<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 March 31, 1999 .

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 For the transition period from_______ to _____.


                        COMMISSION FILE NUMBER 000-23815

                                 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 April 30, 1999, the registrant had 2,624,999 shares of Common Stock
outstanding.

The Exhibit Index is located on page 36.

This report contains a total of 37 pages of which this is page one.


<PAGE>





                                 REGENCY BANCORP

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                            PAGE
<S>                                                                                                         <C>
PART I.             FINANCIAL INFORMATION

           Item 1.  Financial Statements  (unaudited)

                    Consolidated Balance Sheets
                    March 31,  1999,  and  December 31, 1998 . . . . . . . . . . . . . . . . . . . . .        3

                    Consolidated Statements of Operations and Comprehensive Income/(Loss) Three
                    Months Ended March 31, 1999 and 1998 . . . . . . . . . . . . . . . . . . . . . . .        4

                    Consolidated Statements of Shareholders' Equity
                    Three  Months  Ended March 31, 1999 and 1998.  . . . . . . . . . . . . . . . . . .        5

                    Consolidated Statements of Cash Flows
                    Three  Months  Ended March 31, 1999 and 1998.  . . . . . . . . . . . . . . . . . .        6

                    Notes to Consolidated  Financial  Statements . . . . . . . . . . . . . . . . . . .        7

           Item 2.  Management's Discussion and Analysis of Financial
                    Condition  and Results of Operations . . . . . . . . . . . . . . . . . . . . . . .       10

PART II.            OTHER INFORMATION

           Item 1.  Legal  Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       31

           Item 2.  Changes in  Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       31

           Item 3.  Defaults Upon Senior  Securities . . . . . . . . . . . . . . . . . . . . . . . . .       31

           Item 4.  Submission of Matters to a Vote of Security  Holders . . . . . . . . . . . . . . .       31

           Item 5.  Other  Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       31

           Item 6.  Exhibits  and  Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . .       31
</TABLE>


                                       2
<PAGE>






                        REGENCY BANCORP AND SUBSIDIARIES
PART I   ITEM 1.              FINANCIAL INFORMATION


CONSOLIDATED BALANCE SHEETS (UNAUDITED)

<TABLE>
<CAPTION>

(IN THOUSANDS, EXCEPT SHARE DATA)                                   MARCH 31, 1999    DECEMBER 31, 1998
---------------------------------                                   --------------    -----------------
<S>                                                                 <C>               <C>      
ASSETS
Cash and due from banks                                                $  11,959          $  20,220
Federal funds sold                                                          --                5,000
                                                                       ---------          ---------
Total Cash and Equivalents                                                11,959             25,220
                                                                       ---------          ---------
Interest bearing deposits in other banks                                     870                869
Securities available-for-sale                                             50,626             46,990
Non-marketable equity securities (FRB & FHLB stock)                        1,345              1,170
                                                                       ---------          ---------
Loans                                                                    157,085            151,151
Allowance for credit losses                                               (2,653)            (2,631)
Deferred loan fees & discounts                                              (904)              (932)
                                                                       ---------          ---------
Net Loans                                                                153,528            147,588
                                                                       ---------          ---------
Other real estate owned                                                      347                684
Cash surrender value of life insurance                                     3,222              3,186
Premises and equipment, net                                                1,414              1,500
Accrued interest receivable and other assets                               4,744              4,760
                                                                       ---------          ---------
Total Assets                                                             228,055            231,967
                                                                       ---------          ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing transaction accounts                                  47,456             54,236
Interest bearing transaction accounts                                     56,638             54,878
Savings accounts                                                          37,383             46,464
Time deposits $100,000 or over                                            37,783             33,377
Other time deposits                                                       17,436             17,682
                                                                       ---------          ---------
Total  deposits                                                          196,696            206,637
                                                                       ---------          ---------
Short term borrowings                                                      5,000               --
Notes payable and capital lease obligations                                  558                547
Other liabilities                                                          2,707              2,334
                                                                       ---------          ---------
Total Liabilities                                                        204,961            209,518
                                                                       ---------          ---------
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, 2,624,999 and 2,624,374
  shares issued and outstanding in 1999 and 1998, respectively            15,235             15,229
Retained earnings                                                          7,849              7,000
Accumulated other comprehensive income
  Net unrealized gain on available-for-sale securities,
   net of  taxes of $6 in 1999 and $159 in 1998                               10                220
                                                                       ---------          ---------
Total  Shareholders' Equity                                               23,094             22,449
Total Liabilities and Shareholders' Equity                             $ 228,055          $ 231,967
                                                                       ---------          ---------

</TABLE>

See notes to consolidated financial statements


                                       3
<PAGE>

                REGENCY BANCORP AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

 FOR THE THREE MONTHS ENDED MARCH 31,                          1999             1998
 ------------------------------------                          ----             ----
<S>                                                           <C>             <C>    
INTEREST INCOME:
  Interest and fees on loans                                  $ 3,976         $ 3,543
  Interest on investment securities:
    Taxable                                                       596             476
    Nontaxable                                                    141              71
                                                              -------         -------
 Total interest on investment securities                          737             547
  Other                                                            24              34
                                                              -------         -------
           Total interest income                                4,737           4,124
INTEREST EXPENSE:
  Interest on deposits                                          1,292           1,243
  Interest on borrowings                                          123              40
                                                              -------         ------- 
          Total interest expense                               1,415           1,283
                                                              -------         -------
Net interest income                                             3,322           2,841
Provision for credit losses                                        75             125
                                                              -------         -------
Net interest income after provision for credit losses           3,247           2,716
                                                              -------         -------
NONINTEREST INCOME:
  Gain on sale of loans                                            70              15
  Depositor service charges                                       141             112
  Income from investment management services                      241             216
  Gain (loss) on sale of investment securities                      3               5
  Gain on sale of premises & equipment                              1            --
  Servicing fees on loans sold                                     33              69
  Other                                                            84              70
                                                              -------         -------
           Total noninterest income                               573             487
                                                              -------         -------
NONINTEREST EXPENSES:
  Salaries and related benefits                                 1,307           1,196
  Occupancy                                                       355             360
  FDIC insurance and regulatory assessments                        11             113
  Marketing                                                        93             126
  Professional services                                           125             172
  Directors' fees and expenses                                     58              53
  Supplies, telephone and postage                                  82              81
  (Income) loss  from investments in real estate                 --                (7)
  Other                                                           139             210
                                                              -------         -------
           Total noninterest expenses                           2,170           2,304
                                                              -------         -------
Income before income tax expense                                1,650             899
Income tax expense                                                539             380
                                                              -------         -------
Net income                                                    $ 1,111         $   519
Earnings per common share
Basic                                                         $  0.42         $  0.20
Diluted                                                       $  0.39         $  0.19
Shares on which earnings per common share were based
Basic                                                           2,624           2,621
Diluted                                                         2,833           2,784
                                                              -------         -------
</TABLE>

See notes to consolidated financial statements


                                       4
<PAGE>


                        REGENCY BANCORP AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                1999                    1998
                                                       -------------------      --------------------
                                                       SHARE-      COMPRE-      SHARE-       COMPRE-
                                                       HOLDERS'    HENSIVE      HOLDERS'     HENSIVE
                                                       EQUITY      INCOME       EQUITY       INCOME
                                                       ------      ------       ------       ------
<S>                                                   <C>         <C>          <C>          <C>      
COMMON STOCK - SHARES                                                         
 Balance, beginning of period                            2,624                    2,621
 Issuance of common stock under                                               
   stock option plan                                         1                        2
                                                      --------                  -------
 Balance, end of period                                  2,625                    2,623
                                                      --------                  -------
                                                      --------                  -------
                                                                              
 COMMON STOCK                                                                 
 Balance, beginning of period                         $ 15,229                 $ 15,203
 Issuance of common stock under                                               
   stock option plan (Note 9)                                6                       15
                                                      --------                 --------
 Balance, end of period                                 15,235                   15,218
                                                      --------                 --------
                                                                              
 RETAINED EARNINGS                                                            
 Balance, beginning of period                            7,000                    3,327
 Net income                                              1,111     $  1,111         519     $    519
 Common stock dividends                                   (262)                      --
                                                      --------                 --------
 Balance, end of period                                  7,849                    3,846
                                                      --------                 --------
                                                                              
 CUMULATIVE OTHER COMPREHENSIVE INCOME                                        
 Balance, beginning of period                              220                      204
 Unrealized gain (loss) on investment securities                              
   arising during the period, net of                                          
   tax benefit (expense) of $136 and $(3)                 (207)        (207)          5            5
 Reclassification adjustment for (gain) loss on                               
sale                                                                          
   of securities included in net income, net                                  
   of tax (expense) benefit of $(2) and $0                  (3)          (3)         --           --
                                                      --------                  --------
 Balance, end of period                                     10                       209
                                                      --------     --------     --------    ---------
 COMPREHENSIVE INCOME                                              $    901                 $    524
                                                                   --------                 ---------
                                                                   --------                 ---------
                                                                              
 Total shareholders' equity                           $ 23,094                 $ 19,273
                                                      --------                 --------
                                                      --------                 --------
</TABLE>

 See notes to consolidated financial statements                               


                                       5
<PAGE>






                        REGENCY BANCORP AND SUBSIDIARIES


CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>

(IN THOUSANDS) FOR THE THREE MONTHS ENDED MARCH 31,                1999        1998
                                                                 --------    --------
<S>                                                              <C>         <C>     
OPERATING ACTIVITIES:
Net income                                                       $  1,111    $    519
Adjustments:
Provision for credit losses                                            75         125
Provision  for  OREO losses                                          --            22
Depreciation and amortization                                          95         132
Deferred income taxes                                                (425)        200
(Decrease) increase in interest receivable and other assets           594        (326)
Increase in cash surrender value of life insurance                    (36)        (35)
Decrease in real estate held-for-sale                                --         2,540
Increase (decrease) in other liabilities                              384        (135)
Gain on sale of securities                                             (3)         (5)
Gain on sale of loans held-for-sale                                   (70)        (15)
Proceeds from sale of loans held-for-sale                           4,840       4,237
Additions to loans held-for-sale                                   (6,972)     (5,237)
                                                                 --------    --------
Net cash (used in) provided by operating activities                  (407)      2,022
                                                                 --------    --------
INVESTING ACTIVITIES:
Purchase of available-for-sale securities                          (9,626)     (5,821)
Proceeds from sales of available-for-sale securities                1,797           5
Proceeds from maturities of available-for-sale securities           3,830       8,406
Purchases of nonmarketable equity securities                         (175)       --
Net increase in loans                                              (3,860)     (5,444)
Net increase in other short-term investments                           (2)       (156)
Proceeds from sale of OREO                                            385           4
Purchases of premises and equipment                                    (6)        (63)
                                                                 --------    --------
Net cash used in investing activities                              (7,657)     (3,069)
                                                                 --------    --------
FINANCING ACTIVITIES:
Net increase in time deposits                                       4,160       1,644
Net decrease in other deposits                                    (14,101)     (8,162)
Net increase in short-term borrowings                               5,000        --
Proceeds from issuance of common stock under stock option plan          6          15
Cash dividends paid                                                  (262)       --
                                                                 --------    --------
Net cash used in financing activities                              (5,197)     (6,503)
                                                                 --------    --------
NET DECREASE IN CASH AND CASH EQUIVALENTS                         (13,261)     (7,550)
                                                                 --------    --------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                   25,220      19,893
                                                                 --------    --------
CASH AND CASH EQUIVALENTS AT  END OF PERIOD                      $ 11,959    $ 12,343
                                                                 --------    --------
CASH PAID DURING THE PERIOD:
Interest                                                         $  1,418    $  1,566
Income taxes                                                          125        --
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
  AND FINANCING ACTIVITIES:
Transfer of loans to other real estate owned                           48        --
                                                                 --------    --------
</TABLE>

See notes to consolidated financial statements



                                       6
<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 Regency Investment Advisors, Inc. ("RIA"). RIA
provides investment management and consulting services. The Bank has one
wholly-owned subsidiary, Regency Service Corporation ("RSC"), a California
corporation, that has engaged 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, 1998. 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.

NOTE 2. - INVESTMENT SECURITIES

         The Company maintains a securities portfolio consisting of U.S.
Treasury, U.S. Government agencies and corporations, state and political
subdivisions, asset-backed and other securities. An independent custodian holds
investment securities in safekeeping. The provisions of SFAS No. 115 require,
among other things, that certain investments in debt and equity securities be
classified under three categories: securities held-to-maturity; trading
securities; and securities available-for-sale. Securities classified as
held-to-maturity are to be reported at amortized cost; securities classified as
trading securities are to be reported at fair value with unrealized gains and
losses included in operations; and securities classified as available-for-sale
are to be reported at fair value with unrealized gains and losses excluded from
earnings and reported as a separate component of shareholders' equity, net of
tax. If a security is sold, any gain or loss is recorded as a charge to earnings
and the equity adjustment is reversed. At December 31, 1998, the Bank held $46.9
million in securities classified as available for sale. During the period
between December 31, 1998 and March 31, 1999, the Company recorded a net
decrease in the value of its available-for-sale portfolio of $210,000 net of
applicable taxes. This change is reflected as a change in shareholders' equity
in the Consolidated Statement of Shareholders' Equity. The Company had no
securities classified as held-to-maturity or as trading securities at March 31,
1999 or December 31, 1998, respectively.


                                       7
<PAGE>

The following table reflects the amortized cost and approximate fair value of
securities available-for-sale as of March 31, 1999 and December 31, 1998,
respectively.

<TABLE>
<CAPTION>

AVAILABLE-FOR-SALE SECURITES:       MARCH 31, 1999            DECEMBER 31, 1998
-----------------------------       ---------------------     ----------------------
                                    AMORTIZED         FAIR    AMORTIZED         FAIR
(In thousands)                           COST        VALUE         COST        VALUE
                                      -------      -------      -------      -------
<S>                                 <C>            <C>        <C>           <C>    
U.S. Treasuries                       $ 1,002      $ 1,005      $ 1,003      $ 1,008
U.S. Government agencies               19,206       19,017       16,434       16,468
Mortgage-backed securities             17,262       17,235       17,761       17,779
State and political subdivisions       13,135       13,364       11,166       11,488
Equity securities                           5            5          247          247
                                      -------      -------      -------      -------
Total                                 $50,610      $50,626      $46,611      $46,990
                                      -------      -------      -------      -------
</TABLE>


         In addition to the available-for-sale securities listed above, the
Company held $1,345,000 in nonmarketable equity securities at March 31, 1999.
These securities are made up of Federal Reserve Bank and Federal Home Loan Bank
stock, which is not traded on a recognized exchange. In order to maintain
membership in these banks an equity investment is required. The Company can
resell its investment to either the Federal Reserve or the Federal Home Loan
Bank should it choose to relinquish membership. At March 31, 1999, no impairment
reserve was deemed necessary. The Company held nonmarketable equity securities
of $1,170,000 at December 31, 1998.

NOTE 3. -  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. 2 Management's
Discussion and Analysis of Financial Condition and Results of Operations Balance
Sheet Analysis".

<TABLE>
<CAPTION>

LOANS                               MARCH 31, 1999                  DECEMBER 31, 1998
-----                               -------------------------       -----------------------
                                                     PERCENT                       PERCENT
                                                     OF TOTAL                      OF TOTAL
(In thousands)                       AMOUNT           LOANS         AMOUNT          LOANS
--------------                       ------           -----         ------          -----

<S>                                <C>               <C>         <C>              <C>  
Commercial                         $  103,436          65.8%      $   99,341          65.7%
Real estate:
  Mortgage                             16,292          10.4%          16,682          11.0%
  Construction                         27,614          17.6%          25,192          16.7%
Consumer and other                      9,743           6.2%           9,936           6.6%
                                   ----------         -----       ----------         ----- 
Subtotal                           $  157,085         100.0%      $  151,151         100.0%
                                   ----------         -----       ----------         ----- 
Less:
  Unearned discount                       391                            440
  Deferred loan fees                      513                            492
  Allowance for credit losses           2,653                          2,631
                                   ----------                     ----------
Total loans, net                   $  153,528                     $  147,588
                                   ----------                     ----------

</TABLE>


                                       8
<PAGE>


NOTE 4. - EARNINGS PER SHARE

         Basic earnings per share is computed by dividing net income available
to common shareholders by the weighted average number of common shares
outstanding during the period. Diluted earnings per share is computed by
dividing net income available to common shareholders by the weighted average
common shares outstanding during the period plus potential common shares
outstanding. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the Company.

         The following table provides a reconciliation of the numerator and
denominator of the basic EPS computation with the numerator and denominator of
the diluted EPS computation for the three months ended March 31, 1999, and 1998:

<TABLE>
<CAPTION>

EARNINGS PER SHARE
(IN THOUSANDS EXCEPT PER SHARE DATA)             1999        1998
------------------------------------             ----        ----
<S>                                             <C>         <C>   
Basic EPS Computation:
  Net income                                    $1,111      $  519

  Average common shares outstanding              2,624       2,621
                                                ------      ------
Basic EPS                                       $ 0.42      $ 0.20
                                                ------      ------
Diluted EPS Computation:
  Net income                                    $1,111      $  519

  Average common shares outstanding              2,624       2,621
  Stock options                                    155         127
  Warrants                                          54          36
                                                ------      ------
  Total average diluted shares outstanding       2,833       2,784
                                                ------      ------
Diluted EPS                                     $ 0.39      $ 0.19
                                                ------      ------
</TABLE>



Options to purchase 0 and 48,500 shares of common stock at various prices per
share were outstanding at March 31, 1999 and 1998, respectively, but were not
included in diluted EPS because the options exercise price was greater than the
average market price of the common shares for the periods then ended.



                                       9
<PAGE>


ITEM 2.               MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         Certain matters discussed or incorporated by reference in this Annual
Report on Form 10-K including, but not limited to, matters described in Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," are forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially from those
projected. Changes to such risks and uncertainties, which could impact future
financial performance, include, among others, (1) competitive pressures in the
banking industry; (2) changes in the interest rate environment; (3) general
economic conditions, either nationally or regionally; (4) changes in the
regulatory environment; (5) changes in business conditions and inflation; (6)
changes in securities markets; and (7) Year 2000 compliance problems. Therefore,
the information set forth therein should be carefully considered when evaluating
the business prospects of the Company and the Bank.

         OVERVIEW

         The Company's first quarter, ended March 31, 1999, was marked by
continued excellent performance as the Company recorded its third consecutive
quarter with earnings in excess of $1 million. Consolidated net income for the
three months ended March 31, 1999, was $1.1 million, a 114 percent increase when
compared to earnings of $519,000 for the period ended March 31, 1998. The
substantial improvement in earnings for the first quarter of 1999 was a direct
result of the Company's continued growth, its ability to maintain a high
interest margin and lower noninterest expense. During the first quarter of 1999,
interest income increased by $613,000 while interest expense increased by only
$132,000 when compared to the first quarter of 1998. Additionally, the Company
was able to reduce noninterest expense by $134,000 or 5.9 percent. The improved
net interest margin combined with the reduction in noninterest expense improved
the Company's efficiency ratio to 55.7 percent during the first quarter of 1999
from 69.2 percent during 1998's first quarter. Basic earnings per share
increased to $0.42 compared to $0.20 for the quarters ended March 31, 1999 and
1998, respectively. The Company paid a cash dividend of $.10 per share in the
first quarter of 1999 while no dividend was paid in the first quarter of 1998.

         At March 31, 1999, the Company's loan portfolio reached a record $157.1
million, an increase of $21.1 million or 15.5 percent since March 31, 1998, and
an increase of $5.9 million since December 31, 1998. Total assets at March 31,
1999 were $228.1 million an increase of 18.7 percent or $36.0 million, from
$192.1 million at March 31, 1998, however, assets were down $3.9 million from
December 31, 1998 as a result of a seasonal decline in deposits. Total deposits
were $196.7 million at March 31, 1999 up $26.9 million or 15.8 percent from
March 31, 1998 but down $9.9 million from December 31, 1998. While loan growth
has been substantial, nonperforming loans to total loans declined to .66 percent
at March 31, 1999, from 1.52 percent at March 31, 1998.

         The Company's return on average assets was 1.99 percent for the first
three months of 1999 compared to 1.11 percent for the first three months of
1998. Return on average common equity for the first quarter of 1999 was 19.7
percent compared to 11.1 percent for the same period in 1998.

         RIA continued to increase assets under management. At March 31, 1999,
RIA's assets under management had increased to $107.5 million from $96.2 million
at March 31, 1998.


                                       10
<PAGE>

         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>


<TABLE>
<CAPTION>


CONSOLIDATED AVERAGE BALANCE SHEETS, NET 
INTEREST INCOME AND INTEREST RATES
FOR THE THREE MONTHS ENDED MARCH 31,                                  1999                                1998
                                                      ----------------------------------   -------------------------------
                                                       AVERAGE       YIELD/                 AVERAGE      YIELD/
(In thousands, except for percentages)                 BALANCE        RATE      INTEREST    BALANCE       RATE    INTEREST
--------------------------------------                 -------        ----      --------    -------       ----    --------
<S>                                                   <C>            <C>      <C>          <C>           <C>      <C>
ASSETS:
Interest-earning assets:
     Loans (1)                                        $ 153,610      10.50%   $   3,976    $ 130,883     10.98%   $   3,543
     Investment securities (2)                           51,422       5.81%         737       35,582      6.24%         547
     Federal funds sold and other                         1,880       5.18%          24        2,674      5.11%          34
                                                        -------       ----        -----      -------      ----        -----
         Total interest-earning assets                  206,912       9.28%       4,737      169,139      9.89%       4,124
                                                        -------       ----        -----      -------      ----        -----

Noninterest-earning assets:
     Allowance for credit losses                         (2,656)                              (2,284)
     Cash and due from banks                             13,102                               10,876
     Real estate investments                               --                                  2,770
     OREO                                                   542                                  503
     Premises and equipment, net                          1,468                                1,749
     Cash surrender value of life insurance               3,201                                3,050
     Accrued interest receivable and other assets         4,205                                4,862
                                                      ---------                            ---------
         Total average assets                         $ 226,774                            $ 190,665
                                                      ---------                            ---------

LIABILITIES and SHAREHOLDERS' EQUITY:
Interest-bearing liabilities:
     Transaction accounts                                53,400       2.11%         278       47,333      2.35%         275
     Savings accounts                                    39,826       3.51%         345       36,589      4.07%         367
     Certificates of deposit                             53,758       5.05%         669       45,375      5.37%         601
     Federal funds purchased and other                    8,823       5.66%         123        1,831      8.86%          40
                                                        -------       ----        -----      -------      ----        -----
         Total interest-bearing liabilities:            155,807       3.68%       1,415      131,128      3.98%       1,283
                                                        -------       ----        -----      -------      ----        -----

Noninterest-bearing liabilities:
     Transaction accounts                                45,835                               38,342
     Other liabilities                                    2,238                                2,164
                                                      ---------                            ---------
         Total liabilities                              203,880                              171,634
                                                      ---------                            ---------
Shareholders' equity:
     Common stock                                        15,230                               15,183
     Retained earnings                                    7,482                                3,595
     Unrealized gain/loss on investment securities          182                                  253
                                                      ---------                            ---------
         Total shareholders' equity                      22,894                               19,031
                                                      ---------                            ---------
         Total average liabilities and
           shareholders' equity                       $ 226,774                            $ 190,665
                                                      ---------                            ---------

 Net interest income                                                          $   3,322                           $   2,841
                                                                              ---------                           ---------
Interest income as a percentage
     of average interest-earning assets                               9.28%                               9.89%
Interest expense as a percentage
     of average interest-earning assets                              -2.77%                              -3.08%
                                                                      ----                                ---- 
Net interest margin                                                   6.51%                               6.81%
                                                                      ----                                ---- 
                                                                      ----                                ---- 

</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 $337,000 and $278,000 for the quarters ended March 31,
         1999 and 1998, respectively.
(2)      Applicable nontaxable securities yields have not been calculated on a
         taxable-equivalent basis.


                                       12
<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>

(In thousands)
For the three months ended March 31, 1999 and 1998    Volume (1)   Rate (1)     Total
--------------------------------------------------    ----------   --------     -----
<S>                                                   <C>          <C>          <C>  
Net Interest Earnings Variance Analysis:
Increase (decrease) in interest income:
Loans                                                   $ 579       $(146)      $ 433
Investment securities (2)                                 224         (34)        190
Federal funds sold and other                              (10)       --           (10)
                                                        -----       -----       -----
Total                                                     793        (180)        613
                                                        -----       -----       ----- 
Increase (decrease) in interest expense:          
Transaction accounts                                       16         (13)          3
Savings accounts                                           41         (63)        (22)
Certificates ofdeposit                                    101         (33)         68
Federal funds purchased and other                          92          (9)         83
                                                        -----       -----       -----
Total                                                     250        (118)        132
                                                        -----       -----       -----
Increase (decrease) in net interest income              $ 543       $ (62)      $ 481
                                                        -----       -----       -----
                                                        -----       -----       -----
</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.


         Total interest income increased $613,000 or 14.8 percent in the first
quarter of 1999 to $4.7 million as compared to $4.1 million for the first
quarter of 1998. Interest expense in the first quarter of 1999 increased
$132,000 or 10.3 percent to $1.4 million from $1.3 million in 1998. One of the
primary reasons for the Company's increased profitability in the first quarter
of 1999 was the increase in net interest income. Net interest income for the
first quarter of 1999 increased by $481,000 or 16.9 percent. The Company's net
interest margin was 6.51 percent in the first quarter of 1999 as compared to
6.81 percent for the first quarter of 1998.

         Average interest-earning assets increased by $37.8 million in the first
quarter of 1999 to $206.9 million compared to $169.1 million in the first
quarter of 1998. For the period between March 31, 1999 and March 31, 1998 growth
in average interest-earning assets was paced by growth in average loans of 17.2
percent, and growth in average investments of 44.5 percent. Average interest
bearing liabilities grew by 18.8 percent between March 31, 1999 and March 31,
1998 with the majority of growth occurring in the Bank's time deposits which
experienced an increase of $8.3 million or 18.47 percent.


                                       13
<PAGE>


         NONINTEREST INCOME

         The Company receives a significant portion of its income from
noninterest sources related both to activities conducted by the Bank (loan
originations, servicing of loans, sale of loans and depositor service charges),
as well as from its subsidiary RIA.

<TABLE>
<CAPTION>

(IN THOUSANDS) FOR THE THREE MONTHS ENDED MARCH 31,          1999          1998
---------------------------------------------------          ----          ----
<S>                                                          <C>           <C> 
Noninterest Income:
Gain on sale of loans                                        $ 70          $ 15
Depositor service charges                                     141           112
Income from investment management services                    241           216
Gain on sale of securities                                      3             5
Gain on sale of assets                                          1             -
Servicing fees on loans sold                                   33            69
Other                                                          84            70
                                                             ----          ----
Total Noninterest Income                                     $573          $487
                                                             ----          ----
</TABLE>



         Noninterest income during the first quarter of 1999 was $573,000
compared to $487,000 for the same period during 1998, an increase of $86,000 or
17.7 percent. The increase is primarily attributable to a $55,000 increase in
income from the sale of loans resulting from increased single family mortgage
loan production, an increase in depositor service charges of $29,000 resulting
from a larger depositor base, and, an increase in income from investment
management services of $25,000 as a result of increased assets under management.

         Income from investment management services is generated from the
Company's subsidiary, RIA. Revenue from RIA is primarily a result of fees
generated from assets under management. At March 31, 1999, RIA's assets under
management were $107.5 million, an 11.8 percent increase from assets under
management of $96.2 million at March 31, 1998. Assets in client accounts managed
by RIA are not reflected in the consolidated assets of the Company. Revenue from
RIA's operations increased $25,000 or 11.7 percent in the first quarter of 1999
to $241,000 from $216,000 in the first quarter of 1998. On a stand alone basis,
RIA provided the Company with pre-tax net income of $35,000 and $32,000 for the
quarters ended March 31, 1999 and 1998, respectively.

During the first quarter, servicing fees on loans sold declined by $36,000,
primarily as a result of a smaller servicing portfolio of SBA loans sold.


                                       14
<PAGE>




         NONINTEREST 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:

<TABLE>
<CAPTION>

(IN THOUSANDS) FOR THE THREE MONTHS ENDED MARCH 31,                       1999                 1998
---------------------------------------------------                       ----                 ----
<S>                                                                     <C>                 <C>    
Noninterest Expense:
Salaries and related benefits                                           $1,307              $ 1,196
Occupancy                                                                  355                  360
FDIC insurance and regulatory assessments                                   11                  113
Marketing                                                                   93                  126
Professional services                                                      125                  172
Director's fees and expenses                                                58                   53
Supplies, telephone and postage                                             82                   81
(Income)/loss from investments in real estate partnerships                   -                  (7)
Other                                                                      139                  210
                                                                        ------              -------
Total Noninterest Expense                                               $2,170              $ 2,304
                                                                        ------              -------
</TABLE>



         Noninterest expense decreased by $134,000 or 5.8 percent to $2.2
million for the three months ended March 31, 1999, compared to $2.3 million
during the same period ended March 31, 1998. Categories reflecting a reduction
in noninterest expense for the quarter ended March 31, 1999, compared to the
quarter ended March 31, 1998 included: FDIC insurance and regulatory assessments
declining $102,000 as a result of an improved deposit insurance regulatory
rating in 1999; professional services declining $47,000 as a result of lower
legal and accounting expense; marketing declining $33,000 as a result a of a
general reduction in advertising expense; and other operating expense declining
$71,000 as a result of OREO expense incurred in 1998 with no corresponding
expense incurred in 1999.

         Noninterest expense categories reflecting an increase in 1999 included:
salaries and related benefits up $111,000 due primarily to an increase in
overall compensation paid, as well as an increase in full time equivalent
employees; and director's fees and expenses up $3,000 primarily as a result of
interest expense on deferred director's fee balances.

         BALANCE SHEET ANALYSIS

         Total assets at March 31, 1999 were $228.1 million an increase of $36.0
million or 18.7 percent from $192.1 million at March 31, 1998 and a decline of
$3.9 million from assets of $232.0 million at December 31, 1998. The slight
decline in total assets since December 31, 1998 is a result of a seasonal
decline in deposits and is similar to first quarter declines in prior years.

         For the quarter ended March 31, 1999, total loans increased $5.9
million or 3.9 percent to $157.1 million from $151.2 million at December 31,
1998, primarily as a result of growth in the Commercial loan portfolio which
includes SBA and B&I loans. Investment securities, including non-marketable
equity securities, increased 7.9 percent to $52.0 million at March 31, 1999,
from $48.2 million at year-end 1998. For the quarter ended March 31, 1999, the
Company's ratio of 


                                       15
<PAGE>

average earning assets to average total assets was 91.2 percent, compared to
88.7 percent for the comparable period in 1998.

         Deposits declined during 1999's first quarter by $9.9 million or 5.0
percent to $196.7 million from $206.6 million at year end 1998. The decline in
deposits is typical for the Bank during the first quarter and is comparable to
similar declines in deposits experienced in prior years. Shareholders' equity
increased to $23.1 million at March 31, 1999 from $22.4 million at December 31,
1998 primarily as a result of an increase in retained earnings.

         LOANS

         The three areas in which the Bank has directed virtually all of its
lending activities are: (a) commercial loans; (b) real estate loans (including
residential construction and mortgage loans); and (c) consumer loans. The
Company's loans are primarily made within its defined market area of Fresno and
Madera counties. The Bank also maintains a loan production office in Modesto,
California.

         Commercial loans, including SBA and B&I loans, comprised approximately
65.8 percent of the Company's loan portfolio at March 31, 1999, compared to 65.7
percent at December 31, 1998, and 58.3 percent of the Company's loan portfolio
at March 31, 1998. These loans are generally made 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 based upon underwriting analysis. 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 17.6 percent of the
Company's loan portfolio at March 31, 1999, compared to 16.7 percent of the
Company's loan portfolio at December 31, 1998, and 19.6 percent at March 31,
1998. These loans are primarily made for the construction of single family
residential housing. Loans in this category may be made to the home buyer or to
the developer. Construction loans are secured by deeds of trust on the primary
property. The majority of construction loans have floating rates based upon
underwriting analysis. A significant portion of the borrowers' ability to repay
these loans is dependent upon the sale of the property, which is affected by,
among other factors, the residential real estate market. 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 10.4 percent of the loan portfolio
at March 31, 1999, compared to 11.0 percent at December 31, 1998, and 13.0
percent of the loan portfolio at March 31, 1998. Real estate mortgage loans are
made up of non-residential properties and 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 


                                       16
<PAGE>

generally dependent upon the income of the borrower from other sources, however,
declines in the underlying property value may create risk in these loans.

         Consumer loans represented the remainder of the loan portfolio at March
31, 1999, comprising 6.2 percent of the loan portfolio compared to 6.6 percent
of total loans at December 31, 1998 and 7.1 percent at March 31, 1998. This
category includes traditional consumer loans, home equity lines of credit, and
Visa card loans. Consumer loans are generally secured by third trust deeds on
single-family residences or personal property, while Visa cards are unsecured.

         RISK ELEMENTS AND CONCENTRATIONS

         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 are 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.

         Generally, loans are secured by various forms of collateral. The loans
are expected to be repaid from income of the borrower or with proceeds from the
sale of assets securing the loans. The Company's loan policy requires sufficient
collateral to meet the Company's relative risk criteria for each borrower. The
Company's collateral mainly consists of real estate, cash, accounts receivable,
inventory and other financial instruments. The Company either maintains
possession of the collateral in safekeeping or perfects a security interest with
the State of California. The Company's largest concentration of loans based on
collateral is in real estate mortgages, including commercial real estate, and
real estate construction lending. A significant portion of its customers'
ability to repay these loans is dependent upon the economic sectors of
residential real estate development and construction. If a significant decline
in real estate property values were to occur in Fresno County, loans associated
with these collateral types could become impaired as to their full
collectability should default occur.

         The Company does not believe there to be any concentration of loans in
excess of 10 percent of total loans, other than those disclosed above, which
would be significantly impacted by economic or other conditions. For further
discussion of the impact of California economic conditions upon the loan
portfolio, see "Allowance for Credit Losses" below.



                                       17
<PAGE>




         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 March 31, 1999, nonaccrual loans totaled $1.0 million or .66 percent
of total loans, compared to $1.2 million or .79 percent at December 31, 1998,
and $2.1 million or 1.52 percent at March 31, 1998. Of the nonaccrual loans at
March 31, 1999, $806,000 represented the portion of SBA loans that are
guaranteed by the SBA. At December 31, 1998, $831,000 of total nonaccrual loans
represented the portion of SBA loans guaranteed by the SBA.

         In addition to the decline in nonaccrual loans, other real estate owned
declined by $337,000 to $347,000 at March 31, 1999, form $684,000 at December
31, 1998 and $477,000 at March 31, 1998.

         The gross interest income that would have been recorded for loans
placed on nonaccrual status was $110,000 and $276,000 for the quarters ended
March 31, 1999 and 1998, respectively.



                                       18
<PAGE>



         The following table presents information concerning the nonperforming
assets for the periods ending March 31, 1999 and December 31, 1998,
respectively.

<TABLE>
<CAPTION>

(In thousands, except percentages)                March 31, 1999  December 31, 1998
----------------------------------                --------------  -----------------
<S>                                               <C>             <C>      
Nonperforming Assets:
Nonperforming loans                                 $   1,040        $   1,197
Other real estate owned                                   347              684
                                                    ---------        ---------
Total nonperforming assets                              1,387            1,881
                                                    ---------        ---------
Accruing loans 90 days past due                             9               16
                                                    ---------        ---------

Total loans before allowance for credit losses        157,085          151,151
Total assets                                          228,055          231,967
Allowance for credit losses                         $  (2,653)       $  (2,631)
                                                    ---------        ---------

Ratios:
Nonperforming loans to total loans                       0.66%            0.79%
Nonperforming assets to:
   Total loans                                           0.88%            1.24%
   Total loans and OREO                                  0.88%            1.24%
   Total assets                                          0.61%            0.81%
Allowance for credit losses to total
     nonperforming assets                              191.28%          139.87%
Allowance for credit losses to loans                     1.69%            1.74%
                                                    ---------        ---------
</TABLE>

         At March 31, 1999 and December 31, 1998, the Company's recorded
investment in loans for which an impairment has been recognized totaled $11,000
and $1,519,000, respectively. These amounts were evaluated for impairment using
the fair value of collateral. At March 31, 1999, the SFAS No. 114 allowance for
credit losses related to impaired loans was $11,000. The Company uses the cash
basis method of income recognition for impaired loans. For the three months
ended March 31, 1999 and 1998, the Company did not recognize any income on such
loans.

         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 $2.653 million or 1.69 percent
of total loans at March 31, 1999, compared to $2.631 million or 1.74 percent at
December 31, 1998. The increase is the result of additional provision for credit
losses of $75,000 in the first quarter of 1999 along with net charge-offs or
$53,000. 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 currently available to analyze credit loss
potential, including economic factors, overall credit quality, historical
delinquency and a history of actual charge-offs, 


                                       19
<PAGE>

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, 1998, and March 31, 1999.

<TABLE>
<CAPTION>

(In thousands)

<S>                               <C>    
Balance, December 31, 1998        $ 2,631
                                  -------
Provision charged to expense           75
Loans charged off                     (61)
Recoveries                              8
                                  -------
Balance, March 31, 1999           $ 2,653
                                  -------
                                  -------

</TABLE>


         DEPOSITS AND SHORT TERM BORROWINGS

         Deposits represent the Bank's primary 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. The Bank normally experiences a seasonal decline in
deposits in the first quarter of each year. In order to assist in meeting its
funding needs the Bank maintains a Fed Funds line with a correspondent bank in
the amount of $5.0 million. During 1998, the Bank was accepted as a member of
the Federal Home Loan Bank of San Francisco (the " FHLB"). At March 31, 1999,
the Bank held stock in the FHLB which would allow the Bank to borrow up to $14.4
million using various loans or securities as collateral. In addition to these
borrowing methods, the Bank from time to time uses its investment portfolio to
raise funds through repurchase agreements. The Bank may, from time to time,
obtain additional deposits through the use of brokered time deposits. As of
March 31, 1999, the Bank held no institutional brokered time deposits.



                                       20
<PAGE>



         The following table presents the composition of the deposit mix for the
period ending March 31, 1999 and December 31, 1998, respectively.

<TABLE>
<CAPTION>

(In thousands, except percentages)   MARCH 31, 1999             DECEMBER 31, 1998
----------------------------------   ------------------------   -----------------------
                                                 Percent of                Percent of
                                       Amount  Total Deposits   Amount   Total Deposits
                                       ------  --------------   ------   --------------
<S>                                  <C>       <C>             <C>       <C>  
Noninterest bearing deposits         $ 47,456          24.1%   $ 54,236          26.2%
Interest bearing deposits:
  NOW and money market accounts        56,638          28.8%     54,878          26.6%
  Savings accounts                     37,383          19.0%     46,464          22.5%
  Time deposits:
      Under $100,000                   17,436           8.9%     17,682           8.6%
      $100,000 and over                37,783          19.2%     33,377          16.2%
                                     --------         -----    --------         ----- 
Total interest bearing deposits       149,240          75.9%    152,401          73.8%
                                     --------         -----    --------         ----- 
Total deposits                       $196,696         100.0%   $206,637         100.0%
                                     --------         -----    --------         ----- 
                                     --------         -----    --------         ----- 
</TABLE>


         CAPITAL RESOURCES

         The Company and Bank are subject to various minimum capital
requirements as defined by regulation. The current and projected capital
position of the Company and the impact of capital plans and long-term strategies
are reviewed regularly by Management. The Company's capital position represents
the level of capital available to support continued operations and expansion.
The Company's primary capital resource is shareholders' equity, which increased
$3.8 million or 19.8 percent from the previous quarter-end and increased
$645,000 million or 3 percent percent from December 31, 1998. The ratio of total
risk-based capital to risk-adjusted assets was 16.38 percent at March 31, 1999,
compared to 14.31 percent at March 31, 1998. Tier 1 risk-based capital to
risk-adjusted assets was 15.12 percent at March 31, 1999, compared to 13.06
percent at March 31, 1998.

         The Board of Governors of the Federal Reserve System and other federal
banking agencies 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 percent of its assets and commitments to extend credit,
weighted by risk, of which at least 4 percent, 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 percent 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 


                                       21
<PAGE>

includes common shareholder's equity and qualifying perpetual preferred stock
less intangible assets and certain other adjustments. However, no more than 25
percent 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 reserves for credit losses. Effective October 1, 1998,
the Board of Governors and other federal bank regulatory agencies approved
including in Tier 2 capital up to 45 percent of the pretax net unrealized gains
on certain available-for-sale equity securities having readily determinable fair
values (i.e. the excess, if any, of fair market value over the book value or
historical cost of the investment security). The federal regulatory agencies
reserve the right to exclude all or a portion of the unrealized gains upon a
determination that the equity securities are not prudently valued. Unrealized
gains and losses on other types of assets, such as bank premises and
available-for-sale debt securities, are not included in Tier 2 capital, but may
be taken into account in the evaluation of overall capital adequacy and net
unrealized losses on available-for-sale equity securities will continue to be
deducted from Tier 1 capital as a cushion against risk.

         The Board of Governors and other federal banking agencies have adopted
a revised minimum leverage ratio for bank holding companies as a supplement to
the risk-weighted capital guidelines. The old rule established a 3 percent
minimum leverage standard for well-run banking organizations (bank holding
companies and banks) with diversified risk profiles. Banking organizations which
did not exhibit such characteristics or had greater risk due to significant
growth, among other factors, were required to maintain a minimum leverage ratio
1 percent to 2 percent higher. The old rule did not take into account the
implementation of the market risk capital measure set forth in the federal
regulatory agency capital adequacy guidelines. The revised leverage ratio
establishes a minimum Tier 1 ratio of 3 percent (Tier 1 capital to total assets)
for the highest rated bank holding companies and banks or those that have
implemented the risk-based capital market risk measure. All other bank holding
companies and banks must maintain a minimum Tier 1 leverage ratio of 4 percent
or higher leverage capital ratios are required for bank holding companies and
banks that have significant financial and/or operational weaknesses, a high risk
profile, or are undergoing or anticipating rapid growth.

         On December 19, 1991, President Bush signed the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"). The Board of Governors
and other federal banking agencies adopted regulations effective December 19,
1992, implementing a system of prompt corrective action pursuant to Section 38
of the Federal Deposit Insurance Act and Section 131 of the FDICIA. The
regulations establish five capital categories with the following
characteristics: (1) "Well capitalized" - consisting of institutions with a
total risk-based capital ratio of 10 percent or greater, a Tier 1 risk-based
capital ratio of 6 percent or greater and a leverage ratio of 5 percent 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 percent or greater, a Tier 1 risk-based capital ratio of 4 percent or
greater and a leverage ratio of 4 percent 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 percent , a Tier 1 risk-based capital ratio of less than 4
percent , or a leverage ratio of less than 4 percent ; (4) "Significantly
undercapitalized" - consisting of institutions 


                                       22
<PAGE>

with a total risk-based capital ratio of less than 6 percent , a Tier 1
risk-based capital ratio of less than 3 percent , or a leverage ratio of less
than 3 percent ; (5) "Critically undercapitalized" - consisting of an
institution with a ratio of tangible equity to total assets that is equal to or
less than 2 percent.

          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
(a) growth of assets, (b) payment of interest on subordinated indebtedness, (c)
payment of dividends or other capital distributions, and (d) 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.


         The following tables reflect the Company's and Bank's capital amounts,
ratios and applicable regulatory capital requirements as of March 31, 1999.

<TABLE>
<CAPTION>

As of March 31, 1999                                                                                  To be well
(In thousands except percentages)                                                                 capitalized under
                                                                              For capital         prompt corrective
                                                         Actual            adequacy purposes:     action provisions:
                                                    ----------------       ------------------     ------------------
                                                    Amount     Ratio       Amount       Ratio     Amount      Ratio
                                                    ------     -----       ------       -----     ------      -----
<S>                                                 <C>        <C>          <C>         <C>       <C>         <C>   
Total capital (to risk weighted assets):
Consolidated                                        22,944     16.38%       11,208      8.00%          N/A
Regency Bank                                        20,286     14.48%       11,208      8.00%     14,012      10.00%

Tier 1 capital (to risk weighted assets):
Consolidated                                        21,182     15.12%        5,604      4.00%          N/A
Regency Bank                                        18,523     13.22%        5,605      4.00%      8,407       6.00%

Tier 1 capital (to average assets):
Consolidated                                        21,182      9.42%        8,996      4.00%          N/A
Regency Bank                                        18,523      8.25%        8,980      4.00%     11,225       5.00%
                                                    ------      ----         -----      ----      ------       ---- 

</TABLE>



         The risk-based capital ratios increased in 1999 as the increase in
equity outpaced the growth in total assets. Capital ratios are reviewed on a
regular basis to ensure that capital exceeds the prescribed regulatory minimums
and is adequate to meet the Company's future needs. All ratios are in excess of
the regulatory definition of "well capitalized."



                                       23
<PAGE>


         INFLATION

         The impact of inflation on a financial institution differs
significantly from that exerted on manufacturing or other commercial concerns,
primarily because its assets and liabilities are largely monetary. In general,
inflation primarily affects the Company indirectly through its effect on the
ability of its customers to repay loans, or its impact on market rates of
interest, and thus the ability of the Bank to attract loan customers. Inflation
affects the growth of total assets by increasing the level of loan demand, and
potentially adversely affects the Company's capital adequacy because loan growth
in inflationary periods may increase more rapidly than capital. Interest rates
in particular are significantly affected by inflation, but neither the timing
nor the magnitude of the changes coincides with changes in the Consumer Price
Index, which is one of the indicators used to measure the rate of inflation.
Adjustments in interest rates may be delayed because of the possible imposition
of regulatory constraints. In addition to its effects on interest rates,
inflation directly affects the Company by increasing the Company's operating
expenses. The effect of inflation during the three-month period ended March 31,
1999 was not significant to the Company's financial position or results of
operations.

              YEAR 2000 READINESS DISCLOSURE

         The inability of most computers, software and other equipment utilizing
microprocessors to distinguish the year 1900 from the year 2000 poses
substantial risks to all financial institutions including the Company. The year
2000 problem is pervasive and complex. Virtually every financial institution
service provider and vendor will have their computing operations affected in
some way by the rollover of the two-digit year value to 00 if action is not
taken to fix the problem before the year 2000 arrives.

         In 1997, the Company initiated a five-phase plan ("Plan") which
includes awareness, assessment, renovation, validation, and implementation. The
Company's Year 2000 Plan addresses the issues associated with the proper
functioning of the Company's computer hardware and software systems before, at,
and after the turn of the century and other date-related systems issues. The
scope of the project covers all computer systems including PC and network
hardware and software, and mainframe and mainframe software. It also covers all
equipment and other systems utilized in the bank operations or in the premises
from which the Company operates. The Company is using the Year 2000 milestones
established to date by the Federal Financial Institutions Examination Council
(FFIEC) to benchmark and gauge its progress.

         Awareness and Assessment Phases - The Company completed the Awareness
and Assessment Phases, as defined by the FFIEC, for its mission critical systems
and facilities in 1997 and continues to update its assessment as needed.
Non-mission critical systems have also been identified and assessed as to Y2K
readiness and plans and timelines for renovation of both mission critical and
non-mission critical systems have been prepared. Management of the Company
reports regularly to the Board of Directors on its Year 2000 efforts.

         Renovation Phase - The FFIEC guideline date for institutions to
substantially complete program changes and system upgrades for mission critical
systems was December 31, 1998. By that date, the Company had completed repairs,
upgrades, or replacements of all hardware and software components with the
exception of one software program supplied by a third party to 


                                       24
<PAGE>

RIA, the company's investment advisory subsidiary. The Company expects this one
remaining system to be Year 2000 ready in June of 1999 upon receipt and
installation of its scheduled software release. In addition to mission critical
systems and applications, the Company completed redemption of all non-mission
critical systems prior to December 31, 1998.

         Validation and Implementation Phases - To reduce the possibility of
unexpected failure of the Company's systems during and after the century date
change, which could have an impact on the Company and its customers, the Company
continues to test its systems in accordance with a testing strategy and plan
developed in 1998.

         The FFIEC guideline date for institutions to begin testing their
mission critical applications and systems was September 1, 1998. During March
1998, the Company began testing various mission critical and non-mission
critical systems. By December 31, 1998, the Company had substantially completed
this testing, including both remediated systems and systems presumed to be Year
2000 compliant. As a key part of the validation phase, the computer software
that operates the Bank's main customer and accounting system, the "Fiserv CBS
System," was thoroughly tested by Fiserv. Fiserv is one of the largest providers
of bank computer software nationwide. In addition to Fiserv's efforts, the Bank
has conducted additional testing of all components of the software through
January 3, 2001, and has detected no Year 2000 problems. All of the systems
referred to above have been implemented (i.e., placed into a production
environment). All mission critical systems will continue to be monitored and
tested throughout 1999 as releases of enhanced software become available.

         Business Partner Relationships - As part of the Company's Plan, all
third party suppliers and service providers have been contacted and assessed as
to their Year 2000 preparedness. If their reliability cannot be reasonably
assured, alternative vendors, suppliers and other contingency plans have been,
or are, being prepared. In addition, the Bank has communicated with its large
borrowers and major vendors upon which it relies to determine the extent to
which the Company might be vulnerable if those third parties fail to resolve
their Year 2000 issues. Borrowers or large deposit customers are being
categorized based upon risk and are monitored on a regular basis. If a borrowing
customer is determined to have significant Year 2000 exposure that may impair
the quality or collectability of its loan, reserves for potential losses
resulting from such Year 2000 exposures are established accordingly.

         Because the Company recognizes that its business and operations could
be adversely affected if key business partners fail to achieve timely Year 2000
compliance, the Company is evaluating strategies to manage and mitigate the risk
to the Company of their Year 2000 failures. However, although the Company is
establishing reasonable safeguards, there can be no assurance that all key
business partners will adequately address their Year 2000 issues. Therefore,
failures of third parties to adequately address their Year 2000 issues could
adversely affect the business and operations of the Company.

         Contingency Plans - FFIEC guidelines indicate that contingency plans
covering mission critical systems in the event of Year 2000 problems are a
prudent business practice. The Company has developed high level contingency
plans for applications and systems used by the Bank and RIA that are deemed
mission critical as well as plans to cover many non-mission critical
applications and systems.


                                       25
<PAGE>

         The contingency, or business resumption plan, is based on a review of
various emergency scenarios ranging from the Year 2000 failure of a single
software or hardware component to the total loss of systems and applications
should large-scale power or communications failures occur. The Company expects
to have these plans substantially complete by June 30, 1999. Because business
resumption planning is a dynamic process, the Company expects to further refine
and test these plans throughout 1999. As part of the contingency planning
process, the Company intends to take reasonable steps to mitigate foreseeable
and significant risks that can be identified should key business partners fail
to be Year 2000 compliant. The Bank's contingency planning includes risk
management options to insure adequate liquidity availability for the Bank and
its customers should the need arise.

         Costs to Address Year 2000 Issues - The majority of costs associated
with the Company's Year 2000 preparedness efforts have been associated with the
use of existing staff to prepare, test and confirm the components of the plan.
In some cases, third parties have been used to assist with planning and testing
and certain new software and hardware products have been procured. The majority
of these costs would have been incurred in the normal course of business as the
Company regularly upgrades its various systems in an effort to more efficiently
and effectively serve its clientele and conduct its operations. The Company
incurred costs of approximately $15,000 in the quarter ended March 31, 1999,
related to the use of third party consultants and other extraordinary Year 2000
expenses. The Company expects to expend approximately $60,000 during the
remainder of 1999 on Year 2000 related issues. The costs incurred during the
first quarter did not have a material effect on the Company's net income, and
the Company does not expect the costs that will be incurred during the remainder
of 1999 to have a material impact on the Company's net income for the year.


Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         MARKET RISK

         The financial services industry in general and the banking industry
specifically encompass various forms and degrees of risk. As the primary source
of business, the intermediation of funds presents various degrees and types of
risk, which can be managed and controlled, but never completely eliminated.
Management of the Company and its' Board of Directors have established a
framework of policies and procedures to manage risk by identifying, measuring,
monitoring, and controlling the risks involved in the various products and lines
of business of the Company.

         Market risks comprise several of the risk factors encompassed in the
Company's risk management policy/program. Market risk is described as the risk
to a financial institution's condition resulting from adverse movements in
market rates or prices, such as interest rates, foreign exchange rates, or
equity prices. Further description of these components include:

         Interest rate risk is the risk to earnings or capital arising from
movements in interest rates. The economic perspective focuses on a bank's value
given the current interest rate environment and sensitivity of that value to
changes in interest rates. Interest rate risk arises from the 


                                       26
<PAGE>

following: repricing risk differences between the timing of rate changes and the
timing of cash flows; basis risk - changing rate relationships among different
yield curves affecting bank activities; yield curve risk - changing rate
relationships across the spectrum of maturities; options risk - interest-related
options embedded in bank products. The Company manages interest rate risk
through a comprehensive asset/liability policy.

         Price risk is the risk to earnings or capital arising from changes in
the value of portfolios of financial instruments. This risk arises from
market-making, dealing, and position-taking activities for interest rate,
foreign exchange, equity, and commodity markets. Price risk focuses on the
changes in market factors (e.g., interest rates, market liquidity, volatilities,
etc.) that affect traded instruments. The primary accounts affected by price
risk are the ones revalued for financial presentation. The Company does not
engage in trading activities and as a result does not have exposure to price
risk due to market-making, dealing, and position-taking activities for interest
rate, foreign exchange, equity, and commodity markets. Some price risk is
inherent in the Company's balance sheet based upon changes in interest rates,
market liquidity and volatilities. These risks are managed under the Company's
investment policy, and secondarily, by the asset/liability and liquidity
policies.

         Foreign exchange risk a.k.a. transfer risk is the risk to earnings or
capital arising from movement of foreign exchange rates. It arises from accrual
accounts denominated in foreign currency, including loans, deposits, and equity
investments (i.e., cross-border investing). Under GAAP foreign-denominated
accounts are periodically revalued into U.S. dollar terms. This periodic
revaluation may reveal changes in the value of the investment related to the
relative value of the local currency versus the U.S. dollar. The Company does
not engage in foreign exchange trading or cross-border investing and has no
foreign exchange exposure as of March 31, 1999.

         Liquidity risk is the risk to earnings or capital resulting from a
bank's inability to meet its obligations when they come due, without incurring
unacceptable losses, and includes the inability to manage unplanned decreases or
changes in funding sources. Liquidity risk also arises from a failure to
recognize or address changes in market conditions that affect a bank's ability
to liquidate assets quickly and with minimal loss in value. The Company manages
liquidity risk through the Bank's asset/liability and liquidity policies.

         ASSET AND LIABILITY MANAGEMENT

         The Company's asset/liability management policy is designed to ensure
that the Bank is managed to provide adequate liquidity, maintain adequate
capital, and provide a satisfactory and consistent level of profits, within
suitable interest rate risk constraints. Generally, asset-liability ("A/L")
management is a comprehensive integrated process for overall financial
management. The major purpose of A/L management is to ensure that the Bank's
primary financial objectives; profitability, capital adequacy, risk tolerance,
and liquidity are achieved.

         Through A/L management, the Bank develops a methodology, which can be
used to optimize the critical risk/return tradeoff that the institution faces in
pricing, maturity selection, funds allocation, and other decisions every day.
Doing so will result in earnings which are adequate and consistent, thereby
enabling the achievement of profitability and risk objectives.


                                       27
<PAGE>


         The primary capital objective is capital preservation, which is
achieved by controlling interest rate and credit-related risk exposure, and by
the retention of ongoing earnings. The Bank will also strive to ensure that each
dollar of capital is optimally leveraged. The Bank's A/L management program
consists of four major disciplines; interest rate risk management, net interest
margin/spread management, capital management, and liquidity management

         The formal integration of these inter-related areas into an effective
A/L management program that includes a process of planning, organizing, and
controlling all of the Bank's financial resources will enable the Bank to
achieve a planned net interest margin over time within acceptable risk levels.

         INTEREST RATE RISK  

         As a financial institution, the Company's most significant market risk
factor is interest rate risk. Fluctuations in interest rates will ultimately
impact both the level of income and expense recorded on a large portion of the
Bank's assets and liabilities, and the market value of all interest earning
assets, other than those which possess a short term to maturity. Since all of
the Company's interest bearing liabilities and virtually all of the Company's
interest earning assets are located at the Bank, virtually all of the Company's
interest rate risk exposure lies at the Bank level. As a result, all significant
interest rate risk management procedures are performed at the Bank level.

         One approach to quantify interest rate risk is to use a simulation
model to project changes in net interest income that result from forecast
changes in interest rates. The primary analytical tool used by the Company to
gauge interest rate sensitivity is a simulation model used by many banks and
bank regulators. This industry standard model is used to simulate, based on the
current and projected portfolio mix, the effects on net interest income of
changes in market interest rates. This analysis calculates the difference
between a net interest income forecasted over a 12-month period using a flat
interest rate scenario and a net interest income forecast using a rising (or
falling) rate scenario, where the National Prime rate, serving as a "driver" is
made to rise (or fall) by 200 basis points over the 12-month forecast interval
triggering a response in the other rates. According to the Company's policy, the
simulated changes in net interest income should always be less the 12.5 percent
or steps must be taken to reduce interest rate risk. Various strategies the Bank
will use to adjust its exposure to interest rate risk include: lengthen/shorten
asset maturities; lengthen/shorten liability maturities; new product
introductions; secondary marketing/sell newly originated assets; and
growth/contraction (overall). As can be seen from the results of the following
interest rate sensitivity analysis matrix, the simulated change in net interest
income, based on the 12-month period ending March 31, 2000, fell within the 12.5
percent risk limit.

12 month interest rate sensitivity analysis projection as of March 31, 1999 (In
thousands, except percentages)

<TABLE>
<CAPTION>

              Change in      Projected Net         Change         Change
            Driver Rate    Interest Income              $              %
            -----------    ---------------        -------         -------
<S>                        <C>                   <C>            <C>  
                 2.000%             15,995          1,434          9.84%
                 1.000%             15,277            716          4.91%
                 0.000%             14,561              -          0.00%
                -1.000%             13,848          (713)         -4.89%
                -2.000%             13,137        (1,424)         -9.78%

</TABLE>



                                       28
<PAGE>

         The Company does not currently engage in trading activities or use
derivative instruments to control interest rate risk, even though such
activities may be permitted with the approval of the Company's Board of
Directors.

         INTEREST RATE SENSITIVITY AND GAP ANALYSIS

         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. Generally, if assets and
liabilities do not reprice simultaneously and in equal volumes, the potential
for interest rate risk exposure exists. 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. This pricing structure tends to stabilize the net interest margin
percentage achieved 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>

 
Interest Rate Sensitivity Gap:               Immediately    After 3 months       After 12                  
(In thousands, except percentages)            or within      but within         months but          After
As of March 31, 1999                           3 months       12 months       within 5 years       5 years         Total
--------------------                           --------       ---------       --------------       -------         -----
<S>                                          <C>             <C>              <C>                 <C>           <C>      
Interest earning assets:
Loans (1)                                      $ 102,244       $  26,905         $  16,706         $  10,190    $ 156,045
Interest-bearing deposits at other                   177             297               396                 -          870
banks
Securities available-for-sale                      7,005           9,175             5,330            29,116       50,626
Non marketable equity securities                       -               -             1,345                 -        1,345
                                               ---------       ---------         ---------         ---------    ---------
Total interest-earning assets                    109,426          36,377            23,777            39,306      208,886
                                               ---------       ---------         ---------         ---------    ---------

Interest bearing liabilities:
Interest-bearing transaction accounts             56,638               -                 -                 -       56,638
Savings accounts                                  37,383               -                 -                 -       37,383
Time deposits                                     22,902          25,421             6,792               104       55,219
Short term borrowings                              5,000                                                            5,000
                                               ---------       ---------         ---------         ---------    ---------
Total  interest-bearing liabilities              121,923          25,421             6,792               104      154,240
                                               ---------       ---------         ---------         ---------    ---------

Interest rate sensitivity gap                    (12,497)         10,956            16,985            39,202
Cumulative gap                                 $ (12,497)      $  (1,541)        $  15,444         $  54,646
Cumulative gap percentage to
   interest earning assets                         -5.98%          -0.74%             7.39%            26.16%
                                               ---------       ---------         ---------         ---------    ---------

</TABLE>

(1)      Amounts exclude nonaccrual loans of $1,040,000.


         The 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, principal
paydowns, changes in deposit mix or other such movements of funds as a result of
changing interest rate environments.


                                       29
<PAGE>

         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 and other
wholesale funding sources as described above. Additionally, the Bank maintains a
portfolio of SBA loans either available-for-sale or in its portfolio that could
be sold should additional liquidity be required.

         The Company reflected a decrease in liquidity from its operating
activities. Although net income in the first quarter of 1999 provided net cash
flows of $1.1 million, other operating activities used $1.5 million in cash
flows for a total of $407,000 in net cash used by operating activities.
Financing activities, primarily the decrease of customer deposits, used
additional cash flows. Total cash flows used in financing activities were $5.1
million as a result of the decrease in deposits for the first quarter of 1999.
The Company uses cash flows to make investments in loans and investment
securities. The increase in loans was $3.8 million in the first quarter of 1999,
while investment securities increased by $3.6 million. The Company anticipates
increasing its cash levels through the end of 1999 mainly due to increased
profitability and retained earnings. For the same period, it is anticipated that
the demand for loans will continue to moderately increase. The growth in deposit
balances is expected to be sufficient to fund loan growth with excess funds
available for investment in securities.

         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
gains and losses on the Company's available-for-sale securities portfolio have
been included and the percentages shown have been annualized).

<TABLE>
<CAPTION>

For the quarter ended                                         March 31, 1999     March 31, 1998
---------------------                                         --------------     --------------
<S>                                                           <C>                <C>  
Return on average assets                                                 1.99%            1.11%
Return on average shareholders' equity                                  19.70%           11.07%
Average shareholders' equity to average assets                          10.10%            9.98%
Dividend payout ratio                                                   23.81%              --
                                                               --------------     --------------
</TABLE>


         SUBSEQUENT EVENTS

The Registrant and Zions Bancorporation issued a joint press release dated April
27, 1999, announcing the signing of an Agreement and Plan of Merger dated as of
April 27, 1999 (the "Agreement"), by and among Zions Bancorporation, Regency
Bancorp and Regency Bank. Pursuant to the Agreement, Regency Bancorp will merge
with and into Zions Bancorporation in a tax-free merger intended to be accounted
for as a pooling of interests (the "Merger") with 


                                       30
<PAGE>

outstanding shares of Regency Bancorp converted into 0.3233 of a share of Zions
Bancorporation, subject to certain adjustments, and Regency Bank will merge with
and into California Bank and Trust, a subsidiary of Zions Bancorporation. The
Agreement includes among its terms, the grant of a stock option to Zions
Bancorporation to acquire up to 19.9% of the outstanding Regency Bancorp shares
upon the occurrence of certain events pursuant to a Stock Option Agreement dated
as of April 27, 1999. The Merger is subject to the approval of Regency Bancorp
shareholders and applicable regulatory approvals. The foregoing is qualified by
reference to the Form 8-K and exhibits filed with the Commission on May 6, 1999.

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

         (2)      Plan of Reorganization and Merger Agreement dated July 21,
                  1994 by and among Regency Bank, Regency Merger Corporation and
                  Regency Bancorp, incorporated by reference from exhibit 2 of
                  registration statement number 33-82150 on Form S-4, filed with
                  the Commission on July 27, 1994.

         (3.1)    Articles of Incorporation dated June 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.

         (4.1)    Specimen form of Regency Bancorp stock certificate
                  incorporated by reference from exhibit 4.1 of registrant's
                  Annual Report on Form 10-K for the year ended December 31,
                  1994, filed with the Commission on February 27, 1995.

         *(10.1)  401(k) Pension and Profit Sharing Plan, incorporated by
                  reference from exhibit 10.3 of registration statement number
                  33-82150 on Form S-4, filed with the Commission on July 27,
                  1994.


                                       31
<PAGE>

         *(10.2)  Employee Stock Ownership Plan, incorporated by reference from
                  exhibit 10.4 of registration statement number 33-82150 on Form
                  S-4, filed with the Commission on July 27, 1994.

         *(10.3)  Directors Deferred Fee Plan, incorporated by reference from
                  exhibit 10.5 of registration statement number 33-82150 on Form
                  S-4, filed with the Commission on July 27, 1994.

         *(10.4)  Form of Directors Deferred Fees Agreement for Regency Bank,
                  incorporated by reference from exhibit 10.6 of registration
                  statement number 33-82150 on Form S-4, filed with the
                  Commission on July 27, 1994.

         (10.5)   Lease agreement dated December 22, 1988 for premises located
                  at 5240 N. Palm Avenue, Fresno, California, incorporated by
                  reference from exhibit 10.10 of registration statement number
                  33-82150 on Form S-4, filed with the Commission on July 27,
                  1994.

         (10.6)   Electronic Financial Services Agreement dated June 9, 1992,
                  between Regency Bank and Fiserv, incorporated by reference
                  from exhibit 10.12 of registration statement number 33-82150
                  on Form S-4, filed with the Commission on July 27, 1994.

         (10.7)   Comprehensive Banking System License and Service Agreement
                  dated April 13, 1992, between Regency Bank and Fiserv,
                  incorporated by reference from exhibit 10.13 of registration
                  statement number 33-82150 on Form S-4, filed with the
                  Commission on July 27, 1994.

         (10.8)   Lease agreement dated February 20, 1995 for premises located
                  at 3501 Coffee Road, Suite 3, Modesto, California,
                  incorporated by reference fromexhibit 10.19 of registrant's
                  Annual Report on Form 10-K for the year ended December 21,
                  1995, filed with the Commission on March 29, 1996.

         (10.9)   Lease agreement dated August 17, 1995 for premises located at
                  7060 N. Fresno Street, Fresno, California, incorporated by
                  reference from exhibit 10.21 of registrant's Annual Report on
                  Form 10-K for the year ended December 21, 1995, filed with the
                  Commission on March 29, 1996.


         (10.10)  Form of Indemnification Agreement, incorporated by reference
                  from exhibit 10.3 of registrant's Quarterly Report on Form
                  10-Q for the quarter ended June 30, 1996, filed with the
                  Commission on August 2, 1996.

         (10.11)  Lease agreement dated May 13, 1996 for premises located at 126
                  "D" Street, Madera, California, incorporated by reference from
                  exhibit 10.4 of registrant's Quarterly Report on Form 10-Q for
                  the quarter ended June 30, 1996, filed with the Commission on
                  August 2, 1996.

         *(10.12) Employment Agreement made and entered into as of August 22,
                  1996 between Regency Bank, a California Corporation, and
                  Steven F. Hertel, President/Chief Executive Officer,
                  incorporated by reference from exhibit 


                                       32
<PAGE>

                  10.2 of registrant's Quarterly Report on Form 10-Q/A-1 for the
                  quarter ended September 31, 1996, filed with the Commission on
                  November 16, 1996.

         *(10.13) Employment Agreement made and entered into as of August 22,
                  1996 between Regency Bank, a California Corporation, and
                  Steven R. Canfield, Executive Vice President/Chief Financial
                  Officer incorporated by reference from exhibit 10.3 of
                  registrant's Quarterly Report on Form 10-Q/A- 1for the quarter
                  ended September 31, 1996, filed with the Commission on
                  November 16, 1996.

         *(10.14) Employment Agreement made and entered into as of August 22,
                  1996 between Regency Bank, a California Corporation, and
                  Robert J. Longatti, Executive Vice President/Chief Credit
                  Officer incorporated by reference from exhibit 10.4 of
                  registrant's Quarterly Report on Form 10-Q/A-1 for the quarter
                  ended September 31, 1996, filed with the Commission on
                  November 16, 1996.

         *(10.15) Employment Agreement made and entered into as of August 22,
                  1996 between Regency Bank, a California Corporation, and
                  Regency Investment Advisors Incorporated, a California
                  Corporation, and Alan R. Graas, President, incorporated by
                  reference from exhibit 10.5 of registrant's Quarterly Report
                  on Form 10-Q/A-1 for the quarter ended September 31, 1996,
                  filed with the Commission on November 16, 1996.

         *(10.16) Regency Bancorp 1990 Stock Option Plan, as amended, and Form
                  of Nonstatutory Stock Option Agreement, Form of Incentive
                  Stock Option Agreement and Form of Nonstatutory Stock Option
                  Agreement for Outside Directors, under the Regency Bancorp
                  1990 Stock Option Plan, as amended, incorporated by reference
                  on registration statement number 33-3848 on Form S-8, filed
                  with the Commission on April 19, 1996.

         *(10.17) Incentive Stock Option Agreement entered into with Steven F.
                  Hertel, dated December 16, 1996 incorporated by reference from
                  exhibit 10.29 of registrant's Annual Report on Form 10-K for
                  the year ended December 31, 1996, filed with the Commission on
                  March 31, 1997.

         *(10.18) Incentive Stock Option Agreement entered into with Steven R.
                  Canfield, dated December 16, 1996 incorporated by reference
                  from exhibit 10.30 of registrant's Annual Report on Form 10-K
                  for the year ended December 31, 1996, filed with the
                  Commission on March 31, 1997.


         *(10.19) Incentive Stock Option Agreement entered into with Robert J.
                  Longatti, dated December 16, 1996 incorporated by reference
                  from exhibit 10.31 of registrant's Annual Report on Form 10-K
                  for the year ended December 31, 1996, filed with the
                  Commission on March 31, 1997.

         *(10.20) Form of Director Deferred Fees Agreement for Regency Bancorp
                  incorporated by reference from exhibit 10.32 of registrant's
                  Annual Report on Form 10-K for the year ended December 31,
                  1996, filed with the Commission on March 31, 1997.


                                       33
<PAGE>


         *(10.21) Form of Director Deferred Fees Agreement for Regency Service
                  Corporation incorporated by reference from exhibit 10.33 of
                  registrant's Annual Report on Form 10-K for the year ended
                  December 31, 1996, filed with the Commission on March 31,1997.

         *(10.22)Amended and Restated Executive Salary Continuation Agreement
                  dated September 23, 1997, made by and between Regency Bank and
                  Steven F. Hertel, incorporated by reference from exhibit 99.1
                  of registrant's current report on Form 8-K, filed with the
                  Commission on October 9, 1997.

         *(10.23) Amended and Restated Executive Salary Continuation Agreement
                  dated September 26, 1997, made by and between Regency Bank and
                  Robert J. Longatti, incorporated by reference from exhibit
                  99.2 of the Form 8-K, filed with the Commission on October 9,
                  1997.

         *(10.24) Amended and Restated Executive Salary Continuation Agreement
                  dated September 30, 1997, made by and between Regency Bank and
                  Steven R. Canfield, incorporated by reference from exhibit
                  99.3 of the Form 8-K, filed with the Commission on October 9,
                  1997.

         (10.25)  Form of Warrant Agreement and Warrant Certificate,
                  incorporated by reference from exhibit 10.29 of registrant's
                  Annual Report on Form 10-K for the year ended December 31,
                  1997, filed with the Commission on March 27, 1997.

         (10.26)  Belle Plaine Financial LLC Agreement, dated July 23, 1998,
                  incorporated by reference from exhibit 99.1 on Form 8-K, filed
                  with the Commission on July 29, 1998.

         (10.27)  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, 1998, filed with the Commission on March 26,
                  1999.

         (27.1)   Financial Data Schedule

                  (b)      Reports on Form 8-K

                           (i)      The Company filed a Form 8-K dated January
                                    12, 1999 announcing record performance for
                                    1998, and reporting net after-tax income of
                                    $3.67 million or $1.40 per share for 1998.
                                    For the fourth quarter of 1998, the Company
                                    earned $1.45 million or $0.55 per share.

                           (ii)     The Company filed a Form 8-K dated February
                                    10, 1999, in which it reported that the
                                    Registrant declared a $.10 per share cash
                                    dividend for its shareholders of record
                                    February 16, 1999.



                                       34
<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: May 10,  1999         By: /s/ STEVEN F. HERTEL
      -------------             --------------------
                                Steven F. Hertel
                                President and Chief Executive Officer
                                (Principal Executive Officer)



Date: May 10, 1999          By: /s/ STEVEN R. CANFIELD
      ------------              ----------------------
                                Steven R. Canfield
                                Executive Vice President and
                                Chief Financial Officer (Principal
                                Financial and Accounting Officer)


                                       35
<PAGE>




                                  EXHIBIT INDEX


EXHIBIT NUMBER            DESCRIPTION                                 PAGE


          27.1            Financial Data Schedule                      37





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