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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

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FORM 10-QSB

|(Mark One)                                                                       
|---------------------------------------------------------------------------------
|                                                                                 
|x                                                                                
|                                                                                 
|For the quarterly period ended March 31, 2003                                    
|                                                                                 
|OR                                                                               
|                                                                                 
|o                                                                                
|                                                                                 
|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.

4,542,679 shares of Common Stock as of April 30, 2003

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ALLIANCE BANCSHARES CALIFORNIA

QUARTERLY REPORT ON FORM 10-QSB FOR  THE QUARTER ENDED
MARCH 31, 2003

TABLE OF CONTENTS

|               |                       |                                                                                  | Page No.
|-------------- | --------------------- | -------------------------------------------------------------------------------- | --------
|               |                       |                                                                                  |         
|Part I.        | Financial Information |                                                                                  |         
|               |                       |                                                                                  |         
|               | Item 1.               | Financial Statements                                                             |         
|               |                       |                                                                                  |         
|               |                       | Consolidated Statements of Financial Condition at March 31, 2003                 |         
|               |                       |                                                                                  |         
|               |                       | Consolidated Statements of Operations Three months ended March 31, 2003 and 2002 |         
|               |                       |                                                                                  |         
|               |                       | Consolidated Statements of Cash Flows Three months ended March 31, 2003 and 2002 |         
|               |                       |                                                                                  |         
|               |                       | Notes to Consolidated Financial Statements                                       |         
|               |                       |                                                                                  |         
|               | Item 2.               | Managements Discussion and Analysis or Plan of Operation                        |         
|               |                       |                                                                                  |         
|               | Item 3.               | Controls and Procedures                                                          |         
|               |                       |                                                                                  |         
|Part II.       | Other Information     |                                                                                  |         
|               |                       |                                                                                  | 26      
|               | Item 6.               | Exhibits and Reports on Form 8-K                                                 |         
|Signatures     |                       |                                                                                  |         
|               |                       |                                                                                  |         
|Certifications |                       |                                                                                  |         

2



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PART I. 
FINANCIAL INFORMATION

ITEM 1. 
FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITIONMarch 31, 2003(Unaudited)

|Assets                                                     |  |   |             | 
|---------------------------------------------------------- |  | - | ----------- | 
|Cash and due from banks                                    |  | $ | 5,694,100   | 
|Federal funds sold                                         |  |   | 29,940,000  | 
|                                                           |  |   |             | 
|Total cash and cash equivalents                            |  |   | 35,634,100  | 
|Time deposits with other financial institutions            |  |   | 3,926,800   | 
|Securities held to maturity, fair market value $32,628,000 |  |   | 32,354,800  | 
|Loans held for sale                                        |  |   | 6,830,000   | 
|Loans, net of the allowance for loan losses of $2,421,400  |  |   | 146,626,500 | 
|Equipment and leasehold improvements, net                  |  |   | 1,124,200   | 
|Accrued interest receivable and other assets               |  |   | 4,234,300   | 
|                                                           |  |   |             | 
|Total assets                                               |  | $ | 230,730,700 | 
|                                                           |  |   |             | 
|Liabilities and Shareholders Equity                       |  |   |             | 
|Deposits:                                                  |  |   |             | 
|Demand                                                     |  | $ | 34,720,800  | 
|Interest bearing:                                          |  |   |             | 
|Demand                                                     |  |   | 3,925,200   | 
|Savings and money market                                   |  |   | 69,827,900  | 
|Time                                                       |  |   | 66,757,700  | 
|                                                           |  |   |             | 
|Total deposits                                             |  |   | 175,231,600 | 
|                                                           |  |   |             | 
|Accrued interest payable and other liabilities             |  |   | 1,100,300   | 
|FHLB advances                                              |  |   | 32,000,000  | 
|Subordinated debentures                                    |  |   | 2,500,000   | 
|Trust preferred securities                                 |  |   | 7,000,000   | 
|                                                           |  |   |             | 
|Total liabilities                                          |  |   | 217,831,900 | 
|                                                           |  |   |             | 
|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  4,542,679 shares                             |  |   | 3,488,300   | 
|Undivided profits                                          |  |   | 9,410,500   | 
|                                                           |  |   |             | 
|Total shareholders equity                                 |  |   | 12,898,800  | 
|                                                           |  |   |             | 
|Total liabilities and shareholders equity                 |  | $ | 230,730,700 | 
|                                                           |  |   |             | 

The accompanying notes are an integral part of these statements.


3



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Part I. Item 1. (continued)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

|                                                            |  | Three Months Ended March 31, |          
|----------------------------------------------------------- |  | ---------------------------- | ---------
|                                                            |  |                              |          
|                                                            |  | 2003                         |          
|                                                            |  |                              |          
|Interest income:                                            |  |                              |          
|Interest and fees on loans                                  |  | $                            | 3,204,600
|Interest on time deposits with other financial institutions |  |                              | 35,500   
|Interest on securities held to maturity                     |  |                              | 331,200  
|Interest on federal funds sold                              |  |                              | 59,900   
|                                                            |  |                              |          
|Total interest income                                       |  |                              | 3,631,200
|                                                            |  |                              |          
|Interest expense:                                           |  |                              |          
|Interest on deposits                                        |  |                              | 890,000  
|Interest on FHLB advances                                   |  |                              | 160,000  
|Interest on subordinated optional convertible debentures    |  |                              | 50,500   
|Interest on capital note                                    |  |                              |         
|Interest on trust preferred securities                      |  |                              | 87,300   
|                                                            |  |                              |          
|Total interest expense                                      |  |                              | 1,187,800
|                                                            |  |                              |          
|Net interest income before provision for loan losses        |  |                              | 2,443,400
|Provision for loan losses                                   |  |                              | 425,000  
|                                                            |  |                              |          
|Net interest income                                         |  |                              | 2,018,400
|Non-interest income                                         |  |                              | 730,400  
|Non-interest expenses:                                      |  |                              |          
|Salaries and related benefits                               |  |                              | 911,500  
|Occupancy and equipment expenses                            |  |                              | 202,500  
|Other operating expenses                                    |  |                              | 725,300  
|                                                            |  |                              |          
|Total non-interest expense                                  |  |                              | 1,839,300
|                                                            |  |                              |          
|Earnings before income tax expense                          |  |                              | 909,500  
|Income tax expense                                          |  |                              | 370,100  
|                                                            |  |                              |          
|Net earnings                                                |  | $                            | 539,400  
|                                                            |  |                              |          
|Earnings per common share:                                  |  |                              |          
|Basic earnings per share                                    |  | $                            | 0.12     
|Diluted earnings per share                                  |  | $                            | 0.09     

The accompanying notes are an integral part of these statements.

4



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Part I. Item 1. (continued)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

|                                                                                               |  | Three Months Ended March 31, |            
|---------------------------------------------------------------------------------------------- |  | ---------------------------- | -----------
|                                                                                               |  |                              |            
|                                                                                               |  | 2003                         |            
|                                                                                               |  |                              |            
|Cash Flows from Operating Activities:                                                          |  |                              |            
|Net earnings                                                                                   |  | $                            | 539,400    
|Adjustments to reconcile net earnings to net cash provided by  (used in) operating activities: |  |                              |            
|Net amortization of discounts and premiums on securities held to maturity                      |  |                              | 55,100     
|Depreciation and amortization                                                                  |  |                              | 79,700     
|Provision for loan losses                                                                      |  |                              | 425,000    
|Net gains on sales of loans held for sale                                                      |  |                              | (265,300   
|Proceeds from sales of loans held for sale                                                     |  |                              | 6,993,200  
|Originations of loans held for sale                                                            |  |                              | (6,343,100 
|(Increase) decrease in accrued interest receivable and other assets                            |  |                              | 309,300    
|Decrease in accrued interest payable and other liabilities                                     |  |                              | (188,900   
|                                                                                               |  |                              |            
|Net cash provided by (used in) operating activities                                            |  |                              | 1,604,400  
|                                                                                               |  |                              |            
|Cash Flows from Investing Activities:                                                          |  |                              |            
|Net (increase) decrease in:                                                                    |  |                              |            
|Time deposits with other financial institutions                                                |  |                              | (573,600   
|Loans                                                                                          |  |                              | (5,725,200 
|Purchase of equipment and leasehold improvements                                               |  |                              | (78,200    
|Purchase of FHLB stock                                                                         |  |                              | (750,000   
|Purchase of securities held to maturity                                                        |  |                              | (8,071,900 
|Proceeds from maturities of securities held to maturity                                        |  |                              | 5,136,800  
|                                                                                               |  |                              |            
|Net cash used by investing activities                                                          |  |                              | (10,062,100
|                                                                                               |  |                              |            
|Cash Flows from Financing Activities:                                                          |  |                              |            
|Net increase (decrease) in:                                                                    |  |                              |            
|Demand deposits                                                                                |  |                              | 1,981,900  
|Savings and money market deposits                                                              |  |                              | 23,466,500 
|Time deposits                                                                                  |  |                              | (6,941,800 
|Proceeds from stock options exercised                                                          |  |                              | 8,000      
|FHLB advances                                                                                  |  |                              | 10,000,000 
|Proceeds from issuance of capital note                                                         |  |                              |           
|                                                                                               |  |                              |            
|Net cash provided by financing activities                                                      |  |                              | 28,514,600 
|                                                                                               |  |                              |            
|Net increase in cash and cash equivalents                                                      |  |                              | 20,056,900 
|Cash and cash equivalents, beginning of period                                                 |  |                              | 15,577,200 
|                                                                                               |  |                              |            
|Cash and cash equivalents, end of period                                                       |  | $                            | 35,634,100 
|                                                                                               |  |                              |            
|Supplemental disclosure of cash flow information                                               |  |                              |            
|Cash paid during the period for:                                                               |  |                              |            
|Interest                                                                                       |  | $                            | 1,162,200  
|Income taxes                                                                                   |  |                              | 481,800    

The accompanying notes are an integral part of these statements.

5



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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, 2002 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 three month period ended March 31, 2003, 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, 2003.

The
consolidated financial statements include the accounts of Alliance Bancshares California (Bancshares), its wholly owned subsidiaries Alliance Bank (the Bank) and Alliance Bancshares California Capital Trust I (the
Trust), 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.

Use of
Estimates

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 2002 have been reclassified to conform to the 2003 presentation.  These reclassifications had no change to net
earnings or shareholders equity previously reported.

6



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Earnings Per Share

Basic earnings 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 ended March 31, 2003 were 4,541,301 and for the quarter ended March 31,
2002 were 4,506,070.  The weighted average numbers of shares used in the diluted earnings per share computations for the quarter ended March 31, 2003 were 6,014,514 and for the quarter ended March 31, 2002 were 5,957,737.

Basic and diluted earnings per share for the quarters ended March 31, 2003 and 2002 are computed as follows:

|2003                                            |  | Net Earnings |         | Shares |  | Per  Share Amount | 
|----------------------------------------------- |  | ------------ | ------- | ------ |  | ----------------- | 
|                                                |  |              |         |        |  |                   | 
|Net Earnings                                    |  | $            | 539,400 |        |  |                   | 
|                                                |  |              |         |        |  |                   | 
|Basic earnings per share:                       |  |              |         |        |  |                   | 
|                                                |  |              |         |        |  |                   | 
|Net earnings available to common shareholders   |  | $            | 539,400 |        |  | 4,541,301         | 
|                                                |  |              |         |        |  |                   | 
|Effect of conversion of subordinated debentures |  |              | 29,300  |        |  | 1,250,000         | 
|                                                |  |              |         |        |  |                   | 
|Effect of conversion of options and warrants    |  |              |         |        |  | 223,213           | 
|                                                |  |              |         |        |  |                   | 
|Diluted earnings per share:                     |  |              |         |        |  |                   | 
|Net earnings available to common shareholders   |  | $            | 568,700 |        |  | 6,014,514         | 
|                                                |  |              |         |        |  |                   | 
|                                                |  |              |         |        |  |                   | 
|2002                                            |  | Net Earnings |         | Shares |  | Per  Share Amount | 
|                                                |  |              |         |        |  |                   | 
|Net Earnings                                    |  | $            | 207,900 |        |  |                   | 
|                                                |  |              |         |        |  |                   | 
|Basic earnings per share:                       |  |              |         |        |  |                   | 
|Net earnings available to common shareholders   |  | $            | 207,900 |        |  | 4,506,070         | 
|Effect of conversion of subordinated debentures |  |              | 29,300  |        |  | 1,250,000         | 
|Effect of conversion of options and warrants    |  |              |         |        |  | 201,667           | 
|                                                |  |              |         |        |  |                   | 
|Diluted earnings per share:                     |  |              |         |        |  |                   | 
|Net earnings available to common shareholders   |  | $            | 237,200 |        |  | 5,957,737         | 
|                                                |  |              |         |        |  |                   | 

7



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Equity Compensation Plans

The Company accounts for stock-based awards to employees and directors using the intrinsic value method, in accordance with APB Opinion
No. 25, Accounting for Stock Issued to Employees. Accordingly, no compensation expense has been recognized in the consolidated financial statements for employee and director stock arrangements. However, the required pro forma disclosures
of the effects of all options granted on or after January 1, 1995 have been provided in accordance with Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation. SFAS 123 requires
pro forma disclosures of net earnings and earnings per share as if the fair value based method of accounting for stock-based awards had been applied. Under the fair value based method, compensation cost is recorded based on the value of the award at
the grant date and is recognized over the service period. Had compensation cost for the Plan been determined based upon the fair value of the options at the grant dates consistent with the method of SFAS 123, the Companys net earnings per
share would have been reduced to the pro forma amounts indicated below:

|                                                                                                           |  | March 31, |        
|---------------------------------------------------------------------------------------------------------- |  | --------- | -------
|                                                                                                           |  |           |        
|                                                                                                           |  | 2003      |        
|                                                                                                           |  |           |        
|                                                                                                           |  |           |        
|Net earnings, as reported                                                                                  |  | $         | 539,400
|Less - Total stock-based compensation expense determined under fair value method for all qualifying awards |  |           | (5,200 
|                                                                                                           |  |           |        
|Pro forma net earnings                                                                                     |  | $         | 534,200
|                                                                                                           |  |           |        
|Earnings per share:                                                                                        |  |           |        
|Basic:                                                                                                     |  |           |        
|As reported                                                                                                |  | $         | 0.12   
|Pro forma                                                                                                  |  |           | 0.12   
|Diluted:                                                                                                   |  |           |        
|As reported                                                                                                |  |           | 0.09   
|Pro forma                                                                                                  |  |           | 0.09   
|                                                                                                           |  |           |        

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2.      Securities Held to Maturity

The amortized cost and estimated fair values of securities held to maturity at March 31, 2003 are as follows:

|                                                                   |  | Amortized Cost |            | Gross Unrealized Gains |   | Gross Unrealized Losses |  | Estimated Fair Value |        
|------------------------------------------------------------------ |  | -------------- | ---------- | ---------------------- | - | ----------------------- |  | -------------------- | -------
|                                                                   |  |                |            |                        |   |                         |  |                      |        
|U.S. Government agency securities                                  |  | $              | 10,014,000 |                        | $ | 227,500                 |  | $                    |       
|Collateralized mortgage obligations and mortgage backed securities |  |                | 22,340,800 |                        |   | 57,200                  |  |                      | (11,500
|                                                                   |  |                |            |                        |   |                         |  |                      |        
|                                                                   |  | $              | 32,354,800 |                        | $ | 284,700                 |  | $                    | (11,500
|                                                                   |  |                |            |                        |   |                         |  |                      |        

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

|                               |  | Three Months Ended March 31, |          
|------------------------------ |  | ---------------------------- | ---------
|                               |  |                              |          
|                               |  | 2003                         |          
|                               |  |                              |          
|Balance at beginning of period |  | $                            | 1,982,900
|Charge-offs                    |  |                              | (9,800   
|Recoveries                     |  |                              | 23,300   
|                               |  |                              |          
|Net charge-offs                |  |                              | 13,500   
|Additional provisions          |  |                              | 425,000  
|                               |  |                              |          
|Balance at end of period       |  | $                            | 2,421,400
|                               |  |                              |          

9



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4.     Commitments and Contingencies

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 March 31, 2003, we had undisbursed loan commitments of $64.7 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 March 31, 2003, we had outstanding standby letters
of credit with a potential $0.1 million of obligations.  These standby letters of credit will mature in 2003.

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 $0.5 million ($0.12 basic and $0.09 diluted earnings per share) for the first quarter of 2003 as compared to
net earnings of $0.2 million ($0.05 basic and $0.04 diluted earnings per share) for the first quarter of 2002.  The improvement in net earnings in 2003 was due primarily to increases in net interest income, gains on the sales of loans and
broker fees on loans referred to other lenders.

We continued to grow, with assets increasing from $201.9
million at December 31, 2002 to $230.7 million at March 31, 2003.  Net loans continue to constitute the largest portion (approximately 70%) of our interest earning assets, and grew from $148.5 million at December 31, 2002 to $153.5 million at
March 31, 2003.

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

|                                                 |  | Three months ended March 31, |      
|------------------------------------------------ |  | ---------------------------- | -----
|                                                 |  |                              |      
|                                                 |  | 2003                         |      
|                                                 |  |                              |      
|Return on average assets (1)                     |  |                              | 1.00 
|Return on average shareholders' equity (1)       |  |                              | 17.27
|Net yield on average interest earning assets (1) |  |                              | 4.76 
|Earnings per common share:                       |  |                              |      
|Basic earnings per share                         |  | $                            | 0.12 
|Diluted earnings per share                       |  | $                            | 0.09 

---

(1)     Annualized

11



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RESULTS OF OPERATIONS  Three Months Ended March 31, 2003 and 2002

Net Interest
Income

We recorded interest income of $3.6 million for the quarter ended March 31, 2003 as compared to $2.8 million for the quarter ended March 31, 2002.  Interest expense totaled $1.2
million for the quarter ended March 31, 2003 as compared to $1.0 million for the quarter ended March 31, 2002.  The increases in interest income and interest expense were due to increases in the amount of interest earning assets and interest
bearing liabilities, as the weighted average yields earned and rates paid decreased due to lower market interest rates.

Net interest income before provision for loan losses increased to $2.4
million for the quarter ended March 31, 2003, from $1.8 million for the quarter ended March 31, 2002.  This was due primarily to an increase in average interest earning assets from $141.9 million for the quarter ended March 31, 2002 to $208.3
million for the quarter ended March 31, 2003 and, to a lesser extent, to an increase in net average interest earnings assets (average interest earning assets less average interest bearing liabilities) from $29.2 million to $35.5 million.  The
increase in net average interest earning assets was due principally to a $7.5 million increase in average non-interest bearing demand deposit.  Net interest income was impacted by a decrease in the net yield on interest earning assets, or net
interest margin, from 5.08% for the quarter ended March 31, 2002 to 4.76% for the quarter ended March 31, 2003.  This decrease reflected declining market interest rates initiated by the FRB, resulting in the weighted average prime rate
decreasing from 4.75% for the quarter ended March 31, 2002 to 4.25% for the quarter ended March 31, 2003.  Because loans represented in excess of 70% 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 0.90% from 7.97% for the quarter ended March 31, 2002 to 7.07% for the quarter ended March 31, 2003.  By comparison, the weighted average rate
paid on our interest bearing liabilities decreased 0.76% for the quarter ended March 31, 2002, as our time deposits, which have terms up to three years, adjust rates only upon maturity.

12



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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

|                                           |  | Three Months Ended March 31, |            
|------------------------------------------ |  | ---------------------------- | -----------
|                                           |  |                              |            
|                                           |  | 2003                         |            
|                                           |  |                              |            
|                                           |  | Average Balance              |            
|                                           |  |                              |            
|Interest earning assets:                   |  |                              |            
|Federal funds sold                         |  | $                            | 20,192,700 
|Time deposits                              |  |                              | 3,608,100  
|Securities                                 |  |                              | 32,857,400 
|Loans                                      |  |                              | 151,618,300
|                                           |  |                              |            
|Total interest-earning assets              |  |                              | 208,276,400
|                                           |  |                              |            
|Non-interest-earning assets                |  |                              | 9,841,100  
|                                           |  |                              |            
|Total assets                               |  | $                            | 218,117,500
|                                           |  |                              |            
|Interest bearing liabilities:              |  |                              |            
|Interest-bearing demand deposits           |  | $                            | 3,107,600  
|Savings and money market deposits          |  |                              | 59,744,300 
|Time deposits                              |  |                              | 71,474,200 
|FHLB advances                              |  |                              | 29,000,000 
|Subordinated debentures                    |  |                              | 2,500,000  
|Trust preferred securities                 |  |                              | 7,000,000  
|Capital note                               |  |                              |           
|                                           |  |                              |            
|Total interest-bearing liabilities         |  |                              | 172,826,100
|                                           |  |                              |            
|                                           |  |                              |            
|                                           |  |                              |            
|Non-interest bearing liabilities           |  |                              | 32,625,200 
|                                           |  |                              |            
|Total liabilities                          |  |                              | 205,451,300
|Shareholders equity                       |  |                              | 12,666,200 
|                                           |  |                              |            
|Total liabilities and shareholders equity |  | $                            | 218,117,500
|                                           |  |                              |            
|Net interest income                        |  |                              |            
|                                           |  |                              |            
|Interest rate spread                       |  |                              |            
|Net interest margin                        |  |                              |            

Note: Interest income on loans includes loan fees.

Provision for Loan Losses

We charged $0.4 million to the allowance for loan
and lease losses (ALLL) for the quarter ended March 31, 2003 as compared to $0.1 million for the quarter ended March 31, 2002.  These provisions were based on our policies and procedures established for the ALLL.   See
Financial Condition - Changes in the Allowance for Loan Losses below.

13



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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.

Non-Interest Income

Non-interest income includes
primarily service charges on deposit accounts, net gains on sales of loans and loan broker fees for referring loans to other lenders.  Non-interest income increased 152% from the quarter ended March 31, 2002 to the quarter ended March 31, 2003,
primarily due to an increase in net gains on sales of loans (the guaranteed portion of SBA loans) of $0.2 million and an increase of $0.2 million in loan broker fees.  Our ability to generate gains on sales of loans and loan broker fees 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 and loan broker fees may fluctuate significantly from period to period, and results in any period relating to loan sales and broker fees are not necessarily indicative of results that may be obtained in any future
period.

Non-Interest Expense

Salary and
related expenses increased by 5.7% from the quarter ended March 31, 2002 to the quarter ended March 31, 2003 due primarily to an increase in the number of employees.  At March 31, 2003, we employed 47 full time employees, compared with 42
employees at March 31, 2002.

Occupancy and equipment expenses remained unchanged from the quarter ended
March 31, 2002 to the quarter ended March 31, 2003.  Rent expense is scheduled to increase in April 2003 by $20,600 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 34.8% from the quarter ended March 31, 2002 to the quarter
ended March 31, 2003 due in part to increases in advertising, business development and marketing expenses.  These additional expenses were incurred for customer appreciation functions, marketing brochures and a deposit promotion program.

FINANCIAL CONDITION

Regulatory Capital

At March 31, 2003, Bancshares and Banks Tier 1 capital, which is comprised of shareholders equity as modified by certain
regulatory adjustments, was $16.2 million and $19.4 million, respectively.  Our regulatory capital increased since March 31, 2002 as a result of net earnings and, in the case of the Bank, from a capital contribution by Bancshares of $2.0
million using the proceeds of its prior credit facility and $3.5 million of proceeds from the issuance of the trust preferred securities.  Bancshares total capital increased by $7.0 million from the issuance of the trust preferred
securities, a portion of which qualifies as Tier 1 capital ($3.3 million at March 31, 2003).  At March 31, 2003, 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 March 31, 2003(dollars in thousands)

|                                         |  | Actual |        | To Be Adequately Capitalized |  | To Be Well Capitalized |  
|---------------------------------------- |  | ------ | ------ | ---------------------------- |  | ---------------------- | -
|                                         |  |        |        |                              |  |                        |  
|                                         |  | Amount |        | Ratio                        |  | Amount                 |  
|                                         |  |        |        |                              |  |                        |  
|Bancshares                               |  |        |        |                              |  |                        |  
|Total Capital (to risk-weighted assets)  |  | $      | 24,522 |                              |  | 14.4                   | %
|Tier 1 Capital (to risk-weighted assets) |  | $      | 16,159 |                              |  | 9.5                    | %
|Tier 1 Capital (to average assets)       |  | $      | 16,159 |                              |  | 7.4                    | %
|Bank                                     |  |        |        |                              |  |                        |  
|Total Capital (to risk-weighted assets)  |  | $      | 24,068 |                              |  | 14.2                   | %
|Tier 1 Capital (to risk-weighted assets) |  | $      | 19,445 |                              |  | 11.4                   | %
|Tier 1 Capital (to average assets)       |  | $      | 19,445 |                              |  | 8.9                    | %

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 86% and 94% of our funding as a percentage of average total assets during the three months ended March 31, 2003 and 2002,
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 March 31, 2003, we had $32,000,000 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 three months ended March 31, 2003, we had an average balance of $20.2 million in overnight funds sold representing 9.3% 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 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

15



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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 March 31, 2003:

RATE SENSITIVITY March 31, 2003

|                                                            |  | Three Months or Less |             | After Three Months But Within One Year |   | After One Year But Within Five Years |   | After Five Years |            | Total |  
|----------------------------------------------------------- |  | -------------------- | ----------- | -------------------------------------- | - | ------------------------------------ | - | ---------------- | ---------- | ----- | -
|                                                            |  |                      |             |                                        |   |                                      |   |                  |            |       |  
|Rate-Sensitive Assets:                                      |  |                      |             |                                        |   |                                      |   |                  |            |       |  
|Federal funds sold                                          |  | $                    | 29,940,000  |                                        | $ |                                     |   | $                |           |       | $
|Interest-bearing deposits with other financial institutions |  |                      | 1,160,500   |                                        |   | 1,783,000                            |   |                  | 983,300    |       |  
|Securities held to maturity                                 |  |                      |            |                                        |   | 2,013,900                            |   |                  | 6,000,000  |       |  
|Loans, gross                                                |  |                      | 76,073,900  |                                        |   | 38,839,000                           |   |                  | 29,727,000 |       |  
|                                                            |  |                      |             |                                        |   |                                      |   |                  |            |       |  
|Total rate-sensitive assets                                 |  | $                    | 107,174,400 |                                        | $ | 42,635,900                           |   | $                | 36,710,300 |       | $
|                                                            |  |                      |             |                                        |   |                                      |   |                  |            |       |  
|Liabilities and Stockholders Equity:                       |  |                      |             |                                        |   |                                      |   |                  |            |       |  
|Demand deposits                                             |  | $                    | 3,925,200   |                                        | $ |                                     |   | $                |           |       | $
|Savings and money market accounts                           |  |                      | 69,827,900  |                                        |   |                                     |   |                  |           |       |  
|Time deposits                                               |  |                      | 23,168,700  |                                        |   | 38,943,000                           |   |                  | 4,646,000  |       |  
|FHLB advances                                               |  |                      | 7,000,000   |                                        |   |                                     |   |                  | 25,000,000 |       |  
|Subordinated debentures                                     |  |                      |            |                                        |   |                                     |   |                  | 2,500,000  |       |  
|Trust preferred securities                                  |  |                      | 7,000,000   |                                        |   |                                     |   |                  |           |       |  
|                                                            |  |                      |             |                                        |   |                                      |   |                  |            |       |  
|Total rate-sensitive liabilities                            |  | $                    | 110,921,800 |                                        | $ | 38,943,000                           |   | $                | 32,146,000 |       | $
|                                                            |  |                      |             |                                        |   |                                      |   |                  |            |       |  
|Interval Gaps:                                              |  |                      |             |                                        |   |                                      |   |                  |            |       |  
|Interest rate sensitivity gap                               |  | $                    | (3,747,400  | )                                      | $ | 3,692,900                            |   | $                | 4,564,300  |       |  
|                                                            |  |                      |             |                                        |   |                                      |   |                  |            |       |  
|Rate sensitive assets to rate sensitive liabilities         |  |                      | 96.6        | %                                      |   | 109.5                                | % |                  | 114.2      | %     |  
|                                                            |  |                      |             |                                        |   |                                      |   |                  |            |       |  
|Cumulative Gaps:                                            |  |                      |             |                                        |   |                                      |   |                  |            |       |  
|Cumulative interest rate sensitivity gap                    |  | $                    | (3,747,400  | )                                      | $ | (54,500                              | ) | $                | 4,509,800  |       | $
|                                                            |  |                      |             |                                        |   |                                      |   |                  |            |       |  
|Rate sensitive assets to rate sensitive liabilities         |  |                      | 96.6        | %                                      |   | 100.0                                | % |                  | 102.5      | %     |  
|                                                            |  |                      |             |                                        |   |                                      |   |                  |            |       |  

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Investments in Time Deposits and Securities

The following table provides certain information regarding our investments in time deposits with other financial institutions at March
31, 2003:

TIME DEPOSITS INVESTMENTS

|                                     |  | March 31, 2003 |           |                       
|------------------------------------ |  | -------------- | --------- | ----------------------
|                                     |  |                |           |                       
|                                     |  | Book Value     |           | Weighted Average Yield
|                                     |  |                |           |                       
|Time deposits maturing:              |  |                |           |                       
|One year or less                     |  | $              | 2,943,500 |                       
|After one year but within five years |  |                | 983,300   |                       
|                                     |  |                |           |                       
|Total time deposits                  |  | $              | 3,926,800 |                       
|                                     |  |                |           |                       

The
following table provides certain information regarding our investment securities at March 31, 2003.  Expected maturities will differ from contractual maturities, particularly with respect to collateralized mortgage obligations and mortgage
backed securities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.  There were no tax-exempt securities for the quarters ended March 31, 2002 or 2003.

INVESTMENT SECURITIES

|                                                                   |  | March 31, 2003 |            |                       
|------------------------------------------------------------------ |  | -------------- | ---------- | ----------------------
|                                                                   |  |                |            |                       
|                                                                   |  | Book Value     |            | Weighted Average Yield
|                                                                   |  |                |            |                       
|Investment securities maturing:                                    |  |                |            |                       
|Within one year                                                    |  | $              | 2,013,900  |                       
|After one year but within five years                               |  |                | 6,000,000  |                       
|After five years but within ten years                              |  |                | 2,000,100  |                       
|Collateralized mortgage obligations and mortgage backed securities |  |                | 22,340,800 |                       
|                                                                   |  |                |            |                       
|Total investment securities                                        |  | $              | 32,354,800 |                       
|                                                                   |  |                |            |                       

Our
present strategy is to stagger the maturities of our time deposit investments and investment securities to meet our overall liquidity requirements.  At March 31, 2003, we classified all our investment securities as held to maturity as we intend
to hold the securities to maturity.

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 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 March 31,
2003:

LOAN PORTFOLIO COMPOSITION

|                                 |  | March 31, 2003     |             |                 
|-------------------------------- |  | ------------------ | ----------- | ----------------
|                                 |  |                    |             |                 
|                                 |  | Amount Outstanding |             | Percent of Total
|                                 |  |                    |             |                 
|Commercial loans                 |  | $                  | 40,928,300  |                 
|Construction loans               |  |                    | 36,302,000  |                 
|Real estate loans                |  |                    | 64,213,200  |                 
|Other loans                      |  |                    | 8,054,600   |                 
|                                 |  |                    |             |                 
|                                 |  |                    | 149,498,100 |                 
|                                 |  |                    |             |                 
|Less  Deferred loan fees        |  |                    | (450,200    | )               
|Less  Allowance for loan losses |  |                    | (2,421,400  | )               
|                                 |  |                    |             |                 
|Net loans                        |  | $                  | 146,626,500 |                 
|                                 |  |                    |             |                 

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 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 March 31, 2003:

NON-PERFORMING ASSETS

|                                        |  | March 31, 2003 |           | 
|--------------------------------------- |  | -------------- | --------- | 
|                                        |  |                |           | 
|Non-accrual loans                       |  | $              | 2,659,300 | 
|Accruing loans past due 90 days or more |  |                | 4,100     | 
|Troubled debt restructurings            |  |                |          | 
|Other real estate owned                 |  |                |          | 
|                                        |  |                |           | 
|Total                                   |  | $              | 2,663,400 | 
|                                        |  |                |           | 

Nonperforming assets increased from $0.1 million at December 31, 2002 to $2.7 million at March 31, 2003.  The principal
component of this increase is a commercial line of credit secured by all the borrowers assets with

18



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an outstanding balance of approximately $1.8 million at March 31, 2003.  Although this loan is not in default, we classified the loan as substandard
effective March 31, 2003, and accordingly assigned $0.4 million of the allowance for loan losses.  We continue to closely monitor the loan and the collateral, and it is possible that in the future we may further downgrade the loan, resulting in
a material additions in the allowance for loan losses.

The additional interest income that would have been
recorded from non-accrual loans, if the loans had not been on non-accrual status, was $21,700 for the three months ended March 31, 2003.  Cash collections on non-performing loans totaled $3,300 during the quarter ended March 31, 2003 of which
$1,400 was applied to principal and $1,900 was recorded as interest income.  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 recognized on non-accrual loans reduced the net yield on earning assets less than 0.1% for the three month periods ended March 31, 2003 and 2002.

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 March 31, 2003 and December 31, 2002, we had classified $2.4 million and $0.8 million, respectively, of our loans as impaired for which a $0.4 million reserve and zero reserve, respectively, were assigned.  In the three months
ended March 31, 2003, we collected $3,800 on impaired loans.

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

|                               |  | Three Months Ended March 31, |          
|------------------------------ |  | ---------------------------- | ---------
|                               |  |                              |          
|                               |  | 2003                         |          
|                               |  |                              |          
|Balance at beginning of period |  | $                            | 1,982,900
|Charge-offs  commercial loans |  |                              | (9,800   
|Recoveries  commercial loans  |  |                              | 23,300   
|                               |  |                              |          
|Net recoveries (charge-offs)   |  |                              | 13,500   
|Additional provisions          |  |                              | 425,000  
|                               |  |                              |          
|Balance at end of period       |  | $                            | 2,421,400
|                               |  |                              |          

The
provision for loan losses was increased for the three months ended March 31, 2003 primarily due to the increased level of non-accrual loans.

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 March 31, 2003, we had undisbursed loan commitments of $64.7 million.

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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 andprivate 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
March 31, 2003, we had outstanding standby letters of credit with a potential $0.1 million of obligations.  These standby letters of credit will mature in 2003.

Deposits

Total deposits increased from $156.7 million at December 31, 2002
to $175.2 million at March 31, 2003.  This increase was primarily due to a $23.5 million increase in savings and money market deposits primarily generated as a result of a deposit promotion campaign conducted by the Bank, which we used to fund
the growth in our loan portfolio and increase our liquidity.

The following table sets forth information
concerning the amount of deposits from various sources at March 31, 2003:

|           |  | March 31, 2003 |             |                          
|---------- |  | -------------- | ----------- | -------------------------
|           |  |                |             |                          
|           |  | Amount         |             | Percent of Total Deposits
|           |  |                |             |                          
|Branches   |  | $              | 125,064,100 |                          
|Money desk |  |                | 22,938,500  |                          
|Brokered   |  |                | 27,229,000  |                          
|           |  |                |             |                          
|Total      |  | $              | 175,231,600 |                          
|           |  |                |             |                          

We
telephonically solicit deposits through our money desk, which attracts primarily time deposits nationwide.  We also engage brokers or other intermediaries to place certificates of deposit with their customers.  The certificates of deposits
obtained through our money desk and deposit brokers generally had maturities ranging from six months to twenty-four months.  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 a level of liquidity intended specifically to counter any concurrent deposit
reduction that might occur.

In recent years, the interest rates on certificates of deposit obtained
through our money desk or deposit brokers generally have been lower than the interest rates then offered to local customers for certificates of deposit with comparable maturities.  We believe this is due to the highly competitive nature of
Southern California market for deposits and, in particular, the difficulty smaller banks with fewer branch offices have in competing for deposits with larger banks, savings associations and credit unions with multiple offices.

Banks that are not well capitalized under the prompt corrective action rules may not accept brokered deposits
without the prior approval of the FDIC.  In addition, we believe that if we are not well capitalized, we will have greater difficulty obtaining certificates of deposit through our money desk and would likely have to pay higher
interest rates to continue to attract those deposits.  Accordingly, the failure of the Bank to remain well capitalized could have a material adverse affect on us.

Borrowed
Funds

At March 31, 2003, we had $32.0 million in advances from the FHLB which were collateralized by
certain qualifying loans with a carrying value of $25.0 million and investment securities with a carrying value of $24.8

20



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million.  The advances mature on various dates from 2004 through 2006.  Advances totaling $25.0 million bear interest at a weighted average fixed rate of 2.74% and a
$7.0 million advance bears interest at a rate of the prime lending rate less 2.89% (1.36% at March 31, 2003).  Interest is payable monthly with principal and any accrued interest due at maturity.

21



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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 March 31, 2003, our allowance for loan
losses equaled 1.6% of loans.  Although we believed that we had established adequate allowances for loan losses as of March 31, 2003, the credit quality of 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.  As discussed under Financial Condition  Non-Performing Assets, we continue to closely monitor a
$1.8 million loan and the collateral, and it is possible that in the future we may further downgrade the loan, resulting in a material addition in the allowance for loan losses.

22



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

We attract primarily certificates of deposits from institutional investors telephonically nationwide through a money desk.  We also
engage brokers or other intermediaries to place certificates of deposit with their customers.  As of March 31, 2003, money desk deposits were $22.9 million representing 13% of total deposits, as compared to $23.8 million at December 31, 2002
representing 15% of total deposits.  Brokered deposits were $27.2 million at March 31, 2003 representing 16% of total deposits as compared to $32.8 million at December 31, 2002 representing 21% of total deposits.  During 2003, the Company
continued its efforts to increase its levels of core deposits in an effort to decrease its reliance on money desk and broker deposits.

Banks that are not well capitalized under the prompt corrective action rules may not accept brokered deposits without the
prior approval of the FDIC.  In addition, we believe that if we are not well capitalized, we will have greater difficulty obtaining certificates of deposit through our money desk and would likely have to pay higher interest rates to
continue to attract those deposits.  Accordingly, the failure of the Bank to remain well capitalized could have a material adverse affect on us.

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 including the uncertainties of post war Iraq, large budget deficits and a weak economy.  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 March 31, 2003, 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.

23



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

At March 31, 2003, we had outstanding construction loans to developers for tract projects and single
homes for sale to unidentified buyers totaling $24.6 million, representing 16.4% of our loan portfolio, and additional commitments for these projects in the amount of $24.1 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.

24



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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 March 31, 2003, there were no significant changes in the Company's internal controls or in other factors that could significantly affect those controls.

25



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PART II   
OTHER INFORMATION

ITEM 6.   
EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits.

99.1     Certification of Chief Executive
Officer

99.2     Certification of Chief Financial Officer

(b)     Reports on Form 8-K:

The Company filed a Current Report on Form 8-K (Item 5) on February 28, 2003 to report that it had issued a press release announcing its
results of operations for the year ended December 31, 2002 and its financial position at December 31, 2002.

26



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SIGNATURES

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

|DATE:   May 14, 2003 |  | ALLIANCE BANCSHARES CALIFORNIA                                         
|-------------------- |  | -----------------------------------------------------------------------
|                     |  |                                                                        
|                     |  | By:                                                                    
|                     |  |                                                                        
|                     |  | 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. | I have reviewed this quarterly report on Form 10-QSB of Alliance Bancshares California;                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|4. | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|5. | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|6. | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



|Date: May 14, 2003 |  | Name:  | /s/ CURTIS S. REIS                   
|------------------ |  | ------ | -------------------------------------
|                   |  |        |                                      
|                   |  | Title: | President and Chief Executive Officer



---

Certifications for Form 10-QSB

I, Daniel L. Erickson, certify that:

|1. | I have reviewed this quarterly report on Form 10-QSB of Alliance Bancshares California;                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|4. | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|5. | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|6. | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|   |                                                                                                                                                                                                                                                                                                                                                                                          



|Date: May 14, 2003 | Name:  | /s/ DANIEL L. ERICKSON                          
|------------------ | ------ | ------------------------------------------------
|                   |        |                                                 
|                   | Title: | Executive Vice President Chief Financial Officer
|                   |