<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549

                                    FORM 10-Q


/X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the quarterly period ended           September 30, 1996         .
                                     ------------------------------------

/ /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from               to              .
                                    -------------    -------------


                        COMMISSION FILE NUMBER  33-82150
                                                --------

                                 REGENCY BANCORP
                                 ---------------
            (Exact name of registrant as specified in its charter)

             CALIFORNIA                            77-0378956
             ----------                            ----------
          (State or other jurisdiction of          (I.R.S. Employer
          Incorporation or organizations)          Identification No.)

       7060 N. FRESNO STREET, FRESNO, CALIFORNIA              93720
       ------------------------------------------             -------
          (Address of principal executive offices)          (Zip code)


     REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE    (209) 438-2600.
                                                           --------------
                                     None
                                     ----
    (Former name, former address and fiscal year, if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act 
of 1934 during the preceding 12 months (or for the 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      .  
                                                    -----     -----

As of November 14, 1996, the registrant had 1,818,160 shares of Common Stock
outstanding.

The Exhibit Index is located on page 33.

This report contains a total of 35 pages of which this is page one.


<PAGE>

                        REGENCY BANCORP AND SUBSIDIARIES

PART  I                    FINANCIAL INFORMATION

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
          CONSOLIDATED BALANCE SHEET                                                        (UNAUDITED)
 (IN THOUSANDS)                                                                      SEPTEMBER 30, 1996          DECEMBER 31, 1995
-----------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                                     <C>                        <C>
 ASSETS
 Cash and due from banks                                                                      $  11,008                     $ 8,925
 Federal funds sold                                                                               7,000                           -
-----------------------------------------------------------------------------------------------------------------------------------
 Total Cash and Equivalents                                                                      18,008                       8,925
-----------------------------------------------------------------------------------------------------------------------------------
 Interest bearing deposits in other banks                                                             3                           3
 Securities available-for-sale                                                                   28,334                      31,750
-----------------------------------------------------------------------------------------------------------------------------------
 Loans                                                                                          102,677                      97,137
 Allowance for credit losses                                                                    (1,650)                     (1,784)
 Deferred loan fees & discounts                                                                 (1,053)                       (824)
-----------------------------------------------------------------------------------------------------------------------------------
 Net Loans                                                                                       99,974                      94,529
-----------------------------------------------------------------------------------------------------------------------------------
 Investments in real estate                                                                      13,750                      17,954
 Other real estate owned                                                                            569                         341
 Cash surrender value of life insurance                                                           2,868                       2,764
 Premises and equipment, net                                                                      2,272                       2,339
 Accrued interest receivable and other assets                                                     5,036                       5,077
-----------------------------------------------------------------------------------------------------------------------------------
 Total Assets                                                                                 $ 170,814                   $ 163,682
-----------------------------------------------------------------------------------------------------------------------------------

 LIABILITIES AND SHAREHOLDERS' EQUITY
 Deposits:
 Noninterest bearing transaction accounts                                                      $ 34,012                    $ 32,673
 Interest bearing transaction accounts                                                           47,438                      40,656
 Savings accounts                                                                                25,134                      34,882
 Time Deposits $100,000 or over                                                                  18,302                      23,305
 Other time deposits                                                                             27,182                      12,229
-----------------------------------------------------------------------------------------------------------------------------------
 Total Deposits                                                                                 152,068                     143,745
-----------------------------------------------------------------------------------------------------------------------------------
 Short term borrowings                                                                                -                           -
 Notes Payable                                                                                    2,730                       4,109
 Other liabilities                                                                                2,745                       2,886
-----------------------------------------------------------------------------------------------------------------------------------
 Total Liabilities                                                                            $ 157,543                   $ 150,740
-----------------------------------------------------------------------------------------------------------------------------------
 Shareholders' Equity:
 Preferred stock, no par value;
   1,000,000 shares authorized;
    no shares issued or outstanding
 Common stock, no par value; 5,000,000 
   shares authorized, 1,818,160                                                                    
    shares issued and outstanding                                                                8,868                        8,868
 Retained earnings                                                                               4,544                        4,029
 Net unrealized gain (loss) on available-for-sale securities,                                                                    
    net of  taxes  of ($102,000) in 1996 and $ 33,000 in 1995                                      (141)                         45
-----------------------------------------------------------------------------------------------------------------------------------
 Total  Shareholders' Equity                                                                     13,271                      12,942
-----------------------------------------------------------------------------------------------------------------------------------
 Total Liabilities and Shareholders' Equity                                                   $ 170,814                   $ 163,682
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements

                                       2
<PAGE>

                         REGENCY BANCORP AND SUBSIDIARIES

<TABLE>
<CAPTION>
Consolidated Statement of Income (Unaudited) 
----------------------------------------------------------------------------------------------------------------------------------
 (In thousands, except for per common and equivalent share data)      For the three  months               For the nine  months
                                                                        ended September 30,                ended September 30,
----------------------------------------------------------------------------------------------------------------------------------
                                                                      1996             1995               1996             1995
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>                <C>              <C>
 INTEREST INCOME
 Loans (including fees)                                             $ 2,884          $ 2,689          $ 8,380           $ 7,980
 Investment securities:
   Taxable                                                              430              519            1,272             1,346
   Tax exempt                                                            21               21               66                66
----------------------------------------------------------------------------------------------------------------------------------
 Total Investment  Interest Income                                      451              540            1,338             1,412
 Other                                                                   17               18               60                67
----------------------------------------------------------------------------------------------------------------------------------
 Total Interest Income                                                3,352            3,247            9,778             9,459
----------------------------------------------------------------------------------------------------------------------------------
 INTEREST EXPENSE
 Interest on deposits                                                 1,130            1,313            3,296             3,782
 Other                                                                   41               30              141                49
----------------------------------------------------------------------------------------------------------------------------------
 Total Interest Expense                                               1,171            1,343            3,437             3,831
----------------------------------------------------------------------------------------------------------------------------------
 Net interest income                                                  2,181            1,904            6,341             5,628
 Provision for credit losses                                              -              173                -               173
----------------------------------------------------------------------------------------------------------------------------------
 Net interest income after
    provision for credit losses                                       2,181            1,731            6,341             5,455
----------------------------------------------------------------------------------------------------------------------------------
 NONINTEREST INCOME
 Income from investments in real estate partnerships                      -                -                -                 -
 Gain on sale of SBA loans                                              231              227            1,119               590
 Depositor service charges                                               83               66              244               202
 Income from investment management services                             174              111              500               348
 Gain/(loss) on sale of securities                                        -                -                -              (25)
 Gain on sale of assets                                                   5                2               14                 2
 Servicing fees on loans sold                                            92               82              231               238
 Other                                                                   90              100              342               214
----------------------------------------------------------------------------------------------------------------------------------
 Total Noninterest Income                                               675              588            2,450             1,569
----------------------------------------------------------------------------------------------------------------------------------
 NONINTEREST EXPENSE
 Loss (Gain) from investments in real estate partnerships               (12)             518              170               135
 Salaries and related benefits                                        1,154            1,129            3,340             3,308
 Occupancy & Equipment                                                  438              412            1,231               968
 FDIC insurance and regulatory assessments                               15              (3)               47               156
 Marketing                                                              117              116              328               280
 Professional Services                                                  178              126              601               398
 Director's fees and expenses                                            90               66              258               200
 Management fees for real estate projects                               126             (118)             359                56
 Other                                                                  265              265             1002               850
----------------------------------------------------------------------------------------------------------------------------------
 Total Noninterest Expense                                            2,371            2,511            7,336             6,351
----------------------------------------------------------------------------------------------------------------------------------
 Income (loss) before income taxes                                      485             (192)           1,455               673
 Provision for income taxes                                             203              (81)             613               282
----------------------------------------------------------------------------------------------------------------------------------
 Net Income (Loss)                                                      282             (111)             842               391
----------------------------------------------------------------------------------------------------------------------------------
 Net income per common and                                                                                                   
    common equivalent share                                             .15             (.06)             .45               .21
 Shares used in computation                                           1,869            1,808            1,869             1,887
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements

                                       3
<PAGE>

                        REGENCY BANCORP AND SUBSIDIARIES

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
---------------------------------------------------------------------------------------------------------------------------------
 FOR THE NINE  MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
                                                           Common           Common                            Net
                                                  Stock Number of            Stock      Retained       Unrealized
 (In thousands)                                            Shares           Amount      Earnings       Gain (Loss)          Total
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                    <C>           <C>             <C>             <C>
 Balance, December 31, 1994                                 1,711         $ 7,950        $ 7,017         $ (640)        $ 14,327
----------------------------------------------------------------------------------------------------------------------------------
 Issuance of common stock
    under stock option plan
 Issuance of common stock dividend                             11              19              -                              19
    including fractional shares                                86             866           (868)                             (2)
 Tax benefit of stock option transactions                       -              16                                             16
 Cash dividends                                                 -               -           (262)                           (262)
 Net change in unrealized gain (loss) on
    available-for-sale securities (net of
     taxes of $450,000)                                         -               -                           621              621
 Net Income                                                     -               -            391                             391
----------------------------------------------------------------------------------------------------------------------------------
 Balance, September 30, 1995                                1,808         $ 8,851        $ 6,278        $   (19)        $ 15,110
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
                                                           Common         Common                             Net
                                                 Stock  Number of          Stock        Retained       Unrealized
 (In thousands)                                            Shares          Amount       Earnings     Gain (Loss)           Total
-----------------------------------------------------------------------------------------------------------------------------------
 Balance, December 31, 1995                                 1,818         $ 8,868        $ 4,029        $    45         $ 12,942
-----------------------------------------------------------------------------------------------------------------------------------
 Issuance of common stock
    under stock option plan                                    -               -              -

                                                                                              
 Cash dividends                                                -               -            (327)                           (327)


 Net change in unrealized gain (loss) on
    available-for-sale securities (net of
     taxes of $135,000)                                        -               -               -           (186)             (186)
 Net Income                                                    -               -             842                              842
-----------------------------------------------------------------------------------------------------------------------------------
 Balance, September 30, 1996                               1,818           8,868           4,544           (141)           13,271
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements
</TABLE>

                                       4
<PAGE>

                         REGENCY BANCORP AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------------
 (IN THOUSANDS) FOR THE NINE MONTHS ENDED  SEPTEMBER 30,                                               1996                    1995
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                  <C>                    <C>
 OPERATING ACTIVITIES:
 Increase (decrease) in cash equivalents:
 Net income                                                                                            $842                  $  391
 Adjustments:
 Provisions for credit losses                                                                             -                     173
 Provision for losses on real estate                                                                      -                     235
 Provision for OREO losses                                                                                -                      30
 Depreciation and amortization                                                                          535                     446
 Deferred income taxes                                                                                  490                    (164)
 (Increase) decrease in interest receivable and other assets                                            (92)                    324
 Increase in surrender value of life insurance                                                         (104)                    (98)
 Distributions of  income from real estate partnerships                                                 103                      55
 Equity in (income) loss of real estate partnerships                                                    (10)                    135
 (Increase) decrease in real estate held for sale                                                     6,417                       -
 (Gain)/loss on acquisition of partnerships                                                             (63)                   (695)
 Increase (decrease)  in other liabilities                                                             (566)                     25
 (Gain)/loss on sale of securities                                                                        -                    (590)
 Gain on sale of loans held-for-sale                                                                 (1,119)                  7,466
 Proceeds from sale of loans held-for-sale                                                           11,619                  (8,205)
 Additions to loans held-for-sale                                                                    (8,253)                   (267)
 Loss (gain) on sale of premises and equipment and OREO                                                  (1)                      3
-----------------------------------------------------------------------------------------------------------------------------------
 Net cash provided by (used in) operating activities                                                  9,798                    (739)
-----------------------------------------------------------------------------------------------------------------------------------
 INVESTING ACTIVITIES:
 Purchase of available-for-sale securities                                                          (12,109)                (16,001)
 Proceeds from sales of available-for-sale securities                                                 1,000                   3,105
 Purchases of held-to-maturity securities                                                                 -                  (5,886)
 Proceeds from maturities of available-for-sale securities                                           14,094                   8,812
 Proceeds from maturities of held-to-maturity securities                                                  -                   4,000
 Loan participations  purchased                                                                           -                    (750)
 Loan participations sold                                                                                 -                     810
 Net (increase) decrease in loans                                                                    (5,839)                   (665)
 Net decrease (increase) in other short-term investments                                                  -                  (3,801)
 Cash received through acquisition of partnerships                                                      441                       -
 Proceeds from sale of OREO                                                                             123                      76
 Capital contributions to real estate partnerships                                                     (397)                 (1,114)
 Capital distributions from real estate partnerships                                                  1,012                     687
 Payments towards the acquisition and development
     of investments in real estate                                                                        -                    (531)
 Purchases of premises and equipment                                                                   (357)                   (183)
 Proceeds from sale of premises and equipment                                                             -                   3,832
-----------------------------------------------------------------------------------------------------------------------------------
 Net cash provided by (used in) investing activities                                                 (2,032)                 (7,609)
-----------------------------------------------------------------------------------------------------------------------------------
 FINANCING ACTIVITIES:
 Net increase (decrease) in time deposits accounts                                                    9,949                   6,854
 Net increase (decrease) in other deposits                                                           (1,626)                  2,132
 Net increase (decrease) on short term borrowings                                                         -                       -
 Cash dividends paid                                                                                   (327)                   (262)
 Payments for fractional shares related to stock dividends                                                -                      (2)
 Payments on notes payable                                                                           (7,059)                   (151)
 Proceeds from notes payable                                                                            380                       -
 Proceeds from the issuance of common stock under                                                         -
    employee stock option plan                                                                            -                      19
-----------------------------------------------------------------------------------------------------------------------------------
 Net cash provided by (used in) financing activities                                                  1,317                   8,590
-----------------------------------------------------------------------------------------------------------------------------------
 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                 9,083                     242
-----------------------------------------------------------------------------------------------------------------------------------
 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                     8,925                   8,317
-----------------------------------------------------------------------------------------------------------------------------------
 CASH AND CASH EQUIVALENTS AT  END OF PERIOD                                                       $ 18,008                 $ 8,559
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements
                                       5

<PAGE>
                        REGENCY BANCORP AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. - BASIS OF PRESENTATION

     The accompanying consolidated financial statements include the accounts of
Regency Bancorp and its wholly-owned subsidiaries (the "Company"). Regency
Bancorp is a California corporation organized to act as the holding company for
Regency Bank (the "Bank") and its subsidiaries.  The Bank has two wholly-owned
subsidiaries, Regency Investment Advisors, Inc., a California corporation
("RIA"), which provides investment management and consulting services, and
Regency Service Corporation, a California corporation ("RSC"), that engages in
the business of real estate development primarily in the Fresno/Clovis area. All
significant intercompany balances and transactions have been eliminated in
consolidation.

     These unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles on a basis consistent
with the accounting policies reflected in the audited consolidated financial
statements of the Company included in the Annual Report on Form 10-K for the
year ended December 31, 1995.  They do not, however, include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.  In the opinion of management, the unaudited
interim consolidated financial statements reflect all adjustments (all of which
are of a normal, recurring nature) necessary for a fair presentation of the
results for the interim periods presented.  Operating results for the interim
periods presented are not necessarily indicative of the results that may be
expected for any other interim period or for the year as a whole.  Certain items
reflected on the consolidated statement of income and supporting schedules in
prior periods have been reclassified to be consistent with the current
presentation.

NOTE 2. - ACCOUNTING CHANGE

     In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," which requires adoption of the disclosure provisions no later
than fiscal years beginning after December 15, 1995 and adoption of the
recognition and measurement provisions for nonemployee transactions no later
than after December 15, 1995.   The new standard defines a fair value method of
accounting for stock options and other equity instruments.  Under the fair value
method, compensation cost is measured at the grant date based on the fair value
of the award and is recognized over the service period, which is usually the
vesting period.  Pursuant to the new standard, companies are encouraged, but not
required, to adopt the fair value method of accounting for employee stock-based
transactions.  Companies are also permitted to continue to account for such
transactions under Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees,"  but would be required to disclose in a note to the
financial statements pro forma net income, and, if presented, earnings per share
as if the company has applied the new method of accounting.  The accounting
requirements of the new method are effective for all employee awards granted

                                       6
<PAGE>

beginning in 1995.  The Company has determined it will not elect to change to
the fair value method, but will adopt the disclosure provisions in fiscal 1996.


NOTE 3. - INVESTMENT SECURITIES


     During the period between December 31, 1995, and September 30, 1996, the
Company recorded a net decrease in the value of its available-for-sale portfolio
of $186,000 net of applicable taxes.  This change is reflected as a change in
shareholders' equity in the Consolidated Statement of Shareholders' Equity. 
This change in value is primarily the result of higher interest rates in the
bond market at September 30, 1996 as compared to rates at December 31, 1995.

Following is a comparison of the amortized cost and approximate fair value of
securities available-for-sale:

-------------------------------------------------------------------------------
 AVAILABLE-FOR-SALE SECURITIES                  SEPTEMBER          DECEMBER 31,
                                                 30, 1996                  1995
-------------------------------------------------------------------------------
                                     Amortized      Fair   Amortized       Fair
 (In thousands)                           Cost     Value        Cost      Value
-------------------------------------------------------------------------------
 U.S. Treasuries                       $ 2,023    $ 2,018    $ 2,003    $ 2,005
 U.S. Government Agencies               17,104     16,903     20,474     20,459
 Mortgage-backed securities              7,686      7,606      7,655      7,685
 State and Political Subdivision         1,414      1,458      1,540      1,601
 Equity Securities                         349        349          -          -
-------------------------------------------------------------------------------
 Total                                $ 28,576   $ 28,334   $ 31,672   $ 31,750
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

At September 30, 1996 and December 31, 1995 the Company held no investment
securities classified as held-to-maturity. 

NOTE 4. -  LOANS

The following table presents a breakdown of the Company's loan portfolio in both
dollars outstanding as well as a percentage of total loans.  Further discussion
of the Company's loan portfolio can be found in Item No. 7 - Management's
Discussion and Analysis, Balance Sheet Analysis.

-------------------------------------------------------------------------------
 (IN THOUSANDS, EXCEPT PERCENTAGES)     SEPTEMBER 30, 1996    DECEMBER 31, 1995
-------------------------------------------------------------------------------
                                                   Percent              Percent
                                                        of                   of
                                                     Total                Total
                                          Amount     Loans     Amount     Loans
-------------------------------------------------------------------------------
 Commercial                             $ 58,400     56.9%   $ 54,150     55.7%
 Real estate mortgage                     12,190     11.9%     10,389     10.7%
 Real estate construction                 23,594     23.0%     23,706     24.4%
 Consumer and other                        8,493      8.3%      8,892      9.2%
-------------------------------------------------------------------------------
 Subtotal                                102,677    100.0%     97,137    100.0%
-------------------------------------------------------------------------------
 Less:
 Unearned discount                           632                  468
 Deferred loan fees                          421                  356
 Allowances for credit losses              1,650                1,784
-------------------------------------------------------------------------------
 Total loans, net                       $ 99,974             $ 94,529
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

As of September 30, 1996, there were $505,000 in SBA loans held-for-sale.

                                       7
<PAGE>

     In May 1993, the FASB issued SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan."  This standard was further modified by SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan-Income Recognition and
Disclosures."  SFAS Nos. 114 and 118 were effective for the Company as of
January 1, 1995.  They require the Company to measure impaired loans based upon
the present value of expected future cash flows discounted at the loan's
effective interest rate, except that as a practical expedient, a creditor may
measure impairment based on a loan's observable market price or the fair value
of the collateral if the loan is collateral dependent.  A loan is impaired when,
based upon current information and events, it is probable that a creditor will
be unable to collect all amounts due according to the contractual terms of the
loan agreement.

          At September 30, 1996, the Bank's recorded investment in loans for
which impairment has been recognized totaled $164,000.  Included in this amount
is $48,000 of impaired loans for which the related SFAS No. 114 allowance is
$48,000, as well as $116,000 of impaired loans that as a result of write-downs
or the fair value of the collateral, did not have a SFAS No. 114 allowance.     
     

NOTE 5. - EARNINGS PER SHARE   

          Primary earnings per share is computed by dividing net income by the
weighted average number of shares of common stock outstanding and common stock
equivalents (stock options) assumed to be outstanding during the year.  All
share and per share amounts have been adjusted retroactively to reflect the 5%
stock dividend issued in 1995.  As of  September 30, 1996, and September 30,
1995, the Company had 1,869,000 and 1,887,000 total shares of common and common
stock equivalents outstanding.

NOTE 6. -  REAL ESTATE ACTIVITIES

          Regency Service Corporation ("RSC") is involved in residential real
estate development in the Fresno/Clovis area through both limited partnership
investments in joint ventures and direct investments in real estate projects. 
These real estate activities consist primarily of residential subdivisions being
developed into lots and homes.  Limited partnership investments are accounted
for under the equity method.       

          During 1996, RSC continued to aggressively pursue divestiture of its
remaining real estate projects through various transactions.  During the quarter
ended March 31, 1996, RSC dissolved a total of six partnerships and sold its
investment in one property.  As a result of these transactions, RSC obtained
sole ownership of four projects, closed one project out completely and financed
the sale of two properties.  Additionally, the assets of RSC now reflect not
only RSC's equity investment, but the total assets and liabilities of the
acquired projects.  The above transactions resulted in a net loss of $235,000. 
As of September 30, 1996, RSC's equity investment in the four partnerships
acquired was $5,387,760.

                                       8
<PAGE>

The schedule below presents the condensed financial information of the four
entities acquired as of the dates of acquisition:    

-------------------------------------------------------------------------------
 ASSETS:
   Cash                                                                   $ 442
   Notes receivable                                                       2,025
   Land and real estate under construction                               10,031
   Other assets                                                             223
-------------------------------------------------------------------------------
 Total assets                                                            12,721
-------------------------------------------------------------------------------
 LIABILITIES:
   Notes payable                                                          5,300
   Accrued interest and other liabilities                                   425
-------------------------------------------------------------------------------
 Total Liabilities                                                        5,725
-------------------------------------------------------------------------------
 Equity                                                                 $ 6,996
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------


NOTE 7. - SUPPLEMENTAL CASH FLOW INFORMATION

Following is a summary of amounts paid for interest and taxes and of non-cash
transactions for the nine months ended September 30, 1996:

-------------------------------------------------------------------------------
 (IN THOUSANDS)                                                   1996     1995
-------------------------------------------------------------------------------
 Cash paid during the period for:
   Interest on deposits and other borrowings                   $ 3,387  $ 3,798
   Income taxes                                                    316      619
-------------------------------------------------------------------------------
 Non cash transactions:
   Transfer of loans to other real estate owned                               -
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

                                       9
<PAGE>


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

          FINANCIAL SUMMARY

          The Company's consolidated net income for the nine months ended
September 30, 1996, was $842,000, an increase of $451,000 or 115.3% when
compared to earnings of $391,000 for the period ended September 30, 1995.  Net
income for the third quarter of 1996 was $282,000 as compared to a loss of
($111,000) in the third quarter of 1995.  Earnings per share were $0.15 in the
third quarter of 1996, $0.45 for the nine month period ended September 30, 1996,
compared to ($0.06) per share in the third quarter of 1995 and $0.21 for the
nine month period ended September 30, 1995.  The Company paid a cash dividend of
$0.06 per share in the third quarter of 1996.  During the third quarter of 1995,
the Company paid a cash dividend of $0.05.

          The increase in net income of $451,000 for the period ended September
30, 1996 was primarily the result of an increase in net interest income of
$713,000, an increase in income generated from the sale of SBA loans of $529,000
and a decline in losses from investments in real estate of $348,000.  Income for
the third quarter of 1996 increased by $393,000 compared to the third quarter of
1995, primarily as a result of lower losses from investments in real estate. 
During the third quarter of 1996, the Company recorded pre-tax income from
investments in real estate of $12,000 compared to a loss of ($518,000) recorded
in the third quarter of 1995. 

          The Company's return on average assets was 0.69% for the first nine
months of 1996 compared to 0.33% for the first nine months of 1995.  Return on
average common equity for the first nine months was  8.46 % compared to  3.51%
for the same period in 1995.

          At September 30, 1996, the Company's total risk-based capital ratio
was 10.76% while the leverage ratio was 7.52%.   All capital ratios were in
excess of minimum regulatory guidelines. 

          Nonperforming assets declined during the third quarter by $143,000 to
$4,093,000 at September 30, 1996 (2.40% of total assets), compared to $4,236,000
at June 30, 1996  (2.61% to total assets) and $922,000 at December 31, 1995
(0.56% of total assets) as a result of continued paydowns on nonaccrual loans
made to facilitate the sale of RSC partnerships.   As reported in the Company's
quarterly reports on form 10-Q dated March 31, 1996 and June 30, 1996, RSC made
loans amounting to approximately $3.75 million to facilitate the sale of two RSC
partnerships.  The two loans were immediately placed on nonaccrual status in
accordance with applicable accounting guidelines regarding the sale of real
estate.  As homes and/or lots are sold on these projects, principal reductions,
as well as interest payments received are used to reduce the principal balance
outstanding on these loans.  During the quarter ended September 30, 1996, a
third loan of $310,000 was made to facilitate the sale of another RSC project. 
It was also placed on nonaccrual status. 

          The allowance for credit losses as a percentage of total loans was
1.61% at September 30, 1996 (40.31% of nonperforming assets) compared to 1.84%
(193.50% of non-performing assets) at year end 1995.

                                       10
<PAGE>

          During the quarter ended September 30, 1996, the Company opened its
fourth branch office at 126 N. "D" Street, Madera, California.
 
          NET INTEREST INCOME

          The Company's operating results depend primarily on net interest
income (the difference between the interest earned on loans and investments less
interest expense on deposit accounts and borrowings).  A primary factor
affecting the level of net interest income is the Company's interest rate
margin, the difference between the yield earned on interest earning assets and
the rate paid on interest bearing liabilities, as well as the difference between
the relative amounts of average interest earning assets and interest bearing
liabilities.

The following table presents, for the periods indicated, the Company's total
dollar amount of interest income from average interest earning assets and the
resultant yields, as well as the interest expense on average interest bearing
liabilities and the resultant cost, expressed both in dollars and rates.  The
table also sets forth the net interest income and the net earning balance for
the periods indicated.

                                       11
<PAGE>

    CONSOLIDATED AVERAGE BALANCE SHEETS, NET INTEREST INCOME AND INTEREST RATES
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
 (IN THOUSANDS, EXCEPT FOR PERCENTAGES)
 FOR THE THREE MONTHS ENDED SEPTEMBER 30,                           1996                                     1995
-----------------------------------------------------------------------------------------------------------------------------------
                                                        Average       Yield/                     Average      Yield/
                                                        Balance         Rate      Interest       Balance        Rate       Interest
-----------------------------------------------------------------------------------------------------------------------------------
 <S>                                                  <C>             <C>          <C>          <C>           <C>           <C>
 ASSETS
 Interest-earning assets:
 Loans (1)                                            $ 103,154       11.13%       $ 2,885      $ 93,714      11.38%        $ 2,689
 Investment securities (2)                               28,221        6.36%           451        33,224       6.45%            540
 Federal funds sold & other                               1,620        4.17%            17         1,420       5.03%             18
-----------------------------------------------------------------------------------------------------------------------------------
 Total Interest-earning assets                        $ 132,995       10.03%       $ 3,353     $ 128,358      10.04%        $ 3,247
-----------------------------------------------------------------------------------------------------------------------------------
 Noninterest-earning assets:
 Allowance for credit losses                             (1,690)                                  (1,385)
 Cash and due from banks                                  8,668                                    7,842
 Real estate investments                                 16,677                                   17,441
 Premises and equivalent, net                             2,313                                    4,288
 Cash surrender value of life insurance                   2,845                                    2,715
 Accrued interest receivable and other assets             4,171                                    3,185
-----------------------------------------------------------------------------------------------------------------------------------
 Total Average Assets                                 $ 165,980                                 $162,444
-----------------------------------------------------------------------------------------------------------------------------------
 LIABILITIES AND SHAREHOLDERS'
   EQUITY
 Interest-bearing liabilities:
 Transaction accounts                                  $ 46,326        2.68%           312      $ 51,457       3.32%          $ 430
 Savings accounts                                        23,976        4.25%           256        23,530       4.72%            280
 Time deposits                                           42,306        5.29%           563        42,401       5.64%            603
 Federal funds purchased, notes payable
    and other                                             7,219        2.26%            41           765      15.56%             30
-----------------------------------------------------------------------------------------------------------------------------------
 Total  Interest-bearing                              $ 119,828        3.89%       $ 1,172     $ 118,153       4.51%        $ 1.343
-----------------------------------------------------------------------------------------------------------------------------------
 Noninterest-bearing liabilities:
 Transaction accounts                                    30,622                                   26,294
 Other liabilities                                        2,350                                    2,218
-----------------------------------------------------------------------------------------------------------------------------------
 Total liabilities                                      152,800                                  147,294
 Shareholders' Equity:
 Common stock                                             8,868                                    8,851
 Retained earnings                                        4,452                                    6,437
 Unrealized gain / (loss)  on investment
    securities                                             (141)                                    (138)
-----------------------------------------------------------------------------------------------------------------------------------
 Total Shareholders Equity                               13,179                                   15,150
-----------------------------------------------------------------------------------------------------------------------------------
 Total average liabilities and
    shareholders' equity                               $165,980                                $ 162,444
-----------------------------------------------------------------------------------------------------------------------------------
 Net Interest Income                                                               $ 2,181                                  $ 1,904
-----------------------------------------------------------------------------------------------------------------------------------
 Interest income as a percentage of average
    interest-earning assets                                           10.03%                                  10.04%
 Interest expense as a percentage of average
    interest-earning assets                                           (3.51%)                                 (4.15%)
-----------------------------------------------------------------------------------------------------------------------------------
 Net Interest Margin                                                   6.52%                                   5.89%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Loan amounts include nonaccrual loans, but the related interest income has
been included only for the  period prior to the loan being placed on  a
nonaccrual basis.  Loan interest income includes loan fees of approximately
$319,000 and $347,000 for the three months ended September 30, 1996, and 1995,
respectively.
     
(2)  Applicable nontaxable securities yields have not been calculated on a
taxable-equivalent basis because they are not material to the Company's results
of operations. 

                                       12
<PAGE>

    CONSOLIDATED AVERAGE BALANCE SHEETS, NET INTEREST INCOME AND INTEREST RATES
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
 (IN THOUSANDS, EXCEPT FOR PERCENTAGES)
 FOR THE NINE MONTHS ENDED SEPTEMBER 30,                              1996                                     1995
-----------------------------------------------------------------------------------------------------------------------------------
                                                        Average        Yield/                    Average        Yield/
                                                        Balance          Rate     Interest       Balance          Rate     Interest
-----------------------------------------------------------------------------------------------------------------------------------
 <S>                                                   <C>            <C>          <C>          <C>             <C>         <C>
 ASSETS
 Interest-earning assets:
 Loans (1)                                             $ 98,964        11.31%      $ 8,381      $ 91,591        11.65%      $ 7,980
 Investment securities (2)                               28,702         6.23%        1,338        29,347         6.33%        1,412
 Federal funds sold & other                               1,640         4.89%           60         1,589         5.64%           67
-----------------------------------------------------------------------------------------------------------------------------------
 Total Interest-earning assets                        $ 129,306        10.10%      $ 9,779     $ 123,027        10.28%      $ 9,459
-----------------------------------------------------------------------------------------------------------------------------------
 Noninterest-earning assets:
 Allowance for credit losses                             (1,743)                                  (1,421)
 Cash and due from banks                                  8,300                                    7,843
 Real estate investments                                 18,723                                   17,104
 Premises and equivalent, net                             2,297                                    5,552
 Cash surrender value of life insurance                   2,811                                    2,682
 Accrued interest receivable and other assets             4,428                                    3,268
-----------------------------------------------------------------------------------------------------------------------------------
 Total Average Assets                                 $ 164,122                                $ 158,055
-----------------------------------------------------------------------------------------------------------------------------------
 LIABILITIES AND SHAREHOLDERS'
   EQUITY
 Interest-bearing liabilities:
 Transaction accounts                                  $ 45,604         2.69%        $ 919      $ 52,068         3.43%      $ 1,336
 Savings accounts                                        25,383         4.19%          796        20,798         4.87%          758
 Time deposits                                           39,740         5.32%        1,582        41,087         5.50%        1,689
 Federal funds purchased, notes payable
    and other (3)                                         7,888         2.39%          141         1,084         5.92%           48
-----------------------------------------------------------------------------------------------------------------------------------
 Total  Interest-bearing                              $ 118,615         3.87%      $ 3,438     $ 115,037         4.45%      $ 3,831
-----------------------------------------------------------------------------------------------------------------------------------
 Noninterest-bearing liabilities:
 Transaction accounts                                    29,653                                   26,013
 Other liabilities                                        2,554                                    2,100
-----------------------------------------------------------------------------------------------------------------------------------
 Total liabilities                                      150,822                                  143,150
 Shareholders' Equity:
 Common stock                                             8,868                                    8,382
 Retained earnings                                        4,468                                    6,328
 Unrealized gain / (loss)  on investment
    securities                                              (36)                                    (305)
-----------------------------------------------------------------------------------------------------------------------------------
 Total Shareholders Equity                             $ 13,300                                 $ 14,305
-----------------------------------------------------------------------------------------------------------------------------------
 Total average liabilities and
    shareholders' equity                               $164,122                                $ 158,055
-----------------------------------------------------------------------------------------------------------------------------------
 Net Interest Income                                                               $ 6,341                                  $ 5,628
-----------------------------------------------------------------------------------------------------------------------------------
 Interest income as a percentage of average
    interest-earning assets                                            10.10%                                   10.28%
 Interest expense as a percentage of average
    interest-earning assets                                            (3.55%)                                  (4.16%)
-----------------------------------------------------------------------------------------------------------------------------------
 Net Interest Margin                                                    6.55%                                    6.12%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Loan amounts include nonaccrual loans, but the related interest income has
been included only for the  period prior to the loan being placed on  a
nonaccrual basis.  Loan interest income includes loan fees of approximately
$933,000 and $925,000 for the nine months ended September 30, 1996, and 1995,
respectively.

(2)  Applicable nontaxable securities yields have not been calculated on a
taxable-equivalent basis because they are not material to the Company's results
of operations.

(3)  Interest expense has been reduced by capitalized interest on real estate
projects of approximately $0 and $55,000 for the nine month periods ended
September 30, 1996 and 1995, respectively.

                                       13
<PAGE>

     Changes in the interest margin can be attributed to changes in the yield on
interest earning assets, the rate paid on interest bearing liabilities, as well
as changes in the volume of interest earning assets and interest bearing 
liabilities. The following table presents the dollar amount of certain changes
in interest income and expense for each major component of interest earning
assets and interest bearing liabilities and the difference attributable to
changes in average rates and volumes for the periods indicated.

     VOLUME/RATE ANALYSIS
     --------------------
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
 NET INTEREST INCOME VARIANCE ANALYSIS FOR THE THREE MONTHS                        AMOUNT RESULTING FROM            TOTAL CHANGE
 ENDED  SEPTEMBER 30, 1996                                                              CHANGES IN:                   1995-1996
                                                                           VOLUME                          RATE
-----------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                                    <C>                <C>                <C>
 Net Interest Earnings Variance Analysis
 Increase (decrease) in interest income:
 Loans                                                                                    262               (66)               196
 Investment securities                                                                    (80)               (9)               (89)
 Federal funds sold and other                                                               4                (5)                (1)
-----------------------------------------------------------------------------------------------------------------------------------
 Total                                                                                    186               (80)               106
-----------------------------------------------------------------------------------------------------------------------------------
 Increase (decrease) in interest expense:
 Transaction accounts                                                                     (40)              (78)              (118)
 Savings accounts                                                                           5               (29)               (24)
 Certificates of deposit                                                                   (1)              (39)               (40)
 Federal funds purchased, notes payable and other                                          12                (1)                11
-----------------------------------------------------------------------------------------------------------------------------------
 Total                                                                                    (24)             (147)              (171)
-----------------------------------------------------------------------------------------------------------------------------------
 Increase (decrease) in net interest income                                               210                67                277
-----------------------------------------------------------------------------------------------------------------------------------





<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
 NET INTEREST INCOME VARIANCE ANALYSIS FOR THE NINE MONTHS                         AMOUNT RESULTING FROM            TOTAL CHANGE
 ENDED  SEPTEMBER 30, 1996                                                              CHANGES IN:                   1995-1996
                                                                           VOLUME                          RATE
-----------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                                    <C>                <C>                <C>
 Net Interest Earnings Variance Analysis
 Increase (decrease) in interest income:
 Loans                                                                                    615              (214)               401
 Investment securities                                                                    (54)              (20)               (74)
 Federal funds sold and other                                                               2                (9)                (7)
-----------------------------------------------------------------------------------------------------------------------------------
 Total                                                                                    563              (243)               320
-----------------------------------------------------------------------------------------------------------------------------------
 Increase (decrease) in interest expense:
 Transaction accounts                                                                    (153)             (264)              (417)
 Savings accounts                                                                         104               (66)                38
 Certificates of deposit                                                                  (54)              (53)              (107)
 Federal funds purchased and other                                                        103               (10)                93
-----------------------------------------------------------------------------------------------------------------------------------
 Total                                                                                     (1)             (392)              (393)
-----------------------------------------------------------------------------------------------------------------------------------
 Increase (decrease) in net interest income                                               564               149                713
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) A change due to both volume and rate has been allocated to the change in
volume and rate in proportion to the relationship of the dollar amount of the
change in each.

(2) Changes calculated on nontaxable securities have not considered tax
equivalent effects.

     Net interest income before the provision for loan losses was $2,181,000 for
the third quarter of 1996 as compared to $1,904,000 for the comparable period of
1995, an increase of $277,000 or 

                                       14
<PAGE>

14.5%. This increase was primarily attributable to higher loan balances and 
lower rates paid on interest-bearing deposit accounts. The Company's net 
interest margin in the third quarter of 1996 (based on average interest 
earning assets) was 6.52% as compared to 5.89% for the same period in 1995.  
Average interest earning assets grew 3.6% between the third quarter 1996 and 
the third quarter of 1995 while interest-bearing liabilities grew 1.4% over 
the same period.

Net interest income before the provision for loan losses for the first nine
months of 1996 was $6,341,000 as compared to $5,628,000 for the comparable
period of 1995, an increase of $713,000 or 12.7%. This increase was primarily
attributable to lower rates paid on interest-bearing deposit accounts as well as
an increase in the number of loans on the Company's books.  The Company's net
interest margin for the nine month period ended September 30, 1996 (based on
average interest-earning assets) was 6.55% as compared to 6.12% for the same
period in 1995.  Average interest-earning assets grew 5.1% for the nine month
period ended September 30, 1996 as compared to the nine month period ended
September 30, 1995 while interest-bearing liabilities grew 3.1% over the
comparable periods.  The Company's earning asset mix changed slightly with
higher yielding loans increasing as a percentage of average earning assets while
lower yielding investments declined.


     INTEREST EARNING ASSET MIX
-------------------------------------------------------------------------------
 (IN THOUSANDS, EXCEPT PERCENTAGES)
 FOR THE NINE MONTHS ENDED 
 SEPTEMBER 30,                              1996                   1995
-------------------------------------------------------------------------------
                                    Average      Percent   Average      Percent
                                    Balance     of Total    Balance    of Total
-------------------------------------------------------------------------------
 Interest -Earning Asset Mix:
 Loans                             $ 98,964       76.53%   $ 91,591      74.45%
 Investment securities               28,702       22.20%     29,347      24.26%
 Federal funds sold and other         1,640        1.27%      1,589       1.29%
-------------------------------------------------------------------------------
 Total Interest-earning Assets     $129,306       100.0%   $123,027      100.0%
-------------------------------------------------------------------------------

     Average interest-earning assets for the nine months ended September 30,
1996 increased to $129,306,000 from $123,027,000 for the comparable period in
1995.  Average loans increased by $7,373,000 to $98,964,000 representing 76.53%
of average interest-earning assets for the first nine months of 1996, compared
to $91,591,000  or 74.45% for the first nine months of 1995. The yield on
average loans declined to 11.31% at September 30, 1996, from 11.65% at September
30, 1995, due primarily to a lower Prime lending rate, the rate to which most of
the Company's floating rate loans are tied. 

     Other interest-earning assets consist of investment securities, overnight
federal funds sold and other short term investments. These investments are
maintained to meet the liquidity requirements of the Company as well as pledging
requirements on certain deposits, and typically have a lower yield than loans.
The yield on investments decreased to 6.23% for the period ended September 30,
1996, from 6.33% in the comparable period in 1995.  As a percentage of average
interest earning assets investment securities declined to 22.20% for the nine
months ended September 30, 1996 compared to 24.26% for the comparable period in
1995.

     Average interest-bearing liabilities for the nine months ended September
30, 1996 increased to $118,615,000 from $115,037,000 for the comparable period
in 1995 an increase of $3,578,000 or

                                       15
<PAGE>

3.11%.  The primary reason for the increase was the result of RSC assuming 
the debt on several real estate projects that were dissolved during the first 
nine months of 1996.  As a result, federal funds purchased, notes payable and 
other increased by $6,804,000 in 1996 compared to the same period in 1995.  
For the first nine months ended September 30, 1996, the average interest rate 
paid on interest-bearing liabilities declined to 3.87% from an average rate 
of 4.45% paid during the first nine months of 1995.

     NONINTEREST INCOME
     ------------------

     The Company receives a significant portion of its income from noninterest
sources related both to activities conducted by the Bank (SBA loan originations
and servicing, depositor service charges), as well as from the Bank's two
subsidiaries RSC and RIA.

     OTHER INCOME
     ------------

-------------------------------------------------------------------------------
 (IN THOUSANDS)                      FOR THE THREE MONTHS   FOR THE NINE MONTHS
                                     ENDED SEPTEMBER 30,    ENDED SEPTEMBER 30,
-------------------------------------------------------------------------------
                                          1996       1995       1996       1995
-------------------------------------------------------------------------------
 Other Income:
 Income  from investments  in  real        
 estate partnerships                       $ -       $  -       $  -       $  -
 Gain on sale of SBA loans                 231        227      1,119        590
 Depositor service charges                  83         66        244        202
 Income from investment  management        
 services                                  174        111        500        348
 Gain on sale of securities                  -          -          -        (25)
 Gain on sale of assets                      5          2         14          2
 Servicing fees on loans sold               92         82        231        238
 Other                                      90        100        342        214
-------------------------------------------------------------------------------
 Total                                   $ 675      $ 588    $ 2,450    $ 1,569
-------------------------------------------------------------------------------
(Income from RSC and RIA in these consolidated financial statements is included
in noninterest income.  A further discussion of RSC and RIA is set forth below.)

     During the third quarter of 1996, the Company recognized noninterest income
of $675,000 compared to $588,000 for the same period during 1995 an increase of
$87,000 or 14.8%.  For the first nine months of 1996, noninterest income was
$2,450,000 compared to $1,569,000 for the first nine months of 1995, an increase
of  $881,000 or 56.2%.  These increases are attributable to increases in almost
all noninterest income categories.  The greatest increase is attributable to
gains from the sale of  SBA loans (see "SBA Loan Origination & Sales") as well
as income from investment management services (see "Regency Investment
Advisors").

          SBA LOAN ORIGINATION & SALES
          ----------------------------

          The Bank originates loans to customers under a Small Business
Administration ("SBA") program that generally provides for SBA guarantees of 70%
to 90% of each loan. The Bank then sells the guaranteed portion of the loan in
the secondary market while retaining the unguaranteed portion of the loan as
well as the ongoing servicing. Income from the sale of the guaranteed portion is
affected by the timing and volume of sales (when loans are funded and available
for sale), as well as the premium paid in the secondary market. The premium paid
in the secondary market is further affected by the rate and terms of the loan as
well as the yield curve. 

                                       16
<PAGE>

          During the quarter ended September 30, 1996, the Company recognized 
gains on sale of SBA loans of $231,000, an increase of $4,000 from $227,000 
in the comparable period of 1995.  For the nine months ended September 30, 
1996 gains on sale of SBA loans were $1,119,000 compared to $590,000 during 
the first nine months of 1995, an increase of $529,000.  These increases were 
primarily the result of timing related to the number and volume of loans 
available for sale in the respective periods  as well as higher premiums 
recognized in 1996. 

          An additional source of income related to the Bank's SBA loan 
origination activities is reflected in income from the ongoing servicing of 
loans sold.  During the third quarter ended September 30, 1996, servicing 
income totaled $92,000, an increase of $10,000 from income of $82,000 during 
the quarter ended September 30, 1995.  For the nine months ended September 
30, 1996, servicing income totaled $231,000, a decline of $7,000 compared to 
$238,000 of servicing income during the first nine months of 1995.  The 
servicing income decline for the first nine months was the result of payoffs 
of older SBA loans resulting in a slight decrease in the overall size of the 
servicing portfolio. 

          REGENCY SERVICE CORPORATION (RSC)
          ---------------------------------

          The Bank's wholly owned subsidiary, Regency Service Corporation
("RSC"), has engaged in real estate development activities since 1986.  Such
activities, which typically involve the acquisition, development and sale of
residential real properties (but which sometimes involve the sale of properties
prior to development), historically have been structured as limited partnerships
in which RSC is the limited partner and a local developer is the general
partner.  Partnerships are accounted for under the equity method.

          The FDIC has adopted final regulations under the Federal Deposit
Insurance Corporation Improvement Act of 1991 regarding real estate investment
and development activities of insured state banks and their majority-owned
subsidiaries. Under the new FDIC regulations, banks must divest of their real
estate development investments as quickly and as prudently as possible, but in
no event later than December 19, 1996, and must submit a plan to the FDIC
regarding the divestiture of such investments.  Such regulations also permit
banks to apply for the FDIC's consent to continue certain real estate
development activities and/or to file for an extension to continue divestiture
beyond December 19, 1996.  RSC has filed a request with the FDIC to continue its
divestiture beyond December 19, 1996, however, as of the date of this report the
Company has not received written approval for such continuation.

          To comply with these regulations RSC has undertaken business
strategies designed to reduce the Company's involvement in real estate
development through its subsidiary as quickly and as prudently as possible. 
RSC's first challenge in meeting its divestiture obligations has involved the
modification of the original structure of its partnerships. As stated in the
first paragraph, most of the properties RSC has invested in have been through
limited partnerships. Under the limited partnership structure, the general
partner conducts the activities of and manages the partnership.  Due to this
structure, RSC has not had direct day to day control or decision making
capability in regard to substantially all of the properties in which it has been
a limited partner investor. 

                                       17
<PAGE>

          During 1996, RSC continued to aggressively pursue divestiture of its
remaining real estate projects through various transactions.  As of  September
30, 1996, RSC had dissolved or closed out all but three partnerships which
resulted in sole ownership of nine of the projects. These projects are accounted
for under the consolidation method.

          For the third quarter ended September 30, 1996, the net gain from
investments in real estate projects amounted to $12,000, compared to a loss of
$518,000 in the third quarter ended September 30, 1995.  The third quarter loss
in 1995 was primarily the result of the initial establishment of a loss reserve.
The net gain on the sale of real estate in the third quarter of 1996 was the
result of income generated from sales in two projects while losses experienced
in others were offset by the previously established loss reserve.  For the first
nine months of 1996 the net loss from investments in real estate projects
amounted to $170,000, compared to a loss of $135,000 for the first nine months
of 1995, a decline of $35,000.  Actual losses from investments in real estate
projects for the nine months ended September 30, 1996, amounted to $1,404,000. 
These losses were offset by a $1,234,000 reduction in RSC's allowance for real
estate losses.

          On a stand alone basis, RSC's activities reduced the Company's overall
pre-tax income by $1,053,000 in the first nine months of 1996.  This amount
includes all of the costs of operating RSC during this period, including
operating costs such as legal, accounting, project management expense, salaries
and the $170,000 in losses from the sale of real estate mentioned above.  These
operating expenses have been consolidated with similar operating expenses in the
Company's income statement and noninterest expense table above. 

               Additional discussion of loans made by RSC to its partnerships
and, in general, of the Company's investment in RSC is contained in this report
under the headings, "Nonperforming Loans" and "Investments in Real Estate".

          REGENCY INVESTMENT ADVISORS  (RIA)
          ----------------------------------

          The Bank's wholly-owned subsidiary, Regency Investment Advisors
("RIA"), was formed in August 1993 through the acquisition by the Bank of the
assets, including the client list, of a fee-only investment management and
consulting firm.  RIA provides investment management and consulting services,
including comprehensive financial and retirement planning and investment advice,
to individuals and corporate clients for an annual fee that varies depending
upon the size of a client account.

          Income from RIA for the third quarter 1996 increased to $174,000 from
$111,000 in the same period of 1995, an increase of $63,000.  For the first nine
months of 1996, income from RIA was $500,000, an increase of $152,000 or 43.7%
from income of $348,000 for the first nine months of 1995.   RIA on a stand
alone basis in the nine month period ended September 30, 1996, posted net pre-
tax income of $21,000 compared to a net pre-tax loss of  ($106,000) in the first
nine months of 1995.

                                       18
<PAGE>

     As of September 30, 1996, RIA had $72.5 million in assets under management,
an increase of $21.6 million compared to $50.9 million as of September 30, 1995.
Assets in client accounts managed by RIA are not reflected in the consolidated
assets of the Company.

     OTHER EXPENSE 
     -------------

     Noninterest expense reflects the costs of products and services, systems,
facilities and personnel for the Company.  The major components of other
operating expenses stated both as dollars and as a percentage of average assets
are as follows:

     OTHER OPERATING EXPENSE TO AVERAGE ASSETS
     -----------------------------------------

-------------------------------------------------------------------------------
 (IN THOUSANDS, EXCEPT PERCENTAGES)
 FOR THE THREE MONTHS ENDED
 SEPTEMBER 30,                                 1996                 1995
-------------------------------------------------------------------------------
                                                   Percent              Percent
                                                        of                   of
                                          Amount   Average     Amount   Average
                                                    Assets               Assets
-------------------------------------------------------------------------------
 Other Expense:
 Loss (Gain) from  investments in real
 estate partnerships                      $  (12)   (0.03%)    $  518     1.27%
 Salaries and related benefits             1,154     2.76%      1,129     2.76%
 Occupancy                                   438     1.05%        412     1.01%
 FDIC insurance and regulatory 
  assessments                                 15     0.04%        (3)     (.01)%
 Marketing                                   117     0.28%        116     0.28%
 Professional services                       178     0.43%        126     0.31%
 Director's fees and expenses                 90     0.22%         66     0.16%
 Management fees for real estate
  projects                                   126     0.30%       (118)    (.29)%
 Other                                       265     0.64%        265     0.65%
-------------------------------------------------------------------------------
 TOTAL                                    $2,371     5.68%     $2,511     6.15%
-------------------------------------------------------------------------------

     For the third quarter ended September 30, 1996, other expenses decreased by
5.6% or $140,000 to $2,371,000, from $2,511,000 during the comparable period in
1995.  The primary cause of  the decline was due to lower losses from
investments in real estate.  Professional services (legal and accounting),
directors fees and expenses, and management fees for real estate projects all
increased in the three month period ended September 30, 1996 compared to 1995
mainly due to increased activity related to RSC's divestiture of it's real
estate holdings. When compared to average assets for the respective periods,
other expenses declined to 5.68% versus 6.15% in 1995. 

                                       19
<PAGE>


<TABLE>
<CAPTION>

    OTHER OPERATING EXPENSE TO AVERAGE ASSETS
-------------------------------------------------------------------------------------------------------

 (IN THOUSANDS, EXCEPT PERCENTAGES)
 FOR THE NINE MONTHS ENDED  SEPTEMBER 30,                          1996                  1995
-------------------------------------------------------------------------------------------------------
                                                                      Percent of             Percent of
                                                                         Average                Average
                                                             Amount       Assets    Amount       Assets
-------------------------------------------------------------------------------------------------------
 <S>                                                        <C>           <C>      <C>           <C>
 Other Expense:                                                    
 Loss (Gain)from investments in real estate partnerships      $ 170        0.14%     $ 135         .11%
 Salaries and related benefits                                3,340        2.71%     3,308        2.80%
 Occupancy                                                    1,231        1.00%       968        0.82%
 FDIC insurance and regulatory assessments                       47        0.04%       156        0.13%
 Marketing                                                      328        0.27%       280        0.23%
 Professional services                                          601        0.49%       398        0.34%
 Director's fees and expenses                                   258        0.21%       200        0.17%
 Management fees for real estate projects                       359        0.29%        56        0.05%
 Other                                                        1,002        0.81%       850        0.72%
-------------------------------------------------------------------------------------------------------
 TOTAL                                                      $ 7,336        5.96%   $ 6,351        5.37%
-------------------------------------------------------------------------------------------------------

</TABLE>

     For the nine months ended September 30, 1996, other expenses increased 
15.5% or $985,000 to $7,336,000, up from $6,351,000 during the comparable 
period in 1995.  The primary causes of the increase were due to higher 
occupancy expense as well as higher fees for professional services (legal and 
accounting), directors fees and expense, and management fees for real estate 
projects.  When compared to average assets for the respective periods, other 
expenses increased to 5.96% versus 5.37% in 1995. 

     Salaries and benefits expense increased by only $32,000 or 0.97% in the 
nine month period ended September 30, 1996 as compared to the first nine 
months of 1995.   Occupancy expense increased by $263,000 or 27.2% for the 
first nine months of 1996 compared to the same period in 1995, primarily due 
to the sale and leaseback transaction involving the Company's headquarters 
facility completed in the third quarter of 1995.  As a result of the 
transaction, the Company now leases its facility at 7060 N. Fresno Street, 
Fresno, CA.  As part of the transaction, the Company recorded a loan to the 
buyer of the property. The resulting increase in interest income from the 
loan offsets the higher rental expense reflected as part of the occupancy 
expense number shown above. 

     FDIC insurance and regulatory assessments declined by $109,000 or 69.9% 
in the first nine months of 1996 compared to the same period in 1995 due to 
lower insurance premiums charged by the FDIC.

     BALANCE SHEET ANALYSIS

     Total assets increased by $7,132,000 or 4.4% between December 31, 1995 
and September 30, 1996.  The Company's loan portfolio increased by $5,540,000 
or 5.7% primarily as a result of $4,060,000 in loans made by RSC to 
facilitate the sale of three of its partnerships.  Deposits increased during 
the nine months ended September 30, 1996 by $8,323,000 or 5.8%, primarily due 
to concerted marketing efforts and additionally from new deposits generated 
by the Banks new Madera branch. 

                                        20

<PAGE>

     LOANS

     The Company's loans are primarily made within its defined market area of 
Fresno and Madera counties.  During the first quarter of 1995, the Company 
opened an SBA loan production office in Modesto and additionally employs 
business development officers targeting businesses in the northern and 
southern San Joaquin Valley for SBA loans as well.
          
     Commercial loans, including SBA loans, comprised approximately 56.9% of 
the Company's loan portfolio at September 30, 1996. These loans are generally 
to small and mid-size businesses and professionals. Commercial loans are 
diversified as to industries and types of business, with no material industry 
concentrations.  Most of these loans have floating rates with the majority 
tied to the national Prime Rate. The primary source of repayment on most 
commercial loans is cash flow from the primary business.   Additional 
collateral in the form of real estate, cash, accounts receivable, inventory 
or other financial instruments is often obtained as a secondary source of 
repayment.

     Real Estate Construction lending comprised 23.0% of the Company's loan 
portfolio at September 30, 1996,  consisting of loans primarily for the 
construction of single family residential housing. Loans in this category may 
be to the home buyer or to the developer.  Construction loans are secured by 
deeds of trust on the primary property.  Such loans also contain $4.9 million 
in loans RSC has made to its partnerships or to facilitate the sale of a 
project.  The majority of construction loans have floating rates tied to 
either the national Prime Rate or Regency Bank's Reference Rate.  A 
significant portion of the borrowers' ability to repay these loans is 
dependent on the residential real estate market, principally from the sale of 
the property.  In this regard, the Company's potential risks include a 
general decline in the value of the underlying property, as well as cost 
overruns or delays in the sale or completion of a property. 

     Real Estate Mortgage loans comprised 11.9% of the loan portfolio at 
September 30, 1996, and are made up of (69%) non-residential properties and 
(31%) single-family residential mortgages. The non-residential loans 
generally are "mini-perm" (medium-term) commercial real estate mortgages with 
maturities under seven years.  The residential mortgages are secured by first 
trust deeds and have varying maturities.  Both types of loans may have either 
fixed or floating rates. The majority are floating.  Risks associated with 
non-residential loans include the decline in value of commercial property 
values; economic conditions surrounding commercial real estate properties; 
and vacancy rates. The repayment of single-family residential mortgage loans 
is generally dependent on the income of the borrower from other sources, 
however, declines in the underlying property value may create risk in these 
loans.

     Consumer installment loans represented the remainder of the loan 
portfolio at September 30, 1996, comprising 8.2% of total loans.  This 
category includes traditional Consumer Installment Loans (47%), Home Equity 
Lines of Credit (40%), Leases (1%), and Visa Card Loans (12%). Consumer 
installment loans are generally secured by third trust deeds on single-family 
residences, while Visa Cards are unsecured. 

                                       21

<PAGE>

     RISK ELEMENTS 

     The Company assesses and manages credit risk on an ongoing basis through
stringent credit review and approval policies, extensive internal monitoring and
established formal lending policies.  Additionally, the Bank contracts with an
outside loan review consultant to periodically grade new loans and to review the
existing loan portfolio.   Management believes its ability to identify and
assess risk and return characteristics of the Company's loan portfolio is
critical for profitability and growth.   Management strives to continue the
historically low level of credit losses by continuing its emphasis on credit
quality in the loan approval process, active credit administration and regular
monitoring.  With this in mind, management has designed and implemented a
comprehensive loan review and grading system that functions to continually
assess the credit risk inherent in the loan portfolio.   Additionally,
management believes its ability to manage portfolio credit risk is enhanced by
the knowledge of the Bank's service area by the lending personnel and Board of
Directors. 

     In addition to the credit risk associated with the Bank's loan 
portfolio, the Company continually reviews and monitors RSC's activities and 
potential exposure  to loss related to the sale of properties whether owned 
directly or in partnership.  In conjunction with this analysis, the Company 
established a reserve for potential real estate losses during 1995.  At 
September 30, 1996 the Company's analysis indicated the reserve was 
sufficient to absorb anticipated additional losses generated from the sale of 
properties at expected price levels.   Should market conditions change and 
the expected demand for new homes or sales prices decline, or, should other 
issues not presently known arise which effect disposition of RSC properties, 
it is possible additional reserves could be required which could negatively 
effect the Companies results of operations, including earnings and capital 
ratios.  

     NONPERFORMING LOANS

     The Company's current policy is to cease accruing interest when a loan 
becomes 90-days past due as to principal or interest; when the full, timely 
collection of interest or principal becomes uncertain; or when a portion of 
the principal balance has been charged off, unless the loan is well secured 
and in the process of collection.  When a loan is placed on nonaccrual 
status, the accrued and uncollected interest receivable is reversed and the 
loan is accounted for on the cash or cost recovery method thereafter, until 
qualifying for return to accrual status.   Generally, a loan may be returned 
to accrual status when all delinquent interest and principal become current 
in accordance with the terms of the loan agreement or when the loan is both 
well secured and in process of collection.  

     At September 30, 1996, nonaccrual loans amounted to $3,524,000 or 3.43% 
of total loans compared to $3,855,000 or 3.85% at June 30, 1996 and  $581,000 
or .60% at December 31, 1995.   Other real estate owned was $569,000 at 
September 30, 1996 compared to $381,000 at June 30, 1996 and $341,000 at 
December 31, 1995.  As previously discussed, the primary reason for the 
increase in nonperforming loans during the first nine months of 1996 is 
related to three loans made to facilitate the sale of RSC properties.  During 
the first quarter of 1996, two loans totaling  $3,750,000 were made to 
facilitate the sale of RSC properties, while during the third quarter an 

                                    22

<PAGE>

additional loan of $310,000 was made to facilitate the sale of a third 
property. Management expects these loans will appear in the nonperforming 
category until the properties underlying the loans are substantially sold out.

Following is a table presenting the Nonperforming Assets for the periods ending
September 30, 1996 and December 31, 1995.

     NONPERFORMING ASSETS

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
 (IN THOUSANDS, EXCEPT PERCENTAGES)           SEPTEMBER 30, 1996      DECEMBER 31, 1995
----------------------------------------------------------------------------------------
 <S>                                          <C>                     <C>
 Nonperforming Assets:
 Nonaccrual RSC loans                                    $ 3,452                  $ 505
 Nonaccrual bank loans                                        72                     76
 Restructured loans                                            -                      -
----------------------------------------------------------------------------------------
 Nonperforming loans                                       3,524                    581
 Other real estate owned                                     569                    341
----------------------------------------------------------------------------------------
 Total nonperforming assets                                4,093                    922
----------------------------------------------------------------------------------------
 Accruing loans 90 days past due                              75                    725
----------------------------------------------------------------------------------------
 Total loans before allowance for losses                 102,677                 97,137
 Total assets                                            170,814                163,682
 Allowance for possible credit losses                     (1,650)                (1,784)
----------------------------------------------------------------------------------------
 Ratios:
 Nonperforming loans to total loans consolidated            3.43%                   .60%
 Nonperforming loans to total loans bank 
    only (excluding RSC loans)                               .07%                   .08%
 Nonperforming assets to:                                 
 Total loans                                                3.99%                   .95%
 Total loans and OREO                                       3.96%                   .95%
 Total assets                                               2.40%                   .56%
 Allowance for possible credit losses to  total                   
    nonperforming assets                                   40.31%                193.50%
----------------------------------------------------------------------------------------
</TABLE>

     At September 30, 1996, the Bank's recorded investment in loans for which
impairment has been recognized totaled $164,000.  Included in this amount is
$48,000 of impaired loans for which the related SFAS No. 114 allowance is
$48,000, as well as $116,000 of impaired loans that as a result of write-downs
or the fair value of the collateral, did not have a SFAS No. 114 allowance.     


     ALLOWANCE FOR CREDIT LOSSES

     The allowance for credit losses reflects management's judgment as to the
level which is considered adequate to absorb potential losses inherent in the
loan portfolio.  This allowance is increased by provisions charged to expense
and reduced by loan charge-offs net of recoveries. Management determines an
appropriate provision based on information currently available to analyze credit
loss potential, including: (a) the loan portfolio growth in the period, (b) a
comprehensive grading and review of new and existing loans outstanding, (c)
actual previous charge-offs, and (d) changes in economic conditions. 

     The allowance for credit losses totaled $1,650,000 or 1.61% of total loans
at September 30, 1996, compared to $1,784,000 or 1.84% at December 31, 1995. 
The decrease is the result of net charge-offs totaling $134,000 during the first
nine months of 1996 with no additional provision deemed necessary.  It is the
policy of management to maintain the allowance for credit losses at a level
adequate for known and future risks inherent in the loan portfolio.  Based on
information

                                    23


<PAGE>

currently available to analyze credit loss potential, including economic 
factors, overall credit quality, historical delinquency and a history
of actual charge-offs, management believes that the credit loss provision and
allowance is adequate.  However, no prediction of the ultimate level of loans
charged-off in future years can be made with any certainty. 



Following is a table presenting the activity within the Company's provision for
credit losses for the period between December 31, 1995 and September 30, 1996.

---------------------------------------------------------------------
 (IN THOUSANDS)
---------------------------------------------------------------------
 Balance, December 31, 1995                                   $ 1,784
---------------------------------------------------------------------
 Provision charged to expense                                       -
 Loans charged off                                                209
 Recoveries                                                        75
---------------------------------------------------------------------
 Balance, September 30, 1996                                  $ 1,650
---------------------------------------------------------------------

     INVESTMENTS IN REAL ESTATE

     The Company's investment in real estate consists of the Bank's 
investment of capital and retained earnings in RSC.  At September 30, 1996, 
RSC was the sole owner of nine projects and is a limited partner in three 
projects.  As of September 30, 1996, the Company had an equity investment of 
$13,750,000 invested in these partnerships and projects compared to 
$17,954,000 at December 31, 1995. In addition, RSC has loans totaling 
$4,959,000, including one loan to a partnership and three loans to facilitate 
the sale of projects which have been classified as construction loans on the 
consolidated balance sheet.  As a result of the dissolution of several RSC 
partnerships, RSC has become the 100% owner of several projects.  As a result 
of these transactions, the assets and liabilities of RSC now reflect not only 
RSC's equity investment, but the total assets and liabilities of the acquired 
projects as well.  See "Regency Service Corporation" for further discussion 
of these issues. 

                                     24
<PAGE>

     FUNDING SOURCES

     Deposits represent the Bank's principal source of funds for investment. 
Deposits are primarily core deposits in that they are demand, savings, and 
time deposits generated from local businesses and individuals.  These sources 
are considered to be relatively more stable, long-term deposit relationships 
thereby enhancing steady growth of the deposit base without major 
fluctuations in overall deposit balances.   In order to assist in meeting its 
funding needs, the Bank maintains federal funds lines with correspondent 
banks in addition to using its investment portfolio to raise funds through 
repurchase agreements.  In addition, the Bank may, from time to time, obtain 
additional deposits through the use of brokered time deposits.  As of 
September 30, 1996, the Bank held no brokered time deposits and had no 
outstanding borrowings from correspondent banks.

The following table presents the composition of the deposit mix for the period
ending September 30, 1996, and December 31, 1995, respectively.


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------

 (IN THOUSANDS)                                    SEPTEMBER 30, 1996            DECEMBER 31, 1995
-------------------------------------------------------------------------------------------------------
                                                                Percent of                   Percent of
                                                   Amount   Total Deposits       Amount  Total Deposits
-------------------------------------------------------------------------------------------------------
 <S>                                            <C>              <C>          <C>               <C>
 Deposits:
 Noninterest-bearing  transaction accounts       $ 34,013           22.37%     $ 32,672          22.73%
 Interest bearing deposits:                        72,572           47.72%       75,539          52.55%
 Time deposits:
   Under $100,000                                  18,302           12.04%       12,229           8.51%
    $100,000 and over                              27,181           17.87%       23,305          16.21%
-------------------------------------------------------------------------------------------------------
 Total  Interest-bearing Deposits                 118,055           77.63%      111,073          77.27%
-------------------------------------------------------------------------------------------------------
 Total Deposits                                 $ 152,068         $ 100.0%    $ 143,745          100.0%
-------------------------------------------------------------------------------------------------------

</TABLE>

     During the first nine months of 1996, total deposits increased by 
$8,323,000 or 5.8%, to $152,068,000 at September 30, 1996 compared to 
$143,745,000 at December 31, 1995.  The increase was primarily due to 
concerted marketing efforts and additionally from new deposits generated by 
the Banks new Madera branch.
 
     LIQUIDITY

     Liquidity management refers to the Bank's ability to provide funds on an 
ongoing basis to meet fluctuations in deposit levels as well as the credit 
needs and requirements of its clients.  Both assets and liabilities 
contribute to the Bank's liquidity position.  Federal funds lines, short-term 
investments and securities, and loan repayments contribute to liquidity, 
along with deposit increases, while loan funding and deposit withdrawals 
decrease liquidity.  The Bank assesses the likelihood of projected funding 
requirements by reviewing historical funding patterns, current and forecasted 
economic conditions and individual client funding needs.  The Bank maintains 
lines of credit with two correspondent banks for up to $9,000,000 available 
on a short-term basis. Additionally, the Bank generally maintains a portfolio 
of SBA loans either available for sale or in its portfolio that could be sold 
should additional liquidity be required. 

                                        25

<PAGE>

     INTEREST RATE SENSITIVITY 

     Interest rate sensitivity is a measure of the exposure to fluctuations 
in the Bank's future earnings caused by fluctuations in interest rates.  
Generally, if assets and liabilities do not reprice simultaneously and in 
equal volumes, the potential for such exposure exists.  It is management's 
objective to maintain stability in the net interest margin in times of 
fluctuating interest rates by maintaining an appropriate mix of interest 
sensitive assets and liabilities.  To achieve this goal, the Bank prices the 
majority of its interest-bearing liabilities at variable rates.  At the same 
time, the majority of its interest-earning assets are also priced at variable 
rates, the majority of which float with the Prime Rate.  This pricing 
structure tends to stabilize the net interest margin percentage earned by the 
Bank.  

The following table sets forth the interest rate sensitivity and repricing 
schedule of the Company's interest-earning assets and interest-bearing 
liabilities, the interest rate sensitivity gap, the cumulative interest rate 
sensitivity gap, and the cumulative interest rate sensitivity gap ratio.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------

                                                        NEXT DAY     AFTER THREE       AFTER
                                                       BUT WITHIN         MONTHS    ONE YEAR
 (IN THOUSANDS, EXCEPT PERCENTAGES)                  THREE MONTHS     BUT WITHIN  BUT WITHIN        AFTER
 AS OF SEPTEMBER 30, 1996               IMMEDIATELY                    12 MONTHS  FIVE YEARS   FIVE YEARS      TOTAL
--------------------------------------------------------------------------------------------------------------------
 <S>                                    <C>          <C>             <C>          <C>          <C>          <C>
 Interest Rate Sensitivity Gap:
 Loans (1)                                 $ 40,798      $ 33,702        $ 9,154     $ 9,183      $ 6,316   $ 99,153
 Investment securities and other (2)            349         7,238          3,445      11,388        6,159     28,579
 Fed funds sold                               7,000             -              -           -            -      7,000
--------------------------------------------------------------------------------------------------------------------
 Total Earning Assets                        48,147        40,940         12,599      20,571       12,475    134,732
--------------------------------------------------------------------------------------------------------------------
 Interest-bearing transaction accounts       47,438             -              -           -            -     47,438
 Savings accounts                            22,814         2,320              -           -            -     25,134
 Time deposits                                    -        12,945         24,704       7,676          159     45,484
 Federal funds purchased                          -             -              -           -            -          -
--------------------------------------------------------------------------------------------------------------------
 Total  Interest-Bearing Liabilities         70,252        15,265         24,704       7,676          159    118,056
--------------------------------------------------------------------------------------------------------------------
 Interest rate sensitivity gap              (22,105)       25,675        (12,105)     12,895       12,316
 Cumulative gap                             (22,105)        3,570         (8,535)      4,360       16,676
 Cumulative gap percentage to 
    interest earning assets                 (16.41%)         2.65%         (6.33%)      3.24%       12.38%
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Amounts exclude nonaccrual loans of $3,524,000.
(2)  Amounts exclude unrealized gain/l(loss) of $242,000


     The above table indicates the time periods in which interest-earning 
assets and interest-bearing liabilities will mature or reprice in accordance 
with their contractual terms.  The table does not necessarily indicate the 
impact of general interest rate movements on the net interest margin since 
the repricing of various categories of assets and liabilities is subject to 
competitive pressures. Additionally, this table does not take into 
consideration changing balances in forward periods as a result of normal 
amortization, principle paydowns, changes in deposit mix or other such 
movements of funds as a result of changing interest rate environments.


                                     26

<PAGE>

     CAPITAL RESOURCES

     The Board of Governors and the FDIC have adopted risk-based capital 
guidelines for evaluating the capital adequacy of bank holding companies and 
banks.  The guidelines are designed to make capital requirements sensitive to 
differences in risk profiles among banking organizations, to take into 
account off-balance sheet exposures and to aid in making the definition of 
bank capital uniform internationally.  Under the guidelines, the Company and 
the Bank are required to maintain capital equal to at least 8.0% of its 
assets and commitments to extend credit, weighted by risk, of which at least 
4.0%, must consist primarily of common equity (including retained earnings) 
and the remainder may consist of subordinated debt, cumulative preferred 
stock, or a limited amount of loan loss reserves.  Assets, commitments to 
extend credit and off-balance sheet items are categorized according to risk 
and certain assets considered to present less risk than other permit 
maintenance of capital at less than the 8.0% ratio.

     The guidelines establish two categories of qualifying capital: Tier 1 
capital comprising core capital elements and Tier 2 comprising supplementary 
capital requirements.  At least one-half of the required capital must be 
maintained in the form of Tier 1 capital.  Tier 1 capital includes common 
shareholder's equity and qualifying perpetual preferred stock less intangible 
assets and certain other adjustments.   However, no more than 25% of the 
Company's total Tier 1 capital may consist of perpetual preferred stock.  The 
definition of Tier 1 capital for the Bank is the same, except that perpetual 
preferred stock may be included only if it is noncumulative.  Tier 2 capital 
includes, among other items, limited life (and in the case of banks, 
cumulative) preferred stock, mandatory convertible securities, subordinated 
debt and a limited amount of reserve for credit losses.

     The Board of Governors also adopted a 3.0% minimum leverage ratio for 
banking organizations as a supplement to the risk-weighted capital 
guidelines. The leverage ratio is generally calculated using Tier 1 capital 
(as defined under risk-based capital guidelines) divided by quarterly average 
net total assets (excluding intangible assets and certain other adjustments).

     The Board of Governors emphasized that the leverage ratio constitutes a 
minimum requirement for well-run banking organizations having diversified 
risk. Banking organizations experiencing or anticipating significant growth, 
as well as those organizations which do not exhibit the characteristics of a 
strong, well-run banking organization above, will be required to maintain 
minimum capital ranging generally from 100 to 200 basis points in excess of 
the leverage ratio.  The FDIC adopted a substantially similar leverage ratio 
for state non-member banks.

                                        27

<PAGE>


The table below presents the Company's and the Bank's risk-based and leverage
capital ratios for the quarter ended September 30, 1996.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
 RISK-BASED CAPITAL RATIOS
 (IN THOUSANDS)                       COMPANY                         BANK
--------------------------------------------------------------------------------
                                 Amount         Ratio         Amount       Ratio
--------------------------------------------------------------------------------
 <S>                             <C>           <C>         <C>           <C>
 Risk-Based Capital Ratio:
 Total Capital                    $ 14,062      10.76%      $ 13,554      10.38%
 Tier 1 Capital                     12,429       9.51%        11,921       9.13%
 Total Risk-Adjusted Assets        130,703                   130,614
--------------------------------------------------------------------------------
 Leverage Ratio:
 Tier 1 Capital                     12,429       7.52%        11,921       7.21%
 Average Total Assets              165,222                   165,301
--------------------------------------------------------------------------------

</TABLE>

     As indicated in the table above, at September 30, 1996, the Company's 
capital ratios exceed the minimum capital levels required by current federal 
regulations.  Management believes based upon currently available information 
that the Company and the Bank will continue to meet their respective minimum 
capital requirements in the foreseeable future.

     On December 19, 1991, the President signed the Federal Deposit Insurance 
Corporation Improvement Act of 1991 ("FDICIA").  The FDICIA, among other 
matters, substantially revises banking regulations and establishes a 
framework for determination of capital adequacy of financial institutions.  
Under the FDICIA, financial institutions are placed into one of five capital 
adequacy categories as follows: (1) "Well capitalized" - consisting of 
institutions with a total risk-based capital ratio of 10% or greater, a Tier 
1 risk-based capital ratio of 6% or greater, and a leverage ratio of 5% or 
greater, and the institution is not subject to an order, written agreement, 
capital directive or prompt corrective action directive; (2) "Adequately 
capitalized" - consisting of institutions with a total risk-based capital 
ratio of 8% or greater, a Tier 1 risk-based capital ratio of 4% or greater 
and a leverage ratio of 4% or greater, and the institution does not meet the 
definition of a "well capitalized" institution; (3) "Undercapitalized" - 
consisting of institutions with a total risk-based capital ratio less than 
8%, a Tier 1 risk-based capital ratio of less than 4%, or a leverage ratio of 
less than 4%; (4) "Significantly undercapitalized" - consisting of 
institutions with a total risk-based capital ratio of less than 6%, a Tier 1 
risk-based capital ratio of less than 3%, or a leverage ratio of less than 
3%; (5) "Critically undercapitalized" - consisting of an institution with a 
ratio of tangible equity to total assets that is equal to or less than 2%.


     Financial institutions classified as undercapitalized or below are 
subject to various limitations including, among other matters, certain 
supervisory actions by bank regulatory authorities and restrictions related 
to (i) growth of assets, (ii) payment of interest on subordinated 
indebtedness, (iii) payment of dividends or other capital distributions, and 
(iv) payment of management fees to a parent holding company.  The FDICIA 
requires the bank regulatory authorities to initiate corrective action 
regarding financial institutions which fail to meet minimum capital 
requirements.  Such action may be taken in order to, among other matters, 
augment capital and reduce total assets.  Critically undercapitalized 
financial institutions may also be subject to appointment of a receiver or 
conservator unless the financial institution submits an adequate 
capitalization plan.

                                      28

<PAGE>

     RETURN ON EQUITY  AND ASSETS

The following table sets forth the ratios of net income to average assets and
average shareholders' equity, and average shareholders' equity to average
assets.  Also indicated is the Company's dividend payout ratio.  (For purposes
of calculating average shareholders' equity as used in these ratios, unrealized
losses on the Company's available-for-sale securities portfolio have been
included and the percentages shown have been annualized).

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                     FOR THE THREE MONTHS              FOR THE NINE MONTHS 
                                                   ENDED SEPTEMBER 30, 1996          ENDED SEPTEMBER 30, 1996
-------------------------------------------------------------------------------------------------------------------
                                                          1996               1995           1996               1995
-------------------------------------------------------------------------------------------------------------------
 <S>                                                   <C>               <C>              <C>                <C>
 Return on average assets                                0.68%             (.27)%          0.69%              0.33%
-------------------------------------------------------------------------------------------------------------------
 Return on average shareholders' equity                  8.51%            (2.91)%          8.46%              3.51%
-------------------------------------------------------------------------------------------------------------------
 Average shareholders' equity to average assets          7.94%             9.33%           8.10%              9.43%
-------------------------------------------------------------------------------------------------------------------
 Dividend payout ratio                                  38.68%           (81.31)%         38.87%             66.93%
-------------------------------------------------------------------------------------------------------------------

</TABLE>

                                         29
<PAGE>

PART II   OTHER INFORMATION


     ITEM 1.    LEGAL PROCEEDINGS
                    None

     ITEM 2.    CHANGES IN SECURITIES
                    None

     ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
                    None

     ITEM 4.    SUBMISSION OF MATTER TO VOTE OF SECURITY HOLDERS
                    None
                    
     ITEM 5.    OTHER INFORMATION
                    None

     ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K
          
                    (a) Exhibits

     (3.1)   Articles of Incorporation, as amended, dated September 9, 1994,
             incorporated by reference from exhibit 3.1 of registrant's Annual
             Report on Form 10-K for the year ended December 31, 1994, filed 
             with the Commission on February 27, 1995.

     (3.2)   Bylaws, as amended, incorporated by reference from exhibit 3.2 of
             registrant's Annual Report on Form 10-K for the year ended 
             December 31, 1994, filed with the Commission on February 27, 1995.

   *(10.1)   Amendment to the Project Management Agreement, dated August 21, 
             1996, by and between Regency   Service Corporation, a California
             Corporation, and Gary L. McDonald Real Estate and Development Co.,
             a California Corporation, for project managerial services related 
             to real estate development activities conducted by RSC.

                                      30
<PAGE>

    (27.1)   Financial Data Schedule


* Denotes management contracts, compensatory plans or arrangements.

             (b) Reports on Form 8-K 

             The Company filed a Form 8-K dated July 26, 1996 in which it
             reported the Company had declared a $.06 per share cash dividend
             payable to shareholders of record on July 29, 1996.










                                      31

<PAGE>
                                       
                                  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.
                                       
                                REGENCY BANCORP



Date:  November 8, 1996                 By: /s/Steven F. Hertel
     ------------------------              ----------------------------
                                               Steven F. Hertel
                                               President and Chief 
                                               Executive Officer
                                               (Principal Executive Officer)


Date:  November 8, 1996                 By: /s/Steven R. Canfield
     ------------------------              ----------------------------
                                               Steven R. Canfield
                                               Executive Vice President and
                                               (Chief Financial Officer and 
                                               Accounting Officer)












                                      32

<PAGE>

                                EXHIBIT INDEX
                                       
EXHIBIT                                                           SEQUENTIAL
NUMBER                        DESCRIPTION                        PAGE NUMBER

 *10.1    Amendment  to the Project Management Agreement, dated        34
          August  21,  1996, by  and  between  Regency  Service
          Corporation,  a California  Corporation, and  Gary L.
          McDonald   Real   Estate   and  Development   Co.,  a
          California   Corporation,   for  project   managerial
          services   related   to   real   estate   development
          activities conducted by RSC.

   27.1   Financial Data Schedule                                      35


* Denotes management contracts, compensatory plans or arrangements.



                                      33