990,659         $       --       $(1,673,846)       $51,316,813
  Mortgage-Backed Securities                            12,578,147              1,676           (53,110)        12,526,713
  Equity Securities                                      6,976,325                 --                --          6,976,325
--------------------------------------------------------------------------------------------------------------------------
                                                       $72,545,131         $    1,676       $(1,726,956)       $70,819,851
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Held-to-Maturity:
  Obligations of States and Political Subdivisions      $3,606,928         $    1,894     $     (27,063)      $  3,581,759
  Debt and Other Securities                             12,571,725               517            (55,754)        12,516,488
--------------------------------------------------------------------------------------------------------------------------
                                                       $16,178,653         $    2,411     $     (82,817)       $16,098,247
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------

DECEMBER 31, 1998
Available-for-Sale:
  Obligations of U.S. Government Agencies              $33,978,884          $  99,533     $     (56,399)       $34,022,018
  Mortgage-Backed Securities                            10,557,206             22,972            (4,416)        10,575,762
  Equity Securities                                      6,935,525                 --                --          6,935,525
--------------------------------------------------------------------------------------------------------------------------
                                                       $51,471,615           $122,505     $     (60,815)       $51,533,305
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Held-to-Maturity:
  U.S. Treasury Securities                            $    301,007         $    2,181    $           --       $    303,188
  Obligations of States and Political Subdivisions       4,062,556             41,186              (900)         4,102,842
  Corporate Obligations and Other Securities             4,742,466             59,380            (5,096)         4,796,750
--------------------------------------------------------------------------------------------------------------------------
                                                      $  9,106,029           $102,747    $       (5,996)       $ 9,202,780
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
</TABLE>

As of December 31, 1999, the Company's "available-for-sale" category adjustment
reflected a net unrealized loss of $948,904 net of taxes, and the approximate
market value of the Company's total investment portfolio was $86,998,504,
reflecting an unrealized loss of $1,805,686.

As of December 31, 1998, the Company's "available-for-sale" category adjustment
reflected a net unrealized gain of $33,930 net of taxes, and the approximate
market value of the Company's total investment portfolio was $60,639,334,
reflecting an unrealized gain of $158,441.

The Company had investment securities pledged as collateral for certain
deposits, typically deposits of government entities and for the Bank's seasonal
borrowing line of $33,224,728 and $18,765,780 at December 31, 1999 and 1998,
respectively.

OTHER ASSETS

During 1999, the Company recognized an increase in total other assets. These
assets consist primarily of premises and equipment, interest receivable, other
real estate owned ("OREO"), cash surrender value of life insurance policies
associated with certain executive officers and directors of the Company, taxes
and to a smaller extent other miscellaneous assets.

Total other assets of continuing operations increased $4,370,210 to $20,924,336
at December 31, 1999 compared to $16,554,126 in 1998. The two major components
of this increase were cash surrender value of insurance policies and OREO.

Cash surrender value of insurance policies stood at $4,648,123 and $2,315,705 at
December 31, 1999 and 1998, respectively. The additional $2,332,418 in cash
surrender value of insurance policies was associated with the addition of
policies for the Company's new CEO and for a director of the Company. These
policies have appreciated over the period from December 31, 1998 to 1999.

The other factor associated with the growth in total other assets, was an
increase in OREO. OREO consists of properties acquired by the Bank through
foreclosure and is carried at the lower of cost or fair value, less estimated
costs to sell. At the time the property is acquired, if the estimated fair value
is less than the amount outstanding on the loan, the difference is charged
against the Allowance for loan and lease losses. Subsequent declines, if any, in
estimated fair value are charged to expense. OREO increased $1,198,623 from the
December 31, 1998 balance of $101,014 to $1,299,637 at December 31, 1999. This
increase was attributable to four properties that were foreclosed on and brought
into OREO for liquidation. Three of the properties acquired were building lots
from a real estate development loan and comprise 70.0% of the OREO. The
remaining property is a commercial building lot that was provided as additional
collateral on a commercial credit arrangement. Values of OREO properties have
been discounted for liquidation costs. Liquidation of all properties currently
held in OREO is anticipated prior to the 2000 calendar year end.


16
<PAGE>

DEPOSITS

Total deposits at December 31, 1999, 1998 and 1997 were $273,459,118,
$268,441,893 and $266,930,858, respectively. These figures represent an increase
of $5,017,225 or 1.9% during 1999, and $1,511,035 or 0.6% in 1998 over 1997.
Average total deposits were $264,379,566 in 1999, $253,933,569 in 1998, and
$247,278,369 in 1997.

The Company has been able to attract and retain deposits by providing interest
rates on deposits competitive with other financial institutions in its market
area. Total deposits consist of interest and noninterest-bearing deposits. The
mix of deposits consists of 22.1% noninterest bearing and 77.9%
interest-bearing. The mix of interest-bearing deposits consists of 46.1% in time
certificates of deposit, 34.6% interest checking and 19.3% in savings and money
market accounts. Average time certificates of deposit, the largest portion of
interest bearing deposit accounts, increased to $97,162,885 in 1999, from
$94,129,266 in 1998, and $93,321,953 in 1997, representing an increase of 3.2%
in 1999 over 1998 and 0.9% in 1998 over 1997.

The remaining maturities of the Company's certificates of deposit, including
public time deposits, as of December 31, 1999 and 1998, are indicated in the
following table. Interest expense on these certificates of deposit totaled
$4,917,252 in 1999 and $5,176,285 in 1998.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
MATURITY OF TIME CERTIFICATES OF DEPOSITS
                                                            DECEMBER 31, 1999                     DECEMBER 31, 1998
                                                   ----------------------------------   ----------------------------------
                                                 $100,000 AND OVER     UNDER $100,000  $100,000 AND OVER    UNDER $100,000
                                                    --------------       ------------    ---------------     -------------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                                        <C>                <C>                <C>               <C>
Three Months or Less                                       $16,523            $18,945            $15,604           $24,085
Over Three Months Through Twelve Months                     19,121             27,895             14,473            24,529
Over One Year Through Three Years                            5,933              4,919              8,131             3,182
Over Three Years                                             3,279              1,564              4,332             2,489
--------------------------------------------------------------------------------------------------------------------------
Total                                                      $44,856            $53,323            $42,540           $54,285
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
</TABLE>

OTHER LIABILITIES

Total other liabilities of continuing operations for the Company increased to
$3,554,363 at December 31, 1999 from $2,632,168 in 1998. Total other liabilities
consist of interest payable on interest-bearing liabilities, the Bank's accrued
compensation payable and other miscellaneous liabilities. The increase of
$922,195 or 35.0% in total other liabilities was primarily the result of
treasury tax and loan payments received from the customers of the Bank. The
Bank's customers present these payments to the Bank who in turn forwards the
funds, on scheduled dates, to the U.S. Treasury. These tax payments increased
133.4% or $538,218 due a substantial growth in the number of customers who make
these types of payments through the Bank.

NONINTEREST INCOME

Noninterest income from continuing operations for 1999 was $2,564,447, a
decrease of 25.8% over 1998, which stood at $3,454,179. Noninterest income in
1998 was 9.9% greater than the 1997 amount of $3,142,139. The table below sets
forth the components of noninterest income for the years indicated:

<TABLE>
----------------------------------------------------------------------------------------------
NONINTEREST INCOME
                                                   1999              1998               1997
                                                 -------           --------            ------
                                                            (DOLLARS IN THOUSANDS)
<S>                                             <C>                <C>                 <C>
Service Charges on Deposit Accounts             $   971            $   918             $1,009
Brokered Loan Fees                                  235               1,252             1,028
Other                                              1,358              1,284             1,105
---------------------------------------------------------------------------------------------
Total                                             $2,564             $3,454            $3,142
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------
</TABLE>

Service charges and fees on deposit accounts, one of the primary components of
noninterest income, increased in 1999 to $970,908 or 5.7% over the 1998 amount
of $918,118. This rise was primarily the result of the Bank's decision to
increase its overdraft fees in keeping with those of other financial
institutions in its markets.

Brokered loan fees, another primary source of noninterest income, were $235,768
in 1999. This represents a decrease of $1,016,298 over 1998 which stood at
$1,252,066. The 1998 brokered loan fee income represented an increase of 21.7%
over 1997. The reduction in brokered loan fee income in 1999 can in part be
traced to the Company's decision during


                                                                              17
<PAGE>

the first half of 1999 to hold selected real estate loans in its portfolio
instead of selling those loans into secondary markets. The intent of this
strategy was to diversify the Company's loan portfolio and benefit from the
long-term, higher yielding interest income stream created by the real estate
loans, instead of the one-time brokerage fee earned from the loans' sale.

In addition to the implementation of the strategy, income generated from
brokered loan fees has been adversely impacted by the closing of two of the
Company's real estate loan production offices, the reduction in its real estate
lending staff, and a general slowing in the home refinance market which has
accompanied the increase in market interest rates.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
                                                  1999              1998               1997
                                                  ----              ----               ----
                                                           (DOLLARS IN THOUSANDS)
<S>                                            <C>              <C>                 <C>
Salaries and Benefits                          $ 6,835          $   6,818           $ 6,433
Occupancy                                          746                748               671
Furniture and Equipment                          1,339              1,394             1,264
Other                                            4,890              3,890             3,532
-------------------------------------------------------------------------------------------
Total                                          $13,810            $12,850           $11,900
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------
</TABLE>


Noninterest expense from continuing operations increased in 1999 to $13,810,491
or by 7.5% over 1998 results which stood at $12,850,678. The 1998 results
reflected an increase of 8.0% over 1997 totals of $11,900,255. Salaries and
employee benefits were $6,834,859 in 1999, $6,817,870 in 1998 and $6,432,910 in
1997 representing increases of 0.2% and 6.0% in 1999 and 1998 over their
respective preceding year.

During 1998, and continuing into 1999, the Company attempted to centralize
services and create additional personnel efficiencies to reduce the growth in
staffing expense. The higher interest rates experienced in 1999 severely
curtailed mortgage loan demand. As a result, the Company completely restructured
its residential real estate lending department during the fourth quarter of 1999
to appropriately reflect the current residential mortgage loan demand.
Specifically, the Bank's loan production offices located in Madera and Chico,
California, were closed and staffing in the Bank's Real Estate Department was
reduced by half. Real estate lending operations conducted from these loan
production offices were consolidated into the Bank's Yuba City Real Estate
Department and its Citrus Heights loan production office. The substantial
savings that resulted from this consolidation were offset partially by the
continued restructuring and strengthening of the Bank's loan administration.

Loan administration is considered a critical part of lending operations as this
unit is charged with management and oversight of the loan portfolio. The
restructuring of this unit has involved reassigning certain loan management
duties among existing staff members and hiring additional staff. The Bank has
hired a new chief executive officer and an additional senior loan administrator
with a strong credit background. The Bank also restructured its salaries to a
level competitive with other banks in its operating areas.

The increase of $384,960 in salaries and employee benefits in 1998 over 1997 was
due to commissions paid to the Bank's mortgage lending staff. The Bank
recognized a substantial volume increase in real estate mortgage refinancing
which in turn increased income to the Bank and resulted in an increase in the
commissions being paid.

Other noninterest expenses were $4,890,195 in 1999 a substantial increase of
25.7% over 1998's noninterest expenses of $3,890,304. These same expenses
amounted to $3,532,094 in 1997. While the Company has attempted to recognize
operating efficiencies and control operating expenses, it incurred expenses
related to the Year 2000 issues, its 1989 Stock Option Plan, and the retention
of a new president and chief executive officer for the Company and Bank. In
preparing for the transition into the Year 2000, the Company took precautionary
measures to ensure it was technologically sound.

To maintain its commitment to its Year 2000 readiness program, the Company
expensed $482,860 in 1999 as compared to $302,000 in 1998.

Another significant increase to noninterest expense in 1999 includes an increase
of $294,000 attributed to expenses incurred under the Company's 1989 Stock
Option Plan. This increase was due to the exercise of options expiring in 1999.
The 1989 Stock Option Plan allows for gross-up bonuses associated with the tax
expense incurred by directors and officers when an option is exercised.

Additionally, the Company has incurred expenses of approximately $577,000, which
are primarily associated with the hiring of the new president and chief
executive officer along with a severance and consulting agreement entered into
with the former president and chief executive officer of the


18
<PAGE>

Bank and Company. The entire amount of the contract was expensed in 1999 with
equal monthly payments beginning July 1999 and continuing through June 2000.
Other contributors were expenses associated with efforts to improve the quality
of the loan portfolio and consulting fees associated with the streamlining of
operational processes handled by the Bank.

Another component of other noninterest expense is attorney fees. These fees
decreased substantially in 1999 to $377,000 or 52.6% over the 1998 expense of
$795,000. The 1998 expense reflected an increase of 133.1% over 1997's total of
$340,000. The substantial decrease in 1999 over 1998 was associated with
continued progress towards the resolution and collection of problem loans and
leases. The increase in attorney fees during 1998 was attributed to the
escalated legal expenses associated with the collection and resolution of
nonperforming loans.

INCOME TAXES

The provision (benefit) for income taxes from continuing operations was $865,000
in 1999, $1,603,600 in 1998 and ($511,350) in 1997. The Company's effective tax
rate was 35.2%, 37.1% and (62.9%) for 1999, 1998 and 1997, respectively.

INTEREST RATE SENSITIVITY

Interest rate sensitivity is the relationship between market interest rates and
net interest income due to the repricing characteristics of assets and
liabilities. As interest rates change, interest income and expense also change
thereby changing net interest income ("NII"). NII is the primary component of
the Company's earnings. 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 net income. 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
net interest income.

The following table depicts the Company's interest rate sensitivity position as
of December 31, 1999.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
INTEREST RATE SENSITIVITY AS OF DECEMBER 31, 1999
                                                                         REPRICING OPPORTUNITY
                                   ----------------------------------------------------------------------------------
                                                      OVER THREE
                                         THREE           MONTHS
                                        MONTHS           THROUGH         1 YEAR-          OVER
                                        OR LESS         12 MONTHS        3 YEARS         3 YEARS            TOTAL
                                      ----------     -------------     -----------     -----------        ---------
                                                                (DOLLARS IN THOUSANDS)
INTEREST-EARNING ASSESTS:
<S>                                   <C>              <C>             <C>              <C>                <C>
Federal Funds Sold                    $  22,000        $      -        $      -         $        -         $ 22,000
Loans                                    81,551           9,941          12,739             57,090           161,321
Investments                              11,257           6,459           3,901             65,382           86,999
---------------------------------------------------------------------------------------------------------------------
  Total Interest-Earning Assets        $114,808        $ 16,400        $ 16,640           $122,472         $270,320
---------------------------------------------------------------------------------------------------------------------

INTEREST-BEARING LIABILITIES:
Interest Bearing Demand               $  65,467        $      -        $      -         $        -         $ 65,467
Savings and Money Market Deposits        49,330               -               -                  -           49,330
Time Certificates                        35,468          47,016          10,852              4,843           98,179
---------------------------------------------------------------------------------------------------------------------
  Total Interest-Bearing Liabilities   $150,265         $47,016        $ 10,852         $    4,843         $212,976
Gap                                     (35,457)        (30,616)          5,788            117,629           57,344
---------------------------------------------------------------------------------------------------------------------
Cumulative Gap                         $(35,457)       $(66,073)       $(60,285)        $  (57,344)
---------------------------------------------------------------------------------------------------------------------
</TABLE>


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 statement of condition 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 committee to measure and manage
interest rate exposure is a simulation model. Use of the model to perform
simulations reflecting changes in interest rates over one and two-year time
horizons has enabled management to develop and initiate strategies for managing
exposure to interest rate risks. The committee believes that both individually
and in the aggregate these assumptions are reasonable, but the complexity of the
simulation modeling process results in a sophisticated estimate, not an
absolutely precise calculation of exposure.

MARKET RISK

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


                                                                              19
<PAGE>

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

INTEREST RATE RISK

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

The simulation model captures the impact of changing interest rates on the
interest income received and interest expense paid on all assets and liabilities
reflected on the Company's balance sheet as well as for off balance sheet
financial instruments. This sensitivity analysis is compared to ALCO policy
limits which specify a maximum tolerance level for NII exposure over a one year
horizon, assuming no balance sheet growth, given both a 200 basis point ("bp")
upward and downward shift in interest rates. A parallel and pro rata shift in
rates over a 12-month period is assumed. The following reflects the Company's
NII sensitivity analysis as of December 31, 1999 as compared to the Bank's
policy to limit the one-year NII. The NII shall not exceed 10% of annual
projected or annualized NII when using a 200 bp shock over a one-year horizon.
Also, when expressing the gap ratio as a percentage risk to net interest margin,
it shall not exceed a 10% variance from the projected or annualized NII,
expressed as a percentage of average assets.

<TABLE>
<CAPTION>
-----------------------------------------------------------
(Dollars in thousands)      -200bp      Base      +200bp

                         ----------- ---------   ----------
<S>                       <C>        <C>         <C>
Year 1 NII                $12,939    $13,371     $13,951

NII $ Change              $  (432)         -     $   580

NII % Change                -3.23%         -        4.34%
-----------------------------------------------------------
Policy Limit      10.00%
-----------------------------------------------------------
</TABLE>


The preceding sensitivity analysis does not represent a Company forecast and
should not be relied upon as being indicative of expected future operating
results. These hypothetical estimates are based upon 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/replacement of asset 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/refinancing levels likely 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/external variables. Furthermore, the sensitivity
analysis does not reflect actions that ALCO might take in responding to or
anticipating changes in interest rates.

LIQUIDITY

To maintain adequate liquidity requires that sufficient resources be available
at all times to meet cash flow requirements of the Company. 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 Company 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, available for sale
investments and potential loan sales as sources of asset liquidity. Deposit
growth and 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 two quarters of each year the Bank generally
experiences excess liquidity. The Bank's seasonal agricultural loan demand tends
to challenge the Bank's liquidity position beginning in the second quarter and
continuing into the third quarter of each year. The Bank's liquid assets consist
of cash and due from banks, federal funds sold and investment securities with
maturities of one year or less. The Company's liquid assets totaled $55,597,534
and $53,068,963 at December 31, 1999 and 1998, respectively. Liquid assets as a
percentage of total assets and were 18.5% and 18.0%, respectively as of those
dates. Liquidity is also affected by collateral requirements of its public
deposits and certain borrowings. Total pledged securities were $33,224,728 at
December 31, 1998 and $18,765,780 at December 31, 1997.

The Bank has formal and informal borrowing arrangements with the Federal Reserve
Bank to meet unforeseen deposit outflows or seasonal loan funding demands.
Additionally, the Bank has established a borrowing line with the Federal Home
Loan Bank. The Bank has also entered into an agreement with Lehman Brothers for
a standby short-term loan secured by U.S. Government and Agency Obligations in
the Bank's investment portfolio, in order to fund any liquidity needs not met by
other sources of funding as warranted by loan


20
<PAGE>

demand. As of December 31, 1999 and 1998, the Bank had no outstanding balances
under these agreements. At December 31, 1999, Management believes that the
Company maintains adequate amounts of liquid assets to meet its liquidity needs.

CAPITAL RESOURCES

The Company and the Bank are subject to requirements of the Federal Reserve
Board and FDIC, respectively, governing capital adequacy. These guidelines 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
which must be in Tier 1 Capital.

Federal regulatory agencies have also adopted a minimum leverage ratio of 4.0%,
which is intended to supplement the risk-based capital requirements and to
ensure that all financial institutions continue to maintain a minimum level of
core capital.

Total shareholders' equity on December 31, 1999, decreased by $566,133 to
$23,234,847 over December 31, 1998, total shareholders' equity of $23,800,980.
The decrease is attributed to the loss of $991,457 on the disposal and
discontinuance of EPI. As can be seen by the following table, the Company and
Bank exceeded all regulatory capital ratios on December 31, 1999.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
RISK BASED CAPITAL RATIO AS OF DECEMBER 31, 1999
                                                                     COMPANY                               BANK
                                                          ---------------------------           --------------------------
                                                           AMOUNT               RATIO            AMOUNT              RATIO
                                                          --------             ------           --------           -------
                                                                               (DOLLARS IN THOUSANDS)
<S>                                                   <C>                      <C>          <C>                     <C>
Tier 1 Capital                                        $  24,184                10.56%       $  24,058               10.51%
Tier 1 Capital Minimum Requirement                        9,158                 4.00%           9,153                4.00%
--------------------------------------------------------------------------------------------------------------------------
    Excess                                            $  15,026                 6.56%       $  14,905                6.51%
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Total Capital                                            27,046                11.81%          26,918               11.76%
Total Capital Minimum Requirement                        18,316                 8.00%          18,306                8.00%
--------------------------------------------------------------------------------------------------------------------------
    Excess                                            $   8,730                 3.81%      $    8,612                3.76%
-------------------------------------------------------------------------------------------------------------------------
Risk-Adjusted Assets                                   $228,955                              $228,828
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------

LEVERAGE CAPITAL RATIO

Tier 1 Capital to Quarterly Average Total Assets      $  24,184                 7.97%        $  24,058               7.94%
Minimum Leverage Requirement                             12,134                 4.00%          12,125                4.00%
--------------------------------------------------------------------------------------------------------------------------
    Excess                                            $  12,050                 3.97%       $  11,933                3.94%
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Total Quarterly Average Assets                         $303,345                              $303,133
                                                       --------                              --------
                                                       --------                              --------
--------------------------------------------------------------------------------------------------------------------------
</TABLE>


INFLATION

It is Management's opinion that the effects of inflation on the Company's
financial statements for the years ended December 31, 1999, 1998 and 1997 are
not material.

SUPERVISION AND REGULATION

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


                                                                              21
<PAGE>

Bank may conduct business and obtain financing. The laws and regulations to
which the Company and the Bank are subject can and do change significantly from
time to time, and such changes could materially affect the Company's business,
financial condition, and operating results.

As a result of the Company's and Bank's disappointing 1998 financial performance
and continued concerns regarding the quality of the Bank's loan portfolio, the
Bank's Board of Directors passed a resolution to remedy the concerns. The
resolution requires the Bank to: have Management acceptable to the FDIC and DFI;
continue with the diligent implementation of a previously adopted plan to reduce
the level of non-performing and problem loans, continue with the diligent
implementation of revised lending and collection policies and procedures; ensure
that the Bank maintains an adequate reserve for loan losses; and seek prior
approval of the FDIC and DFI before the payment of any cash dividends.

Additionally, the FDIC and Federal Reserve Board ("FRB") have notified the Bank
and Company that they have determined that the condition of the Bank and Company
are such that prior approval of the regulatory agencies is necessary before
adding or replacing any member of the boards of directors, employing any person
as a senior executive officer, or changing the responsibilities of any senior
executive officer so that the individual would be assuming a different senior
executive officer position. Finally, due to the Bank's condition, the FDIC is
also restricting the Company's and the Bank's ability to enter into any
contracts to pay or make any golden parachute and indemnification payments to
institution affiliated parties.

In March 2000, the FDIC and DFI completed an examination of the Bank. The final
results of this examination have not been reported to the Bank. Management
believes that the Bank will continue to operate under the resolution addressing
the issues described above, and that the Bank can comply with all regulatory
requirements without any material impact on its operations.

CHANGES IN SENIOR MANAGEMENT

To further strengthen senior management of the Bank and Company, Larry D.
Hartwig has been appointed, with appropriate regulatory approval, to the
positions of President andChief Executive Officer of the Company and Bank. Mr.
Hartwig brings to the Company and Bank more than thirty years of experience in
the banking industry, having most recently served as President and Chief
Executive Officer of SC Bancorp and its wholly-owned subsidiary, Southern
California Bank.

SEGMENT REPORTING

On January 1, 1998, the bank adopted the Statement of Financial Accounting
Standards No. 131 (SFAS 131), "Disclosures about Segments of an Enterprise and
Related Information". This statement establishes standards for reporting
enterprise segments of a company in the footnotes to the financial statements.
The Company has no segments that meet the requirements of a reportable segment
according to the guidelines set forth in SFAS 131.

YEAR 2000 COMPLIANCE

The "Year 2000 issue" has generally been described as the inability of computer
systems, software, and other equipment utilizing microprocessors to distinguish
the Year 1900 from the Year 2000. The Year 2000 issues posed significant risks
for all businesses, households, and governments and could have resulted in
system failures and miscalculations causing disruptions in normal business and
governmental operations if action were not taken to fix the problem before the
year 2000 arrived.

As a result of the Company's persistent commitment to its Year 2000 compliance
efforts, it was able to roll into the new millennium without interruption. The
Company will continue to manage its Year 2000 compliance efforts to assure
rollover of other key dates in the Year 2000. Additionally, the Bank continues
to carry reserves for loan and lease losses that could arise from its borrowers
due to Year 2000 issues.

Expenses associated with the Year 2000 compliance efforts amounted to
approximately $482,860 in 1999 and $302,000 in 1998.


22
<PAGE>

CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of California Independent Bancorp:

We have audited the accompanying consolidated balance sheets of CALIFORNIA
INDEPENDENT BANCORP (a California corporation) AND SUBSIDIARIES as of December
31, 1999 and 1998, and the related consolidated statements of operations,
changes in shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of California Independent Bancorp
and Subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.

/s/ Arthur Andersen LLP

Sacramento, California

February 11, 2000


                                                                              23
<PAGE>

CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                                                     1999              1998
                                                                 -------------      -----------
<S>                                                              <C>               <C>
ASSETS

Cash and Due From Banks                                          $  15,887,475     $  30,258,060
Federal Funds Sold                                                  22,000,000        12,100,000
------------------------------------------------------------------------------------------------
  Cash and Cash Equivalents                                      $  37,887,475     $  42,358,060

Investment Securities Held-to-Maturity                              16,178,653         9,106,029
Investment Securities Available-for-Sale                            70,819,851        51,533,305
------------------------------------------------------------------------------------------------
  Total Investments                                              $  86,998,504     $  60,639,334

Loans and Leases                                                   116,032,691       150,609,296
Loans and Leases Held-for-Sale                                      45,287,979        30,262,758
  Less: Allowance for Loan and Lease Losses                         (6,770,523)       (6,024,111)
------------------------------------------------------------------------------------------------
  Net Loans and Leases                                            $154,550,147      $174,847,943

Premises and Equipment, Net                                          7,342,659         7,757,900
Interest Receivable                                                  3,282,957         2,854,674
Other Real Estate Owned                                              1,299,637           101,014
Cash Surrender Value of Insurance Policies                           4,648,123         2,315,705
Deferred Taxes                                                       3,650,310         2,585,124
Other Assets                                                           324,738           745,035
Income Tax Receivable                                                  375,912           194,674
Net Assets From Discontinued Operations                                      -           475,578
------------------------------------------------------------------------------------------------
  Total Assets                                                    $300,360,462      $294,875,041
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
 Noninterest-Bearing                                             $  60,483,798     $  65,641,478
 Interest-Bearing                                                  212,975,320       202,800,415
------------------------------------------------------------------------------------------------
  Total Deposits                                                  $273,459,118      $268,441,893

Interest Payable                                                     1,533,539         1,622,659
Accrued Compensation Payable                                           343,346           227,465
Other Liabilities                                                    1,677,478           782,044
Net Liabilities From Discontinued Operations                           112,134                 -
------------------------------------------------------------------------------------------------
  Total Liabilities                                               $277,125,615      $271,074,061
------------------------------------------------------------------------------------------------

COMMITMENTS AND CONTINGENCIES
Shareholders' Equity:

  Common Stock, No Par Value- Shares Authorized --
   20,000,000, Shares Issued and Outstanding --
   1,904,618 in 1999 and 1,744,580 in 1998                       $  17,950,525     $  15,612,227
  Retained Earnings                                                  6,233,226         8,194,823
  Debt Guarantee of ESOP                                                     -           (40,000)
  Accumulated Other Comprehensive Income (Loss)                       (948,904)           33,930
------------------------------------------------------------------------------------------------
   Total Shareholders' Equity                                    $  23,234,847     $  23,800,980
------------------------------------------------------------------------------------------------
   Total Liabilities and Shareholders' Equity                     $300,360,462      $294,875,041
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED STATEMENTS.


24
<PAGE>

CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                              1999                 1998               1997
                                                                          ------------        -------------        ------------
<S>                                                                       <C>                  <C>                 <C>
INTEREST INCOME

Interest and Fees on Loans and Leases                                     $ 18,624,289         $ 20,752,673        $ 19,225,132
Interest on Investments:
 Taxable Interest Income                                                     3,900,332            3,219,517           2,313,613
 Nontaxable Interest Income                                                    161,764              291,112             274,620
Interest on Federal Funds Sold                                                 593,197              536,411           1,573,312
-------------------------------------------------------------------------------------------------------------------------------
  Total Interest Income                                                     23,279,582           24,799,713          23,386,677
-------------------------------------------------------------------------------------------------------------------------------

INTEREST EXPENSE

Interest on Deposits                                                         8,390,638            8,401,804           9,264,853
Interest on Other Borrowings                                                   182,745              428,970              23,841
-------------------------------------------------------------------------------------------------------------------------------
  Total Interest Expense                                                     8,573,383            8,830,774           9,288,694
-------------------------------------------------------------------------------------------------------------------------------
  Net Interest Income                                                       14,706,199           15,968,939          14,097,983

PROVISION FOR LOAN AND LEASE LOSSES                                          1,000,000            2,246,145           6,153,000
-------------------------------------------------------------------------------------------------------------------------------
  Net Interest Income After Provision for Loan Losses                       13,706,199           13,722,794           7,944,983
-------------------------------------------------------------------------------------------------------------------------------

NONINTEREST INCOME

Service Charges on Deposit Accounts                                            970,908              918,118           1,008,691
Brokered Loan Fees                                                             235,768            1,252,066           1,028,550
Other                                                                        1,357,771            1,283,995           1,104,898
-------------------------------------------------------------------------------------------------------------------------------
  Total Noninterest Income                                                   2,564,447            3,454,179           3,142,139
-------------------------------------------------------------------------------------------------------------------------------

NONINTEREST EXPENSE

Salaries and Employee Benefits                                               6,834,859            6,817,870           6,432,910
Occupancy Expense                                                              746,046              748,445             671,000
Furniture and Equipment Expense                                              1,339,391            1,394,059           1,264,251
Other                                                                        4,890,195            3,890,304           3,532,094
-------------------------------------------------------------------------------------------------------------------------------
  Total Noninterest Expense                                                 13,810,491           12,850,678          11,900,255
-------------------------------------------------------------------------------------------------------------------------------
  Income (Loss) Before Provision (Benefit) for Income Taxes                  2,460,155            4,326,295            (813,133)

PROVISION (BENEFIT) FOR INCOME TAXES                                           865,000            1,603,600            (511,350)
-------------------------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS) FROM CONTINUING OPERATIONS                                 1,595,155            2,722,695            (301,783)
Loss on Disposal of Subsidiary (Net of Income Tax Benefit
  of $499,094, $0, $0)                                                        (713,772)                   -                   -
Income (Loss) on Discontinued Operations (Net of
  Income Tax Benefit (Provision) of $185,225, ($110,700), ($98,450))          (277,685)             157,781             140,353
-------------------------------------------------------------------------------------------------------------------------------

  NET INCOME (LOSS)                                                       $    603,698         $  2,880,476        $   (161,430)
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------

PER SHARE AMOUNTS

 Basic Earnings (Loss) Per Share From Continuing Operations               $       0.88         $       1.54        $      (0.17)
-------------------------------------------------------------------------------------------------------------------------------
 Diluted Earnings (Loss) Per Share From Continuing Operations                     0.87                 1.46               (0.17)
-------------------------------------------------------------------------------------------------------------------------------
 Basic Earnings (Loss) Per Share After Disposal and
  Discontinuance of Subsidiary                                                    0.33                 1.63               (0.09)
-------------------------------------------------------------------------------------------------------------------------------
 Diluted Earnings (Loss) Per Share After Disposal and
  Discontinuance of Subsidiary                                                    0.33                 1.55               (0.09)
-------------------------------------------------------------------------------------------------------------------------------
 Cash Dividends Per Common Share                                                  0.42                 0.40                0.38
-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED STATEMENTS.


                                                                              25
<PAGE>

CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                         ACCUMULATED
                                                     COMMON STOCK                             DEBT         OTHER
                                                -------------------------     RETAINED      GUARANTEE   COMPREHENSIVE
                                                 SHARES          AMOUNT       EARNINGS       OF ESOP    INCOME (LOSS)      TOTAL
                                                ---------     -----------    -----------    ----------  -------------   ------------
<S>                                             <C>          <C>             <C>            <C>          <C>           <C>
BALANCE DECEMBER 31, 1996                       1,546,032    $ 11,138,650    $11,031,155    $(120,000)   $  (17,816)   $ 22,031,989
Comprehensive Income:
  Net Loss From Continuing Operations                   -               -       (301,783)           -             -        (301,783)
  Net Income From Discontinued Operations               -               -        140,353            -             -         140,353
  Other Comprehensive Income, Net of Tax:
    Net Unrealized Investment Gains                     -               -              -            -             -          62,864
    Less: Reclassification Adjustments for
      Gains (Losses) Included in Net Income             -               -              -            -             -         (46,250)
                                                                                                                       ------------
  Other Comprehensive Income, Net of Tax:               -               -              -            -        16,614          16,614
                                                                                                                       ------------
Comprehensive Income (Loss)                             -               -              -            -             -        (144,816)
                                                                                                                       ------------
                                                                                                                       ------------
5% Stock Dividend With Cash Paid
  in Lieu of Fractional Shares                     77,304       2,203,164     (2,218,649)           -             -         (15,485)
Reduction of ESOP Debt                                  -               -              -       40,000             -          40,000
Options Exercised                                  29,857          41,175              -            -             -          41,175
Shares Surrendered From Exercise of Options        (2,062)        (57,957)             -            -             -         (57,957)
Tax Benefit Arising From Exercise of
  Nonqualified Stock Options and
  Disqualifying Dispositions                            -         312,847              -            -             -         312,847
Cash Dividends                                          -               -       (691,630)           -             -        (691,630)

-----------------------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1997                       1,651,131    $ 13,637,879    $ 7,959,446    $ (80,000)   $   (1,202)   $ 21,516,123
Comprehensive Income:
  Net Income From Continuing Operations                 -               -      2,722,695            -             -       2,722,695
  Net Income From Discontinued Operations               -               -        157,781            -             -         157,781
  Other Comprehensive Income, Net of Tax:
    Net Unrealized Investment Gains                     -               -              -            -             -          35,132
    Less: Reclassification Adjustments
      for Gains (Losses) Included in Net Income         -               -              -            -             -               -
                                                                                                                       ------------
  Other Comprehensive Income, Net of Tax:               -               -              -            -        35,132          35,132
                                                                                                                       ------------
Comprehensive Income                                    -               -              -            -             -       2,915,608
                                                                                                                       ------------
                                                                                                                       ------------
5% Stock Dividend With Cash Paid
  in Lieu of Fractional Shares                     82,433       1,895,959     (1,908,005)           -             -         (12,046)
Reduction of ESOP Debt                                  -               -              -       40,000             -          40,000
Options Exercised                                  20,190          55,837              -            -             -          55,837
Shares Surrendered From Exercise of Options        (9,174)       (121,307)             -            -             -        (121,307)
Tax Benefit Arising From Exercise of
  Nonqualified Stock Options and
  Disqualifying Dispositions                            -         143,859              -            -             -         143,859
Cash Dividends                                          -               -       (737,094)           -             -        (737,094)

-----------------------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1998                       1,744,580    $ 15,612,227    $ 8,194,823    $ (40,000)   $   33,930    $ 23,800,980
Comprehensive Income:
  Net Income From Continuing Operations                 -               -      1,595,155            -             -       1,595,155
  Loss on Discontinued Operations                       -               -       (277,685)           -             -        (277,685)
  Loss on Disposal of Discontinued Operation            -               -       (713,772)           -             -        (713,772)
  Other Comprehensive Loss, Net of Tax:
    Net Unrealized Investment Losses                    -               -              -            -             -        (982,834)
    Less: Reclassification
     Adjustments for (Losses)
      Included in Net Income                            -               -              -            -             -               -
                                                                                                                       ------------
  Other Comprehensive Loss, Net of Tax:                 -               -              -            -      (982,834)       (982,834)
                                                                                                                       ------------
Comprehensive Income                                    -               -              -            -             -        (379,136)
                                                                                                                       ------------
                                                                                                                       ------------
5% Stock Dividend With Cash Paid
  in Lieu of Fractional Shares                     90,084       1,756,638     (1,766,084)           -             -          (9,446)
Reduction of ESOP Debt                                  -               -              -       40,000             -          40,000
Options Exercised                                 132,482         117,755              -            -             -         117,755
Shares Surrendered From Exercise of Options       (62,528)       (163,580)             -            -             -        (163,580)
Tax Benefit Arising From Exercise
  of Nonqualified Stock Options
  and Disqualifying Dispositions                        -         627,485              -            -             -         627,485
Cash Dividends                                          -               -       (799,211)           -             -        (799,211)

-----------------------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1999                       1,904,618    $ 17,950,525    $ 6,233,226    $       -    $ (948,904)   $ 23,234,847
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED STATEMENTS.


26
<PAGE>

CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                             1999               1998                1997
                                                                         ------------       -------------       ------------
<S>                                                                      <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net Income (Loss)                                                        $    603,698       $  2,880,476       $   (161,430)
Adjustments to Reconcile Net Income to Net Cash
 Provided by Operating Activities:
  Depreciation and Amortization                                             1,055,667          1,132,251            951,209
  Provision for Losses on Other Real Estate Owned                               3,800             54,153             80,389
  Provision for Loan and Lease Losses                                       1,000,000          2,246,145          6,153,000
  Provision for Deferred Taxes                                             (1,065,186)            20,330         (1,067,925)
  Investment Security Losses, Net                                             440,634                  -            (46,250)
  Purchase of Loans and Leases Held-for-Sale                              (16,171,844)       (26,920,053)       (28,445,574)
  Proceeds From Loan and Lease Sales                                       21,968,279         65,795,347         66,953,000
  (Gain) Loss on Sale of Real Estate Properties, Net                                -                  -            (11,363)
  Loss on Disposal of Discontinued Operations                                 713,772                  -                  -
(Increase) Decrease in Assets:
  Interest Receivable                                                        (428,283)          (183,741)          (457,850)
  Deferred Taxes                                                             (361,754)          (608,994)           504,438
  Cash Surrender Value of Insurance Policies                               (2,332,418)          (103,532)          (632,144)
  Income Tax Receivable                                                      (181,238)          (185,676)          (380,350)
  Net Assets From Discontinued Operations                                           -           (157,781)          (140,352)
  Other Assets                                                                782,051          1,060,880          1,274,814
Increase (Decrease) in Liabilities:
  Interest Payable                                                            (89,120)          (191,538)           408,166
  Accrued Compensation Payable                                                115,881            227,465           (170,127)
  Net Liabilities From Discontinued Operations                               (126,060)                 -                  -
  Other Liabilities                                                           935,434           (426,200)            48,545
----------------------------------------------------------------------------------------------------------------------------
    Net Cash Provided by Operating Activities                            $  6,863,313       $ 45,010,884       $ 44,860,196

CASH FLOWS FROM INVESTING ACTIVITIES

Net Decrease in Loans                                                      20,803,511          3,368,551          7,363,029
Origination of Loans Held-for-Sale                                         (8,807,109)       (57,512,441)       (67,234,000)
Purchase of Securities Held-to-Maturity                                    (9,226,784)        (4,994,679)       (15,440,977)
Purchase of Securities Available-for-Sale                                 (47,981,149)       (39,119,032)       (30,986,075)
Proceeds From Maturity of Securities Held-to-Maturity                       2,174,299         14,993,880         19,538,000
Proceeds From Sales and Maturities of Securities Available-for-Sale        27,250,996         25,713,672          4,417,506
Proceeds From Sales of Other Real Estate Owned                                302,536            968,692            239,569
Purchases of Premises and Equipment                                          (640,426)          (785,331)        (1,712,361)
----------------------------------------------------------------------------------------------------------------------------
    Net Cash Used for Investing Activities                               $(16,124,126)      $(57,366,688)      $(83,815,309)

CASH FLOWS FROM FINANCING ACTIVITIES

Net Increase (Decrease) in Noninterest-Bearing Deposits                    (5,157,680)         4,064,072          6,655,176
Net Increase (Decrease) in Interest-Bearing Deposits                       10,174,905         (1,906,093)        21,931,470
Cash Dividends                                                               (799,211)          (737,094)          (691,630)
Stock Options Exercised                                                       581,660             78,389            296,065
Cash Paid in Lieu of Fractional Shares                                         (9,446)           (12,046)           (15,485)
----------------------------------------------------------------------------------------------------------------------------
    Net Cash Provided by Financing Activities                            $  4,790,228       $  1,487,228       $ 28,175,596
----------------------------------------------------------------------------------------------------------------------------
    Net Decrease in Cash and Cash Equivalents                            $ (4,470,585)      $(10,868,576)      $(10,779,517)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                             $ 42,358,060       $ 53,226,636       $ 64,006,153
CASH AND CASH EQUIVALENTS, END OF YEAR                                   $ 37,887,475       $ 42,358,060       $ 53,226,636

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest                                                                 $  8,662,503       $  9,480,232       $  8,969,709
Income Taxes                                                                  477,434          1,740,000            988,234
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED STATEMENTS.
                                                          CONTINUED ON NEXT PAGE


                                                                              27
<PAGE>

CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                              1999                1998               1997
                                                                          ------------       -------------      ------------
<S>                                                                      <C>                <C>               <C>
SUPPLEMENTAL DISCLOSURES OF
NONCASH INVESTING AND FINANCING ACTIVITIES

Debt Guarantee of ESOP                                                   $    (40,000)      $    (40,000)     $    (40,000)
Net Unrealized Gain (Loss) on Securities Held as
  Available-for-Sale (Net of Taxes)                                          (982,834)            35,132            16,614
Tax Benefit Arising From Exercise of Nonqualified Stock
   Options and Disqualifying Dispositions                                     627,485            143,859           312,847
Stock Dividends                                                             1,756,638          1,895,959         2,203,164
Increase (Decrease) in Other Real Estate Owned as a Result of Foreclosure   1,504,959           (206,324)          144,510
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The accounting and reporting policies of California Independent Bancorp and
Subsidiaries (the Company) conform with generally accepted accounting principles
and general practice within the banking industry. The more significant of these
policies applied in the preparation of the accompanying financial statements are
discussed below.

PRINCIPLES OF CONSOLIDATION

The accompanying financial statements include the accounts of California
Independent Bancorp (CIB) and its wholly-owned subsidiary, Feather River State
Bank (the Bank) and its wholly-owned subsidiary, E.P.I. Leasing Company, Inc.
(EPI). Significant intercompany balances and transactions between CIB and the
Bank have been eliminated in consolidation.

NATURE OF OPERATIONS-

CIB is a California corporation and the bank holding company for the Bank,
located in Yuba City, California. The Bank was incorporated as a California
state banking corporation on December 1, 1976, and commenced operations on April
6, 1977. The Company 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
northern Sacramento Valley, with a total of seven branches. In addition, the
Bank operates one loan production office, emphasizing residential mortgage. The
primary source of income for the Bank is from lending activities, including
commercial, agricultural, real estate and consumer/installment loans and leases.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS-

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.

CASH AND CASH EQUIVALENTS-

For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks, and federal funds sold. Generally, federal funds
are purchased and sold for one-day periods.

INVESTMENT SECURITIES-

The Bank classifies its investments as either "held-to-maturity" or
"available-for-sale." Securities that the Bank has the positive intent and
ability to hold to maturity are classified as "held-to-maturity" and accounted
for at amortized cost in the consolidated balance sheets.

Other securities for which the Bank does not have the positive intent or ability
to hold to maturity are classified as "available-for-sale" and are reported at
their fair values, with unrealized gains and losses reported on a net-of-tax
basis as a separate component of shareholders' equity. Fair values are based on
quoted market prices or broker or dealer price quotations on a specific
identification basis. Certain economic factors could cause the Bank to sell some
of these securities prior to maturity. Such factors include significant
movements in interest rates and significant changes in liquidity demands. Gains
or losses on sale of investment securities are computed using the specific
identification method.

LOANS-

Loans are stated at the principal amount outstanding less applicable unearned
interest income.


28
<PAGE>

A loan is impaired when, based on current information and events, it is probable
that the Bank will be unable to collect all amounts due according to the
contractual terms of the loan agreement. When a loan is impaired, the recorded
amount of the loan in the balance sheets is based on the present value of
expected future cash flows discounted at the loan's effective interest rate, or
on the observable or estimated market price of the loan, or the fair value of
the collateral if the loan is collateral dependent. Income on impaired loans is
recognized in accordance with the Bank's accounting for loans placed on a
nonaccrual status. Cash payments are first applied as a reduction of the
principal balance until collectibility of the remaining principal and interest
can be reasonably assured. Thereafter, interest income is recognized as it is
collected in cash.

LOANS AND LEASES HELD-FOR-SALE-

The Bank originates mortgage loans on residential and farm properties that it
sells into the secondary market to divest itself of the interest rate risk
associated with these primarily fixed-interest rate products. The Bank accounts
for these loans at the lower of cost or net realizable value.

As of January 1, 1997, the Bank adopted Statement of Financial Accounting
Standards No. 125, "Accounting for Transfers of Financial Assets and
Extinguishment of Liabilities." This statement requires, under certain
circumstances, entities to recognize as a separate asset an amount related to
the right to service mortgage loans. The adoption of this statement did not have
a material impact on the Company's financial position and results of operations.

SALES AND SERVICING OF SBA LOANS-

The Bank originates loans to customers under the Small Business Administration
(SBA) program that generally provides for SBA guarantees of 70% to 90% of each
loan. The Bank generally maintains these loans in its portfolio, but
occasionally sells the guaranteed portion of each loan to a third party and
retains the unguaranteed portion in its own portfolio. The Bank may be required
to refund a portion of the sales premium received, if the borrower defaults or
the loan prepays within 90 days of the settlement date. At December 31, 1999,
the Bank had received no premiums subject to such recourse. A gain is recognized
on the sale of SBA loans through collection on sale of a premium over the
adjusted carrying value, through retention of an ongoing rate differential less
a normal service fee (excess servicing fee) between the rate paid by the
borrower to the buyer and the rate paid by the Bank to the purchaser, or both.

To calculate the gain (or loss) on the sale, the Bank's investment in an SBA
loan is allocated among the retained portion of the loan, the excess servicing
retained and the sold portion of the loan, based on the relative fair market
value of each portion. The gain (or loss) on the sold portion of the loan is
recognized at the time of sale based on the difference between the sale proceeds
and the allocated investment. As a result of the relative fair value allocation,
the carrying value of the retained portion is discounted, with the discount
accreted to interest income over the life of the loan. The excess servicing fees
are reflected as an asset that is amortized over an estimated life using a
method approximating the level yield method; in the event future prepayments
exceed Management's estimates and future expected cash flows are inadequate to
cover the unamortized excess servicing asset, additional amortization would be
recognized. In its calculation of excess servicing fees, the Bank is required to
estimate a "normal" servicing fee. The Bank uses the contractual rate of 100
basis points as its estimate of a normal servicing fee.

ALLOWANCE FOR LOAN AND LEASE LOSSES-

The Allowance for loan and lease losses is maintained at a level considered
adequate by Management to provide for losses that can be reasonably anticipated.
Accordingly, loan and lease losses are charged to the Allowance for loan and
lease losses, and recoveries are credited to it. The provision for loan and
lease losses charged to operating expense is based upon past loan loss
experience, loan impairment and estimates of potential losses, which in
Management's judgment, deserve current recognition. Other factors considered by
Management include growth, composition and overall quality of the loan
portfolio, reviews of specific problem loans, and current economic conditions
that may affect the borrowers' ability to pay. This evaluation process requires
the use of current estimates that may vary from the ultimate losses experienced
in the future. The estimates are reviewed periodically, and adjustments, as they
become necessary, are charged to operations in the period in which they become
known.

OTHER REAL ESTATE OWNED-

Other real estate owned consists of properties acquired by the Bank through
foreclosure and is carried at the lower of cost or fair value, less estimated
costs to sell. At the time the property is acquired, if the estimated fair value
is less than the amount outstanding on the loan, the difference is charged
against the allowance for loan and lease losses. Subsequent declines, if any, in
estimated fair value are charged to expense.

INTEREST AND FEES ON LOANS AND LEASES-

Origination fees and commitment fees, offset by certain direct loan origination
costs, are deferred and recognized over the contractual life of the loan as
yield adjustment. Interest income on loans and direct lease financing is accrued
monthly as earned on all credits not classified as nonaccrual. Unearned income
on loans, where applicable, is recognized as income using the effective interest
method over the term of the loan.

Loans are generally placed on nonaccrual status when they are 90 days past due
as to either interest or principal or are otherwise determined to be impaired.
At that time, any accrued but uncollected interest is reversed, and additional
income is recorded on a cash basis as payments are received. However, loans 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 may be
restored to an accrual basis when interest and principal payments are current
and prospects for future payments are no longer in doubt.


                                                                              29
<PAGE>

DEPRECIATION AND AMORTIZATION-

Bank premises and equipment are stated at cost, less accumulated depreciation.
Depreciation on premises, furniture, fixtures and equipment is calculated using
the straight-line method over the estimated useful lives of the assets, which
range from 3 to 31.5 years. Leasehold improvements are amortized using the
straight-line method over the asset's useful life or the term of the lease,
whichever is shorter. Expenditures for major renewals and improvements of bank
premises and equipment are capitalized, and those for maintenance and repairs
are charged to expense as incurred.

STOCK-BASED COMPENSATION-

The Company accounts for stock-based awards to employees using the intrinsic
value method in accordance with Statement of Financial Accounting Standards No.
123 (SFAS 123), "Accounting for Stock-Based Compensation." As permitted by SFAS
123, the Company has not changed its method of accounting for stock options but
has provided the additional required disclosures. For the years ended December
31, 1999, 1998 and 1997 the Company recognized no compensation expense related
to stock options.

INCOME TAXES-

Income taxes reported in the financial statements are computed at current tax
rates, including deferred taxes resulting from temporary differences in the
recognition of items for tax and financial reporting purposes.

The Bank records income taxes for financial statement purposes using the
liability or balance sheet method, under which the net deferred tax asset or
liability is determined based on the tax effects of the differences between the
book and tax bases of the various balance sheet assets and liabilities. Under
this method, the computation of the net deferred tax asset or liability gives
current recognition to changes in tax laws and rates.

FINANCIAL ACCOUNTING PRONOUNCEMENTS-

On January 1, 1998, the Bank adopted the Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income." This statement establishes
standards for the reporting and display of comprehensive income and its
components in the financial statements. Comprehensive income refers to revenues,
expenses, gains, and losses that generally accepted accounting principles
recognize as changes in value to an enterprise but are excluded from net income.
For the Company, comprehensive income includes net income (loss) and changes in
the fair value of its available-for-sale investment securities.

On January 1, 1998, the Bank adopted the Statement of Financial Accounting
Standards No. 131 (SFAS 131), "Disclosures about Segments of an Enterprise and
Related Information." This statement establishes standards for reporting
enterprise segments of a company in the footnotes to the financial statements.
The Company has no segments that meet the requirements of a reportable segment
according to the guidelines set forth in SFAS 131.

On January 1, 1999, the Bank adopted the Statement of Financial Accounting
Standards No. 134 (SFAS 134), "Accounting for Mortgage-Backed Securities
Retained After the Securitization of Mortgage Loans Held for Sale by a Mortgage
Banking Enterprise." This statement amends Statement of Financial Accounting
Standards No. 65 "Accounting for Certain Mortgage Banking Activities" to require
that after the securitization of mortgage loans held for sale, an entity engaged
in mortgage banking activities classify the resulting mortgage-backed securities
or other retained interests based on its ability and intent to sell or hold
those investments. SFAS 134 did not have an impact on the Company's financial
statements.

RECLASSIFICATIONS-

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

(2) INVESTMENT SECURITIES:

As of December 31, 1999, 1998, and 1997, the Bank's shareholders' equity
reflected a net unrealized gain (loss), net of applicable taxes, of $(948,904),
$33,930, and $(1,202), respectively.

The amortized cost and approximate fair value of investments in debt securities
and other investments at December 31, 1999 and 1998 were as follows:


30
<PAGE>

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
INVESTMENTS
                                                                               GROSS             GROSS
                                                         AMORTIZED          UNREALIZED         UNREALIZED          FAIR
                                                           COST                GAINS             LOSSES            VALUE
                                                       -----------          ---------          ---------       -----------
<S>                                                    <C>               <C>                <C>                <C>
DECEMBER 31, 1999
Available-for-Sale:
 Obligations of U.S. Government Agencies               $ 52,990,659      $          -       $ (1,673,846)      $ 51,316,813
 Mortgage-Backed Securities                              12,578,147             1,676            (53,110)        12,526,713
 Equity Securities                                        6,976,325                 -                  -          6,976,325
---------------------------------------------------------------------------------------------------------------------------
                                                       $ 72,545,131      $      1,676       $ (1,726,956)      $ 70,819,851
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Held-to-Maturity:
 Obligations of States and Political Subdivisions      $  3,606,928      $      1,894       $    (27,063)      $  3,581,759
 Debt and Other Securities                               12,571,725               517            (55,754)        12,516,488
---------------------------------------------------------------------------------------------------------------------------
                                                       $ 16,178,653      $      2,411       $    (82,817)      $ 16,098,247
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------

DECEMBER 31, 1998
Available-for-Sale:
 Obligations of U.S. Government Agencies               $ 33,978,884      $     99,533       $    (56,399)      $ 34,022,018
 Mortgage-Backed Securities                              10,557,206            22,972             (4,416)        10,575,762
 Equity Securities                                        6,935,525                 -                  -          6,935,525
---------------------------------------------------------------------------------------------------------------------------
                                                       $ 51,471,615      $    122,505       $    (60,815)      $ 51,533,305
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Held-to-Maturity:
 U.S. Treasury Securities                              $    301,007      $      2,181       $          -       $    303,188
 Obligations of States and Political Subdivisions         4,062,556            41,186               (900)         4,102,842
 Corporate Obligations and Other Securities               4,742,466            59,380             (5,096)         4,796,750
---------------------------------------------------------------------------------------------------------------------------
                                                       $  9,106,029      $    102,747       $     (5,996)      $  9,202,780
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
</TABLE>


The following table shows the amortized cost and estimated fair value of
investment securities by contractual maturity at December 31, 1999 and 1998.
Actual maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or prepayment
penalties.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                               HELD-TO-MATURITY                   AVAILABLE-FOR-SALE
                                                       ------------------------------       ------------------------------
                                                        AMORTIZED             FAIR           AMORTIZED             FAIR
                                                          COSTS               VALUE            COSTS               VALUE
                                                       -----------         ----------       ------------       -----------
<S>                                                    <C>                <C>               <C>               <C>
DECEMBER 31, 1999
Within One Year                                        $10,733,734        $10,727,508        $ 6,976,325       $ 6,976,325
After One But Within Five Years                          5,184,919          5,110,739         47,416,479        46,131,606
After Five But Within Ten Years                            260,000            260,000         18,152,327        17,711,920
--------------------------------------------------------------------------------------------------------------------------
 Total                                                 $16,178,653        $16,098,247        $72,545,131       $70,819,851
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------

DECEMBER 31, 1998
Within One Year                                        $ 1,701,575        $ 1,704,283        $ 9,009,275       $ 9,009,328
After One But Within Five Years                          7,099,454          7,182,822         39,462,340        39,505,777
After Five But Within Ten Years                            305,000            315,675          3,000,000         3,018,200
--------------------------------------------------------------------------------------------------------------------------
 Total                                                 $ 9,106,029        $ 9,202,780        $51,471,615       $51,533,305
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
</TABLE>


Net gains (losses) from sales of "available-for-sale" investment securities
during 1999, 1998 and 1997 were $(440,634), $0 and $46,250, respectively.
Gross gains of $14,141, $0 and $46,250 and gross losses of $454,775, $0 and
$0 were realized on those sales in 1999, 1998 and 1997, respectively.
Investment securities pledged as collateral for certain deposits amounted to
$33,224,728 and $18,765,780 at December 31, 1999 and 1998, respectively.


                                                                              31
<PAGE>


(3) LOANS:

Loans outstanding are summarized as follows:

<TABLE>
<CAPTION>
----------------------------------------------------------------
----------------------------------------------------------------
                                        DECEMBER 31,
                             ----------------------------------
                                 1999                   1998
                             -------------          ------------
<S>                          <C>                    <C>
Commercial and
 Agricultural                $ 55,111,154           $ 72,104,377
Real Estate Construction       30,513,920             53,967,821
Real Estate Mortgage           46,003,764             28,930,047
Consumer                        2,523,695              2,443,283
Lease Financing                27,009,815             23,033,956
Other                             158,322                392,570
----------------------------------------------------------------
 Totals                      $161,320,670           $180,872,054
----------------------------------------------------------------
----------------------------------------------------------------

----------------------------------------------------------------
</TABLE>


Loans on which the accrual of interest has been discontinued or reduced amounted
to approximately $6,115,399, and $6,498,000 at December 31, 1999, 1998,
respectively. This represents the total recorded investment in impaired loans.
The allowance for loan and lease losses that was allocated to these impaired
loans totaled $956,854 and $1,137,457 as of December 31, 1999 and 1998,
respectively. For income reporting purposes, impaired loans are placed on a
nonaccrual status. This is more fully discussed in Note 1. The average balance
of impaired loans during 1999 and 1998 was $5,774,926 and $7,659,329
respectively. Interest income recorded on those loans during 1999, 1998 and 1997
was $212,610, $343,812 and $642,230, respectively. Foregone interest on loans
placed on nonaccrual status was $883,268, $1,431,874 and $982,125 for the years
ended December 31, 1999, 1998 and 1997, respectively.

Changes in the allowance for loan and lease losses are summarized as follows:


<TABLE>
<CAPTION>
---------------------------------------------------------------
                                  YEARS ENDED DECEMBER 31,
                          -------------------------------------
                              1999         1998         1997
                          ----------    ----------   ---------
<S>                        <C>          <C>          <C>
Balance,
beginning of Year          $6,024,111   $5,514,299   $4,052,783
Provision                   1,000,000    2,246,145    6,153,000
Loans Charged-Off          (1,146,903)  (2,333,268)  (4,718,424)
Recoveries on Loans
 Previously Charged-Off       893,315      596,935       26,940
---------------------------------------------------------------
Balance, End of Year       $6,770,523   $6,024,111   $5,514,299
---------------------------------------------------------------
---------------------------------------------------------------

---------------------------------------------------------------
</TABLE>


(4) PREMISES AND EQUIPMENT:

A summary of premises and equipment follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------
                                               DECEMBER 31,
                                       --------------------------
                                           1999             1998
                                       -----------     ----------
<S>                                   <C>              <C>
Land                                  $ 1,432,957      $ 1,432,957
Bank Premises
 and Improvements                       6,026,660        6,015,264
Furniture, Fixtures and Equipment       6,717,304        6,231,161
                                       -----------     -----------
                                      $14,176,921      $13,679,382

Less Accumulated Depreciation
 and Amortization                      (6,834,262)      (5,921,482)
-----------------------------------------------------------------
                                      $ 7,342,659      $ 7,757,900
-----------------------------------------------------------------
-----------------------------------------------------------------

-----------------------------------------------------------------
</TABLE>


Depreciation and amortization charged to expense was $1,055,667, $1,132,251, and
$975,178 in 1999, 1998 and 1997, respectively.

(5) DEPOSITS:

A summary of deposit balances follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------
--------------------------------------------------------------------
                                            DECEMBER 31,
                                ------------------------------------
                                     1999                   1998
                                -------------          -------------
<S>                             <C>                    <C>
Demand                          $  60,483,798          $  65,641,478
Interest-Bearing
 Transaction Accounts              73,762,727             66,012,224
Savings Deposits                   41,033,748             39,963,668
Time Certificates of Deposit       98,178,845             96,824,523
--------------------------------------------------------------------
Total Deposits                   $273,459,118           $268,441,893
--------------------------------------------------------------------
--------------------------------------------------------------------

--------------------------------------------------------------------
</TABLE>


Time certificates of deposit of $100,000 or more, including public time
deposits, amounted to approximately $44,856,075 and $42,540,013 at December 31,
1999 and 1998, respectively.

Interest expense on time certificates of deposit of $100,000 or more, including
public time deposits, amounted to approximately $2,192,867, $2,123,535 and
$2,186,861 in 1999, 1998 and 1997, respectively.

At December 31, 1999, the scheduled maturities of all time certificates of
deposit were as follows:

<TABLE>
<CAPTION>
----------------------------------------------------------
----------------------------------------------------------
                                         DECEMBER 31, 1999
                                         -----------------
<S>                                      <C>
Three Months or Less                         $35,468,192
Over Three Through Twelve Months              47,015,836
Over One Through Three Years                  10,851,776
Over Three Years                               4,843,041
----------------------------------------------------------
Total                                        $98,178,845
----------------------------------------------------------
----------------------------------------------------------

----------------------------------------------------------
</TABLE>


(6) OTHER NONINTEREST INCOME AND EXPENSE:

The components of other operating income and expense were as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------
-----------------------------------------------------------
                              YEARS ENDED DECEMBER 31,
                          ---------------------------------
                            1999         1998        1997
                            ----         ----        ----
                                (DOLLARS IN THOUSANDS)
<S>                       <C>          <C>          <C>
Servicing Fees on Loans   $   553      $   507      $   572
Gains on Sales of Leases       45          192            -
Other                         760          585          533
-----------------------------------------------------------
Total Other
  Noninterest Income       $1,358       $1,284       $1,105
-----------------------------------------------------------
-----------------------------------------------------------
Telephone Expense             320          295          329
Attorney Fees                 377          795          340
Other                       4,193        2,800        2,863
-----------------------------------------------------------
Total Other
  Noninterest Expense      $4,890       $3,890       $3,532
-----------------------------------------------------------
-----------------------------------------------------------

-----------------------------------------------------------
</TABLE>


32
<PAGE>

(7) INCOME TAXES:

The provision (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>
-----------------------------------------------------------
-----------------------------------------------------------
                          YEARS ENDED DECEMBER 31,
                  -----------------------------------------
                     1999           1998            1997
                  ----------     -----------     ---------
<S>              <C>              <C>          <C>
Current-
Federal          $ 1,765,746      $1,122,994   $    519,554
State                164,440         460,276         37,021
-----------------------------------------------------------
                 $ 1,930,186      $1,583,270   $    556,575
-----------------------------------------------------------
Deferred-
Federal             (983,263)         69,891       (907,736)
State                (81,923)        (49,561)      (160,189)
-----------------------------------------------------------
                 $(1,065,186)   $     20,330    $(1,067,925)
-----------------------------------------------------------
                    $865,000      $1,603,600   $   (511,350)
-----------------------------------------------------------
-----------------------------------------------------------

-----------------------------------------------------------
</TABLE>


The effective tax rate and statutory federal income tax rate are reconciled as
follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------
-----------------------------------------------------------
                               YEARS ENDED DECEMBER 31,
                             ------------------------------
                              1999        1998       1997
                             ------      -------    -------
<S>                           <C>         <C>       <C>
Federal Statutory
 Income Tax Rate              34.0%       34.0%     (34.0)%
State Franchise Taxes,
 Net of Federal Income
 Tax Benefit                   7.2         7.2       (7.2)
Tax-Exempt Interest           (4.0)       (3.0)     (15.5)
Corporate Dividends Received    -         (1.9)     (11.1)
Tax Reserve Adjustment          -            -        6.5
Other                         (2.0)        0.8       (1.6)
-----------------------------------------------------------
                              35.2%       37.1%     (62.9)%
-----------------------------------------------------------
-----------------------------------------------------------

-----------------------------------------------------------
</TABLE>

The components of the net deferred tax asset of the Bank, recorded in other
assets, as of December 31, 1999 and 1998, were as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------
-----------------------------------------------------------------
                                        1999              1998
                                     -----------      -----------
<S>                                  <C>              <C>
Deferred Tax Assets-
 Loan Losses                          $2,270,139       $2,000,524
 California Franchise Tax                 55,910          166,422
 Other Real Estate Owned                       -           58,383
 Unrealized Loss on
   Available-for-Sale Securities         776,376                -
 Nonaccrual Loans                        748,940          376,629
 Other                                   266,436          231,475
-----------------------------------------------------------------
Total Deferred Tax Assets             $4,117,801       $2,833,433
-----------------------------------------------------------------
Deferred Tax Liabilities-
 Depreciation                        $   197,619      $   220,549
 Accretion                                     -                -
 Unrealized Gain on
   Available-for-Sale Securities               -           27,760
   Stock Dividends                       269,872                -
-----------------------------------------------------------------
Total Deferred Tax Liabilities       $   467,491      $   248,309
-----------------------------------------------------------------
Net Deferred Tax Asset                $3,650,310       $2,585,124
-----------------------------------------------------------------
-----------------------------------------------------------------

-----------------------------------------------------------------
</TABLE>

The components of the deferred income tax provisions are summarized as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------
------------------------------------------------------------------------
                                        YEARS ENDED DECEMBER 31,
                                ---------------------------------------
                                   1999          1998           1997
                                ---------    -----------     ---------
<S>                           <C>             <C>           <C>
Provisions for
 Possible Loan Losses         $  (269,615)    $ 508,548     $(1,019,549)
Interest on
 Nonaccrual Loans                (372,311)     (205,772)        157,633
Tax Depreciation Methods          (22,930)      (30,029)         (6,360)
California Franchise Tax          110,512      (136,782)       (175,715)
Other Real Estate Owned            58,383        73,286         (15,228)
Accretion                               -      (100,838)         15,602
Other                            (569,225)      (88,083)        (24,308)
------------------------------------------------------------------------
                              $(1,065,186)    $  20,330     $(1,067,925)
------------------------------------------------------------------------
------------------------------------------------------------------------

------------------------------------------------------------------------
</TABLE>


(8) DISCONTINUED OPERATIONS:

On March 21, 2000, the Board of Directors of the Bank, voting as the sole
shareholder of EPI, approved the dissolution and winding up of EPI's affairs.
The loss associated with the 1999 operation and disposal of EPI is $991,457, net
of income tax benefit. The loss on disposal of EPI includes the write-down of
the assets of EPI to estimated net realizable values, the write-off of the Banks
investment in EPI and the goodwill associated with it, and the estimated costs
of disposing of these operations.

Summarized balance sheet data for the discontinued operations as of December 31,
1999 is as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------
-----------------------------------------------------------
ASSETS
<S>                                            <C>
Cash and Due From Banks                        $   143,086
Leases                                             292,245
Commercial Loans                                    26,925
Receivables and All Other Assets                   766,808
-----------------------------------------------------------
Total Assets                                    $1,229,064
-----------------------------------------------------------
-----------------------------------------------------------
LIABILITIES
Payables and All Other Liabilities              $1,341,198
Total Liabilities                                1,341,198
-----------------------------------------------------------
Net Liabilities of Discontinued Operations     $   112,134
-----------------------------------------------------------
-----------------------------------------------------------

-----------------------------------------------------------
</TABLE>


(9) SHAREHOLDERS' EQUITY:

At December 31, 1999, the Company was authorized to issue 20,000,000 shares of
no par common stock. Of this amount, 1,904,618 and 1,744,580 shares of common
stock were issued and outstanding at December 31, 1999 and 1998, respectively.

One of the principal sources of cash for the Company will be dividends from its
subsidiary bank. Banking regulations limit the amount of dividends that may be
paid without prior approval of the Company's regulatory agencies to the lesser
of retained earnings or the net income of the Company for its last three fiscal
years, less any distributions during such period, subject to capital adequacy
requirements. At December 31, 1999, the Company had approximately $1,057,833
available for payments of dividends, which would not require the prior approval
of the banking regulators under this limitation.

The Bank adopted SFAS No. 128, "Earnings per Share," effective December 15,
1998. As a result, the Bank's earnings per share for all prior periods have been
restated. The following table reconciles the numerator and denominator of the
basic and diluted earnings per share computations:


                                                                              33
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
                                                INCOME (NUMERATOR)                                         PER SHARE AMOUNT
                                   --------------------------------------------                  ---------------------------------
                                   CONTINUING      DISCONTINUED                      SHARES      CONTINUING    DISCONTINUED
Basic Earnings (Loss) Per Share    OPERATIONS       OPERATIONS          NET       (DENOMINATOR)  OPERATIONS     OPERATIONS    NET
                                   ----------       ----------      -----------   -------------  ----------     ----------  -------
<S>                                <C>             <C>             <C>               <C>            <C>           <C>       <C>
1999                               $ 1,595,155     $  (991,457)    $   603,698       1,821,549      $0.88         $(0.54)   $0.33
1998                                 2,722,695         157,781       2,880,476       1,763,408       1.54          0.09      1.63
1997                                  (301,783)        140,353        (161,430)      1,738,917      (0.17)         0.08     (0.09)

Effect of Dilutive Securities-Employee Stock Options
1999                                         -               -               -          19,701          -             -         -
1998                                         -               -               -          99,946          -             -         -
1997                                         -               -               -               -          -             -         -

Diluted Earnings (Loss) Per Share
1999                               $ 1,595,155     $  (991,457)    $   603,698       1,841,250      $0.87         $(0.54)   $0.33
1998                                 2,722,695         157,781       2,880,476       1,863,354       1.46          0.08      1.55
1997                                  (301,783)        140,353        (161,430)      1,738,917      (0.17)         0.08     (0.09)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


For the year ended December 31, 1997, employee stock options in the amount of
82,727 were excluded from the computation of diluted earnings (loss) per share,
as their effect was antidilutive.

In August 1999, the Board of Directors authorized a five percent stock dividend
that was distributed on September 17, 1999. The dividend was declared on August
17, 1999, to holders of record on August 31, 1999. The dividend resulted in the
issuance of 90,084 additional shares of common stock. All common stock and per
share amounts have been adjusted to reflect the stock dividend.

In August 1998, the Board of Directors authorized a five percent stock dividend
that was distributed on September 18, 1998. The dividend was declared on August
18, 1998, to holders of record on August 31, 1998. The dividend resulted in the
issuance of 82,433 additional shares of common stock. All common stock and per
share amounts have been adjusted to reflect the stock dividend.

In August 1997, the Board of Directors authorized a five percent stock dividend
that was distributed on September 12, 1997. The dividend was declared on August
12, 1997, to holders of record on August 29, 1997. The dividend resulted in the
issuance of 77,304 additional shares of common stock. All common stock and per
share amounts have been adjusted to reflect the stock dividend.

(10) DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS:

CASH AND CASH EQUIVALENTS-

For these short-term instruments, the carrying value is a reasonable estimate of
fair value.

INVESTMENTS-

For securities held-for-investment purposes, fair values are based on quoted
market prices or dealer quotes. See Note 2 for further discussion.

LOANS-

The fair value of loans is estimated by discounting the future cash flows using
current rates at which similar loans would be made to borrowers with similar
credit ratings for same remaining maturities. The fair value of nonperforming
loans is estimated based on allocating specific and general reserves to the
various nonperforming loan classifications.

DEPOSIT LIABILITIES-

The fair value of demand deposits, savings accounts, and certain money market
deposits is the amount payable on demand at the reporting date. The fair value
of fixed maturity certificates of deposit is estimated using the rates currently
offered for deposits of similar remaining maturities.

OTHER LIABILITIES-

Other liabilities represent short-term instruments. The carrying amount is a
reasonable estimate of fair value.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS-

The fair value of amounts for fees arising from commitments to extend credit,
standby letters of credit and financial guarantees written are not material.

The estimated fair values of the Bank's financial instruments at December 31,
1999 and 1998 were as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                                   DECEMBER 31, 1999                    DECEMBER 31, 1998
                                            ---------------------------------     -------------------------------
                                                CARRYING             FAIR            CARRYING            FAIR
                                                 AMOUNT              VALUE            AMOUNT             VALUE
                                            ---------------    --------------    --------------     --------------
<S>                                         <C>                <C>                 <C>              <C>
FINANCIAL ASSETS:
 Cash and Cash Equivalents                  $  37,887,475      $  37,887,475       $ 42,358,060     $  42,358,060
 Investments                                   86,998,504         86,918,098         60,639,334        60,736,085
 Loans (Net)                                  154,550,147        154,159,581        174,847,943       177,637,438
FINANCIAL LIABILITIES:
 Deposits                                    $273,459,118       $272,994,117       $268,441,893      $268,081,545
 Interest Payable and Other Liabilities         3,554,363          3,554,363          2,632,168         2,632,168
-----------------------------------------------------------------------------------------------------------------
</TABLE>


34
<PAGE>

(11)  STOCK OPTIONS:

During 1989, the Bank adopted the Feather River State Bank 1989 Amended and
Restated Stock Option Plan. The plan is nonqualified and provides that
nonemployee directors and key employees may be granted options to purchase the
Company's stock at the fair market value of the shares as determined by the
Board of Directors. As of May 1995, all previously granted options to purchase
the Bank's stock had been retired and exchanged for options to purchase the
Company's stock, on a one-for-one option basis. All granted options must be
exercised within the earlier of ten years of the date of grant, or within 30
days of termination of employment, or status as a director. Vesting is
determined at the time of grant by the Board of Directors. Current participants
vest over five years from date of employment.

During 1996, the Company adopted the California Independent Bancorp 1996 Stock
Option Plan (1996 Plan), which sets aside 149,052 shares of no par value common
stock of the Company for which options may be granted to key, full-time salaried
employees and officers of the Company, as well as non-employee directors of the
Company. The exercise price of all options to be granted under the 1996 Plan
must be at least 100% of the fair market value of the Company's common stock on
the granting date and be paid in full at the time the option is exercised in
cash, shares of the Company's common stock with a fair value equal to the
purchase price or a combination thereof. Under the 1996 Plan, all options expire
no more than ten years after the date of grant.

Federal income tax benefits relating to options exercised under both plans have
been credited to shareholders' equity. The Company accounts for these plans
under APB Opinion No. 25, under which no compensation cost is recognized upon
issuance of options. Had compensation cost for these plans been determined
consistent with SFAS 123, the Company's net income and earnings per share would
have been reduced to the following pro forma amounts:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                                                1999                  1998                1997
                                                            ----------            -----------          ----------
<S>                                                         <C>                    <C>                 <C>
NET INCOME (LOSS) FROM
  CONTINUING OPERATIONS:             As Reported            $1,595,155             $2,722,695          $(301,783)
                                       Pro Forma               313,074              2,461,329           (560,875)
BASIC EPS:                           As Reported                  0.88                   1.54              (0.17)
                                       Pro Forma                  0.17                   1.40              (0.32)
DILUTED EPS:                         As Reported                  0.87                   1.46              (0.17)
                                       Pro Forma                  0.17                   1.32              (0.32)
-----------------------------------------------------------------------------------------------------------------
</TABLE>

Because the SFAS 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.

A summary of the status of the Company's two stock option plans at December 31,
1999, 1998 and 1997, and changes during the years then ended is presented in the
table and narrative below.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                         1999                 1998                 1997
                                                      ---------             ---------            --------
<S>                                                   <C>                   <C>                  <C>
Outstanding at Beginning of Year                        245,766              223,171              225,813
Granted                                                 248,577               42,638               39,359
Exercised                                              (119,353)             (19,543)             (39,912)
Expired                                                       -                    -               (2,089)
Forfeited                                               (30,533)                (500)                   -
---------------------------------------------------------------------------------------------------------
Outstanding at End of Year                              344,457              245,766              223,171
---------------------------------------------------------------------------------------------------------
Exercisable at End of Year                              282,489              243,561              222,106
Weighted Average Fair Value of Options Granted            $7.48                $9.03                $9.35
---------------------------------------------------------------------------------------------------------
</TABLE>


The options outstanding at December 31, 1999 have exercise prices between $6.55
and $28.50 and remaining contractual lives between 0.5 years and 9.75 years.

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1999, 1998 and 1997, respectively: weighted
average risk-free interest rates of 5.46, 5.48 and 6.43 percent; weighted
average expected dividend yields of 2.05, 1.77 and 1.80 percent. For all three
years, the expected life used was seven years and the expected volatility used
was 31.3 percent.

(12) PROFIT SHARING PLAN AND EMPLOYEE STOCK OWNERSHIP PLAN:

The Bank formed a 401(k) Qualified Savings Plan (the Plan) effective August 1,
1993. All full-time employees who have reached the age of 21 are eligible to
participate beginning on January 1st or July 1st following six months of
employment. All eligible employees are 100% vested in their own contributions,
which may be any whole percentage of pay between 2% and 15% inclusive. Beginning
January 1, 1995, the Bank made annual matching contributions, which were equal
to 20% of each employee's elective contributions not exceeding 6% of pay.
Contributions are invested with Lincoln National Life Insurance Company under
employee directed


                                                                              35
<PAGE>

investment options. The Bank's matching contribution amounted to approximately $
40,000 in 1999, $40,000 in 1998 and $35,000 in 1997.

The Bank formed an Employee Stock Ownership Plan (the ESOP) effective January 1,
1988. Effective January 1, 1995, the ESOP was amended to recognize CIB and all
of its employees as participants. All employees who have completed six months of
service and have reached the age of 21 are eligible to participate in the ESOP.
The ESOP provides for annual contributions at the discretion of the Board of
Directors. The contributions are allocated based on the participants'
compensation for the year. Employees vest ratably in the ESOP over six years.
The ESOP borrowed $200,000 from a nonprofit corporation to acquire 9,762 shares
of CIB common stock in August 1995. The borrowing was payable in five equal
annual installments with interest at prime minus 1/2 percent, which rate was 8%
at December 31, 1999. The Bank made contributions to the ESOP of approximately
$40,000 in each of the years 1999, 1998 and 1997.

(13)  FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK:

The Bank makes commitments to extend credit in the normal course of business to
meet the financing needs of its customers. Commitments to extend credit are
agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee.
Since many of the commitments are expected to expire without being drawn upon,
the total commitment amount does not necessarily represent future cash
requirements.

The Bank is exposed to credit loss, in the event of nonperformance by the
borrower, in the contract amount of the commitment. The Bank uses the same
credit policies in making commitments as it does for on-balance-sheet
instruments and evaluates each customer's creditworthiness on a case-by-case
basis. The amount of collateral obtained, if deemed necessary by the Bank, is
based on Management's credit evaluation of the borrower. Collateral held varies
but may include certificates of deposit, accounts receivable, inventory,
property and equipment, and real property.

The Bank also issues standby letters of credit, which are unconditional
commitments to guarantee the performance of a customer to a third party. These
guarantees are primarily issued to support construction bonds, private borrowing
arrangements, and similar transactions. Most of these guarantees are short-term
commitments expiring in 2000 and are not expected to be drawn upon. The credit
risk involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers. The Bank holds collateral as
deemed necessary, as described above.

The contract amount of commitments not reflected on the balance sheet at
December 31, 1999, were as follows:

<TABLE>
----------------------------------------------------------
<S>                                           <C>
Loan Commitments                              $ 53,911,995
Standby Letters of Credit                           73,000
----------------------------------------------------------
</TABLE>

The Bank is obligated under a number of noncancelable operating leases for
premises and equipment used for banking purposes. Minimum future rental
commitments under noncancelable operating leases as of December 31, 1999 were as
follows:

<TABLE>
<CAPTION>
----------------------------------------------
                             Lease Commitments
                             -----------------
<S>                                    <C>
2000                                   50,123
2001                                   51,624
2002                                   53,792
2003                                   56,051
2004                                   58,406
Thereafter                             60,859
----------------------------------------------
</TABLE>

Rent under operating leases was approximately $179,201, $180,944, and $149,713
in 1999, 1998 and 1997, respectively.

(14)  RELATED PARTY TRANSACTIONS:

The Bank has had loan and deposit transactions and has contracted for services
with certain officers and directors and the companies with which they are
associated. In the opinion of Management and the Board of Directors, all such
loans, commitments to lend, and contracts for services were made under terms
that are consistent with the Bank's normal policies. Loan transactions with
these officers and directors for the years ended December 31, 1999 and 1998,
respectively, were as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------
                                 1999              1998
                             ------------      ------------
<S>                           <C>               <C>
Loan Balances -
 Beginning of Year            $4,375,296        $8,215,744
  Additions                    8,929,977         4,922,154
  Collections                 (7,089,852)        (8,832,602)
                             ------------      ------------
End of Year                   $6,215,421        $4,375,296
                             ------------      ------------
                             ------------      ------------
-----------------------------------------------------------
</TABLE>


The Bank had loans outstanding to a director of the Bank and his associates in
excess of five percent of shareholders' equity. The total principal balance of
the loans to this director was approximately $1,904,450 and $3,298,977 at
December 31, 1999 and 1998, respectively.

Remodeling work of branches and offices of the Bank was done by directors of the
Bank. The Bank paid approximately $0, $9,711 and $442,168, for this work in
1999, 1998 and 1997, respectively.


36
<PAGE>

(15)  CALIFORNIA INDEPENDENT BANCORP FINANCIAL STATEMENTS (PARENT ONLY):


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                                                             DECEMBER 31,
                                                                             ------------
                                                                         1999               1998
                                                                       --------          ---------
                                                                          (DOLLARS IN THOUSANDS)
<S>                                                                   <C>               <C>
BALANCE SHEET-

Assets:
 Cash and Due From Banks                                              $      21         $      54
 Investment in Subsidiaries                                              23,109            23,505
 Other Assets                                                               105               102
--------------------------------------------------------------------------------------------------
  Total Assets                                                          $23,235           $23,661
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------

Liabilities and Shareholders' Equity:
  Shareholders' Equity                                                  $23,235           $23,661
--------------------------------------------------------------------------------------------------
  Total Liabilities and Shareholders' Equity                            $23,235           $23,661
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------

STATEMENTS OF INCOME-

Administrative Expense                                                 $    127         $      81
Other Expense                                                                96                97
--------------------------------------------------------------------------------------------------
Loss Before Equity in Net Income of Subsidiaries                       $    223          $    178
Equity in Net Income of Subsidiaries:
 Distributed                                                                899               899
 Undistributed                                                             (165)            2,086
Income Tax Benefit                                                           93                73
--------------------------------------------------------------------------------------------------
  Net Income                                                            $   604          $  2,880
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------

STATEMENTS OF CASH FLOWS-
Operating Activities:
 Net Income                                                            $    604          $  2,880
Adjustments to Reconcile Net Income to Net Cash
  Provided by Operating Activities-
 Undistributed Equity in Net Income of Subsidiaries                         165            (2,086)
 Deferred Income Taxes                                                        -                 -
 Decrease in Other Operating Assets                                           6                 7
  Net Cash Provided by Operating Activities                                 775               801
Financing Activities:
 Dividends Paid                                                            (808)             (749)
 Net Cash Used in Financing Activities                                     (808)             (749)
 Increase (Decrease) Increase in Cash and Cash Equivalents                  (33)               52
Cash and Cash Equivalents, Beginning of Year                                 54                 2
--------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Year                                $      21         $      54
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------
</TABLE>


(16)  QUARTERLY STATEMENTS OF OPERATIONS:

The following information is unaudited. However, in the opinion of Management,
all adjustments, which include only normal recurring adjustments necessary to
present fairly the results of operations for such periods, are reflected.
Reference is made to "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for further explanation of quarterly
results of operations.


                                                                              37
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                                            1999 QUARTER ENDED (UNAUDITED)
                                                                        -------------------------------------
                                                           MARCH 31           JUNE 30       SEPTEMBER 30        DECEMBER 31
                                                           --------           --------      -------------      ------------
                                                                 (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                                      <C>               <C>                 <C>               <C>
Interest Income                                             $5,831            $ 5,733             $5,820            $5,895
Interest Expense                                             2,055              2,039              2,244             2,235
---------------------------------------------------------------------------------------------------------------------------
Net Interest Income                                          3,776              3,694              3,576             3,660
Provision for Loan and Lease Losses                            550                250                 50               150
---------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for
 Loan and Lease Losses                                       3,226              3,444              3,526             3,510
Noninterest Income                                             646                586                687               645
Noninterest Expense                                          3,110              3,493              3,500             3,707
---------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes                                     762                537                713               448
Provision for Income Taxes                                     279                194                254               138
Net Income From Continuing Operations                          483                343                459               310
---------------------------------------------------------------------------------------------------------------------------
Gain (Loss) on Disposal of Subsidiary &
 Discontinued Operations                                         1                 (7)              (63)              (922)
Net Income (Loss)                                          $   484           $    336            $   396           $  (612)
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Basic Earnings Per Share From Continuing Operations        $  0.28           $   0.19            $  0.25           $  0.16
Diluted Earnings Per Share From Continuing Operations      $  0.27           $   0.19            $  0.25            $ 0.16
---------------------------------------------------------------------------------------------------------------------------
Weighted Average Shares Outstanding-Basic                1,747,213          1,792,691          1,841,000         1,903,362

<CAPTION>
                                                                            1998 QUARTER ENDED (UNAUDITED)
                                                                       --------------------------------------
                                                           MARCH 31           JUNE 30        SEPTEMBER 30        DECEMBER 31
                                                           --------           --------       -------------      ------------
                                                                 (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                                      <C>               <C>                 <C>               <C>
Interest Income                                             $5,964            $ 6,330             $6,553            $5,953
Interest Expense                                             2,172              2,191              2,368             2,100
---------------------------------------------------------------------------------------------------------------------------
Net Interest Income                                          3,792              4,139              4,185             3,853
Provision for Loan and Lease Losses                            396                290                754               806
---------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision
 for Loan and Lease Losses                                   3,396              3,849              3,431             3,047
Noninterest Income                                             761                934              1,014               745
Noninterest Expense                                          2,966              3,522              3,390             2,973
---------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes                                   1,191              1,261              1,055               819
Provision for Income Taxes                                     438                476                393               297
Net Income From Continuing Operations                          753                785                662               522
---------------------------------------------------------------------------------------------------------------------------
Gain (Loss) on Disposal of Subsidiary &
 Discontinued Operations                                        58                 65                 18                17
Net Income                                                 $   811           $    850            $   680           $   539
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Basic Earnings Per Share From Continuing Operations        $  0.43           $   0.45            $  0.38           $  0.29
Diluted Earnings Per Share From Continuing Operations      $  0.41           $   0.43            $  0.36           $  0.27
---------------------------------------------------------------------------------------------------------------------------
Weighted Average Shares Outstanding-Basic                1,733,688          1,735,796          1,752,835         1,830,090

<CAPTION>
                                                                            1997 QUARTER ENDED (UNAUDITED)
                                                                       --------------------------------------
                                                           MARCH 31          JUNE 30         SEPTEMBER 30        DECEMBER 31
                                                           --------          --------        -------------      ------------
                                                                 (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                                      <C>               <C>                 <C>               <C>
Interest Income                                             $5,471            $ 5,903             $6,162            $5,851
Interest Expense                                             2,210              2,360              2,407             2,312
---------------------------------------------------------------------------------------------------------------------------
Net Interest Income                                          3,261              3,543              3,755             3,539
Provision for Loan and Lease Losses                             40              3,296                  -             2,817
---------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for Loan
 and Lease Losses                                            3,221                247              3,755               722
Noninterest Income                                             686                703                879               874
Noninterest Expense                                          2,619              2,970              3,150             3,161
---------------------------------------------------------------------------------------------------------------------------
Income (Loss) Before Income Taxes                            1,288             (2,020)             1,484            (1,565)
Provision (Benefit) for Income Taxes                           508               (855)               587              (751)
Net Income From Continuing Operations                          780             (1,165)               897              (814)
---------------------------------------------------------------------------------------------------------------------------
Gain (Loss) on Disposal of Subsidiary &
 Discontinued Operations                                        37                (28)                91                41
Net Income (Loss)                                          $   817            $(1,193)           $   988           $  (773)
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Basic Earnings Per Share From Continuing Operations        $  0.48           $  (0.71)           $  0.54           $ (0.47)
Diluted Earnings Per Share From Continuing Operations      $  0.48            $ (0.71)           $  0.54           $ (0.47)
---------------------------------------------------------------------------------------------------------------------------
Weighted Average Shares Outstanding-Basic                1,623,334          1,630,448          1,650,073         1,719,598

---------------------------------------------------------------------------------------------------------------------------
</TABLE>


38
<PAGE>

(17)  REGULATORY MATTERS:

The Company and Bank are subject to various regulatory capital requirements
administered by federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Company's and Bank's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Company and Bank must meet specific capital guidelines that involve
quantitative measures of the Company's and Bank's assets, liabilities and
certain off-balance-sheet items as calculated under regulatory accounting
practices. The Company's and Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Company and Bank to maintain minimum amounts and ratios (set forth
in the table below) of total capital (Total Risk-Based), and Tier 1 capital
(Tier 1 Risk-Based) (as defined in the regulations) to risk-weighted assets (as
defined), and of Tier 1 capital (Tier 1 Leverage Ratio) (as defined) to average
assets (as defined). Management believes, as of December 31, 1999, that the
Company and Bank met all capital adequacy requirements to which they are
subject.

As of December 31, 1999, the most recent notification from the FDIC categorized
the Bank as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized the Bank must maintain
minimum Total Risk-Based, Tier 1 Risk-Based, Tier 1 Leverage Ratios as set forth
in the table. There are no conditions or events since that notification that
Management believes have changed the institution's category.

The Company's and Bank's actual capital amounts and ratios are also presented in
the table:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                        TO BE WELL-
                                                                                                     CAPITALIZED UNDER
                                                                         FOR CAPITAL                 PROMPT CORRECTIVE
                                              ACTUAL                  ADEQUACY PURPOSES              ACTION PROVISIONS
                                      -----------------------      ------------------------       ------------------------
                                       AMOUNT         RATIO          AMOUNT           RATIO           AMOUNT            RATIO
                                      --------       -------       ----------        -------         --------          -------
                                                      (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT RATIO DATA)
<S>                                  <C>              <C>         <C>               <C>             <C>              <C>
AS OF DECEMBER 31, 1999:
Total Risk-Based Capital:
 California Independent Bancorp       $27,046          11.81%     > or = 18,316     > or = 8.00%    > or = 22,895    > or = 10.00%
 Feather River State Bank              26,918          11.76%     > or = 18,306     > or = 8.00%    > or = 22,883    > or = 10.00%

Tier I Risk-Based Capital:
 California Independent Bancorp        24,184          10.56%     > or =  9,158     > or = 4.00%    > or = 13,737     > or = 6.00%
 Feather River State Bank              24,058          10.51%     > or =  9,153     > or = 4.00%    > or = 13,730     > or = 6.00%

Tier I Leverage Ratio:
 California Independent Bancorp        24,184           7.97%     > or = 12,134     > or = 4.00%    > or = 15,167     > or = 5.00%
 Feather River State Bank              24,058           7.94%     > or = 12,125     > or = 4.00%    > or = 15,157     > or = 5.00%

AS OF DECEMBER 31, 1998:
Total Risk-Based Capital:
 California Independent Bancorp       $26,660          10.38%     > or = 20,540     > or = 8.00%    > or = 25,675    > or = 10.00%
 Feather River State Bank              26,502          10.33%     > or = 20,528     > or = 8.00%    > or = 25,660    > or = 10.00%

Tier I Risk-Based Capital:
 California Independent Bancorp        23,416           9.12%     > or = 10,270     > or = 4.00%    > or = 15,405     > or = 6.00%
 Feather River State Bank              23,260           9.06%     > or = 10,264     > or = 4.00%    > or = 15,396     > or = 6.00%

Tier I Leverage Ratio:
 California Independent Bancorp        23,416           8.20%     > or = 11,427     > or = 4.00%    > or = 14,284     > or = 5.00%
 Feather River State Bank              23,260           8.15%     > or = 11,419     > or = 4.00%    > or = 14,283     > or = 5.00%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


(18)  FUTURE FINANCIAL ACCOUNTING STANDARDS:

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which is effective for fiscal years
beginning after June 15, 2000. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The Company
will adopt this statement on January 1, 2001 and does not expect that it will
have a material impact on its financial position or results of
operations.


39
<PAGE>

CALIFORNIA INDEPENDENT BANCORP, FEATHER RIVER STATE BANK AND SUBSIDIARY,
DIRECTORS AND MANAGEMENT TEAM

-------------------------------------------------------------------------------
CALIFORNIA INDEPENDENT BANCORP AND FEATHER RIVER STATE BANK DIRECTORS

DAVID A. OFFUTT
CHAIRMAN OF THE BOARD
President, Offutt, Shephard & Haven
Attorney-at-Law

JOHN L. DOWDELL
DIRECTOR
President/CEO, Dowdell Financial Services

HAROLD M. EASTRIDGE
DIRECTOR
President, Trident Investment Corporation
Real Estate Development

WILLIAM H. GILBERT
DIRECTOR
Partner, Gilbert Orchards, Walnut Grower

DONALD H. LIVINGSTONE
DIRECTOR
Teaching Professor, BYU
Marriott School of Business

LARRY D. HARTWIG
PRESIDENT/CHIEF EXECUTIVE OFFICER
California Independent Bancorp
President/Chief Executive Officer
Feather River State Bank

ALFRED G. MONTNA
DIRECTOR
Owner, Montna Farms

WILLIAM K. RETZER
DIRECTOR
Chairman/CEO Examen, Inc.

ROSS D. SCOTT
DIRECTOR
Owner, Scott Center, Physical Therapist

MICHAEL C. WHEELER
DIRECTOR
President and General Manager
Wheeler Chevrolet-Oldsmobile-Cadillac

DIRECTOR EMERITUS
CHARLES M. LEWIS
Vice President, Federal Agricultural Mortgage Corporation (Farmer Mac)

DIRECTOR EMERITUS
DALE L. GREEN
Chief Financial Officer
Dale L. Green, Inc.
Contractor

DIRECTOR EMERITUS
LAWRENCE HARRIS
Walnut Grower
Consulting Civil Engineer

DIRECTOR EMERITUS
LOUIS F. TARKE
Partner, Tarke Brothers & Anderson
Walnut and Rice Grower

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

CALIFORNIA INDEPENDENT BANCORP MANAGEMENT TEAM

LARRY D. HARTWIG
PRESIDENT/CHIEF EXECUTIVE OFFICER

ANNETTE BERTOLINI
CHIEF FINANCIAL OFFICER

FEATHER RIVER STATE BANK MANAGEMENT TEAM

LARRY D. HARTWIG
PRESIDENT/CHIEF EXECUTIVE OFFICER

KENNETH M. ANDERSON

SENIOR VICE PRESIDENT/DIRECTOR OF MARKETING
AND BRANCH SERVICES

ANNETTE BERTOLINI

SENIOR VICE PRESIDENT/CHIEF FINANCIAL OFFICER

BLAINE C. LAUHON

SENIOR VICE PRESIDENT/CHIEF LENDING OFFICER

DOUGLAS R. MARR

SENIOR VICE PRESIDENT/CHIEF CREDIT OFFICER

DON R. MCDONEL
VICE PRESIDENT/SENIOR LOAN OFFICER

EPI LEASING COMPANY, INC. MANAGEMENT

ROBERT J. LAMPERT
PRESIDENT/CHIEF EXECUTIVE OFFICER

FINANCIAL INFORMATION

Analysts, stockholders and other investors seeking financial information about
California Independent Bancorp or any of the subsidiaries should contact:

INVESTOR RELATIONS DEPARTMENT
Annette Bertolini
P.O. Box 929002
Yuba City, California 95992
(530) 674-4444 or 800-258-4334

MEDIA CONTACT
News media seeking general information should contact:

INVESTOR RELATIONS DEPARTMENT
Annette Bertolini
P.O. Box 929002
Yuba City, California 95992
(530) 674-4444 or 800-258-4334

CERTIFIED PUBLIC ACCOUNTANTS/AUDITORS
Arthur Andersen LLP
Sacramento, California

LEGAL COUNSEL
Weintraub, Genshlea & Sproul
Sacramento, California


40
<PAGE>


CALIFORNIA INDEPENDENT BANCORP AND
FEATHER RIVER STATE BANK
BRANCHES AND OFFICES


         YUBA CITY, CA
          1.     BRIDGE STREET BRANCH
                 Agricultural Loan Center &
                 Agricultural Real Estate Center
                 1221 Bridge Street
                 (530) 821-2750

          2.     COLUSA AVENUE BRANCH

                 Business/Consumer Loan Center & Residential Real Estate Center
                 777 Colusa Avenue
[MAP]            (530) 821-2750

          3.     ADMINISTRATIVE OFFICE
                 CIB/FRSB Corporate Headquarters
                 1227 Bridge Street, Suite C
                 (530) 674-4444

         ARBUCKLE, CA
          4.     ARBUCKLE BRANCH
                 540 Amanda Street
                 (530) 476-3281

         COLUSA, CA
          5.     COLUSA BRANCH
                 655 Fremont Street
                 (530) 458-8241

         MARYSVILLE, CA
          6.     MARYSVILLE BRANCH
                 700 E Street
                 (530) 821-2750

         CITRUS HEIGHTS, CA
          7.     REGIONAL LENDING CENTER
                 6929 Sunrise Boulevard, Suite 111
                 (916) 722-2700

         WHEATLAND, CA
          8.     WHEATLAND BRANCH
                 114 D Street
                 (530) 633-3150

         WOODLAND, CA
          9.     WOODLAND BRANCH
                 203 Main Street
                 (530) 661-6400




<PAGE>


[LOGO]

[LOGO]


Member FDIC