Exhibit 13   [GRAPHIC]  California Independent Bancorp  Feather River State Bank  Annual Report 2001  [FEATHER RIVER STATE BANK LOGO]  
   [GRAPHIC]  MISSION
STATEMENT  Our mission is to be a premier Bankthat creates value for  our
customersby building relationships with individuals, businesses and
professionals in the communities we serve.  To achieve our mission, we will form an
alliance with those who influence our success.The
Bank will promote these alliances with a commitment
to excellenceand positive results.  TABLE
OF CONTENTS  Corporate ProfileLetter to the ShareholdersCelebrating Twenty-Five Years of
  Citizenship & ServiceShareholder & Investor InformationFinancial HighlightsManagements Discussion & AnalysisReport of Independent Public AccountantsFinancial StatementsNotes to Financial StatementsDirectors and Management Team  
   CORPORATE
PROFILE  With this annual report, we celebrate
twenty-five years of citizenship and service to the Northern California
communities we serve.  California
Independent Bancorp (CIB) and its banking subsidiary, Feather River State
Bank, engage in a broad range of financial service activities and comprise one
of Northern Californias leading independent financial institutions.  Feather River State Bank was established in
1977 to offer personal service, local decisions, and innovative financial
products to its served communities.  CIB
was formed in 1994 and, after receiving regulatory and shareholder approval,
became the banks holding company in May 1995.  Feather River State Bank serves a customer
base of approximately 24,000 accounts through nine retail branches.   Our customers have access to a full range
of traditional financial services to meet their consumer, commercial,
agri-business, real estate, and small business needs.   The bank is a member of the Federal Deposit Insurance
Corporation and each depositors account is insured for up to $100,000.  Feather River State Bank also offers
noninsured financial services through our affiliation with London Pacific
Advisory Services, Inc., a registered Broker/Dealer, member NASD/SIPC, and
London Pacific Investment Advisory Services, Inc., a Registered Investment
Advisor.  MILESTONES1976
  
  1977
  
  1979A group of Yuba and Sutter
  County businesspeople came 
  together to establish a new 
  community bank
  
  Feather River State Bank 
  established in Yuba City
  
  The operating of the bank's 
  second branch in Marysville  [FEATHER RIVER STATE BANK LOGO]  1 
   LETTER TO THE SHAREHOLDERS  Dear Shareholders:  2001 was a year of both challenge and achievement for California
Independent Bancorp (CIB) and our subsidiary, Feather River State Bank
(collectively, the Company).   Feather
River State Bank (the Bank) will complete its twenty-fifth year in business
in April 2002.   We are extremely proud
of a quarter century of serving customers and expanding our unique banking
franchise, which combines the very best in community banking with a strong
branch system.   Despite the challenges
that presented themselves during 2001, we clearly delivered on our motto of
providing a better brand of banking with measurably superior service and
remain firmly committed to do so as we move forward.  In addition to the events of September 11th, fourth quarter 2001
results were particularly affected by the impact of the softening economic
environment on our exposure to a large, long running agribusiness problem
credit relationship, a construction loan relationship, and our exposure to a
limited number of other previously identified problem credits.   Reflecting this fourth quarter decline, we
deemed it prudent to record a $2,450,000 provision for credit loss, moving
aggressively to value those exposures to market.   These actions along with our current aggressive loan resolution
program position us well for the future.  
Additionally, we remain very cognizant of the dual challenges of a
highly competitive marketplace and the current soft economy.  [PHOTO OF DAVID OFFUTT AND LARRY HARTWIG] (left to right) David Offutt, Chairman of the Board,
and Larry Hartwig, President/CEO  It would be easy to allow this fourth 
quarter event to overshadow the Companys many significant
accomplishments during the year.  The
process of realigning our loan portfolio began in earnest in 1999 and to some
extent remains a work in progress. 
During the last three years, we steadily improved credit quality,
upgraded loan underwriting, diversified our loan portfolio, and established a
strategic reemphasis on traditional commercial and consumer banking.  In many ways this is like changing the tires
on your car while driving at freeway speeds. 
Total loans and deposits were $192.3 million and $275.6 million on
December 31, 2001, compared to $179.0 million and $267.6 million on December
31, 2000, respectively.  Not only did we
grow the loan portfolio and deposit base, but also we are pleased with the
balance and diversification achieved.  Change in our industry continues and we have reconfigured our branch
system to respond to a more knowledgeable and technology oriented
customer.  In addition, we expanded our
geographic market presence with the opening of our two newest full service
branches in the high growth communities of Lincoln and Roseville,
California.  We invested in a larger
franchise, a more cost-effective branch system, product improvements, and
technology enhancements  each of which can be expected to contribute
meaningfully to the bottom line in the years ahead.  We are 2 
   confident that these actions ensure that our customers have access to
the best financial products available and that we maintain the highest level of
professional, personalized service that is key to our success.  While there have been landmark achievements during the year which have
strengthened the value of our franchise and market position, these good things
are not fully evident in our operating results.  The Companys net income for 2001 was $1,409,000, or $0.66 per
diluted share, compared to $2,720,000, or $1.29 per diluted share for
2000.  As mentioned at the outset, the
decline in earnings resulted from the $2,450,000 provision for credit losses
recorded in the fourth quarter of 2001. 
However, despite an unprecedented eleven consecutive interest rate cuts
by the Federal Reserve Board, the Companys net interest margin increased to
4.65% for 2001, compared to 4.33% for 2000. 
Total assets at December 31, 2001 were $306.2 million compared to $301.4
million at December 31, 2000.  We believe the future outlook for California Independent Bancorp and
Feather River State Bank is excellent. 
With the process of restructuring behind us, we are in a strong position
to weather the impacts of a softening economy, and more importantly to capitalize
on an economic recovery.  We will also
continue our community bank tradition of working hard to address the needs of
the communities and neighborhoods where we do business.  As we move forward, improved earnings and
balance sheet strength will be our primary objectives.  We are a well-financed and competitive
community bank and will continue to be very involved in the communities we
serve.  The real strength of our organization is the team of creative,
results-oriented professionals who bring a highly competitive spirit to their
work.  On their behalf, we wish to thank
our customers and shareholders for continued support as we work to make
California Independent Bancorp one of Northern Californias premier financial
service companies.  All of us at the
Company share a common purpose for a prosperous future and pledge our best
efforts to make the future rewarding for our customers, shareholders, and
employees.  /s/ David A. Offutt
  
  /s/ Larry HartwigDavid A. Offutt
  
  Larry HartwigChairman of the Board
  
  President/CEO  MILESTONES1980
  
  1980
  
  1982Successful secondary
  stock offering of 
  $2 million completed
  
  Opening
  of the third
  branch in Colusa
  
  Opening
  of a fourth branch
  on Colusa Avenue to
  better serve Yuba City  [FEATHER RIVER STATE BANK LOGO] 3 
   CELEBRATING
TWENTY-FIVE YEARS OF
CITIZENSHIP&SERVICE  In many respects, 2001 was a watershed year for America.  Our country and our economy were jolted by
the twin shocks of recession and terrorism. 
In addition to deepening the economic downturn, the events of September
11, 2001 will be remembered as the most traumatic in our history since Pearl
Harbor.  But in the great American
tradition, our people have risen to the occasion.  Patriotism is back in America and love of
flag and country is more evident than at any time in recent memory.  Polls show a high number of people wanting
to help their nation and to participate in their community.  Family has a higher priority now, and
tradition means more in the wake of these events.  [PHOTO] In late March 1977, the temporary
headquarters of Feather River State Bank was placed on-site at the Bridge
Street location in Yuba City, the current location of the Company headquarters
and the Banks largest branch.  It is with a sense of pride and a renewed
commitment to our community that we celebrate the twenty-fifth anniversary of
California Independent Bancorps subsidiary, Feather River State Bank
(collectively, the Company).  The date
of that founding was April 6, 1977, and in the years since we have achieved a
great deal.  The historic photos and
major milestones included in this report highlight a quarter century of growth,
development, and progress.  We are proud to be a community bank and,
while we recognize that our brand of banking requires extra effort, we
recognize that it also yields extra rewards. 
Our customers and their families know they can count on us whenever they
need responsive solutions to meet their financial needs.  While we take pride in our tradition, we
definitely are not resting on our past success.  In fact, we are doing quite the opposite.  Following a carefully developed set of
strategic principles, we are committed to a future that includes these core
values:  OUR PROMISE OFABETTER BRAND
OF BANKING  Service sets us apart from the
competition.  We remain fully committed
to continuing the Companys strategic agenda of building meaningful, long-term
relationships with our customers.  But
we will not just meet customer expectations, we plan to exceed them through the
delivery of innovative and personalized financial solutions.  MEASURABLY SUPERIOR SERVICE  Our customers come to us for expertise and
advice, and they expect constructive results, each and every time.  Employees of our organization are trained to
understand and serve those needs in a way that will demonstrate a high level of
responsiveness and professionalism. 
This unsurpassed level of service sets us apart from other banking
organizations.  4 
   [PHOTO OF CHARLES LEWIS, WILLA SHIPPEN,
BARBARA McFARLAND AND JERRY BERSCH] Feather River State Bank officially opens
with a ribbon cutting ceremony on April 6, 1977. Pictured (left to right) are
Charles Lewis, Willa Shippen, Barbara McFarland, and Jerry Bersch.  IN-TOUCH RELATIONSHIP BANKING  Employees throughout the organization nurture
the one-on-one relationships that provide mutual benefit to our customers and
our company.  Complementing this promise
of personalized service, the organization continues to place top priority on
staying technologically competitive and enhancing its selection of automated
delivery systems that offer optimal customer convenience.  We never substitute technology for personal
service, but use it as a means to enhance our personal service
capabilities.  At Feather River State
Bank, when its high-tech, its also high-touch.  CUSTOMER-DRIVEN PRODUCT DEVELOPMENT&DELIVERY  Listening to what our customers have to say
about our employees, products and processes is a critical principle for our
organization.  The ideas that drive our
delivery methods and enhance service levels are based on customer perspective,
which we gain from a variety of market research and customer satisfaction
tracking programs.  Front-line participation
in product development and process improvements come from the employees who
know our customers best.  TRUST&FINANCIAL STRENGTH  For the full quarter century of our existence
we have maintained a strong reputation for financial achievement, professionalism,
and integrity.  Shareholder value is
created through disciplined risk management and cost controls that assure the
financial safety and soundness of our organization.  These are maintained, while we provide the kind of service that
builds customer loyalty, which in turn, further assures the long-term
enhancement of our shareholders investment.  MILESTONES1985
  
  1990
  
  1993The Bank
  reaches $60 million
  in assets and opens a
  fifth branch in Arbuckle
  
  Started Farmer Mac
  farmland department
  
  Opening of the sixth
  branch in the community
  of Woodland  [FEATHER RIVER STATE BANK LOGO] 5 
   CELEBRATING TWENTY-FIVE YEARS OF CITIZENSHIP
& SERVICE  COMMITMENT TO OUR COMMUNITIES  Good corporate citizenship continues to be a
guiding principle of our organization. 
We are also committed to improving the communities in which we work and
live.  We firmly believe in community
involvement, which includes heightened levels of economic partnership,
community understanding, and volunteerism. 
This continues to be a priority as we are generous with our time and
economic support of local civic projects and organizations.  COMMITMENT TO GROWTH  We are proud to uphold the principles of our
free enterprise system, which reward those who value hard-work, thrift, and
innovation.  By helping our consumer and
business customers grow, we help our communities prosper.  To support this goal, we have added full
service banking offices in contiguous communities.  [GROUP PHOTO] More than 200 people representing a cross
section of the community attended the Grand Opening party.  Included were Founders, Directors, Officers,
and civic officials.  As we celebrate our first twenty-five years,
we look to the future firmly committed to serving the needs of our customers
and community.  We will continue to
provide customers with a banking experience that they will truly find
remarkable, and we will succeed in the future as we have over the years by delivering
a better brand of banking.  Our ability
to provide financial services, shared expertise, and Company resources without
disrupting the effectiveness of local branch leadership makes Feather River
State Bank unique and has always been a priority.  Our branch officers retain local market authority, delivering
quick, personal decisions to customers whose financial services needs they
understand and appreciate.  MILESTONES1995
  
  1996
  
  2001California Independent
  Bancorp becomes the parent
  company of the Bank
  
  Opening of the seventh
  branch in Wheatland
  
  Opening of the eighth and
  ninth branches, in
  Lincoln and Roseville  [FEATHER RIVER STATE BANK LOGO]  6 
   SHAREHOLDER
& INVESTOR INFORMATION  PRICE RANGE OF COMMON STOCK  California Independent
Bancorps (CIBs) common stock is traded on the NASDAQ Stock Market under the
trading symbol CIBN.  The common stock
began trading on the NASDAQ Stock Market on July 31, 1996.  Prior to that time, the common stock was
listed on the NASDAQ Bulletin Board and was the subject of limited trading.  The following table presents
the high and low closing sale prices of CIBs common stock for each quarterly
period for the last two years as reported and as retroactively adjusted for the
effect of applicable stock dividends by the NASDAQ Stock Market:  Range of Stock Prices2001 Quarters
  
  High
  
  Low4th
  
  $
  24.30
  
  $
  21.993rd
  
  25.14
  
  21.672nd
  
  26.67
  
  21.911st
  
  21.91
  
  18.10  2000 Quarters
  
  High
  
  Low4th
  
  $
  20.60
  
  $
  18.103rd
  
  20.98
  
  17.232nd
  
  22.56
  
  14.631st
  
  15.76
  
  12.93  CASH DIVIDENDINFORMATION  After adjusting
retroactively for the effect of applicable stock dividends, cash dividends paid
on CIBs common stock were $0.42 per share for the year ending December 31, 2001,
and $0.40 per share for the year ending December 31, 2000.  CIB has paid cash dividends
on its common stock since 1980, and has paid consecutive quarterly cash
dividends since 1991.  It is currently
the intention of the Board of Directors 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 such dividends are dependent upon the earnings, financial condition,
and capital requirements of  CIB and
Feather River State Bank, as well as legal and regulatory requirements.  As of December 31, 2001, CIB had $2,157,747
available for payment of dividends to its shareholders.  The number of shares issued
and outstanding as of December 31, 2001, was 2,115,419.  Call your stockbroker or one
of our market makers for stock information: First Union Securities
  
  (888) 383-3112Hoefer & Arnett
  
  (800) 346-5544Sutro & Co.
  
  (800) 288-2811  First Union Securities
offers Dividend Reinvestment Plans. 
These plans allow conversion of cash dividends into whole or fractional
shares of CIB stock.  This service is
offered free of fee or commission charges.  SHAREHOLDERINFORMATION  Shareholders wishing more
detailed information about CIB may obtain a copy of its Form 10-K or Quarterly
Newsletter upon request  from:  California Independent
Bancorp Investor Relations
Department 1227 Bridge St., Suite C Yuba City, CA 95991 (530) 674-6025 (800) 258-4334  STOCKHOLDER ACCOUNTINFORMATION  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 CIB will be held May 21, 2002, 6:00 P.M., at Feather River State
Banks Colusa Avenue Branch located at 777 Colusa Avenue in Yuba City,
California. 7 
   FINANCIAL HIGHLIGHTS  CALIFORNIA
INDEPENDENT BANCORP & SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31,  2001
  
  2000
  
  1999
  
  1998
  
  1997Interest Income
  
  $
  21,731,566
  
  $
  23,535,234
  
  $
  23,279,582
  
  $
  24,799,713
  
  $
  23,386,677Interest Expense
  
  7,022,370
  
  9,469,856
  
  8,573,383
  
  8,830,774
  
  9,288,694Net Interest Income
  
  14,709,196
  
  14,065,378
  
  14,706,199
  
  15,968,939
  
  14,097,983Provision for Loan and
  Lease Losses
  
  2,450,000
  
  200,000
  
  1,000,000
  
  2,246,145
  
  6,153,000Net Interest Income After
  Provision for Loan and Lease Losses
  
  12,259,196
  
  13,865,378
  
  13,706,199
  
  13,722,794
  
  7,944,983Noninterest Income
  
  2,209,246
  
  2,668,972
  
  2,564,447
  
  3,454,179
  
  3,142,139Noninterest Expense
  
  12,568,197
  
  12,214,959
  
  13,810,491
  
  12,850,678
  
  11,900,255Income (Loss) Before
  Provision for Income Taxes
  
  1,900,245
  
  4,319,391
  
  2,460,155
  
  4,326,295
  
  (813,133
  )Provision (Benefit) for
  Income Taxes
  
  547,200
  
  1,643,525
  
  865,000
  
  1,603,600
  
  (511,350
  )Net Income (Loss) From
  Continuing Operations
  
  1,353,045
  
  2,675,866
  
  1,595,155
  
  2,722,695
  
  (301,783
  )Loss on Disposal of
  Subsidiary
  
  $
  
  
  $
  
  
  $
  (713,772
  )
  $
  
  
  $
  Income (Loss) on
  Discontinued Operations
  
  56,084
  
  44,092
  
  (277,685
  )
  157,781
  
  140,353Net Income (Loss)
  
  $
  1,409,129
  
  $
  2,719,958
  
  $
  603,698
  
  $
  2,880,476
  
  $
  (161,430
  )Per
  Common Share Data 
  (see notebelow)Basic Earnings Per Share
  From Continuing Operations
  
  $
  0.64
  
  $
  1.27
  
  $
  0.79
  
  $
  1.40
  
  $
  (0.16
  )Cash Dividends
  
  $
  0.42
  
  $
  0.40
  
  $
  0.38
  
  $
  0.36
  
  $
  0.34Book Value
  
  $
  12.86
  
  $
  12.83
  
  $
  12.20
  
  $
  12.99
  
  $
  11.65Dividend Payout Ratio
  
  65.63
  %
  31.50
  %
  47.73
  %
  25.97
  %
  n/aWeighted
  Average Common Shares Outstanding - Basic
  
  2,110,031
  
  2,103,500
  
  2,008,257
  
  1,944,079
  
  1,917,154Financial
  Ratios From Continuing OperationsReturn on Average Assets
  
  0.46
  %
  0.90
  %
  0.54
  %
  0.95
  %
  -0.11
  %Return on Average Common
  Shareholders Equity
  
  4.97
  %
  11.18
  %
  6.70
  %
  11.82
  %
  -1.33
  %Net Interest Margin
  
  4.65
  %
  4.33
  %
  4.84
  %
  5.40
  %
  4.92
  %Net Charge-Offs to Average
  Loans and Leases
  
  1.45
  %
  0.70
  %
  0.14
  %
  0.91
  %
  2.70
  %Allowance for Loan and
  Lease Loss as a Percent of Loans and Leases
  
  2.90
  %
  3.20
  %
  4.20
  %
  3.33
  %
  3.29
  %Efficiency Ratio
  
  74.29
  %
  73.00
  %
  79.96
  %
  66.16
  %
  69.03
  %  Note regarding per common share data: All per share amounts and the
weighted average number of common shares outstandingas shown in the preceding table have been
adjusted retroactively, as applicable, to reflect the 5% stock dividends
distributed in each of the years presented.   8 
   [CALIFORNIA INDEPENDENT BANCORP LOGO]  [GRAPHIC]  MANAGEMENT'S DISCUSSION AND ANALYSIS  &  CONSOLIDATED FINANCIAL STATEMENTS  9 
   MANAGEMENT'S DISCUSSION AND ANALYSIS  Managements Discussion and Analysis of
Financial Condition and Results of Operations for theYears Ended
December 31, 2001 and 2000  Certain statements in the annual report, Form 10-K, and in Managements
Discussion and Analysis of Financial Condition and Results of Operations
(excluding statements of fact or historical financial information) involve
forward-looking information within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended, and are subject to the safe harbor created by those
sections.  These forward-looking
statements involve certain risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking statements.  Such risks and uncertainties include, but
are not limited to, the following factors: competitive pressure in the banking
industry increases significantly; changes in the interest rate environment
reduce margins; general economic conditions, either nationally or regionally,
are less favorable than expected, resulting in, among other things, a
deterioration in credit quality and an increase in the provision for possible
loan and lease losses; the loss of key personnel; change in the regulatory
environment; changes in business conditions; volatility of rate sensitive
deposits; operational risks including data processing system failures or fraud;
asset/liability matching risks and liquidity risks; changes in the securities
markets; the impact of the California energy shortage; and the effects of
terrorism, including the events of September 11, 2001 and thereafter, and the
conduct of the war on terrorism by the United States and its allies.  The following discussion and analysis is designed to provide a better
understanding of the significant changes and trends related to California
Independent Bancorps and Feather River State Banks (collectively, the
Companys) financial condition, operating results, asset and liability
management, and liquidity and capital resources; and should be read in
conjunction with the Consolidated Financial Statements of the Company and its
accompanying notes.  Summary of Financial Results  California Independent Bancorp (CIB) 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.  CIB 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 1999 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, net
of applicable expected tax benefits. 
The loss associated with the 1999 operation and disposal of EPI is
$991,457, net of income tax benefits. 
This amount includes the write-off of the Banks original investment in
its subsidiary and associated goodwill. 
During 2001, income attributable to EPI was $56,084, net of income tax
expense.  It is anticipated that the
business affairs of EPI will be dissolved following the orderly wind-down of
the remaining lease portfolio.  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 2001, the Company recognized an increase in total assets over
2000.  At December 31, 2001, total
assets were $306,167,695 as compared to $301,446,561 at December 31, 2000.  Cash and cash equivalents decreased to
$23,046,870 at December 31, 2001 from $27,058,528 at December 31, 2000, while
total investments decreased to $78,357,289 at December 31, 2001 from
$82,011,931 at December 31, 2000.  Net
loans and leases increased 7.8% to $186,783,158 at December 31, 2001 over
$173,290,843 at December 31, 2000. 
Total deposits increased 3.0% to $275,576,069 at year-end 2001 over
$267,632,227 at year-end 2000.  The
Companys shareholders equity increased $1,443,518, or 5.6%, to $27,213,127 at
December 31, 2001 versus $25,769,609 at December 31, 2000.  10 
   During 2001, the Company recognized full-year
net income from continuing operations of $1,353,045, a decreaseof $1,322,821 from 2000.  Net income after disposal and discontinuance
of EPI was $1,409,129 and $2,719,958, for the years ended December 31, 2001 and
2000, respectively.  The decrease in net
income was principally due to an increase in the provision for possible loan
and lease losses of $2,250,000 when comparing full-year 2001 operating results with those of 2000.  This and other factors impacting the
Companys net income are discussed in detail throughout this Managements
Discussion and Analysis.  Basic earnings per share from continuing
operations in 2001 were $0.64, a decrease from 2000 basic earnings pershare from continuing operations of
$1.27.  Diluted earnings per share from
continuing operations were $0.63 in  2001 and $1.27 in
2000.  The Company paid cash dividends
of $0.42 per share in 2001, $0.40 per share in 2000, and $0.38 per share in
1999.  Additionally, the Company
declared and distributed 5% stock dividends in 2001, 2000, and 1999.  Consequently, for all periods presented,
basic and diluted earnings per share, cash dividends paid on common shares, and
the weighted-average number of shares, have been adjusted retroactively to reflect
the 5% stock dividends distributed on September 25, 2001, September 15, 2000,
and September 17, 1999, as well as all other previously declared and
distributed stock dividends.  The following table depicts the Average Daily
Balance Sheets for the years ended December 31, 2001, 2000, and1999. 
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 1999 through 2001.  Average Daily Balance Sheets  2001
  
  2000
  
  1999Average
  Balance
  
  Yield/
  Rate
  
  Interest
  Amount
  
  Average
  Balance
  
  Yield/
  Rate
  
  Interest
  Amount
  
  Average
  Balance
  
  Yield/
  Rate
  
  Interest
  BalanceAssetsEarning-Assets:Short-Term Investments:Federal Funds Sold
  
  $
  13,265,950
  
  3.64
  %
  $
  483,512
  
  $
  10,811,814
  
  5.83
  %
  $
  630,170
  
  $
  11,724,518
  
  5.06
  %
  $
  593,197Investment Securities:Taxable
  
  70,126,926
  
  6.20
  %
  4,347,405
  
  88,214,956
  
  6.59
  %
  5,815,142
  
  66,143,534
  
  5.90
  %
  3,900,332Nontaxable
  
  2,257,511
  
  4.14
  %
  93,354
  
  2,919,889
  
  4.07
  %
  118,719
  
  4,035,737
  
  4.01
  %
  161,764Total
  
  72,384,437
  
  6.13
  %
  4,440,759
  
  91,134,845
  
  6.51
  %
  5,933,861
  
  70,179,271
  
  5.79
  %
  4,062,096Loans and Leases
  
  184,397,462
  
  9.11
  %
  16,807,295
  
  169,272,897
  
  10.03
  %
  16,971,203
  
  181,165,760
  
  10.28
  %
  18,624,289Total Earning Assets
  
  270,047,849
  
  8.05
  %
  21,731,566
  
  271,219,556
  
  8.68
  %
  23,535,234
  
  263,069,549
  
  8.85
  %
  23,279,582Allowance for Possible Loan and
  Lease Losses
  
  (5,187,636
  )
  
  
  
  
  (6,582,886
  )
  
  
  
  
  (6,515,380
  )Non Earning Assets:Cash and due from banks
  
  13,060,787
  
  
  
  
  
  12,366,116
  
  
  
  
  
  17,858,822Premises and Equipment
  
  6,908,879
  
  
  
  
  
  7,101,571
  
  
  
  
  
  7,626,073Other
  
  11,074,349
  
  
  
  
  
  14,008,173
  
  
  
  
  
  11,949,985Net Assets from Discontinued
  Operations
  
  179,100
  
  
  
  
  
  160,128
  
  
  
  
  
  434,413Total Non Earning Assets
  
  31,223,115
  
  
  
  
  
  33,635,988
  
  
  
  
  
  37,869,293Total Assets
  
  $
  296,083,328
  
  
  
  
  
  $
  298,272,658
  
  
  
  
  
  $
  294,423,462Liabilities
  and Shareholders EquityInterest-Bearing
  Liabilities:Demand, Savings and Money
  Market
  
  $
  108,286,106
  
  1.94
  %
  $
  2,098,230
  
  $
  111,131,911
  
  3.00
  %
  $
  3,336,430
  
  $
  112,541,448
  
  3.09
  %
  $
  3,473,386Time Certificates
  
  95,684,104
  
  5.02
  %
  4,803,844
  
  98,437,633
  
  5.71
  %
  5,619,730
  
  97,162,885
  
  5.06
  %
  4,917,252Other Interest-Bearing
  Liabilities
  
  2,899,042
  
  4.15
  %
  120,296
  
  8,099,524
  
  6.34
  %
  513,696
  
  4,028,291
  
  4.54
  %
  182,745Total Interest-Bearing
  Liabilities
  
  206,869,252
  
  3.39
  %
  7,022,370
  
  217,669,068
  
  4.35
  %
  9,469,856
  
  213,732,624
  
  4.01
  %
  8,573,383Noninterest-Bearing
  Liabilities:Demand
  
  58,234,534
  
  
  
  
  
  53,724,117
  
  
  
  
  
  54,675,233Other Liabilities
  
  3,775,080
  
  
  
  
  
  2,941,627
  
  
  
  
  
  2,203,717Total Noninterest-Bearing
  Liabilities
  
  62,009,614
  
  
  
  
  
  56,665,744
  
  
  
  
  
  56,878,950Shareholders Equity
  
  27,204,462
  
  
  
  
  
  23,937,846
  
  
  
  
  
  23,811,888Total Liabilities and
  Shareholders Equity
  
  296,083,328
  
  
  
  
  
  298,272,658
  
  
  
  
  
  294,423,462Net Interest Income
  
  
  
  
  
  $
  14,709,196
  
  
  
  
  
  $
  14,065,378
  
  
  
  
  
  $
  14,706,199Net Interest Margin
  
  
  
  4.65
  %
  
  
  
  
  4.33
  %
  
  
  
  
  4.84
  %  11 
   Net Interest Income  Net interest income, the difference in interest earned on assets and
interest paid on liabilities, increased to$14,709,196 for 2001 over a comparable 2000
net interest income figure of $14,065,378. 
Interest earning assets consist of overnight federal funds sold,
investment securities, and loans and leases. 
In total, these assets averaged $270,047,849, $271,219,556, and
$263,069,549 in 2001, 2000, and 1999, respectively.  Average loans and leases were $184,397,462, $169,272,897, and
$181,165,760 in 2001, 2000, and 1999, respectively, representing an increase of
8.9% in 2001 over 2000, and a decrease of 6.6% in 2000 from 1999.  Interest income decreased 7.7% for 2001 to $21,731,566 from $23,535,234
for 2000, and was $23,279,582 for1999.  The Companys primary source of income is interest and fees on loans and
leases.  For full-year 2001, interest
andfees on loans and
leases decreased $163,908 from the comparable 2000 period.  The decline in interest and fee income is
primarily the result of a 0.92% reduction in portfolio yield which was driven
by the Federal Reserve Banks continual easing of interest rates throughout the
year.  The unfavorable impact of the
lower portfolio yield on interest and fee income was significantly offset by an
increase of $15,124,565, or 8.9%, in average loan and lease balances outstanding
in 2001 over 2000.  This increase in
average loan and lease balances outstanding is directly attributable to
successful business development efforts and the Banks strategic decision to
further diversify its overall loan portfolio via growth primarily in the real
estate secured and commercial lending sectors.  Interest earned on investment securities decreased $1,493,102, or
25.2%, for 2001 in comparison to 2000. 
Average investment securities in 2001, 2000, and 1999, were $72,384,437,
$91,134,845, and $70,179,271, respectively.The principal
reason for the decline in interest earned on the Banks investment securities
was a decrease of $18,750,408, or 20.6%, in the average balance of investment
securities in 2001 from 2000.  This was
primarily the result of bond calls driven by the downward movement in interest
rates and, to a lesser extent, principal paydowns on mortgage-backed securities
and other normal bond maturities.  The
proceeds from securities liquidations were principally used to fund loan
growth, with the excess being reinvested into qualifying replacement securities
and federal funds sold.  Additionally,
the declining interest rate environment resulted in an overall investment
portfolio yield of 6.13% for 2001 compared to 6.51% for 2000.  Interest income on investment securities for
the years ending December 31,
2001, 2000, and 1999 was $4,440,759, $5,933,861, and $4,062,096, respectively.  When
comparing 2000 with 1999, the increase in interest income on investments was
$1,871,765, or 46.1%.  This was due both to an increase in volume
and an increase in the average interest rate earned on the investment
portfolio, which was 6.51% for 2000 versus 5.79% for 1999.  Average federal funds sold were $13,265,950 for 2001, $10,811,814 for
2000, and $11,724,518 for 1999, representingan increase of 22.7% in 2001 over 2000, and a
decrease of 7.8% in 2000 from 1999.  The
yield on federal funds sold was 3.64%, 5.83%, and 5.06% for full-years 2001,
2000, and 1999, respectively, and is reflective of the general interest rate
environment as previously discussed.  After considering the effect of the preceding factors that had an
impact on the Companys interest income, theoverall yield on average earning assets was
8.05%, 8.68%, and 8.85% for the full-years ending 2001, 2000, and 1999,
respectively.  Average interest-bearing liabilities decreased to $206,869,252 for 2001
from $217,669,068 for 2000, and$213,732,624 for 1999.  The
primary component of interest-bearing liabilities is interest-bearing deposits
which averaged $203,970,210, $209,569,544, and $209,704,333 for 2001, 2000, and
1999, respectively.  The Company has
experienced a significant decrease in total interest expense on deposits of
$2,054,086, or 22.9%, in 2001 from 2000. 
This decrease is primarily due to an overall decrease in the average
yield on deposits from 4.27% for 2000 to 3.38% for 2001.  This sharp decline in average deposit yields
was a direct result of the eleven rate cuts made throughout the year by the
Federal Reserve Bank.  Further
contributing to the overall decline in interest expense,  12 
   but to a lesser extent, was a decline in the average balance of
interest-bearing deposits of $5,599,334, or 2.7%, forfull-year 2001 from 2000.  The Company experienced a decrease of $5,200,482 in average other
interest-bearing liabilities when comparing2001 with 2000.  Other interest-bearing liabilities consist primarily of seasonal
short term borrowings from the Federal Home Loan Bank (FHLB) and Federal
Reserve Bank.  Historically, during the
first half of each year the Bank
experiences excess liquidity.  The
Banks seasonal agricultural and construction loan demand, which typically
occurs each year from early June through late October, tends to absorb excess
liquidity and frequently results in a net borrowed position during that time
frame.  The average balance of other
interest-bearing liabilities was $2,899,042, $8,099,524, and $4,028,291 in
2001, 2000, and 1999, respectively. 
During 2001, proceeds from bond calls and the maturity of investment
securities were more readily available to fund loan demand, thereby decreasing
the extent to which the Company utilized other interest-bearing liabilities.  After considering the effect of the preceding factors that had an
impact on the Companys interest expense, totalinterest expense decreased 25.8% to
$7,022,370 for 2001 from $9,469,856 for 2000, and increased 10.5% for 2000 over
$8,573,383 for 1999.  The decline in
2001 from 2000 is essentially the result of the overall declining interest rate
environment and, to a lesser extent, the overall reduction in interest-bearing
liabilities as previously discussed.  The rate paid on total average interest-bearing liabilities was 3.39%,
4.35%, and 4.01% for the full-years ending2001, 2000, and 1999, respectively.  Consequently, the net interest margins were
4.65%, 4.33%, and 4.84% for the full-years ending 2001, 2000, and 1999,
respectively.  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 liabilitiesaffect the Companys net interest margin.  The impact of changes in volume and rate on net interest income
in 2001 compared to 2000, and 2000 compared to 1999, is shown in the following
table.  Changes in
Volume/Rate  2001
  Compared to 2000
  
  2000
  Compared to 1999Volume
  
  Rate
  
  Total
  
  Volume
  
  Rate
  
  Total(Dollars
  in thousands)Federal Funds Sold
  
  $
  143
  
  $
  (289
  )
  $
  (146
  )
  $
  (46
  )
  $
  83
  
  $
  37Investment Securities:Taxable
  
  (1,192
  )
  $
  (276
  )
  (1,468
  )
  1,302
  
  613
  
  1,915Nontaxable
  
  (27
  )
  $
  1
  
  (26
  )
  (45
  )
  2
  
  (43
  )Loans and Leases
  
  1,516
  
  $
  (1,680
  )
  (164
  )
  (1,223
  )
  (430
  )
  (1,653
  )Total
  
  $
  440
  
  $
  (2,244
  )
  $
  (1,804
  )
  $
  (12
  )
  $
  268
  
  $
  256Demand, Savings and Money
  Market
  
  (85
  )
  $
  (1,153
  )
  (1,238
  )
  (44
  )
  (93
  )
  (137
  )Time Certificates
  
  (157
  )
  $
  (659
  )
  (816
  )
  65
  
  638
  
  703Other
  
  (330
  )
  $
  (64
  )
  (394
  )
  185
  
  146
  
  331Total
  
  $
  (572
  )
  $
  (1,876
  )
  $
  (2,448
  )
  $
  206
  
  $
  691
  
  $
  897Increase(Decrease) in Net
  Interest Income
  
  $
  1,012
  
  $
  (368
  )
  $
  644
  
  $
  (218
  )
  $
  (423
  )
  $
  (641
  )  Loans and Leases  The Company continues to emphasize real estate, real estate
construction, commercial, agricultural, and consumerlending activities.  During 2001, the Company continued to pro-actively intensify its
focus on real estate secured and commercial lending to further diversify the
portfolio, improve asset quality, and meet customers needs in its served
geographic market segments.  Gross loans
and leases increased $13,266,336, or 7.4%, when comparing December 31, 2001 with December 31,
2000.  The increase in gross loans and
leases during 2001 is attributable to substantial increases in the commercial
real estate mortgage secured loan portfolio and the commercial portion of the
Commercial and Agricultural loan portfolio. 
Additionally, at December 31, 2001 consumer loans were up slightly over the previous year-end, while
the agricultural, real estate construction, and lease portfolios declined.  13 
   The Company lends primarily to small and medium sized businesses, small
to large sized farms, professionals, andconsumers within its market area, which is principally comprised of
Sutter, Yuba, Colusa, Yolo, and Placer counties, and secondarily, Sacramento,
El Dorado, Butte, and Glenn counties.  A
significant portion of the Companys loan portfolio consists of loans secured by commercial, agricultural, and
residential real estate.  The following
table depicts the composition of the Banks loan and lease portfolio as of
December 31, for each of the last five years:  Composition of Loan and Lease Portfolio  December 31,2001
  
  2000
  
  1999
  
  1998
  
  1997Commercial and Agricultural
  
  $
  40,092,739
  
  $
  41,691,321
  
  $
  55,111,154
  
  $
  72,104,377
  
  $
  79,384,520Real Estate-Construction
  
  32,268,227
  
  35,783,474
  
  30,513,920
  
  53,967,821
  
  23,927,538Real Estate-Mortgage
  
  100,685,224
  
  75,626,555
  
  46,003,764
  
  28,930,047
  
  28,032,552Consumer
  
  4,826,959
  
  4,471,652
  
  2,523,695
  
  2,443,283
  
  1,956,254Lease Financing
  
  11,653,824
  
  19,608,845
  
  27,009,815
  
  23,033,956
  
  33,223,586Other
  
  2,754,618
  
  1,833,408
  
  158,322
  
  392,570
  
  1,021,665Total
  
  $
  192,281,591
  
  $
  179,015,255
  
  $
  161,320,670
  
  $
  180,872,054
  
  $
  167,546,115  During 2001, the Bank continued to realize substantial growth in its
real estate mortgage loan portfolio. 
Theyear-end
balance of mortgage loans secured by commercial, agriculture, and residential
real estate increased $25,058,669, or 33.1%, at year-end 2001 over year-end
2000.  This increase is attributable to
successful business development efforts and the Banks strategic decision to
further diversify its overall portfolio via growth in the real estate secured
lending arena.  At December 31, 2001,
the Banks real estate mortgage loan portfolio equaled $100,685,224, or 52.4%
of the total loan and lease portfolio. 
At December 31, 2000, the real estate mortgage loan portfolio equaled $75,626,555, or 42.3%
of the total loan and lease portfolio. 
These loans are fully secured by real estate collateral and advances are
limited to 65% to 90% of the real estates appraised value depending on the
type of loan.  The Bank makes real estate construction loans, primarily to finance a
variety of commercial, office, and retailprojects, as well as the construction of single-family homes.  At December 31, 2001, these loans decreased
$3,515,247, or 9.8%, compared to year-end 2000.  The Bank had $32,268,227, or 16.8%, and $35,783,474, or 20.0%, of its total loan and lease portfolio
in real estate construction loans outstanding at December 31, 2001 and 2000, respectively.  In all cases, real estate construction loans
are fully secured by the real property being improved.  Advance rates are limited to 60% to 80% of
the projects appraised value at completion depending upon the type of project.  Generally, to further its business
development goals, the Bank enters into construction lending relationships with the commitment, or
the intent to commit, to provide term real estate mortgage financing to its
customer upon project completion.  The Bank makes commercial and small business loans (including lines of
credit) that are secured by the assets ofthe business.  Commercial loans
increased $5,720,493, or 27.2%, between December 31, 2000 and December 31,
2001.  This increase is the result of a
strategically focused marketing effort in the business loan sector throughout
the Banks geographically served areas. 
The Bank had $26,763,479, or 13.9%, and $21,042,986, or 11.8%, of thetotal loan and lease portfolio in
commercial and industrial loans outstanding at December 31, 2001 and 2000,  respectively.  The Bank provides agricultural production lines of credit 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.  At
December 31, 2001, agricultural loans decreased $7,319,075, or 35.4%, in comparison
to December 31, 2000.  There were five principal factors that
contributed to the decline in agricultural loans.  First, the Banks enhanced credit standards continued to result in lower agricultural loan
production.  Second, the economic
adversities  affecting certain agricultural commodities
produced in the Banks trade area have softened new loan demand.  Third,
the Bank successfully collected several troubled agricultural loans over the
past twelve months.  Fourth, the  14 
   Bank charged-off a large, long running agribusiness problem credit
relationship.  And fifth, agricultural
lendingcompetition in
the Banks core market area remains intense. 
The Bank had $13,329,260, or 6.9%, and $20,648,335, or 11.5%, of the
total loan and lease portfolio in agricultural loans outstanding at December
31, 2001 and 2000, respectively. 
Approximately 21% of these loans are guaranteed by the Farm Service
Agency  (FSA, an agency of the U.S. Department of Agriculture).  The Bank grants consumer loans, including secured and unsecured loans
and lines of credit, to finance a variety ofconsumer needs.  At December 31, 2001, consumer loans increased $355,307, or 8.0%,
over December 31, 2000.  The Bank had $4,826,959, or 2.5%, and
$4,471,652, or 2.5%, of the total loan and lease portfolio in consumer loans at
December 31, 2001 and 2000, respectively.  During 2001, the Bank experienced a significant decline in its lease
portfolio.  As of December 31, 2001, net
leasefinancing
receivables declined $7,955,021, or 40.6%, from year-end 2000.  The decline is the direct result of the
Banks decision in the first quarter of 2000 to discontinue originating and
purchasing leases through EPI.  Consequently, the reduction of the remaining
lease portfolio during 2001 was primarily due to scheduled lease
amortization.  The Bank had $11,653,824,
or 6.1%, and $19,608,845, or 11.0%, of the total loan and lease portfolio in
leases at December 31, 2001 and 2000, respectively.  In conjunction with the Banks March 21, 2000 decision to discontinue
and wind-down the operations of EPI,servicing of the lease portfolio was outsourced to Bancorp Financial
Services, Inc. (BFS), a third party specializing in the origination,
acquisition, and servicing of small ticket leases.  On May 21, 2001, Humboldt Bancorp, BFS parent company, announced
a plan to wind-down the operations of BFS in an orderly fashion over time.  Subsequently,
on January 28, 2002, BFS notified the Bank that it had targeted March 31, 2002
as the completion date for its wind-down process and furthermore advised the
Bank of its intent to resign as the servicer of the EPI lease portfolio.  However, BFS also advised the Bank that
while March 31, 2002 is the target date to complete its  wind-down,
BFS committed to performing its responsibilities under the servicing agreement
until the orderly transition to a successor servicer could be effected.  BFS wind-down continues to be an ongoing process and BFS continues to
perform its servicing obligations withregard to the EPI lease portfolio. 
As a result of these developments, Management is in the process of
identifying  and selecting a successor servicer for the
EPI lease portfolio, after which the orderly transition to the successor
servicer  will be effected.  Management
continues to monitor the situation closely and evaluate its alternatives to
mitigate any potential impact relative to BFS change in status.  The Company also originates certain mortgage loans on residential and
agricultural properties, which it sells intothe 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.
140 Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, a replacement  of FASB Statement No.
125.  As of December 31, 2001, 2000, and 1999, total loans serviced by the
Company were $78,062,314, $92,741,075,and $131,991,682, respectively. 
Total loans sold by the Company were $1,725,830 in 2001, $760,000 in
2000, and $21,968,279 in 1999.  The
significant drop in loans sold during 2001 and 2000 compared to 1999 is, in
large  part, the result of the Company changing its secondary market loan
origination process.  Prior to 2000, the  Company
would fund mortgage loans on its books and subsequently sell the mortgages into
the secondary market.   Beginning in 2000 and continuing throughout
2001, the Company primarily brokered secondary market mortgages  servicing
released.  In this process, the Company
originates and processes mortgage loan applications and  delivers
the loan application for approval to a secondary market investor.  Upon loan approval, the investor fundsand services the loan directly and the
Company is paid a one-time packaging fee. 
Consequently, total loans serviced  by the Company declined
during 2001 due to principal amortization, loan payoffs, and fewer originations
of  servicing retained brokered and sold loans.  15 
   Quality of Loans and Leases  Inherent in the lending function is the fact that loan and lease losses
will be experienced, and the risk of loss willvary with the type of loan or lease extended,
general economic conditions, and the creditworthiness of the borrower.  To
reflect the estimated risks of loss associated with its loan and lease
portfolio, provisions are made to the Companys allowance for loan and lease
losses.  As an integral part of this
process, the allowance for loan and  lease losses is subject to
review and possible adjustment as a result of Managements assessment of risk,
third party  reviews, or regulatory examinations conducted
by governmental agencies.  Allowance for Loan and Lease Losses  The Company uses the allowance method in providing for loan and lease
losses.  Loan and lease losses are
chargedagainst the
Allowance for Loan and Lease Losses (ALLL) and recoveries are credited to
it.  The ALLL at December 31, 2001 was
$5,498,433, or 2.9% of total loans and leases outstanding, as compared to
$5,724,412, or 3.2% of total loans and leases outstanding, at December 31,
2000.  Management believes that the
total ALLL is adequate to cover potential losses in the loan and lease
portfolios.  While Management uses all
available information to provide
for loan and lease losses, future additions to the ALLL may be necessary based
on changes in economic  conditions and other factors.  Additions to the ALLL are made by provisions for possible losses.  The provision for possible loan and lease
lossesis charged to
operating expense and is based upon past loss experience and estimates of
potential losses which, in Managements judgment and in accordance with
generally accepted accounting principles, deserves current recognition.  Other
factors considered by Management include growth, composition and overall
quality of the loan and  lease portfolio, review of specific problem
loans and leases, and current economic conditions that may affect the customers ability to repay the
obligation.  Actual losses may vary from
current estimates.  The estimates are  reviewed
regularly and adjustments, if necessary, are charged to operations in the
period in which they become known.  Provisions to the ALLL totaled $2,450,000 and $200,000 for the years
ended December 31, 2001 and December31, 2000, respectively. 
Full-year 2001 provisions were primarily driven by the impact of the
fourth quarter 2001 acceleration
of the already softening economic environment on the Banks exposure to a
large, long running  agribusiness problem credit relationship, a
construction loan relationship, and a limited number of other previously  identified
problem credits.  Reflecting this fourth
quarter decline, the Bank deemed it prudent to move aggressively to value those
exposures to market and, in view of the economy, to further build loan loss
reserves.  The Company had loan and lease charge-offs of $3,108,809 for 2001,
$1,739,930 for 2000, and $1,146,903 for1999.  Over the same periods,
the Company experienced net loan and lease charge-offs (which are net of
recoveries) of $2,675,980, $1,246,111, and $253,588, respectively.  These net charge-offs are equal to 1.5%,
0.7%, and 0.1% of average loans and leases for 2001, 2000, and 1999,
respectively.  The following table illustrates the activity in the Banks allowance
for loan and lease losses for the years endingDecember 31, 1997 through 2001.  16 
   Activity in Allowance for Loan and Lease Losses  2001
  
  2000
  
  1999
  
  1998
  
  1997(Dollars
  in thousands)Balance of Allowance at
  January 1
  
  $
  5,724
  
  $
  6,771
  
  $
  6,024
  
  $
  5,514
  
  $
  4,053Charge-Off by Loan
  Category:Commercial and Other
  
  3,095
  
  1,251
  
  1,009
  
  2,095
  
  4,311Consumer
  
  14
  
  19
  
  15
  
  49
  
  73Real Estate
  
  
  
  470
  
  123
  
  189
  
  335Total
  
  3,109
  
  1,740
  
  1,147
  
  2,333
  
  4,719Recoveries by Loan
  Category:Commercial and Other
  
  396
  
  281
  
  627
  
  499
  
  19Consumer
  
  2
  
  2
  
  
  
  98
  
  3Real Estate
  
  35
  
  210
  
  267
  
  
  
  5Total
  
  433
  
  493
  
  894
  
  597
  
  27Net Charge-offs
  (Recoveries)
  
  2,676
  
  1,247
  
  253
  
  1,736
  
  4,692Provision Charged to
  Expense
  
  2,450
  
  200
  
  1,000
  
  2,246
  
  6,153Balance, December 31
  
  $
  5,498
  
  $
  5,724
  
  $
  6,771
  
  $
  6,024
  
  $
  5,514Total Loans and Leases at
  End of Year
  
  $
  192,282
  
  $
  179,015
  
  $
  161,321
  
  $
  180,872
  
  $
  167,546Average Loans and Leases
  
  184,397
  
  169,273
  
  181,166
  
  189,892
  
  173,906Ratios:Net Charge-offs
  (Recoveries) to Average Loans and Leases
  
  1.5
  %
  0.7
  %
  0.1
  %
  0.9
  %
  2.7
  %Allowance to Loans and
  Leases at End of Year
  
  2.9
  %
  3.2
  %
  4.2
  %
  3.3
  %
  3.3
  %  In 2001, loan and lease losses were divided among two loan categories:
Commercial and Other, which totaled$3,095,238, or 99.6% of full-year 2001 total loan and lease losses; and
Consumer, which totaled $13,571, or 0.4% of total loan and lease losses.  For 2001, the largest category of loss is Commercial and Other and
includes the subcategories of commercial24.6%, agricultural 66.4%, and leases that totaled 8.6% of total
losses.  Of these three subcategories,
agricultural losses were $2,062,528 of total losses and represent the largest
subcategory of losses.  This entire
amount was centered in one large, long running agribusiness problem credit
relationship that experienced a sharp decline in real estate collateral value
during the fourth-quarter driven principally by the softening of the overall
local agricultural economy.  The commercial subcategory of Commercial and Other loan losses at
December 31, 2001 was $764,272.Approximately 60%, or $460,000, of the loss
experienced in commercial loans was centered in the same agribusiness problem
credit relationship discussed in the preceding paragraph.  The remaining $304,272 of commercial
charge-offs were attributable to two borrowers.  The largest is a contractor who liquidated and filed bankruptcy
resulting in a loss of $162,300. 
Management expects significant recovery to ultimately come from the sale
of residential lots that had been pledged as additional security on the
loan.  The other commercial loan was a
protracted workout, for which the Bank had obtained real property collateral as
additional security.  Due to the
excessive passage of time while trying to liquidate the property, the loan was
charged-off.  The borrower subsequently
sold the property and the Bank recovered its prior charge-off.  The lease subcategory of Commercial and Other loan losses at December
31, 2001 was $268,438.  Previously,the Company purchased leases
from EPI, who originated the leases. 
Lease originations were discontinued in March 2000, and EPIs operations
are in the process of being wound-down. 
As previously discussed, lease servicing will continue to be outsourced
to a qualified and experienced third party lease servicing provider.  Recognizing the inherent risks associated
with lease activity, the Company continues to maintain higher reserves for this
portfolio than other conventional loan portfolios.  During 2001, actual net lease charge-offs remained within
established reserves for this portfolio. 
Close monitoring of the lease collections has been assigned to the
Special Asset Department of the Bank. 
Lease portfolio recoveries totaled $138,300, or 32% of total recoveries,
reflecting improved collection results. 
The lease charge-off activity is consistent with Management
expectations.  17 
   During 2000, loan and lease losses totaled $1,739,930 divided among
three categories: Commercial and Other,which totaled $1,250,519, or 71.9% of 2000 total loan and lease losses;
Real Estate, which totaled $469,991, or 27.0% of total loan and lease losses;
and Consumer, which totaled $19,419, or 1.1% of total loan and lease losses.  For 2000, the largest category of loss was Commercial and Other and
includes the subcategories of commercial20.8%, agricultural 13.3%, and leases that totaled 37.8% of total
losses.  Of these three categories,
lease losses were $656,891 of total losses and represent the largest
subcategory of losses.  The commercial
subcategory of loss was $361,692 and was centered in one commercial business
that experienced repetitive periods of unsustained profitability that
eventually led to bankruptcy.  The
agricultural subcategory of loss was $231,937 and was centered in two agribusinesses that were not able to
withstand a sustained period of agricultural adversity that existed at that
time.  Real estate losses for 2000 totaled $469,991 and were centered in two
agribusiness problem credit relationships,both of which had been protracted workout
situations for which the underlying real property collateral value no longer supported the loan position.  During 1999, loan and lease losses totaled $1,146,903, divided among
three categories, the largest of which wasthe Commercial and Other category totaling
$1,008,895, or 88.0% of total loan and lease losses.  Within this category, lease losses were the largest subcategory of
loss totaling $929,406, or 81.0% of total loan and lease losses.  The allocation of the ALLL by loan and lease type as of December 31 for
each of the last five fiscal years is summarizedin the following table.  Any allocation or breakdown in the ALLL is
provided for informational purposes only and should not be construed to lend an
appearance of exactness that does not exist. 
Thus, the following allocation should not be interpreted as an
indication of expected amounts or categories where charge-offs will occur.  Management
uses available information to provide for loan and lease loss reserve
allocation; however, future additions to the ALLL may be necessary based upon
changes in economic conditions and other variables.  Allocation
of Allowance  2001
  
  2000
  
  1999
  
  1998
  
  1997$
  
  %
  
  $
  
  %
  
  $
  
  %
  
  $
  
  %
  
  $
  
  %(Dollars
  in thousands)Balance
  Applicable to:Commercial and Agricultural
  
  $
  1,826
  
  33.2
  %
  $
  2,230
  
  39.0
  %
  $
  3,642
  
  53.8
  %
  $
  3,644
  
  60.5
  %
  $
  3,423
  
  62.1
  %Real Estate-Construction
  
  1,270
  
  23.1
  %
  399
  
  7.0
  %
  417
  
  6.2
  %
  925
  
  15.4
  %
  897
  
  16.3
  %Real Estate-Mortgage
  
  1,320
  
  24.0
  %
  578
  
  10.1
  %
  542
  
  8.0
  %
  610
  
  10.1
  %
  392
  
  7.1
  %Consumer
  
  67
  
  1.2
  %
  36
  
  0.6
  %
  48
  
  0.7
  %
  32
  
  0.5
  %
  31
  
  0.6
  %Leases
  
  488
  
  8.9
  %
  832
  
  14.5
  %
  940
  
  13.9
  %
  706
  
  11.7
  %
  656
  
  11.9
  %Other
  
  527
  
  9.6
  %
  1,649
  
  28.8
  %
  1,182
  
  17.5
  %
  107
  
  1.8
  %
  115
  
  2.1
  %Total
  
  $
  5,498
  
  100.0
  %
  $
  5,724
  
  100.0
  %
  $
  6,771
  
  100.0
  %
  $
  6,024
  
  100.0
  %
  $
  5,514
  
  100.0
  %Nonperforming
  Loans and Leases:Accounted for on a
  Nonaccrual Basis
  
  $
  3,060
  
  
  
  $
  4,926
  
  
  
  $
  6,115
  
  
  
  $
  5,644
  
  
  
  $
  7,585Accruing Past Due 90 Days
  or More
  
  
  
  
  
  
  
  
  
  
  
  
  
  854
  
  
  
  328Total
  
  $
  3,060
  
  
  
  $
  4,926
  
  
  
  $
  6,115
  
  
  
  $
  6,498
  
  
  
  $
  7,913  Management believes the total ALLL is adequate as of December 31,
2001.  The $527,700 amount shown asOther consisted of $158,100
reserved for undisbursed commitments on the combined loan and lease portfolios,
$1,300 reserved for standby lines of credit, and $368,300 in unallocated
reserves.  This unallocated reserve
equals 6.7% of the reserve deemed necessary by Management and provides an added
margin of safety for the overall portfolio.  18 
   Nonperforming Loans  The Company places loans on nonaccrual status when either principal or
interest has been past due for 90 daysor more.  Exceptions to this
policy can be made if the loan is well secured and in the process of
collection.  The Company also places
loans on nonaccrual when payment in full of principal or interest is not
expected or the financial condition of the borrower has significantly deteriorated.  At the time that a loan is placed on
nonaccrual, any accrued but uncollected interest is reversed, and additional
income is recorded on a cash basis as payments are received.  However, loans that are in the process of
renewal in the normal course of business or that are well-secured and in the
process of collection, may not be placed on nonaccrual status, at the
discretion of  Management. 
A nonaccrual loan 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 over the past year as
nonperforming assets decreased from$4,925,579, or 2.8% of the portfolio, on December 31, 2000, to
$3,059,798, or 1.6% of the portfolio, on December 31, 2001.  The Company continued to successfully
implement its classified asset reduction plan and enhance quality control in
the management of the loan portfolio. 
The amount of nonperforming loans and leases at December 31, 2001 reflects
a five-year improving trend in the reduction of nonperforming loans and leases
for the Company.  However, in view of
the continuing softening of the economy and other factors, there is no
assurance that this trend will continue.  The composition of the Companys nonaccrual loans and leases remain
limited to a few large agricultural and realestate relationships.  As of December 31, 2001, 95.6% of the
Companys total nonaccrual loans and leases were concentrated in five
relationships.  Four of the
relationships, totaling $2,664,339, or 87.1%, are real estate loan
relationships, while the remainder, totaling $260,064, or 8.5%, is an
agribusiness credit relationship.  Each
of the nonaccrual loans associated with these relationships is in the process
of collection and is believed to be adequately supported by collateral.  Similarly, as of December 31, 2000, 94.9% of the Companys total
nonaccrual loans and leases were concentratedin ten relationships.  Three of the relationships, totaling
$2,649,952, or 53.2%, were agribusiness in nature, while the remaining seven
relationships, equaling $2,079,691, or 41.7%, were commercial.  Loans on accrual status that were past due 90 days or more as to the
principal and interest continue to be held atzero for December 31, 2001, as was December
31, 2000, and December 31, 1999.  Investments  At December 31, 2001, the Companys investment portfolio was
$78,357,289, or 25.5% of total assets, a decreasefrom $82,011,931, or 27.2% of total assets,
at December 31, 2000. At December 31, 1999, the Banks investment portfolio was
$86,998,504, or 29.0% of total assets. 
At December 31, 2001, 2000, and 1999, federal funds sold were
$5,300,053, $7,700,000, and $22,000,000, respectively.  Federal funds sold are overnight deposits
with other banks.  Under Statement of Financial Accounting Standard No. 115 (SFAS 115),
investments in debt and equity securitiesmust be classified in one of three different categories: Trading,
Available-for-Sale, or 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 related to the
Available-for-Sale category be reported as anadjustment 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, 2001and 2000.  19 
   Investments  Amortized
  Cost
  
  Gross
  Unrealized
  Gains
  
  Gross
  Unrealized
  Losses
  
  Fair
  ValueDecember
  31, 2001Available-for-Sale:Obligations
  of U.S. Government Agencies
  
  $
  39,183,995
  
  $
  1,028,397
  
  $
  (127,235
  )
  40,085,157Mortgage-Backed
  Securities
  
  19,588,131
  
  385,793
  
  (102,496
  )
  19,871,428Debt
  Securities
  
  8,606,413
  
  131,922
  
  (925
  )
  8,737,410Equity
  Securities
  
  6,410,305
  
  68,714
  
  (419,500
  )
  6,059,519$
  73,788,844
  
  $
  1,614,826
  
  $
  (650,156
  )
  $
  74,753,514Held-to-Maturity:Obligations
  of States and Political Subdivisions
  
  $
  1,854,204
  
  $
  57,323
  
  $
  
  
  $
  1,911,527Debt and
  Other Securities
  
  1,749,571
  
  36,629
  
  
  
  1,786,200$
  3,603,775
  
  $
  93,952
  
  $
  
  
  $
  3,697,727December
  31, 2000Available-for-Sale:Obligations of U.S.
  Government Agencies
  
  $
  64,190,292
  
  $
  191,075
  
  $
  (244,192
  )
  64,137,175Mortgage-Backed Securities
  
  6,191,832
  
  213,143
  
  (1,488
  )
  6,403,487Equity Securities
  
  6,755,505
  
  35,907
  
  (637,500
  )
  6,153,912$
  77,137,629
  
  $
  440,125
  
  $
  (883,180
  )
  $
  76,694,574Held-to-Maturity:Obligations of States and
  Political Subdivisions
  
  $
  2,568,282
  
  $
  17,784
  
  $
  (3,966
  )
  $
  2,582,100Debt and Other Securities
  
  2,749,075
  
  
  
  (9,651
  )
  2,739,424$
  5,317,357
  
  $
  17,784
  
  $
  (13,617
  )
  $
  5,321,524  As of December 31, 2001, the Companys Available-for-Sale category
adjustment to the Companys shareholdersequity reflected a net unrealized gain of $530,568, net of taxes, and
the approximate market value of the  Companys total investment
portfolio was $78,451,241 reflecting a net unrealized pre-tax gain of
$1,058,622.  As of December 31, 2000, the Companys Available-for-Sale category
adjustment to the Companys shareholdersequity reflected a net unrealized loss of $243,680, net of taxes, and
the approximate market value of the Companys total investment portfolio was
$82,016,098 reflecting a net unrealized pre-tax loss of $438,888.  In the normal course of business, the Bank pledges its investment
securities as collateral for certain deposits(typically deposits of government entities),
and for the Banks borrowing lines.  The
book value of pledged securities was $50,807,817 and $52,339,269 at December
31, 2001 and 2000, respectively.  Other Assets  During 2001, the Company recognized a decrease in total other
assets.  These assets consist primarily
of premisesand
equipment, interest receivable, other real estate owned (OREO), investment in
a Community Reinvestment Act (CRA) qualified California Affordable Housing
Project, cash surrender value of life insurance policies associated with
certain executive officers and directors of the Company, net deferred taxes,
and other miscellaneous assets.  Total other assets related to continuing operations decreased
$1,041,411 to $17,817,876 at December 31, 2001compared to $18,859,287 at December 31,
2000.  The decline in total other assets
is the result of several factors. 
Interest receivable declined
$748,286 to $2,091,325 at December 31, 2001 from $2,839,611 at December 31,2000. 
Deferred taxes decreased $1,145,626 and stood at $1,022,450 at December
31, 2001 compared to $2,168,076 at December 31, 2000.  This decrease is attributed to differences in the timing of the
recognition of certain income and expense items for tax and financial
accounting purposes.  Premises and equipment also declined $41,905 from December 31, 2000 to
December 31, 2001.  During the year2001, the Company acquired
$901,637 of new property, recognized depreciation of $919,672, and disposed of
various equipment with an immaterial book value.  20 
   Other miscellaneous assets decreased from $1,508,892 at December 31,
2000 to $1,075,181 at December 31, 2001.The majority of
this decline is the result of an investment made in a California Affordable
Housing Project for which the Company recognizes recurring pre-tax impairment
and equity losses.  This investment
contributed toward the Banks achievement of its CRA objectives, and its
economic value is ultimately realized through the tax benefits it generates.  The decreases in other assets described above were offset by increases
in OREO of $137,358, cash surrender valueof life insurance policies of $238,468, and income tax receivable of
$952,291.  The increase in OREO can be
attributed to the foreclosure on certain residential lots that had been pledged
as additional security on a commercial loan that was charged-off during 2001.  Deposits  Total deposits at December 31, 2001, 2000, and 1999 were $275,576,069,
$267,632,227, and $273,459,118,respectively.  These figures
represent an increase of $7,943,842, or 3.0%, at December 31, 2001 over
December 31, 2000, and a
decrease of $5,826,891, or 2.1%, when comparing December 31, 2000 to December
31, 1999.  Average daily total deposits were
$262,204,744 for 2001, $263,293,661 for 2000, and $264,379,566 for 1999.  The Company has been able to attract and retain deposits by providing
superior customer service and offeringinterest rates on deposits competitive with other financial
institutions in its market area.  Total
deposits consist of interest and noninterest-bearing deposits.  At December 31, 2001, the mix of deposits
consists of 25.4% noninterest-bearing and 74.6% interest-bearing.  The mix of interest-bearing deposits
consists of 45.4% in time certificates 
of deposit, 30.0% in
interest-bearing demand deposits, and 24.6% in savings and money market
accounts.  Average time certificates of
deposit, the largest portion of interest-bearing deposit accounts, were
$95,684,104 for 2001, $98,437,633 for 2000, and $97,162,885 for 1999,
representing a decrease of 2.8% in 2001 from 2000, and an increase of 1.3% in
2000 over 1999.  Average daily noninterest-bearing demand deposits, the majority of
which are business checking accounts,increased $4,510,417 to $58,234,534 for 2001, from $53,724,117 for
2000, and stood at $54,675,233 for 1999.  The remaining contractual maturities of the Companys time certificates
of deposit, including public timedeposits, as of December 31, 2001 and 2000, are indicated in the following
table.  Interest expense on time
certificates of deposit totaled $4,803,844 in 2001 and $5,619,730 in 2000.  The decrease in interest expense on time
certificates of deposit was primarily due to the decreasing interest rate
environment experienced during 2001. 
The average yields paid on time
certificates of deposit were 5.02% and 5.71% for the years ended December 31,2001 and 2000, respectively.  Contractual Maturity of Certificates of Deposits  December 31, 2001
  
  December 31, 2000$100,000
  and over
  
  Under
  $100,000
  
  $100,000
  and over
  
  Under
  $100,000(Dollars in thousands)Three Months or Less
  
  $
  18,430
  
  $
  25,164
  
  $
  16,199
  
  $
  20,483Over Three Months Through
  Twelve Months
  
  12,378
  
  28,231
  
  19,837
  
  28,869Over One Year Through Three
  Years
  
  2,902
  
  4,279
  
  3,424
  
  4,811Over Three Years
  
  1,101
  
  792
  
  884
  
  1,248Total
  
  $
  34,811
  
  $
  58,466
  
  $
  40,344
  
  $
  55,411  21 
   Other Liabilities  Total other liabilities relating to continuing operations for the
Company decreased to $3,378,499 at December 31,2001 from $8,044,725 at December 31,
2000.  Total other liabilities consist
of other borrowings, interest payable 
on interest-bearing liabilities,
deferred compensation payable, and other miscellaneous liabilities.  The decrease of $4,666,226, or 58.0%, at
year-end 2001 from year-end 2000 in total other liabilities was primarily due
to a $4,000,000 decrease in short term borrowings on the Banks line of credit
at the FHLB.  Noninterest Income  Noninterest income from continuing operations for 2001 was $2,209,246,
a decrease of 17.2% from 2000, whichstood at $2,668,972. 
Noninterest income in 2000 was 4.1% greater than the 1999 amount of
$2,564,447.  The table below sets forth
the components of noninterest income for the years indicated:  Noninterest Income  2001
  
  2000
  
  1999(Dollars in thousands)Service Charges and Fees on
  Deposit Accounts
  
  $
  1,083
  
  $
  1,010
  
  $
  971Brokered Loan Fees
  
  158
  
  112
  
  236Loan Servicing Fees
  
  366
  
  489
  
  553Other
  
  602
  
  1,058
  
  804Total
  
  $
  2,209
  
  $
  2,669
  
  $
  2564  Service charges and fees on deposit accounts, one of the main
components of noninterest income, increased in2001 to $1,082,547, or 7.2% over the 2000
amount of $1,009,455.  Brokered loan fees, another primary source of noninterest income, were
$158,195 in 2001.  This represents anincrease of $46,140 from 2000,
which stood at $112,055.  Alternatively,
brokered loan fee income experienced a substantial decrease of 52.5% from
$235,768 in 1999 when compared to 2000. 
The increase in brokered loan fee income in 2001 over 2000 is largely
attributable to higher demand in the home refinance market due to the
decreasing interest rate environment throughout 2001.  Loan servicing fees, another major component of noninterest income
declined 25.1% to $366,276 in 2001, from$488,995 in 2000.  This decrease
is principally due to the lower amount of total loans serviced as previously
described in detail in the Loans and Leases section of this Management
Discussion and Analysis.  All other noninterest income decreased $456,239, or 43.1%, to $602,228
in 2001, from $1,058,467 during thecomparable 2000 period.  The
primary reason for this decline was a non-recurring gain of $297,871 on the
sale of other real estate owned during 2000. 
There were also declines in noninsured deposit fee income and other
miscellaneous income items.  Noninterest Expense  Noninterest expense from continuing operations increased in 2001 to
$12,568,197, or 2.9% over 2000 results,which stood at $12,214,959.  The
2000 results reflected a decrease of 11.6% from 1999 totals of
$13,810,491.  The  table
below sets forth the components of noninterest expense for the years indicated.  22 
   Noninterest
Expense  2001
  
  2000
  
  1999(Dollars
  in thousands)Salaries and Benefits
  
  $
  7,261
  
  $
  6,541
  
  $
  6,835Occupancy
  
  822
  
  726
  
  746Furniture and Equipment
  
  1,171
  
  1,170
  
  1,339Other Operating and
  Administrative
  
  3,314
  
  3,778
  
  4,890Total
  
  $
  12,568
  
  $
  12,215
  
  $
  13,810  Salaries and benefits, the largest component of noninterest expense,
was $7,261,191 for 2001, $6,541,651 for2000, and $6,834,859 for 1999, representing an increase of 11.0% in
2001 over 2000, and a decrease of 4.3% in 2000 from 1999.  The increase in 2001 is in large part due to
four factors.  First, the cost of
employee benefit plans, primarily medical insurance and costs associated with
the Companys 401K plan, rose significantly over the last year.  Second, higher incentive accruals resulted
from the Companys goal to further strengthen its sales and service
culture.  Third, the Bank recognized a
one-time charge relating to the reorganization and streamlining of its loan
origination delivery system.  And
fourth, the Company opened and staffed two new branches in Lincoln and
Roseville, California.  Collectively, occupancy and furniture and equipment expenses increased
$97,144, or 5.1%, for 2001 over 2000and stood at $1,992,937 and $1,895,793, for the full year periods,
respectively.  During 2000, the Company
recognized a decrease of 9.1% from $2,085,437 in 1999.  The increase in 2001 over 2000 was
principally driven by the opening of the Banks Lincoln and Roseville,
California branches as described in the preceding paragraph.  Other operating and administrative expenses were $3,314,069 for 2001, a
decrease of $463,446, or 12.3%, from2000s noninterest operating and administrative expenses of
$3,777,515.  This same classification of
expenses amounted to $4,890,195 in 1999. 
The decline in other noninterest operating and administrative expense
during 2001 is attributed primarily to a variety of initiatives implemented by
the Company to further streamline workflow processes and improve its use of
technology, thereby achieving greater operational efficiency.  Other factors impacting the decline in other noninterest operating and
administrative expenses were a decline of$58,714 in attorney fees and $44,898 in Federal Deposit Insurance
Corporation (FDIC) Bank Insurance Fund assessments in 2001 from 2000.  Income Taxes  The provision for income taxes from continuing operations was $547,200
in 2001, $1,643,525 in 2000, and$865,000 in 1999.  The Companys
effective tax rate was 28.8%, 38.0%, and 35.2% for full-years 2001, 2000, and
1999, respectively.  Interest Rate Sensitivity  Interest rate sensitivity is the relationship between market interest
rates and net interest income (NII) due to therepricing characteristics of assets and
liabilities.  As interest rates change,
interest income and expense also change, thereby changing NII.  If more
liabilities reprice than assets in a given period, a liability sensitive
position is created.  If interest rates
decline, a liability sensitive position will benefit NII.  Alternatively, where assets reprice more
quickly than liabilities in a given period (an asset sensitive position), a
decline in market rates will have an adverse effect on NII.  23 
   The following table depicts the Companys interest rate sensitivity
position as of December 31, 2001.  Interest Rate Sensitivity as of December 31, 2001  Repricing
  OpportunityThree
  months
  or less
  
  Over three
  months
  through
  12 months
  
  1 year- 
  3 years
  
  Over
  3 years
  
  Total(Dollars in thousands)Interest-Earning
  Assets:Federal Funds Sold
  
  $
  5,300
  
  $
  
  
  $
  
  
  $
  
  
  $
  5,300Loans and Leases
  
  116,841
  
  10,951
  
  12,479
  
  52,011
  
  192,282Investments
  
  6,060
  
  6,814
  
  20,983
  
  44,500
  
  78,357Total Interest-Earning
  Assets
  
  $
  128,201
  
  $
  17,765
  
  $
  33,462
  
  $
  96,511
  
  $
  275,939Interest-Bearing
  Liabilities:Interest-Bearing Demand
  
  $
  61,692
  
  $
  
  
  $
  
  
  $
  
  
  $
  61,692Savings and Money Market Deposits
  
  50,639
  
  
  
  
  
  
  
  50,639Time Certificates
  
  43,594
  
  40,609
  
  7,181
  
  1,893
  
  93,277Other Interest-Bearing
  Liabilities
  
  398
  
  
  
  
  
  
  
  398Total Interest-Bearing
  Liabilities
  
  $
  156,323
  
  $
  40,609
  
  $
  7,181
  
  $
  1,893
  
  $
  206,006Gap
  
  (28,122
  )
  (22,844
  )
  26,281
  
  94,618
  
  69,933Cumulative Gap
  
  (28,122
  )
  (50,966
  )
  (24,685
  )
  69,933  The above table indicates the time period in which interest-earning
assets and interest-bearing liabilities willmature or may reprice in accordance with
their contractual terms.  However, this
table does not necessarily indicate the impact of general interest rate
movements on the Banks NII or yield because the repricing of various
categories of assets and liabilities is discretionary and is subject to
competitive and other pressures.  As a
result, various assets and
liabilities indicated as maturing or repricing within the same period may in
fact mature or  reprice at different times and at different
rate levels.  For example, although the
Banks regular savings accounts generally are subject to immediate withdrawal,
Management considers most of these accounts to be core deposits having
significantly longer effective maturities based on the Banks experience of
retention of such deposits in changing interest rate environments.  Asset and liability management encompasses an analysis of market risk,
the control of interest rate risk (interestsensitivity management) and the ongoing
maintenance and planning of liquidity and capital.  The composition of the Companys Balance Sheet is planned and
monitored by the Asset and Liability Committee (ALCO), a committee comprised
of the Banks executive management.  The
primary tool used by the ALCO to measure and manage interest rate exposure is a
simulation model.  Use of the model to
perform simulations reflecting changes in interest rates over one and two-year
time horizons has enabled Management to develop and initiate strategies for
managing exposure to interest rate risks. 
The ALCO believes that both individually and in the aggregate its
modeling assumptions are reasonable, but the complexity of the simulation
modeling process results in a sophisticated estimate, not an absolutely precise
calculation of exposure.  Market Risk  Market risk is the risk of loss in a financial instrument arising from
adverse changes in market rates and pricessuch as interest rates, foreign currency
exchange rates, commodity prices, and equity prices.  The Companys primary market risk exposure is interest rate
risk.  The continuous monitoring and
management of this risk is an important component of the Companys asset and
liability management process, which is governed by policies established by its
Board of Directors that are reviewed and approved annually.  The Board of Directors delegates
responsibility for carrying out the asset and liability management policies to
the ALCO.  In this capacity, Management
develops guidelines and strategies impacting the Companys asset and liability
management related activities based upon estimated market risk sensitivity,
policy limits, and overall market interest rate levels and trends.  24 
   Interest Rate Risk  Interest rate risk represents the sensitivity of earnings to changes in
market interest rates.  As interest
rates change,the
interest income and expense streams associated with the Companys financial
instruments also change thereby impacting NII, the primary component of the
Companys earnings.  The ALCO utilizes
the results of 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 interestexpense paid on all assets and liabilities reflected on the Companys
balance sheet as well as for off balance sheet financial instruments.  This sensitivity analysis is compared to
policy limits that specify a maximum tolerance level for NII exposure over a
one-year horizon, assuming no balance sheet growth, given both a 200 basis
point (bp) upward and downward shift in interest rates.  A parallel shift in rate, pro-rated over a
12-month period, is assumed.  The Banks
policy limit threshold is that NII exposure shall not exceed 10% of estimated
NII over the next 12 months.  The
following table reflects the Companys NII sensitivity analysis as of December
31, 2001.  Rate change
  (bp)
  
  Estimated
  benefit (exposure) as a% of annual projected NII+200
  
  1.20
  %-200
  
  1.05
  %
  The preceding sensitivity analysis does not represent a Company
forecast and should not be relied upon as beingindicative of future operating results.  These hypothetical estimates are based on
numerous assumptions including the
nature and timing of interest rate levels including yield curve shape,
repayments on loans, leases and securities, deposit rates, pricing decisions on
loans and deposits, reinvestment and replacement of 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 and refinancing levels deviating from those assumed, the
varying impact of interest rate change caps or floors on adjustable rate
assets, the potential effect of changing debt service levels on customers with
adjustable rate loans, depositor early withdrawals and product preference
changes, and other internal and external variables.  Furthermore, the sensitivity analysis does not reflect actions
that the ALCO might take in responding to or anticipating changes in interest
rates.  Liquidity  The need for liquidity in a banking institution arises principally to
provide for deposit withdrawals, the creditneeds of its customers, and to take advantage
of investment opportunities.  A banking
institution may achieve desired liquidity from both assets and
liabilities.  The Company considers cash
and deposits held in other banks, federal funds sold, other short-term
investments, maturing loans and investments, receipts of principal and interest
on loans, investments available for sale, and potential loan sales as sources
of asset liquidity.  Deposit growth 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 half of each year the Bank experiences
excess liquidity.  The Banks seasonal
agriculturaland
construction loan demand, which typically occurs each year from early June
through late October, tends to absorb excess liquidity and usually results in a
net borrowed position during that time frame.  25 
   The Banks short-term liquid assets consist of cash and due from banks,
federal funds sold, and investmentsecurities with maturities of one year or less (exclusive of pledged
securities).  Irrespective of maturity,
U.S. Government and Agency securities qualify as collateral for borrowings at
the FHLB, Federal Reserve Bank, and with broker-dealers.  The Companys short-term liquid assets totaled $29,684,979 and
$34,687,540 at December 31, 2001 and 2000,respectively.  Short-term liquid assets as a percentage of total assets were
9.70% and 11.51%, respectively as of those dates.  In order to fund its liquidity needs, the Bank maintains formal and
informal borrowing arrangements with theFederal Reserve Bank to meet unforeseen deposit outflows or seasonal
loan funding demands.  The Bank has also
entered an agreement to borrow funds from the FHLB secured by U.S. Government
and Agency obligations in the Banks investment portfolio.  As of December 31, 2001 and December 31,
2000, the Bank had $0 and $4,000,000, respectively, outstanding on these lines.  Liquidity is also affected by collateral
requirements of the Banks public deposit and certain borrowings.  Total pledged securities were $50,807,817 at
December 31, 2001 and $52,339,269 at December 31, 2000.  The Bank monitors its credit facility availability and unencumbered
qualifying collateral in conjunction with itsasset and liability management process.  Policy limits are established and monitored
for maximum borrowings and minimum contingency liquidity levels.  Management believes the Company maintains adequate amounts of liquidity
to meet its needs.  Capital Resources  CIB and the Bank are subject to requirements of the Federal Reserve
Board (FRB) and FDIC, respectively, governingcapital adequacy.  These regulations are intended to reflect the degree of risk
associated with both on and off balance sheet items.  Financial institutions are expected to comply with a minimum
ratio of qualifying total capital to risk-weighted assets of 8.0%.  At least half of which must be in Tier 1
Capital, as defined by the regulations.  Federal regulatory
agencies have also adopted a minimum leverage ratio of 4.0%, which is intended
to supplement the risk-based capital requirements and to ensure that all
financial institutions continue to maintain a minimum level of core capital.  Total shareholders equity on December 31, 2001, increased by
$1,443,518 to $27,213,127 over December 31,2000 total shareholders equity of
$25,769,609.  The increase is attributed
to net income during 2001 of $1,409,129,
an increase of $774,248 in the accumulated other comprehensive income associated
with the market value adjustment on the Banks Available-for-Sale securities,
an increase of $127,018 associated with stock options exercised, and a decrease
of $40,000 to the Banks guarantee of its Employee Stock Ownership debt.  These
increases to shareholder equity were offset by cash dividends paid in the
amount of $895,024, and cash paid in lieu of fractional shares related to the
Companys 5% stock dividend in the amount of $11,853. As can be seen by the
following table, the Company and Bank exceeded all regulatory capital ratios on
December 31, 2001.  26 
   Risk Based
Capital Ratio As of December 31, 2001  Company
  
  BankAmount
  
  Ratio
  
  Amount
  
  Ratio(Dollars in thousands)Tier 1 Capital
  
  $
  26,490
  
  11.23
  %
  $
  26,177
  
  11.09
  %Tier 1 Capital Minimum
  Requirement
  
  9,434
  
  4.00
  %
  9,442
  
  4.00
  %Excess
  
  $
  17,056
  
  7.23
  %
  $
  16,735
  
  7.09
  %Total Capital
  
  29,470
  
  12.49
  %
  29,159
  
  12.35
  %Total Capital Minimum
  Requirement
  
  18,868
  
  8.00
  %
  18,884
  
  8.00
  %Excess
  
  $
  10,602
  
  4.49
  %
  $
  10,275
  
  4.35
  %Risk-Adjusted Assets
  
  $
  235,855
  
  
  
  $
  236,044Leverage
  Capital RatioTier 1 Capital to Quarterly
  Average Total Assets
  
  $
  26,490
  
  8.56
  %
  $
  26,177
  
  8.47
  %Minimum Leverage
  Requirement
  
  12,379
  
  4.00
  %
  12,369
  
  4.00
  %Excess
  
  $
  14,111
  
  4.56
  %
  $
  13,808
  
  4.47
  %Total Quarterly Average
  Assets
  
  $
  309,473
  
  
  
  $
  309,228  Inflation  It is Managements opinion that the effects of inflation on the
Companys financial statements for the years endedDecember 31, 2001, 2000, and 1999 are not
material.  Supervision and Regulation  CIB and the Bank operate in a highly regulated environment and are
subject to supervision and examination byvarious federal and state regulatory agencies.  CIB, as a bank holding company, is subject
to regulation and supervision  by primarily the FRB, and the Bank, as a
California-chartered commercial bank, is subject to supervision and regulation
by primarily the FDIC and the California Department of Financial Institutions
(DFI).  Federal and California state
laws and regulations govern numerous matters involving both entities, including
maintenance of adequate capital and financial condition, permissible types,
amounts and terms of extensions of credit and investments, permissible
non-banking activities, the level of reserves against deposits, and
restrictions on dividend payments.  The
federal and state regulatory agencies possess extensive discretion and powers
to prevent or remedy unsafe or unsound practices or violations of law by banks
and bank holding companies.  CIB and the
Bank also undergo periodic examinations by one or more of these regulatory
agencies, which may subject them to changes in asset valuations, in amounts of
required loss allowances, and in operating restrictions resulting from the
regulators judgments based on information available to them at the time of
their examination.  The Banks
operations are also subject to a wide variety of state and federal consumer
protection and similar statutes and regulations.  Those and other restrictions limit the manner in which CIB and
the Bank may conduct business and obtain financing.  The
laws and regulations to which CIB and the Bank are subject can and do change
significantly from time to time, and such changes could materially affect the
Companys business, financial condition, and operating results.  Changes in Senior Management  To further strengthen senior management of the Bank, on February 20,
2001 the Board announced that DonMcDonel was promoted to the position of Executive Vice President,
Commercial and Retail Banking.  He
accepted this assignment after serving as the Senior Vice President, Senior
Loan Officer of the Bank.  Mr. McDonel
came to the Bank in 1999 with more than twenty (20) years of experience in the
banking industry, having most recently served as Executive Vice
President/Credit Administrator of Douglas National Bank in Roseburg, Oregon.  The
Bank received the necessary approvals to appoint Mr. McDonel to the executive
officer position.  27 
   New Branch Openings  On May 31, 2001, the Bank opened its eighth full service branch in
Lincoln, California.  Approval from theFDIC was received on July 21,
2000.  Additionally, the Bank received
approval from the DFI on July 3, 2000.  On September 26, 2001, the Banks Roseville, California loan production
office was converted into its ninth fullservice branch.  Regulatory approval
from the FDIC and DFI were granted on July 2, 2001, and June 30, 2001,
respectively.  Approval of Stock Repurchase Plan  On November 13, 2001, CIBs Board of Directors approved a plan to
repurchase, as conditions warrant, up to 5%of CIBs common stock on the open
market.  The duration of the plan is
open-ended and the timing of purchases is dependent upon market
conditions.  During 2001, CIB did not
repurchase any of its common stock pursuant to the plan.  Segment Reporting  On January 1, 1998, the Company adopted Financial Accounting Standards
Board (FASB) Statement ofFinancial
Accounting Standards No. 131, Disclosures about Segments of an Enterprise and
Related Information, (SFAS No. 131). 
SFAS No. 131 establishes standards for a public business enterprises
reporting of information about its operating segments in its annual financial
statements.  The Statement requires that
the enterprise report selected information concerning operating segments in interim
financial reports issued to shareholders.  Additionally, the
Statement establishes requirements for related disclosures about products,
services, geographic  areas, and major customers.  SFAS No. 131 requires public business enterprises to report a measure
of segment profit or loss, certain specificrevenue and expense items, and segment
assets.  The Statement further requires
reconciliation of total segment revenues, total segment profit or loss, total
segment assets, and other amounts disclosed for segments to corresponding
amounts in the enterprises general purpose financial statements.  It requires that all public business
enterprises report information about the revenues derived from the enterprises
products or services (or groups of similar products and services), about the
countries in which the enterprise earns revenues and holds assets, and about
major customers regardless of whether that information is used in making
operating decisions.  However, SFAS No.
131 does not require an enterprise to report information that is not prepared
for internal use if reporting it would be impracticable. SFAS No. 131 is
effective for financial statements for periods beginning after December 15,
1997.  The adoption of the applicable provisions of SFAS No. 131 did not have
a material effect on the Company, asManagement believes that it operates only in one segment, the
commercial banking segment.  California Energy Shortage  Throughout 2001, California experienced periodic shortages in the
supply of electricity to the state. 
There hasbeen,
and there may be in the future, limited rolling power outages or blackouts
throughout the state.  Power outages
could disrupt the Companys operations, increase operating costs, and impact
its borrowers ability to repay their debts. 
Contingency plans to deal with power outages have been developed;
however, the frequency or duration of the power outages cannot be
predicted.  As a result, such outages
could adversely affect the Companys future operating results.  28 
   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 Californiacorporation) and subsidiaries as of December
31, 2001 and 2000, 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, 2001. 
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.  Thosestandards 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 financialposition of California Independent Bancorp
and subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted
in the United States.  /s/ Arthur Andersen LLPSacramento, CaliforniaFebruary 14, 2002  29 
   CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2001 AND 2000  2001
  
  2000AssetsCash and Due From Banks
  
  $
  17,746,817
  
  $
  19,358,528Federal Funds Sold
  
  5,300,053
  
  7,700,000Cash and Cash Equivalents
  
  23,046,870
  
  27,058,528Investment Securities
  Held-to-Maturity
  
  3,603,775
  
  5,317,357Investment Securities
  Available-for-Sale
  
  74,753,514
  
  76,694,574Total Investments
  
  $
  78,357,289
  
  $
  82,011,931Loans and Leases
  
  175,808,138
  
  158,681,594Loans and Leases
  Held-For-Sale
  
  16,473,453
  
  20,333,661Less: Allowance for Loan
  and Lease Losses
  
  (5,498,433
  )
  (5,724,412
  )Net Loans and Leases
  
  $
  186,783,158
  
  $
  173,290,843Premises and Equipment, Net
  
  6,936,936
  
  6,978,841Interest Receivable
  
  2,091,325
  
  2,839,611Other Real Estate Owned
  
  541,976
  
  404,618Cash Surrender Value of
  Insurance Policies
  
  5,108,392
  
  4,869,924Deferred Taxes
  
  1,022,450
  
  2,168,076Income Tax Receivable
  
  1,041,616
  
  89,325Other Assets
  
  1,075,181
  
  1,508,892Net Assets From
  Discontinued Operations
  
  162,502
  
  225,972Total Assets
  
  $
  306,167,695
  
  $
  301,446,561Liabilities
  and Shareholders EquityDeposits:Noninterest-Bearing
  
  $
  69,968,239
  
  $
  63,995,909Interest-Bearing
  
  205,607,830
  
  203,636,318Total Deposits
  
  $
  275,576,069
  
  $
  267,632,227Interest Payable
  
  1,246,582
  
  1,879,722Deferred Compensation
  Payable
  
  935,319
  
  631,263Other Borrowings
  
  120,000
  
  4,160,000Other Liabilities
  
  1,076,598
  
  1,373,740Total Liabilities
  
  $
  278,954,568
  
  $
  275,676,952Commitments and
  Contingencies (Note 14)Shareholders
  Equity:Common Stock, No Par Value
  - Shares Authorized - 20,000,000,
  Shares Issued and Outstanding  2,115,419 in 2001 and 2,008,966 in 2000
  
  $
  22,321,519
  
  $
  19,909,484Retained Earnings
  
  4,481,040
  
  6,263,805Debt Guarantee of ESOP
  
  (120,000
  )
  (160,000
  )Accumulated Other
  Comprehensive Income (Loss)
  
  530,568
  
  (243,680
  )Total Shareholders Equity
  
  $
  27,213,127
  
  $
  25,769,609Total Liabilities and
  Shareholders Equity
  
  $
  306,167,695
  
  $
  301,446,561  The accompanying notes are an integral part of these consolidated
financial statements.  30 
   CALIFORNIA
INDEPENDENT BANCORP AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999  2001
  
  2000
  
  1999Interest
  IncomeInterest and Fees on Loans
  and Leases
  
  $
  16,807,295
  
  $
  16,971,203
  
  $
  18,624,289Interest on Investments -Taxable Interest Income
  
  4,347,405
  
  5,815,142
  
  3,900,332Nontaxable Interest Income
  
  93,354
  
  118,719
  
  161,764Interest on Federal Funds
  Sold
  
  483,512
  
  630,170
  
  593,197Total Interest Income
  
  21,731,566
  
  23,535,234
  
  23,279,582Interest
  ExpenseInterest on Deposits
  
  6,902,074
  
  8,956,160
  
  8,390,638Interest on Other
  Borrowings
  
  120,296
  
  513,696
  
  182,745Total Interest Expense
  
  7,022,370
  
  9,469,856
  
  8,573,383Net Interest Income
  
  14,709,196
  
  14,065,378
  
  14,706,19Provision
  for Loan and Lease Losses
  
  2,450,000
  
  200,000
  
  1,000,000Net Interest Income After
  Provision for Loan and Lease Losses
  
  12,259,196
  
  13,865,378
  
  13,706,199Noninterest
  IncomeService Charges on Deposit
  Accounts
  
  1,082,547
  
  1,009,455
  
  970,908Brokered Loan Fees
  
  158,195
  
  112,055
  
  235,768Loan Servicing Fees
  
  366,276
  
  488,995
  
  553,280Other
  
  602,228
  
  1,058,467
  
  804,491Total Noninterest Income
  
  2,209,246
  
  2,668,972
  
  2,564,447Noninterest
  ExpenseSalaries and Employee
  Benefits
  
  7,261,191
  
  6,541,651
  
  6,834,859Occupancy Expense
  
  821,624
  
  725,767
  
  746,046Furniture and Equipment
  Expense
  
  1,171,313
  
  1,170,026
  
  1,339,391Other Operating and
  Administrative Expense
  
  3,314,069
  
  3,777,515
  
  4,890,195Total Noninterest Expense
  
  12,568,197
  
  12,214,959
  
  13,810,491Income Before Provision for
  Income Taxes
  
  1,900,245
  
  4,319,391
  
  2,460,155Provision
  for Income Taxes
  
  547,200
  
  1,643,525
  
  865,000Net Income
  From Continuing Operations
  
  1,353,045
  
  2,675,866
  
  1,595,155Loss on Disposal of
  Subsidiary (Net of Income Tax Benefit of $0, $0, $499,094)
  
  
  
  
  
  (713,772
  )Income (Loss) on
  Discontinued Operations (Net of Income Tax Benefit (Provision) of ($39,400),
  ($30,950), $185,225)
  
  56,084
  
  44,092
  
  (277,685
  )Net Income
  
  $
  1,409,129
  
  $
  2,719,958
  
  $
  603,698Per Share
  AmountsBasic Earnings Per Share
  From Continuing Operations
  
  $
  0.64
  
  $
  1.27
  
  $
  0.79Diluted Earnings Per Share
  From Continuing Operations
  
  0.63
  
  1.27
  
  0.79Basic Earnings Per Share
  After Disposal and Discontinuance of Subsidiary
  
  0.67
  
  1.29
  
  0.30Diluted Earnings Per Share
  After Disposal and Discontinuance of Subsidiary
  
  0.66
  
  1.29
  
  0.30Cash Dividends Per Common
  Share
  
  0.42
  
  0.40
  
  0.38  The
accompanying notes are an integral part of these consolidated financial
statements.  31 
   CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERSEQUITY FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999  Common Stock
  
  Retained
  
  Debt Guarantee
  
  Accumulated
  Other ComprehensiveShares
  
  Amount
  
  Earnings
  
  of ESOP
  
  Income (Loss)
  
  TotalBalance
  December 31, 1998
  
  1,744,580
  
  $
  15,612,227
  
  $
  8,194,823
  
  $
  (40,000
  )
  $
  33,930
  
  $
  23,800,980Comprehensive Income:Net Income from Continuing
  Operations
  
  
  
  
  
  1,595,155
  
  
  
  
  
  1,595,155Net Loss on Discontinued
  Operations
  
  
  
  
  
  (277,685
  )
  
  
  
  
  (277,685
  )Net Loss on Disposal of
  Discontinued Operation
  
  
  
  
  
  (713,772
  )
  
  
  
  
  (713,772
  )Other Comprehensive Loss,
  Net of Tax:Net Unrealized Investment
  Losses
  
  
  
  
  
  
  
  
  
  
  
  (982,834
  )Other Comprehensive Loss,
  Net of Tax:
  
  
  
  
  
  
  
  
  
  (982,834
  )
  (982,834
  )Comprehensive (Loss):
  
  
  
  
  
  
  
  
  
  
  
  (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
  
  
  
  40,000Options Exercised
  
  132,482
  
  117,755
  
  
  
  
  
  
  
  117,755Shares 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
  
  
  
  
  
  
  
  627,485Cash Dividends
  
  
  
  
  
  (799,211
  )
  
  
  
  
  (799,211
  )Balance
  December 31, 1999
  
  1,904,618
  
  $
  17,950,525
  
  $
  6,233,226
  
  $
  
  
  $
  (948,904
  )
  $
  23,234,847Comprehensive Income:Net Income from Continuing
  Operations
  
  
  
  
  
  2,675,866
  
  
  
  
  
  2,675,866Net Income on Discontinued
  Operations
  
  
  
  
  
  44,092
  
  
  
  
  
  44,092Other Comprehensive Income,
  Net of Tax:Net Unrealized Investment
  Gains
  
  
  
  
  
  
  
  
  
  
  
  705,224Other Comprehensive Income,
  Net of Tax:
  
  
  
  
  
  
  
  
  
  705,224
  
  705,224Comprehensive Income:
  
  
  
  
  
  
  
  
  
  
  
  3,425,182ESOP Debt Guarantee
  
  
  
  
  
  
  
  (200,000
  )
  
  
  (200,000
  )Reduction of ESOP Debt
  
  
  
  
  
  
  
  40,000
  
  
  
  40,0005% Stock Dividend With Cash
  Paid in Lieu of Fractional Shares
  
  94,881
  
  1,829,875
  
  (1,839,597
  )
  
  
  
  
  (9,722
  )Options Exercised
  
  14,695
  
  102,584
  
  
  
  
  
  
  
  102,584Shares Surrendered From
  Exercise of Options
  
  (5,228
  )
  (32,733
  )
  
  
  
  
  
  
  (32,733
  )Tax Benefit Arising From
  Exercise of Nonqualified Stock Options and Disqualifying Dispositions
  
  
  
  59,233
  
  
  
  
  
  
  
  59,233Cash Dividends
  
  
  
  
  
  (849,782
  )
  
  
  
  
  (849,782
  )Balance
  December 31, 2000
  
  2,008,966
  
  $
  19,909,484
  
  $
  6,263,805
  
  $
  (160,000
  )
  $
  (243,680
  )
  $
  25,769,609Comprehensive Income:Net Income from Continuing
  Operations
  
  
  
  
  
  1,353,045
  
  
  
  
  
  1,353,045Net Income on Discontinued
  Operations
  
  
  
  
  
  56,084
  
  
  
  
  
  56,084Other Comprehensive Income,
  Net of Tax:Net Unrealized Investment
  Gains
  
  
  
  
  
  
  
  
  
  
  
  774,248Other Comprehensive Income,
  Net of Tax:
  
  
  
  
  
  
  
  
  
  774,248
  
  774,248Comprehensive Income:
  
  
  
  
  
  
  
  
  
  
  
  2,183,377Reduction of ESOP Debt
  
  
  
  
  
  
  
  40,000
  
  
  
  40,0005% Stock Dividend With Cash
  Paid in Lieu of Fractional Shares
  
  99,957
  
  2,285,017
  
  (2,296,870
  )
  
  
  
  
  (11,853
  )Options Exercised
  
  6,724
  
  116,182
  
  
  
  
  
  
  
  116,182Shares Surrendered From
  Exercise of Options
  
  (228
  )
  (5,529
  )
  
  
  
  
  
  
  (5,529
  )Tax Benefit Arising From
  Exercise of Nonqualified Stock Options and Disqualifying Dispositions
  
  
  
  16,365
  
  
  
  
  
  
  
  16,365Cash Dividends
  
  
  
  
  
  (895,024
  )
  
  
  
  
  (895,024
  )Balance
  December 31, 2001
  
  2,115,419
  
  $
  22,321,519
  
  $
  4,481,040
  
  $
  (120,000
  )
  $
  530,568
  
  $
  27,213,127  The accompanying notes are an integral part of these
consolidated financial statements.  32 
   CALIFORNIA
INDEPENDENT BANCORP AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS FOR THE
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999  2001
  
  2000
  
  1999Cash Flows
  From Operating ActivitiesNet Income
  
  $
  1,409,129
  
  $
  2,719,958
  
  $
  603,698Adjustments to Reconcile
  Net Income to Net Cash Provided by Operating Activities:Depreciation and
  Amortization
  
  919,672
  
  996,724
  
  1,055,667Provision for Losses on
  Other Real Estate Owned
  
  
  
  140,000
  
  3,800Provision for Loan and
  Lease Losses
  
  2,450,000
  
  200,000
  
  1,000,000Provision (Benefit) for
  Deferred Taxes
  
  
  
  832,340
  
  (1,065,186
  )Investment Security Losses,
  Net
  
  
  
  
  
  440,634Purchase of Loans and
  Leases Held-for-Sale
  
  
  
  
  
  (16,171,844
  )Proceeds From Loan and
  Lease Sales
  
  1,725,830
  
  760,000
  
  21,968,279Origination of Loans and
  Leases Held-for-Sale
  
  
  
  (1,414,700
  )
  (8,807,109
  )(Gain) Loss on Sale of Real
  Estate Properties, Net
  
  (13,996
  )
  (291,871
  )
  (Gain) Loss on Sale of
  Premises and Equipment
  
  23,870
  
  (19,249
  )
  Loss on Disposal of
  Discontinued Operations
  
  
  
  
  
  713,772(Increase) Decrease in
  Assets:Interest Receivable
  
  748,286
  
  443,346
  
  (428,283
  )Deferred Taxes
  
  512,150
  
  649,894
  
  (361,754
  )Cash Surrender Value of
  Insurance Policies
  
  (238,468
  )
  (221,801
  )
  (2,332,418
  )Income Tax Receivable
  
  (952,291
  )
  286,587
  
  (181,238
  )Net Assets From
  Discontinued Operations
  
  63,470
  
  (338,106
  )
  Other Assets
  
  433,711
  
  (1,228,854
  )
  782,051Increase (Decrease) in
  Liabilities:Interest Payable
  
  (633,140
  )
  346,183
  
  (89,120
  )Deferred Compensation
  Payable
  
  304,056
  
  177,387
  
  115,881Net Liabilities From
  Discontinued Operations
  
  
  
  
  
  (126,060
  )Other Liabilities
  
  (297,142
  )
  (193,208
  )
  935,434Net Cash Provided By (Used
  For) Operating Activities
  
  $
  6,455,137
  
  $
  3,844,630
  
  $
  (1,943,796
  )Cash Flows
  From Investing ActivitiesNet (Increase) Decrease in
  Loans and Leases
  
  (17,945,645
  )
  (18,285,996
  )
  20,803,511Purchase of Securities
  Held-to Maturity
  
  
  
  
  
  (9,226,784
  )Purchase of Securities
  Available-for-Sale
  
  (43,441,081
  )
  (16,046,452
  )
  (47,981,149
  )Proceeds From Maturity of
  Securities Held-to-Maturity
  
  1,580,000
  
  10,712,105
  
  2,174,299Proceeds From Sales,
  Maturities and Calls of Securities Available-for-Sale
  
  46,923,447
  
  11,026,144
  
  27,250,996Proceeds From Sales of
  Other Real Estate Owned
  
  154,138
  
  1,091,590
  
  302,536Purchases of Premises and
  Equipment
  
  (901,637
  )
  (613,657
  )
  (640,426
  )Net Cash Used for Investing
  Activities
  
  $
  (13,630,778
  )
  $
  (12,116,266
  )
  $
  (7,317,017
  )Cash Flows
  From Financing ActivitiesNet Increase (Decrease) in
  Noninterest-Bearing Deposits
  
  5,972,330
  
  3,512,111
  
  (5,157,680
  )Net Increase (Decrease) in
  Interest-Bearing Deposits
  
  1,971,512
  
  (9,339,002
  )
  10,174,905Net Increase (Decrease) in
  Borrowed Funds
  
  (4,000,000
  )
  4,000,000
  
  Cash Dividends
  
  (895,024
  )
  (849,782
  )
  (799,211
  )Stock Options Exercised
  
  127,018
  
  129,084
  
  581,660Cash Paid in Lieu of
  Fractional Shares
  
  (11,853
  )
  (9,722
  )
  (9,446
  )Net Cash Provided by (Used
  For) Financing Activities
  
  $
  3,163,983
  
  $
  (2,557,311
  )
  $
  4,790,228Net Decrease in Cash and
  Cash Equivalents
  
  $
  (4,011,658
  )
  $
  (10,828,947
  )
  $
  (4,470,585
  )Cash and Cash Equivalents,
  Beginning of Year
  
  $
  27,058,528
  
  $
  37,887,475
  
  $
  42,358,060Cash and Cash Equivalents,
  End of Year
  
  $
  23,046,870
  
  $
  27,058,528
  
  $
  37,887,475Supplemental
  Disclosures of Cash Flow InformationCash Paid During the Year
  for:Interest Expense
  
  $
  7,655,510
  
  $
  9,123,673
  
  $
  8,662,503Income Taxes
  
  730,000
  
  1,375,000
  
  477,434Supplemental
  Disclosures of Noncash Investing and Financing ActivitiesDebt Guarantee of ESOP
  
  (40,000
  )
  160,000
  
  (40,000
  )Net Unrealized Gain (Loss)
  On Securities Held as Available-for-Sale (Net of Taxes)
  
  774,248
  
  705,224
  
  (982,834
  )Tax Benefit Arising From
  Exercise of Nonqualified Stock Options and Disqualifying Dispositions
  
  16,365
  
  59,233
  
  627,485Stock Dividends
  
  2,285,017
  
  1,829,875
  
  1,756,638Increase (Decrease) in
  Other Real Estate Owned as a Result of Foreclosure
  
  277,500
  
  
  
  1,504,959  The
accompanying notes are an integral part of these consolidated financial
statements.  33 
   CALIFORNIA INDEPENDENT BANCORP AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001  (1)  Summary of
Significant Accounting Policies:  The accounting and reporting policies of California Independent Bancorp
and its subsidiaries (collectively, the Company)conform with generally accepted accounting
principles in the United States 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-ownedsubsidiary, Feather River State Bank (the
Bank) and its wholly-owned subsidiary, E.P.I.  Leasing Company, Inc. (EPI). 
Significant intercompany transactions and balances 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 wasincorporated
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 nine
branches.  The main source of income for
the Bank is from lending activities, including commercial, agricultural, real
estate, and consumer and 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 in the United Statesrequires 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 federalfunds 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 positiveintent 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 that 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 and
Leases-  Loans and leases are stated at the principal amount outstanding less
applicable unearned interest income.  A
loan or lease isimpaired
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 or lease agreement.  When a
loan or lease is impaired, the recorded amount of the loan or lease on the
balance sheet is based on the present value of expected future cash flows
discounted at the loans or leases effective interest rate, or on the
observable or estimated market price of the loan or lease, or the fair value of
the collateral if the loan or lease is collateral dependent.  Income on impaired loans and leases is
recognized in accordance with the Banks accounting policy for loans and leases
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.  34 
   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 ofthe 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 the first quarter of 2001, the Bank adopted Statement of Financial
Accounting Standards No. 140, Accounting forTransfers and Servicing of Financial Assets
and Extinguishments of Liabilities, a replacement of FASB Statement No. 125  (SFAS
No. 140).  This statement revised the
standard of accounting for securitizations and other transfers of financial
assets as collateral and
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 forSBA guarantees of 70% to 90% of each
loan.  The Bank usually 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, 2001, the Bank had received no premiums subject
to such recourse.  A gain is recognized
on the sale of SBA loans through the collection on sale of a premium over the
adjusted carrying value, through the 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 ofthe 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 (ALLL) is maintained at a
level considered adequate by Management to providefor losses that can be reasonably
anticipated.  Accordingly, loan and
lease losses are charged to the ALLL, 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 and lease portfolio, reviews of specific problem loans and leases, 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 (OREO) consists of properties acquired by the
Bank through foreclosure and is carried at the lowerof 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 in
estimated fair value, if any, are charged to expense.  Interest
and Fees on Loans and Leases-  Origination fees and commitment fees, offset by certain direct loan and
lease origination costs, are deferred and recognizedover the contractual life of the loan as a
yield adjustment.  Interest income on
loans and direct lease financing is accrued daily as earned on all credits not
classified as nonaccrual.  Unearned
income on loans or leases, where applicable, is recognized as income using the
effective interest method over the term of the loan or lease.  35 
   Loans and leases are generally placed on nonaccrual status when the
timely collection of future interest or principal becomesuncertain, 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
and leases that are well-secured and in the process of collection may not be
placed on nonaccrual status, at the discretion of Management.  A nonaccrual loan or lease may be restored
to an accrual basis when interest and principal payments are current and
prospects for future payments are no longer in doubt.  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 AccountingPrinciples Board 25, rather than the fair
value method under Statement of Financial Accounting Standards No. 123
Accounting for Stock-Based Compensation (SFAS 123).  As permitted by SFAS 123, the Company has
not changed its method of accounting for stock options but has provided the
additional required disclosures as if it applied the fair value approach.  For the years ended December 31, 2001, 2000,
and 1999 the Company recognized no compensation expense related to stock options pursuant to SFAS 123.  Comprehensive
Income-  The Company has adopted Statement of Financial Accounting Standards No.
130, Reporting Comprehensive Income. The statementrequires an entity to report and display
comprehensive income and its components.  For the Company, comprehensive income (loss) includes net income and
changes in the fair value, net of applicable taxes, of its available-for-sale
investment securities.  Total
comprehensive income (loss) for 2001, 2000, and 1999 was $2,183,377,
$3,425,182, and $(379,136), respectively. 
Comprehensive income (loss) and its components have been reported as an
integral part of the Companys Statement of Changes in Shareholders Equity.  Income
Taxes-  Income taxes reported in the financial statements are computed at
current tax rates, including deferred taxes resulting fromtemporary 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-  In September of 2000, the Financial Accounting Standards Board (FASB)
issued SFAS No. 140.  This Statement
replacedSFAS No. 125,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities. SFAS No. 140 revised the standard of accounting for
securitizations and other transfers of financial assets and collateral and
requires certain disclosures, but it carries over most of SFAS No. 125s
provisions without reconsideration.  The
Company has adopted the disclosure provisions related to the securitization of
financial assets.  All transactions
entered into after the first quarter of 2001 have been accounted for in
accordance with SFAS No. 140.  This
adoption did not have a material impact on the Company.  In July 2001, the FASB issued SFAS No. 141, Business Combinations
(SFAS No. 141), and SFAS No. 142, Goodwill andOther Intangible Assets (SFAS No.
142).  These Statements change the
method of accounting for business combinations and goodwill in two significant
ways.  First, SFAS No. 141 prohibits the
use of the pooling of interests method and requires the purchase method of
accounting to be used for all business combinations initiated after June 30, 2001.  Second, SFAS No. 142 changes the accounting
method for goodwill from an amortization method to an impairment-only
approach.  As a result, goodwill shall
be accounted for as an asset unless it declines in value.  Companies will be required to test their
goodwill valuation periodically for impairment or loss and to recognize any
change on their books.  The amortization
of goodwill, including goodwill recorded in past business combinations, will
cease upon adoption of SFAS No. 142, which, for companies with calendar year
ends, will be January 1, 2002. 
Management does not believe that the adoption of these Statements will
have a material impact on the Company.  Reclassifications-  Certain reclassifications have been made to amounts previously reported
to conform with current presentation methods. 
Suchreclassifications
have no effect on net income or shareholders equity previously reported.  36 
   (2)  Investment
Securities:  As of December 31, 2001, 2000, and 1999, the Banks equity capital
reflected a net unrealized gain (loss) on the BanksAvailable-for-Sale investment securities,
net of applicable taxes, of $530,568, $(243,680), and $(948,904), respectively.  The amortized cost and approximate fair value of investments in debt
securities, mortgage backed securities, and other investmentsat December 31, 2001 and 2000 were as follows:  Investments  Amortized
  Cost
  
  GrossUnrealized
  Gains
  
  GrossUnrealized
  Losses
  
  Fair
  ValueDecember
  31, 2001Available-for-Sale:Obligations
  of U.S. Government Agencies
  
  $
  39,183,995
  
  $
  1,028,397
  
  $
  (127,235
  )
  40,085,157Mortgage-Backed
  Securities
  
  19,588,131
  
  385,793
  
  (102,496
  )
  19,871,428Debt
  Securities
  
  8,606,413
  
  131,922
  
  (925
  )
  8,737,410Equity
  Securities
  
  6,410,305
  
  68,714
  
  (419,500
  )
  6,059,519$
  73,788,844
  
  $
  1,614,826
  
  $
  (650,156
  )
  $
  74,753,514Held-to-Maturity:Obligations
  of States and Political Subdivisions
  
  $
  1,854,204
  
  $
  57,323
  
  $
  
  
  $
  1,911,527Debt and
  Other Securities
  
  1,749,571
  
  36,629
  
  
  
  1,786,200$
  3,603,775
  
  $
  93,952
  
  $
  
  
  $
  3,697,727December
  31, 2000Available-for-Sale:Obligations of U.S.
  Government Agencies
  
  $
  64,190,292
  
  $
  191,075
  
  $
  (244,192
  )
  64,137,175Mortgage-Backed Securities
  
  6,191,832
  
  213,143
  
  (1,488
  )
  6,403,487Equity Securities
  
  6,755,505
  
  35,907
  
  (637,500
  )
  6,153,912$
  77,137,629
  
  $
  440,125
  
  $
  (883,180
  )
  $
  76,694,574Held-to-Maturity:Obligations of States and
  Political Subdivisions
  
  $
  2,568,282
  
  $
  17,784
  
  $
  (3,966
  )
  $
  2,582,100Debt and Other Securities
  
  2,749,075
  
  
  
  (9,651
  )
  2,739,424$
  5,317,357
  
  $
  17,784
  
  $
  (13,617
  )
  $
  5,321,524  The following table shows the amortized cost and estimated fair value of
investment securities by contractual maturity atDecember 31, 2001 and 2000.  Actual maturities may differ from
contractual maturities because issuers may have the right to call or prepay obligations with or without
call or prepayment penalties.  Held-to-Maturity
  
  Available-for-SaleAmortized
  Costs
  
  Fair
  Value
  
  Amortized
  Costs
  
  Fair
  ValueDecember
  31, 2001No Stated
  Contractual Maturity
  
  $
  
  
  $
  
  
  $
  6,410,305
  
  $
  6,059,519Within One
  Year
  
  589,204
  
  593,295
  
  6,032,211
  
  6,225,255After One
  But Within Five Years
  
  2,869,571
  
  2,951,573
  
  25,046,098
  
  23,776,484After Five
  But Within Ten Years
  
  145,000
  
  152,859
  
  10,283,303
  
  15,063,369After 10
  Years
  
  
  
  
  
  26,016,927
  
  23,628,887Total
  
  3,603,775
  
  3,697,727
  
  73,788,844
  
  74,753,514December
  31, 2000No Stated Contractual
  Maturity
  
  $
  
  
  $
  
  
  $
  6,755,505
  
  $
  6,153,912Within One Year
  
  1,580,107
  
  1,578,808
  
  
  
  After One But Within Five
  Years
  
  3,592,250
  
  3,592,876
  
  47,902,874
  
  47,866,027After Five But Within Ten
  Years
  
  145,000
  
  149,840
  
  18,140,001
  
  18,123,400After 10 Years
  
  
  
  
  
  4,339,249
  
  4,551,235Total
  
  $
  5,317,357
  
  $
  5,321,524
  
  $
  77,137,629
  
  $
  76,694,574  37 
   Net gains (losses) from sales of Available-for-Sale investment
securities during 2001, 2000, and 1999 were $0, $0, and$(440,634), respectively.  Gross gains of $0, $0, and $14,141 and gross
losses of $0, $0, and $454,775 were realized on those sales in 2001, 2000, and
1999, respectively.  Investment securities pledged as collateral for certain lines of credit
and deposits amounted to $50,807,817 and $52,339,269 atDecember 31, 2001 and 2000, respectively.  (3)  Loans and
Leases:  Loans and Leases outstanding are summarized as follows:  December
  31,2001
  
  2000Commercial and Agricultural
  
  $
  40,092,739
  
  $
  41,691,321Real Estate-Construction
  
  32,268,227
  
  35,783,474Real Estate-Mortgage
  
  100,685,224
  
  75,626,555Consumer
  
  4,826,959
  
  4,471,652Lease Financing
  
  11,653,824
  
  19,608,845Other
  
  2,754,618
  
  1,833,408Total
  
  $
  192,281,591
  
  $
  179,015,255  Loans and leases on which the accrual of interest has been discontinued
or reduced amounted to approximately $3,059,798and $4,925,579 at December 31, 2001 and 2000,
respectively.  This represents the total
recorded investment in impaired loans and leases.  The allowance for
loan and lease losses that was allocated to these impaired loans and leases
totaled $1,080,082 and $954,208 as of December 31, 2001 and 2000,
respectively.  For income reporting
purposes, impaired loans and leases are placed on a nonaccrual status.  This is more fully discussed in Note 1.  The average balance of impaired loans and
leases during 2001, 2000, and 1999 was $4,444,063, $7,437,963, and $5,774,926,
respectively.  Interest income recorded
on those loans and leases during 2001, 2000, and 1999 was $290,651, $269,776,
and $212,610, respectively.  Foregone
interest on loans and leases placed on nonaccrual status was $597,145,
$744,369, and $883,268 for the years ended December 31, 2001, 2000, and 1999,
respectively.  Changes in the allowance for loan and lease losses are summarized as
follows:  Years Ended
  December 31,2001
  
  2000
  
  1999Balance, Beginning of Year
  
  $
  5,724,412
  
  $
  6,770,523
  
  $
  6,024,111Provision
  
  2,450,000
  
  200,000
  
  1,000,000Charge-Offs
  
  (3,108,808
  )
  (1,739,930
  )
  (1,146,903
  )Recoveries on Previous
  Charge-Offs
  
  432,829
  
  493,819
  
  893,315Balance, End of Year
  
  $
  5,498,433
  
  $
  5,724,412
  
  $
  6,770,523  (4)  Premises and Equipment:  A summary of premises and equipment follows:  December
  31,2001
  
  2000Land
  
  $
  1,316,224
  
  $
  1,432,957Bank Premises and
  Improvements
  
  5,962,324
  
  6,045,506Furniture, Fixtures and
  Equipment
  
  5,447,096
  
  7,329,037$
  12,725,644
  
  $
  14,807,500Less Accumulated
  Depreciation and Amortization
  
  (5,788,708
  )
  (7,828,659
  )Total Premises and
  Equipment
  
  $
  6,936,936
  
  $
  6,978,841  Depreciation and amortization charged to expense was $919,672, $966,724,
and $1,055,667 in 2001, 2000, and 1999, respectively.  38 
   (5)  Deposits:  A summary of deposit balances follows:  December
  31,2001
  
  2000Demand
  
  $
  69,968,239
  
  $
  63,995,909Interest-Bearing
  Transaction Accounts
  
  70,627,893
  
  70,980,794Savings Deposits
  
  41,703,241
  
  36,900,690Time Certificate of
  Deposits
  
  93,276,696
  
  95,754,834Total Deposits
  
  $
  275,576,069
  
  $
  267,632,227  Time certificates of deposit of $100,000 or
more, including public time deposits, amounted to approximately $34,810,408 and
$40,344,063 at December 31, 2001 and 2000, respectively.  Interest expense on time certificates of
deposit of $100,000 or more, including public time deposits, amounted to
approximately $2,009,467, $2,479,544, and $2,192,867 in 2001, 2000, and 1999,
respectively.  At December 31, 2001, the scheduled
contractual maturities of all time certificates of deposit were as follows:  December
  31, 2001Three Months or Less
  
  $
  43,594,080Over Three Through Twelve
  Months
  
  40,608,752Over One Through Three
  Years
  
  7,180,960Over Three Years
  
  1,892,904Total
  
  $
  93,276,696  (6)  Other
Borrowings:  The Bank maintains secured lines of credit with the Federal Home Loan
Bank (FHLB) and the Federal Reserve Bank,against which the Bank may take advances.  The terms of these credit facilities require
the Bank to maintain in safekeeping with the FHLB or Federal Reserve Bank, as applicable, eligible
collateral of at least 100% of outstanding advances.  To provide  borrowing capacity for short-term liquidity
needs, as of December 31, 2001, the Company had $37,631,914 and $8,000,000 in  safekeeping
and pledged to the FHLB and Federal Reserve Bank, respectively.  At December 31, 2001, 2000, and 1999  there  was $0, $4,000,000, and $0
outstanding, respectively, under the FHLB line of credit.  At December 31, 2001, 2000, and 1999 there were no amounts outstanding on the
Federal Reserve Bank line of credit.  The interest rates on FHLB and Federal Reserve Bank credit advances vary
dependent on the term of the advance and thenature of collateral supporting the
advance.  Interest is paid at maturity
for overnight advances and monthly for other  advances.  Principal is due at maturity.  The interest expense on all FHLB and Federal
Reserve Bank advances was $83,804, 
$460,668, and $156,448 for the
years ended December 31, 2001, 2000, and 1999, respectively.  (7)  Other Noninterest
Income and Expense:  The components of other operating income and expense were as follows:  Years Ended
  December 31,2001
  
  2000
  
  1999(Dollars in
  thousands)Non-Insured Deposit Income
  
  $
  174
  
  $
  222
  
  $
  249Gains on Sale of OREO
  
  14
  
  292
  
  Gains on Sales of Leases
  
  
  
  
  
  45Other
  
  414
  
  544
  
  510Total Other Noninterest
  Income
  
  $
  602
  
  $
  1,058
  
  $
  804Attorney Fees
  
  166
  
  225
  
  377Other Operating and
  Administrative Expense
  
  3,148
  
  3,553
  
  4,513Total Other Noninterest
  Expense
  
  $
  3,314
  
  $
  3,778
  
  $
  4,890  39 
   (8)  Income
Taxes:  The provision (benefit) for income taxes consists of the following:  Years Ended
  December 31,2001
  
  2000
  
  1999Current -Federal
  
  $
  (65,929
  )
  $
  703,171
  
  $
  1,765,746State
  
  28,085
  
  108,014
  
  164,440$
  (37,844
  )
  $
  811,185
  
  $
  1,930,186Deferred -Federal
  
  466,884
  
  631,850
  
  (983,263
  )State
  
  118,160
  
  200,490
  
  (81,923
  )585,044
  
  832,340
  
  (1,065,186
  )$
  547,200
  
  $
  1,643,525
  
  $
  865,000  The effective tax rate and statutory federal income tax rate are
reconciled as follows:  Years Ended
  December 31,2001
  
  2000
  
  1999Federal Statutory Income
  Tax Rate
  
  34.0
  %
  34.0
  %
  34.0
  %State Franchise Taxes, Net
  of Federal Income Tax Benefit
  
  7.2
  
  7.2
  
  7.2Tax-Exempt Interest
  
  (7.9
  )
  (4.9
  )
  (4.0
  )Income Tax Credits
  
  (5.1
  )
  
  
  Other
  
  0.6
  
  1.7
  
  (2.0
  )28.8
  %
  38.0
  %
  35.2
  %  The components of the net deferred tax asset of the Company, recorded in
other assets, as of December 31, 2001 and 2000,were as follows:  2001
  
  2000Deferred
  Tax Assets -Loan and Lease Losses
  
  $
  1,430,950
  
  $
  1,662,775California Franchise Tax
  
  13,085
  
  70,725Other Real Estate Owned
  
  26,904
  
  32,920Unrealized Loss on
  Securities Available-for-Sale
  
  
  
  199,375Nonaccrual Loans and Leases
  
  202,114
  
  895,004Deferred Compensation
  
  370,647
  
  244,662Other
  
  24,448
  
  Total Deferred Tax Assets
  
  $
  2,068,148
  
  $
  3,105,461Deferred Tax Liabilities -Depreciation
  
  135,865
  
  $
  150,471Stock Dividends
  
  475,733
  
  425,884Unrealized Gain on
  Securities Available-for-Sale
  
  434,100
  
  Other
  
  
  
  361,030Total Deferred Tax
  Liabilities
  
  $
  1,045,698
  
  $
  937,385Net Deferred Tax Asset
  
  $
  1,022,450
  
  $
  2,168,076  In addition to the net deferred tax assets as shown in the preceding
table, the Company also had net deferred tax assets relatedto EPI of $0 and $72,894 as of December 31,
2001 and December 31, 2000, respectively. 
These amounts are included as part of  the line item Net Assets
from Discontinued Operations in the Companys Consolidated Balance Sheets.  40 
   The components of the deferred income tax provision (benefit) are
summarized as follows:  Years Ended
  December 31,2001
  
  2000
  
  1999Provisions (Benefit) for
  Possible Loan and Lease Losses
  
  $
  231,825
  
  $
  607,364
  
  $
  (269,615
  )Interest on Nonaccrual
  Loans and Leases
  
  692,890
  
  (146,064
  )
  (372,311
  )Tax Depreciation Methods
  
  (14,606
  )
  (47,148
  )
  (22,930
  )California Franchise Tax
  
  57,640
  
  (14,815
  )
  110,512Other Real Estate Owned
  
  6,016
  
  (32,920
  )
  58,383Deferred Compensation
  
  (125,985
  )
  (136,143
  )
  (108,519
  )Other
  
  (262,736
  )
  602,066
  
  (460,706
  )$
  585,044
  
  $
  832,340
  
  $
  (1,065,186
  )  (9) 
Discontinued Operations:  On March 21, 2000, the Board of Directors of the Bank, voting as the
sole shareholder of EPI, approved the dissolution andwinding up of EPIs affairs.  The loss associated with the 1999 operation
and disposal of EPI was $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 Banks investment in EPI and the goodwill associated with it,
and the estimated costs of disposing of these operations.  During 2001, EPI had net income from
operations of $56,084.  Summarized balance sheet data for the discontinued operations as of
December 31, 2001 is as follows:  AssetsCash
  and Due From Banks
  
  $
  Receivables and All Other
  Assets
  
  201,520Total Assets
  
  $
  201,520LiabilitiesPayables and All Other
  Liabilities
  
  $
  39,018Net Assets of Discontinued
  Operations
  
  $
  162,502  (10)  Shareholders
Equity:  At December 31, 2001, CIB was authorized to issue 20,000,000 shares of
no par common stock.  Of this amount,
2,115,419and 2,008,966
shares of common stock were issued and outstanding at December 31, 2001 and
2000, respectively.  The principal source of cash for CIB is dividends from the Bank.  Banking regulations limit the amount of
dividends that maybe 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,
2001, the Company had approximately $2,157,747 available for payments of
dividends, which would not require the prior approval of the banking regulators
under this limitation.  The Company adopted Statement of Financial Accounting Standards No. 128,
Earnings per Share, effective December 15,1998. 
As a result, the Company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:  41 
   Year Ended December 31,  Income
  (Numerator)
  
  
  
  Per Share
  AmountContinuing
  Operations
  
  Discontinued
  Operations
  
  Net
  
  Shares
  (Denominator)
  
  Continuing
  Operations
  
  Discontinued
  Operations
  
  NetBasic
  Earnings (Loss) Per Share2001
  
  $
  1,353,045
  
  $
  56,084
  
  $
  1,409,129
  
  2,110,031
  
  $
  0.64
  
  $
  0.03
  
  $
  0.672000
  
  2,675,866
  
  44,092
  
  2,719,958
  
  2,103,500
  
  1.27
  
  0.02
  
  1.291999
  
  1,595,155
  
  (991,457
  )
  603,698
  
  2,008,257
  
  0.79
  
  (0.49
  )
  0.30Effect of
  Dilutive Securities
  - Employee Stock Options2001
  
  $
  
  $
  
  
  $
  
  40,5092000
  
  
  
  
  
  
  
  2,9451999
  
  
  
  
  
  
  
  21,720Diluted
  Earnings (Loss) Per Share2001
  
  $
  1,353,045
  
  $
  56,084
  
  $
  1,409,129
  
  2,150,540
  
  $
  0.63
  
  $
  0.03
  
  $
  0.662000
  
  2,675,866
  
  44,092
  
  2,719,958
  
  2,106,445
  
  1.27
  
  0.02
  
  1.291999
  
  1,595,155
  
  (991,457
  )
  603,698
  
  2,029,977
  
  0.79
  
  (0.49
  )
  0.30  For the year ending December 31, 2001, employee stock options in the
amount of $342 were excluded from the computationof diluted earnings (loss) per share, as their
effect was antidilutive.  In August 2001, the Board of Directors authorized a 5% stock dividend
that was distributed on September 25, 2001. 
Thedividend was
declared on August 25, 2001, to holders of record on September 10, 2001.  The dividend resulted in the issuance of
99,957 additional shares of common stock. 
All common stock and per share amounts have been retroactively adjusted
to reflect the stock dividend.  In August 2000, the Board of Directors authorized a 5% stock dividend
that was distributed on September 15, 2000. 
Thedividend was
declared on August 15, 2000, to holders of record on August 31, 2000.  The dividend resulted in the issuance of
94,811 additional shares of common stock. 
All common stock and per share amounts have been retroactively adjusted
to reflect the stock dividend.  In August 1999, the Board of Directors authorized a 5% stock dividend
that was distributed on September 17, 1999. 
Thedividend 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 retroactively adjusted
to reflect the stock dividend.  On November 13, 2001, CIBs Board of Directors approved a plan to
repurchase, as conditions warrant, up to 5% of CIBs commonstock on the open market.  The duration of the plan is open-ended and
the timing of purchases is dependent upon market conditions.  During 2001, CIB did not repurchase any of
its common stock pursuant to the plan.  (11) 
Disclosure of Fair Value of Financial Instruments:  Cash and
Cash Equivalents-  Forthese
short-term instruments, the carrying value approximates fair value.  Investments-  Forsecurities
held-for-investment purposes, fair values are based on quoted market prices or
dealer quotes.  (See Note 2 for further
discussion.)  Loans and
Leases-  Thefair value of
loans and leases is estimated by discounting the future cash flows using
current rates at which similar loans and leases with similar remaining
maturities would be made to borrowers with similar credit ratings.  The fair value of nonperforming loans and
leases is estimated based on allocating specific and general reserves to the
various nonperforming loan and lease classifications.  42 
   Deposit
Liabilities-  Thefair 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-  Otherliabilities
represent short-term instruments.  The
carrying amount approximates fair value.  Off-Balance
Sheet Financial Instruments-  Thefair 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 Companys financial instruments at
December 31, 2001 and 2000 were as follows:  December
  31, 2001
  
  December
  31, 2000Carrying
  Amount
  
  Fair Value
  
  Carrying
  Amount
  
  Fair ValueFinancial
  Assets:Cash and Cash Equivalents
  
  $
  23,047,000
  
  $
  23,047,000
  
  $
  27,059,000
  
  $
  27,059,000Investments
  
  78,357,000
  
  78,451,000
  
  82,012,000
  
  82,016,000Loans and Leases (Net)
  
  186,783,000
  
  190,538,000
  
  173,291,000
  
  173,516,000Financial
  Liabilities:Deposits
  
  $
  275,576,000
  
  $
  276,264,000
  
  $
  267,632,000
  
  $
  268,075,000Other Borrowings
  
  120,000
  
  120,000
  
  4,160,000
  
  4,160,000Interest Payable, Deferred
  Compensation
  
  
  
  
  
  
  
  Payable, and Other
  Liabilities
  
  3,259,000
  
  3,259,000
  
  3,885,000
  
  3,885,000  (12)  Stock
Options:  During 1989, the Bank adopted the Feather River State Bank 1989 Amended
and Restated Stock Option Plan.  The
plan isnonqualified and
provides that nonemployee directors and key employees may be granted options to
purchase the Bank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 CIB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 no later
than three (3) months and one (1) day after any termination of employment or
status as a director.  Vesting is
determined at the time of grant by the Board of Directors.  During 1996, CIB adopted the California Independent Bancorp 1996 Stock
Option Plan (1996 Plan) which, as of December31, 2001, after adjustment for all
subsequently distributed stock dividends, sets aside 190,286 shares of no par
value common stock of CIB for which options may be granted to key, full-time
salaried employees and officers of the Company, as well as nonemployee
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 CIBs common stock on the granting date.  Additionally, the options must be paid in
full at the time the option is exercised in cash, shares of CIB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.  43 
   During 2000, CIB adopted the California Independent Bancorp 2000 Stock
Option Plan (2000 Plan) which, as of December31, 2001, after adjustment for all
subsequently distributed stock dividends, sets aside 110,250 shares of no par
value common stock of CIB.  The 2000
Plan provides for the grant of Incentive Stock Options (ISO) and
Non-qualified Stock Options (NQSO), within the meaning of the Internal
Revenue Code of 1986, as amended (the Code), to employees, including
directors and officers who are also employees of the Company.  The 2000 Plan also provides for other types
of stock and option awards that may be granted to employees, officers and
directors of the Company and its subsidiaries. 
Awards may also be granted to the Companys consultants, independent
contractors, and advisors, provided they render bona fide services that are not
in connection with the offer and sale of securities in a capital-raising
transaction.  Options granted may be
exercised within the times or upon the events determined by the Stock Option
Committee (the Committee) as set forth in the Award Agreement governing such
option.  However, no option will be
exercisable after the expiration of one hundred twenty (120) months from the
date the option is granted.  The vesting of any option granted under the 2000 Plan will be determined
by the Committee at its sole discretion. 
The exerciseprice
of each NQSO granted pursuant to the 2000 Plan will be determined by the
Committee, but may not be less than eighty five percent (85%) of the fair
market value of the stock subject to the option on the date the option is
granted.  The exercise price of each ISO
granted pursuant to the 2000 Plan will also be determined by the Committee, but
may not be less than one hundred percent (100%) of the fair market value of
shares on the grant date, unless the optionee owns 10% or more of the combined
voting power of CIB.  In such event, the
purchase price of the stock subject to the ISO may not be less than one hundred
ten percent (110%) of the fair market value of shares on the grant date.  Federal income tax benefits relating to options exercised under the
plans have been credited to shareholders equity.  TheCompany
accounts for these plans under Accounting Principals Board 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:  2001
  
  2000
  
  1999Net Income From Continuing
  Operations:
  
  As reported
  
  $
  1,353,045
  
  $
  2,675,866
  
  $
  1,595,155Pro forma
  
  1,353,045
  
  2,625,397
  
  313,074Basic EPS:
  
  As reported
  
  0.64
  
  1.27
  
  0.79Pro forma
  
  0.64
  
  1.25
  
  0.16Diluted EPS:
  
  As reported
  
  0.63
  
  1.27
  
  0.79Pro forma
  
  0.63
  
  1.25
  
  0.15  Because the SFAS 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resultingpro forma compensation cost may not be
representative of that to be expected in future years.  A summary of the status of the Companys three stock option plans, after
adjustment for all subsequently distributed stockdividends, at December 31, 2001, 2000, and
1999, and changes during the years then ended, is presented in the table and
narrative below.  2001
  
  2000
  
  1999Outstanding at Beginning of
  Year
  
  397,887
  
  344,235
  
  245,544Granted
  
  41,529
  
  110,002
  
  248,577Exercised
  
  (6,724
  )
  (14,694
  )
  (119,353
  )Expired
  
  
  
  (1,044
  )
  Forfeited
  
  (24,987
  )
  (40,612
  )
  (30,533
  )Outstanding at End of Year
  
  407,705
  
  397,887
  
  344,235Exercisable at End of Year
  
  313,847
  
  309,551
  
  282,489Weighted Average Fair Value
  of Options Granted
  
  $
  8.88
  
  $
  7.70
  
  $
  7.48  44 
   The options outstanding at December 31, 2001 have exercise prices
between $7.16 and $28.50 and remaining contractual livesbetween 1 year and 9.8 years.  The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with thefollowing weighted-average assumptions used
for grants in 2001, 2000, and 1999, respectively: weighted average risk-free
interest rates of 4.96%, 6.08%, and 5.46%; weighted average expected dividend
yields of 1.78%, 2.13%, and 2.05%.  For
all three years, the expected life used was seven years and the expected
volatility used was 30.77%.  (13)  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 havereached the age
of 21 are eligible to participate following 90 days 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 were invested with Lincoln
National Life Insurance Company under employee directed investment options.  Beginning January 2000, the Bank made annual matching contributions
equal to 50% of each employees elective contributionsnot exceeding 6% of pay.  Of the matching contributions, 50% is
applied in cash and 50% of the funds are applied to the purchase of CIB common
stock.  The Banks matching contribution
amounted to approximately $114,565 in 2001, $127,211 in 2000, and $40,000 in
1999.  Beginning January 2001, contributions were invested in the Principal
Financial Group under employee directed investmentoptions.  The Bank formed an Employee Stock Ownership Plan (the ESOP) effective
January 1, 1988.  Effective January 1,
1995, theESOP was amended
to recognize CIB and all of its employees as participants.  All employees who have completed 90 days 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 8,125 shares of CIB common
stock in June 2000.  The borrowing is
payable in five equal annual installments with interest at prime minus 1/2%,
which rate was 4.25% at December 31, 2001. 
The Bank made contributions to the ESOP of approximately $40,000 in each
of the years 2001, 2000, and 1999.  (14)  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
establishedin 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.  In the event of nonperformance by the borrower, the Bank is exposed to
credit loss 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 evaluateseach 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, personal property and equipment, and real property.  The Bank also issues standby letters of credit, that are unconditional
commitments to guarantee the performance of a customerto 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 2002 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, 2001 were as follows:  Loan
  Commitments
  
  $
  40,832,117Standby
  Letters of Credit
  
  $
  520,000
  45 
   The Bank is obligated under a number of noncancelable operating leases
for premises and equipment used for banking purposes.  Minimum future rental commitments under noncancellable operating
leases as of December 31, 2001 were as follows:  Lease
  Commitments2002
  
  $
  176,1162003
  
  179,7042004
  
  184,5432005
  
  189,6092006
  
  78,300Thereafter
  
  72,626$
  880,899
  Rent under operating leases was approximately $143,102, $53,004, and
$179,201 in 2001, 2000, and 1999, respectively.  (15)  Related
Party Transactions:  The Bank has had loan and deposit transactions and has contracted for
services with certain officers and directors and thecompanies 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, 2001 and 2000,
respectively, were as follows:  2001
  
  2000Loan
  Balances - Beginning of Year
  
  $
  3,177,423
  
  $
  3,607,217Additions
  
  740,986
  
  843,823Collections
  
  (2,096,316
  )
  (626,937
  )Reclassification to Third
  Party Loans
  
  
  
  (646,680
  )End of Year
  
  $
  1,822,093
  
  $
  3,177,423  At December 31, 2001, the Bank had loans outstanding to a director and
his associates in excess of 5% of shareholders equity.  The total principal balance of the loans to
this director was approximately $1,565,586.  At December 31, 2000, the Bank had loans outstanding to two directors
and their associates in excess of 5% of shareholdersequity. 
The total principal balance of the loans to these directors was
approximately $2,765,482.  46 
   (16) 
California Independent Bancorp Financial Statements (Parent Only):  December
  31,2001
  
  2000(Dollars in thousands)Balance
  Sheets -Assets:Cash and Due From Banks
  
  $
  57
  
  $
  56Investment in Subsidiaries
  
  26,900
  
  25,621Other Assets
  
  448
  
  95Total Assets
  
  $
  27,405
  
  $
  25,772Liabilities and
  Shareholders Equity:Liabilities
  
  $
  192
  
  $
  2Shareholders Equity
  
  27,213
  
  25,770Total Liabilities and
  Shareholders Equity
  
  $
  27,405
  
  $
  25,772Statements
  of Income -Administrative Expense
  
  $
  288
  
  $
  127Other Expense
  
  113
  
  89Loss Before Equity in Net
  Income of Subsidiaries
  
  $
  401
  
  $
  216Equity in Net Income of
  SubsidiariesDistributed
  
  1,307
  
  1,010Undistributed
  
  338
  
  1,837Income Tax Benefit
  
  165
  
  89Net Income
  
  $
  1,409
  
  $
  2,720Statements
  of Cash Flows -Operating Activities:Net Income
  
  $
  1,409
  
  $
  2,720Adjustments to Reconcile
  Net Income to Net Cash Provided by Operating Activities(Deficit) Equity in Net
  Income of Subsidiaries
  
  (338
  )
  (1,837
  )Increase (Decrease) in
  Other Operating Assets
  
  (353
  )
  10Increase in Other Operating
  Liabilities
  
  190
  
  2Net Cash Provided by
  Operating Activities
  
  908
  
  895Financing Activities:Dividends Paid
  
  (907
  )
  (860
  )Net Cash Used in Financing
  Activities
  
  (907
  )
  (860
  )Increase (Decrease) in Cash
  and Cash Equivalents
  
  1
  
  35Cash and Cash Equivalents,
  Beginning of Year
  
  56
  
  21Cash and Cash Equivalents,
  End of Year
  
  $
  57
  
  $
  56  47 
   (17)  Quarterly
Statements of Operations:  The following information is unaudited. 
However, in the opinion of Management, all adjustments, which include
only normalrecurring
adjustments necessary to present fairly the results of operations for such
periods, are reflected.  All per share
amounts and the weighted average number of shares outstanding as shown for each
quarterly period in the following tables have been adjusted retroactively, if
applicable, to reflect the 5% stock dividends distributed in each of the years
presented.  Reference is made to
Managements Discussion and Analysis of Financial Condition and Results of
Operations for further explanation of results of operations.  Quarterly
Statements of Operations  2001
  Quarter EndedMarch 31
  
  June 30
  
  September
  30
  
  December 31(Unaudited)(Dollar
  amounts in thousands, except per share data)Interest
  Income
  
  5,706
  
  5,557
  
  5,244
  
  5,224Interest
  Expense
  
  2,116
  
  1,848
  
  1,673
  
  1,385Net
  Interest Income
  
  3,590
  
  3,709
  
  3,571
  
  3,839Provision
  for Loan and Lease Losses
  
  
  
  
  
  
  
  2,450Net
  Interest Income After Provision for Loan and Lease Losses
  
  3,590
  
  3,709
  
  3,571
  
  1,389Noninterest
  Income
  
  601
  
  511
  
  613
  
  484Noninterest
  Expense
  
  3,188
  
  3,089
  
  3,129
  
  3,162Income
  Before Income Taxes
  
  1,003
  
  1,131
  
  1,055
  
  (1,289
  )Provision
  for Income Taxes
  
  364
  
  405
  
  380
  
  (602
  )Net Income
  From Continuing Operations
  
  639
  
  726
  
  675
  
  (687
  )Gain
  (Loss) on Disposal of Subsidiary & Discontinued Operations
  
  12
  
  14
  
  12
  
  18Net Income
  (Loss)
  
  651
  
  740
  
  687
  
  (669
  )Basic
  Earnings Per Share From Continuing Operations
  
  $
  0.30
  
  $
  0.34
  
  $
  0.32
  
  $
  (0.33
  )Diluted
  Earnings Per Share From Continuing Operations
  
  0.30
  
  0.34
  
  0.31
  
  (0.32
  )Weighted
  Average Shares Outstanding
  
  2,109,414
  
  2,109,414
  
  2,109,740
  
  2,111,536  48 
   2000
  Quarter EndedMarch 31
  
  June 30
  
  September
  30
  
  December
  31(Unaudited)(Dollar
  amounts in thousands, except per share data)Interest Income
  
  5,684
  
  5,816
  
  6,044
  
  5,991Interest Expense
  
  2,242
  
  2,260
  
  2,520
  
  2,448Net Interest Income
  
  3,442
  
  3,556
  
  3,524
  
  3,543Provision for Loan and
  Lease Losses
  
  150
  
  50
  
  
  
  Net Interest Income After
  Provision for Loan and Lease Losses
  
  3,292
  
  3,506
  
  3,524
  
  3,543Noninterest Income
  
  738
  
  497
  
  726
  
  708Noninterest Expense
  
  2,931
  
  2,914
  
  2,935
  
  3,435Income Before Income Taxes
  
  1,099
  
  1,089
  
  1,315
  
  816Provision for Income Taxes
  
  419
  
  403
  
  496
  
  325Net Income From Continuing
  Operations
  
  680
  
  686
  
  819
  
  491Gain (Loss) on Disposal of
  Subsidiary & Discontinued Operations
  
  
  
  20
  
  (17
  )
  41Net Income (Loss)
  
  680
  
  706
  
  802
  
  532Basic Earnings Per Share
  From Continuing Operations
  
  $
  0.32
  
  $
  0.33
  
  $
  0.39
  
  $
  0.23Diluted Earnings Per Share
  From Continuing Operations
  
  $
  0.32
  
  $
  0.33
  
  $
  0.39
  
  $
  0.23Weighted Average Shares
  Outstanding
  
  2,100,042
  
  2,101,040
  
  2,103,655
  
  2,109,199  1999
  Quarter EndedMarch 31
  
  June 30
  
  September
  30
  
  December 31(Unaudited)(Dollar
  amounts in thousands, except per share data)Interest Income
  
  5,831
  
  5,733
  
  5,820
  
  5,895Interest Expense
  
  2,055
  
  2,039
  
  2,244
  
  2,235Net Interest Income
  
  3,776
  
  3,694
  
  3,576
  
  3,660Provision for Loan and
  Lease Losses
  
  550
  
  250
  
  50
  
  150Net Interest Income After
  Provision for Loan and Lease Losses
  
  3,226
  
  3,444
  
  3,526
  
  3,510Noninterest Income
  
  646
  
  586
  
  687
  
  645Noninterest Expense
  
  3,110
  
  3,493
  
  3,500
  
  3,707Income Before Income Taxes
  
  762
  
  537
  
  713
  
  448Provision for Income Taxes
  
  279
  
  194
  
  254
  
  138Net Income From Continuing
  Operations
  
  483
  
  343
  
  459
  
  310Gain (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
  
  $
  0.25
  
  $
  0.17
  
  $
  0.23
  
  $
  0.15Diluted Earnings Per Share
  From Continuing Operations
  
  $
  0.25
  
  $
  0.17
  
  $
  0.22
  
  $
  0.15Weighted Average Shares
  Outstanding
  
  1,926,302
  
  1,976,441
  
  2,029,702
  
  2,098,456  49 
   (18) 
Regulatory Matters:  CIB and the Bank are subject to various regulatory capital requirements
administered by federal banking agencies. 
Failure tomeet
minimum capital requirements can initiate certain mandatory, and possibly
additional discretionary, actions by regulators that, if undertaken, could have
a direct material effect on CIBs and the Banks financial statements.  Pursuant to capital adequacy guidelines and
the regulatory framework for prompt corrective action, CIB and the Bank must
meet specific capital guidelines that involve quantitative measures of CIBs
and the Banks assets, liabilities, and certain off-balance-sheet items as calculated
pursuant to regulatory accounting practices. 
CIB and the 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 CIB and the Bank to maintain minimumamounts 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, that as of December 31, 2001, CIB and the Bank met all capital
adequacy requirements to which they are subject.  As of December 31, 2001, the most recent notification from the FDIC
categorized the Bank as well capitalized under theregulatory framework for prompt corrective
action.  To be categorized as well
capitalized, the Bank must maintain minimum Total Risk-Based, Tier 1
Risk-Based, and 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.  CIB and the Banks actual capital amounts and ratios are also presented
in the table:  Actual
  
  For Capital
  Adequacy Purposes
  
  To Be
  Well-Capitalized
  Under Prompt
  Corrective Action
  ProvisionsAmount
  
  Ratio
  
  Amount
  
  Ratio
  
  Amount
  
  Ratio(Dollar
  amounts in thousands, except ratio data)As of
  December 31, 2001Total
  Risk-Based Capital:California
  Independent Bancorp
  
  $
  29,470
  
  12.49
  %
  18,868
  
  8.00
  %
  23,685
  
  10.00
  %Feather
  River Sate Bank
  
  29,159
  
  12.35
  %
  18,884
  
  8.00
  %
  23,604
  
  10.00
  %Tier I
  Risked Based Capital:California
  Independent Bancorp
  
  26,490
  
  11.23
  %
  9,434
  
  4.00
  %
  14,151
  
  6.00
  %Feather
  River State Bank
  
  26,177
  
  11.09
  %
  9,442
  
  4.00
  %
  14,163
  
  6.00
  %Tier I
  Leverage Ratio:California
  Independent Bancorp
  
  26,490
  
  8.56
  %
  12,379
  
  4.00
  %
  15,474
  
  5.00
  %Feather
  River Sate Bank
  
  26,177
  
  8.47
  %
  12,369
  
  4.00
  %
  15,461
  
  5.00
  %As of
  December 31, 2000Total Risk-Based Capital:California Independent
  Bancorp
  
  $
  28,509
  
  12.77
  %
  17,856
  
  8.00
  %
  22,320
  
  10.00
  %Feather River Sate Bank
  
  28,357
  
  12.72
  %
  17,835
  
  8.00
  %
  22,294
  
  10.00
  %Tier I Risked Based
  Capital:California Independent
  Bancorp
  
  25,683
  
  11.51
  %
  8,928
  
  4.00
  %
  13,392
  
  6.00
  %Feather River State Bank
  
  25,534
  
  11.45
  %
  8,917
  
  4.00
  %
  13,376
  
  6.00
  %Tier I Leverage Ratio:California Independent
  Bancorp
  
  25,683
  
  8.49
  %
  12,093
  
  4.00
  %
  15,117
  
  5.00
  %Feather River Sate Bank
  
  25,534
  
  8.45
  %
  12,090
  
  4.00
  %
  15,112
  
  5.00
  %  50 
   (19)  Future
Financial Accounting Standards:  In July 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations (SFAS No. 143). 
ThisStatement
addresses financial accounting and reporting for obligations associated with
the retirement of tangible, long-lived assets and the associated asset
retirement costs. SFAS No. 143 applies to legal obligations associated with the
retirement of long-lived assets which result from the acquisition,
construction, development and the normal operation of a long-lived asset,
except for certain obligations of lessees. 
The Statement requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. 
The associated asset retirement costs are capitalized as part of the carrying
amount of the long-lived asset. SFAS No. 143 is effective for financial
statements issued for fiscal years beginning after June 15, 2002.  Management does not expect the adoption of
this statement to have a material impact on its financial position and results
of operations.  In October 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (SFASNo. 144), which replaces SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of.  The accounting
model for long-lived assets to be disposed of by sale applies to all long-lived
assets, including discontinued operations, and replaces the provision of
Accounting Principles Board Opinion No. 30, Reporting Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, for
the disposal of segments of a business. 
SFAS No. 144 requires that those long-lived assets be measured at the
lower of carrying amount or fair value less costs to sell, whether reported in
continuing operations or in discontinued operations.  Therefore, discontinued operations will no longer be measured at
net realizable value or include amounts for operating losses that have not yet
occurred.  The provisions of SFAS No.
144 are effective for financial statements issued for fiscal years beginning
after December 15, 2001 and, generally, are to be applied prospectively.  Management does not expect that the adoption
of this statement will have a significant impact on the Companys current
financial position or results of operations.  51 
   DIRECTORS
AND MANAGEMENT TEAM  CALIFORNIA
INDEPENDENT BANCORP AND FEATHER RIVER STATE BANK  California Independent Bancorp and Feather River State Bank DirectorsDavid A. OffuttChairman of the BoardPresident, Offutt, Shephard & HavenAttorneys-at-LawJohn L. DowdellPresident/CEO, Dowdell Financial ServicesHarold M. EastridgePresident, Trident Investment CorporationReal Estate DevelopmentWilliam H. GilbertPartner, Gilbert Orchards, Walnut GrowerLarry D. HartwigPresident/Chief Executive OfficerCalifornia Independent BancorpPresident/Chief Executive OfficerFeather River State BankJohn I. JelavichRetired, Banker/InvestorDonald H. LivingstoneTeaching Professor, Brigham Young UniversityMarriott School of BusinessAlfred G. MontnaOwner, Montna FarmsWilliam K. RetzerChairman/CEO, Examen, Inc.Michael C. WheelerPresident and General Manager,Wheeler Chevrolet-Oldsmobile-CadillacDirectors EmeritusDale L. GreenChief Financial Officer, Dale L. Green, Inc.ContractorLawrence HarrisWalnut Grower, Consulting Civil EngineerRoss D. ScottOwner, Scott Center, Physical TherapistLouis F. TarkePartner, Tarke Brothers & AndersonWalnut and Rice GrowerCalifornia Independent Bancorp ManagementLarry D. HartwigPresident/Chief Executive OfficerRobert J. LampertChief Financial Officer/Corporate SecretaryDouglas R. MarrAssistant Corporate SecretaryKevin R. WatsonAssistant Corporate SecretaryFeather River State Bank Managing CommitteeLarry D. HartwigPresident/Chief Executive OfficerRobert J. LampertExecutive Vice President/Chief Operating OfficerDon R. McDonelExecutive Vice President/Commercial and Retail BankingKenneth M. AndersonSenior Vice President/Business Development and MarketingBlaine C. LauhonSenior Vice President/Commercial and Agricultural LendingDouglas R. MarrSenior Vice President/Chief Credit OfficerFinancial Information and Media ContactAnalysts, stockholders and other investors seeking financial
  information about California Independent Bancorp or any of its subsidiaries,
  or news media seeking general information, should contact:Investor Relations Department1227 Bridge St., Suite CYuba City, CA, 95991(530) 674-6025 or(800) 258-4334Certified Public Accountants/AuditorsArthur Andersen LLPSacramento, CALegal CounselWeintraub Genshlea Chediak Sproul, A Law CorporationSacramento, CA  52 
   BRANCHES ANDOFFICES  For
information Call (530) 674-6000 or (800) 258-4334  YUBA CITY, CA1.
  Bridge Street Branch
  1221 Bridge Street2.
  Colusa
  Avenue Branch
  & Consumer Loan Center
  777 Colusa Avenue3.
  Loan Operations Center
  995 Tharp Rd.4.
  Administrative Office
  CIB/FRSB Corporate Headquarters
  1227 Bridge Street, Suite CARBUCKLE, CA5.
  Arbuckle Branch
  540 Amanda StreetCOLUSA, CA6.
  Colusa Branch 655
  Fremont StreetMARYSVILLE, CA7.
  Marysville Branch
  700 E StreetROSEVILLE, CA8.
  Roseville Branch &
  Regional Loan Center
  1552 Eureka Road, Suite 101WHEATLAND, CA9.
  Wheatland Branch
  114 D StreetWOODLAND, CA10.
  Woodland Branch
  203 Main StreetLINCOLN, CA11.
  Lincoln Branch
  435 S. Highway 65, Suite A  [MAP
OF SACRAMENTO]  53 
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