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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB

(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the
quarterly period ended     September 30, 2002

OR

|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the
transition period from _________ to __________

Commission file number   000-33455

|ALLIANCE BANCSHARES CALIFORNIA                                                   
|---------------------------------------------------------------------------------
|                                                                                 
|(Exact name of Registrant as specified in its charter)                           
|                                                                                 
|California                                                                       
|                                                                                 
|(State or other jurisdiction of incorporation or organization)                   
|                                                                                 
|100 Corporate Pointe  Culver City, California                                    
|                                                                                 
|(Address of principal executive offices)                                         
|                                                                                 
|(310) 410-9281                                                                   
|                                                                                 
|(Registrants telephone number, including area code)                             
|                                                                                 
|                                                                                 
|(Former name, former address and former fiscal year, if changed, since last year)

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

|Yes | x | No | o
|--- | - | -- | -

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

4,538,679 shares of Common Stock as of October 31, 2002

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##### Table of Contents

ALLIANCE BANCSHARES CALIFORNIA

QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER
30, 2002

TABLE OF CONTENTS

|               |                                                                   | Page No.                                                                                     
|-------------- | ----------------------------------------------------------------- | ---------------------------------------------------------------------------------------------
|               |                                                                   |                                                                                              
|Part I.        | Financial Information                                             |                                                                                              
|               |                                                                   |                                                                                              
|               | Item 1.
Financial Statements                                      |                                                                                              
|               |                                                                   |                                                                                              
|               |                                                                   | Consolidated Statements of Financial Condition September 30, 2002 and December 31, 2001      
|               |                                                                   |                                                                                              
|               |                                                                   | Consolidated Statements of Operations Three and nine months ended September 30, 2002 and 2001
|               |                                                                   |                                                                                              
|               |                                                                   | Consolidated Statements of Cash Flows Nine months ended September 30, 2002 and 2001          
|               |                                                                   |                                                                                              
|               |                                                                   | Notes to Consolidated Financial Statements                                                   
|               |                                                                   |                                                                                              
|               | Item 2.
Managements Discussion and Analysis or Plan of Operation | 11                                                                                           
|               |                                                                   |                                                                                              
|               | Item 3.
Controls and Procedures                                   | 25                                                                                           
|               |                                                                   |                                                                                              
|Part II.       | Other Information                                                 |                                                                                              
|               |                                                                   |                                                                                              
|               | Item 6.
Exhibits and Reports on Form 8-K                          | 26                                                                                           
|               |                                                                   |                                                                                              
|Signatures     | 27                                                               
|               |                                                                  
|Certifications | 28                                                               
|               |                                                                  

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##### Table of Contents

PART I. 
FINANCIAL INFORMATION

ITEM 1. 
FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

|                                                                                                                    |                                                                                             | September 30, 2002 |             | December 31, 2001 |  
|------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ------------------ | ----------- | ----------------- | -
|                                                                                                                    |                                                                                             |                    |             |                   |  
|                                                                                                                    |                                                                                             | (Unaudited)        |             |                   |  
|Assets                                                                                                              |                                                                                             |                    |             |                   |  
|Cash and due from banks                                                                                             |                                                                                             | $                  | 4,306,400   |                   | $
|Federal funds sold                                                                                                  |                                                                                             |                    | 15,350,000  |                   |  
|                                                                                                                    |                                                                                             |                    |             |                   |  
|                                                                                                                    | Total cash and cash equivalents                                                             |                    |             | 19,656,400        |  
|Time deposits with other financial institutions                                                                     |                                                                                             |                    | 3,503,800   |                   |  
|Securities held to maturity                                                                                         |                                                                                             |                    | 15,491,500  |                   |  
|Loans, net of the allowance for loan losses of $1,952,400 at September 30, 2002 and $2,426,500 at December 31, 2001 |                                                                                             |                    | 142,134,000 |                   |  
|Equipment and leasehold improvements, net                                                                           |                                                                                             |                    | 885,700     |                   |  
|Accrued interest receivable and other assets                                                                        |                                                                                             |                    | 3,153,900   |                   |  
|                                                                                                                    |                                                                                             |                    |             |                   |  
|                                                                                                                    | Total assets                                                                                |                    | $           | 184,825,300       |  
|                                                                                                                    |                                                                                             |                    |             |                   |  
|Liabilities and Shareholders Equity                                                                                |                                                                                             |                    |             |                   |  
|Deposits:                                                                                                           |                                                                                             |                    |             |                   |  
|                                                                                                                    | Demand                                                                                      |                    | $           | 28,727,600        |  
|                                                                                                                    | Savings and money market                                                                    |                    |             | 41,273,000        |  
|                                                                                                                    | Time                                                                                        |                    |             | 84,068,500        |  
|                                                                                                                    |                                                                                             |                    |             |                   |  
|                                                                                                                    | Total deposits                                                                              |                    |             | 154,069,100       |  
|                                                                                                                    |                                                                                             |                    |             |                   |  
|Accrued interest payable and other liabilities                                                                      |                                                                                             |                    | 1,487,800   |                   |  
|FHLB advances                                                                                                       |                                                                                             |                    | 12,000,000  |                   |  
|Subordinated debentures                                                                                             |                                                                                             |                    | 2,500,000   |                   |  
|Capital note                                                                                                        |                                                                                             |                    | 3,000,000   |                   |  
|                                                                                                                    |                                                                                             |                    |             |                   |  
|                                                                                                                    | Total liabilities                                                                           |                    |             | 173,056,900       |  
|                                                                                                                    |                                                                                             |                    |             |                   |  
|Commitments and contingencies                                                                                       |                                                                                             |                    |            |                   |  
|Shareholders equity:                                                                                               |                                                                                             |                    |             |                   |  
|                                                                                                                    | Serial preferred stock, no par value:                                                       |                    |             |                   |  
|                                                                                                                    | Authorized  20,000,000 shares                                                              |                    |             |                   |  
|                                                                                                                    | Outstanding  none                                                                          |                    |             |                  |  
|                                                                                                                    | Common stock, no par value:                                                                 |                    |             |                   |  
|                                                                                                                    | Authorized - 20,000,000 shares                                                              |                    |             |                   |  
|                                                                                                                    | Outstanding  4,538,679 shares at September 30, 2002; 4,505,079 shares at December 31, 2001 |                    |             | 3,480,300         |  
|                                                                                                                    | Undivided profits                                                                           |                    |             | 8,288,100         |  
|                                                                                                                    |                                                                                             |                    |             |                   |  
|                                                                                                                    | Total shareholders equity                                                                  |                    |             | 11,768,400        |  
|                                                                                                                    |                                                                                             |                    |             |                   |  
|                                                                                                                    | Total liabilities and shareholders equity                                                  |                    | $           | 184,825,300       |  
|                                                                                                                    |                                                                                             |                    |             |                   |  
|                                                                                                                    |                                                                                             |                    |             |                   |  

The accompanying notes are an integral part of these statements.

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Part I. Item 1. (continued)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

|                                   |                                                             | Three Months Ended September 30, |         | Nine Months Ended September 30, | 
|---------------------------------- | ----------------------------------------------------------- | -------------------------------- | ------- | ------------------------------- | 
|                                   |                                                             |                                  |         |                                 | 
|                                   |                                                             | 2002                             |         | 2001                            | 
|                                   |                                                             |                                  |         |                                 | 
|Interest income:                   |                                                             |                                  |         |                                 | 
|                                   | Interest and fees on loans                                  |                                  | $       | 3,214,700                       | 
|                                   | Interest on time deposits with other financial institutions |                                  |         | 29,900                          | 
|                                   | Interest on securities held to maturity                     |                                  |         | 189,000                         | 
|                                   | Interest on federal funds sold                              |                                  |         | 65,500                          | 
|                                   |                                                             |                                  |         |                                 | 
|                                   | Total interest income                                       |                                  |         | 3,499,100                       | 
|                                   |                                                             |                                  |         |                                 | 
|Interest expense:                  |                                                             |                                  |         |                                 | 
|                                   | Interest on deposits                                        |                                  |         | 980,800                         | 
|                                   | Interest on FHLB advances                                   |                                  |         | 92,200                          | 
|                                   | Interest on subordinated debentures                         |                                  |         | 51,600                          | 
|                                   | Interest on capital note                                    |                                  |         | 44,800                          | 
|                                   |                                                             |                                  |         |                                 | 
|                                   | Total interest expense                                      |                                  |         | 1,169,400                       | 
|                                   |                                                             |                                  |         |                                 | 
|                                   | Net interest income before provision for loan losses        |                                  |         | 2,329,700                       | 
|Provision for loan losses          |                                                             |                                  | 225,000 |                                 | 
|                                   |                                                             |                                  |         |                                 | 
|                                   | Net interest income                                         |                                  |         | 2,104,700                       | 
|Non-interest income                |                                                             |                                  | 584,800 |                                 | 
|Non-interest expenses:             |                                                             |                                  |         |                                 | 
|                                   | Salaries and related benefits                               |                                  |         | 971,200                         | 
|                                   | Occupancy and equipment expenses                            |                                  |         | 244,600                         | 
|                                   | Other operating expenses                                    |                                  |         | 719,900                         | 
|                                   |                                                             |                                  |         |                                 | 
|                                   | Total non-interest expense                                  |                                  |         | 1,935,700                       | 
|                                   |                                                             |                                  |         |                                 | 
|Earnings before income tax expense |                                                             |                                  | 753,800 |                                 | 
|Income tax expense                 |                                                             |                                  | 319,700 |                                 | 
|                                   |                                                             |                                  |         |                                 | 
|                                   | Net earnings                                                |                                  | $       | 434,100                         | 
|                                   |                                                             |                                  |         |                                 | 
|Earnings per common share:         |                                                             |                                  |         |                                 | 
|                                   | Basic earnings per share                                    |                                  | $       | 0.10                            | 
|                                   | Diluted earnings per share                                  |                                  | $       | 0.08                            | 
|                                   |                                                             |                                  |         |                                 | 

The accompanying notes are an integral part of these statements.

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Part I. Item 1. (continued)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

|                                                 |                                                                                       | Nine Months Ended September 30, |           
|------------------------------------------------ | ------------------------------------------------------------------------------------- | ------------------------------- | ----------
|                                                 |                                                                                       |                                 |           
|                                                 |                                                                                       | 2002                            |           
|                                                 |                                                                                       |                                 |           
|Cash Flows from Operating Activities:            |                                                                                       |                                 |           
|                                                 | Net earnings                                                                          |                                 | $         
|                                                 | Adjustments to reconcile net earnings to net cash provided by operating activities:   |                                 |           
|                                                 | Net amortization (accretion) of discounts and premiums on securities held to maturity |                                 |           
|                                                 | Depreciation and amortization                                                         |                                 |           
|                                                 | Provision for loan losses                                                             |                                 |           
|                                                 | Increase in accrued interest receivable and other assets                              |                                 |           
|                                                 | Increase in accrued interest payable and other liabilities                            |                                 |           
|                                                 |                                                                                       |                                 |           
|                                                 | Net cash provided by operating activities                                             |                                 |           
|                                                 |                                                                                       |                                 |           
|Cash Flows from Investing Activities:            |                                                                                       |                                 |           
|                                                 | Net (increase) decrease in:                                                           |                                 |           
|                                                 | Time deposits with other financial institutions                                       |                                 |           
|                                                 | Loans                                                                                 |                                 |           
|                                                 | Purchase of equipment and leasehold improvements                                      |                                 |           
|                                                 | Purchase of securities held to maturity                                               |                                 |           
|                                                 | Proceeds from maturities of securities held to maturity                               |                                 |           
|                                                 |                                                                                       |                                 |           
|                                                 | Net cash used by investing activities                                                 |                                 |           
|                                                 |                                                                                       |                                 |           
|Cash Flows from Financing Activities:            |                                                                                       |                                 |           
|                                                 | Net increase in:                                                                      |                                 |           
|                                                 | Demand deposits                                                                       |                                 |           
|                                                 | Savings and money market deposits                                                     |                                 |           
|                                                 | Time deposits                                                                         |                                 |           
|                                                 | Proceeds from stock options exercised                                                 |                                 |           
|                                                 | FHLB advances                                                                         |                                 |           
|                                                 | Proceeds from issuance of capital note                                                |                                 |           
|                                                 |                                                                                       |                                 |           
|                                                 | Net cash provided by financing activities                                             |                                 |           
|                                                 |                                                                                       |                                 |           
|Net increase in cash and cash equivalents        |                                                                                       |                                 | 5,563,500 
|Cash and cash equivalents, beginning of year     |                                                                                       |                                 | 14,092,900
|                                                 |                                                                                       |                                 |           
|Cash and cash equivalents, end of year           |                                                                                       | $                               | 19,656,400
|                                                 |                                                                                       |                                 |           
|Supplemental disclosure of cash flow information |                                                                                       |                                 |           
|                                                 | Cash paid during the year for:                                                        |                                 |           
|                                                 | Interest                                                                              |                                 | $         
|                                                 | Income taxes                                                                          |                                 |           
|                                                 |                                                                                       |                                 |           

The accompanying notes are an integral part of these statements.

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Part I. Item 1. (continued)

ALLIANCE BANCSHARES CALIFORNIA AND SUBSIDIARYNotes to Consolidated Financial Statements(Unaudited)

1.   Nature of Business and Significant Accounting Policies

Organization

The accompanying unaudited
consolidated financial statements have been prepared in accordance with the instructions to Form 10-QSB and, therefore, do not include all footnotes as would be necessary for a fair presentation of financial position, results of operations and
changes in cash flows in conformity with generally accepted accounting principles.  However, these interim financial statements reflect all adjustments (consisting of normal recurring adjustments and accruals) which, in the opinion of the
management, are necessary for a fair presentation of the results for the interim periods presented.  These unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles on a basis
consistent with, and should be read in conjunction with, the Companys audited financial statements as of and for the year ended December 31, 2001 and the notes thereto included in the Companys Form 10-KSB filed under the Securities
Exchange Act of 1934.

The results of operations for the nine month period ended September 30, 2002, are not necessarily
indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2002.

The consolidated financial statements include the accounts of Alliance Bancshares California (Bancshares), its wholly owned subsidiary Alliance
Bank (the Bank) and Lexib Realcorp, a wholly owned subsidiary of the Bank.  Bancshares is a bank holding company which was incorporated in February 2000 in the State of California.  The Bank is a California-chartered bank that
commenced operations in 1980. The Banks deposit accounts are insured by the Federal Deposit Insurance Corporation up to the maximum amount and under the terms allowed by federal regulations.  References in these Notes to the
Company refer to Bancshares and its consolidated subsidiaries.

On November 30, 2001, Bancshares acquired the Bank
by means of a merger which resulted in the Bank becoming a wholly owned subsidiary of the Company and the Banks shareholders became shareholders of the Company, owning the same number and percentage of Company shares as they had owned in the
Bank.  Prior to the acquisition, the Company only had nominal assets and had not conducted any business.

Use of
Estimate

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

Reclassifications

Certain amounts for 2001 have been reclassified to conform to the 2002 presentation.

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Income Per Share

Basic income per share for each of the periods presented was computed by dividing the net income by the weighted average number of shares of common stock
outstanding during each such period.  The weighted average numbers of shares used in the basic earnings per share computations for the quarter and nine months ended September 30, 2002 were 4,538,678 and 4,526,991, respectively, and for the
quarter and nine months ended September 30, 2001 were 4,505,079 and 4,504,815, respectively.  The weighted average numbers of shares used in the diluted earnings per share computations for the quarter and nine months ended September 30, 2002
were 5,961,263 and 5,948,907, respectively, and for the quarter and nine months ended September 30, 2001 were 5,971,412 and 5,970,836, respectively.

Basic and diluted earnings per share for the quarter ended September 30, 2002 and 2001 are computed as follows:

|2002                        |                                                 | Net Earnings |         | Shares  |  | Per Share Amt |          
|--------------------------- | ----------------------------------------------- | ------------ | ------- | ------- |  | ------------- | ---------
|                            |                                                 |              |         |         |  |               |          
|Net Earnings                |                                                 | $            | 434,100 |         |  |               |          
|                            |                                                 |              |         |         |  |               |          
|Basic earnings per share:   |                                                 |              |         |         |  |               |          
|                            | Net earnings available to common shareholders   |              | $       | 434,100 |  |               | 4,538,678
|                            | Effect of conversion of subordinated debentures |              |         | 29,300  |  |               | 1,250,000
|                            | Effect of conversion of options and warrants    |              |         |         |  |               | 172,585  
|Diluted earnings per share: |                                                 |              |         |         |  |               |          
|                            |                                                 |              |         |         |  |               |          
|                            | Net earnings available to common shareholders   |              | $       | 463,400 |  |               | 5,961,263
|                            |                                                 |              |         |         |  |               |          
|                            |                                                 |              |         |         |  |               |          
|2001                        |                                                 | Net Earnings |         | Shares  |  | Per Share Amt |          
|                            |                                                 |              |         |         |  |               |          
|Net Earnings                |                                                 | $            | 282,496 |         |  |               |          
|                            |                                                 |              |         |         |  |               |          
|Basic earnings per share:   |                                                 |              |         |         |  |               |          
|                            | Net earnings available to common shareholders   |              | $       | 282,500 |  |               | 4,505,079
|                            | Effect of conversion of subordinated debentures |              |         | 29,900  |  |               | 1,250,000
|                            | Effect of conversion of options and warrants    |              |         |         |  |               | 216,333  
|Diluted earnings per share: |                                                 |              |         |         |  |               |          
|                            |                                                 |              |         |         |  |               |          
|                            | Net earnings available to common shareholders   |              | $       | 312,400 |  |               | 5,971,412
|                            |                                                 |              |         |         |  |               |          

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Basic and diluted earnings per share for the nine months ended September 30, 2002 and 2001 are computed as
follows:

|2002                        |                                                 | Net Earnings |           | Shares    |  | Per Share Amt |          
|--------------------------- | ----------------------------------------------- | ------------ | --------- | --------- |  | ------------- | ---------
|                            |                                                 |              |           |           |  |               |          
|Net Earnings                |                                                 | $            | 1,276,100 |           |  |               |          
|                            |                                                 |              |           |           |  |               |          
|Basic earnings per share:   |                                                 |              |           |           |  |               |          
|                            | Net earnings available to common shareholders   |              | $         | 1,276,100 |  |               | 4,526,991
|                            | Effect of conversion of subordinated debentures |              |           | 86,800    |  |               | 1,250,000
|                            | Effect of conversion of options and warrants    |              |           |           |  |               | 171,916  
|Diluted earnings per share: |                                                 |              |           |           |  |               |          
|                            |                                                 |              |           |           |  |               |          
|                            | Net earnings available to common shareholders   |              | $         | 1,362,900 |  |               | 5,948,907
|                            |                                                 |              |           |           |  |               |          
|                            |                                                 |              |           |           |  |               |          
|2001                        |                                                 | Net Earnings |           | Shares    |  | Per Share Amt |          
|                            |                                                 |              |           |           |  |               |          
|Net Earnings                |                                                 | $            | 1,038,500 |           |  |               |          
|                            |                                                 |              |           |           |  |               |          
|Basic earnings per share:   |                                                 |              |           |           |  |               |          
|                            | Net earnings available to common shareholders   |              | $         | 1,038,500 |  |               | 4,504,815
|                            | Effect of conversion of subordinated debentures |              |           | 88,800    |  |               | 1,250,000
|                            | Effect of conversion of options and warrants    |              |           |           |  |               | 216,021  
|Diluted earnings per share: |                                                 |              |           |           |  |               |          
|                            |                                                 |              |           |           |  |               |          
|                            | Net earnings available to common shareholders   |              | $         | 1,127,300 |  |               | 5,970,836
|                            |                                                 |              |           |           |  |               |          

2.   Securities Held to Maturity

The amortized cost and estimated fair values of securities held to maturity at September 30, 2002 are as follows:

|                                            |  | Amortized Cost |            | Gross Unrealized Gains |   | Gross Unrealized Losses |  | Estimated Fair Value |  
|------------------------------------------- |  | -------------- | ---------- | ---------------------- | - | ----------------------- |  | -------------------- | -
|                                            |  |                |            |                        |   |                         |  |                      |  
|Obligations of U.S. Government and agencies |  | $              | 12,020,900 |                        | $ | 285,500                 |  | $                    | 
|Collateralized mortgage obligations         |  |                | 3,470,600  |                        |   | 2,200                   |  |                      | 
|                                            |  |                |            |                        |   |                         |  |                      |  
|                                            |  | $              | 15,491,500 |                        | $ | 287,700                 |  | $                    | 
|                                            |  |                |            |                        |   |                         |  |                      |  

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The amortized cost and estimated fair values of securities held to maturity at December 31, 2001 are as
follows:

|2001                                        |  | Amortized Cost |           | Gross Unrealized Gains |   | Gross Unrealized Losses |  | Estimated Fair Value |  
|------------------------------------------- |  | -------------- | --------- | ---------------------- | - | ----------------------- |  | -------------------- | -
|                                            |  |                |           |                        |   |                         |  |                      |  
|Obligations of U.S. Government and agencies |  | $              | 5,982,700 |                        | $ | 118,200                 |  | $                    | 
|                                            |  |                |           |                        |   |                         |  |                      |  

3.   Allowance for Loan Losses

The following table presents an analysis of changes in the allowance for loan losses during the periods indicated:

CHANGES IN ALLOWANCES FOR LOAN LOSSES

|                               |  | Nine Months Ended September 30, |           
|------------------------------ |  | ------------------------------- | ----------
|                               |  |                                 |           
|                               |  | 2002                            |           
|                               |  |                                 |           
|Balance at beginning of period |  | $                               | 2,426,500 
|Charge-offs                    |  |                                 | (1,022,400
|Recoveries                     |  |                                 | 73,300    
|                               |  |                                 |           
|Net charge-offs                |  |                                 | (949,100  
|Additional provisions          |  |                                 | 475,000   
|                               |  |                                 |           
|Balance at end of period       |  | $                               | 1,952,400 
|                               |  |                                 |           

Charge-offs included $841,000 related to
a business which failed during the second quarter of 2002.

4.   Subsequent Event

In October 2002, Bancshares newly formed wholly owned subsidiary, Alliance Bancshares California Capital Trust I, a Delaware trust, issued and sold $7,000,000
of trust preferred securities. These securities mature in 30 years, are redeemable at our option beginning after 5 years, and require quarterly distributions, initially at a rate of 5.27%, which will reset quarterly at the three month LIBOR rate
plus 3.45%.  The securities also qualify as Tier 1 capital for regulatory purposes which will enable us to support further growth.  We have also used $3 million of the proceeds from such issuance to repay Bancshares capital
note.

5.   Commitments and Contingencies

The Company is a party to
financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit, standby letters of credit and financial
guarantees.  Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets.  The Companys exposure to credit loss in the event of non-performance by
the other party to the financial instrument for commitments to extend credit, standby letters of credit and financial guarantees written is represented by the contractual notional amount of those instruments.  The Company uses the same credit
policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

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|Financial instruments whose contract amounts represent credit risk: |  | Contractual or notional amount |           
|------------------------------------------------------------------- |  | ------------------------------ | ----------
|                                                                    |  |                                |           
|Commitments to extend credit                                        |  | $                              | 54,699,000
|Standby letters of credit and financial guarantees written          |  |                                | 263,000   

Commitments to extend credit are
agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Since some
of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.  The Company evaluates each customers creditworthiness on a case-by-case basis. 
The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on managements credit evaluation of the counterparty.  Collateral held varies, but may include assignment of deposits and assignment
of real estate interests.  Standby letters of credit and financial guarantees written are conditional commitments issued by the Company to guarantee the performance of a customer to a first party.  Those guarantees are primarily issued to
support public and private borrowing arrangements.  All standby letters of credit will mature at various dates through 2003.  The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan
facilities to customers.  The Company holds certificates of deposit and other collateral of at least 100% of the notional amount as support for letters of credit for which collateral is deemed necessary.

The Company is subject from time to time to various claims and lawsuits which arise primarily in the ordinary course of business.  No material losses are
anticipated with respect to any existing matters.

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ITEM 2.   
MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Background

The following discussion presents information about our consolidated results of operations, financial condition, liquidity and capital resources.  Substantially
all of our operations are conducted by the Bank and the Bank accounts for substantially all of our revenues and expenses.  This information should be read in conjunction with our unaudited consolidated financial statements, and the notes
thereto, contained elsewhere in this Report.

References in this Form 10-QSB to the Company, we or us
refer to Alliance California Bancshares (Bancshares) and its consolidated subsidiaries, including Alliance Bank (Bank).

Forward-Looking Information

The statements contained herein that are not historical facts are forward-looking statements based on managements current expectations and beliefs
concerning future developments and their potential effects on the Company.  These forward-looking statements involve risks and uncertainties, including the risks and uncertainties described herein under the caption Factors Which May
Affect Future Operating Results.  There can be no assurance that future developments affecting the Company will be the same as those anticipated by management, and actual results may differ from those projected in the forward-looking
statements.  Statements regarding policies and procedures are not intended, and should not be interpreted to mean, that such policies and procedures will not be amended, modified or repealed at any time in the future.

Overview

We recorded net earnings of $434,100 ($0.10 basic and $0.08 diluted earnings per share) for
the third quarter of 2002 as compared to net earnings of $282,500 ($0.06 basic and $0.05 diluted earnings per share) for the third quarter of 2001.  For the nine months ended September 30, 2002, we generated net earnings of $1,276,100 ($0.28
basis and $0.23 diluted earnings per share) as compared to net earnings of $1,038,500 ($0.23 basic and $0.19 diluted earnings per share) for the same period of 2001. The improvement in net earnings in 2002 was due primarily to an increase in the net
interest income and gains on the sales of loans, primarily SBA loans.

We continued to grow during the year, with assets increasing from
$140.5 million at December 31, 2001 to $184.8 million at September 30, 2002.  Net loans continue to constitute the largest portion (approximately 81%) of our interest earning assets, and grew from $112.2 million at December 31, 2001 to $142.1
million at September 30, 2002.  The growth of the loan portfolio is significant because not only does it represent the greatest concentration of our assets, it is also the highest yielding of our assets.  Our growth was funded principally
by time deposits obtained primarily through our money desk.

Set forth below are certain key financial performance ratios for the periods
indicated:

|                                                 |                            | Nine months ended September 30, |      
|------------------------------------------------ | -------------------------- | ------------------------------- | -----
|                                                 |                            |                                 |      
|                                                 |                            | 2002                            |      
|                                                 |                            |                                 |      
|Return on average assets (1)                     |                            |                                 | 1.01 
|Return on average shareholders equity (1)       |                            |                                 | 15.50
|Net yield on average interest earning assets (1) |                            |                                 | 5.22 
|Earnings per common share:                       |                            |                                 |      
|                                                 | Basic earnings per share   |                                 | $    
|                                                 | Diluted earnings per share |                                 | $    
|                                                 |                            |                                 |      
|                                                 |                            |                                 |      
|(1)     Annualized                               |                            |                                 |      

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

Net Interest
Income

We recorded interest income of $3,499,100 and $9,616,000, respectively, for the quarter and nine months ended September 30, 2002
as compared to $3,008,100 and $9,287,500, respectively, for the quarter and nine months ended September 30, 2001. Interest expense totaled $1,169,400 and $3,269,500, respectively, for the quarter and nine months ended September 30, 2002 as compared
to $1,231,200 and $3,836,600, respectively, for the quarter and nine months ended September 30, 2001.  With respect to interest income, the increases in the average amounts of interest earning assets from 2001 to 2002 more than offset the
declines in the weighted average yield earned on these assets.   With respect to interest expense, the declines in the weighted average rates paid on these liabilities from 2001 to 2002 more than offset the increase in the average amount
of interest bearing liabilities.  The decrease in the weighted average yield and rates was due to declining market interest rates.

Net interest income before provision for loan losses increased to $2,329,700 and $6,346,500 for the quarter and nine months ended September 30, 2002, respectively,
from $1,776,900 and $5,450,900 for the quarter and nine months ended September 30, 2001, respectively.  This was due primarily to an increase in average interest earning assets from $131,068,000 and $127,398,400 for the quarter and nine months
ended 2001 to $174,386,000 and $162,026,300 for the quarter and nine months ended 2002, respectively.  However, net interest income was also impacted by a decrease in the net yield on interest earning assets, or net interest margin, from 5.42%
and 5.70% for the quarter and nine months ended September 30, 2001, respectively, to 5.34% and 5.22% for the quarter and nine months ended September 30, 2002, respectively.  This decrease reflected declining market interest rates initiated by
the FRB, resulting in the weighted average prime rate decreasing from 6.57% and 7.50% for the quarter and nine months ended September 30, 2001, respectively, to 4.75% for the quarter and nine months ended September 30, 2002.  Because loans
represented in excess of 80% of our interest earning assets, and because a substantial portion of our loans bear interest at rates tied to the prime rate, the weighted average yield on our interest earning assets decreased 1.27% and 1.87%,
respectively, from 10.26% and 10.76% for the quarter and nine months ended September 30, 2001, respectively, to 8.99% and 8.89% for the quarter and nine months ended September 30, 2002, respectively.  By comparison, the weighted average rate
paid on our interest bearing liabilities decreased 1.43% and 1.67%, respectively, for the quarter and nine months ended September 30, 2001, as our time deposits, which have terms ranging from one day to nine years, adjust rates only upon
maturity.

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##### Table of Contents

The following table presents the weighted average yield on each specified category of interest earning assets,
the weighted average rate paid on each specified category of interest bearing liabilities, and the resulting interest rate spread and net interest margin for the periods indicated.

ANALYSIS OF NET INTEREST INCOME

|                                   |                                            | Quarter Ended September 30, |            
|---------------------------------- | ------------------------------------------ | --------------------------- | -----------
|                                   |                                            |                             |            
|                                   |                                            | 2002                        |            
|                                   |                                            |                             |            
|                                   |                                            | Average Balance             |            
|                                   |                                            |                             |            
|Interest earning assets:           |                                            |                             |            
|                                   | Federal funds sold                         |                             | $          
|                                   | Time deposits                              |                             |            
|                                   | Securities                                 |                             |            
|                                   | Loans                                      |                             |            
|                                   |                                            |                             |            
|Total interest-earning assets      |                                            |                             | 174,386,000
|Non-interest-earning assets        |                                            |                             | 7,369,000  
|                                   |                                            |                             |            
|Total assets                       |                                            | $                           | 181,755,000
|                                   |                                            |                             |            
|Interest bearing liabilities:      |                                            |                             |            
|                                   | Interest-bearing demand deposits           |                             | $          
|                                   | Savings and money market deposits          |                             |            
|                                   | Time deposits                              |                             |            
|                                   | FHLB advances                              |                             |            
|                                   | Subordinated debentures                    |                             |            
|                                   | Capital note                               |                             |            
|                                   |                                            |                             |            
|Total interest-bearing liabilities |                                            |                             | 142,484,000
|                                   |                                            |                             |            
|Non-interest bearing liabilities   |                                            |                             | 27,836,000 
|                                   |                                            |                             |            
|                                   | Total liabilities                          |                             |            
|                                   | Shareholders equity                       |                             |            
|                                   |                                            |                             |            
|                                   | Total liabilities and shareholders equity |                             | $          
|                                   |                                            |                             |            
|Net interest income                |                                            |                             |            
|                                   |                                            |                             |            
|Interest rate spread               |                                            |                             |            
|Net interest margin                |                                            |                             |            

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ANALYSIS OF NET INTEREST INCOME

|                                   |                                            | Nine Months Ended September 30, |            
|---------------------------------- | ------------------------------------------ | ------------------------------- | -----------
|                                   |                                            |                                 |            
|                                   |                                            | 2002                            |            
|                                   |                                            |                                 |            
|                                   |                                            | Average Balance                 |            
|                                   |                                            |                                 |            
|Interest earning assets:           |                                            |                                 |            
|                                   | Federal funds sold                         |                                 | $          
|                                   | Time deposits                              |                                 |            
|                                   | Securities                                 |                                 |            
|                                   | Loans                                      |                                 |            
|                                   |                                            |                                 |            
|Total interest-earning assets      |                                            |                                 | 162,026,300
|Non-interest-earning assets        |                                            |                                 | 6,189,300  
|                                   |                                            |                                 |            
|Total assets                       |                                            | $                               | 168,215,700
|                                   |                                            |                                 |            
|Interest bearing liabilities:      |                                            |                                 |            
|                                   | Interest-bearing demand deposits           |                                 | $          
|                                   | Savings and money market deposits          |                                 |            
|                                   | Time deposits                              |                                 |            
|                                   | FHLB advances                              |                                 |            
|                                   | Subordinated debentures                    |                                 |            
|                                   | Capital note                               |                                 |            
|                                   |                                            |                                 |            
|Total interest-bearing liabilities |                                            |                                 | 130,072,800
|                                   |                                            |                                 |            
|Non-interest bearing liabilities   |                                            |                                 | 27,167,700 
|                                   |                                            |                                 |            
|                                   | Total liabilities                          |                                 |            
|                                   | Shareholders equity                       |                                 |            
|                                   |                                            |                                 |            
|                                   | Total liabilities and shareholders equity |                                 | $          
|                                   |                                            |                                 |            
|Net interest income                |                                            |                                 |            
|                                   |                                            |                                 |            
|Interest rate spread               |                                            |                                 |            
|Net interest margin                |                                            |                                 |            

Provision for Loan Losses

We charged $225,000 and $475,000 to the allowance for loan and lease losses (ALLL) for the quarter and nine months ended September 30, 2002, respectively,
as compared to $100,000 and $250,000 for the quarter and nine months ended September 30, 2001, respectively.  These provisions were based on our policies and procedures established for the ALLL.   See Changes in the Allowance
for Loan Losses below.

The credit quality of our loans will be influenced by underlying trends in the economic cycle, particularly in
Southern California, and other factors, which are beyond managements control.  Accordingly, no assurance can be given that we will not sustain loan losses that in any particular period are sizable in relation to the ALLL. 
Additionally, subsequent evaluation of the loan portfolio by us and by our regulators, in light of factors then prevailing, may require increases in the ALLL through changes to the provision for loan losses.

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Non-Interest Income

Non-interest income includes
primarily service charges on deposit accounts and net gains on sales of loans.  Non-interest income increased 144.2% and 93.3% from the quarter and nine months ended September 30, 2001 to the quarter and nine months ended September 30, 2002,
respectively, primarily due to an increase in net gains on sales of loans (primarily the guaranteed portion of SBA loans) of $246,000 and $683,600, respectively.  Our ability to generate gains on sales of loans depends primarily on our ability
to originate loans with favorable interest rates, which depends on a number of factors beyond our control, including general economic conditions, loan demand, competition and market interest rates.  Accordingly, gains and losses from sales of
loans may fluctuate significantly from period to period, and results in any period relating to loan sales are not necessarily indicative of results that may be obtained in any future period.

Non-Interest Expense

Salary and related expenses increased by 34.8% and 25.4% from the quarter and nine
months ended September 30, 2001 to the quarter and nine months ended September 30, 2002, respectively, due primarily to an increase in the number of employees, particularly in the lending departments.  At September 30, 2002, we employed 45 full
time employees, compared with 39 employees at September 30, 2001.

Occupancy and equipment expenses increased by 22.1% and 15.2% from the
quarter and nine months ended September 30, 2001 to the quarter and nine months ended September 30, 2002, respectively, due to increased rent expense and the depreciation cost of computer equipment.  Rent expense increased in August 2002 by
$12,100 per month and is scheduled to increase again in November 2002 by $4,600 per month from rent under a 60-month lease entered into in December 2001 for our new Orange County Regional Office in Irvine, California.

Other operating expenses increased 53.6% and 30.1% from the quarter and nine months ended September 30, 2001 to the quarter and nine months ended September 30, 2002,
respectively, due in part to increases in advertising and marketing expenses, legal costs, and data processing fees.  Additional advertising and marketing expenses were incurred for customer appreciation functions and marketing brochures. 
The increase in legal costs is related to the increase in loan charge-offs as discussed below in the section Changes in the Allowance for Loan Losses below.  In general, data processing fees can be expected to increase as we grow
because they are largely transaction driven.

FINANCIAL CONDITION

Regulatory Capital

At September 30, 2002, Bancshares and Banks Tier 1 capital, which is comprised of shareholders equity as modified by certain regulatory adjustments, were
$11.8 million and $14.7 million, respectively.  Our regulatory capital increased during the third quarter of 2002 as a result of net earnings.  At September 30, 2002, Bancshares and the Bank were each well capitalized as
defined under applicable regulations.  The following table sets forth the regulatory standards for well capitalized and adequately capitalized institutions and the capital ratios for Bancshares and the Bank as of the date indicated.

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REGULATORY CAPITAL

At September 30, 2002

(dollars in thousands)

|                                         |  | Actual |        | To Be Adequately Capitalized |  | To Be Well Capitalized |  
|---------------------------------------- |  | ------ | ------ | ---------------------------- |  | ---------------------- | -
|                                         |  |        |        |                              |  |                        |  
|                                         |  | Amount |        | Ratio                        |  | Amount                 |  
|                                         |  |        |        |                              |  |                        |  
|Bancshares                               |  |        |        |                              |  |                        |  
|Total Capital (to risk-weighted assets)  |  | $      | 16,221 |                              |  | 10.4                   | %
|Tier 1 Capital (to risk-weighted assets) |  | $      | 11,768 |                              |  | 7.6                    | %
|Tier 1 Capital (to average assets)       |  | $      | 11,768 |                              |  | 6.5                    | %
|Bank                                     |  |        |        |                              |  |                        |  
|Total Capital (to risk-weighted assets)  |  | $      | 19,154 |                              |  | 12.3                   | %
|Tier 1 Capital (to risk-weighted assets) |  | $      | 14,702 |                              |  | 9.5                    | %
|Tier 1 Capital (to average assets)       |  | $      | 14,702 |                              |  | 8.1                    | %

Liquidity

Our objective in managing our liquidity is to maintain cash flow adequate to fund our operations and meet obligations and other commitments on a timely and cost
effective basis.  We manage this objective through the selection of asset and liability maturity mixes.  Our liquidity position is enhanced by our ability to raise additional funds as needed through available borrowings or accessing
deposits nationwide through our money desk.

Deposits provide most of our funds.  This relatively stable and low-cost source of funds
has, along with shareholders equity, provided 93% and 98% of our funding as a percentage of average total assets during the nine months ended September 30, 2002 and the year ended December 31, 2001, respectively.  This reduction was
directly attributable to the increased volume of loans receivable, which outpaced the growth in deposits, and required an increase in borrowed funds.

Secondary sources of liquidity include borrowing arrangements with the FRB and the FHLB.  Borrowings from the FRB are short-term and must be collateralized by
pledged securities.  As a member of the FHLB system, the Bank may obtain advances from the FHLB pursuant to various credit programs offered from time to time.  Credit limitations are based on the assessment by the FHLB of the Banks
creditworthiness, including an adequate level of net worth, reasonable prospects of future earnings, sources of funds sufficient to meet the scheduled interest payments, lack of financial or managerial deficiencies and other factors.  Such
advances may be obtained pursuant to several different credit programs, and each program has its own rate, commitment fees and range of maturities.  Funds borrowed from the FHLB must be collateralized either by pledged securities or by
assignment of notes and may be for terms of a few days to several years.  As of September 30, 2002, we had $12,000,000 outstanding FHLB advances and had no outstanding borrowings from the FRB.

We also have liquidity as a net seller of overnight funds at a level that will cushion any unexpected increase in demand for funds or decrease in funds
deposited.  During the nine months ended September 30, 2002, we had an average balance of $14.6 million in overnight funds sold representing 8.7% of total average assets.

Asset
Liability Management

Based on our business, market risk is primarily limited to interest rate risk which is the impact that changes in
interest rates would have on future earnings.  Our Investment Committee manages interest rate risk, including interest rate sensitivity and the repricing characteristics of assets and liabilities.  The principal objective of our

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asset/liability management is to maximize net interest income within acceptable levels of risk established by policy.  Interest rate risk is measured using financial
modeling techniques, including stress tests, to measure the impact of changes in interest rates on future earnings.  Net interest income, the primary source of earnings, is affected by interest rate movements.  Changes in interest rates
have lesser impact the more that assets and liabilities reprice in approximately equivalent amounts at basically the same time intervals.  Imbalances in these repricing opportunities at any point in time constitute interest sensitivity gaps,
which is the difference between interest sensitive assets and interest sensitive liabilities.  These static measurements do not reflect the results of any projected activity and are best used as early indicators of potential interest rate
exposures.

An asset sensitive gap means an excess of interest sensitive assets over interest sensitive liabilities, whereas a liability
sensitive gap means an excess of interest sensitive liabilities over interest sensitive assets.  In a changing rate environment, a mismatched gap position generally indicates that changes in the income from interest earning assets will not be
completely proportionate to changes in the cost of interest bearing liabilities, resulting in net interest income volatility.  This risk can be reduced by various strategies, including the administration of liability costs and the reinvestment
of asset maturities.

The following table sets forth the distribution of rate-sensitive assets and liabilities at September 30,
2002:

|                                                                                   |  | Three Months or Less |             | Over Three Through Twelve Months |   | Over One Year Through Five Years |    | Over Five Years |            | Non- Interest Bearing |   | Total      |  
|---------------------------------------------------------------------------------- |  | -------------------- | ----------- | -------------------------------- | - | -------------------------------- | -- | --------------- | ---------- | --------------------- | - | ---------- | -
|                                                                                   |  |                      |             |                                  |   |                                  |    |                 |            |                       |   |            |  
|Assets                                                                             |  |                      |             |                                  |   |                                  |    |                 |            |                       |   |            |  
|Federal funds sold                                                                 |  | $                    | 15,350,000  |                                  | $ |                                 |    | $               |           |                       | $ |           |  
|Interest-bearing deposits with other financial institutions                        |  |                      | 363,500     |                                  |   | 1,783,000                        |    |                 | 1,357,300  |                       |   |           |  
|Securities held to maturity                                                        |  |                      | 1,000,000   |                                  |   | 991,600                          |    |                 | 12,501,100 |                       |   | 998,800    |  
|Loans, gross                                                                       |  |                      | 85,871,400  |                                  |   | 22,759,000                       |    |                 | 25,764,000 |                       |   | 9,692,000  |  
|Non-interest earning assets                                                        |  |                      |            |                                  |   |                                 |    |                 |           |                       |   |           |  
|                                                                                   |  |                      |             |                                  |   |                                  |    |                 |            |                       |   |            |  
|Total assets                                                                       |  | $                    | 102,584,900 |                                  | $ | 25,533,600                       |    | $               | 39,622,400 |                       | $ | 10,690,800 |  
|                                                                                   |  |                      |             |                                  |   |                                  |    |                 |            |                       |   |            |  
|Liabilities and Stockholders Equity:                                              |  |                      |             |                                  |   |                                  |    |                 |            |                       |   |            |  
|Demand deposits                                                                    |  | $                    |            |                                  | $ |                                 |    | $               |           |                       | $ |           |  
|Savings and money market accounts                                                  |  |                      | 41,273,000  |                                  |   |                                 |    |                 |           |                       |   |           |  
|Time deposits                                                                      |  |                      | 18,150,500  |                                  |   | 58,234,000                       |    |                 | 7,684,000  |                       |   |           |  
|FHLB advances                                                                      |  |                      |            |                                  |   |                                 |    |                 | 12,000,000 |                       |   |           |  
|Subordinated debentures                                                            |  |                      |            |                                  |   |                                 |    |                 | 2,500,000  |                       |   |           |  
|Capital note                                                                       |  |                      |            |                                  |   |                                 |    |                 | 1,500,000  |                       |   | 1,500,000  |  
|Accrued interest payable and other liabilities                                     |  |                      |            |                                  |   |                                 |    |                 |           |                       |   |           |  
|Stockholders equity                                                               |  |                      |            |                                  |   |                                 |    |                 |           |                       |   |           |  
|                                                                                   |  |                      |             |                                  |   |                                  |    |                 |            |                       |   |            |  
|Total liabilities and stockholders equity                                          |  | $                    | 59,423,500  |                                  | $ | 58,234,000                       |    | $               | 23,684,000 |                       | $ | 1,500,000  |  
|                                                                                   |  |                      |             |                                  |   |                                  |    |                 |            |                       |   |            |  
|Interest rate sensitivity gap                                                      |  | $                    | 43,161,400  |                                  | $ | (32,700,400                      | )  | $               | 15,938,400 |                       | $ | 9,190,800  |  
|                                                                                   |  |                      |             |                                  |   |                                  |    |                 |            |                       |   |            |  
|Cumulative interest rate sensitivity gap                                           |  | $                    | 43,161,400  |                                  | $ | 10,461,000                       |    | $               | 26,399,400 |                       | $ | 35,590,200 |  
|                                                                                   |  |                      |             |                                  |   |                                  |    |                 |            |                       |   |            |  
|% of interest rate sensitive gap in maturity period to total rate sensitive assets |  |                      | 24.2        | %                                |   | (18.3                            | )% |                 | 8.9        | %                     |   | 5.2        | %
|                                                                                   |  |                      |             |                                  |   |                                  |    |                 |            |                       |   |            |  
|Cumulative ratio                                                                   |  |                      | 24.2        | %                                |   | 5.9                              | %  |                 | 14.8       | %                     |   | 19.9       | %
|                                                                                   |  |                      |             |                                  |   |                                  |    |                 |            |                       |   |            |  
|Rate sensitive assets to rate sensitive liabilities                                |  |                      | 1.7         |                                  |   | 0.4                              |    |                 | 1.7        |                       |   | 7.1        |  
|                                                                                   |  |                      |             |                                  |   |                                  |    |                 |            |                       |   |            |  
|Cumulative ratio                                                                   |  |                      | 1.7         |                                  |   | 1.1                              |    |                 | 1.2        |                       |   | 1.2        |  
|                                                                                   |  |                      |             |                                  |   |                                  |    |                 |            |                       |   |            |  

At September 30, 2002, our rate
sensitive balance sheet was in a positive gap position.  This implies that our net interest margin would increase in the short-term if interest rates were to rise and would decline in the short-term if interest rates were to fall.  Our net
interest margin was lower during the nine months ended September 30, 2002 than in the same period of 2001 due to a decline in prevailing market rates of interest that had a greater effect on our assets than our liabilities.  However, as noted
above, the extent to which our net interest margin will be impacted by changes in prevailing interests rates will depend on a number of factors, including how quickly rate sensitive assets and liabilities react to interest rate changes.

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##### Table of Contents

Investments in Time Deposits and Securities

The
following table provides certain information regarding our investments in time deposits with other financial institutions and investment securities at the dates indicated.

TIME
DEPOSITS AND INVESTMENT SECURITIES

|                                |                                      | At September 30, 2002 |            | At December 31, 2001   | 
|------------------------------- | ------------------------------------ | --------------------- | ---------- | ---------------------- | 
|                                |                                      |                       |            |                        | 
|                                |                                      | Book Value            |            | Weighted Average Yield | 
|                                |                                      |                       |            |                        | 
|Time deposits maturing:         |                                      |                       |            |                        | 
|                                | One year or less                     |                       | $          | 2,146,500              | 
|                                | After one year but within five years |                       |            | 1,357,300              | 
|                                |                                      |                       |            |                        | 
|Total time deposits             |                                      | $                     | 3,503,800  |                        | 
|                                |                                      |                       |            |                        | 
|Investment securities maturing: |                                      |                       |            |                        | 
|                                | One year or less                     |                       | $          | 1,993,000              | 
|                                | After one year but within five years |                       |            | 13,498,500             | 
|                                |                                      |                       |            |                        | 
|Total investment securities     |                                      | $                     | 15,491,500 |                        | 
|                                |                                      |                       |            |                        | 

Our present strategy is to stagger the
maturities of our time deposit investments and investment securities to meet our overall liquidity requirements.  At September 30, 2002, we classified all our investment securities as held to maturity as we intend to hold the securities to
maturity.  All of the above investment securities were instruments of the U.S. Government or its Agencies.

Loans

Our present lending strategy is to attract small to mid-sized business borrowers by offering a variety of commercial and real estate loan products and a full range of
other banking services coupled with highly personalized service.  We offer secured and unsecured commercial term loans and lines of credit, construction loans for individual and tract single family homes and for commercial and multifamily
properties, accounts receivable and equipment loans, SBA loans and home equity lines of credit.  We often tailor our loan products to meet the specific needs of our borrowers.  Our primary lending area includes all six Southern California
counties: Los Angeles, Orange, Riverside, San Diego, San Bernardino and Ventura.

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The following table sets forth the composition of our loan portfolio at the dates indicated:

LOAN PORTFOLIO COMPOSITION

|                                 |  | At September 30, 2002 |             | At December 31, 2001 | 
|-------------------------------- |  | --------------------- | ----------- | -------------------- | 
|                                 |  |                       |             |                      | 
|                                 |  | Amount Outstanding    |             | Percent of Total     | 
|                                 |  |                       |             |                      | 
|Commercial loans                 |  | $                     | 48,031,000  |                      | 
|Construction loans               |  |                       | 38,454,000  |                      | 
|Real estate loans                |  |                       | 49,910,000  |                      | 
|Other loans                      |  |                       | 7,933,000   |                      | 
|                                 |  |                       |             |                      | 
|                                 |  |                       | 144,328,000 |                      | 
|                                 |  |                       |             |                      | 
|Less  Deferred loan fees        |  |                       | (241,600    | )                    | 
|Less  Allowance for loan losses |  |                       | (1,952,400  | )                    | 
|                                 |  |                       |             |                      | 
|Net loans                        |  | $                     | 142,134,000 |                      | 
|                                 |  |                       |             |                      | 

Our strategy has been to reduce our
level of construction loans, particularly the more speculative types, as a percentage of total assets and Tier 1 capital.  Loan growth has occurred in our commercial and industrial loan portfolio, which has generated greater diversification,
and in real estate loans.

Non-Performing Assets

Non-performing assets consist of
non-performing loans and other real estate owned.  Non-performing loans are (i) loans which have been placed on non-accrual status; (ii) loans which are contractually past due 90 days or more with respect to principal or interest, and have not
been restructured or placed on non-accrual status, and are accruing interest as described below; and (iii) troubled debt restructurings (TDRs).  Other real estate owned consists of real properties securing loans on which we have
taken title in partial or complete satisfaction of the loan.  The following table sets forth information about non-performing assets at the dates indicated:

NON-PERFORMING
ASSETS

|                                        |       | September 30, 2002 |         | December 31, 2001 |  
|--------------------------------------- | ----- | ------------------ | ------- | ----------------- | -
|                                        |       |                    |         |                   |  
|Non-accrual loans                       |       | $                  | 848,000 |                   | $
|Accruing loans past due 90 days or more |       |                    |        |                   |  
|Troubled debt restructurings            |       |                    |        |                   |  
|Other real estate owned                 |       |                    |        |                   |  
|                                        |       |                    |         |                   |  
|                                        | Total |                    | $       | 848,000           |  
|                                        |       |                    |         |                   |  
|                                        |       |                    |         |                   |  

Non-performing assets at September 30, 2002 decreased to $848,000 from $903,700 at December 31, 2001.  The
non-accrual loan at September 30, 2002 consisted of an $848,000 real estate construction loan for twenty-eight condominium units in Carson, California.  The additional interest income that would have been recorded from non-accrual loans, if the
loans had not been on non-accrual status, was $24,000 for the nine months ended September 30, 2002.  There were no cash collections on non-performing loans during the quarter ended September 30, 2002.  Interest payments received on
non-accrual loans are applied to principal unless there is no doubt as to ultimate full repayment of principal, in which case, the interest payment is recognized as interest income.  Interest income not

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recognized on non-accrual loans reduced the net yield on earning assets less than 0.1% for the nine month periods ended September 30, 2002 and 2001.

Impaired Loans

An impaired loan is a loan which management determines is probable that we will be
unable to collect all principal and interest amounts due according to the contractual terms of the loan agreement.  Impaired loans can include non-performing loans, although not all impaired loans will be non-performing loans.

We determine impaired loans by a periodic evaluation on an individual loan basis.  At September 30, 2002 and December 31, 2001, we had classified
$1,160,000 and $899,000, respectively, of our loans as impaired for which specific reserves of $299,000 and none, respectively, were provided.  In the nine months ended September 30, 2002, we collected $12,400 on impaired loans.  The
majority of the impaired loan balance is concentrated in the $848,000 aforementioned condominium loan in Carson, California.  The borrower filed for bankruptcy on August 5, 2002.  We have reserved $280,000 for this project which represents
our best estimate of probable loss considering current market conditions.

Changes in Allowance for Loan Losses

The following table presents an analysis of changes in the allowance for loan losses during the periods indicated:

CHANGES IN ALLOWANCES FOR LOAN LOSSES

|                               |  | Nine Months Ended September 30, |           
|------------------------------ |  | ------------------------------- | ----------
|                               |  |                                 |           
|                               |  | 2002                            |           
|                               |  |                                 |           
|Balance at beginning of period |  | $                               | 2,426,500 
|Charge-offs                    |  |                                 | (1,022,400
|Recoveries                     |  |                                 | 73,300    
|                               |  |                                 |           
|Net charge-offs                |  |                                 | (949,100  
|Additional provisions          |  |                                 | 475,000   
|                               |  |                                 |           
|Balance at end of period       |  | $                               | 1,952,400 
|                               |  |                                 |           

Charge-offs included $841,000 related to
a business which failed during the second quarter of 2002.

Off-Balance Sheet Credit Commitments and Contingent Obligations

Commitments to extend credit are agreements to lend to a customer as long as there is not a violation of any condition in the loan contract.  Commitments
generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Since we expect some commitments to expire without being drawn upon, the total commitment amounts do not necessarily represent future
loans.  At September 30, 2002, we had undisbursed loan commitments of $54.7 million.

Standby letters of credit and financial
guarantees are conditional commitments issued to secure the financial performance of a customer to a third party.  These are issued primarily to support public and private borrowing arrangements.  The credit risk involved in issuing a
letter of credit for a customer is essentially the same as that involved in extending a loan to that customer.  We hold certificates of deposit and other collateral of at least 100% of the notional amount as support for letters of credit for
which we deem collateral to be necessary.  At September 30, 2002, we had outstanding standby letters of credit with a potential $0.3 million of obligations.  These standby letters of credit will mature in 2003.

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Deposits

Total deposits increased from $120.7 million at
December 31, 2001 to $154.1 million at September 30, 2002.  This increase was primarily due to a $25.5 million increase in time deposits primarily generated by our money desk, which we used to fund the growth in our loan
portfolio.

We telephonically solicit deposits through a money desk, which attracts primarily time deposits nationwide.  These deposits
typically are placed with institutional investors and bear interest at the higher end of national rates for time deposits with comparable maturities.  We sometimes deal with a broker or other intermediary which places the deposits with a number
of institutions.  We limit the amount of money desk deposits that are scheduled to mature in any one calendar month and limit the amount of funds purchased from one intermediary to manage the risk of excessive dependence on any single deposit
or depositor.  In addition, we have historically maintained an appropriate level of liquidity specifically to counter any concurrent deposit reduction that might occur.  As of September 30, 2002, money desk deposits were $67.8 million
representing 44% of total deposits, as compared to $39.9 million at December 31, 2001 representing 33% of total deposits.

Under Federal
Deposit Insurance Corporation rules, banks that are not well capitalized may not be able to accept deposit funds obtained directly or indirectly by or through any deposit broker without a waiver.  The failure of the Bank to remain well
capitalized could result in it not being able to accept deposits through deposit brokers, which might have a material adverse affect on us.  At September 30, 2002, approximately 23%of our deposits (approximately $36 million) were from
deposit brokers.

Borrowed Funds

FHLB advances increased $7,000,000 during the
quarter ended September 30, 2002 due to an additional advances obtained by the Bank under its credit facility with the Federal Home Loan Bank of San Francisco (FHLB).  These advances mature on July 25, 2005 and bear interest at a
rate of prime minus 2.89% (1.86% at September 30, 2002).  The remaining $5,000,000 advance from FHLB matures on December 6, 2004 and carries a fixes interest rate of 4.18%.  These advances are collateralized by certain qualifying
investment securities and loans with a carrying value of $37,355,200 that have been pledged to secure the advance at September 30, 2002.   In addition, Bancshares borrowed an additional $2,000,000 under a $3,000,000 credit line
arranged through Pacific Coast Bankers Bank.  Subsequent to September 30, 2002, we used $3 million of the proceeds from the issuance of the trust preferred securities discussed previously in Note 4 to repay the capital note.

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FACTORS WHICH MAY AFFECT FUTURE OPERATING RESULTS

We face risk from changes in interest
rates.

The success of our business depends, to a large extent, on our net interest income. Changes in market interest rates can affect
our net interest income by affecting the spread between our interest earning assets and interest bearing liabilities. This may be due to the different maturities of our interest earning assets and interest bearing liabilities, as well as an increase
in the general level of interest rates. Changes in market interest rates also affect, among other things:

| |  | Our ability to originate loans;                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |   |                                                                                                         
| |  | The ability of our borrowers to make payments on their loans;                                           
| |   |                                                                                                         
| |  | The value of our interest earning assets and our ability to realize gains from the sale of these assets;
| |   |                                                                                                         
| |  | The average life of our interest earning assets;                                                        
| |   |                                                                                                         
| |  | Our ability to generate deposits instead of other available funding alternatives; and                   
| |   |                                                                                                         
| |  | Our ability to access the wholesale funding market.                                                     

Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other
factors beyond our control.

We face risk from possible declines in the quality of our assets.

Our financial condition depends significantly on the quality of our assets.  While we have developed and implemented underwriting policies and procedures to
guide us in the making of loans, compliance with these policies and procedures in making loans does not guarantee repayment of the loans.  If the level of our non-performing assets rises, our results of operations and financial condition will
be affected.  A borrowers ability to pay its loan in accordance with its terms can be adversely affected by a number of factors, such as a decrease in the borrowers revenues and cash flows due to adverse changes in economic
conditions or a decline in the demand for the borrowers products and/or services.

Our allowances for loan losses may be inadequate.

We establish allowances for loan losses against each segment of our loan portfolio.  At September 30, 2002, our allowance for loan losses equaled 1.4% of
loans.  Although we believed that we had established adequate allowances for loan losses as of September 30, 2002, the credit quality or our assets is affected by many factors beyond our control, including local and national economic
conditions, and the possible existence of facts which are not known to us which adversely affect the likelihood of repayment of various loans in our loan portfolio and realization of the collateral upon a default.  Accordingly, we can give no
assurance that we will not sustain loan losses materially in excess of the allowance for loan losses.  In addition, the FDIC and California Department of Financial Institutions, as an integral part of their examination process, periodically
review our allowance for loan losses and could require additional provisions for loan losses.  Material future additions to the allowance for loan losses may also be necessary due to increases in the size and changes in the composition of our
loan portfolio. Increases in our provisions for loan losses would adversely affect our results of operations.

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A significant portion of our deposits are higher-cost, less stable deposits obtained through our money desk.

Deposits obtained through deposit brokers or a money desk are typically more interest rate-sensitive than branch deposits.  Accordingly, they typically are
higher cost and less stable to the insured institution than deposits through branches.

We attract deposits telephonically nationwide
through a money desk.  As of September 30, 2002, money desk deposits were $67.8 million representing 44% of total deposits, as compared to $39.9 million at December 31, 2001 representing 33% of total deposits.

Under the Federal Deposit Insurance Act, banks that are not well capitalized may not accept deposit funds obtained directly or indirectly by or through any deposit
broker.  The failure of the Bank to remain well capitalized would prevent us from accepting deposits from deposit brokers without a waiver from the FDIC, which might have a material adverse affect on the Bank and its financial
condition.  At September 30, 2002, approximately 23% of our deposits (approximately $36 million) were from deposit brokers.

Economic conditions may worsen.

Our business is strongly influenced by economic conditions in our market area (principally, Southern California) as well as regional and national economic
conditions.  During the past year, economic conditions in Southern California have deteriorated. Should the economic condition in these areas further deteriorate, the financial condition of our borrowers could weaken, which could lead to higher
levels of loan defaults or a decline in the value of collateral for our loans. In addition, an unfavorable economy could reduce the demand for our loans and other products and services.

At September 30, 2002, a significant number of our loans were collateralized by real estate located in California.  Because of this concentration in California,
our financial position and results of operations have been and are expected to continue to be influenced by general trends in the California economy and its real estate market.  Real estate market declines may adversely affect the values of the
properties collateralizing loans. If the principal balances of our loans, together with any primary financing on the mortgaged properties, equal or exceed the value of the mortgaged properties, we could incur higher losses on sales of properties
collateralizing foreclosed loans.  In addition, California historically has been vulnerable to certain natural disaster risks, such as earthquakes and erosion-caused mudslides, which are not typically covered by the standard hazard insurance
policies maintained by borrowers.  Uninsured disasters may adversely impact our ability to recover losses on properties affected by such disasters and adversely impact our results of operations.

Our business is very competitive.

There is intense competition in Southern California and elsewhere in the
United States for banking customers.  We experience competition for deposits from many sources, including credit unions, insurance companies and money market and other mutual funds, as well as other commercial banks and savings
institutions.  We compete for loans and deposits primarily with other commercial banks, mortgage companies, commercial finance companies and savings institutions. In recent years out-of-state financial institutions have entered the California
market, which has also increased competition.  Many of our competitors have greater financial strength, marketing capability and name recognition than we do, and operate on a statewide or nationwide basis.  In addition, recent developments
in technology and mass marketing have permitted larger companies to market loans more aggressively to our small business customers.  Such advantages may give our competitors opportunities to realize greater efficiencies and economies of scale
than we can.  We can provide no assurance that we will be able to compete effectively against our competition.

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A significant portion of our loan portfolio consists of construction loans to developers for tract projects and single homes for resale to unidentified buyers.

At September 30, 2002, we had outstanding construction loans to developers for tract projects and single homes for sale to
unidentified buyers totaling $19.9 million, representing 13.8% of our loan portfolio, and additional commitments for these projects in the amount of $0.1 million.  These types of loans generally have greater risks than loans on completed homes,
multifamily and commercial properties.  A construction loan generally does not cover the full amount of the construction costs, so the borrower must have adequate funds to pay for the balance of the project.  Price increases, delays and
unanticipated difficulties can materially increase these costs.  Further, even if completed, there is no assurance that the borrower will be able to sell the project on a timely or profitable basis, as these are closely related to real estate
market conditions, which can fluctuate substantially between the start and completion of the project.  If the borrower defaults prior to completion of the project, the value of the project will likely be less than the outstanding loan, and we
could be required to complete construction with our own funds to minimize losses on the project.

Our business is heavily regulated.

Both Bancshares, as a bank holding company, and Bank, as a California-chartered FDIC-insured bank, are subject to significant governmental supervision and regulation,
which is intended primarily for the protection of depositors.  Statutes and regulations affecting us may be changed at any time, and the interpretation of these statutes and regulations by examining authorities also may change.  We cannot
assure you that future changes in applicable statutes and regulations or in their interpretation will not adversely affect our business.

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ITEM 3.   
CONTROLS AND PROCEDURES

The Companys management, including the Chief Executive Officer and Chief Financial
Officer, have conducted an evaluation of the effectiveness of the Companys disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended, within 90 days of the filing of this quarterly
report.  Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer believe that the Companys disclosure controls and procedures were effective in ensuring that information required to be disclosed by the
Company in this quarterly report has been made known to them in a timely manner.

During the quarter ended September 30, 2002, there were
no significant changes in the Companys internal controls or in other factors that could significantly affect those controls.

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PART II   OTHER INFORMATION

|ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K                                                                                                                                    
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                     
|        | (a)                                                                                                                                                                 
|        |                                                                                                                                                                     
|        |                                                                                                                                                                     
|        |                                                                                                                                                                     
|        | (b)                                                                                                                                                                 
|        |                                                                                                                                                                     
|        | The Company filed a Current Report on Form 8-K on October 7, 2002 to report that it had terminated the engagement of Grant Thornton LLP as its
independent auditors.
|        |                                                                                                                                                                     
|        | The Company filed a Current Report on Form 8-K on November 8, 2002 to report that it had engaged McGladrey & Pullen, LLP as its independent
auditors.               
|        |                                                                                                                                                                     

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SIGNATURES

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

|DATE: | November 14, 2002 | ALLIANCE BANCSHARES CALIFORNIA                                         
|----- | ----------------- | -----------------------------------------------------------------------
|      |                   |                                                                        
|      | By:               | /s/  DANIEL L. ERICKSON                                                
|      |                   |                                                                        
|      |                   | Daniel L. Erickson Executive Vice President and Chief Financial Officer
|      |                   |                                                                        

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Certifications for Form 10-QSB

|I, Curtis S. Reis, certify that:
|--------------------------------
|                                
|1.                              
|2.                              
|3.                              
|4.                              
|                                
|                                
|                                
|5.                              
|                                
|                                
|6.                              



|Date: November 14, 2002 | Name:  | /s/ CURTIS S. REIS                   
|----------------------- | ------ | -------------------------------------
|                        |        |                                      
|                        | Title: | President and Chief Executive Officer

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Certifications for Form 10-QSB

|I, Daniel L. Erickson, certify that:
|------------------------------------
|                                    
|1.                                  
|2.                                  
|3.                                  
|4.                                  
|                                    
|                                    
|                                    
|5.                                  
|                                    
|                                    
|6.                                  



|Date: November 14, 2002 | Name:  | /s/ DANIEL L. ERICKSON                         
|----------------------- | ------ | -----------------------------------------------
|                        |        |                                                
|                        | Title: | Executive Vice PresidentChief Financial Officer

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