<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

          [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 for the Year ended DECEMBER 31, 2000

                                       OR

          [ ] 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 333-12892

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

 STATE OF CALIFORNIA                          77-0559736
--------------------                          ----------
(State or other jurisdiction of               (I.R.S. Identification No.)
employee incorporation or organization)

 581 HIGUERA ST., SAN LUIS OBISPO,
CALIFORNIA  93401                             (805) 782-5000
----------------------------------            --------------
(Address of principal                         Registrant's telephone
executive offices) (Zip Code)                 number, including area code


Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:  None


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 such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]1

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB [X].

Registrant's revenue for this year ended December 31, 2000 was $5,100,994. The
aggregate market value of the voting stock held by non-affiliates of the
Registrant at March 1, 2001 was $4,341,422. As of March 1, 2001, the Registrant
had 630,066 shares of Common Stock outstanding.

Transitional Small Business Disclosure Format (check one) Yes [ ] No[X]


-----------------
1 Prior to December 18, 2000, Mission Community Bancorp's subsidiary, Mission
Community Bank, N.A., filed reports pursuant to Section 15(d) of the Securities
Exchange Act of 1934 with the Comptroller of the Currency. On December 18, 2000,
Mission Community Bancorp filed an 8-K Report with the Commission reporting that
it had acquired Mission Community Bank, N.A. in a holding company formation
transaction and that it would thereafter file reports with the Commission
pursuant to Section 15(d) of the Securities Exchange Act of 1934.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>

<S>                                                                                                         <C>
PART I.......................................................................................................3

     ITEM 1.      DESCRIPTION OF BUSINESS....................................................................3

     ITEM 2.      DESCRIPTION OF PROPERTIES.................................................................12

     ITEM 3.      LEGAL PROCEEDINGS.........................................................................13

     ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......................................13

PART II.....................................................................................................13

     ITEM 5.      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..................................13

     ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.....15

     ITEM 7.      FINANCIAL STATEMENTS......................................................................28

     ITEM 8.      CHANGES WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...........................51



PART III....................................................................................................51

     ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
                  CONTROL PERSONS; COMPLIANCE WITG SECTUB 16(a) OF THE EXCHANGE ACT.........................51

     ITEM 10.     EXECUTIVE COMPENSATION....................................................................52

     ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............................53

     ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................................55

     ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K..........................................................56

</TABLE>


                                                                            2
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                                      NOTE

Certain statements contained in this Report, including, without limitation,
statements containing the words "believes", "anticipates", "intends", "expects",
and words of similar import, constitute "forward-looking statements" within the
meaning of section 27a of the Securities Act of 1933 and section 21e of the
Securities Exchange Act of 1934. Such forward looking statements involve known
and unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: general economic and business conditions in those areas in which the
company operates, demographic changes, competition, fluctuations in interest
rates, changes in business strategy or development plans, changes in
governmental regulation, credit quality, the availability of capital to fund the
expansion of the company's business, and other factors referenced in this
Report, including in "Item 1. Description of Business - Factors That May Affect
Future Results Of Operations." The Company disclaims any obligation to update
any such factors or to publicly announce the results of any revisions to any of
the forward-looking statements contained herein to reflect future events or
developments

                                     PART I

ITEM 1.    DESCRIPTION OF BUSINESS

GENERAL

Mission Community Bancorp (the "Company") is a California corporation organized
in September, 2000 to act as the bank holding company for Mission Community Bank
(the "Bank"). In December, 2000, the Company acquired all of the outstanding
common stock of the Bank in a holding company formation transaction.
Shareholders of the Bank received one share of the common stock of the Company
for each share of Bank common stock. The transaction was accounted for on a
basis similar to the pooling of interest method and was structured to be tax
free to the shareholders. Other than holding the shares of the Bank, the Company
conducts no significant activities, although it is authorized, with the prior
approval of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), the Company's principal regulator, to engage in a variety of
activities which are deemed closely related to the business of banking.

THE BANK

The Bank, a national banking association, opened its Main Office and commenced
operations on December 18, 1997 at 581 Higuera Street, San Luis Obispo,
California 93401. The Bank is authorized to engage in the general commercial
banking business and its deposits are insured by the Federal Deposit Insurance
Corporation up to the applicable limits of the law. At December 31, 2000, the
Company had approximately $62.9 million in assets, $42.6 million in net loans,
$54.2 million in deposits, and $5.7 million in stockholders' equity. The Bank
does not offer trust services or international banking services and does not
plan to do so in the near future.

The Bank established a wholly-owned subsidiary community development
corporation, Mission Community Development Corporation ("MCDC"), and an
affiliate not-for-profit, Mission Community Services Corporation ("MCSC").

Mission Community Development Corporation is a "for-profit" CDC, which provides
financing for small businesses and low- and moderate-income area development
and/or affordable housing projects. Its purpose is to benefit small business and
low- and moderate-income areas/residents. The board of directors of MCDC
consists of four members of the Board of Directors of the Bank and three outside
members who are actively involved in supporting community affairs and
activities.

Mission Community Services Corporation is a "not-for-profit" public charitable
corporation under the internal Revenue Section Code 501 (c)(3). This company's
primary focus is to provide technical support, services and accessibility to
funding sources, which require non-profit status to qualify for granting
purposes. The Board of Directors of MCSC consists of both Bank and Mission
Community Development Corporation board members.

Mission Community Bank and its subsidiary Mission Community Development
Corporation and its affiliate Mission Community Services Corporation, form an
organizational vehicle intended to provide economic revitalization and community
development to the Central Coast of California.


                                                                           3
<PAGE>


The Bank's Mission Statement commits to:

"...THE DEVELOPMENT OF HIGH QUALITY, COMMUNITY DIRECTED BUSINESS BANKING
SERVICES AND THE FOSTERING AND NURTURING OF SMALL BUSINESS GROWTH. WE WILL BE
INNOVATIVE IN THE DEVELOPMENT AND CREATION OF JOBS AND INDIVIDUAL WEALTH AS A
FACILITATOR FOR THE UTILIZATION AND EMPLOYMENT OF PARTNERSHIP RESOURCES WITHIN
OUR MARKETPLACE."

The Department of Treasury, Community Development Institution Fund (CDFI), has
certified the Company and the Bank as "community development financial
institutions." This provides Community Reinvestment Act (CRA) credit to
institutional depositors and investors. Related to its status as a "community
development financial institution," the Company completed the private placement
of $1,000,000 in common and preferred stock during December 2000 to two
institutional investors. See "Item 5. Market for Common Equity and Related
Stockholder Matters - Issuance of Preferred Stock."

BANKING SERVICES

The Bank offers a wide variety of deposit, loan and other financial services to
small businesses, entrepreneurs and their employees and families. Its key
strengths are customer service, an experienced management team familiar with the
community through the Bank's involvement in various community lending and
development projects, together with its wholly-owned subsidiary, Mission
Community Development Corporation.

The Bank's primary service area consists of San Luis Obispo County, which lies
centrally within the State of California along the Pacific Ocean. The Bank
operates out of its Main Office in the city of San Luis Obispo, its branch in
Paso Robles, and a loan production office in Arroyo Grande The Bank offers
products and services to Customers located throughout San Luis Obispo County.
The city of San Luis Obispo is located in the central west portion of San Luis
Obispo County. The South County includes the cities of Pismo Beach, Arroyo
Grande, Grover Beach, and unincorporated areas of Oceano and Nipomo and is often
referred to as the "Five Cities" area. The "North County" includes the cities of
Paso Robles, Atascadero, Templeton and Santa Margarita. "The Coast" includes Los
Osos, Morro Bay, Cayucos, Cambria and San Simeon. The Bank offers services to
companies and individuals located in the southern and northern portions of the
county through the use of ATMs and courier services.

The Bank offers checking and savings accounts, money market accounts and time
certificates of deposits; offers commercial, agribusiness, government
guaranteed, real estate, automobile and other installment and term loans and
leases; issues drafts, sells travelers' checks and provides other customary
banking services. Although the Bank does not operate a trust department, it
makes trust services available through correspondent institutions. The business
plan of the Bank emphasizes providing highly specialized financial services in a
professional and personalized manner to individuals and businesses in its
service area.

The Bank's operating policy since its inception has emphasized small business,
commercial and retail banking. Most of the Bank's customers are retail
customers, farmers and small to medium-sized businesses. The Bank takes real
estate, listed and unlisted securities, savings and time deposits, automobiles,
machinery and equipment as collateral for loans. The areas in which the Bank has
directed virtually all of its lending activities are (i) commercial and
agricultural loans, (ii) installment loans, (iii) construction loans, and (iv)
other real estate loans or commercial loans secured by real estate. As of
December 31, 2000, these four categories accounted for approximately 39.6%,
7.2%, 7.6% and 45.5% respectively, of the Bank's gross loan portfolio. As of
December 31, 2000, $22.9 million or 53.2% of the Bank's $43.1 million in gross
loans consisted of interim construction and real estate loans, primarily for
single family residences or for commercial development.

Most of the Bank's deposits are attracted by local promotional activities and
advertising in the local media. A material portion of the Bank's deposits have
not been obtained from a single person or a few persons, the loss of any one or
more of which would have a materially adverse effect on the business of the
Bank. As of December 31, 2000, the Bank had approximately 2,504 deposit accounts
consisting of non-interest bearing (demand), interest-bearing demand and money
market accounts with balances totaling $10.7 million for an average balance per
account of approximately $7,933; 845 savings accounts with balances totaling
$27.5 million for an average balance per account of approximately $32,487; and
315 time certificate of deposit accounts with balances totaling $16.1 million,
for an average balance per account of approximately $50,997.

The principal sources of the Bank's revenues are (i) interest and fees on loans,
(ii) interest on investments, (iii) service charges on deposit accounts and
other charges and fees, (iv) interest on federal funds sold (funds loaned on
short-term basis to other banks) and (v) gain on sale of loans. For the year
ended December 31, 2000, these sources comprised 69.9%, 13.0%, 7.9%, 1.8% and
5.2%, respectively, of the Bank's total operating income.


                                                                          4
<PAGE>


The Bank has not engaged in any material research activities relating to the
development of new services or the improvement of existing services.

There has been no significant change in the types of services offered by the
Bank since its inception, except in connection with new types of accounts
allowed by statute or regulation in recent years. The Bank has no present plans
to enter any new line of business that would require the investment of a
material amount of total assets.

Most of the Bank's business originates from San Luis Obispo County, and there is
no emphasis on foreign sources and application of funds. The Bank's business,
based upon performance to date, does not appear to be seasonal. A material
portion of the Bank's loans is not concentrated within a single industry or
group of related industries, nor is the Bank dependent upon a single customer or
group of related customers for a material portion of its deposits. Management of
the Bank is unaware of any material effect upon the Bank's capital expenditures,
earnings or competitive position as a result of federal, state or local
environmental regulation.

The Bank holds no patents, licenses (other than licenses obtained from bank
regulatory authorities), franchises or concessions.

EMPLOYEES

As of March 1, 2001, the Bank had a total of 35 employees, of which 34 were
full-time employees. The management of the Bank believes that its employee
relations are satisfactory. The Company has no salaried employees; the Company's
officers all hold similar positions at the Bank and receive compensation from
the Bank.

COMPETITION

The banking and financial services business in California generally, and in the
Bank's market area specifically, is highly competitive. The increasingly
competitive environment is a result primarily of changes in regulation, changes
in technology and product delivery systems, and the accelerating pace of
consolidation among financial services providers.

The Bank's business is concentrated in San Luis Obispo County. In order to
compete with other financial institutions in its service area, the Bank relies
principally upon local advertising programs; direct personal contact by
officers, directors, employees, and shareholders; and specialized services such
as courier pick-up and delivery of non-cash banking items. The Bank emphasizes
to its customers the advantages of dealing with a locally owned and community
oriented institution. The Bank also seeks to provide special services and
programs for individuals in its primary service area who are employed in the
agricultural, professional and business fields, such as loans for equipment,
furniture, tools of the trade or expansion of practices or businesses. Larger
banks may have a competitive advantage because of higher lending limits and
major advertising and marketing campaigns. They also perform services, such as
trust services, international banking, discount brokerage and insurance
services, that the Bank is not authorized or prepared to offer currently. The
Bank has made arrangements with its correspondent banks and with others to
provide such services for its customers. For borrowers requiring loans in excess
of the Bank's legal lending limits, the Bank has offered, and intends to offer
in the future, such loans on a participating basis with its correspondent banks
and with other independent banks, retaining the portion of such loans which is
within its lending limits. As of December 31, 2000, the Bank's legal lending
limits to a single borrower and such borrower's related parties were $596,800 on
an unsecured basis and $895,200 on a fully secured basis, based on regulatory
capital plus reserves of $5,968,000.

Commercial banks compete with savings and loan associations, credit unions,
other financial institutions, securities brokerage firms, and other entities for
funds. For instance, yields on corporate and government debt securities and
other commercial paper affect the ability of commercial banks to attract and
hold deposits. Commercial banks also compete for loans with savings and loan
associations, credit unions, consumer finance companies, mortgage companies and
other lending institutions.





EFFECT OF GOVERNMENT POLICIES AND RECENT LEGISLATION

Banking is a business that depends on rate differentials. In general, the
difference between the interest rate paid by the Bank on its deposits and its
other borrowings and the interest rate received by the Bank on loans extended to
its customers and securities held in the Bank's portfolio comprise the major
portion of the Bank's earnings. These rates are highly sensitive to many factors


                                                                             5
<PAGE>


that are beyond the control of the Bank. Accordingly, the earnings and growth of
the Bank are subject to the influence of domestic and foreign economic
conditions, including inflation, recession and unemployment.

The commercial banking business is not only affected by general economic
conditions but is also influenced by the monetary and fiscal policies of the
federal government and the policies of regulatory agencies, particularly the
Federal Reserve Board. The Federal Reserve Board implements national monetary
policies (with objectives such as curbing inflation and combating recession) by
its open-market operations in United States Government securities, by adjusting
the required level of reserves for financial institutions subject to its reserve
requirements and by varying the discount rates applicable to borrowings by
depository institutions. The actions of the Federal Reserve Board in these areas
influence the growth of bank loans, investments and deposits and also affect
interest rates charged on loans and paid on deposits. The nature and impact of
any future changes in monetary policies cannot be predicted.

From time to time, legislation is enacted which has the effect of increasing the
cost of doing business, limiting or expanding permissible activities or
affecting the competitive balance between banks and other financial
institutions. Proposals to change the laws and regulations governing the
operations and taxation of banks, bank holding companies and other financial
institutions are frequently made in Congress, in the California legislature and
before various bank regulatory and other professional agencies. See "Financial
Services Modernization Act."

SUPERVISION AND REGULATION

         GENERAL

The Company and the Bank are extensively regulated under both federal and state
law. Set forth below is a summary description of certain laws that relate to the
regulation of the Company and the Bank. The description does not purport to be
complete and is qualified in its entirety by reference to the applicable laws
and regulations.

         THE COMPANY

The Company is a bank holding company within the meaning of the Bank Holding
Company Act of 1956, as amended (the "BHCA"), and is registered as such with,
and subject to the supervision of, the Federal Reserve Board. The Company is
required to file with the Federal Reserve Board quarterly and annual reports and
such additional information as the Federal Reserve Board may require pursuant to
the BHCA. The Federal Reserve Board may conduct examinations of bank holding
companies and their subsidiaries.

The Company is required to obtain the approval of the Federal Reserve Board
before it may acquire all or substantially all of the assets of any bank, or
ownership or control of the voting shares of any bank if, after giving effect to
such acquisition of shares, the Company would own or control more than 5% of the
voting shares of such bank. Prior approval of the Federal Reserve Board is also
required for the merger or consolidation of the Company and another bank holding
company.

The Company is prohibited by the BHCA, except in certain statutorily prescribed
instances, from acquiring direct or indirect ownership or control of more than
5% of the outstanding voting shares of any company that is not a bank or bank
holding company and from engaging, directly or indirectly, in activities other
than those of banking, managing or controlling banks or furnishing services to
its subsidiaries. However, the Company may, subject to the prior approval of the
Federal Reserve Board, engage in any, or acquire shares of companies engaged in,
activities that are deemed by the Federal Reserve Board to be so closely related
to banking or managing or controlling banks as to be a proper incident thereto.
See discussion under "Financial Modernization Act" below for additional
information.

The Federal Reserve Board may require that the Company terminate an activity or
terminate control of or liquidate or divest subsidiaries or affiliates when the
Federal Reserve Board determines that the activity or the control or the
subsidiary or affiliates constitutes a significant risk to the financial safety,
soundness or stability of any of its banking subsidiaries. The Federal Reserve
Board also has the authority to regulate provisions of certain bank holding
company debt, including authority to impose interest ceilings and reserve
requirements on such debt. Under certain circumstances, the Company must file
written notice and obtain approval from the Federal Reserve Board prior to
purchasing or redeeming its equity securities.

Under the Federal Reserve Board's regulations, a bank holding company is
required to serve as a source of financial and managerial strength to its
subsidiary banks and may not conduct its operations in an unsafe and unsound
manner. In addition, it is the Federal Reserve Board's policy that in serving as
a source of strength to its subsidiary banks, a bank holding company


                                                                          6
<PAGE>


should stand ready to use available resources to provide adequate capital
funds to its subsidiary banks during periods of financial stress or adversity
and should maintain the financial flexibility and capital-raising capacity to
obtain additional resources for assisting its subsidiary banks. A bank
holding company's failure to meet its obligations to serve as a source of
strength to its subsidiary banks will generally be considered by the Federal
Reserve Board to be an unsafe and unsound banking practice or a violation of
the Federal Reserve Board's regulations or both.

The Company is subject to the periodic reporting requirements of Section 15(d)
of the Securities Exchange Act of 1934, as amended, and files reports pursuant
to such Act with the Securities and Exchange Commission.

         THE BANK

The Bank is chartered under the laws of the United States and its deposits are
insured by the FDIC to the extent provided by law. The Bank is subject to the
supervision of, and is regularly examined by, the Office of the Comptroller of
Currency ("OCC"). Such supervision and regulation include comprehensive reviews
of all major aspects of the Bank's business and condition.

Various requirements and restrictions under the laws of the United States and of
California affect the operations of the Bank. Federal statutes relate to many
aspects of the Bank's operations, including reserves against deposits, interest
rates payable on deposits, loans, investments, mergers and acquisitions,
borrowings, dividends and locations of branch offices. Further, the Bank is
required to maintain certain levels of capital.

If, as a result of an examination of a bank, the OCC should determine that the
financial condition, capital resources, asset quality, earnings prospects,
management, liquidity, or other aspects of the Bank's operations are
unsatisfactory or that the Bank or its management is violating or has violated
any law or regulation, various remedies are available to such regulatory agency.
Such remedies include the power to enjoin "unsafe or unsound" practices, to
require affirmative action to correct any conditions resulting from any
violation or practice, to issue an administrative order that can be judicially
enforced, to direct an increase in capital, to restrict the growth of the Bank,
to assess civil monetary penalties, to remove officers and directors, and
ultimately to terminate the Bank's deposit insurance, which would result in a
revocation of the bank's charter.

         CAPITAL STANDARDS

The Federal Reserve Board and the OCC have adopted risk-based minimum capital
guidelines intended to provide a measure of capital that reflects the degree of
risk associated with a banking organization's operations for both transactions
reported on the balance sheet as assets and transactions, such as letters of
credit and recourse arrangements, which are recorded as off balance sheet items.
Under these guidelines, nominal dollar amounts of assets and credit equivalent
amounts of off balance sheet items are multiplied by one of several risk
adjustment percentages, which range from 0% for assets with low credit risk,
such as certain U.S. Treasury securities, to 100% for assets with relatively
high credit risk, such as business loans.

A banking organization's risk-based capital ratios are obtained by dividing its
qualifying capital by its total risk adjusted assets. The regulators measure
risk-adjusted assets, which includes off balance sheet items, against both total
qualifying capital (the sum of Tier 1 capital and limited amounts of Tier 2
capital) and Tier 1 capital. Tier 1 capital consists primarily of common stock,
retained earnings, non-cumulative perpetual preferred stock (cumulative
perpetual preferred stock for bank holding companies) and minority interests in
certain subsidiaries, less most intangible assets. Tier 2 capital may consist of
a limited amount of the allowance for possible loan and lease losses, cumulative
preferred stock, long term preferred stock, eligible term subordinated debt and
certain other instruments with some characteristics of equity. The inclusion of
elements of Tier 2 capital is subject to certain other requirements and
limitations of the federal banking agencies. The federal banking agencies
require a minimum ratio of qualifying total capital to risk-adjusted assets of
8% and a minimum ratio of Tier 1 capital to risk-adjusted assets of 4%.

In addition to the risked-based guidelines, federal banking regulators require
banking organizations to maintain a minimum amount of Tier 1 capital to total
assets, referred to as the leverage ratio. For a banking organization rated in
the highest of the five categories used by regulators to rate banking
organizations, the minimum leverage ratio of Tier 1 capital to total assets is
3%. For all banking organizations not rated in the highest category, the minimum
leverage ratio must be at least 4%. In addition to these uniform risk-based
capital guidelines and leverage ratios that apply across the industry, the
regulators have the discretion to set individual minimum capital requirements
for specific institutions at rates significantly above the minimum guidelines
and ratios. Future changes in regulations or practices could further reduce the
amount of capital recognized for


                                                                           7
<PAGE>


purposes of capital adequacy. Such a change could affect the ability of the
Bank to grow and could restrict the amount of profits, if any.

The following table presents the amounts of regulatory capital and the capital
ratios for the Bank and the Company, compared to its minimum regulatory capital
requirements as of December 31, 2000:

<TABLE>
<CAPTION>

                                           December 31, 2000

                                 Company         Bank        Minimum Capital
                                  Actual        Actual        Requirements
                                 -------        ------       ---------------
<S>                              <C>            <C>          <C>
  LEVERAGE RATIO                   9. 5%          8.4%              4%
  TIER 1 RISK-BASED RATIO         10. 8%         10.4%              4%
  TOTAL RISK-BASED RATIO          11. 8%         11.1%              8%

</TABLE>

Under applicable regulatory guidelines, the Bank was considered "Well
Capitalized" at December 31, 2000. Under existing regulations of the Federal
Reserve Board, the capital ratios of the bank holding company with total assets
of less than $150 million, such as the Company, are deemed to be the same as
those of the Bank.

         PROMPT CORRECTIVE ACTION AND OTHER ENFORCEMENT MECHANISMS

Federal banking agencies possess broad powers to take corrective and other
supervisory action to resolve the problems of insured depository institutions,
including but not limited to those institutions that fall below one or more
prescribed minimum capital ratios described above. An institution that, based
upon its capital levels, is classified as well capitalized, adequately
capitalized, or undercapitalized may be treated as though it were in the next
lower capital category if the appropriate federal banking agency, after notice
and opportunity for hearing, determines that an unsafe or unsound condition or
an unsafe or unsound practice warrants such treatment. At each successive lower
capital category, an insured depository institution is subject to more
restrictions. The federal banking agencies, however, may not treat a
significantly undercapitalized institution as critically undercapitalized unless
its capital ratio actually warrants such treatment.

In addition to measures taken under the prompt corrective action provisions,
commercial banking organizations may be subject to potential enforcement actions
by the federal regulators for unsafe or unsound practices in conducting their
businesses or for violations of any law, rule, regulation, or any condition
imposed in writing by the agency or any written agreement with the agency.

         SAFETY AND SOUNDNESS STANDARDS

The federal banking agencies have adopted guidelines designed to assist the
federal banking agencies in identifying and addressing potential safety and
soundness concerns before capital becomes impaired. The guidelines set forth
operational and managerial standards relating to internal controls, information
systems and internal audit systems; loan documentation; credit underwriting;
asset growth; earnings; and compensation, fees and benefits.

In addition, the federal banking agencies have also adopted safety and soundness
guidelines with respect to asset quality and earnings standards. These
guidelines provide six standards for establishing and maintaining a system to
identify problem assets and prevent those assets from deteriorating. Under these
standards, an insured depository institution should:

     -    conduct periodic asset-quality reviews to identify problem assets;

     -    estimate the inherent losses in problem assets and establish reserves
          that are sufficient to absorb estimated losses;

     -    compare problem asset totals to capital;

     -    take appropriate corrective action to resolve problem assets;

     -    consider the size and potential risks of material asset
          concentrations; and

     -    provide periodic asset quality reports with adequate information for
          management and the board of directors to assess the level of asset
          risk.


                                                                          8
<PAGE>


These guidelines also set forth standards for evaluating and monitoring earnings
and for ensuring that earnings are sufficient for the maintenance of adequate
capital and reserves.

         PREMIUMS FOR DEPOSIT INSURANCE

Through the Bank Insurance Fund ("BIF"), the FDIC insures the deposits of the
Bank up to prescribed limits for each depositor. The amount of FDIC assessments
paid by each BIF member institution is based on its relative risk of default as
measured by regulatory capital ratios and other factors. Specifically, the
assessment rate is based on the institution's capitalization risk category and
supervisory subgroup category. An institution's capitalization risk category is
based on the FDIC's determination of whether the institution is well
capitalized, adequately capitalized or less than adequately capitalized. An
institution's supervisory subgroup category is based on the FDIC's assessment of
the financial condition of the institution and the probability that FDIC
intervention or other corrective action will be required.

The assessment rate currently ranges from zero to 27 cents per $100 of domestic
deposits. The FDIC may increase or decrease the assessment rate schedule on a
semi-annual basis. An increase in the assessment rate could have a material
adverse effect on the Company's earnings, depending on the amount of the
increase. The FDIC is authorized to terminate a depository institution's deposit
insurance upon a finding by the FDIC that the institution's financial condition
is unsafe or unsound or that the institution has engaged in unsafe or unsound
practices or has violated any applicable rule, regulation, order or condition
enacted or imposed by the institution's regulatory agency.

All FDIC-insured depository institutions must pay an annual assessment to
provide funds for the payment of interest on bonds issued by the Financing
Corporation, a federal corporation chartered under the authority of the Federal
Housing Finance Board. The bonds, commonly referred to as FICO bonds, were
issued to capitalize the Federal Savings and Loan Insurance Corporation. The
FDIC established the FICO assessment rates effective for the third quarter of
2000 at approximately $.021 per $100 annually for assessable deposits. The FICO
assessments are adjusted quarterly to reflect changes in the assessment bases of
the FDIC's insurance funds and do not vary depending on a depository
institution's capitalization or supervisory evaluations.

         FINANCIAL SERVICES MODERNIZATION LEGISLATION

GENERAL. On November 12, 1999, President Clinton signed into law the Gramm-
Leach-Bliley Act of 1999 (the "Financial Services Modernization Act"). The
Financial Services Modernization Act repeals the two affiliation provisions of
the Glass-Steagall Act: Section 20, which restricted the affiliation of Federal
Reserve Member Banks with firms "engaged principally" in specified securities
activities; and Section 32, which restricts officer, director, or employee
interlocks between a member bank and any company or person "primarily engaged"
in specified securities activities. In addition, the Financial Services
Modernization Act also contains provisions that expressly preempt any state law
restricting the establishment of financial affiliations, primarily related to
insurance. The general effect of the law is to establish a comprehensive
framework to permit affiliations among commercial banks, insurance companies,
securities firms, and other financial service providers by revising and
expanding the BHCA framework to permit a holding company system to engage in a
full range of financial activities through a new entity known as a Financial
Holding Company.

The law also:

     -    broadens the activities that may be conducted by national banks,
          banking subsidiaries of bank holding companies, and their financial
          subsidiaries;

     -    provides an enhanced framework for protecting the privacy of consumer
          information;

     -    adopts a number of provisions related to the capitalization,
          membership, corporate governance, and other measures designed to
          modernize the Federal Home Loan Bank system;

     -    modifies the laws governing the implementation of the Community
          Reinvestment Act; and

     -    addresses a variety of other legal and regulatory issues affecting
          both day-to-day operations and long-term activities of financial
          institutions.

The Company and the Bank do not believe that the Financial Services
Modernization Act will have a material adverse effect on their operations in the
near-term. However, to the extent that it permits banks, securities firms, and
insurance companies to affiliate, the financial services industry may experience
further consolidation. The Financial Services Modernization Act is intended to
grant to community banks certain powers as a matter of right that larger
institutions have accumulated on an ad hoc


                                                                         9
<PAGE>


basis. Nevertheless, this act may have the result of increasing the amount of
competition that the Company and the Bank face from larger institutions and
other types of companies offering financial products, many of which may have
substantially more financial resources than the Company and the Bank.

FINANCIAL HOLDING COMPANIES. Bank holding companies that elect to become a
financial holding company may affiliate with securities firms and insurance
companies and engage in other activities that are financial in nature or are
incidental or complementary to activities that are financial in nature. The
Company has not yet elected to become a financial holding company.

"Financial in nature" activities include: securities underwriting; securities
dealing and market making; sponsoring mutual funds and investment companies;
insurance underwriting and agency; merchant banking; and activities that the
Federal Reserve Board, in consultation with the Secretary of the Treasury,
determines from time to time to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto.

A bank holding company must meet three requirements before becoming a financial
holding company: all of the bank holding company's depository institution
subsidiaries must be (1) well capitalized, (2) well managed, and (3) in
compliance with the Community Reinvestment Act (except in limited
circumstances). In addition, the bank holding company must file with the Federal
Reserve Board a declaration of its election to become a financial holding
company, including a certification that its depository institution subsidiaries
meet the foregoing criteria.

Failure to comply with the financial holding company requirements could lead to
divestiture of subsidiary banks or require all activities of the company to
conform to those permissible for a bank holding company. No Federal Reserve
Board approval is required for a financial holding company to acquire a company
(other than a bank holding company, bank or savings association) engaged in
activities that are financial in nature or incidental to activities that are
financial in nature, as determined by the Federal Reserve Board. In December,
2000 the Federal Reserve Board approved an interim rule defining the three
categories of activities financial in nature or incidental to a financial
activity:

     -    lending, exchanging, transferring, investing for others, or
          safeguarding financial assets other than money or securities;

     -    providing any device or other instrumentality for transferring money
          or other financial assets; or

     -    arranging, effecting or facilitating financial transactions for the
          account of third parties.

The interim rule also establishes a mechanism through which financial holding
companies or other interested parties may request that the Federal Reserve Board
find that a particular activity falls within one of these three categories. For
example, the Federal Reserve Board has recently issued a proposed rule that
would grant financial holding companies the right to act as real estate brokers
and managers.

A bank holding company that is not also a financial holding company is limited
to engaging in banking and such other activities as determined by the Federal
Reserve Board to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto.

PRIVACY. Under the Financial Services Modernization Act, federal banking
regulators are required to adopt rules that will limit the ability of banks and
other financial institutions to disclose non-public information about consumers
to nonaffiliated third parties. These limitations will require disclosure of
privacy policies to consumers and, in some circumstances, will allow consumers
to prevent disclosure of certain personal information to a nonaffiliated third
party. Federal banking regulators issued final rules on May 10, 2000. Pursuant
to the rules, financial institutions must provide:

     -    initial notices to customers about their privacy policies, describing
          the conditions under which they may disclose nonpublic personal
          information to nonaffiliated third parties and affiliates;

     -    annual notices of their privacy policies to current customers; and

     -    a reasonable method for customers to "opt out" of disclosures to
          nonaffiliated third parties.

The rules were effective November 13, 2000, but compliance is optional until
July 1, 2001. These privacy provisions will affect how consumer information is
transmitted through diversified financial companies and conveyed to outside
vendors. It is not possible at this time to assess the impact of the privacy
provisions on the Company's financial condition or results of operations.


                                                                         10
<PAGE>

CONSUMER PROTECTION RULES--SALE OF INSURANCE. In December 2000, pursuant to
the requirements of the Financial Services Modernization Act, the federal
bank and thrift regulatory agencies adopted consumer protection rules for the
sale of insurance products by depository institutions. The rule is effective
on April 1, 2001 and applies to any depository institution or any person
selling, soliciting, advertising, or offering insurance products or annuities
to a consumer at an office of the institution or on behalf of the
institution. The regulation requires oral and written disclosure, before the
completion of the sale of an insurance product or annuity, that such product:

     -    is not a deposit or other obligation of, or guaranteed by, the
          depository institution or its affiliate;

     -    is not insured by the FDIC or any other agency of the United States,
          the depository institution or its affiliates; and

     -    has certain risks of investment, including the possible loss of value.

The depository institution may not condition an extension of credit on the
consumer's purchase of an insurance product or annuity from the depository
institution or from any of its affiliates, or on the consumer's agreement not
to obtain, or a prohibition on the consumer from obtaining, an insurance
product or annuity from an unaffiliated entity. Furthermore, to the extent
practicable, a depository institution must keep insurance and annuity sales
activities physically segregated from the areas where retail deposits are
routinely accepted from the general public. Finally, the rule addresses cross
marketing and referral fees.

SAFEGUARDING CONFIDENTIAL CUSTOMER INFORMATION. In January 2000, the banking
agencies adopted guidelines requiring financial institutions to establish an
information security program to:

     -    identify and assess the risks that may threaten customer information;

     -    develop a written plan containing policies and procedures to manage
          and control these risks;

     -    implement and test the plan; and

     -    adjust the plan on a continuing basis to account for changes in
          technology, the sensitivity of customer information and internal or
          external threats to information security.

Each institution may implement a security program appropriate to its size and
complexity and the nature and scope of its operations. The guidelines are
effective July 1, 2001.

         COMMUNITY REINVESTMENT ACT

The Bank is subject to certain fair lending requirements and reporting
obligations involving home mortgage lending operations and Community
Reinvestment Act ("CRA") activities. The CRA generally requires the federal
banking agencies to evaluate the record of a financial institution in meeting
the credit needs of their local communities, including low and moderate
income neighborhoods. In addition to substantial penalties and corrective
measures that may be required for a violation of certain fair lending laws,
the federal banking agencies may take compliance with such laws and CRA into
account when regulating and supervising other activities. In connection with
its assessment of CRA performance, the appropriate bank regulatory agency
assigns a rating of "outstanding." "satisfactory," "needs to improve" or
"substantial noncompliance." At its last examination by the OCC, the Bank
received a CRA rating of "Satisfactory."

FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

In addition to the other information contained in this Report, the following
risks may affect the Company. If any of these risks occur, the Company's
business, financial condition or operating results could be adversely
affected.

DEPENDENCE ON REAL ESTATE. A significant portion of the loan portfolio of the
Bank is dependent on real estate. At December 31, 2000, real estate served as
the principal source of collateral with respect to approximately 53.2 percent
of the Bank's loan portfolio. A decline in current economic conditions or
rising interest rates could have an adverse effect on the demand for new
loans, the ability of borrowers to repay outstanding loans, the value of real
estate and other collateral securing loans and the value of real estate owned
by the Bank, as well as the Company's financial condition and results of
operations in general and the market value of the Company's common stock.
Acts of nature, including earthquakes and floods, which may cause uninsured
damage and other loss of value to real estate that secures these loans, may
also negatively impact the Company's financial condition.

                                       11


<PAGE>


INTEREST RATE CHANGES. The earnings of the Company and the Bank are
substantially affected by changes in prevailing interest rates. Changes in
interest rates affect the demand for new loans, the credit profile of
existing loans, the rates received on loans and securities and the rates the
Bank must pay on deposits and borrowings. The difference between the rates
the Bank receives on loans and securities and the rates it must pay on
deposits and borrowings is known as the interest rate spread. Given the
Bank's current volume and mix of interest-bearing liabilities and
interest-earning assets, the Bank's interest rate spread can be expected to
increase when market interest rates are rising, and to decline when market
interest rates are declining. The Bank's analysis indicates that the
decreases in the target federal funds rate announced by the Federal Reserve
Board in January will likely result in a drop of 10 to 15 basis points in the
Bank's interest rate spread. If interest rates continue to decline,
competitive pressure and other factors may prevent the Bank from making
proportionate decreases in the interest rates its pays on deposits,
especially MMDA and NOW accounts, resulting in a larger decrease in the
interest rate spread. Although the Bank believes its current level of
interest rate sensitivity is reasonable, significant fluctuations in interest
rates may have an adverse impact on the Company's and the Bank's business,
financial condition and results of operations.

COMPETITION. Competition may adversely affect the Bank's performance. The
financial services business in the Bank's market area is highly competitive,
and becoming more so due to changes in regulation, technological advances and
the accelerating pace of consolidation among financial service providers. The
Bank faces competition both in attracting deposits and in making loans. It
competes for loans principally through the interest rates and loan fees it
charges and the efficiency and quality of the services it provides.
Increasing levels of competition in the banking and financial services
businesses may reduce the Bank's market share or cause the prices it charges
for its services to fall. The Company's results may differ in future periods
depending on the nature or level of competition.

REGULATION. The Company and the Bank are subject to government regulation
that could limit or restrict their activities, adversely affecting
operations. The financial services industry is heavily regulated. Federal and
state regulation is designed to protect the deposits of consumers, not to
benefit shareholders. The regulations impose significant limitations on
operations, and may be changed at any time to impose significant new
limitations, possibly causing the Company's results to vary significantly
from past results. Government policy and regulation, particularly as
implemented through the Federal Reserve Board, significantly affects credit
conditions for the Bank.

BORROWERS' FAILURE TO PERFORM. A significant number of the Bank's borrowers
and guarantors may fail to perform their obligations as required by the terms
of their loans, resulting in losses for the Company. The Bank has adopted
underwriting and credit policies, and loan monitoring procedures, including
the establishment and monitoring of allowances for credit losses. Management
believes these provisions are reasonable and adequate, and should keep credit
losses within expected limits by assessing the likelihood of nonperformance,
tracking loan performance and diversifying the credit portfolio. However,
these policies and procedures may not be adequate to prevent unexpected
losses that could materially and adversely affect the Company's results of
operations.

ITEM 2.    DESCRIPTION OF PROPERTIES

The Bank and the Company occupy a property owned by the Bank at 581 Higuera
Street, San Luis Obispo, California 93401, where the Bank's main office is
located. The property, consisting of approximately 21,850 sq. ft., was
purchased from an unaffiliated third party for $976,449. The Bank purchased
and installed the modular facility being utilized as the banking facility for
a total of $250,846, plus improvements of $466,209. On August 8, 1998, the
Bank opened a loan production office at 1226 Park Street, Paso Robles,
California 93446. This office became a full service branch in April, 1999.
The Bank leases approximately 3,000 sq. ft. at $1,925 per month. The term of
the lease is five years, and the Bank has an option to renew the lease for
two additional five-year periods. On April 16, 2000 the Bank opened an
administrative office at 560 Higuera Street, San Luis Obispo, California
93401. The Bank leases approximately 1,125 sq. ft. at $1,406 per month. The
term of the lease is two years. On December 15, 2000, the Bank opened a loan
production office at 154 West Branch Street, Arroyo Grande, California 93420.
The Bank leases approximately 2,000 sq. ft. at $2,392 per month, plus common
area operating expenses. The term of the lease is five years, and the Bank
has an option to renew the lease for two additional sixty-month periods.

For the years ended December 31, 1999 and 2000, the total occupancy cost was
$118,550 and $132,880, respectively. In the opinion of management, the
premises are adequate for the Company's purposes and the Company has
sufficient insurance to cover its interest in the premises.


                                       12


<PAGE>

ITEM 3.           LEGAL PROCEEDINGS

The Company and the Bank are, from time to time, subject to various pending
and threatened legal actions which arise out of the normal course of its
business. Neither the Company nor the Bank is a party to any pending legal or
administrative proceedings (other than ordinary routine litigation incidental
to the Company's or the Bank's business) and no such proceedings are known to
be contemplated.

There are no material proceedings adverse to the Company or the Bank to which
any director, officer, affiliate of the Company or 5 % shareholder of the
Company or the Bank, or any associate of any such director, officer,
affiliate or 5% shareholder of the Company or Bank is a party, and none of
the above persons has a material interest adverse to the Company or the Bank.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On December 12, 2000, the Bank submitted to its shareholders, at a special
meeting called for the purpose, a proposal to establish the Company as a
holding company for the Bank. 474,143 votes shares were voted for the
proposal, and 750 against, with none abstaining. No other matters were
submitted to a vote of security holders during the fourth quarter of 2000.

                                     PART II

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

The Company's common stock has traded infrequently in the over-the-counter
market under the symbol "MISS." The Company's Common Stock is not listed on
any exchange or market. However, Pacific Crest Securities, Sutro & Co. and
Wedbush Morgan Securities make a market in the Company's Common Stock.
Certain information concerning the Common Stock is reported on the NASDAQ
electronic bulletin board.

The information in the following table indicates the high and low bid prices
of the Company's Common Stock for each quarterly period during the last two
years based upon information provided by Wedbush Morgan Securities. These
prices do not include retail mark-ups, mark-downs or commission. All data for
the periods before December 15, 2000, the date the Company became a holding
company for the Bank, reflects trading in stock of the Bank rather than of
the Company.

<TABLE>
<CAPTION>
        QUARTER ENDED                 BID PRICES
        -------------           ---------------------
        1999                       LOW           HIGH
        ----                    ------         -------
        <S>                     <C>            <C>
        March 31                $ 7.00         $ 9.00
        June 30                   8.50           9.00
        September 30             8.125           9.00
        December 31              8.125           9.50

        2000
        ----
        March 31                $ 8.25         $ 8.50
        June 30                   7.75           8.50
        September 30              7.00           8.25
        December 31               7.50           8.00
</TABLE>

HOLDERS

As of March 1, 2001, there were approximately 385 holders of the Company's
Common Stock.

DIVIDENDS

The Company, and the Bank before the establishment of the Company, have
followed a policy of retaining earnings to support asset growth. No cash
dividends have been paid. Whether or not stock or cash dividends will be paid
in the future by the

                                       13


<PAGE>


Company will be determined by the Board of Directors after consideration of
various factors. The Company's profitability and regulatory capital ratios in
addition to other financial conditions will be key factors considered by the
Board of Directors in making such determinations regarding the payment of
dividends by the Company. Additionally, certain provisions of the preferred
stock restrict the ability of the Company to pay cash dividends unless the
required dividends on the preferred stock are also paid.

The Company is a legal entity separate and distinct from the Bank. The
Company's shareholders are entitled to receive dividends when and as declared
by its Board of Directors, out of funds legally available therefore, subject
to the restrictions set forth in the in the California General Corporation
Law (the "Corporation Law"). The Corporation Law provides that a corporation
may make a distribution to its shareholders if the corporation's retained
earnings equal at least the amount of the proposed distribution. The
Corporation Law also provides that, in the event that sufficient retained
earnings are not available for the proposed distribution, a corporation may
nevertheless make a distribution to its shareholders if it meets two
conditions, which generally stated are as follows: (i) the corporation's
assets equal at least 1-1/4 times its liabilities, and (ii) the corporation's
current assets equal at least its current liabilities or, if the average of
the corporation's earnings before taxes on income and before interest
expenses for the two preceding fiscal years was less than the average of the
corporation's interest expenses for such fiscal years, then the corporation's
current assets must equal at least 1-1/4 times its current liabilities.

The availability of operating funds for the Company and the ability of the
Company to pay a cash dividend depends largely on the Bank's ability to pay a
cash dividend to the Company. The payment of cash dividends by the Bank is
subject to restrictions set forth in the National Bank Act. In general,
dividends may not be paid from any of the Bank's capital. Dividends must be
paid out of available net profits, after deduction of all current operating
expenses, actual losses, accrued dividends on preferred stock, if any, and
all federal and state taxes. Additionally, a national bank is prohibited from
declaring a dividend on its shares of common stock until its surplus fund
equals its common capital, or, if its surplus fund does not equal its common
capital, until at least one-tenth of such bank's net profits, for the
preceding half year in the case of quarterly or semi-annual dividends, or the
preceding two half-years in the case of an annual dividend, are transferred
to its surplus fund each time dividends are declared. The approval of the OCC
is required if the total of all dividends declared by a national bank in any
calendar year exceeds the total of its net profits for that year combined
with its retained net profits of the two preceding years, less any required
transfers to surplus or a fund for the retirement of any preferred stock.
Under these provisions and considering minimum regulatory capital
requirements, the bank was not eligible to pay dividends at December 31,
2000. Furthermore, the OCC also has authority to prohibit the payment of
dividends by a national bank when it determines such payment to be an unsafe
and unsound banking practice.

Additionally, bank regulatory agencies have authority to prohibit banks from
engaging in activities that, in their respective opinions, constitute unsafe
and unsound practices in conducting its business. It is possible, depending
upon the financial condition of the bank in question and other factors, that
the bank regulatory agencies could assert that the payment of dividends or
other payments might, under some circumstances, be an unsafe or unsound
practice. Further, the bank regulatory agencies have established guidelines
with respect to the maintenance of appropriate levels of capital by banks or
bank holding companies under their jurisdiction. Compliance with the
standards set forth in such guidelines and the restrictions that are or may
be imposed under the prompt corrective action provisions of federal law could
limit the amount of dividends which the Bank may pay.

ISSUANCE OF PREFERRED STOCK

On December 29, 2000, the Company issued 100,000 shares of preferred stock to
the Community Development Financial Institutions Fund, a division of the U.S.
Treasury Department ("CDFI"), for $500,000. Such shares of preferred stock were
designated as "Series A Non-Voting Convertible Redeemable Preferred Stock" and
have identical rights and privileges in every respect to Common Stock except
that they are non-voting. The dividend rights attributable to the holders of
"Non-Voting Convertible Redeemable Preferred Stock" are proportioned to those of
the holders of the Common Stock based upon two for one conversion ratio set
forth below; that is, the Non-Voting Convertible Redeemable Preferred Stock
participates on a per share basis in any dividend declared on Common Stock at
the rate of one-half of the per share common dividend, but are not entitled to
any fixed rate of return (zero percent cumulative). This Non-Voting Convertible
Redeemable Preferred Stock may be converted into Common Stock of the Company on
a two-for-one exchange (and 50,000 shares if Common Stock shall be set aside and
reserved by the Company for such purpose) at any time upon the request of a
holder of such Non-Voting Convertible Redeemable Preferred Stock upon or after
the transfer of Non-Voting Convertible Redeemable Preferred Stock by the initial
holder thereof. In the event the Company is liquidated, for any reason, the
holders of Non-Voting Convertible Redeemable Preferred Stock shall be entitled
to a liquidation preference of Five Dollars ($5.00) per share before holders of
Common Stock receive any distribution and after the holders of Common Stock
receive Ten Dollars ($10.00) per share, any further distributions on Non-Voting
Convertible Redeemable Preferred Stock and

                                       14


<PAGE>


Common Stock shall be at the ratio of One Dollar ($1.00) per share on the
Non-Voting Convertible Redeemable Preferred Stock to Two Dollars ($2.00) per
share for Common Stock. If the Common Stock is subdivided, combined or
reclassified, the Non-Voting Convertible Redeemable Preferred Stock shall be
subdivided, combined or reclassified on the same basis. The holders of the
Non-Voting Convertible Redeemable Preferred Stock shall have no right to vote
any such shares except as may be required by applicable law.

The Non-Voting Convertible Redeemable Preferred Stock shall be automatically
redeemable, in whole or in part, at any time upon the request if the holder
of such Non-Voting Convertible Redeemable Preferred Stock, in cash at the
price of Five Dollars ($5.00) per share, without further action on the part
of the Company, upon and after a finding by the CDFI or its successor that
the Company is in default under any Community Development Financial
Institutions Program Assistance Agreement for Technical Assistance Grants to
and Equity Investments in Regulated Institutions, or any successor agreement,
to which the Company is a party or by which it is bound.

The $500,000 in proceeds from the CDFI investments was included in the
audited financial statement of the Bank for the year-ended December 31, 1999
because the CDFI grant approval had occurred during such year. When the
proceeds from the sale of Non-Voting Convertible Redeemable Preferred Stock
were received, $401,675 was invested as a capital contribution to the Bank
with the remaining $98,325 used for expenses related to the transaction.

On December 29 2000, the Company issued 29,500 shares of Common Stock and
20,500 shares of preferred stock to National Community Investment Fund
(NCIF), a private sector community development investment trust for the
distribution of community development funds at $10.00 per share for an
aggregate of $500,000. Such shares of preferred stock were designated as
"Series B Non-Voting Preferred Stock" and have rights and privileges similar
to Common Stock except that they are non-voting. The dividend rights
attributable to the holders of the Series B Non-Voting Preferred Stock are
proportioned to those of the holders of the Common Stock; that is, the Series
B Stock participates on a per share basis in any dividend declared on Common
Stock, but such Stock is not entitled to any fixed rate of return (zero
percent cumulative). The Series B Non-Voting Preferred Stock is not
convertible or redeemable. If the Common Stock is subdivided, combined or
reclassified, the Series B Non-Voting Preferred Stock shall be subdivided,
combined or reclassified on the same basis.

In the event the Company is liquidated, for any reason, the holders of Series
B Non-Voting Preferred Stock shall be entitled to a liquidation preference of
Ten Dollars ($10.00) per share before holders of Common Stock receive any
distribution but such liquidation preference is junior in right of payment to
the liquidation preference for the Series A Non-Voting Convertible Redeemable
Preferred Stock discussed above. Additionally, in the event of a so-called
"change in control event" (including certain mergers, sales of assets or
tender offers), holders of the Series B Non-Voting Preferred Stock shall be
entitled to receive a payment in the same form of consideration and in the
same amount as the per share price received, or deemed to be received, by the
holders of the common stock of the Company in or as a result of the "change
in control event."

When the proceeds from the sale of Series B Non-Voting Preferred Stock were
received, $475,000 was invested as a capital contribution to the Bank with
the remaining $25,000 used for expenses related to the transaction.

The sales of the Non-Voting Convertible Redeemable Preferred Stock and the
Series B Non-Voting Preferred Stock were made in reliance on the exemption
provided in Section 4(2) of the Securities Act of 1933.

The Company and the Bank anticipate that they will continue during 2001 and
in subsequent years to seek investments from CDFI, NCIF and other
institutions which invest in community development financial institutions in
order to support the capital for community development investment purposes.
Such investment may be in the form of common and/or preferred stock. The
Company is authorized to issue an additional 369,934 shares of Common Stock
and up to 879,500 shares of preferred stock without shareholder approval.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATION

The following is selected consolidated financial data with respect to the
Company's statement of financial position for the year ended December 31, 2000
and its statement of income for the year ended December 31, 2000. Bank
statements for the

                                       15


<PAGE>


year ended December 31, 1999 are included on a comparative basis. The
information presented has been derived from the audited consolidated
financial statements included in Item 7 of this Form 10-KSB. This information
should be read in conjunction with such consolidated financial statements and
the notes thereto. The summary consolidated financial data with respect to
the year ended December 31, 1998 for the Bank has been derived from the
audited financial statements of the Company, which are not presented herein.

                                       16


<PAGE>

<TABLE>
<CAPTION>
                                                          At or for the year ended December 31,
                                                          -------------------------------------
                  (Dollars in thousands)                  2000           1999            1998
                                                        --------       --------          ------
<S>                                                     <C>            <C>             <C>
Summary of Operations
     Interest Income                                    $  4,433       $  2,458        $    911
     Interest Expense                                      2,169          1,064             380
                                                        --------       --------          ------
        Net Interest Income                                2,264          1,394             531
     Provision for Loan Losses                               393            155              72
                                                        --------       --------          ------
        Net Interest Income After Provision                1,871          1,239             459
     Noninterest Income                                      668            537             254
     Noninterest expense                                   2,307          1,804           1,524
                                                        --------       --------          ------
        Income Before Taxes                                  231            (29)           (811)
     Income Tax                                             (100)           (70)              -
                                                        --------       --------          ------
        Net Income                                      $    332       $     42        $   (811)
                                                        --------       --------          ------
                                                        --------       --------          ------
Per Share Data
     Net Income - Basic                                 $   0.51       $   0.07        $  (1.35)
     Net Income - Diluted                               $   0.51       $   0.07        $  (1.35)
     Actual Number of Shares Outstanding                 630,066        600,566         600,566
     Actual Weighted Average Number of Shares            650,826        614,245         600,566
Balance Sheet Data - At Period End
     Total Assets                                         62,929         47,825          22,961
     Total Loans                                          43,128         33,431          15,128
     Allowance for Loan Losses                               512            210              72
     Investment Securities                                13,805          5,228           2,000
     Total Deposits                                       54,171         40,411          18,454
     Total Shareholders' Equity                            5,724          4,771           4,435
Operating Ratios and Other Selected Data
     Return on Average Assets                               0.6%           0.1%           -5.4%
     Return on Average Equity                               6.8%           1.0%          -17.0%
     Operating Efficiency Ratio                            78.7%          93.5%          194.1%
     Net Interest Margin                                    4.6%           4.9%            4.4%
     Average Equity to Average Assets                       9.0%          13.1%           31.6%
Selected Asset Quality Ratios - At Period End
     Nonperforming Loans to Total Loans                     2.4%           0.0%            0.0%
     Nonperforming Assets to Total Assets                   1.6%           0.0%            0.0%
     ALL as a Percentage of Nonperforming Loans            50.2%             NA              NA
     ALL as a Percentage of Total Loans                     1.2%           0.6%            0.5%
</TABLE>

HISTORY

The Bank commenced operations in December 1997 as a full service community
bank. The Bank has also established a wholly-owned community development
corporation subsidiary and its affiliated not-for profit subsidiary. The
intent of the community development subsidiary and affiliate is to provide
financing for small businesses and low- to moderate-income area development.
To date, the operations of the community development companies were not
material as of December 31, 2000.

In its first three years of operations, the Bank has progressively increased
its business activities and expanded its operations in San Luis Obispo and
neighboring areas. A majority of the Bank's activities are considered
"community development" activities with a focus on providing a selection of
financial services to small businesses and business professionals. Beginning
in 2001, the Company and Bank anticipate more activity in various community
development programs for both grants and deposits under programs authorized
by the Department of Treasury's Community Development Institution Fund
(CDFI). The CDFI has certified the Bank and the Holding Company as a
"community development financial institution " (CDFI). The Bank and Company
are currently in the process of reviewing its options for both grants and
deposit programs.


                                  17
<PAGE>


The Company was organized in December 2000 to provide a vehicle to facilitate
raising capital from various organizations wishing to benefit from the Bank's
community development status. Capital activities under the umbrella of the
Company are expected to become an increasing resource for equity to provide
additional capital for Bank growth and expansion and for deposits by
organizations to get credit for community development activities.

BASIS OF PRESENTATION

The following discussion and analysis is intended to assist in an
understanding of the significant factors that influenced our consolidated
financial condition at December 31, 2000 as compared to the Bank alone in
December 31, 1999. The following discussion and analysis, which refers to the
company on a consolidated basis, should be read in conjunction with our
financial statements and corresponding notes.

ASSETS

During 2000, total assets increased $15.1 million from $47.8 million at
December 31, 1999 to $62.9 million at December 31, 2000. This increase in
assets was consistent with budgeted plans to continue to increase the volume
of business in the Bank's market area by continued business development in
existing markets, by upgrading the Loan Production Office in Paso Robles to a
full service branch in 1999 and by opening a Loan Production Office in Arroyo
Grande in 2000. The Bank is very active in the local communities that it
serves and officers and staff members participate in a wide-range of business
and community group activities as a means of both providing community support
and to expand its business development contacts.

The following table presents, for the periods indicated, the distribution of
average assets, liabilities and shareholders' equity, as well as the total
dollar amounts of interest income from average interest-earning assets and
the resultant yields. Also presented are the dollar amounts of interest
expense and average interest-bearing liabilities, expressed both in dollars
and in rates. Nonaccrual loans are included in the calculation of the average
balances of loans, and interest not accrued is excluded.


                                    18
<PAGE>

<TABLE>
<CAPTION>
                                    For the Year-ending December 31,       For the Year-ending December 31,
                                               2000                                    1999
                                    -----------------------------------------------------------------------
                                     Average        Income/      Average     Average     Income/     Average
                                     Balance        Expense     Yield or     Balance     Expense     Yield or
                                     (000's)        (000's)     Rate Paid    (000's)     (000's)     Rate Paid
                                     -------        -------     ---------    -------     --------    ---------
<S>                                  <C>            <C>         <C>          <C>         <C>         <C>
Interest-bearing deposits in
banks                                 $   324          $21     6.50%         $   586       $   33      5.70%
Investment securities                  10,777          758     7.00%           5,292          331      6.20%
Federal funds sold                      1,451           90     6.20%           1,223           62      5.10%
Loans                                  36,549        3,564     9.80%          21,414        2,032      9.50%
                                     --------       ------                  --------       ------
  Total Interest-earning assets       $49,101        4,433     9.00%         $28,516        2,458      8.60%
                                     ========                               ========
Interest-bearing liabilities:
   Deposits:
     Demand, interest-bearing           1,937           51     2.60%           1,391           33      2.40%
     Savings                           26,590        1,399     5.30%          14,235          659      4.60%
     Time                              11,915          678     5.70%           7,262          363      5.00%
     Borrowings                           623           40     6.40%             145            9      6.00%
                                     --------       ------                  --------      -------
       Total interest-bearing
liabilities                           $41,065        2,168     5.30%         $23,032        1,064      4.60%
                                     ========                               ========
Net interest income and yield:
Net Interest income                                 $2,265                                 $1,394
                                                   =======                                =======
Net yield on interest-earning
assets                                                         4.60%                                   4.90%

</TABLE>

NET INTEREST INCOME

The principal component of earnings is net interest income. Net interest
income is the difference between the interest earned on loans and investments
and the interest paid on deposits and other interest-bearing liabilities.

Net interest income is affected by changes in the amount and mix of our
interest-earning assets and interest-bearing liabilities, referred to as a
"volume change". It is also affected by changes in the yields we earn on
interest-earning assets and rates we pay on interest-bearing deposits and
other borrowed funds, referred to as a "rate change".

The following table sets forth changes in interest income and interest
expense for each major category of interest-earning assets and
interest-bearing liabilities, and the amount of change attributable to volume
and rate changes for the years indicated. Changes not solely attributable to
rate or volume have been allocated to volume and rate changes in proportion
to the relationship of the absolute dollar amounts of the changes in each.

                                                   Year ended December 31, 2000

                                                                          19
<PAGE>

<TABLE>
<CAPTION>

                                                               over
                                                   Year ended December 31, 1999
                                            --------------------------------------
                                                Increase (decrease) due to change
                                                      (Dollars in thousands)
                                            --------------------------------------
                                              Average
                                              Balance/       Average
                                               Volume          Rate         Total
                                            -----------    ------------   ---------
<S>                                         <C>            <C>            <C>
 Increase (Decrease) in:
 Interest Income:
    Interest-bearing deposits in banks         $(17)              $4          $(13)
    Investment securities                        381              46            427
    Federal funds sold                            13              15             28
    Loans                                      1,474              58          1,532
                                            -----------    ------------   ---------
          Total                                1,851             123          1,974

 Interest Expense:
    Demand, interest-bearing                      14               4             18
    Savings                                      639             101            740
    Time                                         259              56            315
    Borrowings                                    31               -             31
                                            -----------    ------------   ---------
          Total                                  943             161          1,104
                                            -----------    ------------   ---------
 Increase (Decrease) in
     Net Interest Income                        $908           $(38)           $870
                                            ===========    ============   =========
</TABLE>

Average balances of all categories in each period were included in the volume
computations.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO DECEMBER 31, 1999

For the year ended 2000, interest income was $4.4 million, an increase of
$1.7 million or 76% compared to $2.5 million for the year ended 1999. The
majority of the increase came from increased levels of earning assets as the
Bank expanded it lending base and business activities. Interest rates for
loans and investments also increased in 2000 as the Federal Reserve
incremented interest rates up as a hedge against perceptions of inflationary
pressures. Average loan yields increased by 30 basis points in 2000 while
average loans outstanding increased by approximately 70% by volume.

The increase in interest income was generated primarily by the significant
increase in the volume of average interest-earning assets, which were $49.1
million as of December 31, 2000 compared to $28.5 million as of December 31,
1999. The Bank also experienced a nominal increase in the overall yield on
these assets as the yields increased from 8.60% as of December 31, 1999 to
9.00% as of December 31, 2000.

Interest expense increased $1.1 million to $2.2 million compared to $1.1
million in 1999. The Bank has promoted and will continue to promote a
"special" savings account, which pays a rate of interest between the rate
paid for interest checking and certificates of deposits. This account is
similar to a money market account based on rates but is generally more stable
since it does not provide for withdrawal by check. This savings account
represented approximately 65% of total deposits in 2000 and 62% of total
deposits in 1999.
PROVISION FOR LOAN LOSSES


                                                                            20
<PAGE>

We make provisions for loan losses to bring the total allowance for loan
losses to a level deemed appropriate. We base our determination on such
factors as our historical experience, the volume and type of lending we
conduct, the amount of our nonperforming loans, regulatory policies, general
economic conditions, and other factors related to the collectibility of loans
in our portfolio. The amount we provide for loan losses is charged to
earnings. Our provision for loan losses was $392,500 for 2000 compared to
$155,000 for 1999.

The increase in the provision expense is consistent with the Bank's material
growth in the loan portfolio, which increased by $9.7 million or 29% in 2000
and with the Bank's overall assessment of the adequacy of the Allowance for
Loan Losses and asset quality as discussed later in this section.

NONINTEREST INCOME

Noninterest income for 2000 was $668,000, an increase of $130,000 when
compared to 1999. The Bank experienced a relatively large decrease in income
from the sale of loans in 2000 compared to 1999. The Bank recorded income
from the sale of loans of $268,000 in 2000 versus $414,000 in 1999. This
decrease was the result of premiums for the sale of SBA loans in 2000 and the
retention of some SBA loans in the Bank's portfolio rather than selling the
loans.

Fee and service charge income increased by $277,000 from $123,000 in 1999 to
$400,000 in 2000. This increase was the result of the overall growth in Bank
activity and from the planned increase in merchant card services as part of a
strategy to expand relationship banking products to small businesses. In
2000, the Bank increased its staffing commitment to merchant card sales and
service. Fee income from merchant card income increased from less than
$30,000 in 1999 to $163,000 in 2000.

NONINTEREST EXPENSE

Noninterest expense increased in 2000 by $504,000 from $1.8 million in 1999
to $2.3 million in 2000. This increase is consistent with the overall growth
pattern of the Bank, which included additional or upgraded facilities,
additional staff, and increases in data processing related costs.

Professional fees increased to $124,000 in 2000, which is up by $63,000 from
1999. The primary reason for this increase was legal expenses relating to the
formation of the Company - $25,000 and additional legal fees relating to the
filing for a grant from the Community Development Financial Institutions
Fund. The grant was awarded to the Bank in 1999, but additional legal work
was required in 2000 to allow the grant to be passed to the Bank as
contributed capital.

There was also a corresponding increase in expenses relating to previously
discussed merchant card processing program with the increased expenses in
2000 estimated at approximately $140,000.

INCOME TAXES

During 2000 we recorded a $100,000 tax benefit compared to the $70,000
benefit in 1999. The Company has a net operating loss carryforward of $1.3
million for federal income and California franchise tax purposes. See also
Note G to the consolidated financial statements for more information on
income taxes.

LIQUIDITY AND ASSET/LIABILITY MANAGEMENT

The objective of our asset/liability strategy is to manage liquidity and
interest rate risks to ensure the safety and soundness of the Bank and its
capital base, while maintaining adequate net interest margins and spreads to
provide an appropriate return to our shareholders.

The Bank's liquidity, which primarily represents our ability to meet
fluctuations in deposit levels and provide for customers' credit needs, is
managed through various funding strategies that reflect the maturity structures
of the sources of funds being gathered and the assets being funded. The Bank's
liquidity is further augmented by payments of principal and interest on loans
and increases in short-term liabilities such as demand deposits, short-term
certificates of deposit, and overnight purchases of federal funds. Short-term
investments, primarily federal funds sold and federal fund lines of credit
provided by our correspondent banks, are the primary means for providing
immediate liquidity. In order to meet the Bank's liquidity requirements, we
endeavor to maintain an appropriate liquidity ratio. The liquidity ratio is
equivalent to the sum of cash and deposits at other banks, interest-earning
deposits at other banks, federal funds sold, and Available for Sale investment


                                                                            21
<PAGE>

securities, divided by deposits. As of December 31, 2000 and 1999, the Bank's
liquidity ratio was 24.5% and 25.6%, respectively. The Bank has various
liquidity lines, which totaled $5.3 million as of December 31, 2000.

The Company's liquidity is provided from a line of credit from a
correspondent bank and from cash retained from stock offerings for expenses
and working capital. The Bank is not currently eligible to pay dividends and
this is considered in liquidity planning for the Company. At December 31,
2000, the Company had a $200,000 loan outstanding from Pacific Coast Bankers
Bank, for the purpose of effecting the Holding Company. The Company
anticipates establishing a line of credit in 2001.

The objectives of interest rate risk management are to control exposure of
net interest income to risks associated with interest rate movements in the
market, to achieve consistent growth in net interest income and to profit
from favorable market opportunities. Even with perfectly matched repricing of
assets and liabilities, risks remain in the form of prepayment of assets,
timing lags in adjusting certain assets and liabilities that have varying
sensitivities to market interest rates and basis risk.

The table below sets forth the interest rate sensitivity of our
interest-earning assets and interest-bearing liabilities as of December 31,
2000, using the interest rate sensitivity gap ratio. For purposes of the
following table, an asset or liability is considered rate-sensitive within a
specified period when it can be repriced or matures within its contractual
terms.

<TABLE>
<CAPTION>
                                                    Over 3
                                                  months to
                                   Up to         less than 1     1 Year to 5     Over 5
                                  3 months           Year           Years         Years          Total
                                 ---------------------------------------------------------------------
<S>                              <C>             <C>             <C>             <C>           <C>
Interest-Earning Assets:
   Investment Securities            $   4,867      $  1,036      $   3,562       $ 4,340       $13,805
   CDs with Other Banks                   198           100                                        298
   Federal Funds Sold                     295                                                      295
   Loans                               15,088         8,566          3,098        15,356        42,108
                                 ---------------------------------------------------------------------
                                    $  20,448      $  9,702      $   6,660       $19,696       $56,506
                                 =====================================================================
Interest-Bearing Liabilities:
   Money Market and NOW             $   2,916                                                  $ 2,916
   Savings                             27,451                                                   27,451
   Time Deposits                                      6,707          9,015           342        16,064
   Other Borrowings                     2,648                                                    2,648
                                 ---------------------------------------------------------------------
                                    $  33,015      $  6,707      $   9,015       $   342       $49,079
                                 =====================================================================
Interest Rate Sensitivity Gap       $(12,567)      $  2,995      $ (2,355)       $19,354       $ 7,427
Cumulative Interest Rate
   Sensitivity Gap                  $(12,567)      $(9,572)      $(11,927)       $ 7,427       $14,854
Cumulative Interest Rate
   Sensitivity Gap Ratio
   Based on Total Assets               -19.8%        -15.1%         -18.8%         11.7%         23.4%

</TABLE>

Gap analysis attempts to capture interest rate risk, which is attributable to
the mismatching of interest rate sensitive assets and liabilities. The actual
impact of interest rate movements on our net interest income may differ from
that implied by any gap measurement, depending on the direction and magnitude
of the interest rate movements, the repricing characteristics of various on
and off-balance sheet instruments, as well as competitive pressures. These
factors are not fully reflected in the foregoing gap analysis and, as a
result, the gap report may not provide a complete assessment of our interest
rate risk.

A generally negative cumulative gap value means that over the periods
indicated our liabilities will reprice slightly faster than our assets. This
means generally that, in a rising interest rate environment, net interest
income can be expected to decrease and that, in a declining interest rate
environment, net interest income can be expected to increase. In actual

                                                                        22
<PAGE>

practice, the Bank has generally delayed changing deposit rates when the
Federal Reserve changes the rates for federal funds and/or the discount
window. This strategy allows the Bank to continue to attract deposits during
periods of declining interest rates but negates some of the benefit from a
negative cumulative gap.

LENDING ACTIVITIES

We originate, purchase and sell loans, or participate interests in loans for
our own portfolio and for possible sale in the secondary market. Our loans
include home equity loans and lines, leases, commercial business,
agribusiness, commercial real estate loans, Small Business Administration
loans, and consumer loans.

The following table sets forth the composition of our loan portfolio by type
of loan at the periods indicated:

<TABLE>
<CAPTION>
                                                      2000                                 1999
                                          -----------------------------        -----------------------------
Loan Category                                Amount           Percent            Amount            Percent
-------------                             ------------      -----------        -----------       -----------
<S>                                       <C>                 <C>            <C>                    <C>
 Commercial, Financial, and
Agricultural                              $15,967,144          37.02%        $11,463,410            34.29%
 Real Estate                               19,655,465          45.58%         15,076,650            45.10%
 Construction                               3,278,013           7.60%          4,438,621            13.28%
 Installment Loans to Individuals           3,092,718           7.17%          2,227,097             6.66%
   Leases                                   1,124,627           2.61%            220,688             0.66%
 All other (including overdrafts)              10,352           0.02%              4,637             0.01%
                                          ------------      -----------       ----------           -------
   Total Loans, gross                      43,128,319         100.00%         33,431,103           100.00%
                                          ============      ===========       ==========           =======
Standby Letters of Credit                     220,000                            133,000
Undisbursed Loan Commitments               10,287,000                          5,538,000

</TABLE>

We make commercial loans to provide working capital, finance the purchase of
equipment and for other business purposes. These loans can be "short-term",
with maturities ranging from thirty days to one year, or "term loans" with
maturities normally ranging from one to twenty-five years. Short-term loans
are generally intended to finance current transactions and typically provide
for periodic principal payments, with interest payable monthly. Term loans
normally provide for floating interest rates, with monthly payments of both
principal and interest.

We make consumer loans to finance automobiles, various types of consumer
goods, and other personal purposes. Consumer loans generally provide for the
monthly payment of principal and interest. Most consumer loans are secured by
the personal property being purchased.

We make construction-financing loans primarily as interim loans made to
finance the construction of commercial and single family residential
property. These loans are typically short term. We do not make loans for
speculative purposes.

Residential real estate loans are generally limited to home equity loans and
home equity lines of credit. The Bank is not active in residential real
estate lending and refers loan requests for residential mortgages to other
lenders.

Our other real estate loans consist primarily of commercial and industrial
real estate loans. We make these loans based on the income generating
capacity of the property or the cash flow of the borrower. These loans are
secured by the property. We offer both fixed and variable rate loans with
maturities, which generally do not exceed 15 years, unless the loans are
Small Business Administration ("SBA") loans secured by real estate or other
commercial real estate loans easily sold in the secondary market.

We also make SBA-guaranteed loans, the guaranteed portion of which may be
resold in the secondary market. We have in the past sold the guaranteed
portion of our SBA loans in the secondary market but retained the servicing
rights for such SBA loans. At December 31, 2000 and 1999, the Bank serviced
approximately $10.0 million and $6.7 million, respectively, in SBA loans. We
categorize SBA loans as Commercial or Real Estate depending on the underlying
collateral.

                                                                           23
<PAGE>

Many of our loans have floating rates tied to our base rate or other market rate
indicator, the majority of which are adjusted at least quarterly. The following
table shows the maturity distribution of the fixed rate portion of the loan
portfolio and the repricing portion of the variable rate portion of the loan
portfolio outstanding as of December 31, 2000:

<TABLE>
<CAPTION>
                                                               After one
                                               Due within       Year but          After
Loan Category                                   One Year       Within five      Five Years          Total
-------------                                  ----------     ------------      ----------        ---------
<S>                                            <C>            <C>               <C>               <C>
 Commercial, Financial, and Agricultural       $5,659,649       $4,342,668      $ 5,964,827       $15,967,144
 Real Estate                                      638,688        2,637,732       16,379,045        19,655,465
 Construction                                   2,293,921          736,231          247,861         3,278,013
 Installment Loans to Individuals               1,228,822        1,110,005          753,891         3,092,718
  Leases                                                -        1,124,627                -         1,124,627
 All other (including overdrafts)                  10,352                -                -            10,352
                                               --------------------------------------------------------------
   Total loans, gross                          $9,831,432       $9,951,263      $23,345,624       $43,128,319
                                               ==============================================================

                                                             After one
                                              Due within      Year but           After
Interest Rate Sensitivity                      One Year      Within five       Five Years          Total
-------------------------                     ----------     ------------      ----------        ---------

 Predetermined rates                          $ 2,098,393      $12,372,418       $1,894,827       $16,365,638
 Floating or adjustable rates                  22,575,835                -        4,186,846        26,762,681
                                              ---------------------------------------------------------------
   Total loans, gross                         $24,674,228      $12,372,418       $6,081,673       $43,128,319
                                              ===============================================================
</TABLE>

ASSET QUALITY

The risk of nonpayment of loans is an inherent feature of the banking
business. That risk varies with the type and purpose of the loan, the
collateral which is utilized to secure payment, and ultimately, the credit
worthiness of the borrower. In order to minimize this credit risk, many loans
are approved and/or reviewed by the Loan Committee of the board of directors.
Our Loan Committee is comprised of directors and members of our senior
management.

We grade our loans based on a risk assessment with loans with minimum risk
graded as "pass" with other classifications of "Special Mention",
"Substandard", "Doubtful" and "Loss", depending on credit quality. As these
loans are identified in our review process, we add them to our internal watch
list and establish loss allowances for them as follows: Special Mention - 5%,
Substandard - 15%, Doubtful - 50%, and Loss - 100%. Additionally, our loans
are examined regularly by the OCC, and the Bank engages an outside firm to
perform periodic reviews of the loan portfolio and to test the adequacy of
the Allowance for Loan Losses.

We do not return a loan to accrual status until it is brought current with
respect to both principal and interest payments, the loan is performing to
current terms and conditions, the interest rate is commensurate with market
interest rates and future principal and interest payments are no longer in
doubt at which time a further review of loans is conducted.

The following table provides information with respect to the components of
our impaired or nonperforming assets at the dates indicated:


                                       24
<PAGE>

<TABLE>
<CAPTION>
                                                  2000           1999
                                               ----------     ----------
<S>                                            <C>            <C>
Nonperforming                                  $1,258,122     $        0
Related Allowance for Loan Losses              $  153,000     $        0
Average Impaired Loans                         $  468,000     $   19,000
Recognized Interest Income on Impair Loans           None           None

</TABLE>

Restructured loans are those loans with concessions in interest rates or
repayment terms to assist the borrower. Non-accrual loans are generally loans
which are past due 90 days or are loans that management believes the interest
upon which may not be collectible. At December 31, 2000 the Bank had
$1,258,122 in loans on non-accrual. These loans were SBA guaranteed loans,
with the exception of two. Of this amount, $750,965 represents the amount
guaranteed by the SBA. There were no loans on non-accrual as of December 31,
1999.

Other real estate owned is acquired in satisfaction of loan receivables
through foreclosure or other means. We record these properties on an
individual asset basis at the estimated fair value less selling expenses. The
Bank had no other real estate owned as of December 31, 2000 and 1999.

ALLOWANCE FOR LOAN LOSSES

The following table summarizes, for the periods indicated, changes in the
allowance for loan losses arising from loans charged off, recoveries on loans
previously charged off, additions to the allowance which have been charged to
operating expenses and certain ratios relating to the allowance for loan
losses:

<TABLE>
<CAPTION>
                                          For the Year Ended December 31,
                                          -------------------------------
                                               2000           1999
                                          ------------   ----------------
<S>                                          <C>           <C>
Allowance For Loan Losses:
Balance at Beginning of Period               $210,219      $ 72,000
Actual Charge-offs:
   Commercial                                  91,370
   Consumer                                                  16,781
   Real Estate                                      -             -
     Total Charge-Offs                         91,370        16,781
Less Recoveries:
   Commercial                                       -             -
   Consumer                                       258             -
   Real Estate                                      -             -
       Total Recoveries                           258             -

Net Loans Charged Off                          91,112        16,781
Provision for Loan Losses                     392,500       155,000
Balance at End of Period                     $511,607      $210,219
                                           ========================
Ratios:
Net Loans Charged Off to Average Loans           0.25%         0.05%
Allowance for Loan Losses to Total Loans         1.19%         0.63%

</TABLE>

We perform quarterly detailed reviews to identify the risks inherent in our
loan portfolio, assess the overall quality of our loan portfolio and to
determine the adequacy of our allowance for loan losses and the related
provision for loan losses to be charged to expense. Our systematic reviews
follow the methodology set forth by the OCC in its 1993 policy statement on
the allowance for loan losses.


                                       25
<PAGE>

(1)A key element of our methodology is our previously discussed credit
classification process. As of December 31, 2000, the Bank did not establish
special reserves for individual loans based on specific anticipation of loss
to the portfolio. Additionally, we consider the inherent risk present in the
"acceptable" portion of our loan portfolio taking into consideration
adjustments for trends, changes in economic conditions and other relevant
factors that may affect repayment of the loans. As of December 31, 2000, the
Bank allocated $30,000 as an additional portion of the Allowance for other
factors. The Bank does not have adequate loss history to include loss
migration factors in its evaluation of the Allowance; however, it will begin
to use a migration to help estimate trends beginning in 2001. Upon
completion, the written analysis is presented to the board of directors for
discussion, review and approval.

We consider our allowance for loan losses to be adequate to provide for
losses inherent in our loans. While we use available information to recognize
losses on loans and leases, future additions to our allowance may be
necessary based on changes in economic conditions. In addition, federal
regulators, as an integral part of their examination process, periodically
review our allowance for loan losses and may recommend additions based upon
their evaluation of the portfolio at the time of their examination.
Accordingly, there can be no assurance that our allowance for loan losses
will be adequate to cover future loan losses or that significant additions to
the allowance for loan losses will not be required in the future. Material
additions to the allowance for loan losses would decrease our earnings and
capital and would thereby reduce our ability to pay distributions among other
adverse consequences.

Our ratio of allowance for loan losses to total loans has significantly
increased from 0.63% of loans as of December 31, 1999 to 1.19% of total loans
as of December 31, 2000. This increase is consistent with a more mature loan
portfolio and current economic conditions. On a peer basis (source - Uniform
Bank Performance Ratio report prepared by FDIC), similar sized banks as of
December 31, 2000 maintained an average ratio of 1.25%.

As part of the analysis of the allowance, the Bank also assigns certain risk
factors to the entire loan portfolio in addition to the specific percentages
used for classified loans. The following table summarizes the allocation of
the allowance for loan losses by general loan types used internally by the
Bank as of December 31, 2000. This form of review was first implemented in
2000.

<TABLE>
<CAPTION>
                                        Loans            Percent        Factor         Reserve Amt.
                                    -----------        -----------     --------       --------------
<S>                                 <C>                <C>             <C>            <C>
Construction                         $3,292,349          7.82%          0.25%            $  8,231
Commercial Real Estate                8,480,946         20.13%          0.25%              21,202
Other 1st TDs                         9,316,855         22.12%          0.25%              23,292
Other RE Secured                      2,982,225          7.08%          0.25%               7,456
SBA (Unguaranteed)                    3,818,646          9.06%          2.50%              95,466
Government Guaranteed                 2,101,252          4.99%          0.00%                  -
Commercial                            6,641,416         15.76%          0.50%              33,207
Installment                           1,269,261          3.01%          0.50%               6,346
Agribusiness                          1,880,629          4.46%          0.50%               9,403
Other Secured                         1,640,773          3.89%          0.34%               5,579
Other Unsecured                         703,967          1.67%          1.10%               7,749
                                    -----------                                          --------
Total Loans                         $42,128,319                                          $217,931
                                    ===========                                          ========
Classified Loans                    $ 1,258,122 (1)                    25.6%             $264,000
                                    ===========                                          ========
Unallocated                                                                               $30,000
</TABLE>

INVESTMENT ACTIVITY

We are required under federal regulations to maintain a minimum amount of
liquid assets and are also permitted to purchase certain other investment
securities. We intend to hold securities in our investment portfolio to
balance the overall interest-rate sensitivities of its assets and liabilities.

----------------
(1) Of this amount, $750,965 represents the amount that is guaranteed by the
SBA.


                                       26
<PAGE>

Our investment decisions are primarily made by the Bank's Chief Financial
Officer within policies limits established by the board of directors. The CFO
reports investment activity on a monthly basis to the Board and on a
quarterly basis to the Investment Committee. Our investments can include
investment grade corporate securities, AAA-rated mortgage-backed securities,
federally insured certificates of deposit, U.S. treasury obligations and U.S.
Government agency-backed securities. Our goals are to obtain the highest
yield consistent with maintaining a stable overall asset and liability
position while limiting economic risks. In accordance with this policy we
actively manage our investment portfolio, the composition of which may shift
substantially over time. For further information concerning our investment
securities portfolio see Note B of the notes to our consolidated financial
statements included in Item 7.

The following table summarizes the amounts and distribution of our investment
securities held as of the dates indicated, and the weighted average yield as
of December 31, 2000 and 1999.

<TABLE>
<CAPTION>
December 31, 2000                   Available-for-Sale Securities                  Held-to-Maturity Securities
                                 ------------------------------------         --------------------------------------
                                                             Weighted                                      Weighted
                                  Amortized       Fair        Average          Amortized        Fair       Average
                                     Cost        Value         Yield             Cost           Value       Yield
                                 ----------    -----------   --------         ----------    ----------    ----------
<S>                              <C>           <C>           <C>              <C>           <C>           <C>
 US Government Agencies          $10,274,396   $10,343,681     6.89%          $  388,830    $  355,730       7.13%
 Commercial paper                                                              2,394,762     2,394,762       6.64%
 Other Investments                         -             -                       676,054       654,828       8.05%
                                 -----------   -----------                    ----------    ----------
   Total Investments             $10,274,396   $10,348,681     6.89%          $3,459,646    $3,405,320       6.97%
                                 ===========   ===========                    ==========    ==========

December 31, 1999                   Available-for-Sale Securities                   Held-to-Maturity Securities
                              -----------------------------------------   --------------------------------------
                                                             Weighted                                      Weighted
                                  Amortized       Fair        Average          Amortized        Fair       Average
                                     Cost        Value         Yield             Cost           Value       Yield
                                 -----------   -----------   --------         ----------    ----------    ----------
 US Government Agencies           $4,579,083    $4,439,044     6.50%            $364,136      $293,398       7.13%
 Other Investments                         -            -                        424,992       401,422       8.13%
                                 -----------   -----------                    ----------    ----------
   Total Investments              $4,579,083    $4,439,044     6.50%            $789,128      $694,820       7.67%

</TABLE>

DEPOSITS

Deposits are the primary source of funding for our lending and investing needs.
Total deposits were $54.2 million at December 31, 2000 representing a 34% or
$13.8 million increase in 2000.

The scheduled maturity distribution of time deposits as of December 31, 2000,
were as follows (dollar amounts in thousands):

<TABLE>
<S>                                            <C>
 Less than 3 months                           $ 6,709,177
 3 months to 6 months                           6,308,779
 6 months to 12 months                          2,703,763
 1 year to 5 years                                342,318
                                              -----------
 Total                                        $16,064,037
                                              ===========
</TABLE>

SHORT TERM AND OTHER BORROWINGS

The Bank classifies as short-term borrowings certain certificates of deposit,
which require pledged collateral. As of December 31, 2000 these borrowings
totaled $2,448,000 at an average rate of 6.95%. As of December 31, 1999
short-term


                                       27
<PAGE>

borrowings totaled $2,472,000 at an average rate of 6.75%. As of December 31,
2000, the Company also had a $200,000 loan from a correspondent bank at an
average cost of 9.50%. The Company is in the process of obtaining a line of
credit.

For further information concerning our borrowings, see Notes B and F of the
notes to our consolidated financial statements included in Item 8.

Y2K DISCLOSURES

The Company experienced no significant problems related to its information
technology Systems upon arrival of the Year 2000, nor was there any
interruption in service to its customers. Total expenses during 2000 related
to Y2K were not material.

EFFECTS OF INFLATION AND ECONOMIC ISSUES

The impact of inflation on a financial institution can differ significantly
from that exerted on other companies. Banks, as financial intermediaries,
have many assets and liabilities, which may move in concert with inflation
both as to interest rates and value. This is especially true for banks with a
high percentage of interest rate-sensitive assets and liabilities. A bank can
reduce the impact of inflation if it can manage its interest rate sensitivity
gap. We attempt to structure our mix of financial instruments and manage our
interest rate sensitivity gap in order to minimize the potential adverse
effects of inflation or other market forces on our net interest income and,
therefore, our earnings and capital.

The Bank expects to see additional interest rate fluctuation in 2001 with the
preponderance of pressure on rate reductions. The status of the economic
outlook for 2001 remains unsure, but there is a strong likelihood that there
will be at a minimum a continuation of the economic slowdown that began at
the end of 2000 and which has continued into the first quarter of 2001.

California is currently experiencing material problems with energy supply and
cost. There is a strong speculation that these problems will be more severe
during the summer months. Any prolonged difficulties with electrical supplies
could exacerbate other economic challenges and cause a full recession in
California. The Bank is monitoring the economy, interest rate changes, and
energy supply issues and expects to appropriately underwrite its loans and
monitor its general expansion until there are clearer indications that there
will not be a major economic slowdown in 2001.

ITEM 7.    FINANCIAL STATEMENTS


                    MISSION COMMUNITY BANCORP AND SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS
                                      WITH
                          INDEPENDENT AUDITORS' REPORT
                           DECEMBER 31, 2000 AND 1999


<TABLE>
<S>                                                                     <C>
  INDEPENDENT AUDITORS' REPORT
  ON THE CONSOLIDATED FINANCIAL STATEMENTS                                  29

  CONSOLIDATED FINANCIAL STATEMENTS
        Consolidated Balance Sheets                                      30-31
        Consolidated Statements of Income                                   32
        Consolidated Statement of Changes in Shareholders' Equity           33
        Consolidated Statements of Cash Flows                               34
        Notes to Consolidated Financial Statements                       35-49

</TABLE>


                                       28


<PAGE>


             INDEPENDENT AUDITORS' REPORT


Board of Directors and Shareholders of
Mission Community Bancorp and Subsidiary

We have audited the accompanying consolidated balance sheets of Mission
Community Bancorp and Subsidiary as of December 31, 2000 and 1999 and the
related consolidated statements of income, changes in shareholders' equity, and
cash flows of the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Mission Community
Bancorp and Subsidiary as of December 31, 2000 and December 31, 1999, and the
results of its operations and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.


VAVRINEK, TRINE, DAY & CO., LLP


Laguna Hills, California
February 15, 2001

                                       29
<PAGE>


                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999


<TABLE>
<CAPTION>

                                                                                             2000                1999
                                                                                             ----                ----
<S>                                                                                      <C>                 <C>

ASSETS

Cash and Due from Banks                                                                  $ 2,326,294         $ 3,696,762
Federal Funds Sold                                                                           295,000           2,120,000
                                                                                         -----------         -----------
                                             TOTAL CASH AND CASH EQUIVALENTS               2,621,294           5,816,762

Interest - Bearing Deposits in Other Banks                                                   298,000             100,000

Investment Securities:
  Investment Securities, Available for Sale                                               10,343,818           4,439,044
  Investment Securities, Held to Maturity                                                  3,461,313             789,128
                                                                                         -----------         -----------
                                                 TOTAL INVESTMENT SECURITIES              13,805,131           5,228,172

Loans:
  Commercial                                                                              14,987,191           9,444,576
  Agricultural                                                                             2,114,932           2,239,522
  Construction                                                                             3,278,013           4,471,133
  Real Estate                                                                             19,655,465          15,044,138
  Consumer                                                                                 3,092,718           2,231,734
                                                                                         -----------         -----------
                                                                 TOTAL LOANS              43,128,319          33,431,103

Allowance for Loan Losses                                                                   (511,607)           (210,219)
                                                                                         -----------         -----------
                                                                   NET LOANS              42,616,712          33,220,884


Federal Reserve Bank Stock and Other Stock, at Cost                                          143,575             132,125
Premises and Equipment                                                                     2,374,049           2,278,747
Accrued Interest and Other Assets                                                          1,070,282           1,047,937
                                                                                         -----------         -----------
                                                                                         $62,929,043         $47,824,627
                                                                                         ===========         ===========

</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.

                                       30
<PAGE>


                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>

                                                                                             2000                 1999
                                                                                       <C>                  <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:
   Noninterest-Bearing Demand                                                            $ 8,459,467          $ 7,491,875
   Money Market and NOW                                                                    2,195,717            1,662,616
   Savings                                                                                27,451,361           18,298,813
   Time Deposits Under $100,000                                                            6,129,829            5,728,700
   Time Deposits $100,000 and Over                                                         9,934,207            7,228,962
                                                                                       -------------        -------------
                                                               TOTAL DEPOSITS             54,170,581           40,410,966

Short-Term Borrowings                                                                      2,648,000            2,472,000
Accrued Interest and Other Liabilities                                                       386,287              170,522
                                                                                       -------------        -------------
                                                            TOTAL LIABILITIES             57,204,868           43,053,488

Commitments and Contingencies - Notes D and  L

Shareholders' Equity:
   Preferred Stock Authorized 1,000,000 Shares:
      Series A - $5 Stated Value; Issued and Outstanding, 100,000
      Liquidation Value of $500,000                                                          392,194              438,379
      Series B - No Par Value; Issued and Outstanding, 20,500
      Liquidation Value of $205,000                                                          191,606                    -
   Common Stock - $10 Stated Value; Authorized 1,000,000 Shares;
      Issued and Outstanding 630,066 Shares in 2000 and
      600,566 Shares in 1999                                                               6,272,276            5,977,276
   Accumulated Deficit                                                                    (1,172,779)          (1,504,477)
   Accumulated Other Comprehensive Income-
       Unrealized Gain (Loss) on Available-for-Sale Securities                                40,878            (140,039)
                                                                                       -------------        -------------
                                                   TOTAL SHAREHOLDERS' EQUITY              5,724,175            4,771,139
                                                                                       -------------        -------------
                                                                                         $62,929,043          $47,824,627
                                                                                       =============        =============

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       31
<PAGE>

                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>

                                                                                            2000                 1999
                                                                                            ----                 ----
                                                                                          <C>                 <C>
INTEREST INCOME
   Interest and Fees on Loans                                                             $3,563,592           $2,031,815
   Interest on Investment Securities                                                         749,719              322,494
   Other Interest Income                                                                     119,813              103,973
                                                                                          ----------          -----------
                                                        TOTAL INTEREST INCOME              4,433,124            2,458,282

INTEREST EXPENSE
   Interest on Money Market and NOW                                                           50,724               24,733
   Interest on Savings Deposits                                                            1,398,659              667,054
   Interest on Time Deposits                                                                 678,187              363,488
   Other Interest Expense                                                                     41,124                8,735
                                                                                          ----------          -----------
                                                       TOTAL INTEREST EXPENSE              2,168,694            1,064,010
                                                                                          ----------          -----------
                                                          NET INTEREST INCOME              2,264,430            1,394,272

Provision for Loan Losses                                                                    392,500              155,000
                                                                                          ----------          -----------
                                                    NET INTEREST INCOME AFTER
                                                    PROVISION FOR LOAN LOSSES              1,871,930            1,239,272

NONINTEREST INCOME
   Gain on Sale of Loans                                                                     267,503              413,912
   Service Charges, Fees and Other Income                                                    400,368              123,450
                                                                                          ----------          -----------
                                                                                             667,871              537,362
NONINTEREST EXPENSE
   Salaries and Employee Benefits                                                          1,053,177              875,576
   Occupancy Expenses                                                                        132,880              118,550
   Furniture and Equipment                                                                   187,112              175,927
   Other Expenses                                                                            934,934              634,504
                                                                                          ----------          -----------
                                                                                           2,308,103            1,804,557
                                                                                          ----------          -----------
                                            INCOME (LOSS) BEFORE INCOME TAXES                231,698              (27,923)
Income Tax Benefit                                                                          (100,000)             (70,000)
                                                                                          ----------          -----------
                                                                   NET INCOME             $ 331,698            $  42,077
                                                                                          ==========          ===========
Per Share Data:
   Net Income - Basic                                                                          $0.51                $0.07
   Net Income - Diluted                                                                        $0.51                $0.07

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       32
<PAGE>

                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                    YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>

                                                       Common Stock                                                   Accumulated
                                       Preferred       ------------           Comprehensive    Accumulated       Comprehensive
                                         Stock      Shares       Amount           Income         Deficit            Income
                                       ---------    ------       ------       -------------    -----------       -------------
<S>                                    <C>          <C>        <C>            <C>             <C>                <C>
BALANCE AT
   DECEMBER 31, 1998                   $      -     600,566    $5,977,276                      $(1,546,554)           $3,984

Issuance of Preferred Stock             438,379

COMPREHENSIVE INCOME:
Net Income                                                                         $42,077          42,077

Net Unrealized Loss
  On Available-for-Sale
  Securities                                                                      (144,023)                         (144,023)
                                                                              -------------
  TOTAL COMPREHENSIVE INCOME                                                     $(101,946)
                                       ---------    ------       ------       -------------    -----------       -------------
                                                                              -------------
BALANCE AT
   DECEMBER 31, 1999                    438,379     600,566     5,977,276                       (1,504,477)        (140,039)

Issuance of Preferred Stock             145,421

Issuance of Common Stock                             29,500       295,000

COMPREHENSIVE INCOME:
Net Income                                                                        $331,698         331,698

Net Unrealized Gain On
  Available-for-Sale Securities,
  Net of Taxes of $28,407                                                          180,917                          180,917
                                                                              -------------
  TOTAL COMPREHENSIVE INCOME                                                      $512,615
                                       ---------    -------      ------       =============    -----------       -------------
BALANCE AT
   DECEMBER 31, 2000                   $583,800     630,066    $6,272,276                     $(1,172,779)          $40,878
                                       =========    =======    ==========                     ===========       =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       33
<PAGE>

                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                             2000                   1999
                                                                                       ------------           ------------
<S>                                                                                    <C>                    <C>
OPERATING ACTIVITIES
   Net Income                                                                          $    331,698           $     42,077
   Adjustments to Reconcile Net Income to Net
      Cash Provided (Used) by Operating Activities:
         Depreciation and Amortization                                                      145,058                128,621
         Provision for Credit Losses                                                        392,500                155,000
         Gain on Sale of Loans                                                             (267,503)              (413,912)
         Deferred Taxes                                                                    (108,000)               (70,000)
         Net Change in Other Assets and Liabilities                                         147,886               (769,524)
                                                                                       ------------           ------------
                                           NET CASH PROVIDED (USED) BY
                                                  OPERATING ACTIVITIES                      641,639               (927,738)

INVESTING ACTIVITIES
   Net Change in Federal Reserve Bank and Other Stock                                       (11,450)                16,750
   Net (Increase) Decrease in Deposits in Other Banks                                      (198,000)               400,000
   Purchase of Available-for-Sale Securities                                            (41,031,849)           (35,378,539)
   Purchase of Held-to-Maturity Securities                                                 (267,740)              (767,303)
   Proceeds from Maturities and Sales of Available-for-Sale Securities                   33,047,339             32,882,297
   Proceeds from Maturities of Held-to-Maturity Securities                                    9,742                      -
   Net Increase in Loans                                                                 (9,520,825)           (17,905,959)
   Purchases of Premises and Equipment                                                     (240,360)               (62,253)
                                                                                       ------------           ------------
                                                      NET CASH USED BY
                                                  INVESTING ACTIVITIES                  (18,213,143)           (20,815,007)

FINANCING ACTIVITIES
   Net Increase in Demand and Savings Accounts                                           10,653,241             14,670,178
   Net Increase in Time Deposits                                                          3,106,374              7,286,724
   Net Increase in Other Borrowings                                                         176,000              2,472,000
   Proceeds from Issuance of Common Stock                                                   295,000                      -
   Proceeds from Issuance of Preferred Stock - Net of Costs                                 145,421                438,379
                                                                                       ------------           ------------
                                                  NET CASH PROVIDED BY
                                                  FINANCING ACTIVITIES                   14,376,036             24,867,281
                                                                                       ------------           ------------

                                            NET INCREASE (DECREASE) IN
                                             CASH AND CASH EQUIVALENTS                   (3,195,468)             3,124,536
Cash and Cash Equivalents at Beginning of Period                                          5,816,762              2,692,226
                                                                                       ------------           ------------
                                             CASH AND CASH EQUIVALENTS
                                                        AT END OF YEAR                 $  2,621,294           $  5,816,762
                                                                                       ============           ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Interest Paid                                                                       $  2,147,949           $  1,050,517
   Taxes Paid                                                                          $        800           $        800
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements



                                       34
<PAGE>


                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The financial statements include the accounts of Mission Community Bancorp
and its subsidiary, Mission Community Bank ("the Bank"), and the Bank's
subsidiary, Mission Community Development Corporation collectively referred
to herin as the "Company".

NATURE OF OPERATIONS

The Bank has been organized as a single reporting segment and operates two
branches in the Central Coast area of California. The Bank's primary source
of revenue is providing Small Business Administration ("SBA") guaranteed
loans, real estate, commercial and consumer loans to customers, who are
predominately small and middle-market businesses and individuals.

MISSION COMMUNITY DEVELOPMENT CORPORATION

Mission Community Development Corporation is a community development
corporation, which provides financing for small businesses and low- and
moderate-income areas and projects. The Board of Directors of Mission
Community Development Corporation consists of four members of the Board of
Directors of the Company and three outside members who are actively involved
in supporting community affairs and activities. Community development
investment is limited to 5% of the Company's capital and up to 10% with prior
approval by the Comptroller of the Currency.

Mission Community Development Corporation has a closely held affiliate
corporation, Mission Community Services Corporation.

Mission Community Services Corporation is intended to operate as a
"not-for-profit" corporation. This company's primary focus will be to provide
technical support, services, and accessibility to funding sources, which
require not-for-profit status to qualify for granting purposes. The Board of
Directors of Mission Community Services Corporation will consist of both
Company and Mission Community Development Corporation board members.

Operations of Mission Community Development Corporation and affiliate were
not material as of December 31, 2000.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

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



                                       35
<PAGE>

                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, cash and cash equivalents include cash,
due from banks and federal funds sold. Generally, federal funds are sold for
one-day periods.

CASH AND DUE FROM BANKS

Banking regulations require that all banks maintain a percentage of their
deposits as reserves in cash or on deposit with the Federal Reserve Bank. The
Bank complied with the reserve requirements as of December 31, 2000.

The Company maintains amounts due from banks, which exceed federally insured
limits. The Company has not experienced any losses in such accounts.

INVESTMENT SECURITIES

Bonds, notes, and debentures for which the Company has the positive intent
and ability to hold to maturity are reported at cost, adjusted for premiums
and discounts that are recognized in interest income using the interest
method over the period to maturity.

Investments not classified as trading securities nor as held to maturity
securities are classified as available-for-sale securities and recorded at
fair value. Unrealized gains or losses on available-for-sale securities are
excluded from net income and reported as an amount net of taxes as a separate
component of other comprehensive income included in shareholders' equity.
Premiums or discounts are amortized or accreted into income using the
interest method. Realized gains or losses on sales of held-to-maturity or
available-for-sale securities are recorded using the specific identification
method.

LOANS

Loans receivable that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at their
outstanding unpaid principal balances reduced by any charge-offs or specific
valuation accounts and net of any deferred fees or costs on originated loans,
or unamortized premiums or discounts on purchased loans.

Loan origination fees and certain direct origination costs are capitalized
and recognized as an adjustment of the yield of the related loan.

The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they
become due. When interest accrual is discontinued, all unpaid accrued
interest is reversed. Interest income is subsequently recognized only to the
extent cash payments are received.



                                       36
<PAGE>


                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

LOANS - CONTINUED

For impairment recognized in accordance with Financial Accounting Standards
Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 114,
"ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN", as amended by SFAS No.
118, the entire change in the present value of expected cash flows is
reported as either provision for credit losses in the same manner in which
impairment initially was recognized, or as a reduction in the amount of
provision for credit losses that otherwise would be reported.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is adjusted by charges to income and decreased
by charge-offs (net of recoveries). Management's periodic evaluation of the
adequacy of the allowance is based on the Company's past loan loss
experience, known and inherent risks in the portfolio, adverse situations
that may affect the borrower's ability to repay, the estimated value of any
underlying collateral, and current economic conditions.

LOANS HELD FOR SALE

SBA loans originated and intended for sale in the secondary market are
carried at the lower of cost or estimated market value in the aggregate. Net
unrealized losses are recognized through a valuation allowance by charges to
income.

PREMISES AND EQUIPMENT

Land is carried at cost. Premises and equipment are carried at cost less
accumulated depreciation and amortization. Depreciation is computed using the
straight-line method over the estimated useful lives, which ranges from three
to ten years for furniture and fixtures and forty years for buildings.
Leasehold improvements are amortized using the straight-line method over the
estimated useful lives of the improvements or the remaining lease term,
whichever is shorter. Expenditures for betterments or major repairs are
capitalized and those for ordinary repairs and maintenance are charged to
operations as incurred.

INCOME TAXES

Deferred tax assets and liabilities are reflected at currently enacted income
tax rates applicable to the period in which the deferred tax assets or
liabilities are expected to be realized or settled. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through
the provision for income taxes.

COMPREHENSIVE INCOME

Beginning in 1998, the Company adopted SFAS No. 130, "REPORTING COMPREHENSIVE
INCOME", which requires the disclosure of comprehensive income and its
components. Changes in unrealized gain (loss) on available-for-sale
securities net of income taxes is the only component of accumulated other
comprehensive income for the Company.



                                       37
<PAGE>


                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

FINANCIAL INSTRUMENTS

In the ordinary course of business, the Company has entered into off-balance
sheet financial instruments consisting of commitments to extend credit,
commercial letters of credit, and standby letters of credit. Such financial
instruments are recorded in the financial statements when they are funded or
related fees are incurred or received.

EARNINGS PER SHARES (EPS)

Basic EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted-average number of common shares
outstanding for the period. 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 entity.

STOCK-BASED COMPENSATION

SFAS No. 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION", encourages, but does
not require, companies to record compensation cost for stock-based employee
compensation plans at fair value. The Company has chosen to account for
stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board (APB) Opinion No. 25, "ACCOUNTING FOR STOCK
ISSUED TO EMPLOYEES", and related Interpretations. Accordingly, compensation
cost for stock options is measured as the excess, if any, of the quoted
market price of the Bank's stock at the date of the grant over the amount an
employee must pay to acquire the stock. The pro forma effects of adoption are
disclosed in Note H.

DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

In December 1996, the FASB issued SFAS No. 126, "EXEMPTION FROM CERTAIN
REQUIRED DISCLOSURES ABOUT FINANCIAL INSTRUMENTS FOR CERTAIN NONPUBLIC
ENTITIES," an amendment of FASB Statement No. 107. In accordance with SFAS
No. 126, the Company is exempt from the disclosure requirements of SFAS No.
107 and has therefore elected not to disclose fair value information for
financial instruments.

CURRENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133, "ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES" (as amended in 2000 by SFAS NO. 138).
This Statement establishes accounting and reporting standards for derivative
instruments and for hedging activities. This new standard was originally
effective for 2000. In June 1999, the FASB issued SFAS No. 137, "ACCOUNTING
FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - DEFERRAL OF THE EFFECTIVE
DATE OF FASB STATEMENT NO. 133". This Statement establishes the effective
date of SFAS No. 133 for 2001. SFAS No. 133 is not expected to have a
material impact on the Company's financial statements.

RECLASSIFICATIONS

Certain reclassifications were made to prior years' presentations to conform
to the current year. These reclassifications are of a normal recurring nature.



                                       38
<PAGE>


                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE B - INVESTMENT SECURITIES

Debt and equity securities have been classified in the statements of
condition according to management's intent. The carrying amount of securities
and their approximate fair values at December 31 were as follows:

<TABLE>
<CAPTION>
                                                                           Gross             Gross            Estimated
                                                      Amortized         Unrealized        Unrealized           Market
                                                         Cost              Gains            Losses              Value
                                                      -----------       -----------       -----------         -----------
<S>                                                   <C>               <C>               <C>                 <C>
AVAILABLE-FOR-SALE SECURITIES:
   DECEMBER 31, 2000
      U.S. Government Agencies                        $10,274,533           $79,429        $ (10,144)         $10,343,818
                                                      ===========       ===========       ===========         ===========

   DECEMBER 31, 1999
      U.S. Government Agencies                        $ 4,579,083           $   141        $(140,180)         $ 4,439,044
                                                      ===========       ===========        ==========         ===========

HELD-TO-MATURITY SECURITIES:
   DECEMBER 31, 2000
      U.S. Government Agencies                        $   388,830           $     -        $ (33,100)         $   355,730
      Other                                             3,072,483             2,101          (23,327)           3,051,257
                                                      -----------       -----------        ----------         -----------

                                                      $ 3,461,313           $ 2,101        $ (56,427)         $ 3,406,987
                                                      ===========       ===========        ==========         ===========

   DECEMBER 31, 1999
      U.S. Government Agencies                        $   364,136           $     -        $ (70,738)         $   293,398
      Other                                               424,992                 -          (23,570)             401,422
                                                      -----------       -----------        ----------         -----------

                                                      $   789,128           $     -        $ (94,308)         $   694,820
                                                      ===========       ===========        ==========         ===========
</TABLE>

Investments securities carried at $6,776,266 as of December 31, 2000 were
pledged to secure short-term borrowings and other deposits as required by law.

Proceeds from sales of securities available-for-sale during 2000 and 1999
were $3,204,339 and $1,004,297 respectively. Gross realized gains of $4,339
in 2000 and $4,297 in 1999 are included in other income.


                                       39

<PAGE>



                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE B - INVESTMENT SECURITIES - CONTINUED

The scheduled maturities of securities available for sale at December 31, 2000,
were as follows:

<TABLE>
<CAPTION>
                                                      Available-for-Sale Securities         Held-to-Maturity   Securities
                                                      -------------------------------      -------------------------------
                                                       Amortized             Fair            Amortized              Fair
                                                         Cost               Value              Cost               Value
                                                      ------------        ------------     ---------------     -----------
<S>                                                   <C>                 <C>              <C>                 <C>
Due in One Year or Less                               $   593,140         $   596,436        $        -        $        -
Due in One Year to Five Years                           5,868,911           5,881,140                 -                 -
Due in Five Years to Ten Years                          3,335,749           3,376,867                 -                 -
Due in Greater Then Ten Years                             476,733             489,375           388,830           355,730
Other                                                           -                   -         3,072,483         3,051,257
                                                      ------------        ------------     ---------------     -----------
                                                      $10,274,533         $10,343,818        $3,461,313        $3,406,987
                                                      ============        ============     ===============     ===========
</TABLE>



NOTE C - LOANS

The Bank's loan portfolio consists primarily of loans to borrowers within the
Central Coast Area of California. Although the Bank seeks to avoid
concentrations of loans to a single industry or based upon a single class of
collateral, real estate and real estate associated businesses are among the
principal industries in the Bank's market area and, as a result, the Bank's
loan and collateral portfolios are, to some degree, concentrated in those
industries.

The Bank also originates SBA loans for sale to institutional investors. At
December 31, 2000 the Bank was servicing approximately $10,014,500 in loans
previously sold or participated.

A summary of the changes in the allowance for possible loan losses as of
December 31 follows:

<TABLE>
<CAPTION>
                                                               2000                1999
                                                            ----------         -----------
<S>                                                         <C>                 <C>
Balance at Beginning of Year                                 $210,219            $ 72,000
Additions to the Allowance Charged to Expense                 392,500             155,000
Recoveries on Loans Charged Off                                   258                   -
                                                            ----------         -----------
                                                              602,977             227,000

Less Loans Charged Off                                        (91,370)            (16,781)
                                                            ----------         -----------

Balance at End of Year                                       $511,607            $210,219
                                                            ==========         ===========
</TABLE>


                                       40
<PAGE>




                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999




NOTE C - LOANS - CONTINUED


The following is a summary of the investment in impaired loans, the related
allowance for loan losses, and income recognized thereon as of December 31:

<TABLE>
<CAPTION>
                                                             2000                1999
                                                         ----------           ----------
<S>                                                      <C>                    <C>
Recorded Investment in Impaired Loans                    $1,020,000             $     -
                                                         ==========           ==========
Related Allowance for Loan Losses                        $  153,000             $     -
                                                         ==========           ==========
Average Recorded Investment in Impaired Loans            $  468,000             $19,000
                                                         ==========           ==========
Interest Income Recognized for Cash Payments                  None                 None
                                                         ==========           ==========
</TABLE>


NOTE D - PREMISES AND EQUIPMENT

A summary of premises and equipment as of December 31 follows:

<TABLE>
<CAPTION>
                                                            2000                1999
                                                        -----------         -----------
<S>                                                     <C>                 <C>
Land                                                    $  976,498           $  976,498
Buildings                                                  722,333              717,055
Leasehold Improvements                                     227,490              179,607
Furniture, Fixtures, and Equipment                         823,354              636,152
                                                        -----------         -----------
                                                         2,749,675            2,509,312
Accumulated Depreciation and Amortization                 (375,626)            (230,565)
                                                        -----------         -----------
                                                        $2,374,049           $2,278,747
                                                        ===========         ===========
</TABLE>


The Bank has entered into operating leases for its branches and operating
facilities, which expire at various dates through 2005. These leases include
provisions for periodic rent increases as well as payment by the lessee of
certain operating expenses.

The Bank leases the facility for the administration office from a principal
shareholder of the Company. The operating lease expires April 2002.

                                       41
<PAGE>



                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE D - PREMISES AND EQUIPMENT - CONTINUED

Rental expense relating to these leases was approximately $35,000 in 2000 and
$23,000 in 1999 which included rental expense related to the lease of
premises owned by the principal shareholder of approximately $7,000 for 2000.

At December 31, 2000, the future minimum annual payments for this lease is as
follows:

<TABLE>
<CAPTION>
                                       Related
                        Other            Party
                      --------         -------
<S>                   <C>              <C>
             2001     $ 49,000         $17,000
             2002       48,000           6,000
             2003       40,000               -
             2004       29,000               -
             2005       26,000               -
                      --------         -------
                      $192,000         $23,000
                      ========         =======
</TABLE>


The minimum rental payments shown above are given for the existing lease
obligations and do not reflect any increases in rent. It is not a forecast of
rental expenses.

NOTE E - DEPOSITS

At December 31, 2000, the scheduled maturities of time deposits are as follows:

<TABLE>
<S>                                                          <C>
                         Due in One Year                     $15,582,115
                         Due in One to Five Years                481,921
                                                             -----------
                                                             $16,064,036
                                                             ===========
</TABLE>


                                       42
<PAGE>



                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE F - SHORT-TERM BORROWINGS

Short-term borrowings at December 31, 2000 are comprised of the following
advances:

<TABLE>
<CAPTION>
      Maturity            Interest          Amount
        Date                Rate
   ------------          -----------      ------------
<S>                       <C>               <C>
   1/16/2001                 6.95%          $2,448,000
   1/11/2001                 9.50%             200,000
                                          ------------
                                            $2,648,000
                                          ============
</TABLE>

These advances are secured by investment securities as discussed in Note B.


NOTE G - INCOME TAXES

The income tax provision (benefit) for the years ended December 31, 2000 and
1999 is comprised of the following:

<TABLE>
<CAPTION>
                                        2000                 1999
                                   ---------             --------
<S>                                <C>                   <C>
Current Taxes:
   Federal                         $       -             $      -
   State                               8,000                    -
                                   ---------             --------
                                       8,000                    -
Deferred                            (108,000)             (70,000)
                                   ---------             --------

                                   $(100,000)            $(70,000)
                                   =========             ========
</TABLE>

A comparison of the federal statutory income tax rates to the Company's
effective income tax follows:

<TABLE>
<CAPTION>
                                                                  2000                                  1999
                                                       ----------------------------        -------------------------------
                                                        Amount              Rate              Amount               Rate
                                                       ---------           --------        -----------         -----------
<S>                                                   <C>                  <C>               <C>                 <C>
Federal tax rate                                       $  79,000             34.0%           $ (9,500)            (34.0)%
California franchise taxes, net of federal
   tax benefit                                            17,000              7.3%             (2,000)             (7.2)%
Reduction in valuation allowance                        (200,000)           (86.3)%           (58,000)           (207.7)%
Other items - net                                          4,000              1.8%               (500)             (1.8)%
                                                       ---------           ------            ---------          -----------
                                                       $(100,000)           (43.2)%          $(70,000)           (250.7)%
                                                       =========           ======            =========          ===========
</TABLE>


                                       43
<PAGE>



                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE G - INCOME TAXES - CONTINUED

The following is a summary of the components of the net deferred tax asset
accounts recognized in the accompanying statements of financial condition:


<TABLE>
<CAPTION>
                                                                   2000                 1999
                                                               -----------           -----------
<S>                                                              <C>                  <C>
Deferred Tax Assets:
   Organizational and Start-up Costs                             $110,000             $169,000
   Operating Loss Carryforwards                                   488,000              540,000
   Allowance for Loan Losses Due to Tax Limitations               188,000               74,000
   Other                                                           10,000                    -
                                                               -----------           -----------
                                                                  796,000              783,000

Valuation Allowance                                              (376,000)            (576,000)

Deferred Tax Liabilities:
   Cash Basis of Tax Reporting                                   (222,000)            (118,000)
   Depreciation Differences                                       (20,000)             (19,000)
   Unrealized Gain on Investment Securities                       (28,000)                   -
                                                               -----------           -----------

Net Deferred Tax Assets                                          $150,000              $70,000
                                                               ===========           ===========

</TABLE>

The valuation allowance was established because the Bank has not reported
earnings sufficient enough to support full recognition of the deferred tax
assets. The Bank has net operating loss carryforwards of approximately
$1,300,000 for federal income and California franchise tax purposes. Net
operating loss carryforwards, to the extent not used, will expire in varying
amounts through 2018.


NOTE H - STOCK OPTION PLAN

During 1998, the Board of Directors adopted a stock option plan, which was
approved by the shareholders, under which 180,000 shares of the Company's
common stock may be issued. The Company applies APB Opinion No. 25 and
related interpretations in accounting for its plan. Accordingly, no
compensation cost has been recognized for its fixed stock option plan.

The fair value of each option grant was estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions:
risk-free rate of 6.00% and 5.00% for 2000 and 1999 respectively, expected
lives of five years, no dividend payments and disregarding any stock price
volatility.



                                       44

<PAGE>

                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE H - STOCK OPTION PLAN - CONTINUED

A summary of the status of the Company's fixed stock option plan as of December
31, 2000 and changes during the year is presented below:

<TABLE>
<CAPTION>
                                                     2000                               1999
                                           ---------------------------       ---------------------------
                                                             Weighted                         Weighted
                                                             Average                          Average
                                                             Exercise                         Exercise
                                            Shares            Price            Shares          Price
                                          ----------        ----------       -----------     -----------
<S>                                      <C>              <C>              <C>              <C>
Outstanding at Beginning of Year            115,652           $  9.89          120,099         $  10.00
Granted                                       7,500           $  8.06           11,000         $   8.72
Forfeited                                    (5,486)          $  8.81          (15,447)        $  10.16
                                          ----------                         -----------
Outstanding at End of Year                  117,666           $  9.83          115,652         $   9.89
                                          ==========                         ===========

Options Exercisable at Year-End              42,566           $ 10.00           22,520         $  10.00

Weighted-Average Fair Value of
  Options Granted During the Year                             $  1.58                          $   0.89
</TABLE>


The following table summarizes information about fixed options outstanding at
December 31, 2000:

<TABLE>
<CAPTION>
                                          Options Outstanding
                         ----------------------------------------------------
                                                                                     Options Exercisable
                                                Weighted-                       ----------------------------
                                                 Average            Weighted                      Weighted
                                                Remaining            Average                       Average
     Exercise                Number            Contractual          Exercise        Number        Exercise
      Price               Outstanding             Life                Price       Exercisable       Price
-------------------      ---------------     ---------------     --------------  -------------  ------------
<S>                      <C>                 <C>                 <C>             <C>            <C>
$7.00 to $10.00                 117,666         7.3 Years             $9.83         42,566         $10.00

</TABLE>

                                       45
<PAGE>


                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE H - STOCK OPTION PLAN - CONTINUED

Had compensation costs for the Company's stock option plan been determined based
on the fair value at the grant dates for awards under this plan consistent with
the method of SFAS No. 123, the Bank's consolidated results of operations and
per share amounts would have been adjusted to the pro forma amounts indicated
the table below:

<TABLE>
<CAPTION>
                                         2000           1999
                                    ------------   ------------
<S>                                <C>            <C>
Net Income:
   As Reported                      $ 331,698       $ 42,077
   Pro Forma                          305,050         13,004

Basic Income Per Share:
   As Reported                           0.51           0.07
   Pro Forma                             0.47           0.02

Diluted Income Per Share:
   As Reported                           0.51           0.07
   Pro Forma                             0.47           0.02

</TABLE>


NOTE I - OTHER EXPENSES

Other expenses as of December 31 are comprised of the following:

<TABLE>
<CAPTION>
                                              2000                 1999
                                        -------------       --------------
<S>                                    <C>                 <C>
Data Processing                          $ 291,881            $ 130,882
Professional Expenses                      123,965               61,188
Office Supplies and Expenses               108,622               97,716
Marketing and Business Promotion            91,080               91,463
Insurance                                   27,484               33,763
Other Expenses                             291,902              219,492
                                        -------------       --------------

                                         $ 934,934            $ 634,504
                                        =============       ==============
</TABLE>


                                       46
<PAGE>


                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999



NOTE J - PREFERRED STOCK

Series A - the Series A Preferred Stock has a $5.00 stated value and is
non-voting, convertible and redeemable. Each share is convertible into voting
common stock of the Company on a two-for-one exchange. Series A shares are
not entitled to any fixed rate of return but do participate on the same basis
(as if converted on a two-for-one exchange) in any dividends declared on the
Company's common stock. In the event of liquidation, the holders of Series A
shares will be entitled to a liquidation preference of $5.00 per share before
the holders of common stock receive any distributions and after the holders
of common stock receive distributions of $10.00 per share, all distributions
will be on the same basis (as if converted on a two-for-one exchange). These
shares were issued for $392,194 (net of issuance costs of $107,806) pursuant
to a grant from the Community Development Institutions Fund ("CDFI") of
Department of the Treasury.

Series B - the Series B Preferred Stock has a $10.00 stated value and is
non-voting, non-convertible and non-redeemable. Series B shares are not
entitled to any fixed rate of return but do participate on the same basis in
any dividends declared on the Company's common stock. In the event of
liquidation, the holders of Series B shares will be entitled to a liquidation
preference of $10.00 per share before the holders of common stock receive any
distributions. Additionally, in the event of a so-called "change in control
event" (including certain mergers or sales of assets) holders of the Series B
Preferred Stock shall be entitled to receive payment on the same basis as the
holders of the common stock of the Company. These shares were issued for
$191,606 (net of issuance costs of $13,394) pursuant to a grant from the
National Community Investment Fund ("NCIF"). In connection with this grant,
NCIF also purchased 29,500 shares of the Company's common stock for $10.00
per share.

NOTE K - RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Bank has granted loans to certain
directors and the companies with which they are associated. In the Bank's
opinion, all loans and loan commitments to such parties are made on
substantially the same terms, including interest rate and collateral, as those
prevailing at the time for comparable transactions with other persons. The
balance of these loans outstanding at December 31, 2000 and 1999 was
approximately $1,945,000 and $2,703,000, respectively.


NOTE L - COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Bank enters into financial commitments to
meet the financing needs of its customers. These financial commitments include
commitments to extend credit and standby letters of credit. Those instruments
involve to varying degrees, elements of credit and interest rate risk not
recognized in the statement of financial position.

The Bank's exposure to credit loss in the event of nonperformance on commitments
to extend credit and standby letters of credit is represented by the contractual
amount of those instruments. The Bank uses the same credit policies in making
commitments as it does for loans reflected in the financial statements.

                                       47
<PAGE>


                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE L - COMMITMENTS AND CONTINGENCIES - CONTINUED

As of December 31, 2000, the Bank had the following outstanding financial
commitments whose contractual amount represents credit risk:

<TABLE>
      <S>                                        <C>
       Commitments to Extend Credit                $ 10,287,000
       Standby Letters of Credit                        220,000
                                                  ---------------
                                                   $ 10,507,000
                                                  ===============
</TABLE>

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Standby
letters of credit are conditional commitments to guarantee the performance of a
Bank customer to a third party. Since many of the commitments and standby
letters of credit are expected to expire without being drawn upon, the total
amounts do not necessarily represent future cash requirements. The Bank
evaluates each customer's credit worthiness on a case-by-case basis. The amount
of collateral obtained if deemed necessary by the Bank is based on management's
credit evaluation of the customer.

The Company is involved in various litigation, which has arisen in the ordinary
course of business. In the opinion of management, the disposition of such
pending litigation will not have a material effect on the Bank's financial
statements.


NOTE M - EARNINGS PER SHARE

The following is a reconciliation on net income and shares outstanding to the
income and number of shares used in the computation of earnings per share:

<TABLE>
<CAPTION>>
                                                      2000                        1999
                                            ------------------------    -----------------------
                                               Income        Shares         Income    Shares
                                           -------------   -----------  -----------  -----------
<S>                                        <C>             <C>          <C>          <C>
Net Income                                    $ 331,698                    $ 42,077
Average Common Shares
     Outstanding During the Year                              600,714                  600,566
Preferred Shares Participating
     in Net Income With Common
     Shareholders - Average                                    50,112                   13,679
                                           -------------   -----------  -----------  -----------
                     Used in Basic EPS          331,698       650,826        42,077    614,245

Dilutive Effect of Outstanding
     Stock Options                                                 -                        -
                                           -------------   -----------  -----------  -----------
                  Used in Dilutive EPS        $ 331,698       650,826      $ 42,077    614,245
                                           =============   ===========  ===========  ===========
</TABLE>

Preferred shares are included in the computation of basic earnings per share
because they share equally with common shares in the distribution of net income
and they do not have a stated dividend rate.

                                       48

<PAGE>

                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE N - REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory - and possibly additional discretionary - actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier 1 capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average
assets (as defined). Management believes, as of December 31, 2000, that the Bank
meets all capital adequacy requirements to which it is subject.

As of December 31, 2000, the most recent notification from the Comptroller of
the Currency categorized the Bank as well-capitalized under the regulatory
framework for prompt corrective action (there are no conditions or events since
that notification that management believes have changed the Bank's category). To
be categorized as well-capitalized, the Bank must maintain minimum ratios as set
forth in the table below. The following table also sets forth the Bank's actual
capital amounts and ratios (dollar amounts in thousands):

<TABLE>
<CAPTION>
                                                                                    Amount of Capital Required
                                                                              -------------------------------------
                                                                               To Be Adequately         To Be Well-
                                                            Actual               Capitalized            Capitalized
                                                      -------------------    --------------------   ---------------------
                                                       Amount      Ratio      Amount      Ratio      Amount      Ratio
                                                      ----------  --------   ----------  --------   ----------  ---------
<S>                                                   <C>         <C>        <C>         <C>        <C>         <C>
AS OF DECEMBER 31, 2000:
   Total Capital (to Risk-Weighted Assets)               $5,803    11.1%        $4,194       8.0%      $5,242      10.0%
   Tier 1 Capital (to Risk-Weighted Assets)              $5,291    10.1%        $2,097       4.0%      $3,145       6.0%
   Tier 1 Capital (to Average Assets)                    $5,291     8.9%        $2,390       4.0%      $2,987       5.0%

AS OF DECEMBER 31, 1999:
   Total Capital (to Risk-Weighted Assets)               $5,121    13.0%        $3,159       8.0%      $3,949      10.0%
   Tier 1 Capital (to Risk-Weighted Assets)              $4,911    12.4%        $1,580       4.0%      $2,370       6.0%
   Tier 1 Capital (to Average Assets)                    $4,911    11.9%        $1,656       4.0%      $2,070       5.0%
</TABLE>


The Bank is restricted as to the amount of dividends that can be paid. Dividends
declared by national banks that exceed the net income (as defined) for the
current year plus retained net income for the preceding two years must be
approved by the OCC. The Bank may not pay dividends that would result in its
capital levels being reduced below the minimum requirements shown above.


                                      49
<PAGE>

                    MISSION COMMUNITY BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


NOTE O - FORMATION OF MISSION COMMUNITY BANCORP

On December 15, 2000, Mission Community Bancorp acquired Mission Community Bank
by issuing 600,566 shares of common stock in exchange for the surrender of all
outstanding shares of the Bank's common stock. There was no cash involved in
this transaction. The acquisition was accounted for like a pooling of interest
and the consolidated financial statements contained herein have been restated to
give full effect to this transaction.

Mission Community Bancorp has no significant business activity other than its
investment in Mission Community Bank. Accordingly, no separate financial
information on the Company is provided.













                                      50
<PAGE>

ITEM 8.  CHANGES WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL

         DISCLOSURE
              None.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The following table lists the names and certain information as of December 31,
2000, concerning all directors and executive officers of the Company and the
Bank. The Company and the Bank have no "significant employees" except its
executive officers.

<TABLE>
<CAPTION>
                                                                                              YEAR FIRST ELECTED OR
    NAME AND TITLE                  AGE     BUSINESS EXPERIENCE FOR PAST FIVE YEARS           APPOINTED DIRECTOR*

<S>                                <C>     <C>                                                     <C>
    Robert E. Bloch                  53     Banker(1)                                                N/A
     Executive Vice President and
     Chief Financial Officer

    Bruce M. Breault                 58     Partner and Owner, F. McLintocks, Inc.                   1996
     Founding Chairman of the               (restaurants) (1973-)
      Board (Emeritus)

    Roxanne M. Carr                  63     Division President and Corporate Senior Vice             1997
     Secretary                              President, The Mortgage House, Inc. (1995-);
                                            Regional Vice President, ARCS Mortgage, Inc.
                                            (1973-1995)

    Karla S. Cool                    58     President and Owner, Central California                  1998
     Director                               Investments (1998-); Broker and Owner, Karla
                                            Cool Realty (1987-1998)

    William B. Coy                   63     Corporate Marketing Manager, San Luis Obispo             1996
     Vice Chairman of the Board             County Farm Supply Company (1991); Managing
                                            Partner, Rancho Rio Conejo (citrus and
                                            avocados) (1979-)

    Erol F. Giray, M.D.              44     Psychiatrist                                             1997
       Director

    Anita M. Robinson                48     Banker (2)                                               1996
     Director, President and
      Chief Executive Officer

    Robin L. Rossi                   53     President, Rossi Enterprises (property                   1996
     Director                               management) (1991-); President, Infinite
                                            Horizons, Inc. (Manager of Avila Beach
                                            Resort) (1979-)

    Gary E. Stemper                  58     Eagles Crest Winery, LLC, Manager (2000-);               1996
     Chairman of the Board                  Sales Consultant and Technical Analyst,
                                            Artesia Ready Mix, Inc. (1996-2000);
                                            Partner, Eberle Winery of Paso Robles
                                            (1982-); Owner, Gary Stemper Construction
                                            Co. (1967-); Partner, Mill Road Vineyard (1994-);

    Karl F. Wittstrom                47     Self-Employed-real estate development,                   1997
     Director                               ranching, vineyards, investments, (1996-);
                                            President and CEO, Allwaste Transportation
                                            and Remediation, Inc. (1992-1996)
</TABLE>

* Refers to year first elected or appointed to Board of the Bank.

-----------------
(1)   Mr. Bloch has over 26 years of banking-related experience. For the
      period 1991 to 1992 he served as Senior Vice President/Chief Financial
      Officer, and from 1993 to 1998 as Executive Vice President/Chief
      Financial Officer, with Heritage Oaks Bank, Paso Robles, California.
      From 1983 to 1992, he held executive management positions with Valley
      Federal Savings and Loan, Van Nuys, California; Antelope Valley Savings
      & Loan, Lancaster, California; and Bloch Investments, Inc. in
      Chatsworth, California. From 1976


                                      51
<PAGE>

      to 1983 he was with the accounting firm of Grant Thornton (formerly
      Alexander Grant & Co.) in Van Nuys, California where he served as CPA
      and Audit Manager.

(2)   Ms. Robinson has over 27 years of banking experience. From 1982 to 1989
      she was a Vice President, Branch Manager and Commercial Loan Officer
      for National Bank of Southern California in Santa Ana, California. From
      1989 to 1993 Ms. Robinson served as Executive Vice President/Senior
      Loan Administrator of Commerce Bank of San Luis Obispo. In 1994 she
      became the President and Chief Executive Officer of Commerce Bank of
      San Luis Obispo and served in that capacity until the bank was acquired
      by ValliWide Bank in 1996. Ms. Robinson left ValliWide Bank and joined
      the organizing effort of the Bank in 1996.


None of the Bank's directors or executive officers were selected pursuant to any
arrangement or understanding, other than with the directors and executive
officers of the Bank, acting within their capacities as such. There are no
family relationships between the directors or executive officers of the Bank and
none serve as directors of any other company which has a class of securities
registered under, or which is subject to the periodic reporting requirements of,
the Securities Exchange Act of 1934 or any investment company registered under
the Investment Company Act of 1940.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Company does not have a class of equity securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934 (the "Exchange Act").
Therefore, the Company's officers and directors, and persons who own more than
10% of the Company's Common Stock, are not subject to the reporting requirements
under Section 16(a) of the Exchange Act.

ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

The following table sets forth a summary of annual and long-term compensation
for services in all capacities to the Bank for the Bank's President and Chief
Executive Officer.

<TABLE>
<CAPTION>
                                                                                         Long-Term
                                                                                       Compensation
                                                 Annual Compensation                      Awards
                            ---------------------------------------------------------------------------------------------
                                        Salary/                     Other Annual          Securities         All Other
NAME AND POSITION             Year     Benefits       Bonus       Compensation (1)    Underlying Options   Compensation
<S>                          <C>      <C>           <C>           <C>                 <C>                  <C>
ANITA M. ROBINSON
  President and Chief         2000      $90,000        -               $6,000                --                  --
  Executive Officer           1999      $90,000        -               $6,000                --                  --
                              1998      $90,000        -               $5,000              20,000                --
</TABLE>



      --------------------------
(1) This figure represents automobile allowance paid during the year.

No other officer received annual compensation of $100,000 or more in 2000. The
Company currently pays no salaries to its officers.


OPTION/SAR GRANTS

On January 20, 1998 the Bank's Board of Directors adopted the 1998 Stock Option
Plan, pursuant to approval by the Bank's shareholders prior to January 20, 1999.
The Bank's shareholders approved the 1998 Stock Option Plan at the Annual
Meeting of Shareholders held on June 16, 1998. In 1998, a total of 125,099
incentive and non-qualified stock option shares were granted at a price range of
$10.00 to $11.00 per share; 5,000 stock option shares were retired; and no stock
options were exercised. In 1999, a total of 11,000 incentive option shares were
granted at a price range of $8.125 to $9.00 per share; 17,433 incentive and
non-qualified stock options were retired; and no


                                      52
<PAGE>

options were exercised. In 2000, a total of 7,500 incentive and non-qualified
stock option shares were granted at a price range of $7.875 to $8.188 per
share; 5,486 stock option shares were retired; and no options were exercised.
The 1998 Stock Option Plan and the options granted pursuant thereto were
assumed by the Company in connection with the holding company formation
transaction in which the Bank became a wholly-owned subsidiary of the Company.

LONG TERM INCENTIVE PLAN AWARDS

There were no long-term incentive plan awards in 1998, 1999 or 2000.

EMPLOYMENT CONTRACTS

The Bank and Ms. Robinson entered into an employment contract in 1997, for a
period of three years, expiring December 31, 2000, which provides a base salary
of $7,500 per month, discretionary bonuses, an automobile allowance of $500 per
month, expense reimbursement, $250,000 of life insurance and standard and
customary medical and dental insurance benefits. The contract provides for
severance benefits of six months' compensation for termination without cause and
severance benefits equal to the greater of $100,000 or the base salary for the
balance of the contract term for termination after a merger, change in control,
or other defined corporate reorganizations. The Bank and Ms. Robinson are in the
process of negotiating the terms of a new Employment Contract to become
effective January 1, 2001. The Company and the Bank have not entered into any
other employment contracts.

DIRECTORS' COMPENSATION

During 1998, 1999 and 2000 the Bank's directors were not paid for attending
meetings of the Board or the committees on which they served. Directors of the
Company receive no compensation for attending meetings.

One non-employee director received a Stock Option grant during the year-ending
December 31, 2000, which was for 2,500 non-qualified stock option shares at a
price of $7.875 per share.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT

The following table sets forth certain information as of December 31, 1999,
concerning the beneficial ownership of the Company's outstanding Common Stock:
(i) by each of the directors and executive officers; and (ii) by all directors
and executive officers of the Company as a group. Management is not aware of any
change in control of the Company which has occurred since January 1, 1999 or of
any arrangement which may, at a subsequent date, result in such a change in
control. Management of the Company is aware of one person who owns, beneficially
or of record, more than 5% of the Company's outstanding Common Stock: The
Patrick W. Hopper Trust beneficially owns 41,834 shares of common stock, or 6.6%
of total shares outstanding.


<TABLE>
<CAPTION>

                                                                                TOTAL
                                              COMMON STOCK       SHARES         SHARES
                                              BENEFICIALLY     SUBJECT TO    BENEFICIALLY    PERCENT
   NAME AND POSITION HELD                      OWNED (1)       EXERCISE(2)      OWNED        OF CLASS
   ----------------------                      ---------       -----------      -----        --------

                                      53
<PAGE>

<S>                                          <C>              <C>           <C>             <C>
   Bruce M. Breault                               21,250          8,359         29,609         4.6%
    Founding Chairman of the Board
    (Emeritus)

   Roxanne M. Carr                                10,000          4,680         14,680         2.3%
    Secretary

   Karla S. Cool                                   2,837             --          2,837         0.5%
    Director

   William B. Coy                                  7,750(3)       4,680         12,430         2.0%
    Director and Secretary

   Erol F. Giray, M.D.                             6,530          4,039         10,569         1.7%
    Director

   Anita M. Robinson                              15,659         12,000         27,659         4.3%
    Director, President and
    Chief Executive Officer

   Robin L. Rossi                                 13,707(4)       7,080         20,787         3.3%
    Director

   Gary E. Stemper                                 7,500          6,120         13,620         2.1%
    Vice Chairman of the Board

   Karl F. Wittstrom                              15,100          5,640         20,740         3.3%
    Director

   All Directors and Executive Officers
    as a Group (10)                              103,833         55,598        159,431        23.3%
                                               ---------       --------       --------      -------
</TABLE>
---------------------------
(1)  Includes shares beneficially owned, directly or indirectly, together with
     associates. Also includes shares held as trustee and held by or as
     custodian for minor children, by a closely held business or other
     associate. Unless otherwise indicated, all shares are held as community
     property under California law or with sole vetoing and investment power.

(2)  Shares subject to options that were exercisable within 60 days of 12/31/00
     are treated as issued and outstanding for the purpose of computing the
     percent of class owned by such person but not for the purpose of computing
     the percent of class owned by any other person.

(3)  Includes 2,500 shares held by the Blanchard Family Trust of which Mr. Coy
     serves as a co-trustee.

(4)  Includes 474 shares held in the name of The Rossi Foundation.


                                      54

<PAGE>


             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CERTAIN TRANSACTIONS

There are no existing or proposed material transactions between the Company
or the Bank and any of its executive officers, directors, or beneficial
owners of 5% or more of the Common Stock, or the immediate family or
associates of any of the foregoing persons, except as indicated below.

Directors and organizers of the Bank, including an organizing director who
resigned from the Board, advanced approximately $360,000 for the purpose of
covering the Bank's application for a national bank charter, organization and
pre-opening expenses, for which they were reimbursed only $310,000 by the
Bank, with the approval of the Comptroller of the Currency. Additionally, all
of the organizing Directors guaranteed a loan in the amount of $400,000 from
County Bank, Merced, California, at West Coast Prime plus 1.25%, for the
Bank's organization and pre-opening expenses and capital and leasehold
expenditures. The organizing Directors and organizers did not receive any
remuneration for these advances or the guarantees of the loan. Monies
borrowed to pay organization expenses properly borne by the Bank, including
interest and other charges related thereto, were repaid from the Bank's
capital funds, with the prior approval of the Comptroller of the Currency.

Some of the Bank's directors and executive officers and their immediate
families, as well as the companies with which such directors and executive
officers are associated, are customers of, and have had banking transactions
with the Bank in the ordinary course of business and anticipate having such
banking transactions with such persons in the future. In the opinion of
Management, all loans and commitments to lend included in such transactions
were made in compliance with applicable laws on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons of similar creditworthiness and
did not involve more than a normal risk of collectibility or present other
unfavorable features. As of December 31, 2000, loans outstanding to the
Bank's directors and executive officers (including associated companies)
totaled approximately $2.7 million.

                                       55


<PAGE>


ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K

EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT #                                                                          PAGE
---------
<S>        <C>                                                                     <C>
2.1        Plan of Reorganization and Agreement of Merger dated as of
           October 4, 2000*

3.1        Articles of Incorporation

3.2        Bylaws

4.1        Certificate of Determination for Series A Non-Voting
           Convertible Redeemable Preferred Stock

4.2        Certificate of Determination for Series B Non-Voting Preferred
           Stock

10.1       Purchase and Sale Agreement and Lease dated January, 1997, as
           amended

10.2       Financial Facilities Purchase Agreement

10.3       Employment Contract - Ms. Robinson

10.4       Lease Agreement - Paso Robles

10.5       Lease Agreement - San Luis Obispo

10.6       Lease Agreement - Arroyo Grande

10.7       1998 Stock Option Plan

21         Subsidiaries of the registrant

23         Consent of accountants

</TABLE>

* Filed as an exhibit to the Company 8-K Report of December 18, 2000.


REPORTS ON FORM 8-K:

On December 18, 2000, the Company filed a form 8-K Report reporting under
Item 5 that Mission Community Bank, N.A., a national banking association
organized under the laws of the United States, completed its holding company
reorganization, whereby the Bank became the wholly owned subsidiary of the
Company. Pursuant to the Plan of Reorganization and Agreement of Merger,
dated as of October 4, 2000, each outstanding share of Bank common stock was
exchanged for one share of common stock of the Company. The filing of such
8-K Report by Bancorp also began the Company's filings with the Securities
and Exchange Commission under Section 15(d) of the Securities Exchange Act of
1934, as amended ("Exchange Act"). The Bank previously filed such Exchange
Act reports with the Comptroller of the Currency pursuant to Section 15(d) of
the Exchange Act.

                                       56


<PAGE>


SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

MISSION COMMUNITY BANCORP

By: /s/ Anita M. Robinson
-------------------------
ANITA M. ROBINSON
President and Chief Executive officer
Dated: March 30, 2001

By: /s/ William C. Demmin
-------------------------
WILLIAM C. DEMMIN
Executive Vice President and Chief Financial officer
Dated: March 30, 2001

[Signatures continue on next page]

                                       57


<PAGE>


Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Dated: March    , 2001

<TABLE>
<CAPTION>
<S>                       <C>                                      <C>
/s/ Bruce M. Breault      Founding Chairman of the Board           March 30, 2001
--------------------
BRUCE M. BREAULT          (Emeritus)


/s/ Roxanne M. Carr       Secretary                                March 30, 2001
--------------------
ROXANNE M. CARR


/s/ Karla S. Cool         Director                                 March 30, 2001
--------------------
KARLA S. COOL


/s/ William B. Coy        Vice Chairman of the Board               March 30, 2001
--------------------
WILLIAM B. COY


/s/ Erol F. Giray, M.D.   Director                                 March 30, 2001
---------------------
EROL F. GIRAY, M.D.


/s/ William C. Demmin     Executive Vice President and Chief       March 30, 2001
---------------------     Financial Officer (Principal
WILLIAM C. DEMMIN         Accounting Officer)


/s/ Anita M. Robinson     Director, President and Chief
---------------------
ANITA M. ROBINSON         Executive Officer                        March 30, 2001


/s/ Robin L. Rossi        Director                                 March 30, 2001
---------------------
ROBIN L. ROSSI


/s/ Gary E. Stemper       Chairman of the Board                    March 30, 2001
---------------------
GARY E. STEMPER


/s/ Karl F. Wittstrom     Director                                 March 30, 2001
---------------------
KARL F. WITTSTROM
</TABLE>




                                       58



<PAGE>


EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT #                                                                   PAGE
---------
<S>         <C>                                                             <C>
2.1         Plan of Reorganization and Agreement of Merger dated as of
            October 4, 2000*

3.1         Articles of Incorporation

3.2         Bylaws

4.1         Certificate of Determination for Series A Non-Voting
            Convertible Redeemable Preferred Stock

4.2         Certificate of Determination for Series B Non-Voting Preferred
            Stock

10.1        Purchase and Sale Agreement and Lease dated January, 1997, as
            amended

10.2        Financial Facilities Purchase Agreement

10.3        Employment Contract - Ms. Robinson

10.4        Lease Agreement - Paso Robles

10.5        Lease Agreement - San Luis Obispo

10.6        Lease Agreement - Arroyo Grande

10.7        1998 Stock Option Plan

21          Subsidiaries of the registrant

23.1        Consent of accountants
</TABLE>

*Filed as an exhibit to the Company 8-K Report of December 18, 2000.

                                       59